Load-shedding: SMEs outside EPZs, industrial belts bear the brunt

The ongoing regular power cuts are eating away at the profits of small and medium enterprises (SMEs) in Bangladesh since they need to rely on costly diesel to keep their operation up and running, which is raising the cost of production. 

Millions of SMEs located outside the export processing zones (EPZs) and designated industrial zones like in Ashulia, Gazipur, Maona, Barishal, Khulna and Mymensingh and those located at the district and upazila levels are facing production losses owing to the regular load-shedding.

Those housed in the EPZs and industrial belts have so far been largely kept out of the purview of the current phase of regulated power cuts.

It came after the government announced a schedule for area-based power cuts to mitigate the electricity crisis amid a fall in gas supply on July 17, driven by lower imports of liquefied natural gas and inadequate local production.

Janata Engineering, an agricultural machinery manufacturing unit in Chuadanga, is one of the factories facing the fallout of the reduced power supply. 

Its production has witnessed a decline because of the load-shedding that lasts at least two hours during working hours every day. As a result, the factory can't run at its full capacity.

The tool-making factory is now fearing a major loss.

Md Oli Ullah, managing director of Janata Engineering, says district-level industrial zones have not been brought under the power cut schedule of the government.

"As a result, frequent load-shedding is taking place."

A small entrepreneur in Savar says the production at his leather factory has received a serious blow due to the two-hour power cut during working hours.

Rubina Akter Munni, owner of Design By Rubina, a leather and jute bag manufacturer at Mirer Bazar in Gazipur, however, does not face power cuts during working hours like Oli Ullah and the entrepreneur in Savar since her factory is located in an industrial belt.

However, Munni, who makes 30,000 pieces of leather and jute bags a month for both export and local markets, is, too, worried.

This is because if she receives a large order, her factory workers would have to work after 10:00pm to ship goods on time.

Humayun Rashid, managing director of Energypac Power Generation Ltd, says the group has many manufacturing units.

Instead of keeping them closed during power cuts, diesel-run generators are used to keep them operational.

"As a result, the cost of production is increasing," he said.

In order to reduce power consumption, Energypac, currently does not run the machines that consume more power. Rather, it is running the equipment that requires less electricity.

In order to bring down diesel use and thus maintain the current level of foreign currency reserves, the government has already shut down the diesel-run power plants since the fuel is imported.

"But we are becoming dependent on diesel. So, the government should reduce the frequency of power cuts in the areas where industries are located," said Rashid.

Md Shaheen Ahamed, managing director of Anjuman Trading Corporation Ltd, says the rate at which the manufacturing costs are going up, it would become very difficult for them to bear the additional expenditures if the current situation persists.

Manufacturers are also facing lower gas pressure since there is an energy shortage as well.

"If the energy crisis persists, we will not be able to deliver the products as per promised dates," said Ahmed, also the chairman of the Bangladesh Tanners Association.

Hatil Furniture's energy expenditure has trebled owing to the use of diesel-run generators.

"If the current situation continues, the cost of production will increase," said Salim H Rahman, chairman of the furniture manufacturer. 

"We will suffer financially because of using diesel-run generators," said Taslim Shahriar, senior assistant general manager of Meghna Group of Industries.

Rizwan Rahman, president of the Dhaka Chamber of Commerce and Industry, says many SMEs are facing a challenging situation because of the load-shedding.

"But we are following the government's instruction since the country is going through a crisis."

SMEs' profit margin is being squeezed owing to the rise in production costs.

"Many, however, can't afford generators and are cutting back their production," Rahman said.

"The longer the load-shedding persists, the higher the losses will be for almost every business."

Mostofa Azad Chowdhury Babu, senior vice-president of the Federation of Bangladesh Chambers of Commerce and Industry, says the worst sufferers of the energy crisis are the SMEs as they don't have the financial strength to run generators to keep factories operational during power cuts.

Of them, the small units outside the EPZs and industrial zones are feeling more pain than others, he said.