The recent energy crisis has hit hard the Bangladesh textile mills. Industry leaders said that since the scarcity of gas began a couple of months earlier, 60% of textile mills’ production was hampered due to the gas crisis. And textile factories have reduced 30%-40% of their total production capacity and might hamper the $60 billion export earnings target set for the current FY23.
Figure: Textile factories have reduced 30%-40% of their total production capacity.
According to Bangladesh Textile Mills Association (BTMA) around 60% of member factories are in an exposed situation due to the severe gas crisis. Especially factories located around Dhaka, in Narayanganj, Araihazar, Madhabdi, Ashulia, Savar, Gazipur, Sreepur, Bhaluka, Chittogram and Kumilla area were facing an average of 12-hour halts due to gas scarcity as they were functioning through captive power generation.
At a recent press briefing, BTMA President Mohammad Ali Khokon said textile millers wanted continuous supply of gas to keep their production running.
“We are even prepared to pay partially higher charges from the current gas price if the government can supply nonstop power to the industrial units by at least 3,000 mmcfd a day,” said Khokon.
He further added, “If the govt. import 200 MMcfd gas from spot market by $25/mmbtu, and import 500 mmcfd by contract price $15 MMBTU, average per m3 gas price (including local supply) reach Tk22.83, and we are prepared to pay it. Even if the government import $30 MMBTU, the average price will reach to Tk28, but it will aid our textile industry to survive, which is now destined to halt production up to 12 hours due to the severe gas crisis.”
BTMA President said, “The recent $16 billion investment in the country’s primary textile sector was in an exposed situation for the lack of satisfactory gas supply.
Replying to the matter that paying an extra portion of the price for buying LNG from the spot market at a greater price would benefit millers in making a profit. While the key focus is to sustain the investment and the textile industry.
Mohammad Ali Khokon said, “Production cost of yarn is $1.25 per kg. If there is a 12-hour blackout, it surges to $2.5 per kg. So, if the government buys LNG from the spot market and sells to millers at Tk22.83/m3, the cost would be $1.35 per kg, so our profit margin may be lessened, but we certainly will sustain.”
Mohammad Ali Khokon also added that they established factories in remote areas but the areas have become populated and the authority provided them with gas from their primary source, which further contracted the supply.
He also said that 84% of the export earnings are from the textile and apparel sector.
“Investment in the textile sector is around $16 billion and it contributes more than 13% to GDP. It also meets 85%-90% yarn demand for knit RMG and 40%-45% fabric plea for woven garments,” Khokon added, saying that it also meets 7 billion meter fabric for local demand with a value of around $8 billion.
The textile sector claims $29 billion from textile and apparel export earnings and with a retention of $21 billion from the primary linkage industry.
Mohammad Ali Khokon said, “The backward linkage industry produces more than 1,700 MW power through captive generation and they pay around Tk500 crore per year against gas consumption of 169.1 billion cubic feet.
“Due to the current crisis, we have now lost export orders worth $1 billion export from the textile sector and the jobs of 1 million people also under danger,” he added.