Bangladesh’s Ship-breaking Industry in Choppy Waters: Calls for Support Amidst Economic Turmoil
The 4th Bangladesh International Trade Summit brought together industry leaders and experts to discuss challenges and opportunities in various sectors. Two sessions, “Harnessing the Potential of Green Ship Recycling” and “Bangladesh’s Power Sector at a Crossroads,” highlighted critical issues needing attention.
Ship-breaking Industry Seeks Support
The ship-breaking industry in Bangladesh, once a global leader, is facing rough seas due to the ongoing war in Ukraine and the global economic crisis. Industry representatives attending the summit called for government support to navigate these challenges.
Industry Leader: Bangladesh a Leader in Green Ship Recycling
Mohammed Zahirul Islam, managing director of a major ship-breaking company, highlighted Bangladesh’s significant progress in the industry. He emphasized advancements in environmental and waste management practices, along with improved health facilities and worker insurance. These improvements have positioned Bangladesh as a global leader in green ship recycling.
Challenges and Uncertainties
However, Islam painted a grim picture of the current situation. Ship imports, a crucial lifeline for the industry, have halved since the Russia-Ukraine conflict began in 2022. This has caused economic stagnation and impacted over 130 ship-breaking yards in Chittagong. The ongoing instability in the banking sector further complicates matters.
Compliance with Green Practices Key for European Contracts
The Norwegian Ambassador to Dhaka pointed out that most European ships destined for recycling end up in South Asia. However, environmental concerns and inadequate waste management practices pose significant challenges for Bangladesh to secure contracts from Europe. Upgrading ship-breaking facilities and ensuring compliance with EU regulations are essential for Bangladesh to remain competitive.
Experts Discuss Power Sector Issues
Another session focused on the critical issues plaguing Bangladesh’s power sector. Experts discussed overcapacity, reliance on expensive imported fuels, and the need for strategic planning.
Overcapacity Creates Problems
Mizanur Rahman, a former energy regulator, highlighted the shift from undercapacity to overcapacity in the power sector. Unlike developed nations with a maximum overcapacity of 20%, Bangladesh experiences a staggering surplus exceeding 25% in summer and 40% in winter. This not only increases costs but also poses risks to the sector’s stability. Projections indicate a further rise in overcapacity to over 40% by 2030.
Power Shortages and Rising Costs Despite Surplus
Humayun Rashid, representing a power generation company, pointed out the paradox of frequent power cuts in industrial areas despite the surplus. These cuts, coupled with rising power costs, severely affect export-oriented industries.
Indiscriminate Power Plant Construction Blamed
Experts like BUET’s former dean, Ijaz Hossain, criticized the unplanned construction of power plants. Building gas-fired plants despite gas shortages and relying on expensive imported fuels have exacerbated the situation. While acknowledging the relative affordability of Liquefied Natural Gas (LNG) compared to liquid fuels, Hossain questioned the continued purchase of power from expensive liquid fuel plants, further inflating costs.
Shift Needed to Reduce Reliance on Imported Fuels
The session concluded with a strong recommendation to shut down liquid fuel power plants. Experts warned that the current trend of constructing import-dependent power plants could lead to a staggering $24 billion annual expense on energy imports by 2030. Concerns were raised about Bangladesh’s ability to manage such a high foreign currency outflow amidst the current economic crisis.
The Road Ahead
The 4th Bangladesh International Trade Summit shed light on the challenges faced by the ship-breaking industry and the power sector. The discussions emphasized the need for government support, improved environmental practices, strategic planning for power generation, and a shift towards cleaner and more sustainable solutions. Navigating these issues will be crucial for Bangladesh’s continued economic growth and development.
