11:06 am, Friday, 7 February 2025

Textile sector calls for halt to gas price hike

Apparel and textile sector trade bodies on Monday wrote to the interim government demanding suspending the plan to increase the price of gas for the industrial sector and captive power plants.

The business bodies called for the formulation of a policy to establish a competitive and sustainable pricing mechanism through consultations with stakeholders.

Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association, Bangladesh Textile Mills Association and Bangladesh Terry Towel and Linen Manufacturers and Exporters’ Association in a letter to energy adviser Muhammad Fouzul Kabir Khan demanded taking urgent steps to address the gas crisis prevailing in the industrial sector.

The trade bodies urged the government to formulate a medium-to-long term strategy and time-bound action plan to ensure uninterrupted gas supply in the industrial sector as production in factories by 50-60 per cent due to the shortage of gas.

The joint letter of the trade bodies said that recent media reports indicated that the government planned to raise industrial gas prices by around 150 per cent to Tk 75 per cubic metre.

Such a hike could have long-term adverse effects on industrialisation and the economy, the letter read.

The letter said that over the past five years, factory production costs have increased by 50 per cent, while export incentives have been reduced, disrupting industrial operations.

Challenges such as import-export disruptions, banking sector issues, labour dissatisfaction and security concerns have further strained production and supply chains, it said.

‘The current initiative to increase gas prices comes at a time when our factories are operating under insufficient gas pressure and uncertainty and are suffering from massive financial losses. In our industrially intensive areas, especially in factories located in Gazipur, Mymensingh, Narayanganj and Savar, production has decreased by 50-60 per cent due to gas shortage,’ the four trade bodies said.

The letter also mentioned that in January 2023, gas prices for the industrial sector were raised by 150 per cent with a promise of uninterrupted supply, but the industry did not experience the expected benefits.

According to the business bodies, in the fiscal year 2023-24, Bangladesh’s total gas supply was 25,947 million cubic metres, with 18 per cent allocated to industries. The garment sector accounted for about 30 per cent of industrial gas usage, amounting to an annual demand of approximately 1,400 MMCM.

If the gas price increases by Tk 45 per cubic metre, it would raise annual costs for the garment sector by Tk 6,300 crore, equivalent to 1.5 per cent of export earnings while textile industry and captive power plants, consuming 10 per cent of the country’s total gas supply, would face an added cost of Tk 11,675 crore annually, or 2.7 per cent of export earnings, the letter read.

‘This massive increase in costs will exceed the capacity of the industry, resulting in the risk of losing our competitiveness in the international market,’ it said.

Considering the contribution of the textile and apparel sector to Bangladesh’s economy, particularly in industrialisation, employment, foreign exchange reserves, social development and women’s empowerment, the trade bodies requested the government not to increase the price of gas for the industrial sector.

Textile sector calls for halt to gas price hike

Update Time : 09:52:09 pm, Monday, 27 January 2025

Apparel and textile sector trade bodies on Monday wrote to the interim government demanding suspending the plan to increase the price of gas for the industrial sector and captive power plants.

The business bodies called for the formulation of a policy to establish a competitive and sustainable pricing mechanism through consultations with stakeholders.

Bangladesh Garment Manufacturers and Exporters Association, Bangladesh Knitwear Manufacturers and Exporters Association, Bangladesh Textile Mills Association and Bangladesh Terry Towel and Linen Manufacturers and Exporters’ Association in a letter to energy adviser Muhammad Fouzul Kabir Khan demanded taking urgent steps to address the gas crisis prevailing in the industrial sector.

The trade bodies urged the government to formulate a medium-to-long term strategy and time-bound action plan to ensure uninterrupted gas supply in the industrial sector as production in factories by 50-60 per cent due to the shortage of gas.

The joint letter of the trade bodies said that recent media reports indicated that the government planned to raise industrial gas prices by around 150 per cent to Tk 75 per cubic metre.

Such a hike could have long-term adverse effects on industrialisation and the economy, the letter read.

The letter said that over the past five years, factory production costs have increased by 50 per cent, while export incentives have been reduced, disrupting industrial operations.

Challenges such as import-export disruptions, banking sector issues, labour dissatisfaction and security concerns have further strained production and supply chains, it said.

‘The current initiative to increase gas prices comes at a time when our factories are operating under insufficient gas pressure and uncertainty and are suffering from massive financial losses. In our industrially intensive areas, especially in factories located in Gazipur, Mymensingh, Narayanganj and Savar, production has decreased by 50-60 per cent due to gas shortage,’ the four trade bodies said.

The letter also mentioned that in January 2023, gas prices for the industrial sector were raised by 150 per cent with a promise of uninterrupted supply, but the industry did not experience the expected benefits.

According to the business bodies, in the fiscal year 2023-24, Bangladesh’s total gas supply was 25,947 million cubic metres, with 18 per cent allocated to industries. The garment sector accounted for about 30 per cent of industrial gas usage, amounting to an annual demand of approximately 1,400 MMCM.

If the gas price increases by Tk 45 per cubic metre, it would raise annual costs for the garment sector by Tk 6,300 crore, equivalent to 1.5 per cent of export earnings while textile industry and captive power plants, consuming 10 per cent of the country’s total gas supply, would face an added cost of Tk 11,675 crore annually, or 2.7 per cent of export earnings, the letter read.

‘This massive increase in costs will exceed the capacity of the industry, resulting in the risk of losing our competitiveness in the international market,’ it said.

Considering the contribution of the textile and apparel sector to Bangladesh’s economy, particularly in industrialisation, employment, foreign exchange reserves, social development and women’s empowerment, the trade bodies requested the government not to increase the price of gas for the industrial sector.