Gas crisis eats up $2bn export opportunity of knit makers

The knitwear industry in the county has long been reeling from insufficient gas supply, which is now causing this vital export sector to miss out on potential export earnings worth $2 billion (Tk 18,000 crore) a year, industry insiders say.

Knitwear exports fetched $20 billion in the July-May period of the current fiscal year -- a sizeable 36 percent jump from $15.36 in the corresponding period last fiscal year, according to the latest EPB data.

Although knitwear is one of the most successful export-earning sub-sector in Bangladesh, this longstanding issue of inadequate gas supply is also causing some knitwear factories to incur heavy losses while some are facing closure.

Knitwear factory owners have repeatedly approached different levels of the government demanding sufficient gas supply for the industry, but the issue remains unresolved.

Even the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) failed to bring a solution through discussions at various levels of government.

Fazlee Shamim Ehsan, vice-president of BKMEA, told the Business Insider Bangladesh, "We have met more than once with the government and stakeholders on the issue. After each meeting, the gas supply gets better for a few days, then it returns to the same sorry state.”

Ehsan’s noted that his own knit factory in Narayanganj is often suspending production due to the gas crisis. “As a result, my production costs are increasing and missing shipping dates.”

He informed that knitwear export is worth around $20 billion a year. Of this, 10 to 15 percent of production is disrupted due to the lack of gas. “If the issue is resolved, the industry could bring in an additional about $2 billion a year.”

In order to supply uninterrupted gas to industrial establishments in the Narayanganj area, the old supply line has to be changed first, he said, adding that it is also necessary to install compressors in the national grid.

Furthermore, all kinds of illegal gas lines have to be disconnected, which is abound in Narayanganj, Ehsan observed.

Due to the lack of adequate gas, Total Fashion Limited, another fully export-oriented knitwear factory in Narayanganj, is in financial ruins and could be shut down at any time. Three thousand workers of this gas-dependent composite knitwear factory are staring at looming unemployment.

The company, with a market value of Tk 300 crore, has been producing readymade garments and exporting them to Europe and America for over a decade. The company was set up using bank loans.

Md Kabirul Islam, manager (administration) of Total Fashion on May 23 sent a letter to the energy secretary, chairman of Petrobangla and managing director of Titas Gas Company to ensure uninterrupted gas supply.

The letter detailed the plight of Total Fashion and the extent of losses it is incurring due to the lack of gas supply. It mentioned that in the last six-seven months, the company has suffered a loss of around Tk 46.5 crore.

Titas Gas Narayanganj office's Deputy Managing Director Imam Uddin Sheikh confirmed receiving the letter from Total Fashion.

"The factory is located at the very end of the pipeline and the transmission line is 4 inches in radius. As a result, gas does not reach the factory when pressure is low,” Sheikh informed in reply.

At the time of setting up the factory, the company did not follow Titas’s instructions to install the transmission line at a greater radius, he added.

Right now, Sheikh said, it is not technically possible to solve this problem before laying a 20-bypass pipeline.

However, he admitted that the other way to improve the situation a bit is to remove all illegal connections in the area.