Tk35,000cr stuck, factories idle, jobs delayed – all for want of gas connections

Highlights:

• Tk35,000 crore investments stalled awaiting long-delayed gas connections
• Major factories remain idle despite completed construction and financing
• Companies repay loans without revenue from non-operational industrial units
• Gas shortages disrupt economic zones across Bangladesh's manufacturing sector
• Investors face mounting losses, maintenance costs, and cash flow pressure
• Bangladesh lacks sufficient gas supply for growing industrial energy demand

City Group around six years ago established the Hosendi Economic Zone in Munshiganj, investing nearly Tk11,000 crore to build six large industrial units. But without gas connections, the factories are yet to go into production.

The economic zone has yet to generate any returns, but the company has already started repaying loan instalments and interest on massive bank borrowings used for the investment.

Bangladesh's private sector has poured tens of thousands of crore taka into new factories – steel plants, garment units, cement facilities, seed crushing plants – all ready to produce, employ, and boost demand. But most remain idle, waiting for gas connections.

The Business Standard has found that at least Tk35,000 crore in private investment is sitting idle across economic zones and industrial sites. The actual figure is certainly higher as energy ministry sources say 1,800 more applications for gas connections are pending, and the financial exposure behind each has not been fully tallied.

The investments TBS has confirmed so far tell their own stories. Abdul Monem Group has invested Tk5,000 crore in Abdul Monem Economic Zone. Meghna Group has invested Tk6,000 crore in Meghna Economic Zone, and another Tk10,000 crore is awaiting utilisation in Cumilla Economic Zone.

Infograph: TBS

Bashundhara has invested Tk1,023 crore in a seed crushing plant, while Nitol Niloy Group committed Tk600 crore in Kishoreganj Economic Zone, and Bay Group Tk400 crore in Bay Economic Zone. And the list continues to grow.

These are not speculative or half-built projects. Most are completed or near-completed factories whose owners have already borrowed from banks, hired or planned workers, and are now paying fixed costs on idle assets generating no revenue.

Meanwhile, the banks, which financed much of this capacity, are taking back loans that cannot yet generate the cash flows needed for repayment.

City draining investment

Mohammad Hasan, managing director of City Group, said six industrial units in its economic zone remain without gas connections, leaving the investment unproductive.

He added that low gas pressure has also cut output at the existing factories, while dollar appreciation has caused significant financial losses.

He added that gas connections for Hoshendi Economic Zone were sanctioned by Titas and accordingly a security deposit of Tk150 crore was deposited in 2018 and 2021.

Several banks said the group is facing working capital pressure as cash flow is diverted from operating businesses to service liabilities linked to the economic zone. City Group is also seeking local and foreign buyers for some businesses to ease debt pressure.

Founded shortly after independence, City Group is among Bangladesh's largest consumer goods conglomerates and has maintained a clean loan record for over five decades.

It operates at least 40 enterprises across edible oil, sugar refining, rice and flour processing, packaged foods, poultry feed, shipbuilding, tea estates, banking, insurance and healthcare.

The group supplies 35% of the country's edible oil, 40% of sugar and 25% of flour demand. With an annual turnover of around Tk32,000 crore, City Group directly employs about 25,000 people, while indirect employment exceeds 10 lakh, according to market reports.

Meghna's plea for gas unheard

Meghna Group, the first private operator licensed for an economic zone, established Meghna Economic Zone in 2015 on 245 acres in Narayanganj, with Tk6,000 crore invested.

At least 10 local and foreign companies, including five units of Meghna, have invested in the zone, but production has been disrupted by gas shortages, leaving large capital idle. Several firms are still waiting to begin operations.

The group completed its third economic zone in Cumilla in 2022 on 350 acres, attracting about Tk10,000 crore in investment. The Bangladesh Economic Zones Authority (Beza) estimates total investment could reach Tk25,000 crore once fully operational.

Since 2022, Meghna Group has pursued gas connection approvals across multiple agencies, with several inter-ministerial meetings held but no resolution. The group also held a press briefing on the issue last year.

Chairman Mostafa Kamal at a recent view exchange programme of the Bangladesh Investment Development Authority (Bida) said the group has invested $400 million in a steel plant and $300 million in glass and paperboard factories. 

He added that maintaining the facilities has cost about Tk80 crore annually since 2022. The group has also spent Tk100 crore upgrading the grid and another Tk100 crore on GTCL pipeline infrastructure to speed up gas supply.

He said these efforts have failed to deliver results, with Beza yet to provide a clear timeline for gas and electricity connections.

Monem's Tk5,000cr burden

About 37km from Dhaka along the Dhaka–Chattogram highway, Abdul Monem Group has invested nearly Tk5,000 crore in an economic zone approved by authorities.

Beza approved the country's second private economic zone in 2017, targeting motor parts, food and beverages, light engineering, packaging and chemical manufacturing.

However, only Honda Private Limited has begun production so far, as gas shortages have left most investments idle and turned the project into a financial burden.

To ease pressure, the group has already sold its sugar mill, according to company officials. 

An official said several local and foreign investors had initially committed, alongside some of the group's own facilities, but operations have stalled due to a lack of gas connections.

Capital locked-in for Nitol Niloy, Tata

Nitol Niloy Group launched the Kishoreganj Economic Zone in 2022, the first in a haor region. Tata Group invested Tk600 crore in pickup truck production, while Nitol invested Tk700 crore in tyres and auto parts.

However, gas shortages have stalled operations, leaving the factories non-functional despite their launch. The idle capital is now placing financial strain on the group.

Aman and Bay

Aman Group invested nearly Tk4,000 crore in its Aman Economic Zone in Narayanganj in 2017, setting up factories for cement, packaging, beverages and poultry feed. However, most of the units remain non-operational due to the gas shortage.

Meanwhile, Bay Economic Zone, approved in Gazipur with a target of attracting $3 billion in investment, has yet to take off and remains largely on paper.

Bashundhara, TK Group wait for gas since 2022

In 2022, Bashundhara Group installed a soybean crushing plant with a capacity of 5,000 tonnes per day and a seed crushing plant of 2,500 tonnes per day in Narayanganj. 

The Tk1,023 crore project, backed by Agrani and Janata banks, has yet to start production due to repeated failure to secure a gas connection, leaving lenders unable to recover repayments from the idle investment.

An official said the company has repeatedly applied to Petrobangla, Titas and other agencies since 2022 and attended inter-ministerial meetings, but no supply has been provided.

Similarly, TK Group completed a steel mill in Chattogram in 2022 but has been waiting for a gas connection since then. Managing Director Mostafa Haider said gas is the key raw material for steel production, leaving the investment idle without supply.

He added that a leased jute mill revived in 2024 also remains without gas, while applications for chemical and other projects are still pending. 

Haider said billions of dollars are locked in stalled projects, with entrepreneurs under cash flow pressure as they continue servicing bank loans on non-operational factories.

Gas shortages in state-run economic zones

In 2011, the government set a target to establish 100 economic zones, but none has been fully realised, largely due to insufficient gas supply. Several zones have completed infrastructure, yet only three have received partial gas connections.

Bida executive chairman after taking office during the interim period, said due to utility constraints, the government would focus on only ten economic zones. However, those ten zones are still facing gas disruptions.  

The largest, the Mirsharai Economic Zone in Chattogram, spans 35,000 acres with a planned investment of $18 billion. Although work began in 2012, actual investment remains limited due to gas and water shortages.

Beza sources said land allocation began in April 2017, with 539 plots created under Bepza. Of these, 244 plots have been allotted to 41 organisations as of 10 December, but only three industrial units are in production, with another three awaiting start-up.

Beza has provided only partial gas supply in Mirsharai, similar to the Japanese Economic Zone and East West Economic Zone.

The Jamalpur Economic Zone, completed in 2021 on 163 acres, has attracted $1.756 billion in investment proposals from 16 entrepreneurs, but actual investment stands at $216 million due to gas constraints. 

Similar stagnation is seen in the Sirajganj Economic Zone, Sabran Tourism Park and other zones where infrastructure exists but utility connections are missing.

'Restoring order in energy will take time'

Energy ministry sources said about 1,800 gas connection applications remain pending with distribution companies as of April. Of these, 550 industrial units have waited four to five years despite paying demand note fees, often worth several crore taka.

Businesses say investors were previously assured of uninterrupted utility support, including gas, when investing in economic zones.

Speaking at a roundtable in the capital on Thursday, Amir Khasru Mahmud Chowdhury said feasibility assessments in the economic zone planning phase were inadequate, adding that too many zones had been approved simultaneously.

He said easing the cost of doing business is now the top priority, with steps planned to address utility shortages, including gas and electricity.

Meanwhile, Energy Minister Iqbal Hassan Mahmood said restoring order in the energy sector would take time and would require further inter-ministerial coordination.

Petrobangla estimates current gas demand at 3.8 billion cubic feet per day against a supply of 2.6-2.7 billion, leaving industries short. The shortage has also forced periodic shutdowns in power and fertiliser plants.

Why gas? Why isn't there an easy substitute?

Bangladesh's industrial dependence on gas reflects decades of development built around a single, low-cost and reliable energy source delivered directly to factories.

Gas serves two core functions: heat and power. Textiles, cement, ceramics, food processing, and seed crushing rely on gas-fired boilers for sustained high temperatures at low cost.

It also underpins electricity generation. Weak grid reliability forced factories to invest in captive gas-fired power plants to ensure uninterrupted production.

Diesel can replace gas for boilers and generators, but costs two to three times more, sharply eroding competitiveness in energy-intensive sectors such as textiles and cement.

"Even after the gas price hike, captive power remains cheaper," said Abul Kalam Azad, a consultant in the spinning sector.

In January 2023, the government raised captive gas tariffs to Tk30 per cubic metre from Tk16, with some users seeing a 150% increase to Tk30 from Tk11.98.

Azad said gas remains cost-effective, noting that one cubic metre generates about 3 kWh of electricity at roughly Tk10 per unit, below the average grid tariff of around Tk11.

He added that LNG import costs are around Tk100 per unit while industries pay Tk30, implying continued subsidy support. "A large share of this subsidy is effectively being absorbed by users," he said.

LPG can substitute gas in limited heating uses, but it is not viable at industrial scale due to higher costs and supply volatility, exposed during the 2025 energy crisis.