TDS Desk:

Fearing major supply disruptions from traditional Middle Eastern suppliers amid escalating regional conflicts, the government is moving to secure government-to-government (G2G) agreements with Russia, Brunei, and Malaysia to safeguard urea imports ahead of the upcoming Boro season.

The Ministry of Industries is currently negotiating with Russia’s state-owned Prodintorg, Malaysia’s Petronas Chemicals, and Brunei’s BFI. The goal is to bypass the high-risk maritime chokepoints of the Strait of Hormuz and the Bab el-Mandeb Strait—the principal sea routes for fertiliser originating in the Gulf.

These initiatives were detailed in a proposal presented by the Ministry of Industries to the Cabinet Committee on Economic Affairs, chaired virtually by Finance Minister Amir Khosru Mahmud Chowdhury.

Despite the heightened shipping risks in the region, the committee also gave in-principle approval to continue importing urea from the UAE’s Fertiglobe, albeit under revised cost-and-freight (CFR) terms instead of the traditional freight-on-board (FOB) structure. The Ministry of Industries will subsequently seek retrospective approval for the arrangement from the Cabinet Committee on Government Purchase.

Additionally, the committee granted in-principle approval for a long-term G2G import agreement with Russia’s JSC Foreign Economic Corporation Prodintorg, an entity that already supplies MOP fertiliser to Bangladesh.

Bangladesh already imports MOP fertiliser from the Russian company under a long-term agreement.

Bangladesh’s annual urea demand is around 26 lakh tonnes, of which 14 lakh tonnes is required during the peak Boro season from December to March. As of 13 September, the country had 3,76,000 tonnes of urea in stock.

Although the stock level was almost the same at this time last year, there was no fear of import disruption in the absence of conflict in the Middle East.

Bangladesh does not primarily import non-urea fertilisers such as DAP and MOP from the Middle East. Therefore, there is no immediate reason to expect a shortage of these fertilisers. The government is also allowing private-sector companies to import non-urea fertilisers alongside government procurement.

Agriculture Secretary Rafiqul E Mohamed told The Business Standard that disruptions to shipping through the Strait of Hormuz and surrounding sea routes had forced the government to seek alternative suppliers.

“The government is trying to procure fertiliser, fuel oil and other petroleum products from alternative sources. There is no alternative to this under the current circumstances,” he said.

He said Bangladesh was shifting its focus from traditional Middle Eastern suppliers to countries including Brunei, Morocco, Malaysia and China, while discussions had also begun with Canada and Tunisia.

“The government is taking all necessary steps to ensure imports and build stocks of essential agricultural inputs. Cost is not the priority at this stage. Ensuring supply is,” he added.

Domestic urea production remains constrained

Of the five urea fertiliser plants under the Bangladesh Chemical Industries Corporation (BCIC), only Ghorashal Palash Fertilizer PLC is currently operational. The other four have remained shut since the beginning of the year due to a shortage of gas.

The government began supplying gas to Chittagong Urea Fertilizer Limited on 25 August to restart the plant. However, the Ministry of Industries said the factory has not yet been able to resume production.

Meanwhile, the multinational urea fertiliser plant Karnaphuli Fertilizer Company Limited (KAFCO) will remain closed until 14 October to complete scheduled overhauling.

Houthi control of Bab el-Mandeb raises concerns

Historically, Saudi Arabia’s SABIC exported urea to Bangladesh from Al Jubail port via the Strait of Hormuz. Following the outbreak of regional hostilities, Saudi exports were rerouted to Yanbu Commercial Port on the Red Sea. However, Houthi control over the Bab el-Mandeb Strait has created fresh security risks for shipments originating from Yanbu as well.

UAE to supply fertiliser under revised terms

In response to transit risks through the Strait of Hormuz, UAE supplier Fertiglobe proposed shifting its FY2026–27 G2G supply agreement from an FOB to a CFR model. Given the urgent need to build reserves, the Cabinet Committee accepted the adjusted terms.

Under FOB terms, Bangladesh handles chartering, shipping, and unloading logistics. Under CFR, Fertiglobe assumes freight arrangements, but Bangladesh must adhere to stricter discharge conditions.

Fertiglobe has stipulated a required discharge rate of 5,000 tonnes per day at Bangladeshi ports, subject to a demurrage penalty of $40,000 (approx. Tk50 lakh) per day for delays. BCIC transport contractors have cautioned that current port logistics can handle a maximum of 3,000 tonnes per day, raising concerns over potential penalty costs.

The revised UAE proposal also alters pricing mechanisms, tying final rates to market bulletin benchmarks during the week of loading or transit through the Strait of Hormuz, subject to negotiation. Payment will be triggered once vessels clear the Strait and shipping documents are submitted.

To bypass the Strait entirely in the interim, Fertiglobe recently dispatched two emergency shipments to Bangladesh from its subsidiary, Egyptian Fertilizer Company, routed via the Red Sea.