Chinese help sought to set up urea plant in Sylhet despite severe gas shortage

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FE Report
The government is planning to set up a gas-based fertiliser factory in Sylhet, investing $560 million though the country is facing severe gas supply shortage, officials said Monday.
It has sought fund from the Chinese government in the last joint economic commission (JEC) meeting between Dhaka and Beijing for constructing the Shahjalal fertiliser factory at Fenchuganj in Sylhet.
The Bangladesh Chemical Industries Corporation (BCIC) under the ministry of industries would be entrusted with the responsibility of setting up the plant with a production capacity of 1750 tonnes per day.
"We do not know about the proposed fertiliser factory. The industries ministry is yet to seek gas supply confirmation from us," a director of the state-run energy corporation, Petrobangla, told the FE.
We would not be able to supply gas to any bulk customers, including industrial units, at this moment before augmenting gas production, he told the FE.
Petrobangla has been failing to supply adequate gas to the existing customers due to an estimated deficit of more than 200 million cubic feet (mmcf) of gas per day.
"The energy division has advised us to set up the plant in Sylhet instead of Sirajganj. So, we have decided to set up the factory in Fenchuganj," Industries secretary Dewan Zakir Hossain told the FE.
The industries ministry earlier had a plan to construct the North-West Fertiliser Factory in Sirajganj.
"We haven't had talk with Petrobangla yet on getting the gas supply. But as the energy division assured us of the supply we are moving forward with our project," Mr. Hossain said.
Petrobangla has already stopped gas supply to three state-owned fertiliser factories- one each at Ghorasal and Polash in Narshingdi, and Chittagong- due to gas supply crunch in the country.
Mr. Hossain said the Chinese government in the last JEC meeting in Beijing had assured funding the proposed Shahjalal fertiliser factory.
"We have a plan to start construction work of the factory in 2010 and begin production from early 2014," the industries secretary said.
A member of the Bangladesh delegation to the recently held Bangladesh-China JEC meeting told the FE that the Chinese side was initially reluctant to finance the project due to inadequate gas production in the country.
"When we assured the Chinese side of the availability of gas in Sylhet, they agreed in principal to fund the project. But they would examine the viability of the proposed fertiliser plant," the official said.
He said Dhaka had sought concessional loan from the Chinese government which, however, favoured costly "buyer's credit". "We need to further negotiations to obtain soft loan."