Ghorasal Polash Urea Fertilizer Project
On February 26, 2020, MIGA issued a guarantee for $357 million to cover a non-shareholder loan from The Hongkong and Shanghai Banking Corporation Limited of Hong Kong, SAR, China, acting through its Dhaka Branch and MUFG Bank, Ltd. of Japan acting through its Singapore Branch, to the Bangladesh Chemical Industries Corporation for the Ghorasal Polash Urea Fertilizer Plant. The $357 million guarantee will provide coverage for principal and interest payments on the loan for a period of up to 14 years against the risk of a non-honoring of sovereign financial obligation by the Government of Bangladesh. HSBC is acting as agent for the Guarantee Holders.
The project is being financed by the MIGA-guaranteed loan and a JBIC/NEXI loan facility, and involves the construction, installation, and operation of the $1.5 billion Ghorasal Polash Urea Fertilizer Plant at Ghorasal in the Narsingdi District in Bangladesh. The new plant will have an annual urea fertilizer production capacity of 900,000 tons. The Bangladesh Chemical Industries Corporation, a state-owned enterprise, will own and operate the plant. Engineering, procurement, and construction of the project will be led by the consortium of Mitsubishi Heavy Industries and China National Chemical Engineering No7 Construction Company Limited, and with Marubeni Corporation acting as coordinating agent for the consortium, financing parties and the project owner.
Greater use of fertilizer, promoted through subsidies, has been critical for Bangladesh to produce enough food for its 164 million people and enable smallholder farmers to earn a living. However, lack of investment in the fertilizer sector has led domestic fertilizer production to fall in recent years, forcing Bangladesh to increasingly rely on expensive fertilizer imports and creating a growing fiscal burden on the Government of Bangladesh.
The project will help the country go a long way towards reaching self-sufficiency in fertilizer production. The project’s annual production capacity will more than triple the combined output of two obsolete fertilizer plants it is replacing, whilst utilizing the same amount of natural gas (the plant’s key input). At the same time, the project will reduce the environmental footprint of fertilizer production, generating less waste and incorporating carbon capture technology to significantly reduce carbon dioxide emissions.
MIGA’s E&S engagement throughout the underwriting process has led directly to the incorporation of design elements that will further reduce the environmental impact of the project.
MIGA’s support for this Project is consistent with the Agency’s priorities of supporting investment into countries eligible for concessional financing from the International Development Association, and supporting projects with climate finance components.