Leaders of the textile and clothing sector have strongly opposed the move to raise gas tariff, saying that the proposed 132 per cent hike, if implemented, would increase their production cost by 5.0 per cent.
Such a steep tariff hike would curtail the growth of the sector as well as the economy, they said. Besides, it would cause erosion in competitiveness and affect employment growth rate, they said.
The leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) placed the demand at a joint press conference at the BGMEA headquarters in the city on Wednesday.
They said any hike in gas or electricity tariff will not be 'acceptable' unless the government ensures uninterrupted gas supply, single-digit bank interest rate, EVC (electronic gas volume corrector) in all factories and compensation for the losses incurred by the millers due to gas crisis.
BGMEA president Md Siddiqur Rahman, BKMEA's acting president Mansoor Ahmed and BTMA president Md Ali Khokhon spoke at the press briefing.
Recently, the Bangladesh Energy Regulatory Commission (BERC) held a public hearing on gas price hike, as different distribution companies have proposed, among others, raising the gas tariff for industrial use to Tk 18.04 per cubic metre from Tk 7.76 -- an increase of 132 per cent.
The distribution companies also proposed 96 per cent gas tariff hike for captive power generators.
BTMA president Md Ali Khokhon said about 585 textile mills, including spinning mills, produce around 1300 megawatt of electricity through captive power generators.
Encouraged by the government, the textile mills have invested about Tk 300 billion to Tk 350 billon in developing infrastructure and importing generators for captive power, he said.
"But unfortunately, majority of the mills could not use the full capacity of the captive power plants for more than one decade due to erratic gas supply and low gas pressure," he added.
Besides, damage caused to machinery, failure in making timely shipment and higher bills for services have led to a substantial rise in yarn and fabric production costs, said Mr Khokon.
He alleged that the distribution companies, including Titas Gas, have raised gas tariff by more than 400 per cent on six occasions in the last ten years without solving the nagging gas crisis.
Because of gas tariff hikes in 2015 and 2017, the production cost of a kilogramme of yarn went up by Tk 8.05 or 9.0 US cents, Mr Khokhon explained.
In such a situation when millers are trying to adjust the rising cost, the distribution companies have again come up with gas tariff hike proposals, he said. As a result, the cost of producing one kg of yarn would increase by another Tk 7.72, he explained.
Consequently, many textile mills might face closure, which would badly affect the RMG sector, Mr Khokhon said, as the textile millers meet 80-85 per cent of the demand for yarn and 35-40 per cent of the demand for fabric in this sector.
Terming the gas tariff hike proposal suicidal, the BTMA president said, "Any gas price hike is unacceptable to us unless the millers are duly compensated for their financial losses resulting from gas crisis."
BGMEA president Siddiqur Rahman said, "The proposed 132 per cent gas tariff hike will raise our production cost by 5.0 per cent, as washing and finishing segments of the garment factories use boilers extensively."
As a result, electricity and transportation cost, among others, will also go up, affecting all the industrial sectors, he noted.
The sector is already under tremendous pressure because of the declining global apparel prices. In such a situation, the cost of local production is going up following recent wage hike, appreciation of local currency against US dollar and high bank interest rate, he explained.
The volume of gas supplied to the textile and clothing sector is very negligible, compared to the sector's contribution to the economy, Mr Rahman said, urging the government to keep the sector outside the purview of gas price hike.
The government has assured the garments owners that it would help keep the cost of production at a tolerable level after the wage hike, he said. Thus, question about the rationality of gas price hike for the RMG arises automatically.
Urging the government not to increase the gas tariff at least for the next couple of years, The BGMEA president demanded a long-term energy policy to help the entrepreneurs properly plan their investment.
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