Bangladesh’s Garment Industry hit by global energy crisis

At Ha-Meem Group’s factory in Ashulia, diesel generators keep production running when gas pressure falls. The company employs around 90,000 workers and produces 9.3 million garments monthly for brands including Gap, American Eagle and JCPenney.

Since Russia’s invasion of Ukraine, industrial gas prices have risen 150% and diesel prices nearly 70%. Meanwhile, LNG prices have almost tripled since the Iran war began, putting further pressure on manufacturers.

Bangladesh’s dependence on imported energy, inadequate domestic gas exploration and frequent power outages have worsened the crisis. Power shortages exceeding 3,000 megawatts have triggered widespread load-shedding, disrupting businesses and households.

The crisis has also become a major challenge for Prime Minister Tarique Rahman’s government. Delays to the $12.65 billion Rooppur nuclear power plant and geopolitical tensions involving India, Russia and China have complicated efforts to ensure reliable energy supplies.

The government is promoting rooftop solar power, reducing import duties on solar equipment and planning nearly 13,000 megawatts of additional electricity generation. However, solar power remains insufficient for garment factories operating around the clock.

Despite receiving additional orders from international buyers shifting production away from China, Ha-Meem Group’s daily energy bill has increased from $200,000 to nearly $300,000. Buyers, however, remain reluctant to pay higher prices.

Manufacturers warn that rising costs and production delays could push international buyers towards Vietnam, Cambodia and Pakistan. Persistent power shortages could also discourage investment in other industries Bangladesh hopes to develop.

BKMEA President Mohammad Hatem expressed hope that the power crisis could ease within three to four years. For now, however, high fuel prices and escalating Middle East tensions continue to threaten the country’s industrial growth.

Translated from Time magazine.

-AJM