Top spinners urged the government to increase gas price in phases, not in one go, as the sector is facing challenges due to the import of cheaper yarn and fabrics from India and China.A proposed 130 percent hike in gas prices for captive power plants, which the spinners use for continued power generation, will badly hurt the sector, said A Matin Chowdhury, managing director of Malek Spinning Mills. The proposed hike is abnormally high and it will be difficult for the spinners to absorb price shocks in the current volatile situation, Chowdhury added. The hike will take the price of gas to Tk 19.26 per cubic metre from Tk 8.36 now. The government had already raised the price of gas for captive power plants as recently as September last year from Tk 4.36 per cubic metre to the current rate. Bangladesh Energy Regulatory Commission will hold a public hearing on the gas price hike proposed by Titas Gas Transmission and Distribution Company Ltd on August 7-8. The sector has also been facing a downward price pressure of yarn and fabrics, volatile cotton markets and the negative impact of the Gulshan terror attack on the garment sector, Chowdhury told reporters on Thursday. Recently, the Indian government announced a package worth $900 million for employment generation and promotion of export in the textile and apparel sector, according to Chowdhury. The package has been launched to improve labour working conditions, give a 25 percent investment subsidy and an income tax waiver to garment makers, he added. India has disbursed $3.5 billion in funds for factory upgrades between 2000 and 2014. These initiatives by the Indian government and higher gas prices for the captive power plants will erode our competitiveness as many local knitters and woven garment makers will rely on cheaper Indian yarn and fabrics,” Chowdhury said at the Bangladesh Textile Mills Association office. “The local spinners would not be able to supply yarn at lower prices for the Indian subsidies,” he said. As a result, the massive investment to the tune of nearly $5 billion has been made in the sector over the years will be in big trouble. One of the major difficulties is that the spinners and weavers cannot pass on additional prices to consumers as the value of products depends on foreign retailers, he added. Captive power generators account for 17 percent of total gas consumption, according to data from Petrobangla, the national oil, gas and mineral exploration company. Primary textiles account for 4 percent of the electricity generated by captive power plants. “We are selling our products at minimum prices only to keep our businesses afloat. The profit margin declined in the spinning and weaving sectors,” said Tapan Chowdhury, president of BTMA. “The primary textile sector could grow to its current position because of subsequent government support in gas prices and other policies. We need further support for the growth of the local business. ”Currently, the spinners can supply 90 percent of raw materials to the local consumers and weavers can meet 45 percent demand of the local users, he said. New investment would not come in the sector if the gas price is hiked abnormally, he added.
