Steel rod makers incur Tk 600mloss a day for gas staggering

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Jasim Uddin Haroon with Pankaj Dastider Steel product makers Wednesday said one day's production loss now comes to Tk 600 million because of staggered gas supply at the country's prime rod manufacturing hub in Chittagong. They said steel makers in Sitakunda and Baizid belts, nearly 250 kilometres away from Dhaka and just 15 kilometres from Chittagong Port, manufacture around 10,000 tonnes a day. The gas distribution entity -- Karnaphuli Gas Distribution Company -- began gas staggering three days a week for the industrial belt on October 26. The manufacturers supply nearly cent per cent of quality mild steel (MS) rod to meet the country's requirements. Besides, on an average they supply 70 per cent of total steel requirements of the country. "We estimate that production losses have reached Tk 600 million a day as all major players produce nearly 10,000 tonnes of steel products a day," Alihussain Akberali, chairman and managing director of the country's largest steel maker BSRM Group said. The major steel players in the belt are BSRM, AKS, RSRM, KSRM, SARM, GPH Ispat, Baizid Steel, Islam Steel which produce over 5000 tonnes of steel products a day. The other re-rolling mills numbering 40-plus produce nearly another 5000 tonnes, industry people said. Alihussain Akberali hinted that the gas staggering would create shortage of MS products during its peak time leading to rise in the prices of key construction materials. He said those who earlier converted their plants into furnace oil system, but kept it on hold, would raise their production cost. "I think an additional Tk 1700 per tonne would be required if any rod manufacturer engages in production through furnace oil," Mr Alihussain, also a senior steel maker in the country, added. Many millers said they would be forced to declare lay-off if the gas staggering continues for a few more days. Chairman of RSRM, M Rahman, said they would fail to pay salaries to workers following the abrupt gas staggering by the gas distribution company. "We'll be forced to close our plants if this goes on for at least a few more days," a distressed M Rahman said. Steel product makers said they had imported adequate raw materials -- scraps and billets -- to meet the peak-time demand for rod which has been growing over 10 per cent year-on-year basis. They also said they would face financials losses following the sudden gas staggering, which might force them to shut their 'furnaces'. Md Shajahan, managing director of KSRM said this would lead to extra losses in terms of interest payment for delay in repayment of bank loans taken against import of raw materials. Currently, gas supply is around 190 mmcft a day against the existing requirement of 220-230 mmcft. The gas staggering might come to an end after the supply of 20 mmcft gas begins from Samutang gas field in Chittagong, sources close to the industry observed. Another report adds: Acting upon continuous protest against staggering of gas by industries and commercial enterprises, the authorities have enhanced supply of the same to Chittagong by 16 million cubic feet yesterday. But industrial plants continue to suffer due to gas staggering. A top official in the local gas distribution company KGDC has said that Chittagong yesterday received 214 million mmcft of gas, up from 198 mmcft the previous day. "We have received 214 mmcft of gas from the national grid today and the Petrobangla is considering ways to enhance the quantity in the next few weeks until the gas from the Semutang well comes through pipeline," the official told the FE. Industries in Chittagong said Wednesday afternoon they were not aware of any move by the concerned authority to improve supply of gas. Some plants are facing risk of survival as the staggering continued for the last two weeks. Head of Marketing and Production Development of the BSRM Group of Companies M Firoze has said they have two major re-rolling plants in Chittagong in the Fouzderhat and Nasirabad industrial areas and production at both the units has reduced by 45 per cent due to gas staggering. "This will result in the hike of prices of rod, angle, channel and other steel products and the capital city will be most affected as flyovers and other major infrastructures in Dhaka are using 100 per cent steel products made by the major steel plants of Chittagong," he said. Mr Firoze argued that the government will lose a huge amount of money on account of revenue from the re-rolling industries with almost halved production of steel goods because the government gets revenue of Tk 2500 per tonne plus income tax on profit. Two BSRM plants produce annually 0.55 million tonnes of rods and other items which is likely to come down to 0.236 million tonnes due to staggering of gas, he said. Most of the major steel plants including Abul Khayer Steel, BSRM, Kabir Steel, GHP Ispat, Shima Auto Re-rolling are located at Chittagong which supply about 70 per cent of the country's total demand of steel products, he informed. Karnafuli Gas Distribution Company, responsible for the region's gas distribution, said the gas rationing was enforced in Chittagong due to short supply from the national grid as the government has decided to resume production in Chittagong Urea Fertilizer factory. All industrial areas were divided into seven zones and gas rationing was introduced there with suspension of production for three days a week from late October at the directive of the Petrobangla, officials said adding that the gas supply reduced to 198 mmcft from 222 mmcft against the demand of around 350 mmcft in Chittagong region. Petrobangla sources said that gas production in the recent times has reduced. "We used to get 35 million cubic feet gas but now it has come down to 13 million cubic feet, while the gas from Bangura is now 100 mmcft which was 140 until recently," the Petrobangla official said.