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Textile millers demand duty-free import of furnace oil as gas crisis stings sector

FE Report | September 19, 2017 00:00:00

The country's primary textile millers have demanded duty-free or bonded warehouse facility for importing heavy furnace oil (HFO) for their captive power generators as gas shortage prevails.

"The majority of the spinning mills run on captive power produce electricity on their own," Tapan Chowdhury, president of the Bangladesh Textile Mills Association (BTMA), told reporters on Sunday.

The government itself helped the entrepreneurs set up such mills by lending policy support, which also included inspiration for generating captive power at a competitive rate, he said.

The industry is struggling to survive and to be competitive mainly because of the ongoing gas crisis and the frequent hike in energy prices, he said, adding that the sector is aware of the shortage and the government's move to overcome the situation.

"We think it will take time to solve the problem," he said.

He added the association was informed that LNG would be available by the first half of next year.

But there is no guideline for the pricing of LNG, the BTMA president said, adding if the price was much higher than what millers could afford, entrepreneurs should have an alternative to tackle the gas crisis.

Considering the scenario, the government should allow duty-free import of heavy fuel or provide bonded-warehouse facility to help the millers stay competitive and survive, Mr Chowdhury noted.

Some of the BTMA mills are operating by running generators using heavy fuel, he said, adding that they buy it from the state-run Bangladesh Petroleum Corporation at a rate of Tk 42 a litre.

If the government provides such facility, entrepreneurs could produce electricity, which would cost Tk 6.50 per unit, he said, adding it would help them be competitive.

There is no fresh investment in the sector mainly due to the scarcity of gas and some are going for expansion, depending on their own power supply capacity to make the existing business viable, said the BTMA former president Jahangir Alamin.

According to the BTMA only 17 new mills launched production between 2012 and 2016.

Out of the 17 mills, some 10 are spinning mills, five are weaving and two are dying units.

Until 2016, a total of 424 spinning mills, 794 weaving mills and 241 dyeing, printing and finishing mills have been registered with the BTMA.

The $6.0-billion industry currently has an annual yarn production capacity of 2,410 million kgs, woven fabric capacity of 3,580 million meters, and dyeing, printing and finishing capacity of 2,795 million meters.

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