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Dhaka Friday,  Mar 29, 2024

Gas supply deal with KAFCO expires

Shamim Jahangir

A high-powered team of Karnaphuli Fertilizer Company Limited (KAFCO) is negotiating with the government high-ups for extension of gas supply deal that has expired on Friday last.
“We are negotiating with Kafco team to extend the deal…it might be required mid of this month to finilise it,” an official of Petrobangla told on Saturday.
He said the Karnaphuli Gas Distribution Company Limited (KGDCL) is trying to sign the extension deal with Kafco after protecting the interest of the country.
Asked about the fresh tariff while extending the deal, the official said it’s yet to be finilised. I can assure you that it would be the best deal, he said.
According to officials, Kafco gets up to 63 million cubic feet par day, 100 percent of its requirement, while the total local demand is 419mmcfd in Chittagong zone. KGDCL supplies only 158mmcfd of gas in Chittagong zone.
Kafco paid an average of $ 2.35 per mcf for gas during 2004-2005 under its profit sharing formula, with monthly prices up to $ 2.89. The average price paid over the last 10 years was $1.22 per mcf, but with the increasingly higher rates in recent years, Kafco website addressed.

Talking to this correspondent, several officials of Kafco said they have started negotiations with the KGDCL and final negotiations with the company will start at mid of this month.

Besides, Japan International Cooperation Agency (JICA) vice president Masakazu Ichikawa in a recent letter to state minister for power and energy Nasrul Hamid informed the gas supply contract for Kafco would expire at the end of July 2015 and renewal of the contract is needed.
The government guarantees gas supplier’s obligation to provide specific amount of gas to Kafco under the agreement, he said.
“I heard that the application of the new Gas Act implemented in 2010 that would relieve the authority from the obligation of supply of gas and so the guarantee of Bangladesh would be of no effect,” he added.
“Therefore I would like to ask you to consider the exceptional treatment for Kafco under the Gas Act and the supply agreement by the government can be effective with respect to the concept of the shareholders agreement,” Masakazu Ichikawa requested.

He said it is one of the most efficient fertilizer plants in Bangladesh.
Established in Bangladesh with the shareholding and support of the governments and private sectors of Bangladesh, Japan, Denmark and the Netherlands, KAFCO is the largest joint venture investment in Bangladesh.
The KAFCO complex produces high-grade granular urea and anhydrous ammonia. The facility consists of an ammonia plant, urea plant, and a urea granulation unit.

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