Govt set to give go-ahead to Tk 54.09b fertiliser factory

FHM Humayan Kabir The government is set to approve construction of the expensive Tk 54.09 billion Shahjalal Fertiliser Factory project with Chinese loan in a bid to augment the country's urea production capacity, officials said Wednesday. Planning Commission (PC) officials said they would place the scheme before the government's highest economic policy-making body, the Executive Committee of the National Economic Council (ECNEC), Thursday seeking its approval. The ECNEC is likely to endorse the project at its meeting today (Thursday) as the BCIC (Bangladesh Chemical Industries Corporation) has received confirmation from the Chinese government about the loan, a senior PC official told the FE. The state-owned BCIC has already signed a US$ 580.19 million commercial deal with the China National Complete Plant Import & Export Corporation Ltd. (Complant) for setting up the Shahjalal Fertiliser Factory in Sylhet by June 2013. As per the loan's terms and conditions, the Chinese government has selected its Complant for setting up the factory in Bangladesh, the official said. Industries Ministry officials said the Chinese government has already assured their of providing $560 million in loan for constructing the country's largest fertiliser production plant. Out of the assistance, the Chinese government will provide $235 million credit and its EXIM Bank $325 million preferential buyers' credit. According to terms and conditions, the government will have to repay the loan in 20 years (five-year grace period) with 2.0 per cent interest rate. Besides, it has to pay 0.2 per cent management fee and another 0.2 per cent commitment fee (payable every 180 days on the balance not disbursed) for the Chinese borrowing. Buyers' credit is a loan where the borrower (buyer) will act as the third party and the lender will appoint the firm for supplying machinery to the buyer. The borrower will repay the costs for procuring equipment. The state-owned BCIC has undertaken the Tk 54.09 billion (nearly $750 million) Shahjalal Fertiliser Factory scheme, with a large production capacity of 1,750 tonnes per day, to cut the supply shortage of the agricultural input. Bangladesh's existing fertiliser factories produce nearly 1.8 million tonnes of urea against the annual demand for more than 3.0 million tonnes. In the last joint economic commission (JEC) meeting between Dhaka and Beijing held in July last year, the Bangladesh government sought the fund from China for constructing the factory. The BCIC will set up the plant with a production capacity of 5,77,500 tonnes per year, the largest capacity in the country. The corporation has six others urea factories including Chittagong Fertiliser Factory with annual capacity of 5,61,000 tonnes, Jamuna Fertiliser Factory with 5,61,000 tonnes, Ashuganj Fertiliser Factory with 5,28,000 tonnes, Urea Fertiliser Factory with 4,70,000 tonnes, Polash Fertiliser Factory with 95,000 tonnes and Natural Gas Fertiliser Factory with 1,06,000 tonnes.