Bangladesh's two decades-old major urea-manufacturing units -- Ghorashal and Palash fertiliser factories -- are destined to be history as government authorities decided to dismantle both, officials said.
An energy-efficient unit with state-of-the-art production facilities will replace the twin, according to the decision made by Bangladesh Chemical Industries Corporation (BCIC).
The rejuvenation of the superannuated fertiliser producers involves a massive reinvestment scheme worth around Tk 100 billion, the sources said.
The corporation terms the reinvestment as a "wake-up" move to get back its glory of meeting country's fertiliser demand and contribute significantly to raising the share of agriculture to GDP (gross domestic product).
In accordance with the G2G (government-to-government) plan, the new factory will be able to redouble production with the same gas-consumption rate as of Ghorashal and Palash factories that were built in the 70s and the 80s respectively.
The factories remained shut most of the time of a year due to unavailability of natural gas, a basic raw material of fertiliser. Such moribund state of the two state-owned enterprises contributed to the snowballing of losses the country's largest corporation incurs.
Officials concerned said the refinancing initiative will not only help boost production but also cut subsidy the government needs to hand out in the form of import to ensure enough supply of fertiliser for agricultural production.
Agriculture has a countable contribution of 16 per cent to the country's GDP.
When contacted, BCIC Acting Chairman Md. Haiul Quaium said the corporation is facing difficulties in maintaining urea production because of not getting enough gas, coupled with the fact that economic age of the plants expired years ago.
He said the old factories consumed gas heavily but production performance was not up to the mark. Both the units can maximum produce 1300 tonnes a day by eating up around 120 cmmf gas.
"That's why we took the reinvestment plan of nearly Tk 100 billion. By making the fresh investment, we will set up a modern plant in the places and can produce 2800 tonnes a day with the same gas consumption rate," he added.
Mr. Quaium, also BCIC Director (Finance), said they already had sent the project proposal to the ECNEC (Executive Committee of the National Economic Council) for approval and one Japanese firm was shortlisted for the tasks.
In absence of reinvestment in those key agriculture-input-producing bases, both financial and operational health of the factories continued shrinking over the years. It, simultaneously, enhanced the country's dependence on imported fertiliser.
Just ten years ago, BCIC managed to produce over 1.6 million tonnes of the agro-inputs but the production capacity went down to nearly 1.1 million in the previous year though the country's demand increased to 2.8 million.
According to BCIC data, the volume of financial losses Ghorashal and Palash factories incurred rose to Tk 1.30 billion and around Tk 300 million respectively.
Talking to the FE, Managing Director of Ghorashal Urea Fertiliser Factory Abul Kashem said the production base was built 45 years ago. Since then, no reinvestment has been made to upgrade this outmoded unit.
He said ongoing gas-supply shortage added another pain to their poor performance. They could not operate the unit for eight months a year for not getting gas.
"So, how can we make profits amid this obstacle?" he raised a counter- question.
Immediate-past BCIC Chairman Mohammad Iqbal, who took the reinvestment initiative to revamp country's fertiliser-production capacity, said they made the move considering growing demand for locally-produced fertiliser.
On G2G basis, the corporation will take loan from the existing financing sources and the government will be the guarantor. The corporation will pay back the loan amount in less than five years in accordance with the plan, if it sails through.
Asked about capability of paying off the loan in less than five years, Mr. Iqbal said the new plant will have the capacity to produce 2800 tonnes a day and 1.0 million tonnes a year from one unit in accordance with the plan.
"The principal amount and interest return will be paid according to the existing market rate. I think it will not be a problem. The focus should be on the gas supply so that production is not hampered for a single day," he said.
Talking about the technology, he said the factories release some gases into the atmosphere that it could not use with the existing technology. But the latest one will enable the factory to reuse the resources.
