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Fertilizers to be imported at higher prices, failing to resolve gas crisis

05 August 2022

Staff Reporter :
Fertilizers will have to be imported from abroad at higher price, if the ongoing gas crisis is not resolved soon, experts said.
 In the last one year, the price of fertilizers increased almost three times in the international market.
In such a situation, experts have suggested increasing the production of fertilizers in domestic factories. But two factories have been shut recently due to gas crisis.
The sector stakeholders think that it is possible to meet the demand till next December with the production by two fertilizer factories and stocked fertilisers.
Bangladesh Chemical Industries Corporation (BCIC) is renovating factories to increase fertilizer production in the country.
Around 2.6 million tonnes of urea fertilizer is required in the country per year. The four fertilizer factories are producing 10 lakh tonnes every year.
Besides, 6 lakh tonnes of fertilizer come from Karnaphuli Fertilizer Company (Kafco) and it will increase the production over 9 lakh tones if the Ghorashal-Palash Urea Fertilizer Factory is reopened in next November.
And by renovating the old fertilizer factories, the production of fertilizer will increase by another 5 to 6 lakh tonnes. It will be able to produce the entire demand of urea fertilizer in the country.
From June 1, the Energy Regulatory Commission increased the price of gas per cubic meter in the fertilizer sector from Tk4.45 to Tk16. As a result, the production cost of fertilizer     has increased by Tk 19.591 crore per tonne.
Around 2,63,61,654 cubic meters of gas was used in Jamalpur's Jamuna Fertilizer Factory (JFCL) in last June. That's why, Tk 30,44,80,104 will have to be paid extra.
It will be difficult to keep the factories running if the government does not pay the extra money due to the increase in gas prices. The production cost of urea fertilizer was Tk 19 per Kg in the last financial year 2021-22.
But, fertilizer has been imported at the rate of Tk70 to 80 per kg from the international market. As a result, the government had to spent Tk9,745 crores for importing fertilizers.
BCIC incurs an average annual loss of Tk 500 crore by supplying fertilizers at prices lower than the cost of production. But the BCIC is not getting money from the government.
On the other hand, there are allegations that dealers and retailers are manipulating and selling fertilizers at higher prices to farmers.
The urea fertilizer is being sold at Tk 20 instead of Tk 14 in most districts including Rangpur, Naogaon, Rajshahi, Gazipur and Narayanganj.
The government gave a subsidy of Tk 28,000 crore for fertilizers in the last financial year due to being forced to buy fertilizers at high prices. A year ago, a tonne of urea fertilizer was bought at $500 from the international market, but now it has crossed $800.
The price of TSP fertilizer is $200-300 per tonne, but it is being sold at $600-700. As a result, the government has to buy fertilizers at a higher price.
On the other hand, many countries have imposed restriction the export of fertilizers to increase their production. Although China is the world's leading exporter of DAP fertilizer, the country imposed a ban on the export of the fertilizer this year.
In such a situation, if the production of urea fertilizer is increased in the country, the risk will be reduced.
Bangladesh has stockpiled more than 7 lakh tonnes of fertilizer and the country's largest factory, Chittagong Urea Fertilizer Limited (CUFL), has been shut down due to gas shortage, but the stocked fertilizer can meet the demand till next December.
As a result, there will be no problem in getting fertilizer in the coming Amon season.
Bangladesh Fertilizer Association Executive Secretary Riaz Uddin Ahmed said that land is limited in Bangladesh, but the agricultural production has increased along with the population.
"Most of the country's food demand is in the country. Consequently, stopping the use of fertilizers overnight will have a severe impact on crop production," he said.
Agriculture Minister Dr Abdur Razzak said, "The price of produced fertilizers is much lower than imported. But, it has become difficult to run the fertilizer factories for gas crisis. Everything depends on the international situation. The government is uncertain about that."
BCIC Chairman Shah Md Imdadul Haque said, "Government is not paying any cost for fertilizer production. On the other hand, the price of gas has been increased. As a result, if the government does not give money, it will not be possible to pay the price of gas."

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