Entrepreneurs face uncertainty

TK Group has invested nearly Tk 10 billion in a steel plant, Karnaphuli Steel Mills, in Chattogram. The company also installed a 12MW captive power plant to ensure an uninterrupted electricity supply.

However, because it has not received a gas connection, it has been forced to rely on electricity from the national grid. Frequent power outages are disrupting production and damaging products.TK Group is not alone.

Applications from 1,857 industrial establishments for gas connections are pending with the country's six gas distribution companies. Meanwhile, the government has decided in principle to suspend new gas connections for industries and increases in gas load for existing factories until the energy crisis eases. The Ministry of Power, Energy and Mineral Resources informed Petrobangla of the decision in a letter dated 14 July.

The ministry's decision has left industrialists waiting for gas connections deeply concerned. Many have completed factory construction but remain unable to begin operations because they have no gas supply, while still having to repay bank loans. Others planning to expand production have also put their investments on hold after receiving no assurance of increased gas allocations.

According to Petrobangla, more than 1,857 applications for industrial gas connections are pending with six gas distribution companies, including Titas Gas Transmission and Distribution PLC.

Of these, around 550 companies have completed all formalities and are simply waiting for their promised gas connections. In other words, they have already paid the required fees but are yet to receive gas.

Speaking to Prothom Alo, Mohammad Mustafa Haider, a director of TK Group, said, "Our appeal to the government is to take swift action to resolve the gas crisis. Otherwise, all industries will face serious difficulties."

In its election manifesto, the ruling BNP pledged to transform Bangladesh into a $1 trillion economy and an upper-middle-income country by 2034. After taking office, the government also introduced several initiatives to stimulate business activity, including the creation of a Tk 600 billion fund.

At an investment conference organised by the Foreign Investors' Chamber of Commerce and Industry (FICCI) last Thursday, Prime Minister Tarique Rahman also invited local and foreign entrepreneurs and investors to undertake new ventures and expand their businesses in Bangladesh.

However, several industrialists told Prothom Alo that no new gas-based industries would attract investment if new gas connections and increased gas allocations remained suspended.

As a result, new employment opportunities would also fall short of expectations. They argued that the decision sends the wrong signal to both domestic and foreign investors.

Inviting new investment while refusing gas connections for new industries sends contradictory messages, they said, urging the government to take effective action as quickly as possible.

Asked about the issue, Ahsan Zaman Chowdhury, Managing Director of Trust Bank, told Prothom Alo yesterday, Monday, that banks have significant exposure to industrial projects.

Factories unable to obtain gas connections are now using LPG or LNG instead, increasing production costs by as much as threefold. As a result, many companies are struggling to make regular loan repayments.

One of Bangladesh's leading conglomerates, Square Group, has acquired a garment factory in Bhaluka, Mymensingh, where it plans to manufacture sweaters and underwear. Although the factory has a gas connection, it has remained inactive for a long time.

Square has applied to have the connection restored. The group has also applied for increased gas loads at five of its textile mills. According to the company, if adequate gas is supplied, its textile operations could create 20,000 new jobs over the next five years. Without gas, however, it will have to slow down its investment plans.

Another major conglomerate, Meghna Group of Industries (MGI), has invested Tk 73.2 billion in two factories—a glass plant and a steel rod plant—at the Cumilla Economic Zone. Construction of the glass factory was completed two and a half years ago, while the rod factory was finished one and a half years ago.

Neither has started operations because they have not received gas connections, despite assurances at the beginning of the investment process. Although production has not begun, MGI is paying nearly Tk 450 million in monthly interest on loans taken for the two projects.

On 20 April, Ashik Chowdhury, Executive Chairman of the Bangladesh Investment Development Authority (BIDA) and the Bangladesh Economic Zones Authority (BEZA), wrote to the Energy and Mineral Resources Secretary regarding factories that had not received gas connections.

The letter referred to five factories, including MGI's two projects. Ashik Chowdhury said that without gas connections, new employment would not be created and both local and foreign investors would be discouraged from investing in Bangladesh.

Meanwhile, City Group has been unable to begin operations at five factories in its privately developed 108-acre economic zone in Gazaria, Munshiganj, because of the gas shortage. Around Tk 140 billion invested in cement, sugar, paper, shipbuilding and liquefied petroleum gas (LPG) plants remains idle.

Company officials said that although the group spent Tk 1.5 billion building its own gas pipeline, the government has still been unable to supply gas. Had gas been available, the factories would have gone into operation in 2022.

Pran-RFL Group plans to establish an industrial park on 1,000 acres of land in Bheduria, Bhola Sadar Upazila, with an investment of Tk 60 billion. The project could create employment for more than 25,000 people. The group intends to utilise Bhola's gas resources for the project and has already applied for a gas connection.

Speaking to Prothom Alo, Power, Energy and Mineral Resources Minister Iqbal Hassan Mahmood said the current situation was inherited from the previous Awami League government.

"They approved projects but did not arrange the gas supply," he stated. "Our priority now is to ensure gas availability."

The minister added that the government is working to increase both domestic production and imports, while discussions are under way to establish a new LNG terminal. Gas connections for industries will resume once supply improves.

Bangladesh's gas shortage is not a new problem. Khondaker Golam Moazzem, Research Director at the Centre for Policy Dialogue (CPD), told Prothom Alo that flawed policies and the influence of the LNG lobby have made Bangladesh's energy sector excessively dependent on imports.

Pointing out that rising prices have also made imports more difficult, he further said, yet there were opportunities to secure lower-cost gas from domestic sources.

As a solution, Khondaker Golam Moazzem said the government needs to adopt long-term measures to normalise energy supplies. Under no circumstances, he argued, should Bangladesh pursue plans that rely primarily on LNG imports.

Gas from Bhola and Barishal should be connected to the national grid as quickly as possible.

He also said BAPEX must meet its target of drilling 48 wells within two years, noting that a section within the Energy Ministry has been working against new drilling projects.

Beyond that, he said, diesel use in transport and irrigation should be reduced through greater investment in electric vehicles and solar power.