Textile millers decry proposed gas price hike
The textile millers yesterday expressed concern over the proposed price hike of industrial gas because of which the production cost will increase and they will finally fail to remain competitive in the global market.
The spinners currently pay Tk 9.62 for every cubic metre of gas and use Tk 8 to Tk 9 worth of gas to produce a kilogramme of yarn, said Shahid Alam, vice chairman of Jalal Ahmed Spinning Mills Ltd.
But the government now plans to increase the price of a cubic metre of industrial gas by 66 percent to Tk 16, which will more than double the production cost of a kg of yarn to Tk 22, he said.
“If the new price is put in place, we will have to increase the selling price of yarn to make profits. But our buyers are not ready for the retrospective price rise.”
Alam spoke at a meeting on the existing gas and energy situation in the country's textile sector. Bangladesh Textile Mills Association (BTMA) organised the event at its office in Dhaka.
The government has so far increased gas price thrice since September 2015 when per cubic metre of gas for industrial use was sold at Tk 4.18, he said.
At the meeting, Khorshed Alam, managing director of Little Star Spinning Mills Ltd, shed light on the struggles he has been facing because of poor service of the state-owned Titas Gas Transmission and Distribution Company Ltd.
“I took Titas to the court as it has been supplying gas to my factory at 2PSI [pounds per square inch] although the gas pressure was supposed to be 15 PSI.”
Alam said he installed electronic volume corrector (EVC) gas metres to measure the exact bills and later the court ordered Titas to solve the issue immediately.
But the state-run firm did not pay heed to the call also, he said. “I am still paying gas bills at the rate of 15 PSI, which is costing me an additional of Tk 2.16 crore a year.
“I had to let go a big unique work order from Turkey as it was not possible for me to produce the goods in my factory due to low gas pressure,” he said.
Tapan Chowdhury, president of BTMA, said he wanted to see a logical gas price hike.
Chowdhury demanded that the government install EVC metres in all gas connections, give quick gas connections to factories which relocated and introduce a long-term industrial gas pricing policy.
“We have to find out the ways on how to survive if the gas price is hiked further,” says A Matin Chowdhury, managing director of Malek Spinning Mills Ltd, a leading spinner. He was also critical of the corrupt officials of Titas. There was an informal system where the textile millers used to give thousands of takas to the Titas officials to get new gas connections, he said. “Now they take money in lakhs.”
Abdul Hai Sarker, chairman of Purbani Group, another leading spinner, suggested that the policymakers sit with the millers before raising gas prices.
The pace of investment slowed down in the country due to a lack of gas connections, said AK Azad, former president of the Federation of Bangladesh Chambers of Commerce and Industry.
In July-March period of this year, capital machinery import registered only 0.13 percent growth while the import of such machinery grew at 58.55 percent in July-February period of 2017, said Azad.
“Previously, the lead-time for the Bangladeshi garment exporters was 120 days, but now it is reduced to 60 days. As a result we have to fight with the time and price of the goods,” said Azad, who is also the managing director of Ha-Meem Group, a leading garment exporter.
Abul Mansur Md Faizullah, chairman of Petrobangla, the state-owned gas and power supplying authority, said the government has imported liquefied natural gas (LNG) to meet the demand in the industrial sector.
The government has also removed 122 percent tax on import of LNG, putting only 15 percent VAT in place for this imported gas, he said. He said the government has started giving gas connections to the industrial units.
Tawfiq-e-Elahi Chowdhury, energy adviser to the prime minister, said the government would launch a crackdown on Titas to cut corruption.
“If Titas is not corrected, the gas will be supplied by other companies and in this case Titas will get only a fee for renting the pipes across the country.”