Gas supply in August has dropped to its lowest level since the early stages of the global coronavirus pandemic, bringing the country to a near standstill.
The average daily gas supply fell to 2,235 million cubic feet per day (mmcfd) in August, the lowest level recorded for the month in a decade, according to an analysis of gas-supply data from 2017 to 2026.
The last time the gas supply was lower was back in April 2020, when it averaged 2,020 mmcfd.
Official estimates put current demand at around 3,860 mmcfd, but energy sector officials say the actual demand has already crossed 4,000 mmcfd and has remained at that level for the last two years.
To supplement the declining domestic gas production and meet rising demand, Bangladesh began importing LNG in 2018.
Because of the US-Israel war on Iran, Qatar, one of Bangladesh’s major long-term LNG suppliers, is currently not providing its contracted supply, forcing Bangladesh to meet its requirements largely through the spot market.
But spot market procurement has now become increasingly difficult and expensive, adding further pressure to the country’s gas supply.
The shortage has quickly spilt over into power generation.
At the height of the crisis this month, the average hourly power generation shortfall reached around 3,000 megawatts, while dozens of gas-fired generating units struggled to obtain adequate fuel.
As of 12:00pm yesterday, the Bangladesh Power Development Board was producing only 12,688 MW against the demand of 16,278 MW.
Power production from gas was around 5,000 MW against an installed capacity of at least 12,000 MW.
Industries have been caught between inadequate gas pressure and frequent power outages, with factories across major industrial belts either cutting production or struggling to operate at sharply reduced capacity.
In Narayanganj, one of the country’s major industrial hubs, the gas crisis from the middle of July has taken a severe toll on both production and daily life.
Dyeing factories have been severely affected by the acute gas shortage and the frequent power outages, said Amzad Hossain, president of the Bangladesh Knit Dyeing Owners Association.
The crisis has also affected households in Narayanganj, where more than 70,000 residential customers are connected to the Titas Gas network.
Aklima Rahman, a resident of Sastapur, said she had installed a clay stove in her flat after piped gas supplies dried up.
“Even though there is no gas in the pipeline, we still have to pay the bill. On top of that, we have to buy food from outside twice a day. So, I was forced to bring in a clay stove,” she said.
Over in Narsingdi, more than 100 factories were forced to shut down or severely reduce production earlier this month, while some factories resorted to burning wood to operate steam boilers.
However, the situation is not that dire anymore, said Rashidul Hasan Rinto, president of the Narsingdi Chamber of Commerce and Industry.
Gas pressure nevertheless remained uneven among factories. Some facilities that previously received around 15 pounds per square inch (PSI) are now getting about 12 PSI, while others were receiving 14 PSI or continuing to receive 15 PSI.
“It is difficult to describe the situation simply in terms of factory closures because production is fluctuating sharply from day to day -- on some days, production falls to zero, while on other days it may reach only around 20 percent,” said Fazlee Shamim Ehsan, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association.
Almost all factories are being affected by the gas crisis to varying degrees, making it difficult to estimate how many could eventually shut down.
“If the government does not take action, many factories could move towards closure,” said Ehsan, also the managing director of Fatullah Apparels.
His own factory is operating at around 30 percent capacity because it is not receiving enough fabric from dyeing units.
As a result, he estimated that the factory had lost around 70 percent of its production capacity on average.
The sharp fall in production is creating a serious cost problem because fixed costs remain largely unchanged even when output falls substantially.
“At such a low level of production, it is no longer economically viable,” he said.
The crisis therefore poses several risks to the export-oriented apparel sector, including order cancellations, demands for discounts and a loss of credibility among international buyers.
Production in areas experiencing gas shortages had fallen by up to 50 percent, said Md Shehab Udduza Chowdhury, vice-president of the Bangladesh Garment Manufacturers and Exporters Association.
For BGMEA members, a 50 percent fall in production can result in a 50 percent increase in production costs, pushing an operation into losses.
Despite the disruption, no incidents of workers or employees being laid off because of the gas crisis had been reported so far, he added.
Businesses are reluctant to formally declare factories closed because of concerns about whether banks would continue to finance them and whether Titas Gas would restore supplies in the future, said Mohammed Amirul Haque, president of the Chittagong Chamber of Commerce and Industry.
The disruption is nevertheless increasing the cost of doing business, said Haque, also the MD of Premier Cement.
CNG stations have also struggled to maintain supplies, leading to long queues and disruptions for transport users.
[Our Correspondents in Narayanganj, Gazipur and Narsingdi contributed to the report]
