Shahjalal Fertilizer Factory resumes production after five-month closure

Shahjalal Fertilizer Company Limited (SFCL) in Sylhet resumed production partially on August 6 after around five months of closure due to the gas crisis.

The factory restarted operations following the collapse of the Sheikh Hasina-led government on August 5.

The factory now owes Tk 779 crore to Jalalabad Gas Transmission and Distribution System Limited. Production has resumed on a limited scale due to "directives from higher authorities" that have led to a partial restoration of gas supplies.

However, concerns persist regarding the factory's long-term operation if the gas issue is not fully resolved.

The SFCL was closed on March 13 this year due to a gas supply disruption. The company cited an outstanding gas bill of approximately Tk 779 crore and a nearly fourfold increase in gas prices as reasons for the shutdown.

The fertilizer factory, built at a cost of Tk 4,985 crore taka, began production on August 14, 2016. It was capable of producing 1,760 metric tonnes of urea fertilizer per day but had been producing around 1,450 metric tonnes daily. The factory also produced liquid ammonia as a by-product.

Moreover, the price of gas supplied to the factory has increased from Tk 4 to Tk 16 per unit and the cost of producing one tonne of fertilizer is around Tk 36,000, while it is sold at Tk 25,000, resulting in a loss of Tk 11,000 per tonne. The Ministry of Industries is trying to resolve this issue by negotiating subsidies with the Ministry of Agriculture.

Despite the high hopes for the project, the factory has not yet turned a profit. While the sale of fertilizer has generated Tk 555 crore for the government, the Jalalabad Gas authority is still owed Tk 779 crore.

Admitting the arrears unpaid, Gopal Chandra Ghosh, General Manager (Operations) of SFCL, said the factory is still facing challenges with insufficient gas supply which affects its production capacity.

He also said that the arrear bill remains unpaid and efforts are ongoing to reconcile subsidy payments with the Ministry of Agriculture. Inter-ministerial discussions are underway to address these issues, and some technical problems at the factory also need resolution before full-scale production can resume.

For the fiscal year 2023-24, the SFCL had a production target of 380,000 tonnes, but by March 13 this year, when it was shut down, it had produced 240,000 tonnes of urea.