Bangladesh Chemical Industries Corporation (BCIC) has faced difficulties in importing urea fertiliser due to the ongoing Middle East crisis. Despite issuing three tender notices to import 400,000 tonnes of urea through private suppliers, the state-owned corporation received offers for only 125,000 tonnes. In response, BCIC is now seeking to import urea through the Direct Procurement Method (DPM). It has already submitted a proposal to the government procurement committee to import 100,000 tonnes of fertiliser from Russia.
Under normal procedures, government agencies are required to invite tenders when purchasing or importing goods. But Section 68(1) of Bangladesh’s Public Procurement Act 2006 allows special procurement methods during emergencies or disaster situations. The provision states that if the government considers it necessary in the public interest to address an urgent national need or a crisis situation, it may conduct procurement through direct purchase or any other lawful method based on the recommendation of the Cabinet Committee on Economic Affairs.
The import of 100,000 tonnes of urea from Russia is being undertaken under the provisions of Section 68(1), according to BCIC sources. A proposal was sent to the ministry before Eid. A Dubai-based company, acting through its local agent, will supply urea produced by a Russian state-owned enterprise. The import process has progressed through the Russian Embassy. Despite the fertiliser purchasing through DPM, it will be supplied at a formula-based price similar to government-to-government (G2G) agreements.
Confirming the matter, Md Moniruzzaman, director (commercial, production and research) of BCIC, told Bonik Barta, “A proposal has been sent to the ministry to import 100,000 tonnes of fertiliser from Russia under the DPM. The Russian company is interested in supplying 300,000 tonnes of urea. We’ve initially proposed importing 100,000 tonnes. They’ll supply the fertiliser at a formula-based price. We hope a decision will be made quickly.”
BCIC usually imports urea under G2G agreements. But the corporation has been unable to import urea from Saudi Arabia and the United Arab Emirates because of the Middle East crisis and has therefore sought alternative sources through private channels.
As part of that effort, BCIC invited three tenders in two rounds, including one re-tender, to import 400,000 tonnes of urea. But suppliers committed to delivering only 125,000 tonnes. BCIC is now considering issuing a fourth tender. Several senior officials of the corporation confirmed the matter to Bonik Barta, although they said a final decision has yet to be made.
The corporation initially invited international tenders to import 200,000 tonnes of urea, but no company participated, according to BCIC sources. In the second round, BCIC again floated a tender for 200,000 tonnes, and two companies expressed interest in supplying 50,000 tonnes. A re-tender was then issued against the first tender, resulting in commitments to supply an additional 75,000 tonnes. In other words, suppliers were found for only 125,000 tonnes against the total tendered volume of 400,000 tonnes. BCIC is now considering a fresh round of tenders. But BCIC Director Md Moniruzzaman said, “There’s no plan to issue a re-tender at this moment.”
A senior BCIC official familiar with the import process and tender proceedings, speaking on condition of anonymity, told Bonik Barta, “We’re maintaining regular communication with various traditional sources. Discussions are also underway regarding the possibility of issuing a re-tender for the 400,000-tonne procurement programme. But no decision has yet been made.”
China, Saudi Arabia, and the United Arab Emirates are among Bangladesh’s major suppliers of urea. The country also imports urea from Qatar. But the closure of the Strait of Hormuz following the joint US-Israeli military action against Iran has created uncertainty over fertiliser imports for Bangladesh, as it has for many other countries.
To address the situation, BCIC is attempting to secure additional urea imports from China, one of its long-standing suppliers. It is also exploring new sources. Discussions have been held with Vietnam, Malaysia, and Brunei, with BCIC indicating that negotiations with Brunei are close to reaching an agreement.
Bangladesh’s urea demand in the next fiscal year is estimated at around 2.62 million tonnes, according to sources at the agriculture ministry and BCIC. Including an additional 500,000 tonnes for strategic reserves, the country will require more than 3.1 million tonnes of urea. Of this, demand for the Aman cultivation season, which begins in July-August, is projected at 665,000 tonnes. As of May 24, Bangladesh had around 398,000 tonnes of urea in stock. The minimum safe stock level is considered to be 400,000 tonnes.
BCIC officials, however, said that there would be no fertiliser shortage despite the slower pace of imports. The corporation’s three operational factories are currently producing around 5,000 tonnes of urea per day, which is sufficient to meet demand during the Aman season.
They added that efforts to increase stockpiles through imports are primarily aimed at meeting demand during the upcoming winter cropping season. The country will still have around 600,000 tonnes of urea in reserve even after meeting seasonal demand, according to their projections.
Industry insiders say BCIC once met nearly 80 percent of the country’s urea demand through domestic production. But 75 to 80 percent of current demand is now met through imports. Given the ongoing global disruptions, they argue that reducing dependence on imports and increasing local production has become essential.
The corporation’s five urea fertiliser factories have a combined annual production capacity of around 3.15 million tonnes, according to information available on BCIC’s website. But Md Moniruzzaman said, “Most of the plants are ageing and can’t operate at full capacity. Annual production could exceed 2 million tonnes if adequate gas supplies were ensured.”
BCIC is also seeking alternative import routes that avoid the Strait of Hormuz. As part of this effort, a vessel carrying 22,000 tonnes of urea from Saudi Arabia is currently en route to Bangladesh via the Mediterranean Sea. The shipment is expected to arrive on June 5. But the alternative route has increased transportation costs.
Import costs for the next fiscal year are also expected to rise. BCIC officials said urea imports in the upcoming fiscal year will be more expensive than in the current one. But the corporation cannot yet estimate the exact increase in expenditure, because fertiliser prices are determined by prevailing international market rates at the time of purchase.
Asked about the issue, BCIC Chief Finance Officer Md Golam Faruque told Bonik Barta, “The war has pushed up both fertiliser prices and freight charges in the global market. The cost of urea purchases for the next fiscal year will consequently be higher than in previous years. But it’s not yet possible to say by how much. Around October last year, we were asked to estimate the budget required for urea imports in the next fiscal year. We prepared projections based on prevailing prices at that time. Since then, global prices have risen significantly. So import costs will certainly increase. The additional expenditure will be reflected in the revised budget.”
Agricultural economist Jahangir Alam said, “Higher prices in the global market and disruptions to shipping through the Strait of Hormuz have reduced the number of available suppliers. Many countries have also scaled back fertiliser exports to secure their own domestic needs amid global uncertainty. Consequently, there are growing concerns about fertiliser availability because of the global crisis. The best solution in this situation is to increase domestic production. Bangladesh should also identify alternative sources that can supply fertiliser without relying on the Strait of Hormuz and import from those markets.”