Chinese Government provides RMB 200 million interest-free loan for Di-Ammonium Phosphate Fertilizer Plant Construction Project (Linked to Project ID#33929 and #38969)

In 2000, the Chinese Government offered $53.29 million of debt financing to the Government of Bangladesh for the Di-Ammonium Phosphate Fertilizer Plant Construction Project. China’s Ministry of Commerce (MOFCOM) agreed to issue an RMB 200 million loan for the project. The loan agreement between MOFCOM and the Government of Bangladesh (captured via Project ID#39369) was finalized on September 13, 2000 and it carried the following borrowing terms: a 15-year maturity, a 10-year grace period, and a 0% interest rate. China Eximbank and the Government of Bangladesh also signed an RMB 239,667,000 government concessional loan (GCL) agreement for the project on September 7, 2005 (captured via Project ID#33929). The GCL carried the following borrowing terms: a 16-year maturity, a 4-year grace period, a 2% interest rate, and a 0.2% commitment fee (service charge). The borrower was expected to use the proceeds of the GCL and the interest-free loan to partially finance a $59.21 million commercial contract between China National Complete Plant Import and Export Corporation Limited (COMPLANT) and Bangladesh Chemical Industries Corporation (BCIC). According to the Government of Bangladesh’s Economic Relations Division (ERD), the interest-free loan from MOFCOM had achieved a disbursement rate of 100% (RMB 200,000,000 out of RMB 200,000,000) as of June 30, 2014 and the borrower had repaid RMB 187,500,000 to MOFCOM as of June 30, 2014. According to the Government of Bangladesh’s ERD, the GCL had achieved a disbursement rate of 100% (RMB 239,667,000 out of RMB 239,667,000) as of June 30, 2014 and the borrower had repaid China Eximbank RMB 132,353,000 as of June 30, 2014 and RMB 239,667,000 as of June 30, 2019. The purpose of the project was to build an 800-ton-per-day di-ammonia phosphate fertilizer plant in the Anowara Upazilla (SubDistrict) of Chittagong Division. COMPLANT was the EPC contractor responsible for project implementation. Construction of the di-ammonium phosphate fertilizer plant — known as Di-Ammonium Phosphate Fertiliser Company Ltd (DAPFCL) — was originally expected to begin at the end of 2000 and projected to commence operations within 30 months (July 1, 2003). However, the project did not commence until April 2004 and it was not completed until June 2006. Then, in August 2016, an ammonia tank at the plant exploded, causing at least 50 people to fall sick from inhaling toxic gas. The emission of toxic ammonia at the fertilizer factory was brought under control on August 23, 2016, some 11 hours after one of two smaller 500-tonne capacity ammonia storage tanks exploded. Fifty people, including women, were admitted to the Chittagong Medical College Hospital (CMCH). BCIC, which now runs the factory, formed a 10-member committee to investigate the incident.

Additional details

1. The Government of Bangladesh loan identification number for the MOFCOM interest-free loan is L1120000913a. The Government of Bangladesh loan identification number for the China Eximbank GCL is L1120050907a 2. The project is also known as the MTDP DI-AMMONIUM PHOSPHATE (DAP) Project and the 800 Metric Tons of 800 MT DI-AMMONIUM PHOSPHATE (DAP) Project. 3. Some sources suggest that COMPLANT also agreed to provide a $29.11 million supplier’s credit, which in turn was funded with the proceeds from an export seller’s credit that it received. This issue warrants further investigation.

Number of official sources

6

Number of total sources

13