Top industrialists have decided to use a four-pronged strategy -- involving furnace oil, lower bank-lending rates, lower margin and strict cost controls -- to offset the losses amid the crisis in natural gas supplies.
Industrial conglomerates such as Abul Khair, PHP, Nasir, Akij and Jamil groups took the decision to keep their business units afloat.
“We sat at a meeting four months ago to discuss how to run our business in the face of the energy crisis,” said Nasiruddin Biswas, chairman of Nasir Group that has business from tobacco manufacturing to float glass and energy saving bulbs.
“Some banks have already agreed to lend us at 9 percent to 9.5 percent instead of 12 percent,” he said.
According to estimates, these five conglomerates have nearly $3 billion in their combined annual turnover.
The industrial sector is faced with a serious setback due to severe gas and electricity crises. Investments worth hundreds of crores of taka have been stuck because of no gas connection and a poor electricity supply. The business houses are experiencing increased demand from national and international buyers, but the energy crisis is blocking the potential, according to industrialists.
Some major factories have installed their own power generation units to overcome the electricity crisis, but this power costs three times more than the power companies'. And the use of furnace oil, an alternative to gas, would cost the industries five times more.
For the past several months, gas suppliers stopped new connections and the existing industries are not getting required gas due to low pressure.
The banks' relatively higher lending rates -- 11 percent to 14 percent -- for loans to industries also reduce the competitiveness of the local industries.
“We know that our profit margin will go down, but it is better to run the business units than sitting idle,” said Nasiruddin Biswas.
He is happy to see that the banks have come forward to help the industries with a single digit interest rate.
A Tk 700 crore tube and glassware factory of Nasir Group cannot start production due to the gas crisis. The business has to count Tk 7 crore every month to the bank.
A top official of Dhaka Tobacco, owned by Akij Group, said some of their industries are in a very bad condition due to the gas crisis.
Akij has invested more than Tk 50 crore in a ceramics and tiles factory on Dhaka-Manikganj Road, but it is not getting a gas connection for months.
“We cannot sit idle with thousands of crores of taka in investment in different industries. We are trying to find alternatives to the energy crisis,” said the official, requesting not to be named.
The chief executive officer of Mutual Trust Bank, however, said he could not slash the interest rate without a reduction in cost of fund that hovers between 9 percent and 10 percent.
“Deposit cost is still high up to 9.5 percent. If I don't give a good rate, I will lose deposits to other banks,” said Anis A Khan.
But he supports the cause of the industrialists.
Khondkar Ibrahim Khaled, former deputy governor of the central bank, said the banks could consider the causes of the industries.
“A bit less profit can give the industries a boost,” said Ibrahim Khaled.
Source: thedailystar.net
