The prolonged gas crisis in Bangladesh is causing severe production issues for textile and spinning mills in Bangladesh, leading them to increase yarn imports by 13 per cent.
Data from Bangladesh Bank shows, between July and April of the current fiscal year, apparel makers in Bangladesh increased their yarn imports from 2.34 billion in the same period previous year to $2.64 billion this year
Apparel exporters in Bangladesh are currently facing a dual challenge: local mills are being compelled toincrease imports despite a dollar shortage whilethe gas crisis has drastically reduced gas pressure, crippling production in the country.
As Bangladesh Textile Mills Association (BTMA) notes, around 70-80 per cent of mills in the country are operating at about only 40 per cent capacity.
RajibHaider, Managing Director, Outpace Spinning Mills, highlights, production in the country dropped below 40 per cent capacity due to the worsening gas crisis over the past month. This issue is particularly acute in areas like Tongi, Joydebpur, Sreepur, and others.
Expressing concern over meeting supply deadlines due to reduced gas supply, Mohammad Ali Khokon, President, BTMA says, this has increased production costs and decreased cash flow, making it hard to pay workers on time. Additionally, disruptions in gas and electricity have impacted RMG factories.
Mohammad Hatem, Executive President, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), notes, though gas pressure in Narayanganj recently increased to 3-4 PSI, it is still insufficient for full operation and is affecting dyeing factories.
A central bank circular on June 30 reduced the cash incentive for local export-oriented textile mills from 3 per cent to 1.5 per cent. This effective rate of 1.2 per cent makes imported yarn more attractive due to lower costs and fewer hurdles in obtaining incentives.
BTMA officials argue that locally-made yarn is cheaper when considering production and cotton import costs. They have called for a return to previous gas prices until the crisis is resolved, as the current supply issues are causing significant operational disruptions.
