Industries counting losses as gas crisis lingers

The country's industries have been facing a prolonged gas shortage for about two years and it has severely impacted their production and profitability.

Despite government assurances of an improved gas supply situation by mid-July following repairs of a damaged FSRU (floating storage regasification unit), entrepreneurs report that the situation remains unchanged in October, nearly three months later.

Numerous textile mills, including some of the country's largest, have reported significant production cuts and substantial financial losses.

Israq Spinning Mills Limited, one of the largest textile mills located at Mawna of Sreepur upazila in Gazipur, has seen its gas pressure plummet to near zero at peak time, significantly reducing its production capacity from 160 tonnes a day to merely 60 tonnes. 

Fazlul Haque, managing director of Israq Spinning Mills Limited, told TBS, "Even though my mill has approval for 15 PSI [pounds per square inch, a measurement unit for gas pressure], it drops to one or even zero [during peak hours]. If the pressure increases a bit at night, I can resume production."

He added, "My daily production capacity is 160 tonnes, but on average, I can only produce 60 tonnes. In other words, due to the gas shortage, 60% of the factory's capacity is being unutilised. As a result, we are incurring significant financial losses."

Similar situations were reported by Intimate Spinning Mills Limited and Little Star Spinning Mills Limited of the same group located in Dhaka's Savar and Narayanganj's Vulta, respectively, with gas pressures as low as 1.5 PSI in one factory and 1 PSI in another yesterday afternoon.

Khorshed Alam, chairman of Little Group Limited, told TBS, "With the addition of electricity, only 40% of the total production capacity is being utilised each month."

He also shared the gas bill for one of his factories for August to show the extent of the gas shortage.

"I am incurring a loss of Tk1.1 crore per month from both mills. Now, I am looking for a way to exit this business," Khorshed said.

Two years ago, the gas price was increased by up to 179%, and the then government stated that the increase was necessary to ensure uninterrupted supply. However, since then, the situation has not improved.

After speaking with eight industrialists from four areas, including Narayanganj, Gazipur, and Savar, seven of them reported that they are suffering from the ongoing gas supply crisis.

Industry sources say there are over 700 gas-based industries in the district. All of these factories are currently suffering due to the gas crisis, they said.

Entrepreneurs say the crisis reached its peak at the end of May when an FSRU was damaged due to Cyclone Remal.

Later, government officials assured that the gas supply situation would improve by mid-July, following the return of the FSRU after being repaired in Singapore.

However, the entrepreneurs say, the situation has not improved even in October.

Petrobangla officials say there is at least a 30% shortfall compared to demand.

Md Kamruzzaman Khan, director of Petrobangla, told TBS, "The current daily demand is 3,800 to 4,000 million standard cubic feet per day (mmcfd), while the supply is approximately 2,700 mmcfd."

He, however, said the gas supply situation has improved a bit. "Previously, we were receiving 500 mmcfd from LNG daily, but now we are getting 700 mmcfd."

Kamruzzaman said the supply will increase to 900 mmcfd after 15 October, once the LNG purchased from the spot market arrives in the country.

Entrepreneurs worried about bank loan repayment

Fazlul Haque said, "We are incurring losses of crores of taka every month. We have loans exceeding one thousand crore taka in the bank. How will we repay this money?"

Expressing his frustration, he said, "If I had an exit policy, I would exit this business permanently."

Mohammad Hatem, managing director of MB Knit Fashions Limited, a Narayanganj-based garment factory, told TBS, "I have a finishing unit in my factory and another factory named MS Dying Printing Limited. Due to the gas crisis, the loss in both factories amounts to nearly Tk2 crore."

He added, "I will have no option but to turn into a loan defaulter," he said, adding that from next March, many garment and textile factory owners will be at risk of becoming defaulters as well.

Azahar Khan, chairman of Mithela Textile Industries Limited, said, "I don't know how I will pay salaries next month if I don't receive money from the bank. I can't gauge whether worker unrest surfaces," he said. "My factory is on life support due to the gas crisis."