Factory owners stare at losses as power cuts bring down production

Infographic: TBS

The country's leading rod manufacturer, BSRM, has a daily rod production capacity of 5,500 tonnes in two factories, but due to power shortage, the production has come down by 25-30%.

Besides, the company's four billet factories have a daily production capacity of more than 6,000 tonnes but the production has also fallen in billet factories due to power crisis.

In about 1,200 industrial factories in Chittagong of various types, the production has dropped on average by 20-30%, while production costs are rising for using alternative fuels and equipment is getting damaged due to frequent power outages.

In this situation, the factory owners are facing financial losses, with garment factory owners who have emergency shipment orders suffering the most.

Factory owners said that if electricity supply was ensured through area-based rationing, the amount of damage could have been reduced. If there is electricity at a certain time, the production could be planned.

BSRM Group Deputy Managing Director Tapan Sen Gupta said, "Due to power shortage, overall production in our factories has decreased by 25 to 30%. Production costs are rising in keeping factories running with alternative fuels. Losses are faced due to low production and increased production cost."

He demanded that the government ensure electricity through rationing so that they can plan and continue production.

KR Group Chairman Sekandar Hossain Tingku said that low voltage of electricity along with load shedding is currently a major problem in steel factories.

RMG and textile factories running at 40% to 50% capacity

Bangladesh Garment Manufactures and Exporters Association Acting President Shahidullah Azim said every day industries are facing six to eight hours of load shading, which is hindering production, although the order booking is lower than capacity.

As a result, every factory is in fear of high-cost air shipment, he said, adding, "If we fail to ship on time, buyers may move to another destination."

This crisis is affecting production efficiency and increasing wastes, which are eating up their capital, said Azim.

He further said a large number of their member factories are running at 40% to 50% capacity.

Azim also mentioned that they are talking with government officials daily to know the actual situation of energy and power.

Echoing Azim, a multination company's head of business development, wishing anonymity, said, "We are very optimistic; we want to rely on government assurance as the prime minister said about 500MW electricity will be added to the national grid and the overall situation will improve by next 10 to 12days."

He further said Bangladeshi garment exporters are a bit lucky as most of them have a capacity gap of about 20-30%, which helps to avoid air shipments during this power shortage.

However, they have to bear additional costs for fuel or overtime to produce their current orders.

He further mentioned that now some factories are running 2-3 hours overtime to produce such less volume of orders as they have to meet the deadline.

"Although it increases their production cost, it is better than air shipment cost," he added.

BKMEA Executive President Mohammad Hatem said, "We are worried about the shipment deadline due to gas and power shortage. Most factories are running at 50% to 60% capacity, which also increases production cost."

BKMEA is also planning to write to the prime minister.

Bangladesh Textile Mills Association President Mohammad Ali Khokon also said most factories in this sector are currently running at 50% capacity, but many textile factories' production has dropped as low as 30% of their capacity.

He said, "The electricity supply situation has become the worst ever. Even posh areas like Gulshan and Banani are facing severe load shedding."

"We are facing this crisis even after repeated electricity price hikes. Currently, the electricity price is 160.46% higher than that in 2010," said Khokon.

Citing an example of a leading textile maker, the BTMA president further said due to the recent gas price hike, the groups' monthly gas bills have jumped to around Tk75 crore on average, which was previously Tk35 crore. "How will this sector survive?" he asked.

FBCCI President Jashim Uddin said, "We had proposed that per unit gas price be increased to Tk25 from Tk16 but the government fixed it at Tk30. Still, the gas supply situation has remained the same."

Production costs are increasing

Garment factory owners of Chittagong said that for lack of electricity, oil consumption has increased by 10%. Generators are also getting damaged due to outages.

Syed Nazrul Islam, first vice president of BGMEA, said that due to the abnormal shortage of electricity, the cost of diesel has increased by 10%. Garment owners are facing 20% losses.

He also said, "We have been demanding electricity rationing. If you inform us that there will be no electricity at a particular time, then we can take alternative measures."

The Chittagong region has about 1,500-1,600MW of electricity demand. Against this, there is 400-500MW load shedding.