Gas crunch cripples industries, threatens export orders

Infographic/TBS

Factory owners are paying a premium of Tk10 per litre for diesel to keep their generators running, a costly measure that reflects how Bangladesh's energy crisis has deepened from a gas shortage into a full-blown power supply crisis.

The extra fuel cost is only part of the pain. Frequent power outages, coupled with years of low gas pressure, are disrupting production at factories across the country's major industrial belts, forcing manufacturers to spend more just to meet export deadlines.

"We have been suffering from the gas crisis for years. Now we are not getting electricity either. We are buying diesel from filling stations by paying Tk10 extra per litre just to keep our generators running," an entrepreneur who owns export-oriented garment and textile factories in Ashulia told The Business Standard.

"I can't run my factories anymore. Please save us!" he said.

A spinning mill in Araihazar, Narayanganj, with 3 lakh spindles has almost ceased operations because of the gas shortage. The owner, who requested anonymity, said the factory's daily gas bill under normal circumstances was around Tk20 lakh, but it is now spending about Tk90 lakh a day on diesel.

Their frustration is no longer an isolated case. It has become the new reality for manufacturers in Ashulia, Gazipur, Savar, Narayanganj and other industrial hubs, where unreliable gas and electricity supplies are forcing factories to operate far below capacity and driving up production costs. Only a handful of factories, mainly in the Sylhet region where gas supply remains comparatively stable, have largely escaped the crisis.

Industry leaders say the worsening energy shortage is eroding Bangladesh's competitiveness at a time when exporters are already struggling with weak global demand, rising costs, and growing competition from rival manufacturing countries.

The Bangladesh Textile Mills Association raised the issue during a meeting with Prime Minister Tarique Rahman yesterday, seeking immediate intervention. According to the association, the prime minister assured industry leaders that the government would take steps to address the crisis, with another meeting scheduled next week.

Business leaders also said the PM had told entrepreneurs at a meeting last week that resolving the broader energy crisis could take about one year.

Production levels across major gas-reliant industries have plummeted to 20%-50% of capacity, down from around 70% a month ago, with several units shutting down entirely. The crisis has been compounded by severe electricity load-shedding of 10 to 14 hours daily in industrial zones powered by the Rural Electrification Board.

The widespread disruption has raised fears among factory owners over their ability to pay workers' wages, clear utility bills, and service bank loans.

Orders shifting feared

Foreign buyers are closely monitoring the supply crunch, inquiring whether local suppliers can meet delivery deadlines. Industry leaders report that some international buyers have already begun scaling back orders or shifting them away from Bangladesh.

Showkat Aziz Russell, president of the Bangladesh Textile Mills Association, confirmed that orders are shifting, warning that retrieving lost clients in the near future will prove challenging.

A senior official from the association noted that at least one European buyer has explicitly cited the gas crisis when transferring a portion of its order volume.

Industry leaders warn that Bangladesh could risk losing up to half its export orders if normal gas supply is not restored swiftly.

Textile mills bear the brunt

The textile sector, one of the country's largest gas consumers with investments estimated at $23 billion, has been among the hardest hit.

Mohammad Mosharaf Hossain, managing director of Mosharaf Composite Textile Mills Limited, said lower gas pressure meant the factory was managing to operate at only around 60% capacity despite relying on alternative energy sources.

"If this situation continues, I do not know how we will pay workers' wages, bank loan instalments and gas and electricity bills from next month," he said.

Mosharaf said the company had so far been using funds from other businesses within the group to meet operating expenses, but questioned how long that could continue.

Even after combining electricity supplied by the Rural Electrification Board with solar power and diesel generation, the mill is operating at only about 20% of capacity, said the spinning mill owner in Araihazar.

He said the factory is losing around Tk1.5 crore a day because of the gas shortage and warned that prolonged disruption could force the sale of personal assets to keep paying workers and meeting other obligations.

Khorshed Alam, chairman of Little Star Spinning Mills Limited in Ashulia, Savar, said his factory is receiving only 0.5 to 1.5 PSI of gas despite having an approved pressure of 10 PSI.

Even after supplementing production with uninterrupted power supply systems, electricity and solar power, the factory is operating at only about 25% of capacity.

"We are worried about how we will pay workers' wages. Ultimately, it may not be possible to keep the factory running," he said.

Other industries under pressure

The crisis has spread well beyond the textile sector. According to the Bangladesh Ceramic Manufacturers and Exporters Association, 25 of its 70 member factories have already suspended production because of inadequate gas supply.

Moynul Islam, chairman of Monno Ceramic Industries Limited and president of the association, said the industry had reached a critical stage. "We are now in a state of uncertainty."

The leather sector is facing similar difficulties. Mohammad Imam Hossain, managing director of ABS Tannery and an executive member of the Bangladesh Tanners Association, said his factory's monthly production capacity of 7-8 lakh square feet had fallen to well below 1.5 lakh square feet despite arranging gas from external sources.

He said export orders were being delayed, while rising overhead costs and shipment disruptions were making it increasingly difficult to pay wages and repay bank loans.

Mizanur Rahman, general secretary of the Bangladesh Tanners Association, said many tanneries were receiving only 10% to 20% of their required gas supply, while some were receiving none at all.

"If the situation persists, paying workers' wages and servicing bank loans will become extremely difficult," he said.

The steel industry is also under strain. According to industry representatives, Bangladesh has around 40 automated steel mills, most of which rely on captive power generation. Large factories using high-pressure gas lines have experienced production disruptions of 30% to 40%, while many smaller plants connected to lower-pressure lines have been left with almost no gas supply.

Sumon Chowdhury, general secretary of the Bangladesh Steel Manufacturers' Association, said steel production machinery must operate continuously and requires more than two hours to restart after a shutdown.

He said many factories were now forced to suspend production for about 12 hours each day and warned that a further two weeks of disruption could force numerous mills to close.

The pharmaceutical industry is also feeling the impact. Sector insiders said most of the country's nearly 300 pharmaceutical factories depend on gas-fired captive power generation and have been forced to halt production for between five and seven hours a day.

Zakir Hossain, secretary of the Bangladesh Association of Pharmaceutical Industries, said the sector had been experiencing gas shortages since 2022.

He said captive power plants generally require gas pressure above 10 PSI to operate efficiently, but pressure had remained well below that level in recent days. At the same time, increased load shedding outside Dhaka was disrupting production for around six hours a day.

"The biggest challenge is API production, where machinery must remain in continuous operation," he said.

Govt expects gradual improvement

The government has expressed optimism that the gas supply situation will begin to improve in the coming days.

State Minister for Power, Energy and Mineral Resources Anindya Islam Amit said earlier this week that gas supply was expected to improve from next week, although restoring normal supply could take another week.

Industry owners and energy experts, however, believe a lasting solution remains some way off.

They argue that the proposed floating storage and regasification unit (FSRU) will take much longer to become operational than official estimates suggest, leaving industries vulnerable to prolonged supply shortages unless alternative gas sources are secured.

The current crisis has been aggravated by the shutdown of the floating LNG terminal operated by Excelerate Energy, with industry representatives saying there is no immediate remedy until the terminal resumes operations.

To strengthen future energy security, the government plans to install Bangladesh's third FSRU and develop a land-based LNG terminal at Matarbari in Cox's Bazar.

The Cabinet Committee on Government Purchase on Tuesday approved a proposal to establish a new FSRU in Kutubjom, Moheshkhali, under a government-to-government arrangement with China National Energy Engineering and Construction Co.

According to the Energy Division, the terminal is expected to be completed within 18 months of receiving final approval.

Experts question timeline

Energy expert M Tamim questioned the government's implementation schedule, saying completing an FSRU within 18 months would be extremely challenging under current conditions.

He said converting an LNG carrier into an FSRU alone generally requires at least two years, while developing an entirely new facility could take a minimum of three years.

According to Tamim, the government's target would only be achievable if the Chinese contractor already had LNG storage facilities and other critical components ready for immediate installation.

Apparel exporters seek temporary relief

As the crisis intensifies, the country's two leading apparel trade bodies have sought temporary measures to keep export production running.

In separate letters sent on Tuesday, the Bangladesh Garment Manufacturers and Exporters Association and the Bangladesh Knitwear Manufacturers and Exporters Association urged the government to allow export-oriented factories to procure compressed natural gas in cylinders from CNG filling stations until normal pipeline supply resumes.

The request followed a directive from Titas Gas Transmission and Distribution Company prohibiting CNG filling stations from selling gas into open cylinders or gas cascade cylinders that are not mounted on authorised vehicles, citing safety concerns and legal restrictions.