Textile mills suffer due to disrupted gas supply despite paying higher price

The ongoing gas shortage continues to hurt the textile industry despite the government's move to inject additional 300 million cubic feet (mmcf) gas to the national grid as some gas-based power plants that resumed operation during Ramadan are utilising much of the added gas.

A director of the Bangladesh Textile Mills Association (BTMA), requesting anonymity, told The Business Standard that they felt little change in the gas supply.

"The added gas is being utilised in power plants that became operational to keep electricity supply stable during Ramadan. Besides an Economic Zone in Rupganj of Narayanganj that specialises in food grain production enjoys priority in utility supplies. As a result, the textile factories in the zone are getting little or no benefit," said the BTMA director.

The factories in Narayanganj zone, home to some 100 textile mills, have been suffering due to the disrupted gas supply although they are now paying a higher price for gas.

"Gas supply to factories in Gazipur and Mawna areas have, however, improved a little. That said, it is still not enough to meet demand," added the BTMA director.

BTMA President Mohammad Ali Khokon told TBS, "We are paying more for gas but the gas supply situation has not improved. In this situation, the cash flow of many factories has come to a negative state. It will be tough to survive in this situation."

From February this year, the government hiked gas price for industries up to 179%, for which it promised uninterrupted gas supply. Industry owners have been paying the increased price for gas, along with increased electricity prices, but are not getting the promised uninterrupted gas supply.

In this situation, entrepreneurs fear that they will fall behind in competitiveness and some industrial factories may be forced to close down due to losses.

Meanwhile, data from Bangladesh Oil, Gas and Mineral Corporation, known as Petrobangla, shows there has been some improvement in gas production and it will further improve by this June.

Petrobangla sources said the government has been sourcing LNG from the spot markets and two ships have arrived at the Moheshkhali port and about 300 mmcf LNG has been added to the national grid.  

Two more ships are scheduled to arrive by April, a Petrobangla official told TBS.

The official, however, added that the volume of added gas has dropped to 200 mmcf.

According to Petrobangla data, the country has a daily gas demand of 3,600 to 4,000 mmcf. Daily supply as of January this year was about 2,650 mmcf and it has now increased to 2,900 mmcf, which is still around 1,000 mmcf less than the demand.

Meanwhile, the government has said it will adjust fuel prices in the local market in line with price change in the global market, which it has not done yet, leaving entrepreneurs dissatisfied.

At least 10 entrepreneurs of the gas-based industrial sector said the gas supply situation has not improved in some areas, including Narayanganj, Narsingdi, Tangail, Manikganj and Gazipur.

A relatively large amount of gas is used in textile mills to generate captive power. 

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) vice president Fazle Shamim Ehsan told TBS that they will write to the relevant ministry seeking regular gas supply and adjustment of gas prices.

Requesting anonymity, a Rupganj-based textile miller said on average mills are running below 50% capacity due to gas shortage despite the gas price hike without any justification.

"During Ramadan we have to pay two and a half fold gas bills, Titas' additional demand charges, workers' salaries and bonuses. We have no idea how to manage such a huge expense without doing business," said the miller.

He was afraid a large number of industries may not sustain themselves after next three months if the gas supply is not adequate for industries.

"If the global economic situation does not improve, industries will not be able to pay workers and another wakeboard is also knocking on our door", he added.

Officials of Rising Spinning Mills Limited, one of the largest industrial groups in the country, has a major unit in Manikganj, which also has a separate dyeing unit, said the situation in their gas-dependent spinning factory has not improved. Instead, it has deteriorated in some cases.

"Earlier I used to pay Tk23-25 lakh taka in gas bills per month. Now the monthly bills have gone up close to Tk50 lakh. But there has been no improvement in gas supply," said Mahmud Hasan Khan Babu, managing director of Rising Group.

"When the gas price was hiked, it was said the price was being hiked to provide uninterrupted supply – which has not been the case," he added.

Abed Textile Processing Mills Ltd of Narsingdi had to pay Tk90 lakh a month for its dyeing unit before the gas price hike. Now the company pays Tk2.30 crore.

The company's Managing Director Abdullah Al Mamun told TBS that the gas supply situation has not improved in Narsingdi.

On the other hand, the distribution company Titas Gas transmission has already issued notice to BTMA member mills to deposit additional demand charges as security money for monthly load and minimum load in line with new tariff rates.

BTMA leaders had talked with the prime minister's Private Industry and Investment Adviser Salman F Rahman on this issue on 23 March at his office at Bangladesh Investment Development Authority (Bida), said Abdullah Al Mamun, who is also vice president of BTMA.

Mamun said the PM's Adviser gave assurance to talk on this issue of additional security deposit.

Little Star Spinning Mills Limited, located in Savar, is also facing the same situation, said the Chairman of the company Md Khorshed Alam.

Although his mill is rated for 10 psi (pounds per square inch), he's getting like 2 psi. He said that he had spoken to 50 entrepreneurs and all of them are facing the same crisis.

However, the Prime Minister's Private Industry and Investment Adviser Salman F Rahman has given assurance as the government is likely to defer the enforcement of the newly hiked prices of gas to April instead of February, in a bid to give some breathing room to industries.

Entrepreneurs demand price adjustment

Entrepreneurs say when the government hiked prices, it had said the price would be adjusted at regular intervals. But it is not happening.

Besides, former BTMA director and Chairman of Little Star Spinning Mills Limited Md Khorshed Alam said, "When the price of gas was increased, the price of gas in the spot market was $40 dollars per mmbtu (Metric Million British Thermal Unit), which is now down to $15. Accordingly, the price should be reduced now."

Bangladesh booked its first LNG cargo from the spot market in April at $14.66 per mmbtu.

The Petrobangla chairman declined to comment on the matter.