Chittagong Urea Fertilizer Factory, Bangladesh

The state-owned Chittagong Urea Fertiliser Factory Ltd (CUFL) has been temporarily shut down to divert the factory's gas supply to power plants in the south-eastern Chittagong region. Established in 1987, CUFL is 240km southeast of Dhaka. It has an installed annual urea fertiliser production capacity of 561,000t. CUFL produces 450,000t annually and employs about 1,000 workers.

Toyo Engineering Corporation of Japan constructed CUFL in 1987. The plant has the capacity to produce 1,700t/day of urea and 1,000t/day of ammonia.

The construction work on CUFL started in October 1985 and its trial operations began in October 1987. The project was financed by seven external agencies including the Japan Bank for International Cooperation (former OECF).

"CUFL produces 450,000t annually and employs about 1,000 workers."

Earlier in 2009, the Polash Urea Fertiliser factory and Ghorasal Urea Fertiliser Factory in the eastern Narsingdi district, 51km northeast of Dhaka, were shut down to divert gas supply to power plants. The gas shortages in Bangladesh resulted in less power production by as much as 650MW. With the closure of CUFL the Power Development Board (PDB) will be able to increase electricity generation by about 180–200MW.

Bangladesh has been experiencing severe power shortages since the start of summer 2009.

Power supply

The power plants in the Haripur-Ashuganj belt region of Bangladesh require continuous gas supply to generate power. The Bangladesh Chemicals and Industries Corporation (BCIC) closed down Polash Urea Fertiliser Limited and Urea Fertiliser Limited at Ghorashal as per the government directive to divert gas to power plants in the Haripur-Ashuganj belt. The closure of the fertiliser factories provided no major benefit as they were consuming only around 30 million cubic feet of gas per day.

Petrobangla, the Bangladesh Oil, Gas and Mineral Corporation initially wanted CUFL to be closed down as it consumes around 50mmcfd of gas. It was considered that the closure of CUFL would result in an increase in power generation from the Rauzan plant in Chittagong. Petrobangla faces constraints in the gas transmission network to supply additional gas to Chittagong.

By diverting gas supply from CUFL to Rauzan's power plant, the power production can be increased to around 360MW, and the power crisis in Chittagong would be lessened. Rauzan currently gets only 40mmcfd of gas against its demand of 90mmcfd.

"With the economy dependent largely on agriculture, Bangladesh is in equal need of power and fertiliser supplies."

Experts consider that CUFL closure will not improve the overall power situation. With the closure only around 150MW of electricity can be added to the total production capacity. Bangladesh faces a power shortage of 1,700MW. PDB gets around 730mmmcfd of gas while it generates around 3,600-3,800MW of electricity against the demand of over 5,500MW.

Fertiliser industry

Bangladesh Chemicals and Industries Corporation (BCIC) opposed the closure of CUFL, which is one of the major suppliers of fertiliser most needful during the Boro season. The country's urea demand is around 28 lakh tonnes a year while BCIC produces around 15–18 lakh tonnes. The closure of CUFL would therefore mean increased dependence on fertiliser imports.

Economic effects

With the economy dependent largely on agriculture, Bangladesh is in equal need of power and fertiliser supplies. The annual requirement of fertiliser is around 2.8 million tonnes. Bangladesh produces 1.8 million tonnes and imports the rest. Experts note that it is possible to procure fertiliser at short notice, but to produce or import electricity takes longer time.

The shortage of electricity in Bangladesh was halting or reducing production in many export-based businesses, especially the cloth industry. Gas supply to the fertiliser industry is not adequate. Bangladesh faces daily shortages of up to 250mmcf. The government has diverted gas from fertiliser production to power generation, a move that it considers meets the immediate needs of industrial and household consumers.