Sri Lanka’s garment sector grapples with continued power cuts

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COLOMBO, March 4 (Reuters) – Indika Prasanna Kumara ventures out each afternoon to try to find 200 liters of diesel for the Broadway Kids clothing factory in Sri Lanka so it can run its generators during blackouts. current and continue to work.

“We have to search different gas stations because of the shortages and then wait in line for eight hours or more,” Kumara said as he and two colleagues from the fuel search team poured their last haul into a generator at the plant, which employs 275 workers in the commercial capital of Colombo.

“Once we get the fuel, we have to keep the canisters because they could be stolen. That’s how desperate people are for fuel.”

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Sri Lanka is facing its worst financial crisis in a decade, with foreign exchange reserves shrinking by 70% to $2.36 billion in January. Read more

The dollar shortage has left the island struggling to pay for imports, including food, medicine and fuel.

A severe shortage of diesel has shut down multiple thermal power stations causing rolling power cuts, which sometimes last more than seven hours a day.

Hit by regular power cuts, Broadway Kids, which produces clothes for British brands such as Next, Matalan, Frugi and John Lewis & Partners, is among dozens of garment factories struggling to meet production targets.

“We operate on very thin margins,” said Chula Dharmadasa, owner of Broadway Kids. “I’m already getting warnings from customers that if we miss our delivery targets, we have to airlift goods, which we can’t afford to do.”

“Our orders will be canceled and buyers will turn to competitors like Bangladesh,” he said, adding that a company’s loss of orders can impact the entire value chain and lead to potentially job losses.

Apparel is Sri Lanka’s second-largest foreign exchange earner and the sector had just experienced a pandemic recovery, with export earnings rising 22.1% to $514 million in January, compared to January 2021.

‘CRITICAL’

Overall, the sector has around 300 factories that generated revenues of $5.4 billion in 2021.

“The situation is now critical as factories shut down due to lack of diesel for generators, personnel transport and freight transport,” said Yohan Lawrence, general secretary of the Joint Apparel Associations Forum, which represents the largest clothing companies in Sri Lanka. .

The government has assured that help is on the way.

Uninterrupted power supply will be restored after March 5, President Gotabaya Rajapaksa’s office said in a statement on Wednesday, but did not provide a plan on how reliable fuel supply would be secured. Read more

On Thursday, Rajapaksa appointed new energy and power ministers in a quick cabinet reshuffle. Read more

The energy situation and fuel shortage forced Broadway Kids to spend 400% more on fuel and generator costs, compared to the same period last year, which drove up overhead costs.

With fewer hours, workers are likely to be paid a third less this month because they don’t work overtime, said Saumya Porage, human resources manager for Broadway Kids.

The fuel shortage also forced the company to suspend free transport for workers. Since many private buses are stuck in fuel queues for hours, some workers choose to walk to work, starting as early as 6 a.m.

“I get up at 4:30 a.m. to cook for my family and go to work. I take a bus for the first few miles and walk the rest of the way,” machine operator RM Manike, 43, said of her hike. of 6 km. to work.

“We are afraid of losing our jobs.

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Reporting by Uditha Jayasinghe; Editing by Devjyot Ghoshal, Robert Birsel

Our standards: The Thomson Reuters Trust Principles.


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