Mega urea project at Ghorashal: Foreign funding hits snag on guarantee agency's objection

The prospect of building the country's largest urea fertilizer factory at Ghorashal has become somewhat uncertain following an objection raised by the Multilateral Investment Guarantee Agency (MIGA), a member of the World Bank Group.

The MIGA's objection relates to high air and pollution caused by the existing Ghorashal Fertilizer Factory Limited (GFFL).

The MIGA is a member of the World Bank Group which offers political and non-economic risks insurance and credit enhancement guarantees for investors in the developing countries.

The proposed US$ 1.25 billion (Tk. 105 billion) project would be built at the present site of the Ghorashal and Palash fertilizer factories. The Palash factory has already been shut down , but the former is still in operation to help meet the local demand for inorganic fertilizer.

The new fertilizer plant will be environment-friendly, sources claimed.

The MIGA, according to sources, has not suggested closure of the GFFL, but warned the financiers of the project not to proceed if the pollution level is not reduced to less than 25ppm (parts per million). The present pollution level of the factory, according to a BCIC official, is much higher than the international standards---25ppm for air and 50ppm for water.

The project now faces serious setback because of environmental pollution being caused by the factory that has lost its economic life some decades back, officials said.

Sources in the Bangladesh Chemical Industries Corporation (BCIC) said it came as a major impediment to the implementation of the new project named Ghorashal Palash Urea Fertiliser Project (GPUFP) with an annual projected capacity of around 1.0 million tonnes.

They said the MIGA objection has made signing of the financial agreement with the overseas investors uncertain. The BCIC will have to devise ways to bring down the pollution level to the internationally accepted levels.

Talking to the FE, project director of the GPUFP Md. Rajiour Rahman Mollick said the MIGA has recently raised the environment-related objection.

In the objection, the Agency said it has found instances of higher environmental pollution and cautioned the financiers not to proceed further unless the pollution level is reduced to below 25ppm (parts per million), he said.

"This is a serious problem that we've to overcome for the greater interest of the project," sources said.

"Though not viable economically, the factory is still in operation. And it is not possible to bring down the pollution level below 25ppm by a factory that had lost economic life almost three decades ago," they said.

Citing an environmental test report that was published in January this year, he said the level of air and water pollution has been much higher than that stipulated by international standards.

When contacted, BCIC chairman Md Haiul Quaium said they have already formed a seven-member committee headed by BCIC director (finance) Md. Billal Hosain and asked it to submit a report within five working days.

He said the production at Ghorashal fertiliser factory will be automatically suspended when new production bases under the project will be installed after dismantling the Palash and Ghorashal nits.

"Palash unit has already been shuttered down but we are still operating the Ghorashal factory with patchwork so that no crisis of fertiliser is created," he added.

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.

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.

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