Gas Price Hike for Fertilizer Factories to Be Announced on Sunday

The Bangladesh Energy Regulatory Commission (BERC) is going to announce the new gas price for fertilizer factories next Sunday (23 November). The decision will be disclosed through a press conference at 3:30 pm on that day.

At the public hearing held on 6 October, Petrobangla and the gas distribution companies proposed increasing the gas price from 16 taka to 40 taka per unit. However, BERC's technical committee recommended setting the price at 30 taka. According to commission sources, the final price may be set at around 29.50 taka per unit.

During the public hearing, BERC Chairman Jalal Ahmed said that every aspect would be considered to maintain balance in determining the gas price. He emphasized that the agriculture sector must be prioritized because it is directly linked to food security and employment. He added that although agriculture’s share in GDP is declining, its importance to the overall economy remains immense. At the same time, the cost of importing LNG also needs to be considered.

Petrobangla has stated that if the price is increased, seven additional LNG cargoes will be imported to supply gas to fertilizer factories. From October to March, the plan is to supply 250 million cubic feet of gas per day. In April–May, 165 million; in June, 175 million; and from July to September, 130 million cubic feet of gas per day will be supplied.

At the public hearing, Bangladesh Chemical Industries Corporation (BCIC) Director Delwar Hossain alleged that in 2022, the gas price was increased from 4.45 taka to 16 taka with a similar promise of increased supply. But uninterrupted gas supply was not provided; instead, supply declined. He said that if full gas supply is ensured, it is possible to produce more than 2 million tonnes of urea fertilizer. In that case, even if the gas price is 30 taka, the cost will still be lower compared to imports.

Bangladesh’s annual demand for urea fertilizer is 3 to 3.2 million tonnes. Due to gas shortages, 1.6 to 2.1 million tonnes have to be imported. BCIC has stated that if the gas price reaches 30 taka, the production cost of fertilizer per kilogram will be approximately 46 taka, whereas imported fertilizer costs around 61 taka per kilogram. Currently, the blended gas price is considered to be 28 taka.

At present, the production cost of urea fertilizer per kilogram is about 38 taka. It is being sold in the market at 27 taka, while BCIC sells it to dealers at 25 taka. As a result, the government has to provide a subsidy of about 13 taka per kilogram.

It is anticipated that fertilizer production costs will increase after the announcement of the new gas price next Sunday. However, if full gas supply is ensured, domestic production will increase and dependence on imports will decrease. This could have a positive long-term impact on the agriculture sector.