Payment delays prompt QatarEnergy to skip fertiliser deal next year
Typically, the state-owned Sonali Bank and Janata Bank open the letters of credit for the BCIC’s fertiliser imports
Highlights:
- Foreign urea suppliers reluctant to deliver fertiliser over delayed payments
- Imposed additional interest charges
- Fertiliser requirements reach about 12-13 lakh tonnes during Boro season
QatarEnergy Marketing, the state-owned company of Qatar, will not sign a new contract with Bangladesh to supply urea fertiliser next year due to delayed import bill payments, according to officials from the Bangladesh Chemical Industries Corporation (BCIC).
They also mention that other foreign companies supplying urea to Bangladesh under government-to-government (G2G) agreements are showing reluctance to deliver fertiliser and have imposed additional interest charges due to delayed payments.
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The officials say the issue has been communicated to the Ministry of Finance, Bangladesh Bank Governor Ahsan H Mansur, and Finance Secretary Md Khairuzzaman Mozumder.
In a letter on 20 March, the Ministry of Industry requested the Ministry of Finance's cooperation to ensure that state-owned banks, which open letters of credit for imports, make timely payments.
Md Nuruzzaman, acting chairman of the BCIC, told TBS on 3 April that QatarEnergy has informed them that it will not sign a fertiliser supply contract for the upcoming year.
"The Ghorashal and Ashuganj fertiliser factories are operational, and given the current stock and import situation, there will be no fertiliser shortage during this Boro season. However, a shortage may arise afterward. Therefore, it is crucial to take action now," he added.
Typically, the state-owned Sonali Bank and Janata Bank open the letters of credit for the BCIC's fertiliser imports.
When asked about the reasons for delays in fertiliser import payments, a senior official from Sonali Bank told TBS on condition of anonymity, "Previously, the Bangladesh Bank used to provide dollars from its foreign currency reserves for state imports. However, as the reserves were gradually depleting, the central bank stopped supplying dollars.
"As a result, it has become increasingly difficult to arrange the large amounts of dollars needed for fertiliser imports, causing frequent delays in bill payments," the official said.
Delays in import bill payment
According to BCIC data, for the current fiscal year, 4.80 lakh tonnes of urea fertiliser are being imported in 16 lots from Saudi Arabia's SABIC, 2.70 lakh tonnes in nine lots from QatarEnergy Marketing, and 2.10 lakh tonnes in seven lots from Fertiglobe of the United Arab Emirates through G2G agreements.
The payment for the 15th lot of fertiliser imported from Saudi Arabia's SABIC, amounting to $10.35 million, was due on 26 February. However, the payment has not yet been made, as informed by the Ministry of Industry to the Ministry of Finance.
In the letter regarding QatarEnergy Marketing, it was mentioned that the payment for the sixth lot supplied by the Qatari company was delayed by three days beyond the designated time, the payment for the next lot was delayed by seven days, and the payment for the eighth lot was made 13 days past the due date.
The Ministry of Industry has stated that the third lot of fertiliser from Fertiglobe, UAE, has reached the loading port. The payment for this lot, amounting to $14 million, is due to be made in the last week of this month. If the payment is not made on time, it could disrupt the import of the next lot, and foreign banks may impose additional interest charges.
