Doing business gets harder for gas, power shortage

Insufficient gas and power supply, increased fuel prices and inflation have escalated production costs in Bangladesh, making doing business here harder, said top business leaders at a discussion yesterday.
Though the industrial sector pays the highest utility tariffs, it has been getting less than half of its demand for gas.
The energy sector was one of the pillars of criminalisation of the previous government, said Commerce Adviser Sheikh Bashir Uddin at a discussion titled “Ways of Mitigating Energy Crisis in the Industrial Sectors” organised by the Bangladesh Chamber of Industries (BCI).

“I had to stand in the rain in front of the residence of the former state minister for power, energy and mineral resources [Nasrul Hamid] to get a gas connection to my industry with my own expenses,” said Bashir, the managing director of AkijBashir Group, which has concerns in ceramics, glass, steel and polymers.
Besides, Bashir said he had to pay a bribe of Tk 20 crore to the road authorities for digging up the road to lay the 40km gas pipeline.
“That will not happen now. It’s an opportunity for you [the business leaders]. Come to us with business proposals and solutions and not just problems — we will sort those out unitedly,” he added.
In the first nine months of the year, about 200 factories have shut their operations and another 300 factories are on the way to shutting shop within the next year, said BCI President Anwar-Ul-Alam Chowdhury.
The industries were established in Bangladesh on the basis of the availability of local gas and fast-learning labour.
“Except those, everything else is expensive here — the land, infrastructure, development, bank financing cost and speed money. But now, we have learned that we don’t have gas or the prices are very high as well. An uncertain situation has emerged.”
Chowdhury went on to blame the foreign currency devaluation, liquidity crisis in the banking sector, lower imports of liquified natural gas, restrictions on the opening of letters of credit and a lack of good governance in the National Board of Revenue for the situation.
The industries’ demand for gas is about 1,040 million cubic feet a day (mmcfd) while they are getting around 500 mmcfd, said Ijaz Hossain, former dean of engineering at Bangladesh University of Engineering and Technology (BUET), in his keynote paper.
“It is very alarming that energy consumption has not increased in the last two years.”
Due to the expansion of the power grid, energy consumption in the domestic sector has increased, which implies the industrial sector has shrunk, he said.
Because of high energy prices and supply disruption, the cost of production is getting higher, thus triggering inflation, causing industries to become defaulters and to go out of business, Hossain added.
There are power cuts four to five times a day, said Md Shamsuzzaman, vice-president of the Bangladesh Knitwear Manufacturers & Exporters Association.
“There are huge illegal connections in industrial areas, but the distribution companies failed to monitor those,” he said.
The government once encouraged building factories but now those are being shut down, said Sk Masadul Alam Masud of the Bangladesh Steel Manufacturers Association.
Syed Nasim Manzur, president of the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh, said they have not been able to run a gas generator in the Savar tannery estate.
“The system loss in the gas sector is nothing but theft. There should be exemplary punishment for those who are involved in theft,” he said.
It was a common practice to get the public works department officials to have a relationship with the ministers or to bribe officials, said Fouzul Kabir Khan, adviser to the ministry of power, energy and mineral resources.
“As a result, the money was invested in unnecessary projects. It’s a waste of money,” he said, adding that that will not happen during the tenure of the interim government.
Khan said they have taken measures to reduce the energy cost, which includes onshore-offshore drilling programmes to increase the supply.
The gas supply will remain the same until February next year and will increase from March, said Petrobangla Chairman Zanendra Nath Sarker.
“It was imposed on me by the previous government’s higher-ups to increase gas supply to the power sector instead of industries. But the industrial sector pays the highest price to us. That will not happen in the coming days.”
He demanded speedy approval of development project proposals for the gas sector from the planning division to increase the gas supply from local gas fields.
Gas should be supplied proportionately to all the sectors, said Rezaul Karim, chairman of the Bangladesh Power Development Board.