Power outages take toll on leather sector

Highlights:

• Large factories manage load shedding with generators
• Small manufacturers incur losses as they don't have the machines
• Production costs increase by 10-15%
• Fears that export target will be missed
• Entrepreneurs demand uninterrupted electricity for 3 months

The country's leather industries, which have been going through their busiest days of the year in processing the hides collected during Eid-ul-Azha, are now feeling the crunch as a result of the load shedding which began last week.

Talking to The Business Standard, manufacturers, particularly at the Tannery Industrial Estate at Savar, said a good number of hides have already been damaged while being processed due to the power outage, which has been happening several times for over two hours a day. 

"We face two or two and half hours of load shedding every day, which causes a huge loss for us. For instance, one-time load shedding damages 1,000 to 2,000 pieces or 40,000-45,000 square feet of leather at the dyeing or colouring stage," said Md Akbar, owner of Khokon Tannery at the Tannery Industrial Estate in Savar. 

"Once started, there is no way to halt the processing work until its completion. The load shedding during this time, particularly at the stage of dyeing and colouring, causes defects in the final output, which reduces leather prices by 60-70%."  

Akbar told TBS that the company is now processing some 50,000 rawhides, and another 50,000 are in the pipeline. "If the outage continues, we will face large-scale losses." 

"Because of the frequent load shedding, 5,000 pieces of our cowhides and 10,000 pieces of goat skins have so far been damaged. Hence, we have incurred some Tk50-60 lakh in losses," said Abdur Rashid Bhuiyan, Managing Director of Dhaka Hide and Skins. 

"Apart from the disruption in production, load shedding also increases our production cost. Significantly."

The government went for load shedding as part of its austerity measures to reduce foreign currency spending on import of electricity-producing gas and oil. The blackout was supposed to be for one hour a day in an organised way across the country, but it has not been going to plan from the very beginning. 

Amid such a situation, diesel-run electricity generators could help leather industries continue most of their work. However, many manufacturers, especially small-scale ones, have been found to have no such machines. The larger ones use generators for most work during the outage.

Insiders have said, though, that not all the production work can be done through generators, adding that the use of alternative power increases production costs significantly as well. 

Md Shahidullah, Managing Director of Azmir Leather, told The Business Standard that the company's costs have increased by 10-15% as a result of the use of generators. "Even then production is being disrupted." Several others echoed similar sentiments. 

Bangladesh Tanners Association General Secretary Md Shakhwat Ullah told The Business Standard that he has learned that many factories have experienced damage to leather while processing it. "If the load shedding continues it will lead to a huge loss for the industry."

When contacted, Executive Engineer of the BSCIC Tannery Industrial Estate Md Mahfuzur Rahman Rizwan told TBS that the BSCIC is yet to get a report on what amount of leather has been damaged in the course of load shedding. 

"We have sent letters to tannery owners asking them for data in this regard," he added. 

The engineer further added that the authorities have already met with officials of the power sector and requested them to inform the tannery estate authorities about the load shedding schedule for the day 24 hours earlier as the case of leather processing is different from that of other industries. 

"We can then take necessary steps to reduce the risk of damage to the leather."

Talking to TBS, Golam Kadir, Deputy General Manager of Dhaka Palli Bidyut Samity for the area, said the total daily electricity demand in the zone is 40MW, whereas only 22MW are available.

"Only tanneries need 12MW. There are also 30 to 40 garments and other different factories in this zone. We have to keep all of them in mind. Since there is an issue of damage in tanneries, we are trying to keep electricity uninterrupted for them."

Meanwhile, Bangladesh Tanners Association General Secretary Md Shakhwat Ullah has urged the government to ensure uninterrupted electricity to the tanneries for at least the next three months so that they can process all the hides collected during Eid-ul-Azha. 

"We recovered slightly from the Covid pandemic last year and exported leather and leather goods worth $1.25 billion in that year. For this year, we have set the target at $1.50 billion. If load shedding continues in this way, we will not achieve this export target. Moreover, we will have to confront huge losses. As such, we demand uninterrupted electricity supply for the next three months," he told TBS.