Gas, power shortage a bane for industries

Bangladesh has been facing a gas shortage for some time with the situation becoming acute in the recent days; however, to add more woe to existing misery, electricity crisis has taken shape.

The gas shortage is also causing a crisis in power generation as the government fails to supply gas to captive power users and gas-fired power plants with the required pressure forcing the power distributors to go for power cuts.

The production data paints a grim picture with majority of sectors, apparel, textile, ceramics, and food production experiencing a drop by 50 per cent in different regions, particularly in Gazipur, Narayanganj, Mymensingh, Dhamrai and Ashulia. 

Bangladesh recently touched a landmark in export earnings by crossing the $50 billion mark for the last fiscal.

Overall export earnings also surpassed the set target by 19.73 per cent in FY 2021-22, despite headwinds blowing from global crunch, according to Export Promotion Bureau.

Naturally, the expectation for the coming year is higher although if the current power shortage is left unaddressed, export oriented business sectors may face difficulty in manufacturing products with the RMG sector facing significant losses.

Relevant to note, the BGMEA higher authority voiced a hope to take RMG exports to $ 100 billion by 2030 – an ambitious target, which can only be fulfilled with uninterrupted power supply.

The special economic zones may have their own power systems, smaller industries supplying vital accessories often work outside the zones and are thus vulnerable to power and gas cuts.

Industry insiders said textile, dyeing and washing factories are operated by electricity from captive power plants and their main fuel is natural gas. Only the textile sector has around 1,700 MW captive power plants and such plants need 600mmcfd of gas every day. In addition, ceramic, bakery and many other factories are also run on gas.

Erratic supply of gas and power will have the most damaging impact on SMEs, especially those which are run in rural or suburban areas by young entrepreneurs. Many such businesses were launched with loans taken from banks with conditions of monthly instalment payments. Understandably, with production hampered, business earnings falter, leading to loan payment default.

Covid-19 lockdowns left many small and medium enterprises facing existential crisis and many were forced to close down. As the economy struggles to regain some momentum, gas and power shortage will only add to the woes of such mid-sized businesses.

According to the Energy and Mineral Resources Division, there is a demand for 3,400 million cubic feet (mmcf) of gas daily in Bangladesh. On Monday, the Petrobangla could supply only 2,822 mmcfd gas. Of this, 507 mmcfd were imported LNG. Just a month ago, the Petrobangla could supply 692 mmcfd LNG to the national grid. 

According to media reports, the government imports 57 to 58 cargo vessels of LNG on a long term contract and 13-15 cargo vessels from the spot market every year.

However, the ongoing conflict in Europe has had a deleterious impact on the global market resulting in a price hike of LNG.

To look at the gas and power crisis affecting everyday life, residents of Dhaka are suddenly seeing load shedding, a nuisance which had been absent for years.

Looking at the issue rationally, there is no magic wand to address it although some swift strategic moves may ease power related demands in the future. Bangladesh had been toying with the idea of hydropower for sometime with development partner International Finance Corporation, IFC, proposing a hydropower agreement with Nepal and Bhutan.

Expediting this will help tackle the soaring power needs in the coming days while the authority can explore ways to buy cheaper LNG from Qatar, the biggest LNG producer. The government set up two floating storage and regasification units (FSRU) in Moheshkhali in 2018 and 2019 to import and supply LNG to the national gas grid. More such units can be taken into consideration.