Sunday, May 05, 2024
Fakir Fashion, a Narayanganj-based readymade garment factory, has a daily dyeing capacity of 56 tonnes. But it is down to 25-30 tonnes due to severe gas shortages, and the factory is mostly running on diesel and LPG.
The company’s Managing Director Fakir Kamruzzaman Nahid said, “From the last year, we have been receiving minimum pressure, and now I have to spend Tk 10 lakh – 15 lakh per day to use diesel and gas.
“Nevertheless, my production capacity is down by 30 per cent – 35 per cent, and I am suffering huge losses. While buyers are pressuring me to meet lead time due to the Red Sea crisis, I cannot continue production.”
Rupa Group, located in Gazipur, currently faces 7 to 8 hours load shedding daily, and gas pressure is low as well.
Its Managing Director Shahidul Islam said, “I am currently using a diesel-based generator, which costs 4-5 times higher than a gas-fired one.
“The order flow is not good and the prices are tight. Despite this, average production costs have risen by nearly 13 per cent. It is difficult to us to continue business as the atmosphere is not favorable.”
This crisis not only affected Rupa Group and Fakir Fashion’s business, but most of the industrialists in the Narayanganj, Gazipur, Ashulia, Savar, Dhamrai, Narsingdi, Munshiganj areas.
Industry insiders are saying that they are paying the government for air, not gas, and suffering due to 6 to 8 hours of load shedding daily.
But the government had increased gas prices by up to 179 per cent early last year, saying that the increased prices will be used to import LNG from the spot market to ensure uninterrupted supply.
On Monday, leaders of the textile, cement and steel sectors held a meeting in the capital to discuss such issues, and on Wednesday, the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) held a meeting as well.
In these meetings, factory owners said the ongoing gas and electricity crisis put them into hot water amid the ongoing global and domestic economic crises. They have been paying more gas prices since last year for quality supply, but the situation continues to worsen day by day.
Amid the situation, business leaders planned to meet Prime Minister Sheikh Hasina soon, and the FBCCI will try to manage the meeting schedule, insiders say.
Bangladesh Textile Mills Association (BTMA) President Mohammad Ali Khokon told The Business Post, “Quality gas supply is nowhere, and we are purchasing air in the name of gas. Most of the time, pressure is down to 1PSI – 2PSI.
“But when the government hiked gas prices, they assured us that the increased prices were spent to import LNG from the spot market. But where is the gas?”
As they failed to increase gas supply even after one years of price hike, they should return to the previous price, said Khokon, also a director of FBCCI.
‘Petrobangla selling air’
On January 18 last year, the government set new gas prices. Before the price hike, the authorities had set a meeting with the industry representatives, and said their aim is to increase gas supply.
During the meeting, factory owners had said they had agreed to pay Tk 22 for per cubic metre (m3) against the previous prices of Tk 11.98 for large, Tk 11.78 for medium, and Tk 10.78 for small, cottage and other industries respectively.
And the amount is enough to raise funds to import LNG from the spot market.
But the government set Tk 30 per m3 gas for all sectors and issued a gazette. They also fixed new prices for the captive, small and commercial power plants at Tk 30 per m3 instead of Tk 16 and the commercial users of gas – such as hotels and restaurants – set at Tk 30.50 instead of previous Tk 26.64 per unit.
Just six months before the price hike, the Bangladesh Energy Regulatory Commission (BERC) had raised the average gas prices by 22.78 per cent for retail consumers, except for CNG-run vehicles.
The Knitwear sector is one of the key sufferers of the ongoing gas and electricity shortages as it is collecting nearly 80 per cent raw materials from the domestic source. The sector is also contributing over 40 per cent of the country’s total export earnings.
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Executive President Mohammad Hatem said, “We are burning gas and earning foreign currency, which is most important for the country’s economy.”
“Bangladesh is facing severe forex reserve shortages. Amid the situation, we are expecting quality gas and electricity supply as much as possible. But what are they doing? They are billing us, and selling air,” said Hatem, also the managing director of MB Knit Fashion Ltd.
Petrobangla initiatives
According to Petrobangla, the country's daily gas demand is 4,000 million cubic feet (mmcf/d), though insiders claim that the actual demand is over 5,000 mmcf/d. But Petrobangla has only been able to supply 2,800 mmcf/d of gas on average due to the declining domestic production and disruptions in LNG imports.
Notably, Petrobangla reported supplying 3,050 mmcf/d of gas Thursday, while 1,000 mmcf/d sourced from imported LNG. Of the total, 1,330 mmcf/d supplied to power plants and 280 mmcf/d to the fertiliser factories.
Despite an 800 mmcf/d demand for industries, over 600 mmcf/d of gas is being supplied.
Officials from Petrobangla highlighted efforts to address the crisis by ramping up gas supply to power plants amid the ongoing heatwave. However, despite maximum efforts, many power plants are struggling to generate electricity due to gas shortages.
During Eid-ul-Fitr and subsequent days, gas supply hit a record low of eight days due to maintenance closure of an LNG terminal, and the shutdown of Bibiyana's compressor station, leading to decreased gas production.
Petrobangla has laid out plans to tackle the gas crisis comprehensively. By 2025, they aim to drill 48 exploratory and workover wells, targeting the connection of 600 mmcf/d of gas to the national grid.
Two years into this initiative since its adoption in 2022, Petrobangla has drilled 11 wells, securing gas receipt of 120 mmcf/d, with 33 mmcf/d already integrated into the national grid.
Additionally, Petrobangla plans to initiate another 100 wells by 2028, starting in 2025, with the aim of augmenting daily gas production by nearly 1,000 mmcf/d of gas through 69 new wells.
Furthermore, workovers on 31 wells are anticipated to yield an additional 500 mmcf/d of gas. The initiative, funded by Petrobangla with Tk 5,722 crore over three years, seeks Tk 13,328 crore from the government.
BPDB wants closure of captive generators
Bangladesh Power Development Board (BPDB) officials advocate for ending captive power supply in industries, arguing that most captive generators are outdated, consuming excessive gas and producing inadequate electricity.
They suggest redirecting gas directly to gas power plants for more efficient electricity generation. However, industrialists argue that uninterrupted electricity supply is crucial for the manufacturing industry, which BPDB cannot consistently provide.
