Industry leaders in apparel and textile sectors have expressed deep concern over the government’s proposal to increase gas prices by 150 per cent in the industrial sector.
They estimate that this hike would result in an additional annual cost of approximately Tk 18,000 crore for captive power plants, severely impacting industrialisation and the economy.
This concern was outlined in a letter sent to Energy Adviser Muhammad Fouzul Kabir Khan on January 23. The letter was signed by representatives from major trade bodies, including the BGMEA, BKMEA, BTMA, and BTTLMEA.
Key issues highlighted in the letter:
Impact of gas price hike:
The proposed increase to Tk 75 per cubic meter could raise annual costs for the garment sector by Tk 6,300 crore and for captive power plants by Tk 11,675 crore, totaling Tk 18,000 crore.
This additional cost, equal to 4.2 per cent of annual export revenue, would undermine the sector’s global competitiveness.
Rising production costs:
Over the past five years, production costs have surged by 50 per cent due to gas price hikes (286.5 per cent), electricity price increases (33.5 per cent), diesel price hikes (68 per cent), and rising bank interest rates (14-15 per cent).
Recent wage increases for garment workers, coupled with reduced export incentives, have further strained the industry.
Global challenges:
Declining demand: According to UNCTAD, global garment imports are expected to drop by 5 per cent in 2024.
Falling export values: From January to November 2024, garment exports to the US and EU fell by 4.24 per cent and 4.83 per cent, respectively, compared to the previous year.
Gas supply crisis:
In key industrial hubs like Gazipur, Narayanganj, Mymensingh, and Savar, factories are experiencing a 50-60 per cent drop in production due to low gas pressure.
Despite a prior 150 per cent gas price hike in January 2023, the promised uninterrupted gas supply has not materialised, disrupting production schedules and damaging buyer trust.
Declining investments:
The textile and garment industry is also experiencing a stagnation in investment. According to Bangladesh Bank, imports of capital equipment for the garment sector fell by 8.95 per cent and for the textile sector by 18.11 per cent between July and November of this fiscal year.
Business leaders’ recommendations:
Suspend the proposed gas price hike and develop a competitive and sustainable pricing policy in consultation with stakeholders.
Address the gas supply crisis and allowing supply gas to factories via cylinders from CNG stations.
Develop a medium- and long-term strategy with a time-bound action plan to ensure uninterrupted gas supply.
Industry leaders emphasised that the apparel and textile sector plays a vital role in Bangladesh’s economy, contributing to industrialisation, employment, foreign exchange reserves, and women’s empowerment.
They urged the government to prioritise stability in this sector, particularly during its transition to middle-income status, and expressed their willingness to collaborate on finding solutions.
