Bangladesh plans to set up DAP fertiliser factory in Saudi Arabia

The government is planning to set up a diammonium phosphate (DAP) fertiliser plant in Saudi Arabia through the joint investment of the two countries aiming to reduce production costs and increase supply.

According to the ministry of industries sources, Saudi Hanwha Saudi Contracting Company (HSCC) is working on a feasibility study for setting up a DAP fertiliser factory in Saudi Arabia.

A memorandum of understanding (MoU) in this regard was recently signed between the Saudi company and the Bangladesh Chemical Industries Corporation (BCIC) which is under the ministry of industries.

The feasibility study is supposed to be completed within six months. It will determine the place where the factory will be set up in Saudi Arabia, the amount of investment, the production cost of fertiliser etc, said the sources.

According to the MoU, the final decision on the investment will be settled by 2024.

Sharif Md Mashud, deputy secretary (BCIC), Ministry of Industries, told The Business Standard that the MoU has been formulated for the feasibility study which will decide how logical the investment will be.

He said the Saudi company will conduct the feasibility study with their own financing and the BCIC will help them by providing the necessary information. The purpose of this MoU is to create a concrete plan for agreement between the two parties through discussions and the feasibility study.

BCIC Senior General Manager (Administration) Sameer Biswas and HSCC Senior Public Relations Director Abdul Aziz Duhaim signed the MoU for Bangladesh and Saudi Arabia respectively.

The plan to set up the factory in Saudi Arabia has been taken as fertiliser imports in the country are being disrupted by the Russia-Ukraine war. Moreover, the urea and DAP factories in the country are also failing to produce enough fertiliser due to a lack of raw materials.

At the MoU signing ceremony, on 15 February, Industries Minister Nurul Majid Mahmud Humayun said that earlier, a memorandum of understanding was signed during the Prime Minister's visit to Saudi Arabia in 2018 to set up a DAP fertiliser plant.

"The latest MoU has been signed for a feasibility study to set up the fertiliser plant at a suitable location in Saudi Arabia," he said.

According to the Ministry of Agriculture, the annual demand for DAP fertiliser in Bangladesh is around 1.65 million tonnes. The DAP fertiliser factory in Chattogram produces only 1 lakh tonne and the rest of the demand is met by imports.

The ministry of industries says that the raw materials required for the production of DAP fertiliser such as rock phosphate and phosphoric acid are not available in Bangladesh. But these raw materials are available in Saudi Arabia.

That is why setting up a factory in Saudi Arabia would be logical which would facilitate the production of DAP fertiliser at a low cost.

The factory could be set up in a joint investment of the two countries. A decision on joint investment will be taken after the feasibility study, as per the ministry.