Fertilizer factories in Bangladesh may soon face significantly higher gas costs, as Petrobangla moves to implement a fertilizer-specific tariff hike—pending final approval from the Bangladesh Energy Regulatory Commission (BERC).
The government has already endorsed the proposal, which would raise the price of additional gas supplied to fertilizer plants from Tk16 to Tk40 per cubic metre.
This marks the first time Petrobangla and gas distribution companies have submitted a category-specific pricing plan, citing the need to import liquefied natural gas (LNG) to meet rising demand.
Officials from the Energy and Mineral Resources Division noted that fertilizer gas prices were Tk4.45 per cubic metre in 2019 and gradually increased to Tk16.
However, the Bangladesh Chemical Industries Corporation (BCIC) has consistently resisted paying the higher rates, citing operational losses.
Despite repeated efforts by Petrobangla and relevant agencies, BCIC has not settled the dues.
BERC had previously assured that government subsidies would offset the financial impact on fertilizer pricing.
The current proposal is linked to BCIC’s plan to reopen shuttered fertilizer plants, which require additional gas supply.
Petrobangla’s seasonal supply data shows average daily allocations of 230 million cubic feet (MMCFD) from November to February, 165 MMCFD in March and October, and 130 MMCFD from April to September.
Fertilizer plants received an average of 116 MMCFD over the past year, forcing prolonged closures and costly fertilizer imports.
BCIC maintains that domestic production remains more economical than imports.
To address the broader gas shortfall, Petrobangla plans to drill 50 exploratory wells by 2025.
Of these, 18 have been completed and six are underway.
While successful drilling could yield 194 MMCFD, pipeline limitations have restricted integration into the national grid—only 74 MMCFD has been connected so far.
Petrobangla also reported declining output from existing fields and a widening gap between supply and demand.
In FY2024–25, average daily supply across eight customer categories stood at 2,453 MMCFD, against a demand of 3,800 MMCFD.
LNG imports reached 83 cargoes in 2022–23 and 94 in 2023–24.
To meet BCIC’s projected need of 330 MMCFD for fertilizer plants, Petrobangla estimates at least 115 LNG cargoes annually—within its import capacity but requiring substantial subsidies.
A Petrobangla official, speaking anonymously, said BCIC has never paid the additional charges for fertilizer-class gas, even after high-level government interventions.
“This is why we’re pursuing a public hearing through BERC rather than increasing supply directly,” the official said. The hearing is scheduled for Monday.
Agricultural Adviser Lieutenant General (retd) Md Jahangir Alam Chowdhury said that fertilizer prices will remain unchanged despite the gas hike.
“The interim government has announced elections in February. If gas prices rise but fertilizer prices stay fixed, the new government will need to absorb the subsidy burden. How they manage it remains to be seen.”
Petrobangla warned that meeting fertilizer demand through LNG imports could require up to Tk6,000 crore in annual subsidies.
