The Bangladesh Chemical Industries Corporation (BCIC) is likely to incur a loss of around Tk 19 billion for selling urea fertiliser at much lower price than the production cost in the next fiscal year, officials said.
Amid such a situation, the corporation has requested the government to provide subsidy against the loss and include it in the subsidy policy.
BCIC chairman Shah Md Aminul Haq in a recent letter to the ministry of finance (MoF) said the corporation imports and produces urea fertiliser to meet local demand.
The government provides subsidy against the losses incurred for selling imported urea fertiliser at low price to the farmers. However, no subsidy is given against the losses incurred for selling urea fertiliser produced in the six factories, owned by the BCIC.
The government in August 2013 fixed the selling price of urea fertiliser at Tk 14,000 per tonne, lowering it from Tk 18,000 a tonne.
Mr Haq also wrote that due to lack of uninterrupted gas supply, the BCIC factories cannot produce fertiliser at expected level. As a result, the production cost of fertiliser goes up, leading to a big financial loss.
According to the BCIC chairman, the six urea plants produced 922,720 tonnes of fertiliser in the fiscal year 2016-17. The production cost of each tonne of fertiliser was Tk 19,304 while their selling price was Tk 14,000 per tonne. As a result, the corporation suffered a loss of Tk 4.89 billion that year.
"If the gas price is fixed at Tk 13 per cubic foot, the production cost of per tonne of urea fertiliser in the fiscal year 2018-19 will reach Tk 25,330 and loss from selling of per tonne fertiliser will stand at Tk 11,330," he wrote to the ministry.
The total loss from urea sales will stand at Tk 18.70 billion in the next fiscal year, he wrote, adding that providing subsidy, to the tune of the loss to be incurred, has become necessary to help save the factories.
A senior MoF official told the FE that they were examining the proposal sent by the BCIC. Decision will be taken after consultation with industries and agriculture ministries, he noted.
BCIC officials said almost all the factories under the corporation, except Shahjalal Fertiliser Company Ltd and Jamuna Fertiliser Company Ltd, have become outmoded many years back.
As a result, mechanical fault, corrosion, leakage, environmental pollution, and breakdown often occur, and efficiency of those factories decreases, they added.
BCIC produced over 1.6 million tonnes of fertilisers through its enterprises ten years back, but the production capacity has now dropped to nearly 0.9 million.
The corporation annually requires 88,770 million cubic feet (mmcf) of gas to operate its six urea fertiliser plants with cent-per cent load. But it presently gets less than 35,000 mmcf, leading to frequent suspension of operation.
Despite attempts over telephone, BCIC chairman Mr Haq could not be reached for his comment in this regard.
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