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Bangladesh - February 15, 2024

Dollar and gas crisis hit hard fertilizer

Farhad Chowdhury : There is a dollar crisis in the country for two long years. still running Besides, severe gas crisis has occurred in recent times across the country. Which is much improved now. All in all, on the one hand, the dollar crisis has created uncertainty in the import of fertilizers. On the other hand, the manufacturing company is not able to produce fertilizer without getting enough supply of gas. If the situation continues, farmers will not get fertilizer on time. As a result, the impact of the dollar and gas crisis on fertilizers. Concerned people have expressed the fear of disrupting food production.
As the import of fertilizers is under threat due to the dollar crisis, there is uncertainty about the supply of urea in the coming Boro season. In the meantime, Bangladesh Chemical Industries Corporation (BCIC) and Karnaphuli Fertilizer Company Limited (Kafco) have written to the Ministry of Finance urging payment of 10.5 million dollars.
Bangladesh Bank and the concerned departments including the Secretary of Industry have also been informed about this.
Meanwhile, Agrani Bank and Krishi Bank are not approving BCIC’s fertilizer import letter of credit or LC due to the dollar crisis. It is said that if fertilizers are not imported due to LC crisis, the food security of the country will be in a disaster. Sources in the Ministry of Industries said that the LC could not be opened for the import of fertilizers.
Meanwhile, Urea producer Yamuna Fertilizer Company Limited (JFCL) has not been able to produce fertilizer for almost a month due to lack of gas supply. The concerned officials do not see any possibility of when the factory will be operational. Meanwhile, Chittagong Urea Fertilizer Limited (CUFL) Company has been instructed to continue production by rationing. Shahjalal Fertilizer Factory Limited and Ashuganj Fertilizer and Chemical Company are also at risk. BCIC officials said, now three factories are in production. A shutdown due to gas.
In agriculture-oriented Bangladesh, most of the demand for fertilizers is still supplied through imports. But the shock of the ongoing economic crisis has been created with this important component of agriculture, fertilizers. According to the information of the Ministry of Agriculture, BCIC has set a target of importing 9 lakh tonnes and 5.5 lakh tonnes of urea fertilizer from Kafco Bangladesh under the GTUG agreement for the current fiscal year 2023-24. From which Kafco, out of 5.5 lakh tonnes imported from Bangladesh, LC has already been opened for 3 lakh tonnes in Bangladesh Krishi Bank and Agrani Bank. LC should be opened for remaining amount by next June.
7.5 lakh tonnes of urea fertilizer will be required during Amon season. Next comes the season of producing the biggest crop – boro, when 60 percent of the total fertilizer supply will be required.
Govt especially finance department gives counter guarantee to BCIC for import of fertilizer. Banks pay the price of fertilizer by creating LTR (Loan Against Trust Receipt) for a period of six months against the guarantee. The government has issued a counter guarantee of Tk 4000 crore in favor of Agrani Bank till last December. Against which the price of urea fertilizer has been paid by creating LTR liability of Tk 2006 crore. At present, the counter guarantee limit of Tk 1,994 crore is still outstanding. Against the target in the current fiscal year, 2.10 lakh tonnes of Urea Fertilizer import LC has been opened through Bangladesh Agricultural Bank and 0.90 lakh tonnes through Agrani Bank. Against these LCs, Kafco, Bangladesh owes $104.67 million. Out of which $75.92 million are owed to Bangladesh Agricultural Bank and $28.748 to Agrani Bank. If this amount is not paid on time, there may be a problem in the process of importing the remaining two and a half lakh tons of fertilizer. Which can be a big threat to the country’s food security.
Chairman of Bangladesh Krishi Bank Nasiruzzaman said, we will understand the demand of fertilizer in January-February. Till now there is no shortage of fertilizer in any area.
Bangladesh Bank Spokesperson Mejbaul Haque said that recently the necessary dollars are being given to import fertilizer and fuel on a priority basis. In this case, if any problem arises, initiatives will be taken to solve it.
Meanwhile, information from Petrobangla says that 316 million cubic meters of gas is needed daily to keep the fertilizer manufacturing factories running. But factories are getting 159 million cubic meters. Due to which it is not possible to continue production in all the factories. Last December, Petrobangla supplied 3,100 million cubic feet of gas per day, of which 750 to 800 million cubic feet was liquefied natural gas (LNG).
Due to volatile prices in the international market, the government limited LNG supply, resulting in daily supply falling to 2,800 million cubic feet. Currently, only 490 million cubic feet of gas supply is available from imported LNG.
Jamuna Fertilizer Company Limited said that in the current financial year, the target of 4.5 lakh tons of fertilizer production has been given. But if the factory is closed for three months then the target will not be met. The plant can produce 1,700 tonnes of fertilizer per day when running at full capacity.
During the global food crisis, the government took initiatives to increase foodgrain production in the country, which is now threatened by the impending fertilizer crisis. Fertilizer imports from two major source countries – Russia and Belarus – have stopped.
There are opportunities to import from various countries including Canada, Saudi Arabia, China, Morocco, Qatar, United Arab Emirates, Tunisia. But even these sources have increased the price of fertilizers. Higher prices will put pressure on the already fluctuating foreign exchange reserves. Meanwhile, the Ministry of Industry has agreements with Saudi Arabia, Qatar and Dubai. From where fertilizers are regularly imported.

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