News Analysis: Fuel Crisis Chokes Bangladesh’s Industries: Garments Sector on the Brink

Factory owners in Ashulia and Gazipur are struggling to keep production lines running as power cuts stretch for three to four hours daily and diesel prices keep climbing.

The ripple effect from the ongoing Iran conflict has pushed global oil prices past $115 a barrel, and Bangladesh — which imports almost all its fuel — is feeling it directly.

“We are already running on thin margins of 4 to 8 percent,” said one senior executive from a major garment group who didn’t want to be named.

“Now raw material costs are up 10 to 15 percent, and in some cases certain chemicals have tripled.

On top of that, we’re burning diesel to keep the machines going.”

Frequent power disruptions have led to production drops of 10–15 per cent at some hubs like Savar and Ashulia.

To meet strict delivery deadlines and avoid order cancellations, some exporters are paying for expensive air freight at their own expense Many factories in Savar and Chattogram are operating at 50 to 60 percent capacity.

Workers are losing overtime, and some smaller units have started delaying salaries.

BGMEA President Mahmud Hasan Khan met energy officials in April and warned that gas and electricity shortages are disrupting production and shipments.

He highlighted that gas prices have risen 286 per cent since 2017 and electricity 33 per cent in five years.

BKMEA President Mohammad Hatem echoed the concern, stating production costs have climbed at least 20 per cent from higher fuel prices, transport costs, wages, and global disruptions.

Many factories run at only 50-60 per cent capacity and can’t pass these costs to buyers.

Both BGMEA and BKMEA are urging the government for urgent relief: special diesel supply arrangements with fuel cards, emergency gas connections especially for small factories, fair gas distribution, faster LNG imports, tax-free imported fuel, and big cuts in duties on solar equipment to push renewables.

They’re also asking for lower export taxes and simpler customs rules in the upcoming budget.
The pain is not limited to garments.

Taxi and CNG drivers in Dhaka are charging 25 to 40 percent more, forcing office-goers and students to cut back on travel. Small businesses and traders are also seeing transport costs eat into their slim profits.

A factory manager in Hemayetpur summed it up: “We used to spend around 15 lakh taka on fuel every month. Now it’s close to 30 lakh.

Buyers are not ready to pay even a dollar more, so we are the ones absorbing the entire shock.”

Industry leaders warn that if the crisis drags on for another two to three months, many factories could face serious order cancellations and possible layoffs.

The government has raised fuel prices recently, but without a quick end to the disruptions in the Middle East, analysts say the coming months could get even tougher for Bangladesh’s export-driven economy.