Tk 217.78cr paid in fertiliser subsidy

The Finance Ministry has paid Tk 217.78 crore to the ailing Bangladesh Chemical Industries Corporation (BCIC) out of a total Tk 1,000 crore spent for subsidising fertilizer sector over the past five years, official sources said.

"The government last week released Tk 217.78 crore to the corporation against the unpaid subsidies worth Tk 1,000 crore," a senior BCIC official said.

He said the amount is quite inadequate to carry out the essential overhauling of its age-old six urea fertiliser factories.

Asked, a Finance Ministry official said the government is trying its best to release the fund. "With the latest disbursement of Tk 217 crore, the total amount paid to BCIC stands at Tk 350 crore in the current fiscal," he added.

The BCIC has been incurring a loss of Tk 200 crore annually on an average for selling fertilizer at a subsidised rate. It would get over Tk 1,000 crore from the government in outstanding subsidies.

The BCIC spends Tk 6,500 to produce one ton of urea, while it has to sell it at Tk 4,800 per ton in line with the government policy, leading to a loss of Tk 1,700 per ton.

Officials said the BCIC is now facing severe problems in overhauling its six fertilizer factories, which are supposed to produce 18.36 lakh tons of urea to meet the two-thirds of the domestic demand.

"Shortfall in production for mechanical problems will certainly force the government to import urea at a much higher rate to meet the domestic demands," a BCIC official said.

Jamuna Fertiliser Factory, one of the six urea fertilizer factories under BCIC, went out of operation last Monday for the third time in six months due to mechanical troubles.

Production of Zia Fertiliser Company Limited was also suspended due to mechanical faults. Chittagong Urea Fertiliser Company was out of operation for 61 days last year, BCIC officials said.

"Machinery of all the urea factories are sophisticated and it needs to be taken care of regularly for smooth production," a senior BCIC official told BDNEWS.

The government has to pay Tk 18,000 each ton of imported fertilizer as against only Tk 4,800 per ton sold by the local factories.

Although the government raised its budgetary allocation for farm subsidy from Tk 300 crore in 2003-04 to Tk 1,200 crore in 2005-06, the BCIC was not benefited from the increase, as the amount is spent to pay off rebates to private phosphoric fertiliser importers and to subsidise the government's own urea imports, officials said.

This year the country's urea requirement is 28 lakh tons. The six factories are supposed to produce 18.36 tons and the remaining amount has to be imported.

In 2001-02, BCIC factories produced 15 lakh tons of urea and incurred a loss of Tk 180 crore for selling the product at subsidised rate. In the following fiscal, it produced 20 tons and suffered a loss of Tk 240 crore. In the current fiscal, the corporation will be suffering a loss of Tk 228 crore for the same reason.