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Due to the acute power deficit and frequent load-shedding, the export-oriented industries, manufacturing and the financial sector’s adoption of digital technology are facing a crisis.
The Power Division reports that from last July to September, the largest amount of load-shedding per day was 2,000–2,200 megawatts. However, in October, this shortfall grew to 2500–3000 megawatts, which is the highest level since last July.
According to experts and industry insiders, the deteriorating electrical supply has caused a major decline in financial transactions and output, as well as a sharp spike in production and operating expenses.
Dr M Tamim, a renowned energy expert, told the Dhaka Tribune that it is only normal for the power shortfall to have an impact on the macroeconomic balance of the country.
“The two main victims of this are banks and manufacturing factories. There are significant issues with bank ATMs and internet banking in particular. Despite having backups, they are no longer able to offer 24/7 backups owing to recent power disruptions,” he continued.
On the other hand, the exporting factories, especially the businessmen in the RMG sector, have realized the problem of power outages very badly.
Recently, they have asked the government to increase the price if necessary, but for an uninterrupted power supply.
“Our factories here generally use two types of power. Firstly, the electricity is drawn from the national grid and secondly, the use of captive power. Now, when there is a shortfall in the power supply from the grid line, they are bound to use their own captive power,” he explained.
Shovon Islam, managing director of Sparrow Group, told Dhaka Tribune that there is no electricity for an average of four to five hours daily in the industries.
The dyeing and washing plants need to be operational for 24 hours but due to the load-shedding the production in these plants is severely disrupted.
“Depending on the size of the factory, an additional cost of Tk3-Tk4 crore is being incurred per month,” he added.
He also said that due to an increase in production costs, production optimization also declined.
“As the factory has to run less, overhead costs are elevated. As the salary of the staff is fixed, whether we can run eight hours or 12 hours, we have to pay full salary to them,” he added.
Mohiuddin Rubel, director of the BGMEA, told Dhaka Tribune that, while the additional cost of diesel may not be entirely accounted for, the overall production cost rises by at least 5%.
Additionally, he stated that when batch production is underway, unexpected load-shedding and interruptions when the generator is starting have an effect on the product’s quality.
If the production is interrupted, there is a risk of increasing the lead time and causing financial loss, he added.
Shovon Islam echoed him saying that the boiler has to be run with diesel. If two boilers of five tons are run with diesel, a huge amount of money is wasted.
M Shahadat Hossain, president of the BTTLMEA, said that the company has been suffering 10 to 11 hours of power outages every day for the last few days.
The company needs 400 litres of diesel per day to run the factory and the cost has gone up to Tk43,600.
“The loss varies from factory to factory, and in my production per kg of product which used to cost Tk2 has now reached about Tk7-Tk8, making it extremely difficult to survive in this market,” he added.
In September, the nation’s export revenue grew negatively by 6.25%.
Buyers from other countries will become less confident if Bangladesh is unable to manufacture and fulfill the present orders on time.
In addition, the country’s traditional banking system has been modernized, mobile financial service (MFS) providers, payment service providers, and fintech have all been introduced, and these factors have all been crucial in the use of technology.
Data shows that power cuts already have an impact on online banking or internet banking. Online banking transactions began to rise in the last two months of FY22 (May and June), but substantially decreased in July, the first month of the current fiscal year.
Bankers and economists blamed load-shedding for this drop.
Replying to the queries about the ongoing electricity shortage and its impact on the banking sector, an MD and CEO of a bank requesting anonymity told Dhaka Tribune that: “As we are a big bank so it may not be impacting our costs in that way. But yes of course, that definitely increases our operating expenses to some extent.”
In the meantime, the central bank earlier on July 26 issued instructions on reducing electricity.
According to the instructions, by next year every bank should reduce the cost in this sector by 25%.
What next?
M Tamim said that he does not see any solution to the power shortage other than relying on winter.
“The pressure on electricity will reduce a little when winter starts around November. That may be a source of relief for now. However, we need to increase our electricity production by at least 2500 MW between next March to April so that this problem does not cause a big headache in the coming summer,” he added.
When asked if it is possible to increase electricity production at this time, he said that he thought it is only possible if the government’s plan is implemented properly.
The government has already stated that there will not be a price hike for electricity which he thinks is a political decision.
“Rampal power plant is scheduled to start generating 1,250 MW of electricity by April. Besides, India’s Adani Power Ltd is supposed to supply a big portion of electricity while the government wants 400 MW by December,” he added.
Moreover, another 300-350 MW of power generation is expected to be increased at Payra Power Plant. If all these are done correctly, it is expected that the next power outage in the summer will be tolerable.
Regarding the solution, Shovon Islam said the government should give the manufacturing sector priority by keeping a maximum of two hours of load-shedding.
“We offer funds for importing gas to generate electricity dedicatedly for the sector and we are ready to pay surcharges,” he added.
However, sources from the Power Division insisted that they are trying to ensure an uninterrupted electricity supply.
They also said that the prices of LNG jumped around six times in the international market since the Ukraine-Russia war which triggered a gas shortage in Bangladesh.
The current situation has forced them to halt production in many gas-fired power plants though they are trying their best to meet the industrial demand.
Meanwhile, manufacturers expressed their concerns further as the State Minister for Power, Energy and Mineral Resources Nasrul Hamid said that there is no hope of improvement in the ongoing load-shedding situation before November, as gas could not be imported.
(DT)
