The largest urea plant project is gaining momentum

| Update:
May 14, 2022 12:22:46

Development activities for the construction of the country’s largest urea fertilizer plant in Narsingdi finally gained momentum after the Covid-19 pandemic.

The Ghorashal Palash urea fertilizer plant under construction is one of the country’s megaprojects. Through it, the state-owned Bangladesh Chemical Industries Corporation (BCIC) planned to produce about 1.0 million tonnes of key agricultural inputs per year and thus reduce its heavy dependence on imports.

According to the project sources, more than 70% of the physical works of the project worth around $1.25 billion or 105 billion taka had already been completed in April 2022.

The mega project suffered a heavy blow soon after the pandemic hit the country in March 2020, which restricted the movement of people around the world.

This forced the Japanese entrepreneur to choose the “force majeure” option. As a result, development activities for the key project remained closed for several months.

“Force Majeure” is a common clause in contracts that essentially releases both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot and crime, or an event described by law as force majeure, prevents one or both parties from fulfilling their obligations under the contract.

Due to the unexpected delay in the construction works, the project lead time has increased by another six months to 39 months until December 2023.

When contacted, Project Director Md Rajiour Rahman Mollick said he was working around the clock to overcome the coronavirus-induced setback.

“We have recovered the loss and completed 72.34% of the massive works until April, while its financial progress is 54.93% without including deposits and other costs.”

Asked about “force majeure”, he said Japan’s Mitsubishi Heavy Industries Ltd (MHI) was building the modern plant. He invoked force majeure at the end of 2020 due to coronavirus restrictions.

“It was kind of a situation that was out of our control. Now the project lead time has increased another six months to 39 months without increasing the cost.”

Mr. Mollick hoped to complete the tasks a few months ahead of schedule, if work progressed at the current rate.

In terms of work progress in some key areas, design and engineering progress is 92.72%, procurement is 93.36%, land use planning is 100%, construction 48.10 percent, civil works 70.08 percent, construction works 29.93 percent, and equipment installation works 66.63 percent, according to project sources.

A BCIC official said the project is very important, given the revival of the company and the reduction of heavy reliance on fertilizer imports.

He felt that his progress is important, but the quality of the work is more important.

“Look at the latest Shahjalal factory which is struggling due to poor quality. I hope the project officials are well aware of the issue,” he added.

Of the total financial requirements for the project, the government will provide 18.44 billion taka, while the rest (86.16 billion taka) will come from commercial loans.

On overseas loans, the Japan Bank for International Cooperation (JBIC) will provide 85%, and the rest will be provided by HSBC and MUFG.

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