Patience thins on low energy

A woman works at a spinning factory in Gazipur. The sector is bearing the brunt of the chronic gas crisis. Photo: Courtesy of Rahmat Group

Like dragons in dungeons, they roar in action. A queue of eight diesel generators provides the lifeline to the gas-starved factory at Gazipur.
The muazzin's call to prayer from the white marbled mosque at the factory premises is close to a whisper. It is just another day in the life of a composite garments factory that copes with failing promises of gas. What should be its right is now a privilege.
"My factory is running at 40 percent capacity that simply warrants survival," says Latiful Bari, a director of Rahmat Group.
The company that generates jobs for nearly 8,000 includes spinning, knitting, dyeing, printing, garments and plastic factories.
Bari, also chairman of Logos Apparels Ltd, says: "The project needs 14MW of electricity a day, which is met by captive energy."
Many apparel factories run low on gas, instilling jitters into the sector.
“During the day, we receive no gas. And even if gas is there, the pressure is too low," he says. The factory receives gas at 3-4 PSI (pound-force per square inch) against a need for 6 PSI.
Rahmat Group's spinning section accounts for 100,000 spindles. Twenty-five percent of production from these entities is exported, while the rest meets domestic demand for sectors: saris, lungis and terry towels.
Its knit factory produces fabric, cotton of various blends. Its dyeing unit produces dyed fabric in tubular and open width form.
Auxiliary services to the 100 percent export-oriented company are provided by its plastics unit that produces hangers and bobbins for both internal and external consumption.
At Rahmat Group, 60 percent of workers are women, and it hires skilled labour. To bind all operations, 250 mid-level managers are responsible.
"For reasons of survival, we have eight diesel generators in operation to meet our energy needs during the day. That is when the factory barely runs at 40 percent capacity," Bari says.
"The use of diesel to run operations is piling costs for us." The factory purchases diesel worth Tk 2.5 lakh a day. The extra need for diesel adds Tk 20 to costs per kilogram on average.
However, for four to five hours starting midnight, the factory receives full gas pressure and runs at full capacity.
A mid-level manager of the dyeing factory says the gas situation is creating havoc on the production floor as well. “Production on our floor goes on in a scheduled manner. In case of sudden power cuts, the dyeing process comes to a halt, ruining fabric and wasting precious time.”
The fabric has to be stripped of the dye and “the whole process has to be redone”.
“Out of our production, about 7-8 percent is wasted, which is within acceptable levels. But of late, due to the energy crisis, waste stands at 15 percent, which costs us in terms of productivity," he says.
Bari says with the present gas crisis, there has been a marked decline in the factory's ability to meet deadlines.
“Work orders often need to be air-shipped to meet deadlines," he says. ”Of late, the company has recorded a 20 percent hike in air freight."
“The biggest stress lies in meeting the salaries for the month and other fixed costs. Even though production is low, bank interests don't sit idle."
"With looming uncertainty in the sector, foreign buyers may be reluctant to place orders, as they will be afraid that shipments will not be made on time," the Rahmat director said.
Foreign buyers are also reluctant to place orders with us these days. They are afraid shipments will not be made on time.”
In times of extra work pressure, Rahmat Group rent extra diesel generators from outside to meet demand and increase energy to its factories.
The group with a turnover of nearly $45 million a year mainly exports to Europe. "Seventy percent of our products head towards France, 20 percent to Germany and the rest to Italy," he adds.
Rahmat Group, established in 1989, has witnessed the highs and lows in business. But despite experience, the group is pessimistic about the future of gas.
“The gas situation has dampened the prospects of this sector. If the government does not take matters in its hands soon, more bad news will follow," the Rahmat director says.
On the same belt lies Hanif Spinning Mills Ltd that employs 700 workers. The 25,200-spindle factory is also paying the price of little or no gas.
Asif Hanif, director, says the problem starts at 6am and stays until 1.30am. “Out of the four gas generators in my factory, only one runs at 50 percent capacity. In other words, my factory receives around 12-13 percent gas of my requirement.”
“We are running at a loss.”
Hanif says: “I am basically paying my employees for nothing. As they still have to come to work, I make them do maintenance work.”
He has been running this factory for eight years now. “But the situation has never been so serious as over the last four months or so.”
To add insult to injury, he has to bear greater gas bills. "When the gas pressure is low, the meters run faster, giving a greater reading. But that does not mean I am receiving more gas. When the pipes are filled with the required amount of gas, the meter moves slower, giving accurate readings,” he explains.
The 100 percent export oriented factory sources cotton mostly from Uzbekistan and supplies mostly to European nations.
“The main problem we face is how to meet customer deadlines. I can make no promises, as it is impossible to say the production capacity for the next day even."
The director of the factory with Tk 200 crore in yearly turnover says: “I don't think the situation will improve. It will go worse.”
On thinking about alternatives, he says, “I am contemplating diesel generators to run operations. But the prices of diesel generators are also riding up on high demand, making the idea less feasible.”
“It sometimes seems that the government is neglecting this sector even though it generates the most employment for the poor.”
The chief commercial officer of Vestes International, a buying house, describes the situation as "completely ridiculous."
Preferring not to be named, the official says most factories most factories are run by gas and that is why they are suffering. "Some factories can make do with diesel generators, but diesel is expensive."
"Heavy fuels also pollute the environment, but that's another story all together."
Even though dyeing and stitching are somewhat managing, but it is the spinning sector that is suffering the most. With more and more spinning factories shutting, demand for yarn is greater than supply and the prices are rocketing as a result. In the last six months, yarn prices shot up by 70 percent, according to industry insiders.
The official explains that when spinners quote prices to buyers, it takes them at least five days to a week to open a letter of credit (LC). But even before the LC falls through, the price rises by 20 cents on a kilogram, making the initial offer void. "Buyers do not like such uncertainty."
No crystal ball is required to predict the future of the apparels industry. Insiders add that if this situation continues, buyers will definitely shift from Bangladesh to India and China, as it was in the past.

[email protected]