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Fuel price rise to affect Pakistan's apparel sector
Apr '12
The recent hike in fuel prices will adversely affect Pakistan's apparel sector and further decrease the country's export volumes, according to Pakistan Readymade Garments Manufacturers Association (PRGMEA).

Beginning April 1, 2012, the price of high speed diesel has increased by Pk Rs. 4.70 per litre to Pk Rs. 108.10 per litre, while the price of light diesel oil (LDO) has shot up by PK Rs. 5.45 per litre to Pk Rs. 98.74 per litre.

Garment exporters in Pakistan say the increase in fuel prices would further increase the problems faced by the sector that is currently facing many challenges like energy crisis, poor infrastructure and stiff competition from foreign markets.

Explaining how the hike in fuel prices will negatively impact Pakistan's garment industry, Mr. Ijaz A Khokhar, Chief Coordinator of PRGMEA, told fibre2fashion, “The garment industry is scattered all over Pakistan and it is not based at one place like the textile centric city of Faisalabad. The procurement of materials is also done from various places. So, all the to-and-fro transport will hurt very badly due to the hike in fuel charges.”

“Another major impact due to increase in fuel price would be on production cost. Since Pakistan is short of electricity, around 80 percent of garment units operate by using electricity produced by generators that run on diesel. So, with the rise in diesel prices, production costs will definitely go up,” he adds.

“Moreover, due to the shortage of power, our units are running at 50 percent capacity, which leads to delay in production of goods. This forces lot of manufacturers to send their goods by air, as the goods need to be delivered to the buyer on time. This is another cost that is added to the process. The air freight increases the value of the product by another 50-60 percent,” he reveals.

“Finally, several of Pakistan's electricity producing units run on gas or oil. So, if oil prices go up, cost of electricity will also increase. Thus, the recent rise in fuel prices would heavily impact the garment sector and would lead to a further decline in exports,” the PRGMEA Chief Coordinator concludes.

Fibre2fashion News Desk - India

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