Production of rod, cement, ceramic tiles, bricks, glass and other construction materials is being disrupted by a gas and power crisis that has now lasted more than a month. As a result, some companies are unable to supply products to the market according to demand.
Construction sector businesspeople say the industry has been in a kind of slump over the past two years since the political change of government. Amid that, a severe gas and power crisis has now persisted for more than a month. As a result, many factories’ production has fallen below half. Some factories have had to halt production entirely. As the crisis drags on, companies are becoming financially weaker.
The Excelerate Energy terminal, which supplies liquefied natural gas (LNG), shut down after a fire on July 21. Since then, the country’s industrial factories have been suffering a severe gas shortage. In between, gas supply from Summit’s terminal was also disrupted amid the shortage. Excelerate resumed partially and Summit resumed fully on August 15. But before the crisis could fully ease, conditions worsened again. Because of a cargo shortage, gas supply from Excelerate’s terminal was cut off again. After being shut for three days, the terminal resumed operation on August 22. Since then, gas supply to industrial factories in some areas has increased somewhat.
The tile and glass industry has been hit hardest by the gas crisis, sources say. Rod and cement follow close behind. Other construction sectors have also felt varying degrees of impact, mainly because of increased load-shedding.
According to the Bangladesh Steel Manufacturers Association (BSMA), the country has roughly 40 automated steel factories, of which 4-5 are large. These factories have the capacity to produce more than 10 million tonnes of rod annually. However, annual demand is 6.5 to 7.5 million tonnes, meaning a portion of the factories’ capacity remains unused even in normal times.
Shahriar Steel Mills, in Dhaka’s Konapara area, has the capacity to produce 300 to 400 tonnes of rod daily. But because of the gas crisis and load-shedding, its production has fallen by 40 to 50 percent.
Asked about this, Shahriar Steel Mills managing director Sheikh Masadul Alam said last Friday that rod demand had fallen by half over the two years since the political change of government, as government development work came to a halt. It then fell further. He said there had been fears of rod prices rising after tax and duty changes following this fiscal year’s budget. However, because of falling sales, owners did not raise prices. He said the construction season is approaching, when demand will rise somewhat. Prices could rise if factories are unable to increase production before then.
The country’s ceramic factories are located in Gazipur, Mymensingh, Narayanganj, Habiganj and Bhola. Except for 7-8 factories in Bhola and Habiganj, nearly all ceramic factories in other areas are suffering from the gas crisis.
Akij Ceramics Limited general manager (sales and marketing) Mohammad Ashraful Haque said the energy crisis is severely damaging production. When energy pressure drops, he said, it becomes difficult to maintain product quality, and products in the middle of the production process are being ruined. Because of disrupted, uninterrupted gas and power supply, the company is only able to produce at 30 percent of capacity.
At Mir Ceramics’ factory in Gazipur’s Sreepur, three of four production units were shut for 17 days. One unit resumed last week. The factory has the capacity to produce 300,000 square feet of tiles daily.
Asked about this, Mir Ceramics factory official Shahiduzzaman said last Sunday that with the gas pressure currently available, more than one unit cannot be run. As a result, tiles cannot be supplied to the market according to demand. Speaking again last Friday night, he said: “Since gas pressure has increased somewhat, we’ve started up another unit. That has boosted production.”
Several ceramic-sector entrepreneurs say that without adequate gas supply, all units of their factories cannot be run, disrupting product supply to the market according to demand. They say that if the situation doesn’t improve quickly, factories will fall into severe financial crisis. Imports could also rise, meaning tiles would have to be bought at higher prices, which would raise the cost of building homes.
Like rod and ceramics, the gas and power crisis is also disrupting cement production. The country currently has 35 to 40 cement-producing companies. Annual cement demand stands at 40 million tonnes. However, operating cement companies have a production capacity of 80 million tonnes — more than double the demand. Bangladesh’s cement market is worth roughly 300 billion to 350 billion taka.
Asked about this, Bangladesh Cement Manufacturers Association president Mohammad Amirul Haque said cement factory production is now considerably disrupted. To keep factories running, they must use alternative energy sources at extra cost. Sudden drops in gas pressure at cement factories are damaging machinery. The adverse effects of repeatedly relying on generators have become a growing concern.
Demand for cement, rod, ceramics and glass and other construction materials has fallen since the mass uprising because of reduced government development work, which is why companies have not expanded their production capacity, Amirul Haque said, noting that the construction sector has survived largely because of some sales activity driven by remittances and a positive rural economy. He said the prime minister is taking time to discuss problem-solving with the private sector. Yet, he said, those in charge of the administration are not speaking up. He said that if the gas and power problem were discussed with industry owners and resolved through a rationing system, production would become possible at every level.