Staff Correspondent:

Most of the fertiliser factories are facing production losses every year due to gas shortages, forcing the government to import fertiliser from abroad at high prices.

Currently, the government needs to import as much as 50 percent of the country’s annual urea demand of 30-32 lakh tonnes to maintain stable agricultural production.

In contrast, about 60 percent of local urea production capacity remained unused in the last fiscal year.

All the fertiliser factories are running below capacity except the newly-built Ghorashal-Palash Fertiliser, which started production in March last year.

For instance, Jamalpur’s Jamuna Fertiliser Company remained idle for 351 days in the last fiscal year. It produced about 4,000 tonnes of urea against the annual production capacity of 5.6 lakh tonnes.

Shahjalal Fertiliser Company in Sylhet, which is one of the modern factories in the country, was shut for 147 days due to gas scarcity.

The government had not only imported 16.44 lakh tonnes of urea from abroad that fiscal year but also needed to bear the cost of maintaining an idle workforce throughout the year for those plants, according to data from Bangladesh Chemical Industries Corporation (BCIC).

BCIC submitted the data to a public hearing yesterday, organised by the Bangladesh Energy Regulatory Commission (BERC), following the proposal to hike the gas price in the fertiliser category.

Currently, the per cubic meter gas price for fertiliser factories is Tk 16.

On August 10, Petrobangla applied to BERC to hike the price to Tk 40 per cubic meter.

The Technical Evaluation Team of BERC recommended that the new price be set at Tk 30.

The BERC will take public opinion until October 13 and announce the decision later.

Most of the invited organisations were absent from the hearing, while the Consumers’ Association of Bangladesh (CAB) boycotted it.

If gas prices are increased, fertiliser prices will also rise in the aftermath, said M Shamsul Alam, CAB’s energy adviser.

“Once fertiliser prices go up, agriculture will collapse, and we will have to import food — the country is gradually turning into an import-dependent market.”

In the interest of food security, the gas price for the fertiliser sector is typically kept low, he added.

In his submission, BCIC’s Director (Planning & Implementation) Md Delwar Hossain said the authorities hiked the gas prices in 2022 with a promise to ensure uninterrupted supply.

But that commitment was not kept.

“Gas supply must be ensured. And if the price has to be increased, instead of raising it steeply, it could be increased from Tk 16 to Tk 20. That would still help protect the farmers.”

Urea production has been declining since fiscal 2007-08 when the “gas rationing system” was initiated amid the gas shortage. Before that year, the local production was around 18 lakh tonnes.

Last fiscal year, local urea production stood at about 10 lakh tonnes, 80 percent of which came from the Ghorashal-Palash plant. This means the other factories produce only 2 lakh tonnes of urea, he added.

“The import dependence has increased manifold and a huge amount of foreign currency is leaking because of this,” he added.

If the gas supply is ensured, the per tonne urea production would cost Tk 38,000, as per the BCIC’s submission. It said the government pays Tk 13,000 as subsidies and they sell it to the dealers at Tk 25,000.

In fiscal 2024-25, the import cost for per tonne urea was Tk 56,547 and in fiscal 2023-24, Tk 51,418, according to data from the BCIC.

If the new rate is fixed at Tk 30, the production cost will be lower than the import cost.

Md Moniruzzaman, deputy secretary of the agriculture ministry, also didn’t oppose the recommendation of raising gas prices.

There is no decision to raise fertiliser prices at the retail level from the government, he said.

“If the government covers the increased production costs through subsidies, then the gas prices may go up,” he added.

The fertiliser factories have a demand of 245 million cubic feet of gas per day (mmcfd), while Petrobangla has provided an average of 116 mmcfd.

If the price is hiked, it will not be possible to supply more than 181 mmcfd on average, said AKM Mizanur Rahman, director (Finance) at Petrobangla.

“The increased price will help Petrobangla to reduce the cost deficit as the fertiliser sector pays less than the average cost of gas supply,” he added.