Gas-electricity crisis cuts orders of 55% of knitwear exporters

Due to disruptions in production in the country's knitwear sector caused by the gas and electricity crisis, factories are at risk of export orders being cancelled or cut. A survey by the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) found that about 55 percent of knitwear exporters reported that export orders had been cancelled or trimmed due to the gas and electricity crisis.

This picture emerged in a summary prepared based on information received from about 20 percent of BKMEA's operational member factories. Among the respondents, 45-46 percent were factories in Narayanganj, 20 percent in Gazipur, 18 percent in Chattogram, and 13 percent in Dhaka.

According to the survey, about 90 percent of factories reported production being disrupted due to the electricity crisis and 75 percent due to the gas crisis. About 14 percent of factories were affected by other crises. Since multiple reasons could be mentioned, these rates exceeded 100 percent.

The severity of the gas crisis has also increased. According to the factories that provided information, there is an average shortage of about 78 percent in gas supply compared to normal demand. At the same time, the duration of daily power outages has increased by about 200 percent compared to before. In other words, power outages have nearly tripled.

Production has also declined significantly due to the fuel crisis. Compared to before, knitting production has decreased by an average of 37-38 percent, dyeing by 51 percent, and garment sewing production by about 40 percent. In some factories, production has fallen to one-third.

This is having a direct impact on business. About 92 percent of factories are having to bear the additional cost of alternative fuel, and the same number of factories reported wastage of labour hours. About 89 percent of factories are at risk of losing buyer confidence. Shipments have been delayed in 87 percent of factories.

In addition, production has been partially halted in about 78 percent of factories. About 60 percent of factories have had to give price discounts to buyers. 59 percent are at risk of bank loan default. And in 55 percent of factories, a situation has arisen where export orders have been cancelled or reduced. In about 7 percent of cases, production has come to a complete halt.

The BKMEA summary said most factories are suffering from both the gas and electricity crises. As a result, production is falling by one-third to half. At the same time, additional fuel costs, shipment delays, and the risk of losing buyer confidence are increasing. Consequently, the prolonged fuel crisis is creating major pressure on the country's knitwear exports.