Oil delivery stoppage causes production cut in jute mills

Yasir Wardad Production has disrupted in jute mills as oil companies have halted supply of jute batching oil (JBO) for three weeks. JBO is a critical input for jute goods production. Industry leaders said public and privately-owned petroleum marketing companies in Bangladesh have stopped delivery to the jute mills since October 25 last month. "Private firms stopped JBO delivery to the mills, citing reasons that the state-owned Eastern Refinery Ltd (ERL) halted supply to their depots. Our production is being hampered," chairman of Bangladesh Jute Spinners Association (BJSA) Muhammad Shams-uz Zoha told the FE. He said: "Without JBO, jute mills are unable to process raw jute to produce jute goods. It will be very difficult to honour the contractual obligation with the buyers, thus affecting our exports." Managing director of Keraniganj Jute Mills Private Ltd Sarowar Hossain said the traditional method of softening jute fibre is to make it spinnable through application of petroleum-based JBO. The requirement of JBO is 2.0 to 2.5 per cent of total volume of jute, he said. He said he failed to collect JBO from Padma oil at Narayanganj depot, forcing near-suspension of production. An official of Padma Oil Depot at Godnail in Narayanganj told the FE that they supply nearly 0.3million litres of JBO from their Godnail depot monthly. "But shutdown of refining by the ERL has resulted in their zero-stock recently," he said. ERL managing director Rezaul Alam admitted that the supply was halted as the refinery work was stopped for 45 five days. "Adulteration of JBO with diesel also caused problem as its price was cheaper compared with diesel and it was easier to mix these two different oils." "The refining is taking place and there will be no problem anymore in supplying JBO to the oil depots from where the mills could get their initial JBO," he said over phone. "The adulteration of diesel with JBO will also stop as the prices of these two oils have been fixed as almost same," he added. Bangladesh's 205 jute mills including 81 spinning and 124 composites need nearly 20 million litres of JBO annually, according to Bangladesh Jute Mills Corporation, Bangladesh Jute Mills Association and BJSA. The mills produce nearly 0.75 million tonnes of jute products and export 0.6 million tonnes per year.