Uninterrupted power, gas supply for sustainable investment

Abul Quasem Haider The signs of an impending landslide fall in export revenue are very much visible. We have been enjoying low-tide in export revenue for last two months. In some sectors, the overall production has dropped down at mid-point. The production has almost reached zero point in a particular area starting from Gazipur Circle to Tangail district simply for want of gas supply. National dailies and electronic media have published many reports on this matter in particular without any significant development so far. The officials are saying that the supply of gas has substantially increased to cater to the demands of the area concerned; and there will be no paucity of gas in future. But the reality is that many manufacturing units have been closed down for want of gas and power. Many entrepreneurs are at cross-roads; not to comprehend what to do, as they are to pay bank interest without due income. As a result, many entrepreneurs have become bank defaulters. In terms of macro-economics, the export revenue has failed to reach its target over last three months. The export revenue in the first quarter i.e. from July to September 2011 is Tk 468.44 billion (46,844 crore) against Tk 362.09 billion of the previous year. The downtrend points to the reason that the government has failed to provide necessary gas and power supply to the manufacturing units. Regrettably, the poor condition of power and gas supply coupled with dilapidated road infrastructure has captured the attention of the foreign buyers; for which orders from them have fallen sharply. This is very alarming which needs to be addressed by the policymakers. If the downtrend continues, the export target can never be materialised. As usual, the knitwear sector has out-reached its target in the first quarter; an amount of export revenue of Tk 194.04 billion has been earned against a target of Tk 194.03 billion. On the other hand the woven sector has failed to achieve its target with revenue earning of Tk 169.82 billion in the said quarter. We can get the picture of export (revenue income) of the first quarter of 2011-2012 fiscal year which grossly reads as follows: Frozen food items earned Tk 14.16 billion with a growth rate of 30.71 per cent, home textile earned Tk 13.96 billion with a growth rate of 46.47 per cent, leather sector earned Tk 5.87 billion with a growth rate of 20.95 per cent, plastic products earned Tk 1.53 billion with a growth rate of 45 per cent. On the other hand, some goods such as wool, woolen products, and computer items have failed to earn anything in the said quarter. The failure in achieving the revenue income will seriously contribute to the existing imbalance of export expenditure. The economy is, perhaps, facing the most crucial time in recent days. Finance Minister AMA Muhith is trying to handle the crisis by taking loans from the banking sector which in the first quarter amounted to Tk 80 billion. The interest rate has hit record high at 18% with low cash flow to the private entrepreneurs. The overall situation is making our products unable to compete with their global rivals. Our products are losing their ability to sustain in the global market. Now, to address this crisis, many entrepreneurs are coming up with suggestions which are as follows: 1. To accelerate production the supply of gas and power should be ensured as quickly possible. Rental power plants should be closed down. Besides, the establishment of gas-fired thermal power plants needs to be stopped. If possible some gas-fired thermal power plants need to be closed to divert this to cater to the demand of the manufacturing units. Pitifully enough, the government is establishing two more gas-fired thermal power plants in Tangail to worsen the matter further and to create panic among the entrepreneurs of the area concerned. The point is establishing two more gas-fired thermal power plants in Tangail will definitely hamper the growth of investment in that area. 2. The government will have to work upon the coal policy as soon as possible. With our coal reserve, we can easily go for coal-fired power plants which may be in operation for years together. A coal-fired power plant in each division will help solve the crisis. In addition to that, per unit electricity cost of gas and furnace oil is higher than that of coal. So, the authority concerned must take into consideration establishing coal-fired power plants in their long-term policy. 3. To address the present energy crisis, we need to empower our Petrobangla with three Ms i.e. men, money, machine. Without sufficient funds allocated to them, can we expect anything from them? Unfortunately, the government has made Petrobangla a non-functional organisation by not allocating funds to them. Many suspect that the officials concerned do not want to give orders to Petrobangla as it does not give any commission to them. This is a reason why the government wants the private companies to work in this sector. Regrettably, our leaders do not work for the interest of the nation. 4. To achieve export revenue target, the government has to adopt some polices such as banning Indian thread. Cash incentive should be increased from 10% to 25%. The point is that India is helping her investors with all kinds of support. With this support, the Indian textile sector is superceding all her rivals. To give an umbrella of shelter to the local investors, the government must come up with cash and kind. 5. Bank interest should be lessened from existing 18% to 8%. The bank charge should be excluded. Much ink has already been spent over the issue of interest rate. With such a huge interest rate, no company can be economically viable. Nowhere in this world, is the interest rate so much. Even in the SAARC countries, the interest rate is much lower than ours. Mr Nazrul Islam Mazumder, president of Bankers Association of Bangladesh, in a recent interview acknowledged the matter. He apprehended that many companies might go bankrupt due to such a high interest rate. 6. The cloud of political instability looms large over the sky. The government must work hand in hand with the opposition party to avoid strikes. It's very unfortunate that our leaders have failed to show maturity as far as the leadership is concerned. The leaders should not invoke the judiciary in such matters as can be settled by themselves. We are watching with frustration the way the leaders are acting. Without political stability, we will not get orders; and our rivals will take advantage of this opportunity. The opposition should consider adverse effect of strikes on our unstable economy. (The writer is the founder Chairman of Eastern University and former vice-president of FBCCI.)