Industries reeling from persistent gas crisis

FE Team | Published: July 08, 2024 21:11:51

The country that was once thought to be floating on gas is unable to make available sufficient volume of this fossil fuel to domestic consumers of various categories. The industrial consumers are worst-hit. The textile mills that need a large volume of gas in recent days have aired their grievances on a number of occasions through their associations. The domestic consumers don't have a voice for they are not organised under the umbrella of any such entity. The last fiscal year was a disappointing one for the industrial sector, as it recorded only 6.66 per cent growth, the lowest in last four years. The rate of growth was 8.37 per cent in the preceding year. Non-availability of sufficient volume of gas was one of the main reasons for such a poor performance. The gas crisis is still hurting the industries and the situation is unlikely to change for the better anytime soon. Quite a big number of factories in the key industrial belts like Narayanganj, Savar and Gazipur are dependent on gas for their operations. The gas crisis has been pushing up their cost of production, making it more challenging for manufacturers and exporters to ensure the supply of products in time. Industry leaders have already expressed their concern and written to the relevant ministries seeking an early resumption of gas supply to run their factories at an optimal capacity.
The main reason behind the gas crunch is the flawed energy policy that the government has been pursuing over the years, demonstrating an inexcusable indifference to experts' suggestion to go for extensive domestic exploration for hydrocarbon. The government has been more interested in importing LNG since 2015 to produce power and feed domestic industries partially than putting in its best efforts for offshore exploration. The cost of LNG import, however, has increased sharply since 2022 as the global energy market became volatile amidst geo-political tensions like the Russia-Ukraine war and the Middle-East conflicts. At home, foreign exchange reserves started depleting at a fast pace for both external and domestic reasons. The local currency also depreciated sharply, making the payments for the import of LNG in US dollar expensive. The crisis of greenback coupled with dwindling value of Taka forced the government to slow down the import of LNG. The net outcome has been a cut in the supply of gas to industry and power units. The government after a prolonged foot-dragging announced new oil and gas exploration move early this year. The results of the exploration work could go either way --- positive or negative. But the country would surely need uninterrupted supply of gas to help the wheels of industrial units running. And the government will have to ensure it, by any means.
The immediate reason behind the current crisis is the damage caused to one of the two floating terminals at Maheshkhali in Cox's Bazar used for regasification of imported LNG. Cyclone Remal caused damage to a terminal on May 27, which was then sent to Singapore for repair. The Petrobangla authority is hopeful of terminal's return by the middle of this month, which it feels, will resolve the gas crunch problem. This particular development also underscores the risks and limitations of over-reliance on energy imports instead of exploring multiple options efficiently. It is expected that the authorities will revisit the energy policy and redesign it keeping in view the long-term needs of the country. The gas crisis is not only affecting the country's export market but it is also significantly pushing up the cost of living of the common consumers.