Export monopolies in peak season concern charcoal traders

Highlights:

• Traders allege syndicate-driven shipping restrictions limit market access
• Shipping options reportedly restricted to two companies preferred by the association president
• Association issues show-cause notice to a trader over media comments about the syndicate
• Traders submit memoranda to the ministry, demanding government intervention to end monopoly
• Traders call for elections to form a new association leadership

The promising charcoal export sector, generating billions of taka annually, is reportedly facing challenges due to a syndicate allegedly influencing the shipping process, according to local traders.

Charcoal traders claim that Mirza Shipon, younger brother of former state minister Mirza Azam, has monopolised the industry for over 14 years as president of the Bangladesh Charcoal Manufacturers and Exporters Association (BCCMEA).

Despite recent changes in government on 5 August that saw Awami League members resigning from various trade organisations, the alleged syndicate within the charcoal traders association reportedly remains active.

Traders noted that, despite reportedly going into hiding following the August changeover, Shipon attended an online association meeting last week. They claim he still holds influence through close associates occupying key positions within the organisation.

In a recent development, Masudul Islam, owner of Kaseem Traders, was recently issued a show-cause notice by Mirza Shipon, questioning why his membership should not be terminated following a media statement he made regarding a syndicate.

In response, Masudul explained that he was simply providing information to a journalist on issues affecting the charcoal sector.

"I am a charcoal trader. A journalist asked me about the problems facing our sector, so I outlined them. For that, the president—who is currently in hiding—issued a show-cause notice on behalf of the association, seeking to cancel my membership… The entire charcoal sector is suffering due to his syndicate," he stated.

Masudul further criticised Mirza Shipon, calling him a "henchman" of Sheikh Hasina and unfit to serve as association president. He urged the government to intervene and dismantle such syndicates.

In recent memorandums submitted to the Ministry of Commerce and the Ministry of Jute and Textile, charcoal manufacturers outlined allegations of monopolistic practices.

These include controlling factories and markets nationwide through the president's associates, misleading buyers, and limiting shipping options to preferred companies.

Additionally, the memorandum claims that Shipon's group has tried to remove Chinese factory owners, reassign factory ownership to favoured associates and push deals with a specific buyer, allegedly bypassing established and experienced buyers.

Local exporters stressed the importance of the peak export season for jute stick charcoal, especially for meeting global demand. Bangladesh's exports are primarily directed to China, with additional markets in a few more countries.

However, some exporters allege that syndicate-driven shipping restrictions have limited access to these markets, effectively confining exports to China.

These claims have prompted calls for government intervention to ensure fair practices and expand export opportunities in this high-potential sector.

Issues in the charcoal export sector

About 40 factories in Faridpur, Rajbari, Magura, and other districts produce around 30,000 tonnes of charcoal annually. TBS spoke to multiple producers who noted several problems hindering the sector.

Shafiq, (pseudonym), a trader from Faridpur, said, "We face numerous complexities in our exports. We can only send 10 tonnes of charcoal per container. We are charged about $1,500 per container, while other goods cost only $400-500. This level of discrimination against a promising export product is unacceptable."

Shafiq also noted that due to monopolistic practices, they rely on only two shipping companies: Reliance Shipping and Logistics Limited, and Phoenix Logistics Ltd. These companies reportedly discourage other shippers, deterring competition. 

A charcoal factory owner, requesting anonymity, said, "Only about 10 out of 20 companies in the country can export; the rest sell locally. This limits export growth and reduces government revenue opportunities."

A Mymensingh-based businessman alleged that several Chinese companies produce charcoal locally without obtaining licences from the Bangladesh Investment Development Authority.

These companies reportedly sell their products to two local companies, Rigalo Private Limited and Panacea Carbon Limited, bypassing tax payments on production.

Additionally, some local companies allegedly claim government export incentives while selling products made by foreign entities.

Shahidullah, (pseudonym), another charcoal exporter, stressed the need for new leadership at the BCCMEA, stating, "We need an election for our association. Having the same president for over a decade is problematic. As the current president is in hiding, an election is necessary to keep the institution functional."

Shahidullah mentioned that the association charges Tk300 per tonne of charcoal and requires a Tk5 lakh membership fee.

However, he claimed that association leaders are exempt from these fees, calling the situation "a gross form of discrimination."

He also alleged that certain companies exaggerate production figures, reporting thousands of tonnes while actually producing only 400-500 tonnes annually.

With the peak charcoal production and export season approaching, lasting the next three to four months, traders are anxious about the impact on their businesses.

Responses from accused businessmen

In response, Abu Mohammad Manna Wadud, managing director of Rigalo Private Limited, denied these allegations.

"The products we export are transported by all shipping lines, so we are all facing challenges. The claim that we have created a shipping syndicate is incorrect. We hope to resolve our differences in the association's upcoming meeting on the 16th," he said.

Manna also dismissed accusations regarding price manipulation, stating, "Due to this year's low jute production, prices have increased naturally. Previously, we bought jute at Tk220 per unit, but it now costs Tk350."

He added that higher jute prices affect all buyers, including those in tobacco and betel nut farming.

He further denied claims of exporting charcoal bought from Chinese companies, stating, "We operate two factories, and as the country's top exporter, we're sometimes targeted by competitors."

Md Azad, managing director of Panacea Carbon, also refuted allegations, stating, "Accusations against Mirza Shipon are exaggerated. While his political connections may have influenced sector policies, current complaints are likely driven by recent changes in government."

Azad noted that Chinese companies introduced the charcoal sector to Bangladesh and followed local regulations.

He estimated that Bangladesh's annual jute stick production of 32-35 lakh tonnes could yield approximately 4.5 lakh tonnes of charcoal, generating export revenue of $40-50 million and employing two million people.

Repeated attempts to contact Mirza Shipon for comment were unsuccessful