Nearly half of production capacity remains unutilised in a decade

Nearly half of the production capacity at the Shahjalal Fertilizer Factory-established at Fenchuganj in Sylhet at a cost of around Tk 50 billion to reduce import dependence by producing 580,800 tonnes of urea annually-has remained unutilised even after ten years of operation.

The underperformance stems from a total of 1,017 days of downtime caused by gas supply disruptions, technical and mechanical failures, maintenance delays, inventory backlogs, and occasional fire incidents, reveals a report of the Implementation Monitoring and Evaluation Division (IMED).

The report shows that the plant produced a total of 3.28 million metric tons of urea over the past decade, with an average capacity utilisation rate of 56.44 per cent-ranging from a low of 41.12 per cent in FY24 to a peak of 72.81 per cent in FY22. Full-capacity utilisation could have added over 2.52 million metric tons of fertiliser, significantly boosting agricultural output while saving foreign currency by cutting import dependence.

Planning ministry officials said the project received approval in December 2011, with a Chinese loan of Tk 39.86 billion as strategy to reduce gap between domestic urea production and the country's annual requirement of 2.9 million metric tons, given the limited capacity of state-run factories.

The primary objective was to reduce dependency on costly imports and conserve foreign exchange, while ensuring a steady and affordable supply of fertiliser to farmers to bolster food security.

The project document anticipated annual foreign currency savings of at least $203.28 million in the years following the fiscal year 2014-15 after commencement of the plant.

Although the project was initially slated for completion by June 2015, it was not fully completed until June 2021-six years behind schedule, despite having an original implementation period of just three and a half years.

However, commercial operations at the plant began in 2016, even though construction and related works continued in parallel.

The IMED assessed the project's impact through a private consultancy firm, and subsequently shared the report with the Ministry of Industries, the project implementing agency-Bangladesh Chemical Industries Corporation (BCIC)-and other relevant government bodies.

"Although the procurement and installation of necessary machinery were completed on time, the primary objective of the project-to produce 580,800 metric tons of granular urea annually-has not been realised since the plant's handover," reveals the report.

Quoting the officials, the report added that the factory continues to face setbacks due to an inadequate supply of natural gas, the key feedstock for urea production, hindering it from operating at full capacity.

Kazi Ashraful Islam, Managing Director of the factory, said the plant has produced approximately 3.3 million metric tons of urea fertilizer to date and added that production could have been significantly higher if the factory had received an uninterrupted, round-the-clock gas supply.

The report highlighted that the urea fertilizer produced by the factory has been supplied to farmers at government-regulated prices, resulting in foreign exchange savings of Tk 132 billion over the past decade. However, this figure amounts to an average annual saving of $98.36 million at current exchange rates, achieving only 48.39 per cent of the original target.

The operation in the factory remained closed for 1017 days in the last decade due to several reasons led by shortage of gas supply by the Jalalabad Gas Transmission and Distribution System Ltd (JGTDSL) by over 380 days. In addition, equipment failures, including turbine blade damage, compressor seal failures, and heat exchanger leakages, further added to the loss of operational days.

Since its inception, the factory recorded its highest downtime of 189 days in the fiscal year 2023-24, 117 days due to gas supply disruptions, while the lowest was 55 days in its first year of operation, FY2015-16.

In FY2018-19, the factory experienced 108 days of production halt, including 48 days due to gas shortage and 60 days for routine maintenance. Another 94 days were lost in FY2019-20, while 20 days for a scheduled inspection, 37 days due to turbine blade failure, and another 37 days for maintenance work.

Downtime further increased in FY2022-23, reaching 144 days. Of this, 16 days were due to gas supply suspension, 75 days resulted from equipment malfunctions and turbine-related issues, and 53 days were used for maintenance work.

Technical and mechanical issues pushed the factory to remain stopped for around 270 days while maintenance work required another over 300 days.

Since its commissioning, Shahjalal Fertilizer Company Ltd (SFCL) has been grappling with leakage in its underground pipeline-an issue absent in other BCIC factories that are 30 to 35 years old.

Officials attribute the problem to the absence of cathodic protection, a critical anti-corrosion measure typically used to safeguard underground pipelines.

A significant portion of the combined 1.79 million metric tons of annual production capacity of BCIC's five major fertilizer factories remained underutilized, the report shows.

In FY2021-22, the total output stood at 470,423 metric tons-just 26.28 per cent of capacity. The following year saw an improvement, with production rising to 741,181 metric tons and the capacity utilisation rate increasing to 41.41 per cent.

Chittagong Urea Fertilizer Limited (CUFL) with a capacity of 380,000 metric tons produced 11.69 per cent of the capacity in FY21-22 and 31.05 per cent in FY22-23.

Jamuna Fertilizer Company Limited (JFCL) produced 28.9 per cent of capacity in FY21-22 and 31.6 in FY22-23 against its 480,000 metric ton capacity.

Ashuganj Fertilizer and Chemical Company Limited produced 13.84 per cent of capacity of 350,000 metric tons in FY21-22 and 44.98 per cent in FY22-23.

BCIC officials said operational improvements and better resource management contributed to the increased production but noted that full capacity utilisation remains a challenge due to raw material shortages and maintenance issues.

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