Nearly 300 Factories Shut Down Due to Gas Shortage

Photo: CNI

Narayanganj Correspondent: The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) has said that nearly 300 factories have been shut down due to the gas shortage, raising concerns about losses in the export industry.

The organization’s leaders made the remarks at a press conference held on Saturday (August 22) at the BKMEA building in Chashara, Narayanganj.

BKMEA leaders said that industrial establishments have been severely affected by the gas shortage that has continued for nearly a month. In particular, as gas pressure has fallen close to zero, production at many factories has come to a complete halt. At one point, more than 300 factories were completely shut down, they said.

BKMEA President Mohammad Hatem said that the country has been facing a severe gas shortage since the 20th of last month. Although the Ministry of Energy had assured that the situation would return to normal from the 10th, the crisis has actually become more severe. Due to low gas pressure, many factories are unable to produce at their designated capacity. As a result, production costs have increased, while uncertainty has also emerged over the timely delivery of export products.

The BKMEA president said that the suspension of production has also made it difficult to pay workers’ salaries and allowances. Considering monthly exports of around $3.5 billion, he claimed that exports worth around $1.5-2 billion have been affected by the ongoing crisis.

He further said that the indirect damage caused by the crisis is even more severe. The gas shortage has created a crisis of confidence among foreign buyers regarding Bangladesh’s industrial sector. Some buyers have already started shifting orders to neighboring countries. In some cases, as much as one-third of orders have been cancelled and shifted to other countries. There are also concerns that orders for the upcoming season may be moved elsewhere.

BKMEA leaders said that if the situation continues, it could have long-term negative effects on the country’s export earnings, employment and overall economy.

At the press conference, they presented six demands to the government. The demands are: allowing gas and electricity bills for June and July to be paid in 12 installments; not disconnecting gas and electricity connections even if bills cannot be paid, so that factories can quickly resume production once the crisis is resolved; providing clear guidelines regarding the gas situation and holding regular weekly briefings by the Ministry of Energy and Petrobangla to prevent rumors and confusion; stopping CNG supply to vehicles other than public transport and encouraging the use of LPG as an alternative so that gas supply to the industrial sector can be increased; disconnecting illegal gas connections and stopping gas theft. BKMEA claims that according to Titas Gas’s own records, system losses stand at 8–10 percent, a significant portion of which is linked to illegal use or theft. Stopping these practices could somewhat reduce the gas shortage, and suspending the classification of loans of industrial establishments that have failed to repay installments due to the gas crisis for at least six months. BKMEA has sought cooperation from Bangladesh Bank on this matter.

BKMEA leaders said that alongside temporary measures, long-term and sustainable energy management must be ensured for the industrial sector. As the country’s gas reserves continue to decline, dependence on imports will increase in the future. Therefore, they demanded that the process of establishing a third floating LNG terminal, or FSRU, be finalized by September. They also emphasized the need to establish more FSRUs and land-based LNG terminals in the future.

BKMEA Executive President Fazle Ehsan Shamim, Vice President (Finance) Morshed Sarwar Sohel, former BGMEA President Kazi Monir, Senior Vice President Amal Poddar, Vice President Ashikur Rahman, Director Nazrul Islam Swapan and Director Mamunur Rashid, among other leaders of the organization, were present at the press conference.