BCIC incurs losses for 24 yrs in 28 yrs of operation

The Bangladesh Chemical Industries Corporation (BCIC) has incurred losses in 24 of the past 28 years, totaling Tk 79.80 billion.

The scenario has come up in an analysis of the Bangladesh Economic Review and an annual report of the industries ministry. The state-run corporation posted growing losses in recent years, with the highest loss of Tk 9.13 billion in the 2023-24 fiscal year.

The BCIC mainly produces fertilizer. Officials concerned said the losses are mounting as most of its fertilizer factories have been out of operation due to a gas crisis. Other factories that produce cement, paper, and glass sheets have been consistent in posting losses. All these issues contributed to the negative earnings.

An analysis of data from the Bangladesh Economic Review, covering the fiscal years 1996-97 to 2022-23, and the industries ministry’s annual report for 2023-24, showed that the BCIC made an accumulated loss of Tk 79.80 billion in 24 years. It first recorded a loss exceeding Tk 5 billion in the 2017-18 fiscal year.

During the remaining four fiscal years, the BCIC made a total profit of Tk 6.57 billion, and the last profitable year was 2014-15.

BCIC Chairman Saidur Rahman told Prothom Alo, "The urea factories are the main (production units). But there was such a loss in the previous fiscal year as production was disrupted by gas shortage. If we return to production, the losses will subside."

The BCIC began its operation in 1976, with 88 factories. According to its public relations office, only 18 factories are now under the corporation’s hold – where 11 are in operation, and the other seven are closed permanently.

Seven of the functional factories are fertilizer plants, with five producing urea, one producing DAP, and one producing TSP fertilizer. Among the rest, one paper, one cement, one glass sheet, and one sanitary ware-insulator factory are still in operation.

Gas is the main raw material for urea fertilizer plants. According to BCIC sources, three of five urea plants are temporarily shut down due to a gas shortage.

It was learned that the Jamuna fertilizer factory has been closed since January 2024, while Chittagong urea fertilizer limited resumed full-swing operation on Sunday night, following an eight-month closure since February. The Ashuganj fertilizer and chemical company has been shut since February, and the Shahjalal fertilizer company since March.

According to the industries ministry report, nine of the 11 functional factories were in-operation in the last fiscal year. Among them, four urea fertilizer plants posted losses amounting to more than Tk 8.74 billion, which exacerbated the corporation’s financial health.

Urea fertilizer is crucial for food production in Bangladesh, and the BCIC is responsible for a significant share of the domestic supply.

According to the industries ministry reports for the previous four fiscal years, there has been a steady decline in urea production by the BCIC. In the 2020-21 fiscal year, the corporation produced 1.03 million metric tons of urea, meeting around 41 per cent of domestic demand. The production fell to just 672,000 metric tons in the fiscal year 2023-24, covering only 25 per cent of domestic demand.

As urea production declines, so do stock levels. Bangladesh had 860,000 metric tons of urea in stock in 2020-21, but it fell to 501,000 metric tons in 2023-24.

According to BCIC officials, some urea manufacturing plants have been closed in the current fiscal year too. With the Boro season approaching, lack of production in the factories may eventually put the food production process at risk.

It requires increased imports to offset the shortfall in production. Officials said there are two types of contracts to import fertilizer – guaranteed and optional. If domestic production falls short due to any issues, optional imports will be brought in to meet demand.

Apart from this, the industries ministry approved the procurement of 150,000 metric tons of urea through tenders to deal with potential shortages.

Apart from urea production, four other BCIC factories posted combined losses of Tk 1.15 billion in the 2023-24 fiscal year. Among them, Karnaphuli paper mills registered a loss of Tk 320 million, Chatak cement company Tk 420 million, Usmania glass sheet factory Tk 120 million, and Bangladesh insulator and sanitaryware Tk 290 million. These four factories have been consistently posting losses over the past decade.

In this regard, Khondaker Golam Moazzem, research director at the Center for Policy Dialogue (CPD), said the profitable factories should be kept in operation. Efforts should be made to ensure gas supply to the fertilizer factories that have been shut due to gas shortage.

Also, the authorities should investigate factors other than the gas crisis are contributing to the losses.