A severe gas and power shortage has disrupted production across much of Bangladesh’s garment industry, but 4A Yarn Dyeing, a supplier to global retailers including Walmart, Gap, and Next, continues operations with minimal interruption by relying on a diversified energy strategy that includes solar power.
Located on the outskirts of Dhaka, 4A Yarn Dyeing employs nearly 7,500 workers. Since 2019, the factory has generated its own electricity through a combination of solar panels—covering about 40% of its power needs—and onsite gas and diesel generators. This approach has allowed the facility to maintain steady production despite the countrywide energy crisis that has worsened due to a conflict in the Middle East. Much of Bangladesh’s electricity generation depends on natural gas, furnace oil, and diesel, resources that have become increasingly scarce and expensive.
A recent survey involving 134 knitwear factories revealed that 55% faced order reductions or cancellations linked to power and gas shortages since late August, and 78% had partially halted production activities. Many factories also reported delays in shipments and discounted prices to buyers amid the disruptions.
Abdullah Hil Nakib, co-owner of 4A, noted the company’s long-standing efforts to avoid dependence on a single energy source by maintaining multiple backups. However, the factory has experienced rising operational costs, with diesel expenses alone increasing monthly fuel bills by about five million taka (approximately US$40,950), a 2% to 3% rise in production costs. The financial pressure intensified following a recent government fuel price hike of up to 17.4%, implemented to offset global price surges and elevated shipping costs linked to the ongoing Middle East conflict, which originated from United States-Israeli strikes on Iran earlier this year.
To further strengthen resilience against potential power interruptions, 4A plans to install a large-scale battery system enabling several hours of continuous operation if energy supplies fail.
Despite 4A’s adaptability, many smaller manufacturers are struggling with the cascading effects of the crisis. According to Bangladesh’s power minister, rising costs of gas imports are slowing industrial growth, triggering electricity outages, and constraining development project budgets due to the increased burden of subsidies.
The ready-made garment sector is a critical component of Bangladesh’s economy, accounting for over 80% of export earnings, employing approximately four million workers, and contributing about 10% to the nation’s gross domestic product. However, rising fuel prices and energy shortages are squeezing factory margins and eroding buyer confidence. For example, exporter Shahidullah Azim described a significant drop in expected orders from a Canadian buyer, citing economic and energy uncertainties as contributing factors.
Some larger firms may absorb higher fuel expenses, but smaller factories face greater risks from power cuts and gas shortages. Compared with competitors like Vietnam and India, where such disruptions are less severe, Bangladesh may lose ground in the global sourcing market unless companies can effectively mitigate these challenges, said Mohiuddin Rubel, additional managing director of Denim Expert Ltd., which supplies brands including H&M.
The extent to which Bangladesh’s garment sector maintains its competitive position will likely depend on the industry’s continued ability to manage energy costs and supply reliability amid ongoing regional and global uncertainties.