Light engineering industry production drops, costs rise amid gas and power crisis

For more than a decade, Faisal Polymer Industries has been manufacturing various types of water taps. The company’s factory is located in Dhaka’s Jatrabari area. The company had already been struggling to do business as expected for several months due to rising raw material prices, declining demand and various other reasons. That situation has further deteriorated due because of the recent gas crisis. With an inadequate and irregular gas supply, the company’s production has fallen by more than 60 per cent in recent months.

Md. Solaiman Parsee, managing director of Faisal Polymer Industries, told Prothom Alo that the factory needs a continuous gas supply to operate its furnace for melting brass used to manufacture water taps. However, gas pressure has been low for the past four to five months and now it is almost non-existent. The factory can currently operate for no more than three to four hours a day.

Solaiman Parsee said, “I have to spend Tk18,000 a day just to keep the factory running. To recover that cost, we need to produce goods worth Tk 7 to 8 lakh a day. But because of the current gas crisis, production has fallen to Tk 3 to 4 lakh. The production shortfall is causing us major financial losses.”

The decline in production has also affected employment. A year ago, 30 workers used to work at Faysal Polymer Industries. Now only 12 workers are employed there.

There are around 350 small and large factories producing water taps in the Jatrabari area, similar to Faisal Polymer Industries. Large factories have their own brass casting or melting facilities. Meanwhile, smaller entrepreneurs have the initial brass tap moulds made at other casting factories using their moulds. As a result, the current gas crisis has negatively affected production at almost all factories in the area.

Small and medium-sized entrepreneurs in the light engineering sector across the country are struggling amid the ongoing gas and electricity crisis. According to Bangladesh Engineering Industry Owners Association, the sector has around 50,000 small and large factories across the country, employing around 650,000 people.

A visit to several major light engineering clusters, including Keraniganj, Bogura, Narayanganj and Pabna, found that electricity is unavailable for more than six to eight hours a day in many areas. In places where production depends on gas, essential processes such as casting and heat treatment have come to a complete halt due to inadequate gas pressure in the pipelines.

Traders said that the demand for light engineering products has already declined amid the country’s overall economic situation. The gas and electricity crisis has added to their difficulties, making it increasingly challenging to keep their businesses afloat. Production at many factories has fallen below half of their capacity. Under these circumstances, paying workers’ salaries and benefits and repaying bank loans has become difficult.

SME entrepreneurs in districts surrounding Dhaka have also reported difficulties. For example, production at agricultural machinery manufacturer Agro Machinery Industries Ltd, located in Shalna, Gazipur, has fallen to less than half of its normal level due to load-shedding. As a result, the company is unable to deliver products according to customers’ orders.

Mohammad Sheikh Sadi, MD of Agro Machinery Industries, said electricity goes out four to five times a day, and each outage lasts at least an hour. A job that could previously be completed in half an hour now takes half a day.

“I am suffering huge losses. I do not know how long we can continue like this. I sometimes even think about relocating the factory from Shalna. We are a small business. Banks do not lend us money. We have to run the business with our own money and by borrowing. I do not think we can survive for long under these circumstances,” Sheikh Sadi said.

Many entrepreneurs have also complained that their electricity bills have increased despite not receiving uninterrupted power. Brothers Engineering, a plastic die manufacturing company in Keraniganj, said its electricity bill increased by more than 30 per cent last month.

Asked about the extent of load-shedding, Mohammad Mofizul Islam, MD of Brothers Engineering, said, “We now need 200 litres of fuel a day to run the generator. Over the past month, generator expenses have increased by 40 per cent, while electricity bills have risen by 30 per cent. At the same time, production has fallen by 30 per cent. The situation has reached a point where we may have to shut down the factory at any time.”

Anwar Hossain Chowdhury, managing director of the SME Foundation, said, “Entrepreneurs are regularly informing us about their difficulties with gas and electricity. Due to the crisis, many businesses are unable to deliver orders on time even after receiving them. As a result, they are in a vulnerable position. If the situation continues, they will find it difficult to repay their bank loan instalments. We are informing the government about these problems faced by entrepreneurs.”