Energy crisis not confined to power-intensive industries

The ongoing energy crisis is no longer affecting just the power-intensive industries, but creating risk factors across all sectors, businesses said yesterday, calling for swift steps.

Gas shortages, high fuel costs and unreliable supplies are disrupting production and investment, they said at a seminar “Biannual Economic State in FY2026”, organised by the Dhaka Chamber of Commerce & Industry (DCCI) at its auditorium in Dhaka.

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Gas shortages are delaying industrial projects, raising manufacturing costs and creating risks for sectors ranging from pharmaceuticals and garments to ICT and small businesses, said DCCI President Taskeen Ahmed.

Presenting the keynote paper, he warned that the energy crunch is no longer confined to power-intensive industries.

Citing the Munshiganj Active Pharmaceutical Ingredient Industrial Park as an example, he said gas supply constraints are continuing to delay production at the park despite plots having already been allocated to 27 companies.

His remarks continue a months-long pattern of escalating DCCI warnings on the energy crisis. Speaking to The Daily Star on 21 August, he estimated that Bangladesh’s energy crisis is costing the industrial sector up to Tk 2,387 crore a day in lost economic output as factories continue to face supply disruptions.

The DCCI, in the keynote paper, recommended ensuring gas connections or alternative energy sources, along with an operational central effluent treatment plant and other essential infrastructure, to make the industrial park fully functional.

Uninterrupted gas and electricity supplies to industrial zones are essential for reducing production costs and ensuring factories can meet increasingly demanding manufacturing timelines, it said.

The chamber also noted that CMSMEs are bearing the cost of dependence on fossil fuels,  and recommended financing rooftop solar installations and energy-efficient machinery to reduce their exposure to rising fuel costs.

It also called on authorities to accelerate these efforts while attracting stronger domestic and international participation in the revised offshore bidding round. It also called for diversifying energy import sources to cushion the economy against external supply and price shocks.

Also speaking at the event, Transcom Group Chief Executive Officer (CEO) Simeen Rahman said uncertainty and disruptions in energy supply have become a major problem for industries across the board.

“We are seeing our production costs rise on a daily basis — costs that none of us had calculated in our annual operating plans. This is directly affecting our bottom line and making companies increasingly vulnerable,” she said.

Higher utility costs are also driving up production costs, while rising raw material prices and operating expenses are adding further pressure, she added.

The Transcom CEO noted that despite a business-friendly budget, private-sector growth faces high interest rates, costly borrowing, persistent inflation, weak confidence, rising non-performing loans and tighter bank lending, constraining investment, expansion and employment.

Consequently, Bangladesh’s global competitiveness is being eroded, she said.

Finance Minister Amir Khosru Mahmud Chowdhury said the issue of the energy sector is a huge problem for the government.

He said, “We are introducing so many policies, carrying out so many reforms, doing so much deregulation, and providing all the support needed to make the private sector-friendly.

“But we cannot solve the electricity and gas problem in one day. This is a problem that we have inherited. And solving the electricity and gas problem will take time.”

He said despite mobilising all the resources and making every possible effort, the government is failing to fully control this timeframe.

The government is looking at what could be done as a stopgap measure in the short term, as well as what could be done in the medium and long term.

Earlier this month, the minister had said it would take at least two years to fully fix the power and gas shortages.

At yesterday’s seminar, he said the government is negotiating with multiple Floating Storage and Regasification Units (FSRUs) simultaneously.

However, he said securing FSRUs would not immediately solve the gas shortage, as the units must first be negotiated, brought to Bangladesh and installed, with several other steps involved in the process

“At the same time, we are also starting work on shore-based gas reserves. Similarly, for oil, we want to ensure a three-month reserve across the energy sector,” said the minister.

He stated that the government inherited dangerously low energy reserves, some below 15 days, but has raised them to one month and aims to reach three months.

“We are trying to do it in the fastest possible way. The energy crisis will improve slowly. It will improve, but it will improve slowly. And I know the damage this is causing to industry; that goes without saying,” he said.

“Because of the war in the Middle East, our fiscal space has reached a very difficult position. Because of the higher prices, particularly the high cost of fuel, we are already taking a hit of $5 billion,” he added.

Hossain Zillur Rahman, executive chairman at Power and Participation Research Centre (PPRC), said the country’s economy is at a critical juncture.

He noted that if the right decisions are taken at this stage, the economy could gain the desired momentum; otherwise, there is a risk of falling further behind.

He observed that harassment in various areas of the economy has evolved into a negative structural issue, preventing reform initiatives from delivering the desired results.

He stressed that the government must pay due attention to this issue and that reducing such harassment is essential for expanding the tax net.

Mahbubur Rahman, president of the International Chamber of Commerce Bangladesh, said in the current fiscal year, inflation has not yet declined to the desired level, while private-sector credit growth remains at its lowest level in many years.

Investment has remained stagnant and the industrial sector has been unable to operate at full capacity.

He said that high interest rates, rising production and import costs, exchange-rate volatility and uncertainty over energy supplies have significantly increased the cost of doing business.

Zaidi Sattar, chairman, Policy Research Institute of Bangladesh, said there is a significant gap between policy formulation and implementation in Bangladesh, resulting in the country failing to achieve the desired benefits.

He said that while Bangladesh maintains relatively liberal policies for export product and market diversification, its policies on imports remain restrictive, with high tariff rates contributing to higher domestic inflation and increased prices of goods.

He also called for the formulation and implementation of appropriate strategies within the available timeframe for Bangladesh’s LDC graduation.

Professor Mustafizur Rahman, distinguished fellow at Centre for Policy Dialogue, said that a revolution in tax collection is essential for implementing the Annual Development Programme, while there is very little possibility of achieving the revenue collection target set in the national budget.