The two Dap factories are producing natural gas-based fertiliser at a cost of Tk 24,500 per tonne and selling that at Tk 18,000, swallowing Tk 6,500 loss per tonne. The two plants will produce more than half a million tonnes annually.

According to experts, the factories inaugurated by Khaleda in September will not be able to bear such losses for long, and it was a wrong decision to install them. The country was better off importing this fertiliser, they pointed out.

Import price of Dap from US and China is $315 per tonne and $330 from Australia, delivered at Chittagong port.

Interestingly, the PMO's (Prime Minister's Office) website (http://www.pmo.gov.bd/wpceng/bcic.htm) still identifies the Dap schemes as loss making. "It is evident that the decision of establishing two plants was not based on economic and commercial considerations. These projects would constitute a permanent drain on the nation's resources," it said.

The PMO's website even accuses the then AL government's industries minister Tofael Ahmed of favouring a certain Chinese company -- COMPLANT-- for the Dap-1 project and initiating the "buyer's credit", which is basically a hard loan incognito.

It also accuses Tofael of undertaking two Dap projects, instead of one, on the premises of Chittagong Urea Fertiliser Limited (CUFL) and thus causing a huge surplus of Dap fertiliser production in the country, which may be costlier than imported Dap.

On September 12, Khaleda inaugurated both the Dap -1 and Dap-2 plants in Chittagong. The Dap-1 plant was built at a cost of Tk 510 crore with Chinese supplier's credit and Dap-2 at Tk 519 crore with Tk 388 crore Japanese "buyer's credit" (other name for supplier's credit).

The China National Complete Plant Import and Export Corporation Ltd (China-COMPLANT) built Dap-1 plant and Toyo Engineering Corporation of Japan Dap-2 plant.

Presently, the annual demand for Dap is 1.5 lakh tonnes, and the two factories can produce 5.28 lakh tonnes. The daily production capacity of the two factories is 1,600 tonnes each.

Given these facts, the four-party alliance after assuming power suspended all work relating to the two Dap projects that were being constructed.

The suspension however turned out to be a double-edged knife as it offended both China and Japan, who gave the loans. Both China and Japan literally stopped all support to Bangladesh on the ground that the relevant agreements were signed and the state was giving the sovereign guarantee. The state must respect its agreements with other states, they said.

Ice started melting late in 2003 when the coalition government reinstated the agreements. But it was not till early 2004 when the government started releasing its share of funds to resume construction of the two plants.

Soon after the government okayed implementation of these suspended projects, the policymakers tried to portray those as profitable ventures. They said the country could export over two lakh tonnes of Dap fertiliser annually after meeting the domestic demand from next year.

Officials however say that with the local production and marketing of Dap at subsidised rate, use of this new kind of fertiliser will help restore a balance in fertiliser use. The country predominantly uses urea fertiliser to a disproportional level, which has affected its soil fertility.

Use of Dap will also help raise overall productivity in agriculture sector since it is more yield-friendly and less harmful to soil fertility than other chemical fertilisers. Experts believe that within a few years, the demand for Dap will rise to one million tonnes.