BCIC seeks fertiliser subsidy, or hike in urea sales price

Bangladesh Chemical Industries Corporation (BCIC) has requested the government to set higher the price of urea fertiliser or provide a subsidy of Tk 4,000 per tonne to offset the losses it incurs due to selling the agriculture input at an administered price, which is lower than production or import costs.
Officials said the state-owned enterprise sought the higher sales price of the commodity or subsidy through the Ministry of Industries (MoI) as the production cost is higher than the market price.
The MoI requested the Ministry of Finance to convene an inter-ministerial meeting to take a decision on fertiliser price or subsidy, they said.
The price of urea remains static at Tk 14,000 per tonne for about last four years since February 2013, when the government reduced the price by Tk 4,000 from Tk 18,000 per tonne.
The government could either increase the sales price or provide the subsidy, BCIC chairman Mohammad Iqbal told the FE Wednesday.
He said the capacity of farmers has increased with the improvement in productivity due to cultivating high-yielding varieties.
"I noticed in many cases, the dealers charge higher than the government-fixed price, but the farmers are buying it," he said, adding that the farmers are now can afford to buy fertiliser at higher prices.
The country's annual demand for urea is around 2.5 million tonnes - BCIC factories produce 1.215 million tonnes and it imports 730,000 tonnes. The BCIC also maintains a stock of around 550,000 tonnes of urea. A subsidy of Tk 13,000 is being provided against import of each tonne of urea.
BCIC in a memo to the MoI said the fertiliser factories, except Jamuna Fertiliser Company Limited, remain closed on an average six to seven months a year due to short-supply of gas. The factories need one more month to resume production when gas supply starts again.
As a result, the production capacity remains unutilised and the cost goes up. The working capacity of the fertiliser factories also decline due to corrosion, pushing up the maintenance cost.
BCIC also pointed out that the latest gas price hike has also contributed in the increased production cost of fertiliser while the new pay scale for the public servants adding up the burden.
The BCIC said that due to lower demand of fertiliser in the command area of Shahjalal Fertiliser Factory in Sylhet, the most part of its production is being supplied to the northern and southern parts of the country. Around Tk 3,000 is being spent per tonne as loading, unloading and transportation cost.
"The financial base of the fertiliser factories is becoming fragile due to lower production, higher production cost, and low selling prices," the BCIC argued in the memo. "The normal life of the factories has expired but BCIC failed to carryout necessary overhauling, repair and maintenance due to financial constraint."
It further said that if the government provides a subsidy of Tk 4,000 per tonne, the fertiliser factories would overcome the financial constraints and be able to carry out necessary maintenance work, according to the memo.
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