Industries scale back production

Power shortages amid a severe crisis of fuel, mainly gas, have started hurting industries with power guzzling steel, fertiliser, and ceramic factories being the worst sufferers. 

Other industries that are also bearing the brunt of the power supply crunch include ship breaking, and apparel.

Recurring power outages and low gas pressure have hurt production of most factories, while a few are trying to deal with the crisis using alternative energy sources.

Infographic: TBS

Exporters have expressed fear that if the supplies of gas and power do not improve quickly, it will not take long to have a negative impact on the country's export earnings.

Steel industry

Chattogram-based BSRM Group, a leading steel manufacturer in the country, has been forced to trim production by at least 30% because it had to switch to electricity generated from furnace oil amid a crisis of gas.

The production cost of the company also has surged by 25% to 30%.

Tapan Sengupta, deputy managing director of BSRM, told The Business Standard his company is currently getting 110 megawatts (MW) of electricity daily against a demand of 150MW. 

They do not have any alternative system to resolve the problem either.

"In this situation, we have been compelled to keep factories running with reduced capacity," he said, adding, "We still cannot estimate the extent of the damage. There is a fear of losing markets if we fail to deliver orders on time."

Power shortages have also eaten into the steel production of KSRM Group and Mustafa Hakim Group, two more steel manufacturing giants in the country.

Mehrul Karim, chief executive officer of KSRM, told TBS that they cannot even use 30% of their production capacity because of power outages.

On the other hand, the average daily mild steel (MS) rod production at two factories of Chattogram-based Mustafa Hakim Group – Golden Ispat and HM Steel – are also wrestling with an electricity and gas crisis. The production of the two companies had to be reduced by about 30% and has come down to 1,100 tonnes from 1,600 tonnes.

Sarwar Alam, director of Mustafa Hakim Group, said, "The steel industry needs an uninterrupted supply of electricity and gas. Amid these shortages, the cost of production as well as the depreciation cost of machinery go up. In addition, we have to pay salaries even if they workers sit idle."

Mohammad Ali Hossain, managing director of PHP Family, said they are trying to deal with the power outages by using diesel and furnace oil.

He said "It will be some time before we can say about the real impact of the current load shedding. But the cost of production has increased a lot."

He, however, expressed hope that the situation will improve soon as the government is trying to provide uninterrupted power and gas supply to industries.
 
Ceramic industry

In the same way, the production cost of RAK Ceramics, the country's top ceramic producer, has increased by 30% as the company is having to continue production with power generated from diesel instead of gas.

Muhammad Shahidul Islam, company secretary of RAK Ceramics, told TBS that the ceramic industry operates gas-powered captive generator-based power plants to meet its electricity needs, but that the prevailing gas crisis is disrupting power generation for 7-8 hours a day. 

At the same time, the production of tiles also is being hindered because of the low pressure of pipeline gas, he added.

Mentioning that the total investment of 30 ceramic factories in the country is more than Tk5,500 crore, he said the abrupt rise in production cost would expose the potential industry to uncertainty for a long time.

Great Wall Ceramic Industries Ltd, the country's largest tiles manufacturer, has also drastically reduced its production owing to low gas pressure.

Md Shamsul Huda, vice-president at Bangladesh Ceramics Manufacturing and Exporters Association and managing director of Great Wall Ceramic, told TBS, "We kept our factory closed for 15 days in June owing to low gas pressure. We are somehow managing to run the factory on a single shift only."

The one-hour recurring blackout will put them into more trouble, he said.

Jamuna and Chattogram fertiliser factories closed

One of the most important agricultural inputs, urea fertiliser producer Jamuna Fertiliser Company Limited (JFCL) has been unable to produce fertiliser for almost a month due to a lack of gas supply. 

Factory officials said they do not see any possibility of the factory starting in the next three months. Chattogram Urea Fertiliser Limited (CUFL) has also been shut down as well. 

Shahjalal Fertiliser factory and Ashuganj Fertiliser and Chemical Company are also facing the same risk.

According to Petrobangla, 316 million cubic metres of gas is needed to keep the factories running and the factories are getting only 159 million cubic metres of gas. As a result, the factories cannot continue production.

Mohammad Sahidullah Khan, general manager (operation) of Shahjalal Fertiliser Factory told TBS, "Due to gas shortages, the factory has stopped production for about a month. We have informed our regulatory bodies, written to them, and held repeated meetings. But there is no solution yet."

RMG

Companies in the garment and textile sector, the top export earners, also are in trouble. 

Fineness Apparels at the Karnaphuli EPZ had a target to export formal wear worth $17 million. However, due to load shedding, the garment production of the company is also disrupted.

Sheikh Mohammad Daniel, managing director of the export-oriented garment factory, told The Business Standard, "Due to load shedding, we have to keep the generator running for a maximum of three to four hours. This results in a minimum of 3% to a maximum of 5% production disruption. Besides, while keeping the production going by alternative means, our production cost is increasing by about 11%.

Rakibul Alam Chowdhury, vice-president of BGMEA and chairman of RDM Group, told The Business Standard, "Intensive load shedding is disrupting production in garment factories. If the situation persists, businesses along with the whole economy will suffer. We have already written to PDB about this problem."

Engineer Estahak Ahmed Shaikat, managing director of Nortex Textiles Mills Ltd, said, "Our production has come down to half the capacity because of low gas pressure." 

Every day, gas pressure remains as low as almost zero from 5.00pm to 3.00am, he claimed. 

Electricity supply also is not stable, making it difficult to run textile and spinning units, said Shaikat, also a director of the Bangladesh Textile Mills Association.

"Our production planning is facing setbacks due to unstable power supply, which will also make on-time shipments difficult," said Abdullah Hil Rakib, managing director of TEAM group.

As a result, buyers may lose their confidence, he added. 

Mentioning that they are trying to continue production amid power outages and gas shortages by running diesel generators at a limited scale, he said, this, however, is pushing the production cost up. 

A leading spinning mill owner seeking anonymity told TBS that they need gas pressure at 15 PSI (pounds per square inch), but that the pressure has been between 1.8 PSI and 3.2 PSI since the Eid vacation was over. 

As a result, they have been forced to put production to a halt. 

Shipbreaking

An average of 2 kg of LPG gas is required to cut one tonne of scrap from old ships. Due to the ongoing gas crisis, the workflow of the shipbreaking industry is also disrupted.

Abu Taher, president of Bangladesh Ship Breakers and Recyclers Association, said that gas is the main fuel for ship breaking.

The government has stopped buying LNG from the spot market. Moreover, rising LPG prices are making matters worse for the local industries.  

"If ongoing crisis prolongs, activities of the country's ship-breaking sector may come to a halt," he feared.

TBS Staff Reporter Eyamin Sajid also contributed to the report