Business Report :
Noman Spinning Mills Limited, part of the renowned Noman Group, produces yarn for the export-oriented ready-made garment (RMG) industry at their factories in Sreepur, Gazipur. With 6,480 rotors, they have an annual production capacity of 16.5 million kilograms.
However, a severe gas crisis in the Gazipur industrial area has severely disrupted production, causing delays in yarn deliveries. Md Enamul Karim, executive director of Noman Spinning Mills Ltd, told that their factory, like many others in the area, has been struggling with the gas shortage for a considerable time, severely affecting their production.
“Currently, we can produce only 50 per cent-60 per cent of our capacity, meaning production has declined by 40 per cent-50 per cent due to the ongoing gas crisis. We can no longer achieve our production targets,” he added. He also mentioned that the gas distribution authority has not provided any indication of a solution to this crisis.
Many other textile mills in major industrial hubs like Tongi, Joydebpur in Gazipur, Bhaluka in Mymensingh, Palash, Madhabdi in Narsingdi, and Savar and Ashulia in Dhaka have also been suffering from the acute gas shortage for over a month.
Textile millers report that production at 80 per cent of the country’s mills has dropped to an average of 40 per cent due to the gas crisis. They fear this will hinder their ability to supply raw materials to RMG factories on time, impacting the revenue of the country’s main export product.
Gas crisis: How it all began
In January 2023, the government raised gas prices by up to 179 per cent, promising that the extra revenue would be used to import LNG from the spot market to ensure a steady supply. However, despite factories paying higher bills for over a year, the gas supply never met expectations, leading to severe production disruptions, industry insiders reported.
They explained that the gas crisis in the country is not a new issue, with the industrial sector facing shortages for a long time due to supply not meeting demand. Currently, the country needs nearly 4,000 million cubic feet (mmcf) of gas per day, but only about 3,050 mmcf is supplied, with industries receiving around 600 mmcf/d, far short of their 1,200 mmcf/d demand.
To address this crisis, the government began importing LNG at the end of 2018. However, LNG prices surged in 2022 due to the Ukraine-Russia war, and the government paused imports due to low foreign exchange reserves, turning to the global spot market instead. As local gas production is insufficient, the country has become increasingly dependent on imports, setting up two floating terminals at Maheshkhali in Cox’s Bazar for importing LNG and converting it to gas for pipeline supply.
A fresh gas crisis emerged when Cyclone Remal damaged a terminal on May 27, which was then sent to Singapore for repair, causing further disruptions in the industrial sector, according to industry insiders. Mohammad Ali Khokon, president of the Bangladesh Textile Mills Association (BTMA), told that despite paying higher prices, there is still no uninterrupted gas supply.
“Since Cyclone Remal, we are facing a new gas crisis due to a damaged LNG terminal. Currently, the pressure is 1-2 PSI during the day and slightly higher at night. Our production has dropped from regular three shifts to 40 per cent-70 per cent below capacity,” he said. Despite constant communication with Petrobangla, the authority hasn’t provided any hope, he added, fearing the industry won’t be able to supply raw materials to the RMG sector on time.
If things continue as they are, it will be tough to achieve export targets, which will further impact the overall economy, he warned.
Ismail Spinning Mills Limited, another Sreepur-based yarn manufacturer of Noman Group with a capacity of 28.68 million kgs annually, is also facing the same issues, said an official. An official from Kaliakoir-based SA Spinning Mills Limited reported that their mill is on the verge of closure due to gas shortages over the past six months.
“Our 40 yarn manufacturing machines need at least 10 PSI of gas, but we only get 1-1.5 PSI, leading to the shutdown of many machines,” he added.
RMG factories depend on the production of textile mills, which provide yarn, woven cloth, and dyed materials. RMG manufacturers report that textile mills cannot supply raw materials on time due to the gas crisis. Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said that insufficient gas pressure disrupts the yarn and cloth dyeing process, delaying raw material supply by 15-20 days for each purchase order.