Gas crunch halts production at CUFL, bleeds govt funds

Production at the Chittagong Urea Fertilizer Limited (CUFL) has remained suspended since April 11 due to a persistent gas crisis, leading to significant financial losses for the government.

The state-owned urea fertiliser company stopped operations after Karnaphuli Gas Distribution Company Limited (KGDCL) cut off its supply, saying they cannot allocate gas to CUFL at present, as the available gas is being diverted to power plants to support the national grid during peak demand.

More than 1,000 employees remain on CUFL's payroll, drawing around Tk 4 crore in monthly salaries and allowances. Maintenance costs run into several more crores per month, according to CUFL officials.

CUFL Managing Director Mizanur Rahman said the prolonged suspension is severely damaging for the factory.

"CUFL has not been in production since April 11 due to a shortage of gas. I have informed both KGDCL and the Bangladesh Chemical Industries Corporation (BCIC) multiple times in writing and continued to follow up on the matter," he told The Financial Express.

Mr Rahman said the factory suffers a daily loss of around Tk 4.5 crore when idle.

"If chemical plants remain closed for extended periods, equipment begins to deteriorate, driving up repair and maintenance costs. Without uninterrupted gas supply, it is difficult to sustain this profitable industrial unit."

He noted that CUFL has not operated for more than three months in a year over the past several years, largely due to chronic gas shortages. "Last year, the total production was just 100,000 tonnes -- far below the plant's annual capacity of over 300,000 tonnes."

CUFL sources confirmed that KGDCL stopped gas supply at 7:00am on April 11. As in previous years, gas was diverted to priority sectors -- particularly power generation -- during the summer to manage rising electricity demand nationwide.

Like several other state-run fertiliser plants, CUFL typically suspends operations during the peak power season. However, insiders say repeated shutdowns are affecting the plant's long-term viability.

According to the state-owned urea fertiliser company, the plant could generate profits of Tk 1 crore per day under uninterrupted production. But the frequent halts have resulted in monthly losses of around Tk 50 crore on average.

Set up in 1987 at a cost of Tk 1,700 crore, CUFL reached the end of its guaranteed 20-year operational life in 2007. Since then, it has faced increasing difficulty in maintaining production due to gas shortages.

The factory requires 51 million cubic feet of gas per day to operate at full capacity, but rarely receives that amount.

Its design capacity is 561,000 tonnes of urea annually, which it has never reached since inception. When operational, the factory produces between 1,650 and 1,680 tonnes of fertiliser per day.

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