Gas supply problems and the economy
Saturday, 23 January 2010
SHORTAGE of gas has badly hit many parts of the country, particularly the port city of Chittagong. Industries that are already operational or are on the way of being set up or on trial production, in and around the port city and also the capital city of Dhaka, are bearing the burnt of this shortage. According to available reports, the severe supply-side constraints relating to gas transmission and distribution has disrupted production. The export-oriented garments and related industries are suffering production losses, in some cases, up to 50 per cent of their normal level. The leaders of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA), Bangladesh Textile Mills Association (BTMA) and Bangladesh Knitwear Manufacturers Association (BKMA) expressed their serious concern to the media about the great sufferings that descended on them from the insufficiency of gas. According to the estimates made by the business leaders of the broad textile industry, 90 per cent of the yarn for the readymade garments (RMG) sector and 97 per cent of the fabric of the knitwear industries are produced locally.
The present shortage of gas has hit the industries severely leading to production decline, to a marked extent, and the closure of a good number of industries under their respective sectors. The leaders of related industries also apprehend the imminent closure of hundreds of industries if this problem persists for long. The entire export-oriented garments sector would then stand to be very badly affected; hundreds of thousands of workers employed in them will thus be facing the additional threat about new redundancy and loss of income.
Apart from the RMG and related sectors, the gas crisis is also affecting adversely production activities in various types of export-based industries in the Chittagong region, and at Narayanganj, Gazipur, Ashulia and Savar in the Dhaka region. The worst effects of the situation are seen at Chittagong. The 'minimum' gas demand of industries in this region is some 335 million cubic feet. Against this demand, only about 216 million cubic feet of gas is being received. It leaves a minimum supply gap of some 120 million cubic feet per day. Many industries that had been set up in Chittagong at least two years ago, are still unable to start production from not getting gas connections. The ones that have got the connection are in no position to carry out normal production activities and, thus, their management have considered it fit not to produce for the time being. As most of them have been set up with borrowings from banks and other financial institutions, they are only accumulating their debts. Therefore, the gas crisis pose a threat not only to various types of industries but also to the banking sector.
This supply-side problem needs to be responded immediately and effectively. The authorities concerned have been holding frequent meetings to search for a solution, but nothing of a substantative nature appears to have come out of these deliberations. Attention needs to be paid from the highest level of the government to this issue which is gradually forming into a very serious threat for the economy. Gas supplies must be augmented on an urgent and priority basis. Production can be increased from the wells which are otherwise operating satisfactorily as a temporary measure while all-out activities must start to find out new gas fields at the fastest. Thus, new exploration activities, along with works to improve the transmission system of gas, should be undertaken with an equal sense of emergency.
The present shortage of gas has hit the industries severely leading to production decline, to a marked extent, and the closure of a good number of industries under their respective sectors. The leaders of related industries also apprehend the imminent closure of hundreds of industries if this problem persists for long. The entire export-oriented garments sector would then stand to be very badly affected; hundreds of thousands of workers employed in them will thus be facing the additional threat about new redundancy and loss of income.
Apart from the RMG and related sectors, the gas crisis is also affecting adversely production activities in various types of export-based industries in the Chittagong region, and at Narayanganj, Gazipur, Ashulia and Savar in the Dhaka region. The worst effects of the situation are seen at Chittagong. The 'minimum' gas demand of industries in this region is some 335 million cubic feet. Against this demand, only about 216 million cubic feet of gas is being received. It leaves a minimum supply gap of some 120 million cubic feet per day. Many industries that had been set up in Chittagong at least two years ago, are still unable to start production from not getting gas connections. The ones that have got the connection are in no position to carry out normal production activities and, thus, their management have considered it fit not to produce for the time being. As most of them have been set up with borrowings from banks and other financial institutions, they are only accumulating their debts. Therefore, the gas crisis pose a threat not only to various types of industries but also to the banking sector.
This supply-side problem needs to be responded immediately and effectively. The authorities concerned have been holding frequent meetings to search for a solution, but nothing of a substantative nature appears to have come out of these deliberations. Attention needs to be paid from the highest level of the government to this issue which is gradually forming into a very serious threat for the economy. Gas supplies must be augmented on an urgent and priority basis. Production can be increased from the wells which are otherwise operating satisfactorily as a temporary measure while all-out activities must start to find out new gas fields at the fastest. Thus, new exploration activities, along with works to improve the transmission system of gas, should be undertaken with an equal sense of emergency.