Bangladesh is going to set up a massive urea fertiliser plant at a cost of $1.3 billion, equivalent to over Tk 11,000 crore, by availing the finance as loan from three foreign financial institutions.
The amount from the Japan Bank for International Cooperation (JBIC), Bank of Tokyo-Mitsubishi UFJ (MUFG Bank) and Hongkong and Shanghai Banking Corporation (HSBC) will be the country’s largest ever foreign currency loan.
State-owned Bangladesh Chemical Industries Corporation (BCIC) will use the money to implement the Ghorasal Polash Urea Fertilizer Project.
This plant will be replacing two of the BCIC’s oldest plants -- Urea Fertilizer Factory and Polash Urea Fertilizer Factory.
The new plant will have an annual production capacity of 9.24 lakh tonnes, which is three times more than the present capacity.
But the consumption of natural gas in the new plant will remain the same because of installation of greener and more fuel-efficient technology. It will also ensure a product of high quality and significantly improve agricultural yields.
The use of chemical fertiliser is rising with increased demand for food production in the country. The use of urea fertiliser alone is the highest.
In FY 2018-19, 5.5 million metric tonnes of fertiliser was used in the country, with urea accounting for around half of it or 2.55 million metric tonnes. The information about the new plant was disclosed at a programme organised by the BCIC and HSBC at InterContinental Dhaka on Sunday night for exchanging the loan documents.
The deal was signed by the BCIC and the three lenders on November 22. Of the total, the HSBC will provide $300 million and the two others the remaining $1 billion.
The loan tenure will be of 14 years, of which four years will be the construction period and the remaining 10 years the repayment period.
Speaking at the programme, Industries Minister Nurul Majid Mahmud Humayun said the factory would be modern, sophisticated and energy efficient.
He said it would be the first fertiliser factory in Bangladesh which would capture the carbon dioxide released when it burns fossil fuel.
“As a result the production of urea fertiliser will increase by 10 percent. It will produce 2,800 tonnes of granular urea per day, which is about three times higher than that of the existing two fertiliser factories,” said Humayun.
Bangladesh and Japan are also collaborating in the areas of industry, infrastructure, communication, ICT, agriculture, textile, power, health and education, and other sectors, he said.
“I am confident that the new factory will ensure availability of urea fertiliser to the farmers at lower cost,” he said.
Kamal Ahmed Mojumder, state minister for industries, hoped that the plant would meet growing demand of fertiliser in the country.
Naoki Ito, Japan’s ambassador to Bangladesh, said this would be a milestone and success story in bilateral relations. “Many success stories will come in future through cooperation among us,’’ he hoped.
He also thanked Japanese companies for their cooperation in implementing different mega project which would contribute to the economic development of Bangladesh.
Md Abul Kalam Azad, principal coordinator for SDG affairs at Prime Minister’s Office (PMO), said the PMO was ready to provide necessary support to implement the project rapidly.
He hoped that the plant would be able to go into production in 2023 and provide quality fertiliser to farmers which would help increase agriculture production.
Md Mahbub ur Rahman, deputy CEO and country head of wholesale banking at HSBC Bangladesh, said this was the largest commercial financing for any project in Bangladesh to date.
He said the project was ensuring sustainable agriculture and was directly linked to Sustainable Development Goals for Bangladesh.
“The HSBC is proud to be a key financing partner…arranging a total $2.8 billion ECA-backed long term loan to support the government-owned large infrastructure projects in the power, energy, telecommunication, aviation and industrial sectors,” he noted.
He further said this loan was not only a transaction but also a reflection of confidence and trust on the government as the economy was gaining strength continuously.
The HSBC is acting as the joint mandated lead arranger, co-arranger, lender, agent, security agent and account bank in this financing.
According to project documents, the new factory was expected to have an economic life of 25 years, reduce fertiliser import and save foreign currency outflows of over $100 million per year, enabling maintenance of the country’s current stability in foreign exchange reserve.
Besides, the project will directly create approximately 1,000 new jobs.
Among others, Md Abdul Halim, secretary to industries ministry, Md Haiul Quaium, chairman of the BCIC, and Md Rajiour Rahman Mollick, director of the new project, addressed the programme.