The Financial Express

Another fertiliser factory to shut for gas supply cut

Stakeholders fear BD becomes import-dependent for agro-input, may count hefty subsidy to save farmers

| Updated: February 05, 2018 15:20:39

Shahjalal Fertilizer Plant in Sylhet's Fenchuganj seen in this file photo. Shahjalal Fertilizer Plant in Sylhet's Fenchuganj seen in this file photo.

Country's lone active urea fertiliser unit, Shahjalal Fertiliser Factory, is now set to halt for gas cut that would make public exchequer count huge costs in import bills and subsidies.

Though Bangladesh Chemical Industries Corporation (BCIC) doesn't see any possibility of supply crunch of the key agro-input this peak cropping season, dealers and a section of corporation's officials fear it might hamper smooth supply of fertiliser.

They especially foresee delayed delivery of fertiliser because of dilapidated conditions of the country's major highways.

At the same time, they said, the transportation will additionally cost the government around Tk 2000 a tonne to carry the fertiliser from their godwons to various parts of the country.

With the shutdown of Jamuna Fertilizer Company Ltd couple of days ago due to unavailability of natural gas, five out of the country's six fertiliser- production bases remained inoperative.

In a latest development, Jalalabad Gas Transmission and Distribution System Limited recently sent a letter to the country's lone active Shahjalal Fertiliser Factory, having annual production capacity of around 394,000 tonnes, for switching off the supply of gas, the basic raw material for fertiliser.

Contacted, Managing Director of Shahjalal Fertiliser Factory Limited, which came into production in 2016, Monirul Haque said they received a letter from Jalalabad Gas Transmission and Distribution System Limited on January 29. In the letter the gas company stated of supply disconnection from the following day by citing government decision.

After getting the letter, they informed the corporation of the development. "It might create supply crunch of the agro-input as the factory on average produces  1600 tonnes. Our main office (BCIC) is now dealing with the matter," he said.

Talking to the FE, General Manager (North) for Marketing of Jalalabad Gas Transmission and Distribution System Limited Engineer Shahinul Islam admitted to the development, saying that they sent the letter for supply suspension.

"It was not our decision. It was government decision. It was only to ensure smooth supply of power during this irrigation season when the demand for power goes up," he added.

Getting tensed by the unexpected development, especially in the peak dry season (January to March), the largest state corporation is on the move from the ministries of industry and agriculture urging the authorities to persuade the Ministry of Power, Energy and Mineral Resources into stepping back.

Terming the gas-suspension move very unfortunate, acting BCIC Chairman Md. Haiul Quaium said fertiliser factories are shutting down one after another due to unavailability of gas. If the gas company executes the move, the country will lose its capacity to produce the input.

"This is peak time. But we're not getting natural gas, which is the main raw material for fertiliser. How can we survive?" he wondered.

Dispelling the fear of fertiliser crunch in this peak period, Mr. Quaium, also BCIC Director (Finance), said the demand for fertiliser for this peak season will be around 1.0 million tonnes and they have a buffer stock of 1.60 million.

"So, we can meet the demand for this season but such things will increase import and will put extra burden on the government exchequer in the form of growing subsidy," he added.

He further said the newly revised weight limit for motorised vehicles through the highways would also raise the transportation expenses manifold, which could be another pain in the neck of state-owned chemicals corporation.

Some of the sources apprehend that Bangladesh could be left import-dependent through erosion of production capacity for the snags.

Just ten years ago, the BCIC managed to produce over 1.6 million tonnes of the agro-input but the production capacity went down to nearly 1.1 million in 2017 though the country's demand increased to 2.8 million.

The BCIC meets the remaining demand through import and the gas rationing will undoubtedly further reduce its production capacity. A state subsidy of Tk 13,000 was provided against import of each tonne of urea in FY'17 as the corporation needs to sell the fertiliser at much lower rates than its cost price.

The government last month approved two proposals. Under the proposals, BCIC will import 45,000 tonnes of granular urea fertiliser from the international market in two lots. It will also import another 25,000 tonnes of fertiliser from the UAE under a state-to-state deal at a cost of Tk 520 million.

The corporation annually requires 88,770 million cubic feet (MMcf) of gas to operate its six urea fertiliser plants with cent-percent load. But the consumption rate plummeted below 35,000 MMcf in FY'17, leading to frequent suspension of operation.

Members of Bangladesh Fertiliser Association strongly criticised the move, saying that it would cast a negative impact on agricultural production as a whole.

President of the association Kamrul Ashraf Khan Poton said Chittagong Urea, Ashuganj, Palash, Ghorashal and Jamuna fertiliser factories were shut at different times because of gas dearth. Now only Shahajalal is in operation.

He said closing down fertiliser factories frequently contradicted government policy of prioritizing the agriculture sector. The ongoing development works on the highways could cost the farmers in the form of delayed delivery of the key input of crop farming.

"The government should not go with such decision. Otherwise, it will hamper agro-production. I think it will be a suicidal move of the government," he said.

[email protected]

Share if you like