Higher production cost creates crisis
Entrepreneurs are being compelled to use compressed natural gas (CNG) in their manufacturing industries for shortage of adequate gas supply or absence of new gas connections, industry insiders said.
As a result, the manufacturers have to count more than 6 times higher cost of production.
Risks of major accidents are also involved in this process of fuelling their industries.
According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the natural gas tariff for the industrial sector is Tk 5.86 per one cubic foot whereas the manufacturers are buying one cubic foot of CNG for Tk 30.
The manufacturing units taking recourse to the costly fuel include readymade garment factories, footwear, knit garment, farm products, textiles, cement, glass, ceramic and plastic units.
Many of the entrepreneurs said for the last five years, they have been using CNG at their industrial units as the government in 2009 stopped giving new gas lines.
Petrobangla (Bangladesh Oil, Gas & Mineral Corporation) data show the country produces around 2,482 million cubic feet of gas per day against the demand for around 3,000 million, leaving a daily shortfall of around 500mmcf.
The gas shortage is affecting manufacturing sector badly.
Manufacturing units using CNG are spread in industrial belts across the country, including in and around Dhaka, Narayanganj, Munshiganj, Narsingdi and Gazipur.
According to the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), in the last five years more than 1,500 entrepreneurs, most of them bulk gas users, have their applications pending with Titas Gas Transmission and Distribution Company Ltd.
They have been in long wait since 2009 for new gas connections in major industrial belts following government’s decision on a moratorium.
According to the manufacturing industry leaders, the industrial sector has a demand for 9.2 million cubic feet of gas. But less than 60 per cent is being met.
“A large number of manufacturing industries have to use CNG to run their boilers without converting those to CNG usage,” Shahidullah Azim, vice president of BGMEA, told the FE.
He said their production cost at manufacturing units increased drastically as CNG-using enterprises are spending at least 6 times higher than the cost of natural gas.
He said most of the industries could not utilise more than 35 per cent of production capacity as they don’t have required gas pressure.
Faruk Hasan, managing director of Giant Group, a leading apparel manufacturer, said the manufacturing industries are getting less than 60 per cent of gas out of total demand.
Due to shortage of gas they could not utilise more than 30 per cent capacity.
Zakir Hossain Nayon, former president of Bangladesh CNG Filling Station & Conversion Workshop Owners Association, said everyday they have been selling hundreds of CNG cylinders most of which are being used in industries.
“Manufacturers are using bulk quantities of CNG but the users don’t have permission from the department,” he said.
He said most industries were set up for pipeline gas but using CNG without preparation. “It could result, anytime, in big accidents.”
Abdus Salam Murshedy, Managing Director of Envoy Group, said, “At washing plants gas is main fuel but they are facing shortage of that. As a result, they don’t have any alternative but to use CNG.”
He regretted that many manufacturing units remained inoperative because of gas crisis while some were running by using CNG or liquefied petroleum gas (LPG).
Nowshad Islam, Managing Director of Titas Gas Transmission and Distribution Company Ltd, said, “It’s true we have observed CNG being used in manufacturing industries illegally.”
He said many industries were waiting for new gas connections but they could not provide the gas line as the country is passing through gas shortages.
Shah Alam Nur