Gas crunch turns severe, hits the industries hard

An acute shortage of energy and power, especially natural gas, has emerged as a major threat to country's economy as it is causing huge production losses in mills and factories, including the export-oriented ones.
Sources in business circles said in addition to production losses, most of the industries are faced with a two-pronged hardship: high spending on liquid fuel to keep the wheels rolling and payment of the minimum mandatory charges to the state-owned gas-distribution-company Titas.
The industry owners have to pay the mandatory charges to Titas as per their load capacity although they are veritably going gas-starved.  
"This double-count loss has now emerged as the biggest threat to the export-oriented industries in continuing their production and maintaining competitiveness," said Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) immediate-past vice-president Mohammad Hatem, who runs two apparel factories of this kind.
According to industry-insiders, about 60 per cent of dyeing and finishing units, weaving and spinning mills, pharmaceutical and re-rolling mills are directly affected by the severe energy crunch.
The situation also discourages expansion of industries as well as new investment, despite having potential.
The gas-supply situation, according to sources, is far from being satisfactory. Industries situated in and around Dhaka and its adjoining areas like Narayanganj, Rupganj, Ashulia, Savar, Narsingdi, Gazipur, Tangail and Manikganj are suffering a lot because of gas shortages.
They even cannot run their gas-based captive power plants properly to generate the required power of their own due to insufficient supply and low pressure of gas. There are more than 500 export-oriented garment, dyeing, printing factories and re-rolling steel mills in Narayanganj, Rupganj and Araihazar belts stretching on both sides of roads from Dhaka to remote areas of the upazilas.
But, most of the mills are experiencing disruption in production for want of adequate gas supply.
Production in most of the textile mills, specially dyeing, printing and finishing units as well as spinning mills, is disrupted more often than not in recent days due to poor fuel-supply situation.
Jahangir Alamin, president of Bangladesh Textile Mills Association (BTMA), the apex body of the country's primary textile industry, narrated such a crisis facing the spontaneously-growing industrial enterprises.
Although there are no official statistics about the losses being inflicted by shortage of gas, industry operators estimated the amount to be about 35-40 per cent of their production volumes.
Most of the industries have to make full payments although they are getting only 40-60 per cent of their demand for gas. "I get only 3-5 PSI (per square inch) gas pressure as against my requirement of 10 PSI to run the boilers," said Mohammad Humayan Kabir, Managing Director of Best Still Ind Ltd in Narayanganj.
According to him, many of the entrepreneurs have to pay Tk 1.0 million to Titas per month as mandatory charge, notwithstanding the fact that most of them are not getting the volume of gas they require.
A large number of industrial units in the locality could not operate their factories at daytime as the pressure mostly remains 2-5 PSI as against their sanctioned load of 10, 15 and 20 PSI.
Most of the mills run only one shift -- and that at night, after 11pm when the pressure starts increasing. Almost a similar situation prevails in Ashuganj, Savar and Manikganj regions.
According to sources, most of the gas-based industries are facing the same problem at least 4-5 hours a day. The pressure starts falling at 10 am and does not go up until evening.
The situation, industry sources indicated, might worsen further with the onset of winter unless corrective measures were taken right now.
Frequent load shedding and disruption of gas and power supply also adversely affect the quality of production-a major default on part of industries that cater foreign consumers.
"Disruption in power or gas supply during the processing of fabrics in case of dyeing, printing and finishing units may spoil the whole thing, causing huge losses to the factory," said Hossain Bin Khaleque, Managing Director of Turag Garments in Ashulia apparel hub.
"The gas crisis takes a heavy toll on manufacturing industries, as a large number of them cannot use their existing capacity," said FBCCI president Kazi Akram Uddin Ahmed.
Some of the small units run with liquefied petroleum gas (LPG), but it is very expensive.
The apex-trade-body leader stressed an early solution to the nagging crisis.
The erratic fuel supply as well as the low pressure of gas in the pipeline not only hamper production but also discourage expansion of industries and new investment.
A business entrepreneur, who owns a textile industry in Gazipur, is caught in a crushing dilemma: he cannot go for production for lack of gas supply while has to count Tk 150 million in bank interest every month.
"We have to wait 3 years after completion of the factory, but yet to go for production for want of gas connection," said Faruq Hasan, Managing Director of Giant Group.
Another entrepreneur, SM Shafiuzzaman of Hudson Pharmaceuticals Ltd, said that he could not go for expansion of the business for lack of the natural gas.
"The industry fails to utilize its full capacity due to the low pressure," said Shafiuzzaman, adding that most of the pharmaceutical industries could not utilize their full capacities for lack of adequate gas supply.
Not only the industries -- the severe supply shortage also affects the city life as it has been causing serious inconveniences to the residents.
Besides supply shortages, experts identified unplanned urbanization and indiscriminate development of industries as well as residential areas as other main reasons for the situation.
Although the situation has improved slightly in some areas, still it is far from being an ideal one. To salvage the industries from the trouble, the FBCCI chief urged the government to gear up its efforts to enhance power and gas generation as well as improve distribution system.
Businesspeople in Narayanganj submitted a number of memorandums to the Ministry of Power, Energy and Mineral Resources and Petrobangla over the issues of production losses and rising production cost due to load shedding, low voltage and severe gas-supply situation.
They requested the ministry to direct the gas-distribution companies to stop demanding the minimum compulsory charge and to install Electric Volume Corrector (EVC) meter. But nothing tangible was there.
According to sources, the situation has aggravated further in recent days as most of the users who applied for new connections but failed to get connected are resorting to taking illegal connection or diversion of the natural gas from the main line. It happens to be a new syndrome contributing to the reduction in gas pressure.
According to Titas Gas Transmission and Distribution Company, they received some 1,000 new applications over the last 4 years. Many of them are bulk users.
"Last year (2013) the authorities approved only 210 applications of bulk consumers to get connection," said Hossain Mansur, Chairman of Petrobangla.
Titas gets some 1,800 mcft from the state petroleum corporation Petrobangla as against its demand for 2,200 mcft, leaving a wide demand-supply gap. To strike the balance between the two they have to curtail the supply to many areas. And the cut-down supply, again, is shared by those having illegal connections.
According to Petrobangla (Bangladesh Oil, Gas and Mineral Corporation), the country produces around 2,345 million cubic feet (Cft) of gas per day as against the demand for about 3,000 million Cft.