Bangladesh Chemical Industries Corporation (BCIC) will overhaul its six factories at a cost of over Tk 10 billion to produce an additional 0.5 million tonnes of urea fertiliser.
The corporation has decided to modernise the factories as the government has raised prices of urea fertiliser after about 11 years to help the state-run entities minimise their financial losses and earn profit.
The government raised the prices of urea fertiliser by more than 100 per cent at the beginning of the current month to meet the ever-growing expenditure on account of marketing the agricultural input at subsidised rates.
BCIC chairman Md Mokhlesur Rahman told the FE Thursday that the state-run corporation had adopted a plan for Balancing, Modernisation and Rehabilitation (BMR) and Balancing, Modernisation, Rehabilitation and Expansion (BMRE) for all of its urea producing factories.
"Implementation of BMR and BMRE at a cost of Tk10 billion in phases will help us get an additional 0.5 million tonnes of urea," he said, adding the move has created huge enthusiasm among around 6000 workers and employees of the factories.
Mr. Rahman, also an additional secretary of the government, said: "We could generate fund for BMRE and BMR as we will be able to make a substantial amount of profit."
The factories are incurring annual losses worth around Tk4.0 billion due to selling of urea at a rate lower than production cost.
Under the revised rates, the mill-gate price of urea has been fixed at Tk 10,000 per tonne or Tk 10 per kg, while the new rate will be at Tk 10,700 per tonne or Tk 10.70 per kg at the level of buffer stocks with effect from June 11.
Earlier, the official prices of urea were Tk 4800 per tonne or Tk 4.80 per kg and Tk 5,300 per tonne or Tk 5.30 per kg at the mill-gate and the buffer stock levels respectively. The production cost was Tk8000 per tonne.
Justifying the upward price adjustment, he said: "The official rates of urea remained unchanged for the last 11 years despite that fact that price of natural gas, electricity tariff, salary and wages, and other expenditures had gone up sharply during the period causing huge losses to the factories," he said.
The government had to spend more than Tk 60.52 billion as subsidy for over a decade, he said and added the payment of the government subsidy on imported urea fertiliser will be Tk 54.05 billion in fiscal 2008-09 alone despite the latest upward adjustments.
Due to acute financial crisis, BMR and BMRE in all the state-run urea plants although some of them have already outlived their longevity. Their production capacity is diminishing fast, were never done
Currently, the combined production capacity of six urea fertiliser factories-Chittagong Urea Fertiliser Factory Ltd (CUFFL), Jamuna Urea Fertiliser Factory Ltd (JUFFL), Zia Urea Fertiliser Factory Ltd (ZFFL), Urea Fertiliser Factory Ltd (UFFL), Natural Gas Fertiliser Factory Ltd (NGFFL) and Polash Urea Fertiliser Factory Ltd (PUFL)- has now virtually fallen bellow 1.4 million tonnes from their original capacity of over 2.2 million tonnes.
These factories have been designed to go for BMR after expiry of 20-year life span. But many of them have surpassed the period by 5-10 years now.
Against this backdrop, BCIC chief said: "We have chalked out the road map to increase production."
In line with the road map, the annual production will increase by 0.5 million tonnes of urea over next four years, of which 0.2 million tonnes will be added in fiscal 2008-09.
He said the country's overall demand for urea has been projected at 2.85 million tonnes for fiscal 2008-09.
Of the total, 1.7 million tonnes of urea, including the additional 0.2 million tonnes, are expected to be available from the domestic sources while the remaining 1.15 million tonnes will be imported - both from KAFCO and overseas, he added.
It may sound incredible that Bangladesh used to export about 0.2 million tonnes of fertiliser on an average a year until 1992 after meeting local demand, an official said, adding the country subsequently became dependent on import as no new factory was built to meet the growing requirement of the agricultural input.
