Gas supply woes jeopardise $70b investment

Reza Mahmud :

A severe shortage of gas supply is crippling Bangladesh’s industrial sector, with mills and factories operating well below capacity as energy intended for industrial use is being diverted to electricity generation and fertiliser production.

In an attempt to address the crisis and stimulate industrial production, the government has pledged to inject additional gas supplies into affected sectors.

However, industry leaders warn that the situation is rapidly deteriorating.

According to sources from the Bangladesh Textile Mills Association (BTMA), nearly 400 gas-dependent factories are struggling to maintain operations. In major industrial zones such as Gazipur, Konabari, Shafipur, Narayanganj, Dhamrai, and Manikganj, gas pressure has reportedly dropped to near zero, severely disrupting manufacturing activities.

In major industrial hubs like Narayanganj, Gazipur, and Tongi, many factories are currently operating at just 30 to 40 per cent capacity. Over $70 billion in investment is believed to be at risk.

Production across key sectors – notably knitwear, readymade garments (RMG), and textiles – has plummeted by 70 to 90 per cent, industry insiders claim. Many factories are now on the brink of closure, grappling with cancelled export orders and rising layoffs.

Energy Adviser Fauzul Kabir Khan, when contacted by The New Nation on Sunday, said: “Today, I met with business leaders and assured them that we will increase gas supply to the industrial sector as per their necessity soon.”

He further noted that starting Monday, government officials would visit affected industrial sites to assess the situation on the ground. “We will increase gas supply to industries as needed after completing inspections,” the Adviser added.

Sources within the Energy Ministry confirmed that efforts are underway to augment supply through gas imports and exploration of both offshore and onshore reserves.

Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), stated that the gas crisis, combined with ongoing banking sector difficulties, is placing severe pressure on the production industries.

Critically low gas pressure has rendered machinery inoperable in many factories, forcing owners to halt operations and absorb substantial financial losses.

“While power outages remain an issue, the gas crisis is the most damaging and urgent,” Hatem said. In key industrial areas such as Dhaka, Narayanganj, and Ashulia, gas pressure is reportedly almost non-existent.

A Titas Gas Transmission and Distribution Company official disclosed that Gazipur alone requires 600-700 million cubic feet of gas daily but is receiving only about 450 million. As a result, many factories have been compelled to switch to costlier alternatives such as diesel, LPG, and CNG, driving up production costs.

BTMA noted that Bangladesh has 1,854 textile mills with a combined investment of approximately $22 billion. Among these, around 900 gas-reliant factories have been hit the hardest.

These establishments, with investments ranging from Tk100 crore to Tk1,000 crore, are facing cancelled orders and strained relationships with international buyers.

A private company chairman, requesting anonymity, reported that gas supply was reduced by 100-120 million cubic feet per day between February and April, bringing many operations to a standstill. Despite recent gas price hikes, business leaders claim the availability of gas has not improved, further complicating recovery efforts.

Former BGMEA director Mohiuddin Rubel pointed out that even factories operating at reduced capacity must bear full energy and labour costs, rapidly depleting capital reserves and pushing many towards default.

Shovon Islam, Managing Director of Sparrow Apparels in Gazipur, remarked, “Despite the gas price hike, we often receive supply for only two hours a day. This inconsistency is driving foreign buyers to seek alternatives in other countries.”

Experts have warned that if the crisis continues unchecked, the industrial sector may slide into recession – endangering investment, employment, and exports.

Factory owners have repeatedly appealed to Petrobangla for urgent measures to stabilise the gas supply.

The BTMA and BKMEA estimate that the daily industrial demand for gas – particularly in spinning, dyeing, and printing – stands at approximately 2,000 million cubic feet.

Current supply levels fall drastically short of this requirement. Each spinning mill is reportedly incurring an average daily loss of Tk25 lakh due to the ongoing shortage.

Compounding the crisis further, uncertainty stemming from potential U.S. tariff measures has prompted many Western buyers to delay orders, placing additional strain on Bangladesh’s already embattled export sector.