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The official announcement on a US$ 1.3-billion financial agreement for building a mega urea fertiliser factory at Ghorasal was made at a ceremony held on Sunday evening in the city.
Earlier on November 21 the agreement was signed between Bangladesh Chemical Industries Corporation (BCIC), which owns the country's all fertiliser factories, and three global lenders at the Ministry of Industries.
The new fertiliser manufacturing base with 0.1 million tonnes of production capacity will be built on the land of Ghorasal and Polash factories, which are in the process of being merged as part of the development activities.
Chairman of the state-run Bangladesh Chemical Industries Corporation (BCIC) Md. Haiul Quaium has exchanged documents of the written agreement with the representatives from Japan Bank for International Cooperation (JBIC), Nippon Export and Investment Insurance (NEXI)-backed Mitsubishi UFJ and Multilateral Investment Guarantee Agency (MIGA)-backed HSBC.
Industries minister Nurul Majid Mahmud Humayun was present on the occasion.
The minister said the project would also benefit indirectly the booming economy alongside saving foreign currency amounting to approximately over Tk 10 billion.
"The project is going to be implemented through bidder financing process and the total cost is estimated at Tk 104.60 billion," he added.
Hailing Bangladesh's growing economy, Chief Executive Officer of HSBC Bangladesh Francois de Maricourt said the bank is honoured to be part of the nation's journey towards middle income country.
"We're aligned with Bangladesh's development strategy and we're proud to support long term projects that will boost the country's economic growth.
State Minister for Industries Kamal Ahmed Mojumder said the government has been working with a long-term vision to export fertiliser by meeting the local demand.
He said the environment-friendly production base would produce 2800 tonnes of urea daily.
President of NEXI Masafumi Nakada, Deputy Governor of JBIC, Japan and principal coordinator (SDG affairs) to the Prime Minister Md Abul Kalam Azad, among others, spoke at the ceremony.
Of the total financial requirement for the project, the government will provide Tk 18.44 billion while the rest (Tk 86.16 billion) will come as commercial loan from the overseas lenders.
Of the overseas loans, Japan Bank for International Cooperation (JBIC) will give 85 per cent and the remaining portion will be provided by HSBC and MUFG.
According to the BCIC sources, the corporation will borrow the loan for a period of 14 years with a four-year grace period.
The rate of interest for JBIC loan (Japanese Yen equivalent to US$ 600 million) will be 2.17 per cent, the rate for HSBC loan (US$ 400) is estimated at 4.37 per cent.
There will be two types of interest rates for MUFG loan (US$300) because the lender will provide finance both in US dollar (4.37 per cent) and Japanese currency (2.17 per cent).