Bangladesh’s textile and spinning mills are struggling to generate yarn due to an extended gas crisis, which has resulted in a 13 per cent increase in yarn imports as fabric and garment manufacturers seek alternative sources to satisfy demand.
According to Bangladesh Bank data, the clothing industry imported yarn worth US $ 2.64 billion between July and April of the recently finished fiscal year, compared to items worth US $ 2.34 billion during the same time in FY ’23.
Apparel exporters claim the garment industry is facing a double whammy. Despite the ongoing dollar problem, local textile mills and garment manufacturers have been obliged to expand their imports. Recent reductions in Government incentives may further stimulate imports. This reliance on foreign yarn may reduce the value added to the RMG business.
The gas supply crisis has also become a critical component in this situation. Typically, garments and textile mills require around 8-10 pounds per square inch (PSI) of gas pressure to run at full capacity.
However, petrol pressure drops to 1-2 PSI throughout the day, greatly affecting output, which continues into the night in the major industrial zones, according to the Bangladesh Textile Mills Association (BTMA).
Low gas pressure has crippled production, causing 70-80 per cent of mills to operate at roughly 40 per cent capacity, according to industry owners. Textile and spinning mills are facing problems, which apparel exporters have realised. They highlighted those disruptions in gas and electricity supplies had also had a considerable impact on RMG factory operations.
According to a central bank circular issued on June 30, the monetary incentive for domestic export-oriented textile manufacturers has been cut from 3 per cent to 1.5 per cent. About six months ago, the incentive rate was 4 per cent.
Last month, the BTMA wrote to Petrobangla Chairman Zanendra Nath Sarker, stressing how the gas crisis has significantly damaged manufacturing output, with supply line pressure in certain member mills plunging to near nothing. This has resulted in considerable mechanical damage and a halt in operations.
The letter further stated that the price of petrol per cubic metre has risen from Taka 16 to Taka 31.5 by January 2023. Despite the price increase and the government’s guarantees of an uninterrupted gas supply, the projected gas supply never arrived.
At a press conference in January of this year, the BTMA also advocated for a restoration to the previous petrol price for textile companies until the existing situation is resolved.
