DAP fertiliser factory nearly non-functional
Tuesday, 10 May 2011
Asaduzzaman Pallab
Tk 11 billion di-ammonium phosphate (DAP) fertiliser factory remains virtually non-functional due to shortage of raw materials and working capital. Sources in Bangladesh Chemical Industries Corporation (BCIC) said, so far only 32,000 tonnes of DAP fertiliser was produced in the current financial year (2010-2011) against the production target of 0.15 million tonnes. The production capacity of the DAP fertiliser factory is around 0.55 million tonnes per year. In the last financial year the production was only 28,000 tonnes in the two units of the factory. The government established two units of DAP fertiliser factory with Chinese and Japanese loan support in 2006. This was aimed at fulfilling the DAP fertiliser demand in the country. The sources said the prices of raw materials for DAP fertiliser (phosphoric acid and ammonia) saw unusual hike in the international market in recent times. As Bangladesh has no fixed sources for procurement of raw materials, it always struggles in the process of procuring the same. With the present level of price of raw materials, the DAP fertiliser production cost varies between Tk 50,000-55,000 per tonne. At the consumer level the price of each tonne of DAP fertiliser is fixed at Tk 25,000 by the government. On condition of anonymity, a senior official of BCIC told the FE that with the substantial subsidy per tonne, the DAP factory authorities face serious shortages of working capital that is ultimately hampering production. "We get the subsidy money from the government. The process of getting money from the government is time consuming and by the time the factory authorities get the subsidy, they face liquidity crisis in their daily operation," he said. The factory was established four years ago with the foreign loan and the government will have to ultimately pay back the money. If the production capacity cannot be used at the optimum level, the money will be wasted. When contacted, BCIC Director (production and research) Khurshid Anowar told the FE that the major problem is the shortage of electricity supply.
Tk 11 billion di-ammonium phosphate (DAP) fertiliser factory remains virtually non-functional due to shortage of raw materials and working capital. Sources in Bangladesh Chemical Industries Corporation (BCIC) said, so far only 32,000 tonnes of DAP fertiliser was produced in the current financial year (2010-2011) against the production target of 0.15 million tonnes. The production capacity of the DAP fertiliser factory is around 0.55 million tonnes per year. In the last financial year the production was only 28,000 tonnes in the two units of the factory. The government established two units of DAP fertiliser factory with Chinese and Japanese loan support in 2006. This was aimed at fulfilling the DAP fertiliser demand in the country. The sources said the prices of raw materials for DAP fertiliser (phosphoric acid and ammonia) saw unusual hike in the international market in recent times. As Bangladesh has no fixed sources for procurement of raw materials, it always struggles in the process of procuring the same. With the present level of price of raw materials, the DAP fertiliser production cost varies between Tk 50,000-55,000 per tonne. At the consumer level the price of each tonne of DAP fertiliser is fixed at Tk 25,000 by the government. On condition of anonymity, a senior official of BCIC told the FE that with the substantial subsidy per tonne, the DAP factory authorities face serious shortages of working capital that is ultimately hampering production. "We get the subsidy money from the government. The process of getting money from the government is time consuming and by the time the factory authorities get the subsidy, they face liquidity crisis in their daily operation," he said. The factory was established four years ago with the foreign loan and the government will have to ultimately pay back the money. If the production capacity cannot be used at the optimum level, the money will be wasted. When contacted, BCIC Director (production and research) Khurshid Anowar told the FE that the major problem is the shortage of electricity supply.