Gas Supply Crunch Stifles Bangladesh Apparel Industry
by Syed Mahmud Onindo, bdnews24.com Fatullah Dyeing and Calendering Mills was once abuzz with activity round the clock but it now remains operational only eight to nine hours a day and its production more than halved in September due to a gas crisis. Its owner Fazlee Shamim Ehsan fears losing the confidence of foreign buyers for the delay in delivering goods. He said the factory now gets gas at a rate of 1.5-2 pounds per second when it was supposed to be 15 PSI. “The highest was 3 PSI in the last week. We’ve failed to make shipments on time.” Shamim said the factory saw 60 percent less production last month. “Our relationship with foreign customers has deteriorated.” The gas crisis has taken the pace off of production in Gazipur industrial zone as well. When the crisis deepened in July, the government had hoped things would return to normal by September. But Nasrul Hamid, state minister for power and energy, said they fear the situation will persist at least until November. Bangladesh Knitwear Manufacturers and Exporters Association or BKMEA warned that factories might resort to cutting jobs in case of long-term production issues. Shamim, vice-president of BKMEA, said the gas crisis woes might “deepen further” in the future, as the Russia-Ukraine war continued to rage, worsening the supply crunch globally. “Without proper shipment, the workers cannot be paid and that will spark discontent among them. We expect the situation to get worse in November.” According to BKMEA, over 800 garment factories of different sizes are located in Narayanganj, 113 of which are listed as dyeing factories. Along with these, there are more dyeing plants in the district and they primarily run on gas. Some factories use gas to generate electricity. Industrial entrepreneurs said the factory owners were hoping to pull through the crisis. But their woes have only deepened and put them on the brink of losses. Mohammad Hatem, executive director of BKMEA and owner of MB Knit Fashion Ltd, said his factory remained shut for four days last week due to a lack of gas. “My factory works on fabrics brought in from other plants, where the gas supply crunch disrupted production.” The crisis has now reached an “extreme” level, he said. “No gas all day, only a bit at night. Like Narayanganj, Gazipur’s Sreepur and Bhaluka areas also suffer gas supply cuts from 5 pm to 5 am. This is causing major disruption in production.” “We saw a 9 percent fall in exports last month after a 28 percent growth the month before. The gas crisis is primarily responsible for that. The fall in exports is similar to what it was during the COVID times.” “Sometimes gas pressure slumps below 1 PSI while we need at least 4-5 PSI to run the machinery. It’s created a multi-faceted crisis.” The apparel factories in the country have several units -- spinning, knitting and dyeing, and they rely on one another. When raw materials like textiles or fabrics are not available in the factories, the factories import the materials. But the depleted foreign currency reserves and higher dollar prices have caused import expenditures to soar, said Hatem. State gas transmission and distribution company Titas is in charge of supplying gas in Narayanganj, where 66,000 legal residential consumers and 591 industrial units depend on its supply. Mamunur Rashid, deputy general manager of the regional office, said the region requires 80 million cubic meters of gas per month, but the supplies are limited to 65 million cubic meters. Narayanganj had always suffered from gas shortages, he said. “The issue has become worse now. We are working on it. But the main problem is that we are not getting as much gas as we need. On top of that, we are having to supply more gas to power plants to tackle the power crisis.” Mamunur hopes the crisis will ease in winter. “The demand for power falls in winter. In that case, we’ll be able to lower our supplies to power plants and boost deliverance to other customers.” Production Cut by “Half”Md Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association or BGMEA, said gas users across the board are suffering due to the crunch. “Apparel production has slipped by 50 percent. The factories have been unable to send goods to buyers on time and are falling short of demand.
So the buyers are purchasing clothing from other countries at higher prices. Our orders have plunged over the past three months.” Owner of Gazipur’s Giant Textiles, Faruque said: “Steam produced by gas is needed to process fabrics at garment factories. Insufficient gas is disrupting fabrics manufacturing.” Md Fazlul Haque, general manager of Lakshmipur’s Sparrow Apparels, spoke of using diesel as a replacement for gas, which is kicking up the expenditures at least four times. Fazlul said his factory, too, is struggling with production cut by half, which is delaying staff payment and goods delivery. MP Abdus Salam Murshedy, managing director of Eco Garments and Fontina Apparels, said disruption in continuous gas supply also “affects the quality of goods” bringing huge losses to factory authorities. In the last financial year, Bangladesh racked up $52.08 billion in export gains and the garment sector generated 82 percent of that. The first two months of this financial year had delivered hopes of growth in export earnings. Traders in the sector think the impact of curtailed production on the economy will be apparent in the coming months. Lower Earnings, Staff CutBKMEA President Hatem said the workers’ earnings are dropping while factories are resorting to sacking to balance out expenditures. “Less production means lower salaries [for work-based employees]. On the other hand, salary-based workers are being sacked because there’s not enough work in the factories. Where will we get the money to pay them?” Hatem said his factory fired over 100 workers and feared rising discontent among the rest. “We sat with the prime minister’s energy adviser, ministers, secretaries, Titas chairman and managing director multiple times, but received no positive messages.” Demand-Supply GapAccording to state-run agency Petrobangla, Bangladesh generated 3,117.7 million cubic feet of gas against 3,760 million cubic feet capacity per day four months ago on Jun 10. At that time, it imported 775 million cubic feet of gas and the rest came from domestic gas fields. On Oct 10, the total supply in the country slumped by around 14 percent to 2,671.7 million cubic feet -- 2,291 million cubic feet produced in the country and 380.6 million cubic feet of LNG brought in from overseas. While the supply from within the country declined by 3 percent, the amount of LNG dropped by half in the space of four months. Titas supplies to Dhaka, Gazipur, and Narayganj also saw a decline. On Oct 10, it delivered 1,378.3 million cubic feet of gas against a daily demand of around 1,700-1,800 million cubic feet. The supply was 1,720.5 million cubic feet on Jun 10. What Government SaysState Minister Nasrul said the government had planned to meet the gas deficit through imports by October but failed. “We thought it was a temporary problem but that is no longer the case. The global situation has changed the dynamics of the issue.” He spoke of “holding tight” for another couple of months. “We'll have to struggle through this month. We’re trying to make some improvements starting next month. Our target is to meet the shortage in factories at first.” “We are giving priority to export-oriented industries so that they can at least meet the purchase orders for the last month. We are also prioritizing fertilizer plants, so power generation is being disrupted.” Nasrul said there was “no hope” of the power cuts improving before November. “We are keeping some power plants shut during the day while those running during daytime remain shut at night. This is stretching the blackouts.”