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How staggered holidays disrupting production systems and intensifying operational costs

Amid ongoing power shortages due to rising global fuel oil and gas prices, the government has scheduled different weekend timings in various industrial areas across the country instead of the traditional weekly shutdown. Mostafa Azad Chowdhury, senior vice president of the Federation of Bangladesh Chambers of Commerce and Industry, suggests that this rolling holiday system will save at least 490-550 MW of electricity. So, now not all units keep the same holiday on Friday. It is —maybe– a good initiative and will help all the RMG units in the country.

Figure: Production issues due staggering holidays.

Meanwhile, many industry representatives in key sectors that use heavy machinery said that prolonged power outages during the holiday break would disrupt machinery and production systems and increase operational costs. Heavy industrial machines take 7-9 days to warm up to normal temperature. So, shutting down the machine would be very expensive. Dyeing mills need 2/3 days preparation to stop their operations to prevent loss of Work-In-Process. Although Friday is a holiday, the dyeing factory does not stop. If its employees get staggered weekly holidays, the manufacturing supply chain will face disruption. If the dyeing factories take 4 days off in a month then the monthly production capacity will decrease by 15%. Late production may require the merchandiser to reschedule the delivery date and lead times will increase. There may even be penalties for manufacturers for late delivery.

In addition, some field offices of the Department of Factory Inspection (DIFE) have ordered closure of factories with 24/7 operations (knitting, dyeing, spinning) and most of these factories use their own captive power and not from the national grid. Different field offices of DIFE have implemented it differently. BTMA sends a clarification which then helps to negotiate the similarities with DIFE.

Bangladesh government prioritizes gas supply to power plants. Even as Bangladesh’s second largest export sector, garment and textile manufacturing centers will not get priority. Manufacturers are ready to accept this and devote their partial production. However, Titas Gas continued to supply gas with low availability to the textile sector. Textile industries have to at least maintain and manage their export commitments with buyers. Jalalabad gas has also reduced supply to the Habigonj area so much that production has dropped to almost zero where gas availability is more in Jalalabad than Titas Gas.

Taslimul Haq-Square-Textiles

Taslimul Hoque, Director of Square Textiles, said, “Most of us as electricity consumers can accept long load shedding, if our jobs or livelihoods are secure. But many jobs will be at risk, if the factory shuts down.” Shutting down export-oriented factories will have a huge negative impact on forex reserves in the medium to long term. Reduction in company capacity also causes unemployment.

In addition, Bangladesh government recently announced a 52 percent hike in fuel prices which is a record jump for the nation, and sparking street protests. According to Power Development Board (PDB) sources, currently, the average production cost per unit of electricity from diesel is about 25 TK and from furnace oil about 15 TK. Meanwhile, the average production cost of gas is around 4 TK per unit. But all in all, the average cost of PDB has already exceeded 9 TK.  The power crisis worsened after volatile global prices forced Bangladesh out of the spot market for liquefied natural gas cargoes. Bangladesh government stopped buying LNG cargoes in June. Bangladesh imported about 30 percent of its LNG this year on a spot basis. Last year import was up to 40 percent.

Some factories have tried running diesel-powered generators to keep production going on, but these come at an additional cost that raises production costs. The entire manufacturing sector is now suffering from rolling power cuts as factories have to spend 10-30 percent extra to meet the shortfall in power supply to keep their production lines running.

The government’s staggering holiday policy has been also proven futile at RMG factories. Garment manufacturing factories in Gazipur, Ashulia, Savar, Dhamrai, Mirpur, Narayanganj, and Mymensingh are still disrupting production for about 12 hours with load shedding despite the government’s staggering holiday policy in industrial zones.

Bangladesh Garments Manufacturers and Exporters Association (BGMEA) has sent a letter to the Ministry of Power and Energy and said that when the matter was reported to the Bangladesh Rural Electrification Board (BERB), they expressed helplessness to take action in this regard. Acting President of BGMEA Md Shahidullah Azim requested the intervention of the Minister of State for Power and Energy to ensure uninterrupted power supply to RMG factories in those areas on an urgent basis and to ensure income and ensure earnings of foreign currency while considering the livelihood of thousands of workers.

Low power consumption is not a permanent solution. Proper use of renewable energy is the best choice to solve the power crisis in Bangladesh as it requires low cost and low risk. Initiatives should be taken to develop the skilled manpower required for the power sector by considering renewable energy sources.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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