Small enterprises hugely impacted by power crisis

Frequent power cuts are having a seriously adverse impact on the economy. The small businesses are really feeling the pinch. According to a recent report published in this newspaper since the nationwide power cuts went into effect on July 19, business owners have been subjected to longer power outages than in days prior.

However, there seems to be little sign of light at the end of the proverbial tunnel. Shortage of gas, higher dollar price and not to mention, short-sighted and inefficient management have gripped our power sector.

The government has decided, for the time being, not to buy LNG from the international spot market and gas supply has fallen since June 30 amid lower domestic production. This has hit the generation of electricity in a country where power production accounts for around 70 per cent of the total gas consumption. As a result, the industries and businesses in Bangladesh are in trouble since production halved while the cost of production is rising. It may be mentioned here that that much of the natural gas-generated electricity has been replaced by electricity imports from India, which rose to 10 per cent of total electricity generation and cost significantly more than domestic generation.

The earlier mentioned report quoted Bangladesh Toy Merchants Manufacturers and Importers Association President Md Shajahan Mojumder as saying, “Our business did not fall even during the peak of the Covid restrictions. But, we are passing through a difficult time now. We had no toys in our warehouses during festivals like Eid, and Durga Puja last year but this year 30 to 40 per cent of our products remain in warehouses.”

The daily load shedding is affecting trade in a big way, although there is no other way at the moment. Businesses can minimize loss by opening early and the government may think about extending the business hours by thirty minutes. Since the world is moving towards hard times, the government may take up a nationwide solar panel installation effort with support from development agencies.

The reality globally at this moment states that everyone has to be ready to weather a storm. No economy is fully insulated from turbulent trends. Accepting this truth, the priority has to adopt the maximum measures to minimize the damage.

Also, making it mandatory for all major markets to place solar panels can provide the necessary lights in case of prolonged power outages.

As stated earlier small businesses have been hit disproportionately hard by the continuing power crisis, with several having to shut operations during outages. Power outages lead to loss of production opportunities and the usage of power backups nearly doubles the cost of power. As a matter of fact, small enterprises generally do not have such backups, given their high operating costs, which forces them to shut operations during power cuts. Along with profitability, the power outages also affect the debt level of the businesses as bank repayment also needs to deferred in case of revenue losses.

There is a need for soul searching. While various studies have shown that Bangladesh has abundant natural gas, question remains as to why this crisis emerged in the energy sector. Energy experts previously warned that an import-dependent energy policy could pose a threat to the country. After many ups and downs, the maritime boundary dispute was resolved in 2014. It was hoped that the government would make an effort to search for gas at sea. Yet no effective action has been taken in the last eight years.

It has to be admitted that the power crunch has echoes of the crisis in another South Asian country, Sri Lanka, which has also suffered hours-long blackouts, contributing to social unrest.

As the war lingers, global economy will continue to slow down, affecting all nations, including Bangladesh. In the days to come, it’s the resilience of this nation which will be put to the test.