Gas scarcity hits industrial output

The prevailing gas supply scarcity is continuing to take its toll on industrial production, resulting in losses faced by different industries.
Bangladesh's industrial backbone is weakening under the crushing weight of an energy crisis that shows no signs of abating, according to industrialists in Bangladesh.
Industries that once relied on affordable and abundant supply of gas now face both scarcity and unaffordable rates, leaving many to become defaulters or shut the factories entirely.
Industry leaders and experts have called for immediate and sustained action to alleviate the crisis. They said diverting gas supply to critical industrial zones such as Narayanganj, Ashulia, Gazipur, and Savar could provide a temporary relief.
They also urged the government to act decisively to prevent further economic fallout, as sectors from textiles to ceramics struggle to stay afloat.
Anwar-Ul-Alam Chowdhury (Parvez), chairman of Evince Group, also president of Bangladesh Chamber of Industries (BCI) said the situation is grim across the board.
In the textile sector, production has plummeted by 30-35 per cent in the garment industry, which earns the lion's share of Bangladesh's export revenue. Steel producers report similar struggles, with output dipping by 25-30 per cent.
He said the ceramic industry, where gas is not just an energy source but a raw material, has seen production drop by over 50 per cent.
He said power failures, compounded by the inability to afford backup diesel generators, have forced nearly 40 per cent of these businesses to shut down.
"As energy prices surge, production costs have ballooned," he said.
Small and medium-sized enterprises, particularly those in rural areas reliant on the Rural Electrification Board grid, have been hit hardest.
Five years ago, energy accounted for about five to six per cent of manufacturing costs; the current figure rose by 10-15 per cent.
Frequent power outages and gas shortages have not only led to reduced output but also wasted ensured supply of raw materials in mid-production, exacerbating losses.
The crisis is rooted in a dramatic decline in gas production. Domestic output peaked at 972 billion cubic feet per year in 2016-17 but fell to 804 billion cubic feet in 2022-23.
With demand exceeding 1,000 million cubic feet per day, (mmcfd) and supply hovering below 500 mmcfd, the gap is widening.
Compounding this issue is the growing dependence on imported liquefied natural gas, constrained by dollar shortages that limit the quantity Bangladesh can buy.
Electricity usage paints a troubling picture of industrial stagnation. While domestic consumption has surged thanks to expanded rural electrification, industrial electricity use from the grid has remained stagnant for three years. This stagnation, despite modest growth in 2020-21, reflects a shrinking industrial sector, further highlighting the gravity of the crisis.
Looking ahead, the challenges loom large. By 2030, gas demand is forecasted to soar to 4,622 mmcfd, while domestic production is expected to plummet to just 701 mmcfd.
This will push Bangladesh's reliance on imported LNG from 22 per cent in 2020-21 to a staggering 67 per cent by 2030-31.
The government's ability to secure this supply remains uncertain, raising serious concerns about the long-term viability of industrial growth.
Energy expert and BUET professor Dr. Ijaz Hossain said efficient management, including reducing losses from gas theft and pilferage, could recover an estimated 60 mmcfd.
Additionally, fully utilising the capacity of floating storage regasification units (FSRUs) could secure an extra 1,100 mmcfd, while accelerating the installation of rooftop and grid-tied solar power systems could help offset the demand for fuel oil," he said in a seminar on Saturday.
In the medium to long term, he recommend diversifying energy sources to include more coal and imported electricity, reducing VAT and sales taxes on energy, and enhancing domestic gas exploration. Reforms in the power sector, such as prioritising uninterrupted electricity supply for industrial feeders, could also stabilise production.
Bangladesh's rapid industrialisation was built on the foundation of cheap and accessible gas. The erosion of that foundation currently threatens not only the country's economic stability but also its ability to generate employment and curb inflation, according to Dr. Ijaz Hossain.
He said without swift and coordinated intervention, the energy crisis could deepen, leaving Bangladesh's once-thriving industries in jeopardy.

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