When a factory shuts down, the first thing one notices is the absence of sound. There is no noise from the machines, no fire in the furnaces, no trucks coming in, and no bustle of workers.
From the outside, it may seem that a factory has simply stopped operating for a few days. But inside the economy, many things continue.
Interest on loans continues to accrue, workers still have household expenses, the cost of raw materials continues to rise, and foreign buyers continue to wait. Only production comes to a halt.
This is the most alarming aspect of the current gas crisis. After nearly three weeks of disruption, production in most of the country’s heavy industries has come to a standstill.
Gas-dependent industries such as steel, glass, ceramics, cement, and chemicals are effectively paralysed. Fifty-seven industrial units of Meghna Group have shut down. TK Group’s chemical, edible oil, and cement factories have also closed.
Production at RFL Group has fallen below 50 percent. In Gazipur, 525 factories, and in Habiganj, 171 factories, have halted production. More than 150,000 workers were employed in those 171 factories in Habiganj.
They are now spending their time idle. In some places, workers are going to factories but finding no work; elsewhere, they are being given leave.
These factories produce a wide range of goods, including edible oil, flour, refined flour, semolina, sugar, cement, paper, LPG, animal feed, and chemicals. When production stops, the impact will be felt in the market.
In some areas, supplies will decline; in others, pressure will build for prices to rise. The gas crisis will then move beyond industrial zones and enter people’s everyday markets.
There is another, quieter danger. Even when an industrial establishment stops producing, its loans do not stop. Bank instalments do not stop.
Nor are companies relieved of their obligations for raw-material bills, wages, maintenance, transportation, electricity, and taxes. Industrial entrepreneurs fear that if production remains suspended for a prolonged period, even otherwise sound businesses could be pushed toward becoming loan defaulters.
The danger is equally serious for exports. A garment factory does not produce garments in isolation. Behind it lies a long production chain involving yarn, fabric, dyeing, finishing, chemicals, transportation, and more.
If one part of that chain stops, the other parts also risk coming to a halt. Most textile mills have already been shut, while the few that remain operational are unable to produce at more than 30 percent of capacity.
Foreign buyers, however, are not partners in our gas crisis. They need products delivered on schedule. If we fail to deliver on time, they may turn to other countries. There is little room for sentiment in business. Once a buyer shifts elsewhere, bringing that buyer back is not easy.
The biggest question is: if this uncertainty becomes the norm, who will invest in new industries in Bangladesh? How can an entrepreneur who does not know whether the factory will have gas tomorrow invest billions of taka and make long-term plans?
In addition to the existing difficulties of obtaining gas connections for new industries, the current crisis will discourage new investment as well.
The immediate cause of this crisis is the disruption in LNG supply. But the long-term causes are more difficult. Domestic gas production is declining, dependence on imports is increasing, yet the infrastructure needed to increase imports is also inadequate.
The failure of a single terminal has created a shortage of nearly 500 million cubic feet of gas per day. Therefore, simply waiting for the terminal to be repaired will not be enough.
In the short term, gas supplies to industries must be restored on an emergency basis. At the same time, Bangladesh needs to drill new wells, intensify exploration both onshore and offshore, take initiatives to utilise the gas reserves in Bhola, expand LNG infrastructure, and move toward renewable energy. Statements from experts have also made clear the need for a parallel, long-term plan.
If the wheels of heavy industry remain stopped for a prolonged period, the repercussions will spread throughout the economy and beyond. Therefore, a sustainable and immediate solution is urgently needed while there is still time.
