Production fails due to power, gas shortages

The country’s garment sector, presently fetching nearly US$13 billion foreign exchange annually, bears an additional cost worth Tk 19.63 billion a year due to power shortage.

Bangladesh Garment Manufacturers and Exporters Association President Abdus Salam Murshedy said this while talking to daily sun yesterday.

“Our 50 to 60 percent garment units use generators run by diesel as a back-up support for ensuring uninterrupted electricity supply to their factories,” Murshedy said adding: “Rest 35 to 40 per cent garment units depend on national grid for electricity supply.”

Apparel (RMG) factories, which are depended on national grid for electricity supply, have to suspend their production for 10 to 12 hours daily due to load-shedding.

“As a result, the garments units that use generators have to purchase about 240 million litres of diesel annually to overcome electricity shortage,” he informed.

Industry owners are spending additional Tk 10.97 billion for buying gas and diesel per year for generating 1,200MW of electricity for their factories, the BGMEA president further told.

“If we are provided with uninterrupted supply of gas and electricity, then we will to spend only Tk 4.05 billion for gas and diesel purpose,” Murshedy told daily sun.

He, however, said that they (RMGs) have been incurring Tk 6.92 billion loss annually due to frequent power failure.

“Damages to machinery and other electricity run equipments are causing another Tk 12.71 billion in annual losses as the power fails three to four times a day,” he said, adding: “The annual loss of the sector is Tk 19.63 billion.”

“We have minimized our production cut by using back-up generators but the units which depend on national grid for power are facing a serious setback due to frequent power cut,” he said expressing his dissatisfaction.

He said a total of 3.5 million people are directly involved with the garments industry, while 30 million people are indirectly dependent on it. “If the government fails to ensure uninterrupted electricity supply in the RMG sectors, then a large number of people will face unemployment,” he feared.

“We are compelled to reduce orders due to power and gas crisis, he said, adding that the garments owners are paying additional cargo charge of US$4 dollar per tonne through air cargo compared to ship cargo due to delay in production.

He called upon the government to keep the power tariff within Tk 3.15 per unit for RMG sector unless an uninterrupted electricity supply could be ensured. “Diesel should be provided to the garments manufacturers at a subsidised price,” he said adding that the garments sector entrepreneurs should be given an uninterrupted electricity and gas supply like the units at export processing zones.”

Readymade garments owners have been facing 25 per cent production loss due to frequent power cut, former BGMEA President Anwarul Kabir Chowdhury Parves told daily sun. “Three hours power cut a day causes 25 percent production fall in garment units,” he said.

He informed that nearly 4000 knit and readymade garments factories require 720megawatts (MW) of electricity daily but we receive only 500MW electricity supply, he said, adding: “Due to frequent power cut, garments owners run production through ‘costly’ diesel run generators.”

The RMG sectors didn’t face such problems three to four years ago, the former BGMEA boss also managing director of Evidence group told daily sun.

The diesel-run generators have a capacity to run three to four hours daily but it comes into inoperative when it took extra load for more than eight to nine hours, he said.

Governments in India, Sri Lanka, Vietnam and China play major role in providing uninterrupted electricity supply for ensuring 100 per cent productivity.

“We have paid overtime to workers to minimise the production loss,” he, further said.

The former president also said that the RMG belt at Asulia and Tangi has low pressure of gas supply that also disrupts the production. “Due to power and gas crisis, our production is reduced drastically.”

Terming the RMG as a first step of industrialisation, he said that the country will go to second phase (installation of capital industry like shipbuilding) and third and final phase (services sector) through the success in RMG and textiles sector. “For this, the government should ensure electricity for RMG and textiles sectors to make it competitive with India, Sri Lanka and China,” he said.

Bangladesh should follow the example of the neighboring India in order to solve the power and energy crisis by taking initiative in this regard, he said.

The crisis for electricity and energy would be reduced significantly if the government prepares an area based industrial mapping under a master plan, he observed. “The government would easily supervise the wastage of valuable lands and ensure power and energy in these sectors,” he firmly said.

He called upon the government to extract coal immediately as the diesel based power plants are not affordable.

The Daily Sun, Fri, 11/03/2011

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Furnace oil price spike will hurt economy, specially Apparel Industry

The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) yesterday urged the government to reverse its decision to increase the furnace oil prices.

The government last Monday raised the price of furnace oil, widely used in industrial units, by 34 percent or Tk 9 per litre, to Tk 35.

In a statement, BKMEA said the sudden rise in furnace oil prices will greatly hamper knitwear manufacturing and exports as production costs will go up and hurt the competitiveness of the local products in the global market.

“During the economic re

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cession knit manufacturers maintained the stronghold of their products by providing competitive price and quality and that's why Bangladesh did not feel the pinch of the worldwide downturn,” said BKMEA.

The international buyers are continually leaning towards Bangladesh for export orders now-a-days because of China's increased labour wages, Pakistan's political instability and Japan's China plus-1 policy, the statement said.

The manufacturers increased their dependency on furnace oil and continued production according to the previous orders to ensure smooth exports and retain the buyers, amid nagging power and gas crisis, which is already a threat to the export-oriented industries, the association said.

“If the industries have to buy furnace oil at a higher price to finish the production, the cost will shoot up and we will incur huge losses. Many industry owners will even be forced to shut down their factories,” BKMEA said.

“Production will have to be stopped and existing export orders will be hampered, which will, in turn, hurt Bangladesh's economy. We fear of losing the world market share that was built by many years of hardship.”

Bangladesh exported $4,311.92 million, posting 43.37 percent growth, in the first six month of this fiscal year, which is the highest among all the export sectors and 42.01 percent of the total national export.

“To meet the national export target and develop the knitwear industry we strongly demand the government review its decision of increasing the furnace oil price,” BKMEA said.

-The Daily Star, Sun, 30/01/2011

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Costly Cotton makes Clothes Expensive

Cotton is getting costlier worldwide, meaning higher prices of clothing items will ultimately burden the customers. Cotton was quoted at $1.53 per pound in the New York Futures trading yesterday, up from $0.95-$1.10 on the international market in August-September last year.

The rise in prices came due to stockpiling by China, the largest consumer of cotton, a poor harvest in cotton growing countries such as Uzbekistan, last year's devastating flood in Pakistan, the fourth largest cotton supplier of the world, and restriction on cotton export by India, the second largest cotton growing country.

Cotton futures prices in China are rising steadily in line with the recovering demand from the textile industry. Textile firms are also increasing their cotton stockpiles due to worries over a further rise in prices.

A senior official of a German brand, having liaison office in Dhaka, said, for the last three to four months the buyers have been paying more for the Bangladeshi garment items as the cotton prices went high worldwide.

"The ultimate pressure will be passed on to the consumers because the retail chains of the western countries will increase the prices at the customers' end," he said, requesting not to be named.

The Bangladeshi garment makers have also increased the prices of clothing items by 25-30 percent for higher cotton prices. The country needs to import all its cotton, and last year the volume was more than 50 lakh bales (440 pounds make a bale).

A Matin Chowdhury, managing director of Malek Spinning Mills Ltd, a major cotton importer, said Bangladeshi garment makers are in dilemma at the present cotton price.

"We have a lot of orders from the buyers, but we are in dilemma whether we would take all the orders because the cotton prices are increasing almost everyday," said Chowdhury, also a knitwear maker.

A senior merchandiser of a UK-based garment company operating in Bangladesh said they have increased the prices of garment items by 25-30 percent from the last spring to cope with the new prices of cotton.

"The buyers agreed to the hike because the prices of raw materials have gone up," the merchandiser said, requesting anonymity.

In its latest move, India, one of the major sources of cotton for Bangladesh, agreed to resume cotton export from January 11 until February 25.

Up to Monday, a total of 5,270 bales of Indian cotton entered Bangladesh through Benapole Land Port after the Indian government temporarily withdrew the ban on cotton exports. India will export 2.5 million bales during this one and a half months.

The Indian government has already set an export ceiling of 5.5 million bales for the ongoing season -- October 2010 to September 2011.

India imposed the ban for the second time in a year on December 15 to boost its stocks for the local market. In 2010, the first ban came on April 21 and continued till October 31.

-Daily Star, Wed, 19/01/2011

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