Millions of dollar looted by fertilize racket in Bangladesh

by Special Correspondent
June 3, 2011

http://www.weeklyblitz.net/1487/millions-of-dollar-looted-by-fertilize-racket-in

Bangladesh government has recently increased the price of Urea fertilizer in the country, stating that the price of this item has jumped in the international market. It may be mentioned here that, a specific racket comprising some business opportunists and government officials are continuing to virtually loot millions of dollars from the national exchequer by exorbitantly increasing price of Urea, keeping the policymakers mostly in dark.

Urea mostly comes to Bangladesh from former Soviet Republics. In 2002, when BNP [Bangladesh Nationalist Party] led coalition government came in power, Bangladesh Chemical Industries Corporation [BCIC] was importing urea mostly from Ukraine at the price ranging between US$ 450-550, though the real price of urea at that time was just US$ 112.

Weekly Blitz has conducted a survey to assess the current price of urea in some of the former Soviet Republics. According to the statistics, current FOB price of urea in Ukraine, for example, if US$ 150 per ton. According to business experts, maximum cost of urea up to Chittagong or Mongla port should not exceed US$ 210, which includes the freight as well as commission paid to the agents by the exporting companies.

But, Bangladesh Chemical Industries Corporation set a ridiculous business style by fixing the import price of urea based on prices provided by a hand-picket number of urea factories in the world. It is learnt that, a particular syndicate is successfully getting business contracts for supplying urea to Bangladesh Chemical Industries Corporation at a price secretly fixed by the syndicate and some of the influential officials of BCIC and the ministry concerned. It may be mentioned here that, BCIC is an autonomous body under Ministry of Industries in Bangladesh.

According to existing practice, the supply syndicate blocks urea at any of the warehouses in the former Soviet Republics couple of months ahead of any international tender floated by BCIC. At this stage, the supply syndicate provides a minimal 'upfront payment' to the warehouse thus buying the stock at the price ranging between US$ 140-150 per ton. Such contracts are generally signed using off-shore companies owned by the syndicate, which are based in various countries in the world. When tender is floated, such off-shore companies pretend to be the 'principal' of the local companies and furnish required bank guarantee for the tender from any international bank. The minimum price offered by the syndicate is always several folds higher than the real price.

After awarding the contract, BCIC generally opens Letter of Credit in favor of the 'principal' company based in Singapore or any other countries in the world, without verifying if this company really owns any warehouse in Singapore or in the country of origin. The exorbitant amount of profit accrued from each of the contracts is shared amongst the supply syndicate and the officials on 70:30 ratios. And, just because of such unexposed corruption, the nation is continuing to lose millions of dollars every year only from this sector.

Business experts have already questioned engaging Bangladesh Chemical Industries Corporation in importing urea from overseas. They said, BCIC is supposed to be the parent organization of state-owned industrial enterprises dealing in chemical sector in the country. But, there is no sense in allowing BCIC in importing urea and other items from abroad. Such import should be made open to public and the government can easily collect information related to latest price of urea in the warehouses in former Soviet Republics through Bangladeshi missions in the respective countries.

The experts suggested immediate formation of an inquiry committee with Prime Minister in the chair to locally and internationally investigate this issue and identify the culprits involved in the racket. They said, the prime minister and the agricultural minister are very sincere in ensuring smooth supply of fertilizer to the farmers. It is their responsibility to form a committee [where none should be included either from BCIC or the ministry of industries] to bust this huge corruption racket.

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