The cost of not getting gas

Delta Agro Food Industries, a joint venture of Seacom Group and Samuda Group, has set up a factory in Narayanganj at an investment of more than Tk 1,200 crore one and a half years ago. 

The aim is to manufacture edible oil and wheat products to meet the growing demand for healthier consumer goods in Bangladesh.

Accordingly, it hired around 250 employees to operate the facility where soybean oil, palm oil, soybean cake, soya milk and flour will be produced.

But Delta Agro has not been able to go into production due to a lack of gas connection. As a result, it is facing a pre-operational loss and paying the bank interest rate every month.

The pre-operational loss is also known as opportunity loss, which is the value of a lost chance or a potential profit that was not realised.

The company applied to Titas Gas Transmission and Distribution Company for a gas connection for the factory on November 10, 2021.

"But we are yet to receive any positive response from Titas Gas," said Mohammed Amirul Haque, managing director of Seacom Group.

In the absence of a gas connection, the facility has been lying idle for one and a half years and the company is facing around Tk 16.5 crore in opportunity lost per month, he said, adding that they are paying bank interest against loans as well.

"This type of situation is really painful for investors."

Delta Agro Food Industries has the capacity to produce 1,000 tonnes of soybean oil and 1,000 tonnes of palm oil every day.

The company is not the lone manufacturing unit that is suffering from the lack of gas connections as well as an adequate supply of the energy.

More than 20 factories are about to be commissioned at the private economic zones such as those owned by Meghna Group of Industries, City Group, Abdul Monem Ltd, and Bay Group of Industries.

But ASM Mainuddin Monem, managing director of Abdul Monem Economic Zone, said recently that Titas Gas has not taken steps to provide a gas connection to the zone, which is located over 216 acres of land in Munshiganj's Gazaria upazila.

Similarly, Meghna Group of Industries, which has three economic zones, said it has been waiting for about two years to avail gas connections. It has submitted applications and paid fees to the government coffer.

Luthful Bari, chief operating officer of Meghna Group, one of the major rubber users in Bangladesh, says the company has expanded its factory at a cost of Tk 150 crore to manufacture tyres for commercial vehicles such as trucks and pick-ups.

"We have installed all manufacturing equipment. But since we have not got gas connections, we have not been able to go into operation."

Seacom's Haque said Delta Agro Food is ready to employ around 2,000 people in the new production facility after commissioning.

"The commercial production will begin when we get the gas connection."

Md Haronur Rashid Mullah, managing director of Titas Gas, said the state-run utility service provider can't provide industrial gas connections in line with the demand due to a lack of adequate supply of gas.

"Even, we can't supply adequate gas to existing customers. We are helpless owing to the disruption in the global energy supply chain and the appreciation of the US dollar."

He admits the importance of providing industrial gas connections as it contributes to economic development. "But the current situation is not favourable to raising the number of industrial connections."

In Bangladesh, industries account for about 18 per cent of national gas consumption, according to Petrobangla.

But they are experiencing a shortage of gas owing to a lower-than-adequate supply. Bangladesh has long struggled to meet local demand for the energy even before the ongoing crunch, induced by the global energy crisis, cropped up.

Against a local demand of 4,000 million cubic feet of gas per day, local sources supply 2,100 mmcfd and imports deliver 750 mmcfd.

Md Shahenur Alam, company secretary of the Pashchimanchal Gas Company, which supplies gas to the north-western region of the country, says they have delayed providing gas connections to industries owing to supply shortage.

There is no initiative on the part of the utility service provider to give gas connections, said Sheikh Monowar Hossain, managing director of the Sirajganj Economic Zone.