Stop gas wastage, reduce VAT-tax for entrepreneurs

We are not getting enough gas in the factory in line with the approval. But the new gas bill will be almost double (in the case of gas used in captive power generation). The production in my factory in the daytime has now almost stopped due to low gas pressure.

As a result, we are running production on electricity due to low gas pressure. But due to the power outage, our expensive machinery is getting damaged which is putting extra pressure on production.

We set up three generators in our factory with a cost of around Tk7 crore. These generators normally have a lifespan of 16-18 years. But due to fluctuations in gas pressure, their lifespan ended in just seven years. We have to change the generators at a huge cost. Many factories are facing such damages due to the gas crisis.

A generator must have a minimum gas pressure of 6 PSIG to achieve around 90% efficiency. If such pressure could be maintained, the generator could run smoothly for 16-18 years. But, we have been forced to run the generators with 425 kilowatts instead of 1,030 kilowatts as we are getting a gas pressure of only 2-3 PSI. As a result, our generators are being damaged causing us economic losses.

Now, let's come to the analysis of the effect of gas price hikes on us.

In my factory, we get 30%-35% of the gas against the demand by paying a bill of around Tk35 lakh per month. The bill would have been around Tk90 lakh if the gas pressure was 7-10 PSIG. However, we will have to pay an additional Tk80 lakh per month for the new gas price. The pressure of this extra price will affect the yarn price.

Due to this, there will be an extra cost of Tk18.75 to Tk28 for producing per pound of yarn. The prices of fabric will increase from Tk5 to Tk7.50 per metre, and weaving and dyeing costs will increase by Tk10-15. In total, the prices would increase by around Tk16-25 per metre which would put pressure on the poor people of the country and harm the local industries.

Since we have to import raw materials including cotton, dyes etc, it could impact the dollar crisis. The industry may face severe losses if foreign products capture the domestic market. The local backward linkage industry and exports would suffer if the mills that are supporting the garments industry for exports cannot survive in competition.

It is probably not possible for the government to continue a large amount of subsidies in this sector in the long run. That is why the Bangladesh Textile Mills Association (BTMA) and the Federation of Bangladesh Chambers of Commerce and Industries (FBCCI) made a joint proposal which would have reduced the government's subsidy to a large extent. But it didn't happen. Further, the price of industrial gas has increased.

How to survive in this situation? The industrialists and exporters of this country showed their ability to survive in any difficult situation in the past. So, we have to continue the fight till the end. For this, both the government and the entrepreneurs have something to do.

Entrepreneurs now have to incorporate machinery with a new technology which runs on diesel or other means rather than gas. Sophisticated machinery that runs on low electricity or low-pressure gas should be installed. Although it would increase the cost, it can be a good option. Power-saving electric motors can also be a good alternative.

Entrepreneurs could also use alternative fuels in boilers. We can start using biomass, especially for boilers. This environmentally friendly method has already been introduced in China. We have to find ways to increase the use of solar energy too.

Meanwhile, the government can reduce the waste of gas in the first place. There is still a lot of system loss at the gas supply level both in households and industries. If the wastages could be prevented in the right way, a huge amount of the country's gas resources would be saved.

Besides, there are large amounts of tariffs and VATs, taxes imposed at the gas supply level. There is scope to provide some relief to the consumers by reducing them. Every month our local mills have to pay 15% VAT for gas consumption and Tk3 VAT per kg of yarn. If the government waives these two VATs, it would relieve the entrepreneurs.

The government should also exempt all duties on imports of accessories and power-saving motors and inverters for converting boilers to eco-friendly power sources.

On the other hand, the country will benefit if new industries are set up by foreign entrepreneurs for biomass production and the production of power-saving motors. This will reduce the wastage of gas and foreign currency.

I have been researching power-saving motors for the last three years and have saved 18%-20% of electricity and changed 50 motors so far. But due to tariff barriers and the high dollar price, our motor import is being hampered.

The author is the chairman of Little Star Spinning Mills Limited