Gas shortage halts production at more than 100 factories

Factories dependent on gas and power across the country are struggling with fuel shortages. Production has already fallen at almost all gas-dependent plants, including those producing essential commodities, medicines, ceramics and steel. Many factories have temporarily suspended production. The worst-hit industrial areas are Narayanganj, Narsingdi and Chattogram.

Some factories in the pharmaceutical, steel and cold-storage sectors are using diesel as an alternative fuel to keep production going on a limited scale. But this has significantly increased their costs.

On Saturday, Prothom Alo gathered information from factories in Narayanganj, Narsingdi, Savar, Gazipur, Chattogram, Habiganj, Mymensingh and Khulna. Most of the country’s major manufacturing industries are located in these areas.

The information shows that more than 100 factories in these regions have halted production over the past week because of the gas shortage. A large share of them produce essential commodities. More than 50 of the affected factories belong to major industrial groups. Another 150-plus factories have significantly reduced production without shutting down completely.

Industrialists said the country has been facing a severe gas supply shortage for about a month, with the crisis intensifying over the past week. With gas pressure too low to run machinery, workers at many factories have been left sitting idle.

Around 50 essential-goods factories shut

There are more than 100 factories in Narayanganj and Chattogram that process essential commodities such as sugar, wheat, edible oil and lentils. Around half of them have temporarily shut down because of the gas shortage. Those that remain open are operating well below capacity.

More than two-thirds of the factories owned by one of the country’s leading industrial groups, Meghna Group of Industries (MGI), are currently shut. Company officials said that as of Saturday afternoon, 40 of the group’s 57 factories had completely halted production. A large share of these factories produce essential commodities. The remaining factories are producing small quantities of selected products.

Another major industrial group, TK Group, has 28 factories. Most of them have stopped production, said group director Mohammad Mostafa Haider. He said only one of its gas-dependent factories around Dhaka was operating on a limited scale, while the others had shut down. Most of the closed factories produce essential commodities.

TK Group also has several factories in the northern region and in Jessore and Khulna. These plants depend on electricity, but production there is also being disrupted by load-shedding. Mostafa Haider said some of these areas were experiencing load-shedding eight to 10 times a day.

Production has also fallen across several factories operated by another major industrial group, ACI Limited. The company has a number of factories around Dhaka. These include a salt factory in Rupganj, Narayanganj; flour and pharmaceutical plants in the Bandar area; and factories in Konabari and Tongi, Gazipur, producing napkins, diapers, agricultural inputs, motorcycles and electrical equipment. Production at all of these factories has fallen well below target.

Company officials said production had fallen by 30 per cent at some facilities, 50 per cent at others and even more at some plants. Salt production has been particularly badly affected.

ACI Limited Executive Director Quamrul Hassan told Prothom Alo: “On one hand, we are struggling with the power shortage. On the other, the generators we used to run on gas can no longer operate because there is no gas. Production at boiler-dependent factories has also fallen drastically because of the gas shortage. All of this is causing us substantial financial losses.”

Sugar trucks fail to reach wholesale market

The gas crisis has begun affecting supplies at Narayanganj’s Nitaiganj, one of the country’s largest wholesale markets. No sugar trucks have entered the market in the past three days. Due to shortages in production and supply, the wholesale price of sugar has risen by Tk 7 per kilogram.

Edible oil production has also declined. For example, Meghna Group’s Meghna Edible Oil Refinery in Narayanganj has been shut for three days because of the gas shortage.

The plant has a daily production capacity of 2,500 tonnes of edible oil, comprising 46 per cent soybean oil and 54 per cent palm oil. Meanwhile, City Group’s City Edible Oil Ltd in Rupshi, Rupganj, has a daily production capacity of 2,500 tonnes of soybean and palm oil combined, but output has fallen to around 1,000 tonnes because of the gas shortage. Production capacity for flour, refined flour and semolina has also declined.

Syed Rafiquar Rahman, technical director of City Group, told Prothom Alo that production had fallen by about 80 per cent because of low gas pressure. “We have shut down one plant and are running another to keep production going somehow. We are supplying the market with whatever we are currently able to produce.”

Rationing introduced to manage the situation

With production largely halted, companies said they were using stocks in their warehouses to maintain normal market supplies. As it is unclear how long the crisis will last, many are now rationing supplies to manage the situation. However, if the crisis continues for a prolonged period, market supplies could fall short.

Meghna Group of Industries (MGI) Chairman Mostafa Kamal said, “Previously, if we supplied 50 tonnes of a product to the market daily, we are now releasing 20 to 25 tonnes so that supplies can last for at least another two or three days. We are doing this to prevent the market from suddenly running out of products.”

TK Group Director Mohammad Mostafa Haider said, “We are going through an extremely difficult situation. We are maintaining supplies with stocks produced earlier. If the situation lasts more than eight to 10 days, it could negatively affect the supply and prices of products in the market.”

Production at RAK Ceramics (Bangladesh), one of the country’s leading ceramic companies, has been completely shut since Wednesday because of the gas shortage.

The company produces ceramic products at four units. Its chief executive officer (CEO), Mohammad Khorshed Alam, said, “It is impossible to keep our factories running without gas. Gas supplies stopped on Wednesday, and production at the factories has also come to a halt.”

Gas connections at the factories of BSRM, one of the country’s leading steel and rod manufacturers, have also been shut for several days. Tapan Sengupta, the company’s deputy managing director, said, “As gas supplies were cut off, we were forced to use diesel as an alternative to keep production running somehow. Even then, output is below half of capacity. Using diesel has increased production costs. Still, we are keeping the factory running because of demand from distributors.”

The pharmaceutical sector, another critical industry, is facing a similar situation. Two gas-dependent factories of leading drugmaker Square Pharmaceuticals, in Pabna and Kaliakair in Gazipur, are now operating on diesel as an alternative fuel. Restarting a pharmaceutical factory after a shutdown takes 10–15 days. For this reason, the company has kept production running with diesel despite the lack of gas.

Mohammad Jahangir Alam, executive director of Square Pharma, said, “We are also struggling to procure the diesel needed to keep the factories running. We are sourcing it in various ways. The amount of diesel currently available to us is enough to operate the two factories for just one day. We are worried about what will happen if we cannot obtain the necessary diesel in time.”

Chattogram EPZ gets half of its gas requirement

Gas shortages and problems with electricity supply are disrupting production at at least 35 factories in Chattogram and surrounding areas. According to Chattogram industrial police sources, four factories have shut down completely, while another 10 to 12 have temporarily suspended operations.

Factories in the Chattogram Export Processing Zone (EPZ) require 15–18 million cubic feet of gas to generate 70 megawatts of electricity. They are currently receiving only about half that amount. Mohammad Shariful Islam, executive director of Chattogram EPZ, told Prothom Alo that gas shortages were disrupting production at 20–25 textile and dyeing factories. However, there were no reports of any factory shutting down completely.

Business associations said small factories in Chattogram, particularly bakeries and producers of essential goods, are unable to continue production unless they can arrange alternative fuel. Some textile factories are using diesel instead of gas, which is raising production costs.

Mohammad Amirul Haque, president of the Chattogram Chamber of Commerce and Industry, said they were receiving reports of production disruptions and factory closures from various businesses. However, many business owners were reluctant to speak openly about the situation because they feared facing problems later.

Situation in other districts

The ongoing gas crisis has also adversely affected factories in Savar. Savar and neighbouring Dhamrai fall under the jurisdiction of Ashulia Industrial Police-1. There are 1,705 industrial establishments in the two upazilas.

Mohammad Mominul Islam Bhuiyan, superintendent of Ashulia Industrial Police-1, told Prothom Alo that production was being disrupted because of the gas shortage, but no factories had shut down. Four or five factories have occasionally announced temporary leave because production was severely affected, but they resumed operations later.

Khairul Mamun, legal affairs secretary of the Bangladesh Garment and Sweater Workers Trade Union Centre, said several hundred workers had already been laid off at a number of factories after notices cited production disruptions as the reason. This has created anxiety among workers about losing their jobs.

Gas-dependent garment factories in Bhaluka, Mymensingh, are also facing production disruptions because of low gas pressure. Some factories have had to reduce the number of production lines. This has also created uncertainty over whether they will be able to deliver products to buyers on schedule. However, no factory has yet closed because of the gas shortage.

For example, Sohel Ahmed, manager of the utility department at Glory Textile & Apparels in Bhaluka, said gas pressure had been somewhat low for the past one and a half to two months. The factory requires gas pressure of 15 psi but is receiving only 11–12 psi, resulting in a 3–4 per cent decline in production.

Narsingdi supplies nearly 70 per cent of the country’s demand for locally produced fabrics. The district has more than 3,000 textile, dyeing and spinning mills combined. The severe gas crisis has brought Narsingdi’s industrial sector to a standstill. About 90 per cent of gas-dependent factories are now completely shut, while average production has fallen to around 10 per cent of capacity.

Export-oriented industries under pressure

More than 100 industrial establishments in Habiganj have been receiving less gas than they require for three weeks. More than half of them are fully export-oriented. Many factories halted production after gas supplies stopped completely for a week.

Six factories at Jamuna Industrial Park remained completely shut last week. However, officials at several industrial establishments said the situation had improved somewhat from yesterday.

Businesspeople in Gazipur said fluctuations in gas pressure were disrupting production while also preventing workers from making proper use of their working hours. When gas pressure is low, workers at many factories have to sit idle. Production resumes when pressure rises somewhat.

About 80 per cent of Bangladesh’s frozen shrimp and fish exports come from factories in the Khulna region. Shrimp is currently in peak season, but load-shedding has put fish-processing factories in the region under pressure. With power unavailable, factories have had to run generators to keep shrimp in cold storage, increasing both production and storage costs.

Sheikh Kamrul Alam, vice-president of the Bangladesh Frozen Foods Exporters Association, said, “The cold-storage facilities have to operate continuously. They contain fish worth hundreds of millions of taka. We are being forced to buy diesel at high prices to run generators, which has significantly increased costs.”

Gas supply improves somewhat

After 25 consecutive days of severe shortages, the gas supply improved somewhat yesterday. Summit’s LNG terminal resumed full operations, while Excelerate Energy’s terminal resumed partial operations. Gas supplies began increasing from 4:00am. However, people familiar with the situation said it could take several more days for the gas shortage to fully ease.

According to Petrobangla, daily gas demand in Bangladesh is 3.8 billion cubic feet. A supply of 3 billion cubic feet would be enough to maintain supplies to most sectors reasonably well. Even in normal times, however, the country receives up to 2.7 billion cubic feet and manages the situation through rationing.

Total gas supply fell to 1.73 billion cubic feet at 4:00pm last Friday. By yesterday evening, it had risen to 2.44 billion cubic feet. There is still a daily shortfall of 260 million cubic feet compared with normal supply levels. The shortfall could be eliminated once Excelerate’s terminal resumes full gas deliveries.

Petrobangla data showed that domestic gas fields produced 1.61 billion cubic feet at 6:00pm yesterday, while imported LNG supplied 830 million cubic feet. Of this, Summit’s terminal supplied 530 million cubic feet and Excelerate Energy’s terminal supplied 300 million cubic feet.

Yesterday, 930 million cubic feet of gas was supplied to the power sector, 150 million cubic feet to fertiliser factories and 1.36 billion cubic feet to industries, households and other sectors.

Business leaders have already expressed their concerns to the government over the ongoing gas and electricity crisis. MGI Chairman Mostafa Kamal told Prothom Alo that he had spoken to the commerce minister and the state minister for power, energy and mineral resources, requesting urgent supplies of gas and electricity. “They said they were trying,” he said.

Quamrul Hassan, executive director of ACI Limited, suggested transporting gas from Bhola to industrial factories by CNG or specialised vehicles as a temporary solution. He said a system for transporting CNG gas from Bhola had been in operation until about two years ago, but supplies had been suspended for nearly a year because of bureaucratic complications. Restarting the system during the current crisis could provide some temporary relief.

[Contributed to the report: Staff Correspondents in Chattogram, Khulna, Mymensingh, Habiganj and Savar, and Correspondents in Narayanganj, Gazipur and Narsingdi.]