BTMA units’ three-month loss caused by gas shortage stands at $1.75b

Originally posted in The Financial Express on 30 January 2022

The Bangladesh Textile Mills Association (BTMA) on Saturday claimed its export-oriented factories incurred $1.75-billion production losses in the past three months for gas supply crunch.

A good number of spinning, weaving, dyeing and printing mills in Dhaka, Gazipur, Savar, Ashulia and Narsingdi industrial zones cannot run fully for gas shortages.

If the proposed 103-116 per cent gas price is hiked in such a situation, BTMA warns, they need an additional Tk 20.47-23 as electricity cost to produce yarn per kg.

“The overhead per-kilo production cost of yarn will be double or 50 cents from its existing rate of 25 cents if the proposed gas hike takes effect,” BTMA president Mohammad Ali Khokon told a press conference in Dhaka.

BTMA vice-presidents Md Fazlul Hoque and Abdullah Al Mamun, director Md Saleudh Zaman Khan and Md Mosharaf Hossain, among others, were present at the briefing.

Opposing the state-owned distribution company’s proposal for gas price hike, the BTMA said the hike in gas price would erode competitiveness of the sector.

He feared any possible closure of primary textile mills, saying they would lose their competitiveness and fail to survive.

Mr Khokon demanded that the government ensure uninterrupted gas supply and do not raise price during the recovery of the pandemic-hobbled garment business.

The latest price was increased in 2019 while more than 360-per cent hike has been made since 2009, he cited.

Investment in the sector would be hampered if gas price rises, he said, adding that textile and clothing industry has started to revive and is yet to fully recover from Covid-19 fallout.

Spinning millers would be at risk of marketing their produced yarn if the proposed hike is implemented as apparel exporters objected when yarn price was enhanced two-five cents, he explained.

Moreover, yarn and fabric supply chain would be disrupted only to encourage import of raw material both legal and illegal ways, Mr Khokon observed.

The knitting sub-sector requires 10-12 million kilo of yarn each day and local millers supply 90 per cent of their demands.

RMG exporters annually import 6.0-billion metres of fabric annually while textile millers supply 35 per cent of the woven sector’s demand, he said.

Backward-linkage industry grew, thanks to state support like smooth supply and ‘encouraging tariff’ of gas to captive generators and availability of labour, according to Mr Khokon.

Although some 1200 electronic volume corrector (EVC) meters have been imported, he said, a negligible number of factories get such devices installed.

“The Titas authorities are taking money by selling air instead of gas,” he alleged.

Despite gas crisis, factory owners have been forced to pay millions in bills to Titas Gas Transmission and Distribution Company in the absence of EVC meters.

The BTMA chief has urged the government to immediately install EVC meters at captive power generator mills to pay bill accordingly.

Citing a global study, he said 57 per cent of rental power plants remained idle in Bangladesh in fiscal year 2019-20 and Titas made a profit of Tk 15.09 billion.

“Why will people bear the cost of an idle power plant and does Titas make a move to increase the price of gas even after making profits?” questioned Mr Khokon.

He demanded frequent import of LNG through investing a portion of the profit made by Titas in the last three to four years.

The BTMA chief demanded uninterrupted gas supply to industries by halting supply to fertiliser factories and transport sector for an interim period.

He sought five to 10 years energy policy to help the sector plan their investment accordingly to produce additional raw materials worth $10 billion.