04

NEDO-IC-00ER36

FeasibiIity Study

on

Rehabilitation at Fenchuganj Fertilizer Factory

March, 2001

New Energy and Industrial Technologies

Development Organization (NEDO)
Entrusted to KOBE STEEL, LTD.

►
□20005066■2
FEASIBILITY STUDY ON REHABILITATION AT FENCHUGANJ
FERTILIZER FACTORY
Kobe Steel, Ltd., Japan
March, 2001

Study purpose ;
This study intends to realize higher energy conservation and reduction of
greenhouse gas emissions in Bangladesh by rehabilitating and applying
uptodate process for urea production plant, as the Fenchuganj fertilizer
plant in old and low efficiency. This feasibility study was made for the
materialization of the project in the scheme of Clean Development
Mechanism (CDM).
 FeasibiIity Study

on

Rehabilitation at Fenchuganj Fertilizer Factory

March, 2001

New Energy and Industrial Technologies

Development Organization (NEDO)
Entrusted to KOBE STEEL, LTD.
 INTRODUCTION

This report has been compiled through collecting the results of basic research “Fenchugangi
Fertilizer Plant Renovation Plan Investigation” for promoting joint implementation, with
which Kobe Steel, Ltd was entrusted from New Energy and Industrial Technology
Development Organization (NEDO) as its research business in 2000.

In December, 1997, the third United Nations Framework Convention on Climate Change was
held in Kyoto. For the purpose of preventing global warming attributable to greenhouse
effect gas, such as CO2, “Kyoto Protocol”, in which advanced countries would aim at
achieving an annual average emission volume reduction by at least 5 % during the period
from 2008 through 2012, compared with the level in 1990, was adopted in the above
Convention. In the case of Japan, reduction target was determined as 6 %. In Kyoto
Protocol, “Joint Implementation”, in which reduction volume of greenhouse effect gas would
be shared each other among advanced nations internationally through actual implementation
of the project, and “Clean Development Mechanism (CDM)”, which advanced nations were
expected to implement jointly with developing countries, were decided as measures for
obtaining flexibility in the process of achieving their target. Under the circumstances, Japan
is anticipated to attain its target with application of such systems.

This investigation has been made for the purpose of contributing to energy saving and
greenhouse effect gas reduction in the targeted county’s industries and its fertilizer industry’s
modernization essentially required for continuous economic development, with introduction
of Japan’s energy saving technology, as well as realizing the renovation project of
Fenchugangi Fertilizer Plant, the oldest and low efficient in Bangladesh, through its
combination with implementation of future “Clean Development Mechanism (CDM)”.

The results of our investigation are herein reported.

March, 2001

Kobe Steel, Ltd

 List of staffs in charge of research
Name Belonging & Managerial Position
Yoshiro Tanaka General Manager,
Environment Plant Engineering
Company,Kobe Steel, Ltd.
Junichiro Nada General Manager, Environment Plant
Engineering Company, Kobe Steel, Ltd.
Yoshio Yabunaka General Manager,Environment Plant
Engineering Company,Kobe Steel, Ltd.
Nobuyuki Masuda Manager, Environment Plant
Engineering Company, Kobe Steel, Ltd.
Akihiko Jogu General Manager in charge of chemical
plant, Environment Plant
Engineering Company, Kobe Steel, Ltd.
Business in charge
Chief in research business,
responsible for overall business
management & project
Assistant chief in research business,
responsible for management of
technical department & process
Research business, responsible for
marketing research
Research business, responsible for
financial affairs
Research business, responsible for
overall engineering business
 CONTENTS

INTRODUCTION
OUTLINE

Chapter 1 BASIC COMPONENTS OF PROJECT................................................... -1-1

1. Situation of Bangladesh............................................................................. -I-1
1.1. Political, Economic, Social Conditions........................................................... -1-1
1.2 Energy Conditions.............................................................................-I-10
1.3 Needs for CDM Project..................................................................... -1-21
2. Necessity for Introduction of Energy Saving Technology in theTargeted Industry. -1-22
3. Significance, Needs of the Project and Spread of thePerformance to Peers Group -1-24
3.1. Significance, Needs in Implementation of the Project.................................... -1-24
3.2 Spread of its Performance to Peers Group...................................................... -1-25

Chapter 2 SPECIFICATION OF THE PROJECT PLAN......................................... -II-1

1. Project Plan............................................................................................... -II-1
1.1 Summary on the Targeted District in the Project (NGFF Fertilizer Plant)......-II-1
1.2 Details of the Project.......................................................................................-II-6
1.3 Greenhouse Effect Gas Targeted in the Project...............................................-II-7
2. Outline of NGFF Fenchuganj Fertilizer Plant............................................-II-8
2.1 Interest on the Side of Fenchuganj Fertilizer Plant.........................................-II-9
2.2 Conditions of Relevant Equipment in Fenchuganj Fertilizer Plant................. -II-10
2.3 Capacity for Performing the Project on the Side of
NGFF Fenchuganj Fertilizer Plant....................................................-11-48
(1) Technical capacity.................................................................................. -11-48
(2) Management system................................................................................ -II-51
(3) Management foundation, management policy......................................... -11-53
(4) Capacity for financial burden.................................................................. -11-54
(5) Capacity for provision of manpower....................................................... -11-55
(6) System for implementation..................................................................... -11-55
2.4 Details of the Project and Specifications of Relevant Equipment
after Renovation in NGFF Fertilizer Plant...................................................... -11-57
2.5 Scope of Funds, Machinery & Equipment
and Services to be Provided Mutually in the Project Implementation............ -11-74
2.6 Preconditions and Points at Issue in Project Implementation......................... -11-76
2.7 The Project’s Implementation Schedule...........................................-11-78
3. Materialization of Financial Plan.............................................................................-11-82
3.1 Financial Plan for the Project’s Implementation
(Amount of Necessary Fund, Fund Raising Method, etc.).............................. -11-82
3.2 Prospect for Fund Raising............................................................................... -11-83
4. Matters Relating to Joint Implementation Conditions............................................ -11-86
4.1 Adjustment Matters with the Targeted Country for Materialization of CDM,
Including Provision of the Project’s Implementation Conditions
and Share of Business Responsibility in View of Actual Situation
in the Project’s Execution Site......................................................................... -11-86
4.2 Possibility of the Targeted Country’s Consent
on the Project’s Joint Implementation
(Requirements for Obtaining the Targeted Country’s Consent,
Based on the Approach of the Targeted Country’s Government Related
Agencies and NGFF Fertilizer Plant).............................................................. -11-86

Chapter 3 PROJECT EFFECT................................................................................... -Ill-1

1. Energy Saving Effect................................................................................................ -Ill-1
1.1 Technical Ground for Positive Energy Conservation Effects.......................... -Ill-1
1.2 Baseline for Energy Saving Effect Calculation Base...................................... -HI-4
1.3 Actual Volume, Period of Production and Accumulated
Volume of Energy Saving Effect..................................................................... -HI-7
1.4 Actual Method for Ascertaining Energy Saving Effect................................... -HI-9
2 Effect Due to Greenhouse Effect Gas Reduction.................................................... -Ill-11
2.1 Technical Base for Production Effect Due to Greenhouse Effect Gas Reduction....-Ill-11
2.2 Baseline for Greenhouse Effect Gas Reduction Effect CalculationBase......... -Ill-11
2.3 Actual Volume, Period of Production and Accumulated
Volume of Greenhouse Effect Gas Reduction Effect...................................... -Ill-12
2.4 Actual Method for Ascertaining Greenhouse Effect Gas ReductionEffect...... -Ill-13
3. Influence to Productivity......................................................................................... -Ill -15

Chapter 4 PROFITABILITY........................................................................................-IV-1
1. Economical Effect Due to Investments Payback..................................................... -IV-1
1.1 Preconditions for Calculation and Financial Plan........................................... -IV-1
1.2 Investment Amount and Effects...................................................................... -IV-2
1.3 IRR Calculation Results and Appraisal........................................................... -IV-3
2. Cost Reduction Effect in this Project....................................................................... -IV-4
2.1 Energy-Saving Effect....................................................................................... -IV-4
2.2 Effects of Greenhouse Gas Reductions............................................................ -IV-4
Chapter 5 CONFIRMATION OF DISSEMINATION EFFECT................................ -IV-1
1. Possibility of Spread of the Technology Introduced in the Project.......................... -IV-1
2. Effects Reflecting the Diffusion of Technologies.................................................... -IV-1
2.1 Energy Saving Effects..................................................................................... -IV-1
2.2 Effects due to Greenhouse Gas Reduction...................................................... -IV-2

Chapter 6 INFLUENCE TO OTHER ASPECTS....................................................... -VI-1

1. Environmental Aspect..............................................................................................-VI-1
2. Economic Aspect...................................................................................................... -VI-1
2.1 Foreign Currency Saving.................................................................................. -VI-1
2.2 Reduction of Production Cost.......................................................................... -VI-2
2.3 Sales Price........................................................................................................ -VI-2
3. Social Aspect............................................................................................................ -VI-2
3.1 Guarantee for Livings of Employees and their Families................................. -VI-2
3.2 Function as a Supply Base of Fertilizer in Fenchuganj Area.......................... -VI-3

CONCLUSION

APPENDIX
1. List of Source Books
2. Site Survey Schedule
OUTLINE
 OUTLINE

This investigation has been made as a basic research, aiming at combination of energy saving
measures of fertilizer plant at Fenchugangi, Bangladesh (hereinafter called as “NGFF
Fertilizer Plant”) with future “Clean Development Mechanism (CDM)”. For the purpose of
making this investigation, experts were delegated there from Japan three times in the past.
Such experts had opportunities to meet the persons concerned of the related Bangladesh
Government Agencies, particularly those of Ministry of Environment and Forest and Ministry
of Industry. Through these meetings, the Government’s position for tackling CDM was
inquired and ascertained clearly by Japanese delegates. When Japanese delegates visited
NGFF Fertilizer Plant, main organization for implementation of the project on the side of
Bangladesh, and Bangladesh Chemical Industries Corporation (BCIC), upper organization of
NGFF Fertilizer Plant, they were able to ascertain mutual efforts to be made for
materialization of NGFF Fertilizer Plant’s renovation project. Also, its technical aspects, in
the case of materialization, were examined by both of the parties. On the side of Japan, the
results of local investigation were examined thoroughly and possible outcomes through
implementation were well reviewed. The summaries of results of local investigation as well
as those of reviews on possible outcomes through implementation are as follows.

With the greater part of territory being surrounded by India, the People’s Republic of
Bangladesh is situated at the western part of India and adjacent to the border of Myanmar in a
narrow area of its southern part. It has a country area of approximately 140,000 km2, about
2 times as large as Hokkaido. With a population of 130 million, almost same as that of
Japan, it is well known as a distinguished over-populated land among developing countries.

As indicated by GDP per capita in Bangladesh, amounting to around US $ 360 (1997), most
people seem to suffer extreme poverty. Under the background, there are losses of properties
due to natural disasters, such as flood and cyclone, and increase of population attributable to
the birthrate highly remained. To let the people get out of such poverty and better their
living standards, the promotion of investments from overseas and activation of economic
activities are essentially required.

Among limited natural resources in Bangladesh, natural gas is the most important natural
resource, which is expected to develop the domestic industries. Around 75 % of natural gas
production are used for power generation and chemical fertilizer manufacturing. While an
estimated amount of workable deposits of natural gas in Bangladesh is regarded as
approximately 10 trillion cubic feet (around 300 billion m3), its annual production is
approximately 250 billion cubic feet (7 billion m3 in 1994/95). Thanks to annual increase of

(1)
consumption volume of electricity consumption volume and that of natural gas at the same
time, reflecting the development of domestic industries, natural gas resource in Bangladesh
will be exhausted in next 20 ~30 years, judging from the present standard of natural gas
consumption volume, unless increase of deposits through new development of natural gas
become available. There are, therefore, urgent needs in Bangladesh to preserve valuable
natural gas as much as possible by means of executing energy saving.

In Bangladesh, the Jamna River streaming via Assam area of India runs through between its
eastern part and western part, while the Padoma River (the Ganges River) and the Megna
River flow into the Jamna River from its north-western area and north-eastern area,
respectively. And the merged three rivers empty themselves into Bay of Bengal. With low
grounds in the greater part of land, these rivers often flow over their banks and cause deluges
in rainy season. This country is, therefore, apt to be influenced considerably by rise of
sea-surface due to global warming.

The implementation of CDM is expected to contribute to economic development through

promotion of investments from overseas, reduction of consumption volume of natural gas,
valuable resource among limited domestic natural resources, by use of energy saving
technology and prevention of global warming through emission volume reduction of
greenhouse effect gas. In anticipation of much benefits to be produced by CDM,
Bangladesh is eagerly desirous of such implementation.

NGFF Fertilizer Plant was constructed by Japanese Consortium, consisting of Kobe Steel,
Ltd., a leading contractor, Mitsubishi Heavy Industries Ltd., Ishikawajima Shipbuilding Co.,
Ltd., Fuji Electric Co., Ltd and Meidensha Co., Ltd, under financial supports from JBIC (the
former EXIM) in 1962. In 1978, its rehabilitation in mechanical fields was implemented by
Kobe Steel, Ltd under financial aids from JBIC (the former Overseas Economic Cooperation
Fund), and its operation has been managed up to now with NGFF’s best efforts. In 1986,
Japan Consulting Institute made an investigation on this project’s rehabilitation and
concluded that fresh equipment should be built up after scrap-down for reason of damages of
the plant, which had been operated more than 25 years after its start-up. The construction of
new plant was, however, not realized due to lack of necessary fund, and operation of the
existing plant has been maintained up to now through NGFF’s efforts.

With a lapse of 23 years after rehabilitation in 1978, the machinery & equipment have
naturally superannuated. As a result, decline in production capacity, rise in production cost
due to increase of energy basic unit as well as environmental pollution attributable to leakage
of gas and liquid in the process have been brought about. Although its operation is barely

(2)
maintained with NGFF’s efforts, the operation ratio hovers around 78 %, owing to
superannuation of the equipment and lack of spare parts. In addition, the basic unit of
energy has exceeded the projected value by about 15 %.

Meanwhile, NGFF Fertilizer Plant is under control of Bangladesh Chemical Industries

Corporation ( hereinafter called as “BCIC”). In view of the present situation of the above
fertilizer plant, BCIC requested us to implement F/S relating to the following 4 items, such as
recovery of production capacity, execution of energy saving, environmental betterment and
measures for prolongment of the plant’s life.

CD To improve the plant’s production capacity up to the value originally projected

(Measures forproduction increase)
(2) To facilitate a minimum of 10 years plant operation (Measures for prolongment of the
plant’s life)
(3) To reduce the basic unit of natural gas (Measures for energy saving)
© To take environmental pollution into consideration (Measures for environment)

Through examination on renovation plan of this time, it has been confirmed that the
production volume originally planned would be recoverable with rehabilitation of the
superannuated machinery & equipment and supplies of spare parts, and that both of reduction
of greenhouse effect gas generation volume and decrease in manufacturing cost of urea
fertilizer would be achievable by reducing natural gas consumption volume down to the value
originally planned. In other words, natural gas volume per ton of urea product will decrease
by around 18.6 %, from the present 1,820 m3 (the mean value in 1999/2000) to 1,535 m3.
Also, urea production volume is expected to increase by about 29 %, from the present 84,275
tons (actual value in 1999/2000) up to 108,625 tons on annual production base, as an effect of
production increase.

With adoption of the manufacturing process technology prevailed 40 years ago, sufficient
collection of energy was not designed in NGFF Fertilizer Plant. In the aspects of capacity
and process technology, there are many differences in this plant, compared with those of latest
energy-efficient fertilizer plants. Our check-up on NGFF’s fertilizer production plan has
revealed that, within the permissible range due to economic examination results, more
reduction of natural gas consumption volume would be attainable with adoption of latest
process in available parts, by utilizing the existing equipment at the maximum and controlling
additional capital expenditures as well as by increasing energy efficiency. With such
improvement of the process, natural gas consumption will decrease furthermore by about 73
m3 per ton of urea product. Consequently, the total consumption volume of natural gas, as a

(3)
result of rehabilitation and process improvement, will amount to 1,462 m3 per ton of urea
product, and the total reduction is expected to be around 20 %. Production increase effect
attributable to process improvement seems, however, to be less than that of the above
rehabilitation, thanks to economical reasons, such as additional expenses for removals of
many bottlenecks existed in the process.

Since additional energy required for production increase exceeds energy reduction volume
obtained from energy saving effect, natural gas consumption volume in this project will
increase, as a whole, by approximately 4,900,000 Nm3 (oil conversion 4,220 toe) on annual
basis, although around 20 % reduction of energy basic unit and simultaneously about 29 %
production increase are achievable as the energy saving effect mentioned above. In respect of
greenhouse effect gas reduction effect, the project’s CO2 volume diffused in the air will
decrease, as a whole, by 7,768 tons annually, as the volume of CO2, arisen from production
increase and fixed in urea product, exceeds that of CO2, corresponding to production increase
and generated from combustion of natural gas.

Our estimate has clarified that the total fund required for the above rehabilitation and process
betterment in NGFF Fertilizer Plant would amount to approximately US$ 19,106,000. For
examination on the project’s profitability, the following conditions have been assumed.
Based on soft loans totally from overseas, borrowings conditions, such as interest: 1 %,
repayment period: 25years, grace period: 7years, and other conditions, such as the present gas
price: 1.93 Taka per m3, urea sales price per ton for production increase, reflecting the present
import price, :US$ 120, have been presumed Consequently, 9.04 % of Internal Rate of
Return (IRR) has been obtained.

As a result of calculating the reduction effect to greenhouse effect gas cost on the basis of the
investment amount and greenhouse effect gas reduction, annual C02 generation volume per
US$ 1 million of investment amount is estimated to decrease by 407 tons(=7,7698 -F
19,106).

In addition to the above energy saving effect and production increase effect, BCIC’s
requirements for betterment of plant environment and more than 10 years prolongment of
urea manufacturing equipment as well as maintenance of function as a fertilizer supply base
in the area of Fenchugangi will be attainable, if this project is materialized. Under the
circumstances, a great deal of enthusiasm for realization of the project are now displayed by
NGFF and BCIC.

(4)
Despite the fact that Bangladesh, as a recipient country of foreign aid, supports its domestic
economy by foreign assistance fund and NGFF is a state-run enterprise, its investment for
plant efficiency is restricted due to the country’s difficult financial conditions, and NGFF is
compelled to operate its plant at extremely low- efficient level.

From employment security viewpoint, this plant’s significance for existing is of great
importance in the area of Fenchugangi, although it is such fertilizer plant as having continued
its operation for 40 years since its start-up. In this project, an effect of greenhouse effect gas
reduction to expenses is relatively high and IRR comes up to the acceptable level of 9.04 %.
Also, implementation of this project, if combined with CDM project, will contribute to CO2
reduction in Japan. In the process of our investigation of this time, a great deal of
enthusiasm for materialization of this project was shown on the side of Bangladesh. Since
cooperation and maximum efforts to be made mutually by both parties were ascertained for
such realization, our endeavors for realizing this project will be continuously made in the
future. Such being the case, provision of ODA (Yen Credit) is strongly desired

(5)
 CHAPTER 1

BASIC COMPONENTS OF PROJECT

 CHAPTER 1
BASIC COMPONENTS OF PROJECT

1. Situation of Bangladesh

Area 147.000 Km2 (Approximately 2 times as large as Hokkaido)

Population 126.900.000 people Population growth rate: 1.7 % (World
Population White Paper/1999)
Capital city Dacca
Race Mostly occupied by Bengalis
Language Bengali (National language)
Adult literacy rate 44 % (Male 50 % /Female 27 %) (Bangladesh
Bureau of Statistics)
Religion Islam 88 %, Hindu 10.5 %, Buddhist 0.6 %, Christian 0.3 %
(National census/1991)
Japanese resident : 440 persons (As of October, 1999 )

1.1. Political, Economic, Social Conditions

(1) Political conditions

Since the establishment of Awami League Government headed by Sheik Hashina in June
1996, a state of confusion caused by the friction between the party in power and
non-government parties has continued. Bangladesh Nationalist Party, leading party
among non-government parties, had developed consistently its movement to overthrow
Awami League Government. Although National Party, 2nd party among
non-government parties, overthrew the former Bangladesh Nationalist Government
headed by Karena Jina in cooperation with Awami League and assisted the establishment
of Awami League Government, it has joined the movement to overthrow Awami League
Government with Bangladesh Nationalist Party. Meanwhile, the former President El
Shado, head of National Party, has been put into prison for reason of corruption during
the term of his service and now on trial.

From the first, there have not been much differences in the policies of Awami League,
Bangladesh Nationalist Party and National Party. With Bangladesh political parties
having no strong financial bases, concessions monopolized by party in power, including
official post, subsidy and public works, often cause political friction. In addition, there
have been many casualties, thanks to seriousness of boycott for Parliament discussion

— I— i —
and Hartal (Political demonstration for producing general Conditions) in the street. It
is, however, prominent that non-government parties have broken their steps. Some
members of non-government parties stood as candidate and won the election, which
relevant parties instructed to boycott. In National Party, there is such movement that
some members support Awami League. Reflecting such movement, Awami League is
successful in securing a stable majority. It is said that justification of the present regime
has been lowered due to some members’ open participation in activities of terrorism or
unfair practice in election. Disturbance of public order is worried about, in view of the
fact that Islam extremists train coups for activity of terrorism with financial aids from
international organization and East Bengal Communist Party, which acted as extreme
terrorist party in the past, has changed itself as underground criminal organization and
has committed crimes repeatedly.

As next general election is scheduled to be made in July 2001 when the tenure of the
present regime expires, there are frequent occurrences of Hartal led by non-government
parties.

1) Political system • Domestic administration

Form of government : Republicanism

Head of state : President Shahhabudin Armedo
Parliament : One house system (Total seats: 330) (30 are, however,
reserved for women)
Prime Minister : Sheik Hashina

2) Diplomacy & National Defense

Diplomatic policy Maintenance of friendly relations with neighborhood
countries as well as reinforcement of cooperative relations
with Western aid countries, including Japan.
Non-alliance group, Member of Islamic Countries’
Conference, Member of the British Commonwealth.
From January 2000, the country has been inaugurated as a
permanent member of United Nations Security Council
with term of 2 years. In March 2000, the country ratified
CTBT as the first country in South Asia area.
Military strength Budget-28.34 billion Taka. (Ratio to ordinary budget
17.8%)(1998/99)

Military service Volunteer system

-1-2-
 Troop strength : Army-101,000 persons, Navy-10,500 persons, Air
Force-6,500 persons

3) History

13 th century : Muslims dominated Hindu’s territory

18th century : British domination was maintained.
1947 : The country achieved independence as a part of Pakistan
and became East Pakistan State
1970 : After the independence of Pakistan, Awami League,
requesting state autonomy, became the leading party at the
first general election. Confrontation with West Pakistan
became crucial.
1971 : Civil war occurred. And it brought about the
India-Pakistan War with military invention of India for the
purpose of assisting East Pakistan. As a result of
surrender made by Pakistan Government Army, the
People’s Republic of Bangladesh was established.
The first President was Sheik Mujibaru Raman. And the
present Prime Minister is his eldest daughter. At the
beginning of its independence, the Government took
presidential system. Dissatisfied with the Government’s
line favorable to India and the President’s action to make
his son the Chief of the General Staff in army, a group of
young commissioned officers carried out a coup d’ etat and
killed the President together with his family, except two
daughters abroad. (6 years-old boy was included) After
then, military regime continued for a period of time.
1979 : Bangladesh Nationalist Party (BNP) Government headed
by Jauru Raman was established.
1981 Since Jauru Raman was killed by counter force in the
military, Vice President Sattaru took over the Presidency.
1982 After the President Sattaru was overthrown through a
bloodless coup d’ etat by Elshad, the Chief of the General
Staff in army, in March, the Constitution came to a
standstill and military regime assumed the governmental
position.
1986 Elshad formed his own party, “National Party” and
managed to take a majority in the General Election held in
May.
1988 While National Party headed by Elshad won an
overwhelming victory over the General Election held in
March, non-government parties boycotted the Election.
1990 More than 130,000 people were killed by a record sized
cyclone. While anti-government protest action became
active, President Elshad, who continued vigorous
administration for about 9 years, resigned due to repeated
corruption and bribery. (Now in prison)
1991 As a result of the General Election in March, BNP became
a leading party, while National Party slid down to third
party. Begum Kareda Jia, wife of the former President
Jauru Raman, became the first woman prime minister.
Prime Minister Kareda Jia filed a proposal to amend the
Constitution for returning to Parliament Members’ Cabinet
System from Presidential System and obtained its approval
through a national referendum in September 1991.
1994 With disastrous defeat of the party in power in the Local
Election held in January, political friction occurred among
non-government parties, including Awami League, which
gathered strength as a second party. Consequently,
Parliament members of non-government parties resigned
all at once, asking for early implementation of General
Election in 1995.
1996 Although General Election was held at the time of
completion of 2 years term, it was boycotted by major
non-government parties. While anti-government protest
action by non-government parties became active, politics
and economy were at a complete standstill. In March,
Prime Minister Jia resigned, and election administration
cabinet started. As Awami League assumed its regime
again with a lapse of 21 years as a result of the General
Election held in June, Hashna Awami, eldest daughter of
the first President Mujitaru Raman, became Prime Minister

—1—4—
 and has continued her service up to the present. Also,
General Election is scheduled to take place in 2001.

(2) Economic conditions

1) Summary on economic aspects

Based on the fact that GNP per capita is less than 300 US$ in Bangladesh, it is said
that most people suffer extreme poverty. Under the background, there are losses of
properties due to natural disasters, such as flood and cyclone, and increase of
population attributable to the birth rate highly remained. Bangladesh, aid recipient
country, has supported its domestic economy with overseas aids funds provided for
reason of its poverty.

Dacca, capital city, has recently attained a rapid development, and economic
activities seem to have become active with a remarkable increase of traffic volume,
including passenger cars and trucks.

As a result of BNP Government’s tackling economic structural reform under the

guidance of World Bank and IMF, a remarkable performance, such as reduction of
financial deficit and improvement of International Balance of Payment, has been
achieved. The growth rate of GDP remains, however, at low level. After
establishment of Awami League regime in June 1996, comparatively stable
economic growth has been attained. Thanks to deluge in 1998, slowdown of GDP
growth in 1998/99 is now worried about. While gross production of food grain
came up to the 20 million tons barrier for the first time in 1998/99, food self-support
rate remains at around 90 %. Also, the industrial ratio to GDP, driving force of
economic growth, still remains at a little more than 10 %. The continuous
achievement of growth rate at the level of 7 % p.a. is required to overcome the
poverty in Bangladesh.

Table I — 1 Table of economic summary

Agriculture, Weaving & Knitting Product Industry,

Main industries
Jute Processing Industry
Main trade items (1997/98)
Export Weaving & Knitting product, Frozen food, Jute product,
Leather goods
Import Capital goods, Textiles, Crude oil & oil product, Steel
Main counterparts of trade (1996/97)
Export United States, United Kingdom, Germany, France,
Belgium, Netherlands
Import India, China, Japan, Singapore, United States, Germany

(Source: Ministry of Foreign Affairs HP)

2) Economic Indicators (Unit: US$, Period: From July through June of each year)

Table I —2 Economic Indicators

Currency Taka (TK)

Exchange rate 1 US $ =49.5 Taka (April, 1999)
55.5 Taka (2000)
GDP 33,897 million (1997/98)
Per capita GDP 268 (1997/98)
Economic growth rate 5.6% (1997/98)
Increase rate of commodity prices 7.0%
Unemployment rate 26.0 % (1994, World Bank data)
Gross trade amount (1997/98)
Export 5,172 million,
Import 7,524 million
Debt service ration 8.6% (1997/98)
(Source: Ministry of Foreign Affairs HP)
Sources of item 2~12 : Bangladesh Bureau of Statistics, Ministry of Finance, IMF
data, etc.
There is an agreement on structural reform plan with IMF
and World Bank.
 3) Economic cooperation

Table 1 — 3 Economic cooperation

Main aids countries (DJapan ©United Kingdom ©Netherlands

(ODA White Paper 1996) ©Canada © Germany
Actual results of aids from
Total: 129.98 million US$
Japan (ODA White Paper)
Onerous financial cooperation (Net disbursement, 1998) 50.14 million US$
Gratuitous financial cooperation ( » ) 216.35 million US$
Technical cooperation ( n ) 22.83 million US$
Bilateral relations:
(Japan/Bangladesh)
Political relations Based on economic & technical cooperation,
friendly relationships have been developed.
Pro-Japanese
Economic relations Trade with Japan (Trade White Paper)
Trade amount (1995) (1996) (1997)
Export 146 million 143 million 130 million
US$ US$ US$
Import 347million 345 million 317 million
US$ US$ US$
Main item
Export Shrimp, Textiles, Textile raw materials
Machinery & equipment, Metal product,
Import
Chemical product
Direct investment from Japan
(Monthly Financial & Monetary 52 cases, 22,4 billion US$
Statistics Report, MOF)
(Source: Ministry of Foreign Affairs)

(3) Social conditions

1) Summary on social aspects
In Bangladesh, economic gap between city district (Dacca) and rural districts tends
to widen, due to recent economic development. In rural districts, there are many
people who are unable to get out of poverty, thanks to losses of properties
attributable to annual repeat of flood and cyclone and high birthrate. As most of
these people gather in Dacca, large city, to seek for better living and occupy
wetlands and side place of railroad track in the city, its living circumstances become
worse. The number of street children and beggar keeps on rising.

-1-7
While rubbish in Dacca amounts to 9,000 tons/day, 300 tons out of the rubbish,
including glass, steel and paper, are recycled by poor people, but 400 tons are left on
road. Capacity of sewage disposal in Dacca is only 20 % and 40 % is individually
disposed. The remaining portion is discharged as it is.

Rikisha-man is an easy job for people coming from rural districts. If a man hires
such Rikisha from its owner by paying about 1 US$/day, he can earn income from
that day. Under the circumstances, the downtown of Dacca is crowded with many
Rikishas. And economic activities are hindered, due to traffic congestion caused
by crowded-ness of Rikisha. When the authority concerned tried to shut Rikisha
out from main street (Milple Street) in the city, Rikisha men started a riot for
protesting such exclusion, resulting in more than 50 injured persons. As of January
2001, exclusive lines are set up partially in main streets of Dacca. (See Photograph I
— 1 and I — 2)

Photograph I — 1 Rikisha
 Photograph I —2 Slum

In rural districts, repairs of roads are always required due to coverage of water
attributable to flood. Since gravel needed for road works is insufficient in
Bangladesh, pebbles in rivers are carried out from the neighborhood of national
border with India and used for such works after cracking by hammer. Sometimes
red bricks are used for road floor after cracking. Relied on jobs, such as carrying
earth and sand for road works and cracking pebbles and red bricks, many people
coming from rural districts make their livings. As introduction of construction
machinery, including conveyor, takes their jobs, there are many resistances. In
Bangladesh, continuation of such insufficient industrial • economic • social activities
provide many people with working places. Unless population problem is resolved,
labor saving and efficiency will not be achievable.

At present, households receiving electricity supply in Bangladesh account for only

15 % of the total. In rural districts, lamps burning kero sine are widely used for
lighting. In respect of fuel for cooking, woods and cattle’s dung are used.

In Dacca, city gas is used in ordinary households. Gas rate is calculated under
fixed amount system, due to difficulty in providing gas meter with each household
by gas supply company. In case of portable cooking stove with 2 burning points,
rate is 288 Taka per month. Spread of electricity contributes to betterment of
standing position and living standard in rural districts.

1-9-
 State-run television broadcasting in Bangladesh televises many programs providing
easily understandable information with viewers, including illiterates.

Cellular phone has recently started to spread, since many years were required to wait
until set-up of fixed telephone at home by telephone company. There is, however,
a fear that telephone companies facing with crisis will stop their connections with
cable telephones.

With inclusion of arsenic in ground water, coming from tube well as drinking water,
exceeding permissible range, it becomes a subject of discussion. Many countries,
including Japan, have competitively provided Bangladesh with funds to set up tube
wells, because surface water proved to be in-sanitary. Although outbreak of
infectious disease has decreased considerably, the content of arsenic in ground water
extremely exceeding the permissible range have been detected in around 90 %
territories of the county. Despite of studies continued by the United Nations and
other countries, prospect for resolving such problem is still far from certain.

2) Standard of reward (As of January, 2001, 1 Taka is equivalent to about 2 Yen)

Road works laborer 100 Taka / day
Rikisha man 150~200 Taka / day
Ordinary laborer 150 Taka / day
Office boy/ Cleaning man / Guard 5.000 Taka / month
Driver 12.000 Taka / month
Receptionist / Computer operator 15.000 Taka / month
Clerk / Assistant programmer 15.00 Taka / month
Accountant 25.000 Taka / month

1.2 Energy Conditions

In Bangladesh, energy production and distribution have been managed by state-run

companies. Major natural resource in Bangladesh is natural gas. As of 1997, an estimated
amount of workable deposits of natural gas is 300 billion m3 (Approximately 10 trillion scf)
and annual supply volume comes up to around 7 billion m3. In respect of other energy
source, such as oil, it depends on import, with availability of collecting minimum volume of
condensate in natural gas field. Natural gas have been produced and sold by Petrobangla
(Oil, Gas, Mineral Resources Corporation). Sales of imported oil are made by Bangladesh
Oil Corporation. As for coal, there are coal-fields in Jamalganj, Peerganj and Brapukeria.
Since coal seam in Jamalganj is such deep as 1,000 ms, it is not economical. In Brapukeria,
1 million tons of annual production is scheduled to start under guiadance of China from 2002.
Although coal depends on import from India and is used mainly for baking bricks, it’s volume
is very small.

In “Asia Research Center World Trend, December, 1998,” Page 23-28, JETRO reported in
detail on energy conditions in Bangladesh (See Figure I— 1). Under entrustment on “South
Asia Area (Bangladesh) Energy Multi-consumption Industries Basic Research Business” from
New Energy and Industrial Technology Development Organization, Japan Consulting
Institute presented its report relating to energy conditions in Bangladesh in March 1991.

Bangladesh Oil Petrobangla

Corporation Gas 7,005,000,000 m3 Exploitation

Oil 2,414,000 tons supply

3,0433,000,000 m’ 2,278,000,000 m ’
256,000 tons

2,149,000 tons Electricity Bangladesh

Development Bureau Chemical Industry
Corporation
10,806 GWH electricityy generation
Chemical fertilizer production
4,612 GWH 1199 GWH
3,003 GWH

Dacca Electricity Rural District ,307,000,000 m3

Supply Corporation Electrification Bureau

2,913 GWH 1,018 GWH

Consumers

Figure I—1 Energy conditions in Bangladesh

(Source: JETRO Asia Economic Research Center HP)

Since electricity supply capacity was 2,500 MW in 1999 and 300 MW short, compared with
2,800 MW of demand, electricity was often cut off. Cut-off of electricity supply causes not
only stoppage of water supply, resulting in inconvenience on living conditions of citizens, but
also slump of industrial production as well as reduction of new investment. According to the
trial calculation made by World Bank, such cut-off pushes down GDP growth by 5 %.
Except the case that Khulna Power Station constructed by Wahtoshira Co, U.S. started its
regular operation in October 1998, there has not been any construction of new power plant

I—11 —
since 1994/95. While the existing equipment superannuated, actual electricity generation
capacity were inclined to decrease with peak time in 1994/95. Simultaneously, electricity
demand increased continuously in parallel with spread of electric appliances and industrial
growth. And its demand exceeded supply in 1996/97.

Of 3,091 GWH of power generation equipment capacity in 1997/98, 76.5 % depends on

natural gas and 16.0 % relies on oil. And the remaining portion is hydraulic power
generation. While actual generation capacity is 2,445 GWH, operation rate remains at 79 %.
At present, Petrobangla sells natural gas to Electricity Development Bureau at the price of 53
Taka per 1,000 SCF. The cost of electricity generation by use of gas in Electricity
Development Bureau amounts to 1.5 Taka per unit, (at the time of KW), and electricity is sold
to Dacca Electricity Supply Corporation at the price of 1.72 Taka. And Electricity Supply
Corporation sells its electricity to end users at the price of 2.45 Taka per KW. Based on the
fact that most of electricity supply volume are, however, treated as “system loss”, a sizable
amount of accounts receivable are un-collectible. Most of losses are caused by pilferage of
electricity. Even government agencies, such as state-run companies and local
self-governments, are in arrears on a lot of electricity rate. According to data for 1994/95,
Dacca Electricity Supply Corporation supplied 4,612 GHW in total, while rates for 2,913
GWH, equivalent to around 63 % of the total, were collected. Of 1,220 billion Taka of
accumulated un-collected rates by Dacca Electricity Supply Corporation, 23 % were due to
government agencies’ arrears. Since Electricity Supply Corporation suffers from deficit
attributable to a huge amount of system loss, the Corporation is in arrears on electricity rates
payable to Electricity Development Bureau in amount of 15.47 billion Taka. Consequently,
Electricity Development Bureau is in arrears on gas rates payable to Petrobangla in amount of
2.58 billion Taka. As Electricity Development Bureau has to live on other financial sources
for repaying loans relating to the existing equipment construction due to its deficit, it incurs
un-availability of increase and repairs of generation equipment, reduction of equipment
operation rate and frequent occurrence of electricity cut-off.

Electricity Development Bureau has concluded with a foreign company an agreement on

construction of new generation equipment with 2,40 MW capacity at the time of completion
of 5th five year plan. In October, 1998, Khulna Power Station constructed by Wahtoshira
Co, U.S. started its operation. For the purpose of obtaining supply of natural gas required
for newly installed generation equipment, introduction of foreign capital has been made by
Gas Development Division. Pertobangla and Electricity Development Bureau decided to
purchases gas and electricity in a lump from foreign companies, respectively. As the result
of this method, Bangladesh Government is neither required to bear equipment construction
cost, nor responsible for management. Since electricity and gas rates are politically lowered,

1-12-
electricity and gas purchased from foreign companies are at high cost and their prices exceed
sales prices of Electricity Development Bureau and Petrobangla. Petrogangla, which was
unable endure back spread, raised gas rates by 15 % in December 1998 and by 15 % in
September 2000, respectively. Meanwhile, Electricity Development Bureau raised
electricity rates by 4.7 % in July 1999. Further to say, it has to pay electricity and gas rates
in foreign currency to foreign companies. Since both of Electricity Development Bureau
and Petrobangla have no capacity for raising foreign funds, Ministry of Finance is worried
about their arrangement. As foreign companies are doubtful of the Government’ capacity
for raising foreign funds, they ask for permission to export natural gas. In view of the
situation that gas consumption volume during the term of 5th five year plan is estimated to be
2 trillion cubic feet and its estimated deposits amounts to approximately 10 trillion cubic feet,
the country cannot afford to export natural gas in large quantity. The policy for expanding
electricity supply capacity in early stage through energy development by use of foreign funds
seems to be reasonable in short term, but it entails much financial burden in long term.

Although Occidental Co.,US caused a large scale of explosion accident in gas working site of
Megruchara, and such 6 trillion Taka of damage, as estimated by Ministry of Environment
and Forest, was brought about, the company withdrew from Bangladesh without paying any
compensation. The reinforcement of gas production capacity was projected in expectation
of power station’s expansion, but supply volume of natural gas exceeded its demand
extremely, thanks to considerable delay of power station construction plan. It is a grave
issue in energy division.

To avoid recurrence of such trouble in the future, Bangladesh Government concluded with
U.S. Government in December 1998 an agreement, in which financial and technical aids as
well as overall policy suggestion would be provided for the purpose of evaluating merits and
demerits of projects to be promoted by foreign companies.

Data relating to energy program in Bangladesh are shown in Table 1—4 through 1—12.
These are quoted from official HP of JETRO Asian Economic Research Center.

Table 1 — 4 Main gas wells in Bangladesh, their production volumes and estimated
amounts of deposits are shown.
Table 1 — 5 Power stations in Bangladesh and their generation capacities are indicated.
Table 1-6 Energy supply and consumption in Bangladesh is set forth.
Table 1-7 Equivalent energy conversion into standard oil is indicated.
Table 1-8 Electricity generation equipment, actual electricity generation capacity and
demand & supply are shown.

-1-13
Table 1-9 Future construction plan for new electricity generation equipment is set
forth.
Table I —10 Supply & demand trend forecast for electricity and gas (at the time of
projection for 5th five year plan) is indicated.
Table I-11 Mining areas allotted to foreign companies.
Table I-12 Energy used ordinarily in cities and rural areas are set forth.
 Table I —4 Main gas wells, their production volumes and estimated amount of deposits

Natural gas (1 billion cubic feet) Oil & liquefied gas (1,000 barrel)

Code Place name Deposits Deposits

Workable Remainin Workable Remainin
up to the up to thee
deposits g deposits deposits g deposits
present present
Exploitation by Petrobangla
BK Bakhrabad 867 549.8 317.2 2,130 763 1,367
FE Feni 80 39.5 40.5 243 87 156
HB Habiganj 1,895 655.7 1,239.3 100 28 72
KT Kail ash Tila 2,529 151.5 2,377.5 27,560 1,208 26,352
MG Meghna 104 6.2 97.8 210 210
NR Narshingdi 126 13.6 112.4 310 8 302
RP Rashidpur 1,309 124.4 1,184.6 4,000 108 3,892
SN Shaldanadi 140 1.6 138.4 420 420
SY Sylhet 266 161.3 104.7 890 551 339
TT Titas 2,100 1,513.3 586.7 3,020 1,890 1,130
Management by Petrobangla (Production is stopped at present)
CH Chhatak 1,140 26.5 1,113.5 80 80
KA Kamta 195 21.1 173.9 40 40
Exploitation by foreign companies
SG Sangu 848 1.2 846.8
Future developments (led by foreign companies)
BB Beani Bazar 167 167.0 1,820 1,820
BG Begumganj 15 15.0 10 10
FG Fenchuganj 210 210.0 520 520
JL Jalalabad 900 900.0 15,750 15,750
KB Kutubdia 468 468.0
SM Semutang 98 98.0 20 20
SB Shahbajpur 333 333.0
Total 13,790 3,265.7 10,524.3 57,123 4,643 52,480

(Source) Data of natural gas are quoted from data on August 1998 in Bangladesh Bureau of Statistics
Pocketbook Bangladesh 98, p 239.
Data of oil & liquefied gas are cited from data on February 1997 in Petrobangla, Petroleum
Exploration Opportunities in Bangladesh, p 26: Statistical Yearbook of Bangladesh 1997, p 262.
Code and place names are cited from Petroleum Exploration Opportunities in Bangladesh pp
26-28, Natun Bhuchittrabalee, p 14.
Note: Jalalabad gas well developed by Occidental Co.,U.S. started its regular operation from
February 1999.

-1-15-
 Table 1 — 5 Power stations and their electricity generation capacities (Unit: MW)

Name
Designed generation Actual generation
Code (All of them are under control of Fuel capacity capacity
Electricity Development Bureau)
AS Ashuganj gas 724 550
BR Baghabari oil 71 71
BS Barisal oil 47 37
BH Bheramara oil 60 40
BL Bhola oil 6 2
BO Bogra oil 8 7
FG Fenchuganj gas 90 60
OH Ghorasal gas 740 680
HP Haripur gas 99 90
KT Kaptai hydraulic 230 230
KL Khulna oil 249 79
RJ Rajshahi oil 2 1
RG Rangpur oil 20 20
RZ Rauzan gas 420 360
SP Saidpur oil 28 18
SH Shahjibazar gas 96 80
SD Siddhirganj gas 60 6
SK Sikalbaha gas 116 92
SY Sylhet gas 20 20
TG Thakurgaon oil 6 3
Total 3,091 2,445

(Source) Data on October 1998 quoted from NEDO’s report on “Local conditions of energy
consumption efficiency” 1999, pi 57-158 and Natun Bhuchittrabalee, p 15.
 Table I — 6 Supply & consumption of energy (1994/95)

Crude oil & Natural gas Electricity

petroleum product (1 million m3) (at the time of
(1,000 tons) GW)
Domestic production & 10 7,005 10,806
electricity generation
Import 2,529
Supply
Export -157
Stock adjustment 32
Total supply volume 2,414 7,005 10,806
Electricity generation 256 3,043
Loss in transportation & 9 372 3,232
transmission of
electricity
Own consumption 5 640
Ordinary household 434 515 2,688
Commerce & service 104 655
Consumption business
Industry 151 688 2,859
Transport & traffic 1,140
Agriculture & others 424 732
Use as raw materials for 2,278
fertilizer
Total consumption 2,414 7,005 10,806
volume

Note : At the time of 10,806 GW in domestic electricity generation, hydraulic generation at the time of
372 GW is included.

-1-17-
 Table 1 — 7 Equivalent energy conversion into standard oil (lOOOtons)

Crude oil &

petroleum Natural gas Electricity
product
Domestic production & 10.19 6,456.51 929.32
electricity generation
Import 2,578.83
Supply
Export -160.10
Stock adjustment 32.63
Total supply volume 2,461.55 6,456.51 929.32
Electricity generation 261.04 2,804.73
Loss in transportation & 9.17 342.87 277.95
transmission of
electricity
Own consumption 4,61 55.04
Ordinary household 442.55 474.68 231.17
Commerce & service 95.86 56.33
Consumption business
Industry 153.97 634.13 245.88
Transport & traffic 1,162.46
Agriculture & others 432.36 62.95
Use as raw materials for 2,099.63
fertilizer
Total consumption 2,461.55 6,456.51 929.32
volume

Note: Conversion value of hydraulic generation volume comes up to 124,470 tons.

(Source) Bangladesh Bureau of Statistics, Statistical yearbook of Bangladesh 1997, pp 251, 256

Table 1 — 8 Electricity generation equipment, actual electricity generation capacity,

and demand & supply
(Unit: MW)
Electricity generation equipment Actual Electricity Gap
Thermal Thermal electricity demanded between
Year generation at peak demand
Hydraulic power power Total
by oil by gas capacity time and supply
1984/85 130 446 564 1,140 1,018 887 131
1989/90 230 444 1,678 2,352 1,834 1,509 325
1994/95 230 682 1,995 2,907 2,133 1,970 163
1995/96 230 682 1,995 2,907 2,105 2,087 18
1996/97 230 682 1,995 2,907 1,768 2,114 -346
1997/98 230 496 2,365 3,091 2,445 2,806 -361
Source : Statistical Yearbook of Bangladesh 1997, p 257; Planning Commission, The Fifth Year Plan
1997-2002, p 238; Ministry of Finance, Bangladesh Economic Review 1998, p 54; Artha
Mantranalaye, Bangladesh Arthanaitik Shameekhha 1999, p 68 ; The Daily Star, 4 April 1998
 Table 1 — 9 Future construction plan for new electricity generation equipment

Electricity
generation
Code Place name Fuel Remarks
capacity
(MW)
Management by Electricity Development Bureau
BP Bara Pukuria Coal 300 To be completed in June, 2002
GH Ghorashal 210 Operation was commenced in
January, 1999, due to delay of
Gas
completion originally scheduled
in March, 1998
HP Haripur Gas 109 To be completed in March, 2000
RZ Rauzan 210 Operation was commenced in
Gas
September, 1997
SH Shahjibazar Gas 60 To be completed in June, 2000
SD Siddhirganj Gas 210 To be completed in March
SY Sylhet Gas 90 To be completed in June, 2001
(Site is undecided) Gas 200 To be completed in June, 2002
Total 1,389
Construction & management by foreign private companies
BI Baghabari 100 The completion originally
Oil/gas scheduled in June, 2000 has been
changed and will be after 2001.
HP Haripur 360 The completion originally
Gas scheduled in June, 2001 will be
delayed considerably.
KL Khulna 110 Regular operation started from
Oil/gas
October2, 1998.
KL Khulna Oil/gas 210 To be completed in June, 2002.
ME Meghnaghat 450 The completion originally
Gas scheduled in June, 2001 has been
changed and will be after 2003.
MY Mymensingh 60 The completions originally
Gas scheduled in June, 1999 were
delayed considerably.
Power station on board 400 The completions originally
(4 places) Oil/gas scheduled in June 1999 were
delayed considerably.
Overall development plan for 350 In respect of Uncol Co’s
Western District proposal ,U.S. Government
Gas
supported , while World Bank is
doubtful.
Total 2,040

Source : The Fifth Five Year Plan 1997-2002, p 342; The Daily Star, 17 Jan. 1.Feb.5 20 May jul. 1999

-1-19-
 Table I —10 Supply & demand trend forecast for electricity and gas
(At the time of projection for 5th five year plan)

Annual demand volume

Actual electricity Electricity demanded at
Year of natural gas
generation capacity (MW) peak time (MW)
(1 million cubic feet)
1997-98 2,813 2,806 365
1998-99 3,464 3,109 410
1999-00 4,342 3,447 438
2000/01 5,156 3,736 455
2001/02 5,739 4,051 495
Total 2,163

Source : The Fifth Five Year Plan 1997-2002, pp 342, 359

Table I — 11 Mining areas allocated to foreign companies

Mining area Company Remarks

(1st allocation of mining area)
12 Occidental (US) Contracted on January 11, 1995
13 • 14 Occidental Contracted on January 1 1, 1995.
Gas explosion accident on June 15, 1997.
15 Cairn (UK) Contracted on June 12, 1995.
16 Cairn Contracted on May5, 1994. On June 12, 1998,
Shangu gas well started its regular operation.
17 • 18 Rexwood (US) • Contracted on January 18,1997.
Oakland (US)
22 UMIC (US) Contracted on February 16,1997.
(2nd allocation of mining area) Decided companies made bids on July 25,1998
3 • 6 Enron (US) • Oakland
5 Shell (Netherlands) • Cairn
7 Triton (US) • Unocal(US) •
PTI (Malaysia)
8 Pangaea (Canada) •
OMV (Austria)
Mining area, where some companies made
bids, but no order has been placed
9 Competed with Tullow (Ireland), Chevron (US) and
Texaco (US)
10 Competed with Unocal, Shell and Cairn
11 Competed with Tullow, Mobil (US) and Petronas
(Malaysia)

Source : Petroleum exploration Opportunities in Bangladesh , pp 4-6 ; The Daily Star ,20, January
1998,13 June,27 July 1998; Data presented from Uchida, special investigator, Japanese
Embassy in Bangladesh

1-20
 Table 1—12 Energy used ordinarily in cities and rural areas (%)

Households in Households in Whole country

cities rural areas
Kerosine lamp 36.73 90.47 84.73
Electric lamp 62.77 8.59 14.37
Lighting
Others, 0.50 0.94 0.90
Total 100.00 100.00 100.00
Firewood 57.63 42.67 44.25
Kerosine burner 2.32 0.36 0.57

Fuel for Gas portable cooking stove 20.43 0.20 2.37

cooking Electric cooking utensils 5.12 0.38 0.88
Others 14.50 56.39 51.93
Total 100.00 100.00 100.00

(Source) Bangladesh Statistical Pocketbook 98, p 164

1.3 Needs for CDM Project

In Bangladesh, its economic development as well as reduction of influence attributable to

global warming are expected through materialization of CDM project. Since it has a
mechanism consistent with national interest, needs for CDM are extremely high in the
country. It is understandable from the fact that Bangladesh Government made a great deal
of effort in the United Nations Framework Convention on Climate Change. The reasons of
strong needs for CDM in Bangladesh are able to summarize as follows.

CD As most of its territory are zero meter high above sea level, Bangladesh is troubled
with natural disaster, such as flood and cyclone, in rainy season every year. And it
is apt to be influenced badly by global warming due to localized torrential down
sour, attributable to climate condition change, and estimated rise of sea surface.
Reduction of greenhouse effect gas generation through implementation of CDM
project is a matter of great concern in Bangladesh.

® Up to the present, Bangladesh has maintained its domestic economy with direct aids
funds from overseas for reason of its poverty. Recently, Bangladesh Government
and people pose questions on infinite continuation of such foreign aids. Such
opinion that development of its domestic industries by themselves, activation of
economic activities and betterment of people’s living standard should be made
through introduction of investment from overseas becomes predominant.
Activation of investment from overseas through implementation of CDM project is
 of great importance to development of Bangladesh as well as slough-off from aid
receiver position.

(3) Natural gas is the most important natural resource in Bangladesh. At present, 3/4 of
natural gas is consumed for electricity generation, basic industry, and production of
chemical fertilizer. Although estimated deposits are regarded as 10 trillion SCF
(Approximately 300 billion m3), there is a possibility of its drying in the future,
owing to annual increase of necessary volume, although annual supply remains
around 7 billion m3. Such being the case, materialization of energy saving in
natural gas massive consumption basic industries and reduction of natural gas
consumption through implementation of CDM is much significant to Bangladesh.

2. Necessity for Introduction of Energy Saving Technology in the Targeted

Industry

With 7 plants of urea in Bangladesh shown in Table 1 — 13, they are divided into 2 types of
equipment, including urea manufacturing equipment with old-fashioned process and large
equipment with adoption of new process. NGFF and PUFF have the former typed
equipment, while other plants have the latter equipment. Since the former equipment has old
typed process, energy efficiency is extremely low. Meanwhile, as the latter is highly
efficient equipment with application of new typed process, energy saving effect obtained from
process change is not expected to be large. In a report on “South Asia Area (Bangladesh)
Energy Massive Consumption Industries Basic Research Business”, 1998, a trial calculation
on energy saving effect through process change with application of collection of wasted heat
and absorption typed refrigeration process is made, by taking advantage of CUFF Fertilizer
Plant, Chittagong as a model case. According to the above report, 1.8 % of energy saving
effect is attainable, but only small merit is obtainable.

1-22-
 Table 1—13 Table for Urea Fertilizer Plants in Bangladesh

Location Production Production

Plant name Process
(Time of Unit name capacity capacity
(Abbreviated title) Licensee
completion) (Ton/year) (Ton/year)
Natural Gas Fertilizer Co Fenchuganj Ammonium 203 65,000 Chemico
(NGFF) (July, 1962) &, Urea 340 100,000 Chemico
Urea Fertilizer Co (UFFL) Ghorasal Ammonium 824 272,000 Kellog,
(September, &, Urea 1,422 470,000 Toatsuo
1972)
Zia Fertilizer Co (ZFCL) Ashuganj Ammonium 930 307,000 Uhde,
(July, 1983) &, Urea 1,600 528,000 Stami
Polash Urea Co (PUFL) Ghorasal Ammonium 170 56,000 China
(July, 1988) &, Urea 305 95,000 China
Chittagong Urea Fertilizer Chittagong Ammonium 1,000 330,000 Kellog
Co (CUFL) &, Urea 1,700 561,000 Toatsu
Jamna Fertilizer Co. Jamna Ammonium 1,000 356,000 Tom,
(JFCL) (July, 1992) &, Urea 1,700 561,000 Snam
Karunafuri Fertilizer Co. Chittagong, Ammonium 1500 500,000 Tom,
(Kfco) (April, 1995) &, Urea 1725 575,000 Stami

In these large-sized urea fertilizer plants with application of new process, production volumes
have decreased due to super-annuation of equipment and imperfection of maintenance.
Simultaneously, unit cost of natural gas per ton of urea has increased. Our recent
investigation has revealed that actual production volumes in UFFL, ZFCL and JUFL declined
to 71.7 % on the average in 1999/2000. In respect of energy consumption volume increase,
18 % up in ZFCL, 20 % up in UFFL and 22 % up in JUFL are estimated, compared with
18 % increase in CUFL Fertilizer Plant at the time of investigation released by the report on
“South Asia Area (Bangladesh) Energy Massive Consumption Industries Basic Research”.

In the case that reliability on machinery & equipment is recovered through application of
maintenance of these new processes in large-sized urea fertilizer plant as well as
implementation of adequate maintenance for each machinery & equipment, a remarkable
energy saving effect with increase of operation rate will be achievable, compared with the
present level. Since these new typed plants have large capacities, energy saving effect and
production increase effect will be extremely effective, compared with those of NGFF.
Necessity for introducing energy saving technology in Bangladesh’s targeted industry is,
therefore, very significant.

1-23-
3. Significance, Needs of the Project and Spread of the Performance to Peers
Group

3.1. Significance, Needs in Implementation of the Project

(1) Greenhouse effect gas reduction effect

With extreme super-annuation of the targeted plant and fuel basic unit being
approximately 2 times as much as the average fuel basic unit of other large-sized urea
fertilizer plants, there are needs for its reduction through introduction of energy saving
technology on the side of Bangladesh. Since CO2 reduction equivalent to 76,450 tons
oil conversion is achievable through implementation of the project and a great deal of
contribution to prevention of global warming, including a partial contribution to CO?
reduction volume in Japan, on thee basis of Kyoto Protocol through its combination with
CDM is also available, implementation of the project is very significant.

(2) Foreign currency saving effect

Production increase effect of around 24,800 tons of urea product is obtainable only
through implementation of the project. The volume equivalent to the volume of urea
being presently imported is reducible. Saving of foreign currency amounts to 3 million
US$ annually, on the assumption that import price per ton per ton is 120 US$ Based on
the possibility of spread of energy saving technology in the project, approximately
600,000 tons of production effect will be attainable in BCIC’s other large-sized urea
plants on the basis of performance in 1999/2000, and it will, therefore, result in around
72 million US$ of foreign currency saving. Bangladesh has always maintained its
domestic economy with aids funds from overseas for reason of most people ‘s suffering
from poverty. In view of such situation, the possibility of saving foreign currency is
very significant. Synergistic effect, obtainable from production increase effect and
energy saving effect through implementation of the project, has the same effect as in case
of export of wasted natural gas after its collection. Since reduction of external payment
with foreign currency is achievable through implementation of the project, significance
to Bangladesh’s economy is extremely high.

(3) Environmental improvement effect

In NGFF Fertilizer Plant, neither introduction of new technology nor significant

reduction renovation has been made, although some rehabilitation were executed, since
its start-up in 1962. As Bangladesh maintains its domestic economy with aids funds
from overseas and capital expenditures required nominally for environmental
improvement are not practicable, the environmental conditions in neighborhood have
become worse considerably due to increase of radiation of toxic substance in parallel
 with development of equipment’s super-annuation. Implementation of the project is
expected to promote necessary modernization of production equipment, betterment of
production, such as reduction of energy consumption volume and improvement of yield
rate, and environmental improvement. Since NGFF’ s working environment for
employees is of very poor quality due to contamination caused by copper liquid flowed
from manufacturing process and bad smell attributable to leakage of ammonium gas and
complains are often brought about from residents in neighborhood, needs for
environmental improvement through implementation of the project are extremely high.

(4) Needs for maintenance of NGFF fertilizer Plant

With application of mixed gas refinery process by use of copper liquid in NGFF
Fertilizer Plant, it has become super-annuated and inefficient plant. Judging from its
depreciable life, it is not wrong, therefore, that it would be closed. Local investigation
clarified that more than 10 years operation would be endurable by repair of works of the
existing old-fashioned equipment. Since employees of NGFF and residents in
Fenchuganj area requested strongly for maintenance of the plant, Bangladesh
Government had to withdraw its closing policy determined at once. Thanks to
guarantee for employment and traders concerned and its function as a supply base for
urea fertilizer to farmhouse and tea plantation, there are strong needs for implementation
of the project on the local side.

3.2 Spread of its Performance to Peers Group

Among energy saving technologies to be introduced in the project, spread of its performance
to peers group is not highly expected. As the performance coming from introduction of
maintenance technology is very significant, its spread will be attainable. Maintenance
technology is all-purpose technology. For example; How to select a targeted equipment
among super-annuated and inefficient machinery & equipment? How to decide inspection
method and inspection item? How to judge inspection results? Whether replace or repair?
To what extent repair should be made? Is any repair method that doesn’t influence
production? Also, maintenance technology is comprehensive technology on the basis of
experience accumulated in plant site for many years and applicable in other industry’s plant,
composing of similar type of machinery & equipment, except urea fertilizer plant. Although
a lot of examination on betterment of operation rate and energy saving are always made in
peers group or other plant, it is difficult for Bangladesh to make investment for nominal
equipment improvement or modernization due to maintenance of its domestic economy
heavily depending on aids funds from overseas. There is a possibility of the project’s
performance being spread over in other plants of peers group, in which operation rate lowered
and energy consumption increased.

-1-25-
 CHAPTER 2

SPECIFICATION OF THE PROJECT PLAN

 CHAPTER 2
SPECIFICATION OF THE PROJECT PLAN

1. Project Plan

1.1 Summary on the Targeted District in the Project (NGFF Fertilizer Plant)

(1) Climate
Throughout the year, the climate in Bangladesh is divided into 2 seasons i.e. rainy season
and dry season. Rainy season means the period from March through September, while
dry season is the period from October to February. Dry season is in winter and its
average lowest temperature is 15 °C during the period from December through January.
Except the mention on general weather situation throughout the country in newspaper’s
weather information column, there is not enough information on weather in Bangladesh
unfortunately and a bit of information is available in TV program. With low spread rate
of TV in local areas, it appears difficult to keep citizen well informed of weather
forecast. From the drawn through evening on October 28 when our investigation team
stayed in Dacca, a storm came on suddenly, resulting in closing of air port and collapse
of trees on the street. Due to lack of weather forecast for storm on the coast, many
fishermen, who went fishing the night before, were reported as missing.

The weather trend and precipitation throughout the year in Dacca is shown in Table II —
1.

Table II — 1 Highest and lowest average temperature and precipitation in Dacca

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Lowest
15 16 23 25 24 26 26 26 26 24 19 15
temperature (°C)
Highest
26 29 34 34 32 32 31 32 32 33 30 28
temperature (°C)
Precipitation (mm) - - 195 176 300 399 262 317 306 79 0 10

Fenchuganj, where NGFF is located, is situated at north-eastern point about 180 km

away in direct distance from Dacca and the near national border with Magaraya District,
India. Different from the other territories, most of which are less than 10 meters above
sea level, Fenchuganj commands a view of mountains near the national border with
India. These mountains lead to hilly country with more than 10 meters height. So its

-II-1
 climate is slightly different from that of Dacca. Its neighborhood is a prominent rainfall
territory and annual precipitation comes up to approximately 3,000 mm. In rainy
season (summer), a lot of moisture-laden air generated in the Gulf of Bengal moves
northward and produce up-drafts in mountains near the national border, resulting in a
large quantity of rainfalls in neighboring plains. With a climate of high temperature and
high humidity, Fenchuganj is hot and stuffy in summer. The progress of construction
works in rainy season comes down to 60 % ~70 % of the progress in drying season.
As most territories in Bangladesh are flooded in rainy season, rice farming is continued
only in limited areas. As chemical fertilizer runs out after being dissolved in water due
to flood, efficiency (fertilizer effect) declines. Since Fenchuganj is fortunately located
at hilly country, it has rarely a flood in fields throughout the year. With low humidity,
cleanness of air and coolness in drying season (winter), the climate during the period
from October to February is very comfortable. Sometimes, lowest temperature declines
below 10 °C. On January 14, 2001 when our investigation team stayed in Fenchuganj,
the lowest temperature was reported to have come down to 5 °C. Although there is no
long-term climate data in Fenchuganj, the data for the past 3 years is indicated in Table
II-2.

Table II —2 Highest & lowest temperature and precipitation in Fenchuganj i

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.
Highest
27.8 31.5 33.8 34.5 36.2 35.5 34.7 35.0 34.5 35.0 34.0 30.3
temperature (°C)
Lowest
9.7 9.8 13.8 18.7 20.3 21.0 23.3 23.0 23.3 21.0 16.5 11.0
temperature (°C)
Precipitation (mm) 32,7 1.7 174 250 489 448 523 371 315 96.1 53.5 0.3

(2) Geographical features

Fenchuganj, where NGFF Fertilizer plant is located, is situated at eastern longitude of

92 °C and northern latitude of 24”40’, which is nearly same as that of Taipei, and it lies
at the southern point 20km away from Sylhet, principal city of State of Sylhet. Also,
Fenchganj is situated at the northeastern point about 190 km away in direct distance from
Dacca, and near the national border with Magaraya, India. In the country where most of
the territories are less than 10 meters above sea level, Fenchuganj command a view of
mountains near the national border with India, and neighborhood area is hilly country
with many undulations. Most of hilly country is covered with tea plantations and a
producing center for tea of good quality. In tea plantations, there are many rubber trees
with certain intervals to avoid direct rays of the sun. Most of flat areas are paddy fields.

—II—2 —
(3) Traffic

From Dacca, capital, to Fenchugannj, any of transport facilities, including railroad

(train), road (car) and airplane, is available.

In case of railroad, 3 trains are available .in a day. Including waiting time for oncoming
train due to single track operation, it takes, however, about 9 hours even by express train.
In respect of class, there are 3 types, such as Shoven (Ordinary car), 1st class and A/C
car. Their fares between Dacca and Fenchuganj are 180 Taka, 300 Taka and 700 Taka,
respectively. Generally, the Japanese is reluctant to get on ordinary train. Since a
ticket for A/C is not obtainable at once, it is necessary to purchase such ticket several
days before boarding.

Meanwhile, it takes about 8 hours by car, owing to bad conditions of roads. Thanks to
rough driving, there is a lot of risk of meeting traffic accident. Particularly, transfer
during night is more risky due to lack of street- lamp. In Bangladesh, the number of
death and serious injury accident occurrence comes up to 58 persons per 10,000
annually. It is more than 30 times higher, compared with 1.8 persons in Japan. In
rainy season, streets are often blocked off due to coverage of water or much time is
required for crossing river by ferryboat.

In case of airplane, it takes about 35 minutes from Dacca to Sylhet and additionally 1.5
hours from Sylhet to Fenchuganj by car. Prior arrangement for car from Sylhet to
Fenchuganj is essentially needed. Between Sylhet and Fenchuganj, there is a crossing
point over river by use of ferryboat, but a bridge is at present under construction. Since
each of Bman and GMG runs 2 flights daily, it is recommendable to take use of them.
While Bman is a state-run company which has Hokker’s jet-planes, GMG is a private
company, which is aligned with British Airline (BA) and run Hokker’s propeller-plane
with 2 engines. As GMG has a reputation for its punctuality to the minute, our
investigation team takes always use of GMG’s plane. One way fare is 4,150 Taka.

(4) Communication
Although NGFF Fertilizer Plant has an outside telephone, it often becomes inconvenient.
Under the circumstances, it is rather impossible to communicate with NGFF Plant by use
of direct telephone or fax from Dacca or Japan. NGFF is equipped with radio
communication facilities for exchanging messages with BCIC’s Office, Dacca. NGFF
‘s communication with outside is usually made by use of telephone in NGFF’s Office
located in the city of Dacca. The internal communication between NGFF Plant and
Sylhet Office is made daily though messengers’ going back and forth. Sending a fax is
the most certain method for communication with NGFF from Dacca or overseas. As
 there is an access point (9723701,09,10,11,17,27,30,35,43,45) of internet provider (Xirus
Net) in Sylhet, it will be convenient if a communication method by e-mail is established
in the future.

Many TV channels through satellite broadcasting are receivable. With set-up of

parabolic antenna and decoder, NHK’s TV program for overseas broadcasting is
receivable in Dacca. In addition to BBC and CNN, other programs in German, French,
Bengali, Hindu, Urdu and Arabic are also receivable.

(5) Standard of living

In 1960, when NGFF was constructed and Bangladesh was called as East Pakistan, the
population was approximately 50 million people. As the result of 2.6 times increase in
the past 40 years, the present population is estimated as 130 million people.

The country area is around 140,000 km2, which is about 2 times as large as Hokkaido.
The State of Sylhet, in which Fenchuganj is situated, occupies around 15 % of the
country area, with population of approximately 6 million people. While the Indian and
the Pakistani in neighborhood countries come into Middle East and West European
lineage in Aryan race, the Bangladeshi is an Oriental who lives on rice. It is said that
GNP per capita amounts to around 300 US$ (1997) and many persons are troubled with
poverty. On the background, there are losses of properties due to natural disaster, such
as flood and cyclone, and increase of population attributable to highly remained birthrate.

The suburbs of Fenchuganj are interspersed with approximately 20 cottages, which run
tea plantations, except NGFF Fertilizer Plant. Although these tea plantations were
owned by British people, who lived there with their families, such plantations are now
incorporated as companies and tea production is made by local people. See Photograph
II-1.

—II—4 —
 Photograph II — 1 Vivid green-colored tea plantation

Most of residents in Fenchuganj are NGFF’s and tea plantations’ employees and their
families as well as cultivation farm families. Without particular industry in the
neighborhood, there are only NGFF Fertilizer Plant, Fenchuganj, a power station with 90
MW, a cement plant, Chatak, and a pulp & paper mill, as a whole, in the State of Sylhet.

Most of people, who come from this part of the country and receive higher education in
Dacca or overseas, don’t come home due to lack of employment in this parts of the
country. Many staffs of NGFF take up position without their families staying in Dacca.
People of intelligent class don’t like to reside permanently in this part of the country for
reason of their sons’ education. Bi-polarization between few people who received
higher of education, such as university education or overseas education, and the greater
part of people are widened considerably. Most of NGFF’s staffs are technical experts
who received higher education. Their speeches and behaviors are logical, but they lack
in practical actions. It is certainly due to the fact that caste system still remains.

Many people of more than lower-middle class are pyknic. There is a tendency that a
pyknic is welcome, based on the reason that people have plenty of meals in wealthy
family. In case of common people, many folks are lean due to undernourishment.
They have, however, mild, good and humane personalities.

The Bangladeshi seems to feel inferior to Indian, and much interchange with India is not
recognized in this part of the country near the national border. Since there are many
Bangladeshis’ crossing the national border unlawfully, India has repeatedly asked
Bangladesh to take appropriate steps.

—II —5 —
(6) Language

Generally, Bengali is spoken in Bangladesh. At the time when Bangladesh was a part
of Pakistan and called as East Pakistan, the Bangladeshi spoke in Bengali, while Urdu
was spoken in Pakistan. Under the circumstances, English was used as official
language in both countries for mutual communication. So there are at present many
people who speak English in Bangladesh. The teaching English is quite popular and, in
case of high school students, they can debate in English rapidly with strong accent.
Almost all of the counterparts, who get in touch with our investigation team in business,
have a talk with the team in English easily.

In the cities of Sylhet and Fenchuganj, common people ‘s literacy rate and education
level are low. Most people speak Bengali only and cannot understand English.

(7) Religion

Most of Bangladeshis are Muslims. Together with Pakistan, Bangladesh had been
under domination of Britain, as a state of India, for a long time since 1860s till the end of
the war. In accordance with the commitment made during the 2nd World War, India
became independent at first. And, for religious reason, Pakistan, mainly consisting of
Muslims, gained independence from India, mainly consisting of Hindus. With distance
of around 2,000km, Pakistan had consequently 2 territories, such as West Pakistan and
East Pakistan, with India lying between both of the countries.

In Fenchuganj district near the national border with India, more than 90 % of people are
Muslims and about 6 % are Hindus. And the remaining people are Christians and
Buddhists.

1.2 Details of the Project

With a lapse of 40 years after its start-up, machinery & equipment in NGFF have
super-annuated. Repair works were implemented several times in the past. In the project,
similar repair works with change of process will be executed, in view of environmental
problem. As a concrete measure, various small works will be implemented accumulatively,
and, with continuation of operation, points at issue will be resolved one by one. The results,
which satisfy the following 4 items requested by BCIC, as mentioned in the “Summary”, and
meet CDM ’s purpose, will be obtainable.

® To improve the Plant’s production capacity up to the value originally projected

(Measure for production increase)

— II —6 —
 (2) To facilitate a minimum of 10 years plant operation (Measure for prolongment of the
Plant)
(3) To reduce the basic unit of natural gas (Measure for energy saving)
© To take environmental pollution into consideration (Measure for environment)

The project’s details for achieving its purpose are summarized as follows.

(1) Process improvement

© Energy saving by means of preventing environmental pollution due to leakage of
lean solution, with low temperature CO conversion and installation of metanator after
abolition of synthesis washing equipment.
(2) Energy saving through collection of hydrogen from purge gas in ammonia synthesis
part.
(3) Energy saving through collection of wasted heat, with installation of economizer in
collectable heat circuit.

(2) Machinery & equipment improvement through maintenance

© Supply of spare parts for emergency use and exchange & repair
(2) Exchange of machinery & equipment, which has become dangerous in continuous
use, due to super-annuation
(3) Supply of material for equipment (Steel plate, pipe, etc), by which repair or
manufacturing at plant site become available.
© Supply of machinery & instrument required to be installed for safe operation or
operative efficiency
© Supply of instrument & spare parts approved as necessary in machinery plant for
maintenance, construction machine plant and analysis room

In parallel with the above, technology transfer, including improvement process

technology and maintenance technology , will be made.

1.3 Greenhouse Effect Gas Targeted in the Project

Targeted gas is CO] in combusted gas discharged from natural reforming furnaces (2 units in
regular operation) and electricity generation boilers (2 units out of 3 in regular operation).
Although hydrocarbon (almost methane) in fuel and natural gas used at NGFF Fertilizer Plant
is also greenhouse effect gas, it’s examination is out of target, since diffusion volume of
methane leaked from relevant pipes and equipment is extremely small. Other greenhouse
effect gas, such as fluorine gas, is not treated in the Plant.

II—7
The volume of CO2, diffused in the air, amounts to about 2,500 m3 / hour, coming from 2
units of natural gas reforming furnace, and around 10,000 m3, coming from 2 units of
electricity generation boiler. The implementations of various energy saving measures in the
Plant will bring about reduction of load in electricity generation equipment, resulting in
decrease of load in electricity generation boiler and reduction of natural gas consumption
volume. In addition, reduction of combusted gas and CO2 diffusion volume will be
attainable.

2. Outline of NGFF Fenchuganj Fertilizer Plant

Although NGFF Plant was built up 40 years ago, its operation is still continuing with lessened
efficiency, and annual production volume, exceeding more than 80 % of the projected
volume, is maintained. The Fertilizer Plant must be the oldest urea plant in the world. 40
years operation has been continued, not only owing to accumulated operation & maintenance
technology, but also due to comparatively strongly-made machinery. With un-development
of compactness and flexibility technology seeking for economical efficiency at that time,
structure, emphasizing sheer scale machinery & equipment with adoption of comparatively
large factor of factor, appears to have been supplied. The machinery actually applied,
particularly rolling mill, is large and strongly-made, compared with similar machinery
prevailing at present.

Since the completion of its construction, the operation of NGFF Plant has been continued
with own maintenance and inspection for 40 years. During the period, rehabilitation works
were made by itself several times. Through Overseas Economic Cooperation Fund’s
financial support in the amount of 285.5 million Taka (Around 19 million US$), rehabilitation
on relatively large scale was implemented during the period from 1978 to 1979 under
technical assistance of Kobe Steel, Ltd. In 1987, rehabilitation on medium scale was
executed with ODA’s fund in the amount of 95.9million Taka (About 3.2 million US$).
Despite Bangladesh Government’s decision to close NGFF in 1993, such decision was upset
for reason of social conditions in this district of the country, and continuation of NGFF was
determined. In 1995, overhaul was implemented with Bangladesh Government’s fund
amounting to 50.3 million Taka. By use of the Government’s fund in the amount of 200
million Taka, rehabilitation works completing at the end of June, 2001 are in progress.

With production cost exceeding sales price, NGFF is continuing its operation in the red. It is
due to the fact that NGFF’s basic unit of natural gas exceeds those of other fertilizer plants
and urea product price is politically lowered. Although initial investment amount was
amortized with a lapse of around 40 years after start-up, the outstanding balances of loan

—II —8 —
provided for several rehabilitation works still remains. As annual maintenance budget is
limited to 10 million Taka (20 million Yen) due to its operation in the red, implementation of
sufficient repair works is unavailable every year and necessary works are carried over to
following year one by one. The Government provides special fund with NGFF once in
every several years for immediate completion of accumulated necessary works at the time
when continuation of operation has become impossible. They are details of repair works.

Thanks to super-annuation and lack of maintenance & inspection and spare parts, the
operation of NGFF Plant is often interrupted. Such interruption causes decrease of urea
production volume as well as loss of energy (Natural gas) attributable to continuous operation
of other equipment. It is due to the fact that excessive energy and time are required for
shutdown and start up at the time of stoppage of all equipment. While production volume
has been lowered to 80 % of projected volume, natural gas basic unit has inversely increased
by around 12 %.

2.1 Interest on the Side of Fenchuganj Fertilizer Plant

Through the process of our local investigation implemented three times in the past, interest in
this project on the side of NGFF and BCIC, its upper organization, has proved to be extremely
high. The beginning of our investigation was based on NGFF’s written request dated
December 20,1999,which Kobe Steel, Ltd. received from BCIC. After then, BCIC urged us
repeatedly to visit NGFF Fertilizer Plant.

Based on the construction agreement between Kobe Steel, Ltd. and Pakistan Industry
Development Corporation concluded in 1958 as an initiative export contract in Japan since
the war, the targeted NGFF Urea Fertilizer Plant started its operation in 1962. At present,
NGFF is a division of BCIC, which is under umbrella of Ministry of Chemistry & Industry,
and 100 % state-owned enterprise. With a lapse of 40 years after start-up, NGFF has
experienced rehabilitation several times up to the present. Owing to super-annuation, its
operation rate has, however, declined to 78 % level. As applied process is also
old-fashioned in addition to its super-annuation, energy consumption volume increases by
around 16 %. Under the circumstances, BCIC requested Kobe Steel,Ltd. by letter to
investigate the Plant without compensation and examine on improvement plan for resolving
the following problems as well as to prepare and make a proposal in writing.

CDTo recover production capacity

® To reduce energy consumption volume
(3) To improve environmental pollution
(4) To facilitate a minimum of 10 years plant operation
After Kobe Steel, Ltd. applied its proposal on NGFF Plant Renovation Plan as a public target
project in “Joint Implementation Promotion Basic Research”, it was entrusted with
investigation on its Renovation Plan from NEDO, and such investigation was executed as
scheduled. It is, therefore, natural that NGFF Plant has much interest in this project.

The positive and cooperative attitudes shown by general manager and all staffs at the time of
our local investigation indicate clearly their interest in this project. With extraction of more
than 200 points at issue in major equipment out of around 1,000 units of machinery &
equipment, they accepted a long time discussion on measures. Although such discussion
sometimes continued until very late at night, our projected investigation was implemented
without delay. At the time of preparing this report, NGFF urged us to present a report
written in English.

As NGFF and BCIC, its upper organization, as well as residents in the suburbs of Fenchuganj
and a commissioner of labor union in Sylhet have their interest in the project, they inquired us
about details of our discussion over and over again. Our discussion revealed that NGFF was
afraid of determination, suggesting closure of its plant, and strongly desired to have an early
decision on implementation of the project. NGFF felt, therefore, greatly relieved by our
explanation that our investigation aimed at pursing energy saving efficiency through
maintenance of NGFF.

As a basic issue in the project, NGFF Plant has much interest in fund-raising. While BCIC
and Ministry of Industry are expected to make adjustments on their own initiatives among
Bangladesh’s authorities concerned, they are interested in combining this project with CDM.
Such being the case, our investigation team has promised them to complete our report written
in English and to cooperate with them in obtaining Bangladesh Government’s approval with
explanation on Overseas Development Aid System as well as to provide information on
development of international discussion for CDM and to work together with them in its
materialization

2.2 Conditions of Relevant Equipment in Fenchuganj Fertilizer Plant

(1) Summary of relevant equipment

1) Relevant equipment in Fenchuganj Fertilizer Plant

Area of plant site : Battery limit-40 acres (162,000 m2)
: Housing colony-364 acres (1,43,000 m2)
: Related supplementary equipment-15 acres (60,700 m2)
: Total: 419 acres (Around 1.7 million m2)

—II—10 —
 Plant equipment capacity

: Ammonia Plant 2 lines, Equipment capacity per unit 100 LT,

Total-203 MT/D
: Urea Plant 3 lines, Equipment capacity per unit 111 LT/D,
Total-338 MT/D
: Power Generation Plant 3 lines, Generation capacity per unit
12,000 KW, Total 36,000 KW
: Ammonia Sulfate Plant I line, Equipment Capacity 40 MT/D
: Sulfuric Acid Plant 1 line, Equipment Capacity 35 MT/D

Supplementary equipment
: Water intake equipment: Capacity per hour 2,600 tons, Water
is supplied through pipes lying under ground to plant
: Service water treatment equipment: Capacity-350 tons per
hour
: Water purification equipment: 3 lines, Capacity per
line-48tons per hour
: Cooling water equipment: Capacity- 11,000 tons
: Bulk urea product warehouse: 156m (L) x 24m (W) x 5.0m
(H)
: Bagged urea product warehouse & shipment equipment: 144m
(M) x 36m (W) x 17.5m (H)
: Machine processing & repair shop, Instrumentation parts
repair shop, Spare parts warehouse
: Others: Analysis room, Head office building, Office at plant
site, School, Clinic, Mosque2

2) Layout within battery limit

Layout Drawing of plant site is shown in Figure II — 1. The area is rectangle in its
shape with distance of 300 m between east and west and that of 580 m between
south and north, and it has 16.5 hectares. Head office, school and clinic are located
out of this area. By use of side track, loading of urea product (50 kg) from
platform to freight car or truck is available.

— II—11 —
 Direction to Sylhet

—T

Directiorl to Dacca

Figure II— 1 Layout Drawing of NGFF Fertilizer Plant Equipment

11-12-
The equipment numbered in Figure II — 1 are as follows.

1. Reservoir
2. Warm water pool
3. Cooling water pump station
4. Cooling water tower
5. Bulk urea product warehouse
6. Bagged urea product warehouse
7. Bagging equipment
8. Urea production equipment (NH3-C02 separation part)
9. Urea production equipment (Compressor House)
10. Urea production equipment (Condensation part)
11. Urea production equipment (Carbamate decomposition part)
12. Urea production equipment (Pump shelter)
13. Urea production equipment (Rotary urea dryer)
14. Urea equipment (Grain production tower)
15. Parts warehouse
16. Machinery plant
17. Instrumental parts repair shop
18. C02 gas holder
19. Ammonia spherical tank
20. Compressor house
21. Analysis room & office at plant site
22. Office at plant site
23. Canteen
24. Ammonia production equipment (Compressor house)
25. Electricity room
26. Substation
27. Ammonia production equipment (Synthesis part)
28. Ammonia production equipment
29. Ammonia production equipment (C02 removal plant)
30. Ammonia production equipment (Natural gas reforming part)
31. Water treatment equipment
32. Power generation plant
33. Side track
34. Place for materials
35. Main gate

-11-13
(2) Ammonia production process

Ammonia production process consists of natural gas reforming equipment (701 section),
1st stage gas compression process, CO2 removal equipment (713 section), 2nd & 3rd

stage gas compression process, Gas refinery equipment (715 section), 4th stage
compressor, Ammonia synthesis equipment (718 section) and Ammonia refrigeration
equipment. Summary of process is shown in Figure II —2. As indicated in Figure
II -2, natural gas sent from outside of the Plant is supplied to natural gas reforming
equipment and reformed through mixing with steam generated in the system. And, after
process of air breathing, it produces mixed gas, consisting of hydrogen, CO, CO2,
nitrogen, a little quantity of unresponsive methane and excessively added steam. This is
called as reformed gas. The reformed gas generates CO2 and H2 in CO conversion
equipment at next stage through reaction of CO contained in reformed gas with
accompanied gas. This reformed gas is compressed and increased in its pressure in 1 st
stage compression process after cooling and sent to CO2 removal equipment (713
section), and most of accompanied CO2 is removed. All quantity of CO2 separated in
this stage is used for urea synthesis. Gas coming out from CO2 removal equipment is
called as synthesis gas. In addition to hydrogen and nitrogen, synthesis gas includes a
little quantity of methane, argon, CO2 and CO. Since CO2 and CO become poison for
ammonia synthesis catalyst, they are removed to the level of ppm in next synthesis gas
refinery equipment (715 section) after compression and pressure increase in 2nd and 3rd
stage gas compression process. In synthesis gas refinery equipment, CO2 and CO are
absorbed and removed through washing by use of copper ammonia acetic acid solution
with low temperature. For cooling of copper ammonia acetic acid solution, cooled
catalyst coming from refrigeration equipment (719) is used. Gas coming from synthesis
gas equipment, consisting of hydrogen and nitrogen with mole rate of 3:1, includes a
little quantity of methane slipped in reforming equipment and invaded argon,
accompanied with the air. Such methane and argon are not only unresponsive against
ammonia synthesis catalyst, but also harmless. After its pressure being increased highly
in compression equipment 4th stage, synthesis gas is sent to ammonia synthesis
equipment (718section). In ammonia synthesis equipment (718 section), ammonia is
generated through reaction of hydrogen and nitrogen under condition of high pressure
and high temperature. Together with unresponsive synthesis gas, generated gas is
refrigerated by cooled catalyst coming from refrigeration equipment (719 section), and
condensed and separated. Separated liquid ammonia is sent to urea synthesis
equipment. Un-condensed gas separated from condensed ammonia is cycled to
ammonia synthesis equipment by compressor and re-used. Unresponsive H2 and N2 are
recycled to ammonia synthesis tower. In parallel with development of ammonia
synthesis, unresponsive methane and argon are accumulated in the system and a part of
gas coming from cycle system gas is always purged.

701
natural gas
reforming
equipment

701
High
temperature CO
conversion
equipment Gas
compressor
1 st stage
713
Carbon acid carbonic acid
gas removal
equipment
Gas
compressor
2nd & 3rd
NH3 cooled catalyst 715 stage
synthesis gas
refining
equipment

NH3 cooled
catalyst Gas
compressor
ammonia ammonia
4th stage
refrigeration synthesis
equipment equipment

ammonia
Urea synthesis storage
equipment equipment

Ammonia

Figure II —2 Ammonia Production Equipment and Process Diagram

11-15-
All reactions occurred in Ammonia Plant, in which methane is used as raw material, is
summarized in the following.

CH4 + 1.391 (H2O) + 1.138 (Nz) +0.304 (Oz) ^ 2.261 (NH3) + CO2

2 moles of ammonia and 1 mole of CO2 are required for urea synthesis. In the case
where all quantity of ammonia are used for urea synthesis as shown in the above
chemical formula, approximately 13 % is short in the volume of CO2 generated from
ammonia equipment. In NGFF, deficiency is, therefore, made up for with collection of
CO2 from ventilator gas in ammonia gas by means of MEA absorption method. Since
ammonia is partially used for raw material of ammonia sulfate or sold outside, CO2 is not
at all times in short supply. Only in case of CO2 being short, CO2 is collected from
ventilation gas in electricity equipment boiler by use of MEA solution.

Details of each process unit in ammonia production process are as follows.

1) Natural gas reforming (701 section)

Concept relating to natural gas refining process is shown in Figure FI—3. Natural
gas introduced into the Plant from Sylhet through pipeline is lowered in its pressure
and divided into natural gas for process (called as PNG) and natural gas for fuel
(called as FNG). PNG contains a little quantity of organic sulfur. As sulfur
becomes a poison for nickel related catalyst filled up in reforming furnace in next
process, it is absorbed and removed by means of putting PNG into organic sulfur
removal equipment filled with activated carbon. Mixed with 14 kg/cm2 of steam
after preheating, PNG is supplied into catalyst tube in direct burning type heating
furnace at 399 °C and 8.2 kg/cm2G via preheating process. In NGFF, mole rate of
steam and carbon atom (S/C) is 5.5.

In 1st reforming furnace, methane reforming reaction (D and CO conversion

reaction (2) occur simultaneously, and hydrogen, CO CO2 and mixed gas
(Reformed gas), consisting of unresponsive CH4 and excessively added vapor, are
obtainable.

CH4 + H2O <4 CO + 3H] (D

CO + H2O <4- CO2 + Hz ®

As both of the above (Band ® are reversible reactions, methane reforming

reaction ® goes forward to right direction through absorbing reaction at high
 temperature and CO2 conversion reaction (2) steps forward to left direction through
heating reaction. With 577 °C and 6.5 kg/cm2, at exit of 1st reforming furnace,
the remaining methane is around 9 %. Reformed gas coming from 1st reforming
furnace is supplied to 2nd reaction furnace, reaction vessel, filled with catalyst. In
reaction vessel, the air sent from air compressor is breathed and temperature rises up
to 930 °C by partial burning of reformed gas. And the remaining gas decreased to
about 0.3 % through the above Q reaction of unresponsive methane. The volume
of breathed air is finally adjusted as necessary nitrogen source on the condition that
rate of H2 to N2 in synthesis gas is 3 to 1. Reformed gas coming from 2nd
reforming furnace is at 6.5 kg/cm2 and 785 °C and gas composition is indicated in
Table II-3.

Table II — 3 2nd Reforming furnace exit gas composition

Composed material ch4 CO CO2 h2 n2 Ar 02

% 0.3 7.4 12.2 58.6 21.3 0.2 0

Reformed gas, with high temperature, coming from 2nd reforming furnace enters
into wasted gas collection boiler tube and is cooled down to 410 °C with generation
of 14.0 kg/cm2 G steam.

Burned gas
CO2 into the air

Organic 1st 2nd Wasted

reforming reforming gas Reformed
Natural gas sulfur
equipment equipment collection gas
removal
boiler
equipment

Process
air blower

Figure II — 3 Diagram of (701) Natural gas reforming equipment

-11-17
2) CO conversion and CO2 removal equipment (713 section)
Concept relating to CO conversion and CO2 removal process is shown in Figure II
— 4. Reformed gas coming from wasted heat collection boiler is sent to CO
conversion equipment and produces hydrogen and CO2 on Fe/Cr related CO
conversion catalyst through CO conversion reaction ® by steam accompanied with
CO. Also, CO decreases to 2.0 %. As CO conversion is thermal reaction,
reformed gas after CO conversion rises up to 438 °C in its temperature. This
reformed gas is collectible for preheating of mixed gas, consisting of PNG supplied
in 1st reforming furnace and steam, and thermal source for re-boiler. Reformed
gas is increased up in its pressure to 19.3 kg/cm2G in synthesis gas compressor 1st
stage after washing and cooling and sent to CO2 removal equipment (713 section).

16.7 % of CO2 contained in reformed gas flows to upper direction over filled layer
in CO2 absorption tower and contacts with oncoming heated calcium carbonate
water solution flowed down from the top of tower. And it is separated and
removed from reformed gas selectively absorbed into water solution by reaction
formula (3), and concentration decreases to 0.6 % at absorption tower exit.

CO2 + K2CO3 + HzO 2KHCO3 (3)

Rich solution with CO2 is reduced in its pressure nearly to pressure level of the
atmosphere sent to the top of re-generation tower and contacts with oncoming steam
rising in the tower while falling. After then, it is heated and re-generated with
diffusion of CO2. Heated lean solution with diffusion of CO2 is removed from
regeneration tower bottom and recycled to absorption top by pump. In CO2
removal process by use of heated calcium carbonate, absorption and regeneration of
CO2 are made at around 100 °C. Process gas coming out of absorption tower top
is cooled and, after separation of condensed water, is increased in its pressure in
synthesis gas compression equipment 2nd & 3 rd stage. Finally, it is sent to
synthesis gas refining equipment. Meanwhile, CO2 coming from regeneration tower
top is cooled and, after separation of condensed water, sent entirely to urea synthesis
equipment, as material for urea.

11-18-
 C02 gas
To gas compression
equipment

Low pressure
steam C02
refrigeration
tower

To gas
High Wasted Reformed CO2 compression
temperature gas gas absorption equipment
Reformed
CO collection compression removal
gas
conversion boiler equipment equipment
equipment

Figure II —4 (701) CO conversion & (713) CO2 removal equipment

Following high pressure CO conversion equipment (FITS), process for converting

the portion of CO unconverted in FITS, with installation of low temperature CO
conversion equipment (LTS), is recently applied. Although 2.0 % of CO remain at
exit of HIS, its reduction to 0.12 % is achievable with application of LTS. As all
quantity of gas reduces due to removal of CO2 at C02 removal equipment exit, the
rate of CO is 2.4 % at present. In case of LTS application, it comes up to 0.14 %.
In latest C02 removal equipment, improvement of CO2 absorption efficiency by use
of thermal calcium carbonate solution and energy saving by adding activation
catalyst, anti-corrosion agent and anti-foaming agent into thermal calcium carbonate
solution are designed. CO2 is now removed to the level of 0.6 % in CO2 removal
equipment in NGFF, but reduction to below 0.2 % is attainable in latest improved
CO2 removal equipment.

3) Synthesis gas refining equipment (715 section)

Concept relating to synthesis gas refinery process is indicated in Figure II-5 (715).
Synthesis gas increased in its pressure up to 144 kg/cm2 in synthesis gas
compression equipment 2nd & 3rd stage is washed by water solution, including low
temperature ammonia copper acetate, in synthesis gas refinery equipment, and most
of remaining CO is absorbed and removed. Since CO2 and CO become poison for
ammonia synthesis catalyst, their removal to the level of ppm is required at this
stage. By contact of synthesis gas introduced from lean solution washing tower
bottom with oncoming ammonia lean solution, including a plenty of Cu+2, flowed
 from upper part, CO contained in synthesis gas is absorbed and removed to the level
of 5 ppm. In lean solution washing tower, CO2 is absorbed and removed to the
level of 50^60 mm at the same time. Gas coming from lean solution washing
tower top enters into final washing tower bottom and is washed through contact with
oncoming ammonia water flowing down. As a result of absorption of CO2,
synthesis gas, consisting of CO and CO2 in less than 5 ppm in each quantity, is
obtainable in final washing tower top. In this synthesis gas, the ratio of hydrogen
and nitrogen is 3 to 1. Although it includes a little quantity of remained methane
and argon entered into system with the air breathed in 2nd reforming furnace, it is
used as raw material for ammonia synthesis, as both of remained methane and argon
are unresponsive to ammonia synthesis reaction. Composition of synthesis gas at
final washing tower exit is shown in Table II —4.

CO condensed
gas
To fuel

NH3 lean
To low solution
regeneration refrigeration
pressure
steam tower equipment

Synthesis CO NH3 - gas Synthesis Refined

gas absorption washing gas synthesis gas
Synthesis compression removal tower compression
gas equipment equipment compression equipment
equipment

Figure II 5 (715) Synthesis gas refinery equipment

Table II —4 Synthesis gas composition mole at final washing tower exit %

Composed
CH4 CO CO2 h2 n2 Ar
material
% 0.4 5-10 ppm 0-5 ppm 74.5 24.8 0.3

This gas is sent to ammonia synthesis part after being increased in its pressure in
synthesis gas compressor 4th stage.

As ammonia absorbed solution, coming from final washing tower bottom, includes
carbonic acid ammonia, it is recycled to urea plant, after reduction of its pressure.

Rich solution extracted from lean solution washing tower bottom is reduced in its
pressure to the level, ranging from 140 kg/cm2 to 2.8 kg/cm2, and sent to the top of
lean solution regeneration tower. Lean solution regeneration tower consists of
upper and lower sections. In upper section, rich solution, flowing down, contacts
with oncoming rising steam and NH3 steam and is finally regenerated with diffusion
of absorbed CO and CO2. As regenerated lean solution extracts metal copper from
Cu + through CO reaction, oxidation is promoted at the bottom of lean solution
regeneration tower by means of blowing the air to maintain ion density ratio of Cu ++
/ Cu in lean solution at certain level. Regenerated lean solution coming from the
bottom of lean solution regeneration tower is cooled to the level of 0 °C by
ammonia after water cooling and is recycled to the top of lean solution washing
tower after being increased in its pressure by high pressure pump. Off gas coming
from the top of lean solution regeneration tower contains about 60 % of CO and
used as fuel in 1st refinery furnace.

Synthesis gas refinery equipment is applied in the process for absorbing and
removing CO and C02 in low temperature by using copper ammonia acetic acid at
high temperature as rich solution. Thanks to the following reasons, it is not
applicable at present.

- In addition to complicated-ness, its operation is difficult.

- With various instrument, its maintenance is expensive.
- Mixing off ammonia acetic acid is troublesome.
- As it is high pressure equipment, leakage is always expected and environmental
pollution by lean solution is worried about.
- As it is applied in low temperature, a lot of energy is used for refrigeration
- Except fuel, separated CO condensed gas is not usable.

11-21
 As mentioned in the latter part of paragraph 2), LTS and the latest improved C02
removal process are recently applied. With application of new process, content of
CO and that of C02 at the entrance of synthesis gas refinery equipment decrease to
0.14 % and 0.21 %, respectively. CO and C02, poison for catalyst, are removed
through their conversion to harmless methanation. Methanation is an adverse
reaction of methane reforming reaction and indicated in thee following reaction
formula.

CO + 3H2 -> CH4 + H20

C02 + 4 H20 -> CH4 + 2H20

Although around 1.26 % (0.14 X 3 +0.21 X 4) of hydrogen loss is caused at this time,
it is less than 2.4 % of CO loss, and merits in application of new process, such as
energy saving ,are widely expected.

4) Ammonia synthesis equipment (717 section)

Concept relating to ammonia synthesis and storage process is shown in Figure II— 6.
Synthesis gas coming from synthesis gas refinery equipment is increased to 365
kg/cm2 in its pressure in ammonia synthesis compressor 4th stage (final stage) and
sent to ammonia synthesis equipment as makeup gas. Mixed with synthesis gas
cycled from synthesis gas cycle machine, this makeup gas is cooled down to the
level of 0 °C in ammonia refrigeration condensation equipment. Ammonia
refrigeration equipment is applied for collection of cooled heat, separated from
synthesis gas in ammonia 2nd separation equipment and kept at 0 °C, and has a
function of refrigeration by use of cooled catalyst. Synthesis gas from cycling
machine contains about 10 % of ammonia and also 7.8 % of ammonia even after its
mixture with makeup gas. When synthesis gas is cooled down to 0 °C in this
refrigeration equipment, most of ammonia is condensed. And it is divided into
condensed ammonia and gas in next 2nd ammonia separation equipment. Through
mixture of makeup gas with cycled gas, a partial pressure of ammonia in cycled gas
decreases and impurities in makeup gas are removed by condensed ammonia with
application of this method, although condensed separation efficiency is relatively
small. And the purity in synthesis gas increases. The gas separated in ammonia
2nd separation equipment is kept at 0 °C and includes about 3 % of ammonia.

After collection of its cooled heat in ammonia refrigeration equipment, this gas is
supplied to ammonia synthesis tower. Ammonia synthesis reaction is heat
generation reaction. Since the temperature of reaction generated gas exceeds that
of entrance gas in catalyst layer, preheating of gas in supply side and cooling of

11-22
reaction generated gas are available in synthesis tower by means of internal heat
exchange between gas at low temperature and reaction generated gas at high
temperature. In respect of gas preheated up to a certain temperature by internal
heat exchange, ammonia synthesis is promoted on Fe related ammonia synthesis
catalyst by the following ammonia synthesis reaction®.

3H] + N] — 2 NH ®

While NH3 is 3 % at synthesis tower entrance and 15.9 % at exit, gas generation
ration is 25 %. Reaction gas coming from synthesis tower is kept at 207 °C and
cooled down to the level of 40 °C. And a part of generated ammonia is condensed
and divided into condensed ammonia and gas in next ammonia 1st separation
equipment. To keep the total of methane and argon, contained in synthesis gas and
cycled in ammonia synthesis equipment, less than 10 %, a part of synthesis gas is
purged to the outside of system and used as fuel in 1 st reforming furnace. After its
cycling by synthesis gas cycle machine, the gas separated by ammonia 1st
separation equipment is mixed with makeup gas and cycled by synthesis gas cycling
machine. Consequently, synthesis gas completes its cycle.

Condensed gas separated in ammonia 1st separation equipment and 2nd separation
equipment are reduced in its pressure and collected in let down tank. After then, it
is sent to spherical tank for ammonia storage and becomes raw material for urea
synthesis. Gas generated in let down tank is used as fuel in 1st reforming furnace.

Purge gas coming from ammonia synthesis system is kept at 1,180 NH3 / H per hour
and contains about 60 % of hydrogen and 10 % of ammonia. Although it is used in
1st reforming furnace as fuel, energy saving is achievable with collection of these

hydrogen and ammonia.

11-23-
 Synthesis gas Synthesis Synthesis
Purge Gas
From gas cycle
compression
machine
equipment

NH3 NH3 2nd Ammonia Synthesis NH3 1st

refrigeration separator synthesis gas separator
condensation tower cooling
equipment equipment

To fuel system

Ammonia
refrigeration down tank
machine
Ammonia
NH3 storage To urea
spherical synthesis
tank equipment

Figure II — 6 (717) Ammonia synthesis & (718) Storage

(3) Recent operation conditions in Ammonia Plant

NGFF’s operation record of Ammonia Plant for 3 years from July, 1997 through June,
2000 has been summarized. It is shown in Table II. With extraction of stoppage hours
and their causes in the past 3 years from the Table, details of stoppage (July, 1997~June,
2000) in Ammonia Plant are indicated in Table II —6. In Table II —5 and II —6,
stoppage hours indicate a half of the actual stoppage hours. Since Ammonia Plant,
consisting of 2 lines, continues its operation of another line even in case of 1 line being
stopped, influence of stoppage hour to ammonia production is considered to a half. As
indicated clearly in Table II —6, the stoppage hours, attributable to troubles of synthesis
gas compressor 716 KT and process air compressor 716 K2, are 2,178 hours in total and
account for 88.8 % of the total. To obtain reliabilities on synthesis gas compressor 716
K1 and process air compressor 716 K2 is needed for operation rate increase in Ammonia
Plant. It is, therefore, understandable how adequate maintenance & repair are much
significant.

11-24-
 Table II -5 NGFF Ammonia Plant Operation Record
1997/98
~99/00
Down Time Capacity Production
Year Month Main compressor shut down Air compressor to shut down Electrical trouble to shut down Reformer trouble to shut down Other trouble to shut down
Hrs. Tons/M Tons/M
NH3 feed pump & Hot carbamate pump
Jut.
gland leak 117:00 6,300 5.278
Aug. Main Compressor (N.S) trip to stop 1) NH3 feed pump (S.C.N) gland leak 186:00 6,300 3,318

1) Urea reactor (C) inside liner

replacement. 2) NH3 feed pump (C) suction
Sep.
cover leak, plunger collar broken & (S,C,N)
gland packing failure
1997
189:00 6,100 4.964
11 uue to leakage or tot iin3 iransier ......
pump (C) suction cover, NH3 B-train
Oct. steaming.
2) Hot carbonate pump meter coil burst
47:00 6,300 4,495
Nov. Due to power failure 95:00 6,100 5,033
Main compressor (S) maintenance (4th
Dec. 40:00 6,300 5,560
stage piston rod changed)
Jan. 10:00 6,300 5,751
IVIdill tUIIIJI baaoi vLUUUI ot ni/iui/
Feb. 26:00 5,692 5.133
electrical line towards water intake main
Main Compressor (S) 3rd. Stage cracked Due to bursting of power plant boiler
Mar. gas compressor (N) starter coil burst and
line changed tubes, B train forced to steaming
replaced repaired.
1998 112:00 6,300 4.837
Main compressor (S) maintenance (3rd.
line towards water intake main gas
Apl. Stage suction & delivery top/bottom
11-25

compressor (N) starter coil burst and

valves changed) 99:00 6,100 4,368
Due to gas suspension by JGT & DS for
May. Process air compressor (N) maintenance. 233:00 6.300
maintenance of Haripur to NGFF gas line. 3.382
NH3 plant was ran with low due to trouble
Jun nil 6,100 6,078
in urea plant
97/98 662:00 74,192 58,197
process trouble in H.P purification section
Jul. Main compressor (S) maintenance. Process air compressor (S) maintenance 36:20
(715) 6,300 5.308
Process air compressor (N) 3rd. Stage Due to leakage of feed water line no.3 in
Aug. piston damaged and changed. Other A train reforming catalysts steaming done power plant, A train forced to steaming anc
1998 maintenance work done. B train was run in low PNG 80:00 6,300 4,874
Main compressor (N) 4th stage bot. Met. Process air compressor (N) bush bearing 1) Aux. Relay coil (switch room) burnt. One pri. Reformer tube (B) top flange
Sep. leakage repaired. 160:05 6,100 4,336
Packing repaired (GP side ) changed 2) Total black out.
Main compressor (N) maintenance. Main A train reforming catalysts steaming done
Oct. 64:45 6.300 5,223
compressor (S) maintenance.
Nov. nil 6,100 5,571
Process air compressor 3rd. Stage cooler 1) Power plant boiler tube leakage. 713 (B) Absorber level troll flange leakage
Dec. Main compressor (S) maintenance 104:00 6,300 4.334
repaired 2) Total black out repaired
 Year Month Main compressor shut down Air compressor to shut down Down Time Capacity Production
Electrical trouble to shut down Reformer trouble to shut down Other trouble to shut down
Mrs. Tons/M Tons/M
Main compressor (S) shut down for Air compressor (N & S) shut down for
Feb.
maintenance maintenance 21:40 5.692 4.818
Main compressor (N & S) shut down for
Mar.
maintenance. 9:22 6.300 5,074
1) Gasket change of reformer tube (B). 2)
Apl. Main compressor (N) maintenance. Air compressor (N & S) maintenance Power shortage
Steaming of A train 92:20 6.100 4,143
Main compressor (S) maintenance. Main
1999 May. Air compressor (N) maintenance. Electrical trouble to short circulator (C) Steaming A train
compressor (N) maintenance 52:25 6,300 4.821
Electrical problem in exciter of air Tube leakage repairing work of 3rd. Stage
Jun Air compressor (N) maintenance. A train steaming
compressor (N) cooler of air comp. (N) 109:42 6.100 4.354
98/99 745:15 67,892 58.317
Main compressor (N) stop for valve Shortage of power due to problem of power
Jul. A train steaming Activated carbon changing work.
changing. station 56:17 6,300 4,942
Cylinder head changing of air compressor
Main compressor (N) stop for gasket
Aug. (S). Air compressor stop for 3rd. stage
leakage
valve change. 115:02 6.300 4.501
Air compressor stop for changing valve in
Sep. changing valve. Neck bush metallic packing refrigeration compressor during failure of
suction 33:08 6.100 4.831
Main compressor (N) stop and 2nd stage
Electrical trouble to change over ref.
Oct. leakage. Main compressor stop for Air compressor stop for maintenance Trouble of water supply and one train shut.
Comp. From (N) to (C)
1999 changing valve. 47:22 6.300 5.045
Air compressor maintenance for changing A train scheduled shut down for changing Scheduled shut down (B) for prill cooler
Nov.
piston, piston rod & bearing catalyst of prim. & second reformer failure of urea 307:22 6.100 2,958
Air compressor (N) maintenance for Scheduled shut down (B) for prill cooler
Dec. maintenance, valve & oil check valve in 4th
changing bearing (big end) failure of urea 197:12 6.300 4.049
Jan. Main compressor maintenance (N & S) 22:05 6.300 4.906
Process trouble (bad gas enter in 717. C02
Feb. Main compressor (S) maintenance cooler (A) cleaning. Cleaning of water
scrubber(B) 73:12 5.896 4,198
11-26

Electrical trouble in air compressor during

Mar. Cleaning water scrubber (B)
change over 74:20 6,300 5.213
2000 Apr. Total plant shut down for shortage of
water (water intake pump failure) 22:20 6.100 5.392
Main compressor (N & S) shut down for tube failure. Electrical problem. A train
May.
maintenance. tripped with high ampere to start-up ref.
41:30 6,300 5.492
Main compressor (N) maintenance for 4th
Jun. stage piston rod changed with new one
(China origin) and etc. Valve change twice. 55:30 6.100 5.096
99/00 1045:33 74.396 56,623
Total 2453:43 222.780 173,137
 Table II —6 details of stoppage (July, 1997^ June, 2000)
in Ammonia Plant are indicated
(1997.07—2000.06)
Cause for stoppage Stoppage hour Ratio
Trouble in synthesis gas compressor 410 Hr 16.7%
Trouble in air compressor 692 Hr 28.2%
Compound troubles in air compressor and synthesis gas 912 Hr 37.2%
compressor
Compound troubles in synthesis gas compressor and 164 Hr 6.7%
relating to electricity
Trouble relating to electricity 182 Hr 7.4%
Trouble relating to reforming furnace 20 Hr 0.8%
Others 74 Hr 3.0%
Total 2,453Hr 100.0 %

With extraction of annual ammonia production volume, actual production volume and
stoppage hour in each year from Table II-5, each ratio has been calculated and indicated
in Table II - 7. NGFF’s plant is operated at around nominal equipment capacity of 200
LT during stable condition. The ratio of annual production volume to projected volume
is such low as 77.3 % on the average in 3 years. It is due to the fact that NGFF’s
production volume was projected on the basis of 365 days / Y standard, i.e. Annual
production 203.2 MT/ Dx 365 D/Y=74,168 MT. On the condition that 320 days are
counted for annual operation day as originally projected, annual production amounts to
65,024 MT/Y and the ratio of average production volume in 3 years to projected value
comes up to approximately 89 % {173, 137/(65,024x3)=0.89). Meanwhile, the average
ratio of stoppage in 3 years is 9.43 %. In the case of calculating the number of days
corresponding to annual operation days on the basis of this value, 330.6 days, which are
longer than 320 days of projected annual days by 10.6 days, are obtainable.

Days corresponding to annual operation = 365x (100-9.43)/!00 = 330.6 days

Although actual operation days are 10.6 days longer, annual operation volume accounts
for 89 % of production value. It is not consistent with the fact that the Plant has been
operated at its nominal capacity during stable condition. On the assumption that a
consecutive stoppage of operation of 45 days is required for regular repair once a year,
320 days of annual operation days are counted. Whenever accident occurs in NGFF, its
operation is, however, immediately stopped and troubled part is repaired. NGFF
completes its repair work skillfully in short time in case of accident, but annual
production volume decreases due to influence of reduction volume caused by a lot of

-11-27
 stoppage times, although days corresponding to total stoppage hours are comparatively
short.

Table II —7 Ammonia production volume & Stoppage hours ratio

(July, 1997^June, 200)
Year 97/98 98/99 99/00 Total
Projected production volume MT/Y 74,192 74,192 74,396 222,780
Production result MT/Y 58,197 58,317 56,623 173,137
Production volume ratio 78.44 % 78.60 % 76.11 % 77.72 %
Operation stoppage hour 662:00 745:15 1045:33 2453:43
stoppage hour ratio 7.56% 8.51 % 11.94% 9.43%

(4) Urea production process

In Urea Plant, 333 LT/D (108,250 MT/Y on the basis of 315 days/Y) of urea in the state
of grain are produced by use of liquid ammonia generated in Ammonia Plant and
carbonic acid gas collected in CO2 removal equipment through Chemico’s complete
cycle method. While urea synthesis equipment consists of 3 complete lines, each of
which has 111 LT/D capacity, each equipment of refrigeration, bagging, storage and
shipment in the following process has 1 line, respectively. Urea production process is
shown in Figure II—7 “Urea synthesis equipment process”. While unresponsive
carbamate is divided into ammonia and CO2 and cycled to separately to synthesis tower
in NGFF, such carbamate is cycled without decomposition to synthesis tower in the latest
energy saving process. Summary on urea production process in NGFF is set forth in the
following.
 NH 3 (From NH3 equipment)

Shipment Urea Product

NH3-CO2
separator
Shipment
equipment
Liquid NH3
storage Wasted water

Urea in the
state of grain Storage & bagging
Carbamate
Refrigeration
Urea synthesis
separation equipment
tower
equipment

Urea solution
Re-dissolution
system
CO]
compressor
Urea in the state Urea grain
Urea evaporation
of grain production
condensation
equipment Refrigeration
equipment
CO] (From NH
equipment) NH3 stripping

Wasted water

Fig. II —7 (400) Diagram of Urea synthesis equipment process

1) Urea synthesis equipment

Makeup ammonia, raw material for urea, is supplied from Ammonia Plant and
stored in liquid ammonia storage equipment together with collected ammonia,
unresponsive in urea synthesis cycle. After then, it is increased up to 250 kg/cm2
in its pressure by ammonia supply pump and put into urea synthesis tower.

Makeup CO2, another raw material for urea, is sent from Ammonia Plant and
compressed up to 70 kg/cm2 by CO2 compressor together with collected CO2,
unresponsive in urea synthesis cycle. After being liquefied through refrigeration
and increased in its pressure up to 250 kg/cm2G, as liquid carbonic acid gas, by
liquid carbonic acid supply pump, makeup gas is put into urea synthesis tower.
The mole ratio of ammonia, supplied to synthesis tower as raw material, to CO2 is

-11-29-
5.6 and exceeds considerably 2 of the equivalent rate. In urea synthesis tower, urea
synthesis reaction attributable to the following reaction formula© and © occurs,
but the temperature in synthesis tower is maintained at 185 °C,as this reaction
causes a small quantity of heat generation reaction. Reaction © advances
un-reversibly with heat generation reaction, while reaction © is reversible
dehydration reaction, slowly going ahead by heat absorption reaction. The
composition of urea and carbamate in urea synthesis tower are, therefore, always
balanced.

2 NH] + CO] => (NH2)C02(NH4) Heat generation ©

(NH2)CO(NH4)2 <=> (NH2)2CO+H20 Heat absorption ©

Since there are a lot of corrosive C02 with high temperature in synthesis tower,
carbon steel is corroded considerably. Its inside is, therefore, processed with
stainless lining and surface is passivated for increase of anti-corrosiveness. So a
small quantity of air is supplied into synthesis tower by high-pressure air compressor
and measure for covering the surface of stainless lining with oxidized film is always
taken.

Reactive generated materials at synthesis tower exit consist of 4 ingredients, such as

urea, carbamate, excessive ammonia and water, and also a small quantity of
hydrogen and nitrogen. Balance composition of reactive generated materials is
shown in Table II — 8.

Table II — 8 Composition at urea synthesis tower exit (Mole %)

Composition
nh3 CO] Carbamate Urea h2o Others
materials
% 43.9 0.0 14.0 32.1 9.7 0.3

Reactive generated materials, coming from the top of urea synthesis tower and being
decreased in its pressure down to 20 kg/cm2 by pressure adjustment valve, is
evaporated through heating of excessive ammonia by steam heater and separated
from urea carbamate solution. Ammonia gas separated from excessive NH]
separator is recycled to liquid ammonia storage equipment together with ammonia,
raw material for synthesis, after cooling and condensation. Urea carbamate
solution without excessive ammonia is sent to carbamate separation equipment after
being reduced in its pressure to 1 kg/cm2 by pressure valve.

11-30-
2) Carbamate separation equipment

Urea carbamate water solution supplied to carbamate separation equipment is heated

up to 100 °C and carbmate is divided into CO2 and NH3 through reaction toward
opposite direction in reaction formula©, while water solution becomes basically
such water solution as containing urea only. Since this reaction is absorption
reaction, heat needed for reaction is supplied by steam with 10 kg/cm2. With this
heat, separation of carbamate and condensation of urea through water vaporization
occur simultaneously. Mixed gas of CO2 and ammonia with water, generated in
carbamate separation equipment, is sent to NH3 -CO2 separation equipment. Also,
urea water solution coming from carbamate separation equipment is sent to urea
evaporation condensation equipment.

3) NH3-CO2 separation equipment

In respect of ammonia and CO2 collected from carbamate separation equipment,
CO2 is selectively absorbed by MEA (Mono ethanol amine) solution and separated
from ammonia. Separated ammonia is increased in its pressure up to 20 kg/cm2 by
3 stage ammonia compressor and, after being condensed by water cooling, sent to
urea synthesis tower from liquid NH3 storage equipment together with makeup
ammonia for their recycling. CO2, absorbed into MEA solution, is separated from
MEA solution in regeneration tower by steam heating and sent to urea synthesis
tower by CO2 compressor together with makeup CO2 for their recycling.

4) Urea evaporation condensation equipment

Urea water solution supplied from carbamate separation equipment is such solution
as already condensed to the level of 80 %. With application of vacuum falling film
evaporation method in vapor condensation equipment, urea solution runs down from
the upper part of inside wall of interior rotary wing in the state of film, and water is
condensed through evaporation after being heated with 10.5 kg/cm2 of steam from
the outside of wall. In evaporation condensation equipment, urea, with temperature
of 145 ~ 150 °C and including less than 0.5 % water, is obtainable in the state of
melting. This melted urea is sent to urea grain production equipment by pump.
For collection of a small quantity of ammonia contained in evaporated water,
un-condensed gas, air (nitrogen and oxygen) breathed into synthesis tower, is
separated after cooling and condensation, and ammonia is collected from condensed
water. This ammonia is sent to NH3 -CO2 separation equipment together with
mixed gas of ammonia and CO2, generated from carbamate separation equipment,

-11-31-
 for their recycling. Condensed wasted solution dried through ammonia stripping is
drained.

5) Grain production, cooling and bagging

A series of equipment in the above consist of 3 lines, and there is a line in the
process after grain production equipment. Melted urea with high temperature is
splayed from tower nozzle at the top of grain production tower to downward and
cooled for formation of urea grain through its contact with oncoming cooled air
from the bottom of grain production tower, while its falling. Finally, it falls down
to the bottom of the tower. This grain urea is cooled down to the level of normal
temperature by rotary drum- type refrigerator and shipped as product after being
bagged in 50 kg each. Sometimes, grain urea from rotary drum-type refrigerator is
stored in storage warehouse on large-scale in bulky condition. It has 99.5 WT % of
product purity and the remaining portion is water. Bullets, impurities, are less than
1.0%.

(5) Recent operation conditions in Urea Plant

The operation record of Urea Plant in NGFF for 3 years from July, 1997 through June,
2000 is summarized and shown in Table II —9. Stoppage hours and their causes are
extracted from the above Table are indicated in Table II —10. Stoppage hours in Table
II —9 and Table 11—10 represent 1/3 of actual stoppage hours. Since 2 lines are in
continuous operation even in case of 1 line being stopped, influence of stoppage hour to
urea production is considered to be 1/3.

Out of total stoppage hours, stoppage hours due to top cover and inside lining of urea
synthesis tower 401 are 2,342 hours and 395 hours, respectively, as shown in Table U —
10. And they come up to 2,737 hours totally and account for 51.7 % of the total
stoppage hours. As complete stop of leakage from tower top cover of urea synthesis
tower 401 HI is required for increasing operation rate of Urea Plant, adequate
maintenance and inspection are essentially needed. With extraction of annual urea
production projected volume, actual production volume and stoppage hour, each ratio is
calculated and shown in Table II—10. Urea Plant is operated nearly at nominal
capacity of 333 LT/D during stable operation condition.

-11-32-
 Table II —9 NGFF UREA Plant Operation Record
NH3 Feed Pump Trouble to shut Down Time Capacity Production
Year Month NH3 Plant Trouble to shut down Autoclave Failure to shut down Electrical Trouble to shut down Other trouble to shut down
Mrs. Tons/M Tons/M
16.00
NH3 main gas compressor
Jul. Pump (?) gland Failure C02 pump feed pump failure 8,525 7,899
tripped 101.00

186.00
Pump (S) Plunger Broken Pump
97.00
Aug. (S) Repairing Pump (C) 8,525 4,534
89.00
Repairing Pump (N) Repairing
24.00
20.00
Sep. (C) unit liner repair 8,250 7,573
1997 169.00
199.00
Oct. Pump (?) gland Repairing (C) unit liner repair 8,525 7,170
49.00

Power Plant BFW line cracked 46.00

Nov. Reformer tube leak repair 8,250 7,453
(full shut down)
55.00
(N) unit top cover leak 100.00
Dec. (C) unit thermo-element boss 8,525 8,582
flange leak 11.00
32.00
Pump (S) cross head repair (C) unit thermo-element boss
Jan. 15.00 8,525 8,787
Pump (S,C & ) gland leak flange leak
9.00

Feb. Power Plant boiler tube leak 18.00 7,700 8,141

112.00
Gas comp. elec, trouble Pump (C) break & cross head NH3 reflux pump crack case 39.00
Mar. (C) unit top cover leak 8,525 7,016
11-33

guide repair & bearing repair 20.00

22.00
34.00
80.00
Main gas comp. Stator coil (S) unit top cover repair NH3 reflux pump repair
Apr. 79.00 8,250 6,518
1998 damaged (N) unit liner leak NH3 transfer pump trouble
11.00
8.00
NG line scheduled repairing 192.00
(N) unit top cover & liner leak &
May (S) unit cross head guide repair 184.00 8,525 5,079
repair
10.00
(S) unit cross head guide & main
207.00
Jun bearing repair 8,250 7,552
(C & N) gland leak & repair 8.00

97/98 1846.00 100,375 86,304

(C) unit head, guide & gear 33.00
Jul. (C) unit top cover leak 8,525 7,732
repairing 99.00
 NH3 Feed Pump Trouble to shut Down Time Capacity Production
Year Month NH3 Plant Trouble to shut down Autoclave Failure to shut down Electrical Trouble to shut down Other trouble to shut down
down Mrs. Tons/M Tons/M
35.00
(C) unit abnormal noise to (N&C) units therm-element 24.00
Aug. NH3 plant process trouble BFW line leak 8,525 7,785
check boss flange reducer leak 29.00
8.00
NH3 C02 feed pump gland 128.00
Blackout power plant to full
Sep. leak 17.00 8,250 6,662
shutdown
No.1(C)/belt driving motor 3.00
1998
C02 feed pump (S) cross 28.00
Oct. (S, C & N) units gland leak 8,525 7,965
head bush pin corroded 13.00

Nov. (S) unit top cover leak 8,250 8,412

23.00
(S) unit liner repair 225.00
Dec. (N) unit thermo-element boss Power plant blackout 36.00 8,525 6,353
tube leak 9.00
C02 feed pump (S & N) bush 33.00
pin repair
Jan. (?) unit gland leak 8,525 8,379
NH3 subcooler outlet line 13.00
leak 7.00
NH3 comp. 401-K1(N) panel 32.00
Feb. (C) unit top circuit line leak 7,700 7,561
board elec. Trouble 19.00
(C) unit top cover leak 105.00
Mar. 8,525 7,594
(N) unit top cover leak 12.00
C02 feed pump suction 240.00
Apr.. (N) unit liner replacement 8,250 6,033
cover & gland leak 8.00
1999 38.00
C02 NH3 feed pump gland &
May. Main comp. Repair (N) unit liner replacement 29.00 8,525 7,844
11-34

stuffing box leak

24.00
80.00
(C) unit top cover leak
Jun (S) unit repair 72.00 8,250 6,324
(S) top circuit repair
16.00
98/99 1438.00 100,375 88,644
80.00
(C) unit tie-rod repairing
NH3 A train repair work (S, C & N) units gland leak 22.00
Jul. 8,525 7,315
(S) unit checking 13.00
27.00
 NH3 Feed Pump Trouble to shut Down Time Capacity Production
Year Month NH3 Plant Trouble to shut down Autoclave Failure to shut down Electrical Trouble to shut down Other trouble to shut down
Mrs. Tons/M Tons/M
86.00
NH3 C02 feed pump gland
Sep. NH3 A train repair work (S) unit top cover leak 8.00 8,250 7,416
leak
20.00
103.00
Oct. (?) unit gland leak (S) unit top cover leak 8,525 7,489
14.00
1999
Planned shutdown for catalyst Prill cooler driving shaft 370.00
Nov. 8,250 4,508
change A train broken & repair 12.00
109.00
(N) unit top cover leak Prill cooler driving shaft &
Dec. 87.00 8,525 5,926
(C) unit liner leak under ground C/W line repair
131.00

NH3 Feed Pump Trouble to shut Down Time Capacity Production

Year Month NH3 Plant Trouble to shut down Autoclave Failure to shut down Electrical Trouble to shut down Other trouble to shut down
Mrs. Tons/M Tons/M
C02 feed pump suction 248.00
Jan. (C) unit liner replacement 8,525 7,179
cover leak 5.00
177.00
Feb. Water scrubber problem (C) unit liner replacement 7,975 6,494
28.00
NH3C02 feed pump gland 74.00
Mar. Water scrubber problem 8,525 7,698
leak 9.00
Jetty water pump tripped to
2000 Apr. 8,250 8,001
full shutdown 27.00
66.00
Power Plant boiler tube leak to
May. (N) unit suet. Cover leak (N) unit top cover leak 4.00 8,525 7,921
suffer full shutdown
41.00
121.00
Jun. NH3 Main comp, repair (S) unit top cover leak C02 feed pump repair 11.00 8,250 7,298
11-35

22.00

99/00 2009.00 92,125 77,245

Gran d Total 5293.00 292,875 252,193
 Table II —10 Causes for stoppage of urea plant operation
___________________________________ (July, 1997^June, 2000)
Cause for stoppage Stoppage hour Ratio %
Leakage at urea synthesis tower cover 2,342 44.25
Corrosion of urea synthesis tower inside
395 7.46
lining
Leakage in Ammonia supply pump 816 15.42
Leakage in liquid C02 supply pump 440 8.31
Trouble relating to electricity system 269 5.08
Others 1,031 19.48
Total 5,293 100.00

In Table II — 10, the ratio of actual production volume to projected volume in NGFF is
86.01 % on the average for 3 years. This ratio exceeds 77.72 % of Ammonia Plant due
to the reason that NGFF’s projected production value, estimated as 100,357 MT/Y, is
lower than annual production volume, contrary to Ammonia Plant. With 320 days for
annual operation days, annual production amounts to 108,265 MT/Y (=1,016 x 333 LT/D
320 D/Y). Since the ratio of average production volume for 3 years to projected value
comes down to 0.795 {=259,223/(108,265 x 3)}, it decreases by around 80 %. While
the ratio of stoppage hour is 21.63 % on the average for 3 years and annual operation
days, corresponding to 287 days {=365 x (100-21.63)/l00}, are shorter than 320days of
projected annual operation days by 33 days. In Urea Plant, the ratio of annual operation
days and the ratio of production volume to projected volume are almost consistent. It is
due to the following reasons. Although stoppage of plant is mainly attributable to urea
synthesis tower’s repair, which requires many days, the number of times of stoppage is
relatively small, compared with operation rate. Also, compared with Ammonia Plant,
influence by number of times of stoppage to production volume is comparatively small,
since there are 3 production lines in Urea Plant.

Table II — 11 Urea production volume & stoppage hour ratio

(July, 1997—June, 2000)
Year 97/98 98/99 99/00 Total
Projected production volume MY/Y 100,375 100,375 100,650 301,400
Actual production MT/Y 86,304 88,644 84,275 259,223
Ratio of production volume 85.98 % 88.31 % 83.73 % 86.01 %
Operation stoppage hour 2,242:00 1,438:00 2,004:00 5,684:00
Ratio of stoppage hour 25.59% 16.42% 22.88 % 21.63%

-11-36
(6) Conditions in electricity power plant

Electricity power plant supplies electricity and steam. While Natural gas is used as fuel,
heavy oil is usable for plant operation under the present structure. It consists of 3 units
of boiler and 3 units of generator. And 1 unit of each machine is preparatory.
Maximum 12,000 kw of electricity generation and generation of steam required for
fertilizer plant are available from the above generators and boilers, respectively. Steam
turbine is steam extraction turbine, and extraction of steam with middle and low pressure
is available. NGFF power plant operation data for 6 years from 1981/82 to 1996/97 is
shown in Table 11—12. This power plant is in relatively smooth operation and one of
equipment, which has no serious problem, thanks to one preparatory line. Although
there has hardly been any problem affecting fertilizer production attributable to
electricity supply capacity of power plant, complete power cut-off due to damage of
boiler tube occurs once or twice a year, as indicated in Table II —5 and II —9.

Table II —12 NGFF power plant operation data (1981/82^1996/97)

Natural gas
Total generation Electricity for Steam for Urea Basic unit of
Year consumption
volume Urea Plant Plant natural gas
volume
Unit NM3/Y KWH/Y KWH/Y MT/Y nmVkwh

81-82 102,427,535 163,875,700 147,376,360 552,677 0.625

82-83 99,575,597 156,031,500 139,650,490 528,303 0.638
83-84 92,420,421 142,724,600 117,124,120 459,427 0.648
84-85 102,268,051 163,838,600 146,900,290 515,664 0.624
85-86 84,471,890 141,718,800 126,950,222 437,352 0.596
86-87 97,902,474 172,111,900 155,022,598 541,337 0.569
87-88 95,990,642 164,860,900 148,232,819 547,662 0.582
88-89 96,146,257 167,324,100 150,816,813 508,403 0.575
89-90 93,947,551 164,330,300 148,729,841 454,264 0.572
90-91 97,619,662 166,651,000 150,687,272 475,414 0.586
91-92 101,116,977 169,397,900 153,189,674 493,930 0.597
92-93 93,958,143 156,739,360 141,438,726 477,141 0.599
93-94 92,045,820 159,535,680 144,013,543 448,377 0.577
94-95 90,318,454 157,311,200 141,764,277 455,352 0.574
95-96 83,731,150 150,239,601 134,900,443 429,522 0.557
96-97 92,404,582 160,845,500 145,589,994 485,528 0.574

In this power plant, a comparatively large of pressed steam is extracted for sending steam
to Fertilizer Plant. Overall thermal efficiency in power plant comes up to
approximately 60 %, and it seems to be a plant with relatively high thermal efficiency.
 Urea production volume versus electricity consumption volume

> 20.0
| 100
* 00.0
o
§ 90.0
E
§ 80.0
| 70.0
| 60.0
£ 50.0
| 40.0
5 30.0
90 100 110 120 130 140 150 160
Electricity consumption volume : million KWH/Y

Figuere II — 8 Relation between urea production and electricity consumption volume

Relation between electricity consumption and steam consumption in Fertilizer Plant

300 350 400 450 500 550 600

Steam consumption volume 1,000 MY/Y

Figure II — 9 Relation between electricity consumption volume

and steam consumption volume in fertilizer equipment

— 11 — 38
 Relation between urea production and electricity consumption volume for the past 38
years and relation between electricity consumption volume and steam consumption
volume in Fertilizer plant for the same period are shown in Figure II —8 and Figure II —
9, respectively. In Figure II —8, relation of urea production volume and electricity
consumption volume is nearly in direct proposition and also relation between electricity
volume and steam consumption volume is almost in direct proposition. Since electricity
and steam supplied to Fertilizer Plant are considered as integration, value of natural gas
basic unit NH3 in power generation is treated as including steam energy accompanied by
electricity per KWH in this report. In case of electricity generation by medium term
turbine, energy required for power generation is entropy attributable to difference of
pressure, in consideration of extracted steam, and not consistent with actual conditions,
as power generation efficiency rate becomes 100 %.

(7) Present conditions of machinery & equipment in Fertilizer Plant

There are plenty of various machinery & equipment in NGFF Fertilizer Plant. Main
equipment are about 300 items and number of all machinery amounts to 1,000 units.
Thanks to super-annuation, application of maintenance technology is required for all of
equipment, which are targeted for examination in NGFF renovation project. The
present conditions of main machinery & equipment needed for urgent repair and
measures are summarized.

1) Rotary machine
a. Actual operation of rotary machines, such as pump, blower, and fan, are
generally maintained with repair works, including repair and exchange of spare
parts.

b. Since axis sealed portion of all pumps are made by grand packing method, a
large quantity of liquid leakage are recognized (Discharging volume exceeding
standard volume). Process liquid and utility (Cooling water, etc) are,
therefore, wasted and such environmental deterioration that gas contained in
liquid gives off bad smell, is brought about.

c. As a whole, screw joint is damaged and a lot of liquid discharge are found in the
contact portions of auxiliary pipe (cooling water) fitted with rotary machine
body.

d. 715 J1 (High pressure lean solution pump) & 715 J2 (Low pressure lean
solution pump)

-11-39-
 Lean solution is considerably leaked from main axis portion and its solution is
solidified, attached and piled in a large quantity.

e. 402 J3 (Ammonia return pump)

Thanks to damages of crankcase and axis in the past, auxiliary works on large
scale were implemented.

f. 402 J1 (Grain production tower supply pump)

Casing pump with jacket was renovated at plant site.

g. 402 J1 (Liquid carbonic acid supply pump)

Type: Vertical triplex plunger, variable stroke, High pressure service,
Discharge pressure: 250 kg/cm2. Adjustment equipment for process
flow volume is workable only for stroke function adjustment of this
pump, but function in stroke adjustment mechanism becomes worse.
As flow meter is not installed in discharge line, exact volume is not
countable.

h. 402 J2 (Stable supply pump)

Type: Vertical triplex plunger, Constant stroke, High pressure service.
Discharge pressure: 250 kg/cm2

Owing to a number of leakage troubles in its body, exchange of

packing and repair works were executed.
As packing material used at present is V type packing made of
synthesis rubber, its life is such short as 3 months
- As examples of troubles in the past, accidents, such as cutting loss of
crankshaft, connecting rod and plunger, and bearing damage
occurred. In these accidents, temporary measures, including
procurement of parts from local suppliers, were taken.

i. Steam turbine for power generator

In 1 unit out of 3 units, inconvenience occurred. So dismantling and inspection

were made after its stoppage of operation. Wears at entrance of steam wing (3
units) were recognized. Exchange with new parts is required.

j. Spare parts of seal ring for power generator’s steam turbine are short.

11-40
 k. Due to corrosion of blower for gas extraction in water purification equipment, it
was in poor operation. Blower made of anti-corrosive material (stainless or
vinyl chloride) is required.

l. 3311 (Cooling tower supply pump)

The height of cooling tower is 23 meters and short in its head, while 5.000 M3/H
and 16 meters (head) are designed in the present specifications. The change to
3,000 M3/H and 24 meters (head) is needed.

m. Mixer in clarifier (Water supply equipment for product collection) is in poor

operation. Inspection & repair are needed.

n. Mixer in flash mixer (product collection equipment) is in poor operation.

Inspection & repair are required.

o. Water supply pump in water supply station is often stopped due to trouble or
alien substances in bearing and shaft portions. As substitute for bearing type,
application of non-oil supply type with hard driver is needed.

2) Machinery
a. With auxiliary works, such as execution of welding and exchange of parts,
actual operation of machinery is maintained. As a whole, any exterior
measures for corrosion attachment to external surface, maintenance of
temperature and looseness of keeping cool cover are not taken.

b. 715 F2 (Refinery tower)

Owing to occurrence of inconvenience, such as development of corrosion and
decrease of function in bubbling stage, repair works were executed.

c. 717 HI (Ammonia synthesis tower)

As development of corrosion and reduction of catalyst’s efficiency occurred,
repair works on large scale are required (The structure doesn’t facilitate
exchange works for inside basket and catalyst). Steps for Improvement are
needed.

d. 718 HI (Ammonia spherical tank)

Leakage of gas in connecting part of top gas exit nozzle is recognized and repair
is needed. Complete extraction of liquid remaining inside the tank and
re-filling method are problems to be resolved.

— II—41 —
e. 402 HI (Urea synthesis tower)
Specifications: Shell-multi-layer carbon steel, sus316Lx 15 mm lining, Internal
temperature (°C) x pressure (kg/cm2) =185x250

- Thanks to corrosion of internal lining and gasket at top cover under severe
operation conditions, operation is often stopped.

f. 403 E2 (Evaporation equipment)

Since the inside and outside circle parts of wing are worn down, clearance with
shell’s diameter widens and efficiency declines. Troubles, such as damage of
bearing relating to revolving rotor, leakage from sealed axis part and vibration
inducement due to unbalance of revolving rotor, occurred. In repair shop, a lot
of time is spent for auxiliary work, such as repair of bearing, increase of wing’s
thickness by welding and change of balance.

g. 402 FI (Excessive ammonia condenser)

Owing to corrosion and frictional wear, this machine becomes risky and
continuous use is unavailable. Steps for betterment are needed.

h. 401 E6 (CO2 3 rd 1st separation cooler)

Since efficiency decreases with excessive damage due to corrosion, measures
for improvement are needed.

i. 403 E4 (Evaporation equipment middle condenser)

As efficiency decreases with excessive damage due to corrosion, steps for
improvement are required.

j. 403 G4 (Surge tank)

This equipment is made of aluminum, and repair is often executed, owing to
corrosion.
Change of aluminum material to stainless material is under study.

k. 405 E10 (Regeneration tower)

As excessive damage is recognized, measures for betterment are needed.

l. 405 FI (Absorber Stripper)

As considerable damage is found, measures for improvement are required.

m. 403 El (Decomposition equipment)

Thanks to attachment and piling of scale inside of tube, efficiency of this
equipment decreases.

— II — 42 —
 n. 40402 (Prill cooler)
The outside circle surface ring is worn down considerably. The dent, due to
frictional wear and scratch on outside circle surface in raider ring, is recognized.

o. 403 E5 (Evaporator after cooker)

Tube was damaged due to corrosion and frictional wear. It was exchanged
with new tube.

p. 404 FI (Grain production tower)

Since corrosion of composition materials for grain production tower (Tower,
frame, brace and stage, etc) is very severe, this tower is in danger. Execution
of reinforcement works by use of supporting materials is required. Checking
on volume of fine particles contained in exhaust gas coming from top of tower
is needed.

q. As hand-hammering is made on outside surface of grain urea hopper to quicken

contents’ falling, serious uneven shape is recognized. Fitting of air knocker,
useful for transport of powdered material, is needed.

r. High pressure water supply heater in power plant is damaged due to corrosion
and frictional wear. Measures for betterment are required.

s. Thanks to considerable super-annuation of cooling tower in power plant, repair

works on large scale are needed. Improvement and repair of composition
materials, such as structure, framework, filling material and hood, as well as
reinforcement of supporting materials are required. A half of fans are not
workable, due to damage of blade and inducement of vibration.

t. As damages in cooling tower for fertilizer plant, structure for composition

materials, framework, louver, lantern, filling material and hood are severe,
repair and reinforcement of supporting materials are required.

3) Compressors
a. The operation of each compressor is somehow maintained with repair works,
such as repair and exchange of spare parts.

b. In compressor room of ammonia plant, 10 units of reciprocating gas compressor

are installed. Among leaked gas from all compressors in the room, bad smell,
arising from NH3, particularly causes worst environment.

-11-43-
c. In urea compressor room, 9 units of reciprocating compressor are installed.
Although leaked gas from all compressors are afloat in this room, its quantity is
relatively small, compared with compressor room in ammonia plant and
environmental problem is not brought about.

d. As the quantity of gas leakage from 716 K1 (Synthesis gas compressor) and 717
K1 (Circular) is particularly large, measures for improvement are required. At
present, leakage gas is discharged to outside of the room through exhaust dust
installed at distance piece, sealed axis part, in 717 K.

e. Due to reduction in treatment capacity of 719 K1 (Ammonia refrigeration

compressor), exchange works of cylinder liner and piston ring with new parts
have been executed. (Any repair was not made for more than 20 years in the
past). Our inspection on inside of cylinder revealed that clearance between
piston ring /liner ring and interface of cylinder liner was 1.3 mm. (Standard
value of this machine = 0.5~0.75 mm)

f. 16 K2 (Process air compressor)

In common with all compressors, their efficiencies have decreased. As
efficiency decline in 716 K2 (Process air compressor) is considerable, it is taken
up as an important matter in process operation.

g. 149 K1 (Ammonia refrigeration compressor)

Although operation was re-started after exchanges of parts for cylinder liner,
piston ring and metallic packing, piston rod cutting accident occurred within 2
days operation. This machine was operated continuously for more than 20
years without any repair work. Until repair of this time, this compressor has
been operated in such condition that load of piston rod exceeded its designed
value. The transformed point in axis diameter at cross head fitting part was cut
off due to effect of long-term and repeated function of load.

h. 402 K1 (Air compressor)

This compressor is plunger & tandem typed compressor with small quantity of
flow volume capacity and usable for high pressure (350 kg/cm2). Also, it is
reciprocating 5 stage compressor. With 30 mm and 16 mm diameter size in 4
absorption/5 class piston and plunger installed at high pressure part respectively,
it has function and structure designed under severe conditions. As examples of
trouble in the past, damage of 4 absorption and 5 class cylinder and piston ring,
installed at high pressure part, often occurred. In case of comparing loss in

-11-44
 shutdown period for repair works with product cost, purchase of new
compressor is more advantageous.

4) Piping system
a. As a whole, actual operation is maintained with repair works for pipes, such as
execution of welding and exchange of spare parts. There are, however, such
pipes as their thickness being reduced due to corrosion and frictional wear.
Red corrosion on outside surface and exfoliation in keeping warm & cool
materials are recognized. Also, liquid leakage and gas leakage from the
connection of piping are found in many points.

b. Thanks to corrosion in Pipe (Size: 70/40) of exit line in 402 J1 CO2 supply
pump and 40212 ammonia supply pump, its thickness decreased to 70/20. So
it is in danger.

c. In execution of cooling water pipe works, there are several errors. Since the
size of down stream pipe installed after junction of plural lines is smaller in its
diameter than those of feeder pipes, reconsideration is required.

5) Electricity equipment
a. Actual operation of electricity equipment and parts in electricity room, motor
for driving rotary machine at plant site and a set of other electricity equipment
are maintained with repair works, such as repair and exchange of spare parts.
Due to super-annuation of electricity equipment as a whole, such operation is
under severe conditions.

b. In respect of 716 K1 (Synthesis gas compressor) and high pressure motor for
other compressors, several short circuit accidents occurred in the past due to
poor insulation.

c. Various spare parts relating to electric parts are short. Since some of old-typed
parts are not produced at present for certain reasons on the side of
manufacturers, these spare parts are not obtainable.

d. Although spare parts for the existing high pressure oil circuit breaker are
needed, they are not produced at present. Recently, vacuum circuit breaker is
generally used. In case of low pressure breaker, mold case circuit breaker is at
present popular. So procurement of spare parts for the existing oil circuit
breaker becomes difficult.

11-45-
 e. Thanks to poor insulation in high pressure motor (400 Kw) for 410 K1
(Ammonia refrigeration compressor), troubles occurred. NGFF has chosen its
course in procuring starter coil and executing fitting works by itself. (NGFF has
similar experience in motor for compressor of ammonia plant)

f. Spare parts for contactor of VCM are short.

g. Spare parts for high pressure compensator are insufficient.

h. Power generator for emergency use is in poor operation, due to poor function of
exciter. Exchange of exciter is needed.

6) Instrumentation
Poor function and operation as well as the state, where nothing remains as the result
of removal of necessary instrument, are recognized as a whole. It is due to
super-annuation, frictional wear and corrosion in instruments. Instruments
required for necessary process points are operated and controlled at minimum
number. While repair works, such as repair and exchange of parts, are executed,
actual operation is maintained. Owing to super-annuation, instrumentation is under
severe conditions. Except the above, points at issue as follows.

a. It is doubtful whether adequate calibration is executed.

b. Leakage gas and liquid in high pressure parts (including pipes) are recognized.

c. Paining of whole instruments, repairs of keeping warm & cool instruments and
environmental cleaning are needed.

d. As the following analyzers required in process operation are poor in their

functions, they are not usable. Measures for urgent improvement are needed.

- h/N2 analyzer (717 sect) (Specific gravity measure method)

- Natural gas detector (701 sect)
- CO & CO2 measure
- AE-AR-701-2
- NH3 measure
- Smoke route oxygen measure

-11-46-
 e. Instrumentation at issue in process operation

- Installation of flow volume record warning equipment is required for

measuring discharged liquid volume of 402 K1 (Air compressor) (FIT-402-4,
FRA-402-4)
- Adjustment of liquid volume of CO2 entering into urea synthesis tower is
available. Installation of CO2 flow volume record adjustment equipment is
required. (FIT-402-2, FRCA-402-2)
- Adjustment of entrance pressure in urea synthesis tower (402 HI) is
available. Pressure record adjustment instrument is needed. (PCV-402-14)

f. Due to troubles in analyzer for boiler water supply and PH meter, hey are not
usable.

g. The following in water supply equipment are in extremely difficult conditions,

due to their poor functions. Since they are essentially required for process
operation, urgent measures are needed.

- Automatic operation is not available due to poor functions of all JCV air
function valve. Because of many points, where manual operation is
executed, smooth operation is not expected. Procurement of new air typed
automatic valve is required.
- Exchange of PH meter is needed.
- Exchange of silica analyzer is required.

7) Present situation relating to machinery plant equipment and construction machine

a. Repair shop equipment

Thanks to super-annuation in machinery processing equipment, the following
machinery processing equipment are not usable.

-Universal grinding machine: Length of bed: 10-6”, swing: 15”, motor: 7.5 kw
-Bench type grinding machine:, motor: 3 kw
-Screw cutter (Screw: BS standard)
-Radial drill machine:

Inconvenience in fixed supporter and inducement of vibration often occur, due

to damage of working structure. Although repair and exchange of parts are
necessary, repair is unavailable as these parts are not produced at present.

-Air hammer, falling weight: 250 kg, motor: 22 kw

11-47-
 -Driving part of 5 tonsof ceiling- run crane is unworkable.

b. Welding & manufacturing instrument

- For reinforcement of repair works through execution of welding, provision of

DC & AC welding materials is newly required.
- NGFF has its own welding experts. In respect of inspection after welding
execution, NGFF asks at present Atomic Energy Center in Bangladesh to
delegate experts for such inspection.

c. Construction machine

Thanks to super-annuation and excessive damages, some of crane ,pay-loader,

and folk-lift are unworkable in their operation. Management of plant operation
relies on newly procured heavy machines.

- Reinforcement for maintenance of each machine and management of spare

parts as well as prolongment of their lives are required.
- 20 tons crane: Provision of spare parts is needed.
- 40 tons P & H crane :Spare parts are required.
- Folk-lift (3 tons): New folk-lift is needed.
- Truck crane (10 tons): Provision of spare parts ids required.
- Pay loader: Provision of spare parts is needed.

2.3 Capacity for Performing the Project on the Side of NGFF Fenchuganj
Fertilizer Plant

(1) Technical capacity

Judging from NGFF’s technical capacity in the aspect of plant engineering, divided into
engineering, procurement, construction and operation (E, P, C and O), it seems that both
of NGFF and BCIC don’t have capacities for performing the project. NGFF has,
however, continued its operation and maintenance of the plant for 40 years after start-up.
In respect of plant operation and maintenance technology, it has, therefore, plenty of
experience and technical capacity.

Since procurement of necessary machinery & materials for maintenance was made by
itself, it is not overestimation to say that NGFF has sufficient capacity in this field,
including overseas procurement. In rehabilitation work made in 1978, NGFF
implemented all local works by itself under support of several supervisors delegated from

-11-48-
Japan. In regard to local works, there is a pile of technology accumulated in many
years. So its technical capacity come up to our expectation.

1) Capacity for engineering

BCIC and NGFF don’t have capacity for engineering. Among plants under the
umbrella of BCIC, personnel change is often carried out and many technical staffs in
NGFF have their working experience of working in BCIC’ s other plants. They
have, therefore, know-how on chemical fertilizer process and operation &
maintenance of equipment. These technologies are, however, individually held and
not accumulated in organization as a whole. And they are not good at numbers and
drawings.

All of 7 fertilizer plants under the umbrella of BCIC were constructed with finance
or fund from overseas and all of their construction contracts were concluded with
foreign engineering companies as package deal. Under the circumstances, there
are historical details that BCIC entrusted engineering with contractors, which made
their basic & detail designs in foreign countries, and any technical transfer of
practical method for project was not received by BCIC.

With collection of technical information from BCIC ’ s fertilizer plants and unified
management of such technical information, BCIC appears to be able to accumulate
sufficient engineering know-how easily. In case that establishment of engineering
method is made, implementation of engineering required for repair work or
maintenance & conservation in all of BCIC ’s fertilizer plant becomes attainable.

2) Procurement of machinery & materials

NGFF has its capacity for procurement of machinery & materials needed for plant
maintenance & conservation, including overseas procurement. All procurement of
machinery & materials by the Government and public corporations are regulated to
be made by open tender in accordance with domestic rule in Bangladesh. NGFF’s
procurement of machinery & materials is made in compliance with such rule
accordingly.

In domestic newspapers, there are public notices of invitation to tender everyday

(See Photograph II — 2). In such public notice, international procurement and
domestic procurement are itemized. In regard to L/C opening relating to overseas
procurement and quality compensation method, including inspection at plant site,
BCIC has plenty of experience. Since BCIC has agents for forwarder business in

— II — 49 —
 Chittagong Port in respect of transport of overseas procurement machinery &
materials, it applies itself to receive cargoes and transport such cargoes to plants on
behalf of NGFF.

Photograph II —2 There are at all times a lot of public notices for tender in newspapers

3) Local works
It is our judgement that NGFF has sufficient technical capacity of implementing
installation work required for renovation work. Since completion of construction
work, NGFF has continued plant operation & maintained relevant equipment by
itself. Also, it has experience in rehabilitation works several times in the past.

During the period from 1978 through 1979, NGFF implemented rehabilitation on relatively large
scale under technical assistance of Kobe Steel Ltd. with Overseas Economic Fund’ s financial
aid amounting to 28.55 Kurore. In 1987, rehabilitation work was executed under ODA’s fund
in the amount of 95.9 million Taka. Although Bangladesh Government made its decision to
close NGFF in 1993, it determined NGFF ‘s continuation due to social reason in this district,
with reversion of the above decision, and in 1995 NGFF made its overhaul under financial aid in
the amount of 50.3 million Taka from Bangladesh Government. At present, rehabilitation work
with the Government’s ADP (Annual Development Program) in the amount of 2 billion Taka is
under progress.
 NGFF’s maintenance division has many years experience in doing daily works, such as removal
of machinery, repair and installation, without stopping operation in other lines. NGFF ’s
experience and capacity in repair work appear to be superior to those of unaccustomed outside
constructors. With some construction machines and machinery plant, NGFF ’s maintenance
division is able to perform repair works of this time through supply and provision of necessary
spare parts. Meanwhile, BCIC is in a position to lend construction machines owned by other
fertilizer plants to NGFF, if necessary.

(2) Management system

As in BCIC ’s other plants, there is hardly any delegation of management power,
including technical division’s operation, maintenance and inspection of whole plant,
from general manager to responsible persons in each special division of NGFF. With
full responsibility of general manager, top-down management system is complete in the
plant. In case of implementation of the project, general manager is expected to hold
additional post of project manager on NGFF side, and any staff of NGFF is not assigned
to such position.

NGFF ’s organization is shown in Figure II— 10. The number of NGFF ’s employees is
at present about 1,15o persons. Owing to recent personnel cut, the number of
employees has decreased. It’s organization is subdivided and office duties ranging from
engineer to technical staff are clearly distinguished.

11-51
 1150

Figure!! —10 Organization Chart of NGFF

lx DCE/DCC lx DCE(Civil) f) 2x Motor Cycle

lx ME/Chem 1x Office Assist (Mosbbirul Islam) 2, Office Equipment
4x Ag/AC/AS 1 x MUSS 1x Engineer (C) a) 1 x Plain Paper Copier
26x MO 'MT/ HS07HST 1x Sweeper b) IxDuplicating Machine
lOx SO-I/SO-II/ 2xHO/HST 1 x Office Assist, c) 60 x Typewriter
ST-l/ST-II 1x ST-I/ST-D lx Typist d) 1 x Fax Machine
4x SSO/SST lx SSO/SST lx MLSS e) 14 x Calculator
4x MT/MST f) lx Air Conditioner
2x ST-I/ST-H
2x SST

a) A.C.M. (Gen. Adm. Protocol) Additional Chief Manger a) Aya Female Assist to Nurse for Attending the
b) MLSS (Many Places) Member of Lower Subordinate Staff Patients in Medical Labo
c) A.C.M.0. (Medical) Additional Chief Medical Officer b) Imam Mosque Guide
d) D.C.M.O. (Medical) Dupty Chief Medical Officer c)Moazzin Mosque Guide
e) M.O. (Medical) Medical Officer d) Khadim Helper in Mosque
f) A.H.M. (School) Assistant Head Master
g) A.C.A. (Finance) Additional Chief Accountant
h) D.C.A (Finance) Dupty Chief Accountant
i ) A.O. (Finance) Accuntant Officer
j ) D.C.A. (Bill, Pay) Dupty Chief Accountant
k) D.C.E/D.C.C. (Ammonia) Dupty Chief Engineer/Dupty Chief Chemist
1) S.A.E./Forman (Ammonia) Sub Assistant Engineer/Forman
m) M.O./H.S.O. (Ammonia) Master Operator/Highly Skilled Operator
n) SO-I/SO-II (Ammonia) Skilled Operator-I/Skilled Operator-II
o) SSO/SST (Ammonia) Semi Skilled Operator/Semi Skilled Technician
p) MO/HSO (Ammonia) Master Operator/Highly Skilled Operator
q) D.C.C./D.C.E. (Urea) Dupty Chief Chemist/Dupty Chief Engineer
r) AE/AC/AS (Urea) Assistant Engineer/Assistant Chemist/Assistant Superintendent
s) MO/HST (Urea) Master Operator/Highly Skilled Technician
t) ST-I/ST-II (Urea) Skilled Techinician-I/Skilled Technician-!!
u) D O E (Sylhet Gas Pipe) Dupty Chief Engineer
v) MO/MT (Water Pump Supply) Master Operator/Master Technician
w) M E.. (Mechanical) Mechanical Engineer
x) DOE (Civil) (Civil) Dupty Chief Engineer
y) AE (Civil) Assistant Engineer
z) MT/HST (Civil) Master Technician/Highly Skilled Technician
aa) DOE (Training & Tech.) Dupty Chief Engineer
bb) Sr. S.F.O. (Fire & Safety) Senior Safety and Fire Officer
cc) F.S.L. (Fire & Safety) Fire and Safety Leader
dd) MPIC Material Planning and Inventory Control
ee) SGPL Syhlet Gas Pipe Line
(3) Management foundation, management policy

NGFF is compelled to manage itself under weak financial foundation and severe
management policy. NGFF ’s own planning and implementation of future management
problems, such as sales and income program required for company management, is in
difficult condition. Thanks to deficiency of supply, domestic fertilizer market in
Bangladesh relies on import for making up for the shortage of around 50,000 tons
annually. In each fertilizer plant of BCIC, its necessary production volume is
decreasing due to super-annuation and shortage of fund. Based on the tendency, such as
demand increase and production volume reduction, import volume of urea is likely to
increase in the future.

With domestic demand of urea exceeding its production volume extremely, a seller’s
market is formed in Bangladesh. Since urea product prices are determined by the
Government and bagged urea has been fixed as 4,800 Taka per ton for several years,
market principle is, however, not applicable. Such being the case, management effort in
operation appears unnecessary. In 2000, the Government introduced territorial
allocation system in production, distribution and consumption of fertilizer. As a result,
trading of NGFF ’s fertilizer was limited to 4 traders in the suburbs of Sylhet.
Reflecting poor capacities of these traders, 35,000 tons of urea is stored in NGFF ’s
fertilizer warehouse and 150 million Taka of inventories are posted in NGFF.

Meanwhile, natural gas price was raised twice by 15 % each in December, 1998 and
September, 2000, respectively. At present, price per 11 m3 is 1.93 Taka and total
payment amounts to 30 million Taka monthly. With posting red figures every year,
NGFF has accumulated deficiency amounting to 300 million Taka. Such accumulated
capital deficiency is almost equivalent to arrears to Jalalabad Gas Supply Co, natural gas
supplier. Such being the case, the gas supply company gives a warning of stopping gas
supply, unless gas rates in arrears are settled. Without introduction of fund from
Bangladesh Government, NGFF is not in a position to solve this problem only by its
management effort. Under such limited circumstance that the Government decided
continuation of NGFF ’s operation and urea product’s official price is fixed below
production cost and distribution has to rely on traders designated by the Government,
management responsibility is restricted to product cost reduction, attainable by
reasonable management through restructuring of organization as well as increase of
production volume and basic unit reduction effect.

In the process of organization’s restructuring, a considerable number of employees’ cut

was made. Because of request to shorten stoppage time of operation for production

-11-53-
 increase, there is a possibility that maintenance method becomes sloppy. Under the
limited time and budget, procurement of pure spare parts or parts, consistent with
specifications, become difficult and available materials, kept by side, are used after
adequate machine processing. And it results in increase of the number of operation
interruption as well as production volume reduction.

(4) Capacity for financial burden

BCIC has neither intention nor capacity to bear funds required for NGFF ’ s
rehabilitation through implementation of COM. BCIC asks Japan for providing all
funds needed in the project, including fund for local works. Ex work price of urea
product has been fixed domestically for several years by the Government as 4,800 Taka
per ton in respect of 50kg bagged product. Although natural gas basic units are
relatively low in BCIC ’s other latest large size urea plants, payback of initial investment
are not yet finished in some of these plants. With gradual increase in material natural
gas price, back spreads are recorded in many plants. In BCIC ’s fertilizer plants, around
6,000 Taka of production cost on the average exceeds its sales price. Despite BCIC ‘s
request for urgent increase of urea price by 1,000 Taka per ton at the minimum against
the Government, it has no chance of raising such price, since general election of
Parliament members in next year is near at hand. Under such difficult financial
condition, BCIC refuses to undertake its finance for NGFF ’s renovation work.

Although initial investment was amortized with a lapse of 40 years since Start-up of
operation in NGFF, its basic unit is 2 times as much as those of other latest plants. In
continuation of red book closing, NGFF has to maintain its operation and present capital
deficiency comes up to approximately 300 million Taka with gradual exhaustion of
working capital. As annual budget for maintenance works amounts to 10 million Taka
(20 million Yen) only, such works required for maintenance of operation are postponed
accumulatively and its operation is put in danger.

Under thee circumstances, Bangladesh Government decided to implement rehabilitation

required for maintenance of safe operation in NGFF with introduction of fund,
amounting to 450 million Taka totally, in 2 phases and 1st phase rehabilitation with
budget of 200 million Taka is in progress. Following up 1st phase rehabilitation to be
completed in June, 2001, 2nd phase rehabilitation with budget of 250 million Taka
(about 500 million Yen) is now under preparation with its implementation schedule in
July, 2001. Also, NGFF has no capacity for bearing financial burden.

-11-54-
 Although BCIC insists on its inability for financial burden, budgetary measure for 2nd
phase rehabilitation in NGFF has been taken. With regard to use of 250 million Taka of
budget planned for 2nd phase rehabilitation work as Bangladesh ‘s financial part, more
consideration is needed.

In addition, NGFF has necessary equipment and technology, including man power and
construction machines, required for plant maintenance, since it continued its operation
while maintaining urea production equipment for the past 40 years. Also, BCIC ’ s
other urea plants have capacities for maintenance & inspection of their own equipment.
Meanwhile, adjustment of resources, including construction machines owned by BCIC ’
s plants, is needed for their maximum use in NGFF ’ s renovation work. NGFF has also
machinery plant equipment, construction materials for its own maintenance. It is
conceivable that the value, obtainable from making use of these resources in local works
of CDM energy saving project, is counted as part of Bangladesh ’ s financial provision.

(5) Capacity for provision of manpower

NGFF ’ s maintenance division organizes its line-up, consisting of 359 persons. Out of
the total members, there are 106 persons in power generation division, 102 persons in
electricity & instrumentation division and 15 persons in civil engineering & construction
division and other divisions. Completion of local works is achievable by making use of
these members effectively in parallel with usual maintenance works.

In addition, support from operation division is obtainable, if necessary, since such

division has 404 employees. Although BCIC has not any person suitable to NGFF ’ s
renovation work among its members, taking main positions, delegation of one or two
technical staffs is conceivable but it is limited to technical experts of machinery and civil
engineering. Any technical expert in instrumentation field is unavailable.

(6) System for implementation

BCIC has its understanding of lump sum turn key form being unsuitable to renovation
project in NGFF and doesn’t stick to open tender method particularly. Although a
contractor is decided in principle through open tender method, there are many previous
instances of contracts on private base. For example, there are capacity betterment
projects, such as renovation works in Ghorasal and CUPL. Also, Bangladesh
Government has its understanding of private contract to be concluded with original
contractor without tendering in the case of China’s renovation agreement in PUFL. It
is, therefore, probable that implementation of NGFF renovation work is made
exceptionally by Japanese alliance, since construction of NGFF Fertilizer Plant was built
up by Japanese alliance. Reasonable contract amount is, however, required as
precondition.

As scale and details of CDM renovation work are similar to those of previous
rehabilitation work executed in 1978, it doesn’t raise a question as far as responsibilities
are shared in same way. In previous rehabilitation work, engineering and main
machinery & materials were provided by Japanese side and implementation scope of
construction works were shared by NGFF, for reason of plant performance responsibility
being taken by Japanese side.

NGFF ’ s consent on project implementation through similar sharing of responsibility has

been obtained. Project team for implementation of basic design and procurement
business is formed outside Bangladesh (Probably in Japan). It is ideal that detail design
is executed by domestic design company in Bangladesh and installation work is
implemented by NGFF ’ s members, headed by responsible persons in charge of such
works. With continuation of maintenance for 40 years, NGFF Plant has know-how on
such maintenance. Since execution of such work is needed without making sacrifice of
production volume, coordination, among production division, maintenance division, and
local work contractor, is essentially required. Also, project manager’s ability for
adjustment with general manager in each division is needed. In view of these
conditions, managing director of NGFF Plant appears to be most suitable person for
project manager at execution site. Project manager is scheduled to appoint a
coordinator for project adjustment, who fulfills his duty on behalf of project manager,
among NGFF ’s staffs. From Japan, delegation of several supervisors is expected.
Thanks to difficulty in completing all construction works in short period only by NGFF
members, local companies are to be appointed. Main business of these local companies
is provision of technical experts and laborers, but their provision of construction
machines and materials for works appears to be difficult. It is, therefore, necessary to
make use of NGFF ’ s machinery & materials at the maximum and use insufficient items
borrowed from BCIC ’ s other plants.

- 11-56
2.4 Details of the Project and Specifications of Relevant Equipment after
Renovation in NGFF Fertilizer Plant

(1) Details of the project in Fenchuganj Fertilizer Plant

1) Process improvement
Process improvement is limited to energy massive consumption typed ammonia
process, while betterment works in urea production process are not planned due to
relatively low economical effect obtainable from energy saving through change to
latest carbamate cycle method, compared with investment amount. Improvement
part of ammonia process is shown in Figure II — 11 “Process flow after improvement
of ammonia equipment”. The part, indicated by heavy line in Figure II — 11, is
process laying- pipes in improvement part.

a. Improvement of ammonia synthesis gas refinery method (Plan - A)

With installation of low temperature converter and methanator after abolition of

synthesis gas washing equipment, using lean solution, prevention of
environmental pollution due to leakage of lean solution and energy saving are
achievable. The change parts of process are as follows.

- By means of installing low temperature converter (8) between the existing

CO] removal regeneration tower re-boiler (713E4) and gas scrapper cooler
(701E4), reduction of CO, remained in process gas, from the present level of
2.0 % to 0.12 % is attainable.

- Reduction of thermal volume required for regeneration of solution is

achievable, by mixing absorption activation catalyst, anti-corrosion agent and
anti-foaming agent with thermal lean solution in CO] removal equipment and
reducing volume of CO] remained in the gas from the present level of 0.6 %
to 0.2 %. For the purpose of increasing absorption efficiency in CO]
absorption tower (713F1) and regeneration efficiency in regeneration tower
(713F2), internally filled materials are changed.

- After being divided at absorption side of gas compressor 2nd stage (17), process gas
coming from C02 removal equipment is successively introduced into newly installed
methanator pre-heater (12), methanator thermal exchanger (13), mathanator (14), final
cooler (15) and drain separator (16), and synthesis gas is refined by means of converting
remained CO and C02 into methane through methanator reaction. Refined gas is
returned to absorption side of gas compressor 2nd stage together with process gas.

11-57-
 - Compressed synthesis gas in gas compressor 2nd and 3rd stage is supplied
directly to absorption side of gas compressor 4th stage by skipping copper
acetic acid gas refinery equipment. In this process, such copper acetic acid
gas refinery equipment is not used.

With installation of ammonia equipment in each of 2 lines, independent operation of each

line is available. Methanation reaction is a kind of large heat generation reaction occurred
at 190 °C on nickel related catalyst. Although total content of CO and C02 at entrance of
methanator amounts to 0.35 % only, there is an increase of temperature up to 21 °C. In
methanator pre-heater (12), process gas to be sent to methanator is preheated by high
temperature reformed gas coming from HIT (6). Such methanator pre-heater is usable
only at the beginning of raising temperature in methanator , but only heat exchanger for
heat generation in methanator is used after normal operation condition. As H2Q is
generated by methanation reaction, refined gas is divided, after condensed water being
separated by drain separator (16), and returned to absorption side of the existing gas
compressor 4th stage for its movement to ammonia synthesis gas equipment.

b. Addition of HD S

Since natural gas received by NGFF contains a small quantity of sulfur, it is absorbed and
removed in organic sulfur removal tank(l) by activation carbon for preventing poisoning of
nickel related reformed catalyst. As Cu-Zn related low temperature CO conversion
catalyst, extremely sensitive to sulfur, is used in reforming process, reduction of sulfur
contained in process gas to the level below ppm is needed. With installation of HDS (4),
filling CO-Mo catalyst and ZnO, in addition to organic sulfur removal tank before the
process of natural gas supply to reforming equipment, a small quantity of remained sulfur is
removed. Although HDS (4) is newly installed for 1 line, it treats 2 lines’ volume of
process natural gas collectively. After then, such collected gas is divided into 2 parts and
supplied to each of the lines. HDS consists of 2 catalyst filling layers, such as upper and
lower layer. C02-Mo and ZnO are filled in entrance of upper part and exit of lower part,
respectively. After going through the existing organic sulfur removal tank (701 Gl) in the
state of normal temperature, process natural gas absorbs and removes organic sulfur by
activation carbon. And, after being preheated up to 350 °C at first by steam in the
existing process gas pre-heater (701E7) and secondly by HTS exit gas in newly installed
process gas pre-heater (3), it is supplied to HDS (4), adding a small quantity of purge gas
(191 Nm3/H) coming from ammonia synthesis part. In HDS, organic sulfur is at first

converted into sulfuric hydrogen through water addition reaction by Co-Mo catalyst.
Generated sulfuric hydrogen is absorbed into ZnO in lower layer and separated from
process natural gas. Sulfur remained in process gas is reduced to the level below comma

- 11 58
- -
ppm. Process steam and process gas are mixed after water addition desulfurization
process, because of occurrence of H20 + ZnO = Zn (OH)2 reaction. Completely
desulfurized process natural gas is sent to reforming equipment, after being mixed with
steam, heated up to 400 °C by process gas from HTS, in the existing process steam
super-heater(701E3).

- 11 59
- -
 Figure II — 11 Improved Ammonia Process Flow

C02, To Urea Synthesis

Synthesis

Hot Potash Ammonia

Synthesis Unit
COo Removal

Delete
Drain

Coolin;

Water
11-60

Natural
Gas
Reformer
Cooling

Water
Cooling

Water

Process

Natural Gas Notes:STM = Steam

Aqueous
Newly Established Process piping Ammonia
 The name and number of machinery & equipment in process flow after
ammonia equipment renovation in Figure II — 11 are as follows.

1. Activation carbon organic sulfur removal tank (701G1)

2. Process gas pre-heater (701E)
3. Process gas pre-heater (701E)
4. Water addition desulfurization tank (newly installed)
5. Process steam super heater (newly installed)
6. High temperature CO converter (701H1)
7. CO] removal regeneration re-boiler (713E4)
8. Low temperature CO converter (newly installed)
9. Gas scrapper cooler (701E)
10. Drain separator (701G2)
11. Gas compressor 1 st stage (716K1)
12. Methanator pre-heater (newly installed)
13. Methanator heat exchanger (newly installed)
14. Methanator (newly installed)
15. Final cooler (newly installed)
16. Drain separator (newly installed)
17. Gas compressor 2nd & 3 rd stage (716K)
18. Gas compressor 4th stage (716K1)
19. Ammonia scrapper (newly installed)
20. Filter (newly installed)
21. Purge gas raising temperature instrument (newly installed)
22. Diffusion film typed hydrogen separator (newly installed)

c. Collection of hydrogen from synthesis purge gas (Plan - B)

At present, purge gas discharged from ammonia synthesis gas is as follows.

Ar : 4.6 %, Ch4 : 6.4 %

H : 59.3 %, N : 19.7 %, NH3 : 10.0 %,
Flow volume:590 Nm3/h, Total : l,180Nm3/h, Temperature: 40 °C,
Pressure : 350 kg/cm2

Purge gas is now used as fuel in natural gas 1st reforming furnace. In this
collection work, energy saving is attainable by means of collecting ammonia
and hydrogen from this purge. Collected gas from 2 lines is collectively
treated in 1 line of hydrogen collection equipment. Purge gas, discharged from
ammonia synthesis part, is supplied to newly installed ammonia scrapper (19)

- 11-61
 and washed with water cycled by pump. And then, ammonia out of purge gas
is washed and removed. By sending water to urea equipment, ammonia is
collectable. Hydrogen is also separated and collected by diffusion film
method. As diffusion film is, however, affected by liquid drip accompanied
from ammonia scrapper (19) in the process of separation & collection, such
liquid drip is completely removed from gas by filter (20), before hydrogen being
supplied to diffusion film type hydrogen separator (22). In addition, liquid
drip, incompletely separated in filter, is completely evaporated by means of
increasing its temperature up to 50 °C with steam in purge gas raising
temperature equipment (21). In case of temperature being relatively higher,
diffusion coefficient becomes larger and good efficiency is obtainable.
Diffusion film typed hydrogen separator (21) has such structure as bundling
hollow string. In diffusion film typed hydrogen separator (21), hydrogen
penetrates selectively as a main component and other gas components rarely
penetrate. Components of penetrated gas are as follows.

Hz: 92.8 %, Nz : 4.7 %, NH3: 0.0 %, Ar : 11.7 %,% : 0.8 %

Flow volume: 528Nm3/h totally in 2 lines, Temperature: 40 °C, Pressure: 18
kg/cm2

While collection rate of ammonia is almost 100 %, that of hydrogen exceeds

90 %. Collected hydrogen is returned to absorption side of gas compressor
(17) 2nd stage and recycled. Non-penetrated gas, including nitrogen mainly
and more than 30 % of hydrogen and methane totally, is sent to 1st reforming
furnace and used as fuel gas.

2) Improvement of machinery & equipment through maintenance

In NGFF Fertilizer Plant, there are about 300 units of main machinery and the
number of all machinery comes up to nearly 1,000 units. Thanks to
super-annuation, application of maintenance technology is required for all the
machinery, which is targeted for examination in NGFF renovation project. With
extraction of items affecting urea production considerably and items urgently needed
in NGFF Plant, around 200 items were studied carefully together with NGFF ’s
technical staffs. Consequently, such maintenance as mentioned in the following
paragraph (2) 2): Specifications after repair of machinery & equipment has been
determined.

-11-62
(2) Specifications after renovation of relevant equipment in Fenchuganj Fertilizer Plant

1) Specifications of new machinery relating to process improvement

Specifications of new machinery relating to process improvement are shown in

specifications list of the following Table 11—13 Plan A (Abolition of lean solution
washing equipment) and Table 11—14 Plan B (Purge gas hydrogen collection).
Although specifications of civil engineering foundation, steel framework
construction work, electricity, instrumentation, laying pipes, and keeping warm &
painting works are actually needed, they are omitted in this report.

— 11 — 63 —
 a. Improvement of ammonia synthesis gas refinery method (Plan —A)

Table II —13 Specifications list of new machinery in Plan-A

(Abolition of lean solution washing equipment)

Number of Name of Quality of

Quantity Specifications
machinery machinery material

3 Process natural
gas pre-heater
1 body side: multi-pipe cylinder type heat exchanger, TEM-C, BEM, (body
SB, condition) : liquid FITS exit gas, pressure : 6.4 kg, entrance
temperature : 438 °C, exit temperature : 234 °C, (pipe side
pipe side:
STB condition) : natural gas, pressure : 12 kg, entrance temperature:
185 °C, exit temperature : 400 °C, heat transfer pipe : 150
pieces, 3/4", OD : 150 pieces, body : 400 D x 6,000 L

4 Water addition 1 SB legged vertical type cylinder compression vessel, designed

reactor pressure : 8.6 kg, designed temperature : 350 °C, body
diameter; 1940, T-T 6100, upper part Co-Mo catalyst: 6.8 m3,
lower part ZnO catalyst : 4 m3, catalyst layer with support,
catalyst entrance & exit manhole: 4 points, TE : 4 pieces, P : 11
pieces

8 Low 2 SB41B independent vertical cylinder pressure vessel, designed pressure:

temperature 8 kg, designed temperature : 211 °C, body size : 3000
reactor Dx5000T-T, total height : 8100, catalyst upper part : ZnO,
catalyst bottom part: Cu-Zn related LTS catalyst

713F1 C02 absorption 2 existing exchange of fillings, addition of absorption activation agent
tower

713F2 C02 2 existing exchange of fillings, addition of anti-corrosion agent and

regeneration anti-foaming agent
tower

12 Methanator 2 SB/STP multi cylinder type heat exchanger, TEM-C, (body side
pre-heater condition): liquid FITS exit gas, pressure: 6.4 kg, entrance
temperature : 438 °C, exit temperature : 243 °C, (pipe side
condition) liquid C02 removal exit gas, pressure : 19.4 kg,
entrance temperature : 40°C, exit temperature : 190 °C

13 Methanator heat 2 SB multi cylinder type heat exchanger, type: TEM-C, BEM, (body
exchanger side condition) liquid methanator exit gas, pressure : 18.5 kg,
entrance temperature : 211 °C, exit temperature : 60 °C, (pipe
side condition) liquid C02 removal exit, pressure : 19.4 kg,
entrance temperature: 40 °C, exit temperature : 190 °C, body
size : 318.5 x 6,690 L, 4 units

15 Final ccooler 2 SB/STP multi cylinder type heat exchanger, type: TEM-C, BEM, (body
side condition) liquid methanator exit gas, pressure : 18.5 kg,
entrance temperature : 60 °C, exit temperature: 40 °C, (pipe side
condition) cooling water, pressure: 5 kg, entrance temperature :
30 °C, exit temperature : 40 °C, body size : 318.5 D x 6,130 L

14 Methanator 2 SB(Alloy) Type : vertical cylinder, fillings : Ni related methanator catalyst,

size : 1,200 D x 5,270 H

16 Drain separator 2 C/S Type : vertical cylinder with wire mist caatcher, size : 318.5 D x
2,650 H, temperature: 40 °C, pressure : 19 kg

— II — 64 —
 b. Collection of hydrogen and ammonia from ammonia synthesis purge gas
(Plan-B)

Generally, equipment for collection of hydrogen and ammonia from ammonia

synthesis purge gas, is supplied by vendor as a package, including all of the
following equipment on skid, after completion of laying pipes and painting
works. Local works are, therefore, limited to their connections with the
existing pipes.

Table 11 — 14 Specifications list of new machinery in Plan-B

(Purge gas hydrogen collection)

Number of Name of Quality of

Quantity Specifications
machinery machinery material
19 Ammonia 1 SB/STPC Capacity : entrance gas volume : 1,180 nm3/H, ammonia synthesis
scrapper gas ccomposition : H2 : 59.3 %, N2 : 19.9 %, NH2, 10.0 %,
Ar:4.6 %, CH4 : 6.4 %, pressuree : 110 kg/cmG, entrance
temperature : 33 °C, equipment : ammonia removal by pressure
reduction and washing, auxiliary equipment: water cycle pump
and water surge pump are included.

20 Filter 1 SB(C/S) disposal gas volume : 1.180 Nm3/H, Temperature : 33 °C,

pressure .110 kg, temperature : 33 °C, pressure .110 kg, Mist
from ammonia scrapper is separated and removed.

21 Purge gas 1 SB/STP multi cylinder type heat exchanger, type : TEM-C, BEM, (body
raising side condition) liquid steam, pressure : 2 kg/cm2G, entrance
temperature temperature : 120 °C, (pipe side condition) : purge gas, pressure
instrument 110 kg/cm2G, entrance temperature : 33 °C, exit temperature :
50 t

22 Diffusion type 1 body BS entrance gas volume: 1,062 Nm3/h, entrance pressure : 110
hydrogen hollow kg/cm2G, temperature : 50 °C, hydrogen collection rate : more
separator string than 90 %, collected hydrogen pressure : exceeding 18 kg/cm2G
diffusion
film
filling,
capacity

2) Specifications of machinery & equipment relating to maintenance

a. Repair specifications of machinery & instruments relating to Ammonia Plant

1. 716K.1 Synthesis eas compressor (snare parts & equipment) required quantity : for 2 units Spare parts
- Piston ring 2 sets
- Piston rod 1 set
- Piston 1 set
- Cylinder liner 1 set
- Valve plate 200
- Valve spring 1,000
- White metal bearing 2 sets
- Metallic packing 2 sets

-11-65-
2. 716 K2 Process air compressor (spare parts & equipment) required quantity : for 2 units
- Installation of new oil filter in exit side process line
- Installation of 1st and 2nd filter for removal of mist in lubricating oil
- Set-up of elements in each filter as spare parts
3. Cooling water pump (manufacturing & exchange) required unit: 1 unit pump specifications
- Type : centrifugal pump,
- Disposal liquid : cooling water,
- Capacity : 500 m3/h,
- Pressure : absorption pressure =11.0 kg/cm2G, discharge pressure = discharge 2.0 kg/cm2
- Temperature :25
- Seal type : grand packing method,
- Quality of material : body-cast iron, shaft-carbon steel,
Motor : motor 18.5 KW x 6 P x 400 V
4. 716K2 Process air compressor (manufacturing & addition) required unit: 1 unit
A. Compressor type
centrifugal type compressor
B. Summarized specifications
compressor : 4 stages
disposal wind volume : 6,000 Nm3/ discharge pressure : 8.5 ATG
axis driving force : 675 KW
electromotor : 750 KW x 2P x 3,300 V x 3 4> x 50 Hz,
C. Accessories
inter-cooler, after-cooler lubricating oil equipment, laying pipes, a set of instrumentation, common
holder
D. Spare parts (for 2 years operation)
bearing, axis seal, filter-element, O ring, gasket
5. 717H 1 Ammonia synthesis basket (manufacturing & exchange of catalyst and others)
required unit: 1 unit
As its efficiency decreased and maintenance became difficult, due to its structure, in which exchange of
catalyst is unavailable, a new basket (filled with catalyst) is manufactured.
6. Non-activated gas generator (Installation of new equipment) Required unit: 1 unit specifications
- N2 gas generation flow volume 200 Nnr/h
- Product N2 gas ccompsition N2+ Ar = 99.9 vol %
- Operation time 8 h/day
- Composition method air compressor + air dyer + N2 gas generation equipment
- Composition equipment Except the above, receiver tank (about 1 m3), laying pipes
electricity, a set of new product
- Motor for compressor 100 Kw x 400 V x 3 0 x 50 H
Fitting area : About 12 m Lx3mWx4mH

11—66 —
 b. Repair specifications of machinery and instruments relating to Urea Plant

1. 402 K1 A. B. C air compressor (manufacture & exchange) exchange quantity : for 2 units
Design specifications:
-Type : multi stage piston type
- capacity : 40Nm3 /h air
- absorption pressure : 1 kg/cm2, discharge pressure : 325 kg/cm2
- design temperature : 0-35 U
Machinery specifications :
-type : horizontal, 5 stages, oil lubricating method
- number of rotation : around 360 rpm
- driving force transmission : V-belt driving
- base : common base
- quality of material : gas contact part-steel, piston-aluminum, piston rod-steel
- motor : 22 kw x 400v x 50HZ
Accessories:
- heat exchanger
- oil separator, measure (thermometer, cooling water flow volume controller, oil flow volume meter,
etc)
- absorption filter : spare instrument: 4 sets each
2. 401E6 CO? 3 stage 1st discharge cooler (manufacturing & exchange) 1 set
This machine is considerably damaged due to corrosion. Its exchange for newly manufactured
machine is needed.
3. 402J 1 A. B. C liquid ammonia sunolv oumn (snare Darts & equipment) Required quantity : 13 units
Machinery specifications :
- Type : fixed speed stroke, plunger type
- temperature : entraance-16—38 °C
- prressure : entrance-18—20 kg/cm2, exit: 250 kg/cm2G
Spare parts :
- packing: type : V type, material-Teflon, quantity: 1000 size : 3-3/8” OD x 2-3/8” ID
- spacer Quality of material: SUS-304 quantity: 30 pieces
- adapter : (male, female) Quality of material : SUS-304 quantity : 30 pieces each
4. 402H1 A. B. C urea synthesis tower (spare parts & equipment)
Machinery specifications :
- size : 1,000 $ x 12,000 h x 150 t,
- type : multi layer vertical cylinder type, inside surface: SUS 316 L lining
- entrance temperature : 100 °C, exit temperature : 185 °C, entrance pressure: 250 kg/cm2G
Spare parts :
- quality of material : upper part lining, size: 2,000 W x 4,000 L x lOt,quality off material : SUS 316L,
quantity : 16 pieces, (Cleaning and treatment for anti-transmission are needed.) -spare parts for
AL-gasket -4 sets
- manufacturing of new top cover, quality of material : SUS 316L, quantity : 1 set
- 2-1/2” stud bold, quality of material SUS-316 : quantity : 32 pieces
- 4” corn liner, quality of material : 1 set
-reducer : quantity : 3 sets
5. 402 FI Excessive ammonia condenser (procurement of materials & repair at plant site)
It is in danger, owing to reduction of thickness caused by corrosion. Procurement of new lining
material and welding work at plant site are required.
Procurement of materials :
quality of material : SUS 316L, size: 1,000 W x 3,500L x 44 t, quantity : 27 pieces
6. 403E4 Evaporator middle condenser (manufacturing & exchange) 3 units
It is in danger, due to damage attributable to corrosion. Manufacturing of new shell and tube bundle
and their exchange for the existing equipment are needed.
7. 403G4 Urea surge tank (procurement of material and manufacturing at plant site) 3 units
Repair is required frequently due to corrosion of body, made of AL material. Procurement of stainless
material and repair at plant site are needed.
Procurement of material:
Size : 1,000 W x 3,000 L x 10 t, quality of material: SUS-304, quantity : 20 pieces
8. 405E Regeneration tower boiler (manufacturing & exchange) 1 unit
It is damaged considerably due to corrosion. Shell is newly manufactured by use of clad steel.
(Stainless material lining was originally planned, but application of clad steel has been decided, in view
of accuracy in execution work)
9. 405 FI Absorption tower stopper (procurement of material & works at plant site)
It is damaged considerably owing to corrosion. Procurement of material and lining work at plant site
are needed.
Procurement of material:
Size : 1,000 W x 3,200 L x 3 t, quality of material : SUS-318L, quantity : 15 pieces per units, 30 pieces
in total for 2 units
 c. Repair specifications of machinery & instruments relating to power plant and
other equipment

1. Steam turbine for power plant (spare parts & equipment) 3 units
A. Specifications of turbine :
- type : double automatic air extraction/ condensation method
- capacity : 12,000 KW
- number of rotation : 3,000 rpm
B. Spare parts for sealing material (for 2 units)
- For ground of governor side
- For inter-ground of high, middle, low temperature sides
- For ground of motor side
- For close-off plate
C. Spare parts for blade (for 3 units)
- High pressure curtis stage (2 sets)
- Shroud (2 sets)
- coking piece, stripper pin (1 set)
2. Blade for cooling water tower (manufacturing & exchange) 1 unit
Specifications of cooling tower :
- Capacity : 3 x 3,350 m3/Hr (3 compartment)
- Fan : absorption type
- driving force : 55 KW x 4 P
Procurement of spare parts :
procurement o new fan (with boss), quality of material : 4 units corresponding to FRP ,
quantity : 4units of fan with 4 pieces of blade
3. High pressure water supply pre-heater (manufacturing & exchange) 3 units
It is damaged due to corrosion and frictional wear. Manufacturing of tube bundle and its exchange are
needed.
Specifications of tube bundle :
- Type : horizontal cylinder type, U-typed pipe
- heating tube : 5/8” x 18 BWG x 3,450L x 65m2, quality of material : maritime use
(BFTF3)
- stay rod, tube support, body, flange ( made of copper), A set of channel inside accessories are
included.
4. Pure water equipment blower (procurement & exchange) 3 units
Its operation is unavailable due to corrosion. Manufacturing of new anti-corrosive blower is needed.
Specifications of equipment:
Capacity : 42 NmVmin. x 60 mm Ag x 1.5 KW, quality o material: FRP
5. Warm water pump (renovation)
The existing pump is poor in its capacity. Although design capacity is 5,000 m3/h x 16 (H) m x 300
KW, 25 m of capacity increase is required. By its renovation, increase of capacity up to 3,000 m3/Hr x
21 (H) m is achievable.
Points of renovation:
- The existing casing is re-used.
- Increase of capacity is attainable by means of manufacturing new rotary body (main axis and fan
caster).
- As accessories, liner- ring and wear- ring are also manufactured.

— II — 69 —
 d. Repair specifications of instrumentation and analyzer

1. (715) CO & CO? analvsis meter (procurement & exchange) 2 sets

2. AE-AR-702-2 Sulfuric hvdrogen analvzer (procurement & installation) 2 sets
gas extraction equipment, H2S detector
3. NH? gas record analvsis meter (procurement & installation)
A. AIT-717-4 (instruction/transmitter) 2 sets
Type : ER131, 1 P, NH3 graduations : 0-20 %
B. AR-717-4 (record/receiver) 2 sets
NH3 graduations : 0^20 %
C. AIT-717-3 (instruction/transmitter) 2 sets
ER131 1 P, NH3 graduations, : 0~10 %
D. AR-717-3 (record/receiver) 2 sets, NH3 graduations : 0"-10 %
4. Smoke channel oxygen analyzer (procurement & installation) 1 set
After extracting smoke channel gas from smoke channel by use of absorber and passing it through
drain separator, oxygen analysis and measurement are made.
5. (717) Svnthesis gas H?/N? ratio measure (procurement & installation)
Type: gas specific gravity measurement method
- Non-anti-explosion type gas density measurement converter 2x2 sets
- Anti-explosion type gas density measurement converter 2x2 sets
- Flow volume set-up instrument 2 x2 sets
- CDW cable, etc 2x2 sets
- Pressure reduction valve for bombe 4x2 sets
6. (713) Procurement of new CO? analvzer 1 set
7. (402K1) Air compressor discharge volume record/ alarm device
(procurement & installation)
3 sets
A. FIT-402-4, output: 0.2"-1.0 kg/cm2
B. FRA-402-4, recorder, pressure switch
8. (402141) CO? flow volume record adjustment equipment for
CO2 sent to urea svnthesis tower (procurement & installation) 3 sets
A. FIT-402-2, output: 0.2~1.0 kg/cm2
B. FRA-402-2 recorder, adjuster, operation instrument pressure switch
9. (402H1) Urea svnthesis entrance pressure record adjustment
equipment (procurement & Installation) 2 sets
PCV-402-14, diaphragm adjustment valve (air operation), positioner for the above valve, 3 sides
electromagnetic valve, pressure switch
0. JCV for pure water equipment (procurement & exchange)
Type : butterfly valve, quality of material: cast iron (rubber lining) 45 sets,
diaphragm valve 60 sets,
manually-operated valve(material quality: cast iron + rubber lining) 66 sets
11. Procurement of PH meter lset
12. Silicon analvzer (procurement) lset
 e. Repair specifications of spare parts & machinery for electricity equipment

1. Compensator (equipment & exchange) 1 set

Specifications : 1st voltage : 3.3 kw x 50 Hz
2nd voltage : 2.474-2.15- 1.815 kv x 50 Hz
2. Compensator (equipment & exchange) 1 set
Specifications : 1st voltage : 3.3 kv x 50 Hz x 3 (p
2nd voltage : 19.5 kv x 50 Hz x 3 0
capacity : 6,500 KVA
3. Compensator (equipment & exchange) lset
Specifications : 1st voltage : 3.3 kv x 50 Hz x 3 <j>
2nd voltage : 19.5 kv x 50 Hz x 3 0
capacity : 1,700 KVA
Vacuum circuit breaker (equipment & exchange) 3 sets
Specifications : electric current = 1,200 A x 3.6 kw
capacity : 250 MVA x 50 Hz, with base
5. Vacuum circuit breaker (equipment & exchange) 1 set
Specifications : electric current = 600 A x 3.6 Kv
Capacity : 250 MVA x 50 Hz, with base
5. (716K1) Substitutable reactor for synthesis gas compressor (equipment & exchange) 1 set
Specifications : 82 KVA x 87 A x3 <f>, 3,500 kw x 3,300 V x 50 Hz
7. (716K2) Substitutable reactor for air compressor (equipment & exchange) 1 set
19.5 KVA x 21.6 A x 3 0,820 kw x 3,300 V x 50 Hz
8. Motor for ammonia refrigeration compressor: 1 set
High- pressure motor (400 kw) is unworkable due to insulation trouble. Procurement and
exchange of starter coil are required. Quantity of coil: Fitting to 12 units of machine is made
by NGFF.
?. Motor for energy use (manufacture & exchange) 1 set
Based on manufacturer’s opinion that fitting of exciter for this motor is unavailable at plant site,
manufacture of new motor is needed.
Specifications of motor:
-capacity : 1,250 KVA x 3.5 KV x 50 Hz x 1,000 rpm
-exciter : RHEO statistic automatic voltage adjuster
-accessories : AVR single body (automatic voltage adjuster)
-manufacture quantity : 1 unit
 f. Repair specifications of other off-site equipment

Construction machine & machinery plant equipment

1. Radical drill machine (Darts manufacture & eaumment) 1 unit
Thanks to poor drill support, poor connection and vibration, repair is required. Since
manufacturer stopped production of this typed machine, there is not any division of design,
manufacture and services. Examination, such as analysis, inspection and sketch, by expert
delegated to plant site is needed.
2. Tools for milling machine (procurement) 1 set
endmill : 1 mm $ ~30 mm (1 mm pitch) with milling chuck, drill: 1 mm $ ~32 mm(l mm
pitch), micrometer : outsside-50~75 mm, inside-50^75 mm
3. Folk-lift (procurement) 1 unit
Specifications of machine :
Type : diesel engine car (48 kw), capacity: 3 tons, double mist: 3 m, folk : standard type
Pipe vendor (procurement) 1 unit
pipe 70 OD x 40 ID processing is available.
Type : reciprocating oil pressure cylinder (by motor type pump) stroke-350 mm,
manually-operated exchange valve method, vendor diameter : 1.5 m x 1 set, 2.5 m x 1
set
5. Welding cutting machine (procurement)
A. DC/ARC welding machine 2 sets
Regular electric current 300 A, (input: V x Hz = 400 V x 50 Hz),
welding cable 20 m with hand-holding torch
B. AC/ARC welding machine 5 sets
Regular electric current 300 A (input: VxHz = 400 V x 50 H z)
welding cable 20 m with hand-holding torch
C. TIG welding machine 1 set
Regular electric current 300 A
welding cable 8 m, gas regulator
D. Plasma cutter (air compressor, without accessories) 1 set
Regular current 70 A, cutting torch
Cable 10 m

-11-72-
 g. Analyzer and other instruments for laboratory

(Note : Voltage of all electric instruments: 110V/220V, 50/60 Hz AC)

1. Weighing scale:
A. digital scale (Max.200 gr.) 2 sets
B. upper balance (Max.3,000 gr.) 1 set
2. pH meter (digital type) 1 set
3. Transmission meter (digital type) 1 set
4. Spectro-photometer (digital type) 1 set
(Silica, steel, sulfide, hydrazine, ammonia, bullet, others)
5. Frame-photometer (for natural gas) lset
6. Gas chromatograph
A. Gas chromatography (with TCD) 1 set
(Process gas, For measurement of H2,N2,CO ,C02,CH4~C6Hi4, etc)
B. Gas chromatography (with FID) 1 set
(Process gas, For measurement of CO, C02, methanol and others
in condensed water at the level of ppm)
7. Karlfisher water drip measure (measurement for water in urea) 1 set
8. Jar tester (with 6 paddle mixer) 1 set
(For measurement of optical medicine additive in flocklation)
9. Electric dry oven (by 350 °C) 1 set
(Temperature adjuster is needed.)
10. Low temperature incubator 1 set
(temperature range:-10 °C to 50 °C)
11. Vibrating sifter machine 1 set
(with different size of sifters)
12. Muffle electric furnace (Max. temperature : 1,100 °C) 1 set
(with temperature adjuster)
13. Coefficient of viscosity group
(For moving coefficient of viscosity and red wood) 1 set each
14. Flash point tester (For lubricating oil) 1 set
15. Yellow sulfur analyzer 1 set
(Measurement for H2S, COS and mercaptan in natural gas at the level of ppm)
16. Bombe calorie meter 1 set
(For measurement of sulfuric compound)
17. De-ionization meter (For highly purified water) 1 set
18. Distilled water production equipment 1 set
19. Mixer (For crushed solid matter) 1 set
20. Electromagnetic mixer & hot plate 1 set
21. Vacuum pump 1 set
22. Portable air compressor 1 set

11-73-
2.5 Scope of Funds, Machinery & Equipment and Services to be Provided
Mutually in the Project Implementation

For thee purpose of materializing the project for energy saving and environmental measures
in NGFF Fertilizer Plant at the earliest convenience through its combination with COM, joint
execution of necessary business was ascertained among BCIC, NGFF and our investigation
team. Partial responsibility of each party was determined as follows.

(1) Scope of machinery & services to be provided on the side of Bangladesh

1) Working stage for materialization of thee project

Bangladeshi parties are expected to take steps to ask for the Government’s approval
on project implementation and obtain its agreement. In respect of funds required
for project implementation, the parties are anticipated to ask for Japanese
Government for finance by means of combining the project with COM and take
necessary steps to obtain such funds. Itemized descriptions areas follows.

0 Communication, negotiation and adjustment business with Bangladesh

Government for project implementation as well as acquisition of the
Government’s approval.
(2) Acquisition of Bangladesh Government’s approval for their approach to Japan
in respect of finance required in the project.
(3) Provision of technical data on equipment and operation in NGFF Fertilizer Plant
to cooperate with Japan in their preparation of technical data required for
various application procedures in Bangladesh.
0 All procedures required in the companies, Bangladesh Government related
agencies’ procedures and applications relating to the project
@ A series of procedures and conclusion of loan agreement, relating to borrowing.

2) Execution stage for the project

0 Application and acquisition of approval for tax exemption or tax breaks of
import duties and VAT relating to goods imported from overseas.
(2) Provision of cooperation and different kinds of services required for obtaining
Bangladesh’s visa or cooperate qualification needed in domestic activities in
respect of project implementation.
 (3) Provision of technical documents of basic design data and the existing
machinery & equipment.
® Procurements of machinery, materials and various works, and also those of
machinery and materials manufactured domestically in Bangladesh in respect of
project implementation.

(2) Scope of machinery & services to be provided on the side of Japan

Japanese party (principal executor for this investigation) cooperates with Bangladesh in
preparing technical data required for Bangladeshi parties’ obtaining their Government
approval and providing such data with them. Also, Japanese party prepares technical
data needed for Bangladesh’s steps of financial application to Japanese Government and
provides different kinds of support services required until determination of Japanese
loan. With paying attention to development of international discussion on realization of
CDM in the future, under the present situation that actual implementation method of
CDM is still unclear, Japanese party is under preparation for providing Bangladesh
successively with information acquired by Japanese side. Itemized descriptions are as
follows.

1) Working stage for materialization of the project

Japanese party provides with the following services.

CD Communication, negotiation and adjustment business with Ministry of Industry

BC1C and NGFF Fertilizer Plant in respect of project implementation.
(2 Communication and adjustment business with Japanese Government reiatec
agencies in respect of this basic investigation and project implementation.
(3) Systematic support work in Bangladesh’s structuring for raising funds fron
Japan in respect of project implementation.
© Cooperation in preparing technical data required for Bangladesh’s various
application procedures.
(5) Provision of information acquired by Japanese side through international
discussion on realization of CDM.

11 — 75 —
 2) Execution stage for the project

Japanese party provides the following matters.

(D Detail plan and detail design of machine & equipment to be planned, based on
the project and Japanese technology.
(2) Design support for other machinery & materials relating to the project.

(3) Technical support for other machinery & materials to bee procured outside
Bangladesh.
© Technical guidance for certain period after completion of the project.

© Support for CO2 reduction volume monitoring.

2.6 Preconditions and Points at Issue in Project Implementation

(1) Funding

Both of BCIC and NGFF don’t have capacities for bearing funds required for project
implementation. It is, therefore, precondition that such funds are provided from Japan.
In addition, BCIC and NGFF are desirous of receiving funds as grant. In case of soft
loan except grant, it depends on financial conditions, such as interest rate and repayment
period. The values for services provided by BCIC and NGFF in local works are to be
counted as a part of principal builder ’s financial burden, if provision of funds on the side
of principal builder is required. Also, adjustment on diversion of a part of ADP fund
provided for NGFF ’s rehabilitation work Phase II to principal builder’s financial burden
is needed

(2) Effectuation of CDM and its procedures

As for the purpose of CDM agreed in COP3 held at Kyoto in 1997, its definite
implementation method was not consented in COP6 conference held at Hague,
Netherlands in October 2000. Japanese Government decided, however, to contribute
another one billion of fund to “Global Environment Facility”, consisting of 9 advanced
countries, such as Japan and the United States. Necessary procedures for project
targeted in CDM and trade conditions for CO2 reduction volume after project
implementation are to be immediately clarified. NGFF is in urgent need of
implementing rehabilitation for energy saving and CO2 reduction effect as well as
prolong-ment of equipment’s life.

-11-76-
(3) Bangladesh Government’s attitude

Bangladesh Government ’s preparation of implementation organization in CDM project

is urgently required. Despite Ministry of Environment and Forest ’s positive effort for
CDM ’s effectuation through participating in CDM externally, there is not a complete
understanding on the purpose of CDM and collective view in Bangladesh Government.
Bangladesh has not reached, therefore, its final stage to ratify Kyoto protocol of COPS.
According to Ministry of Environment & Forest, it is expected to organize task team in
the Government immediately for ratification of protocol and establishment of
organization, receiving CDM project. Based on our explanation with Ministry of
Industry, business promoter, in respect of CDM ’s purpose, the Ministry deepened its
understanding. Both of BCIC and NGFF promised us for taking necessary actions to
obtain consents on project implementation in combination with CDM from relevant
departments in the Government. Meanwhile, Japanese investigation team pledged
themselves to cooperate fully with Bangladesh in provision of soft loan, such as Yen
Credit, from Japan.

(4) Production cost and sales price of urea

Bangladesh Government is required to solve NGFF ’s management in the red by
reducing politically price of natural gas supplied to NGFF or adopting free price system
for sales price of urea product. In thee case that NGFF is maintained politically under
deficit management, introduction of suitable amount of fund is needed. Such deficiency
is due to increase in fuel natural gas price and low price of urea product pegged by the
Government for the past several years. Compared with international price, 6,000 Taka
of urea production cost per ton in respect of 50 kg bagged product is not costly. If urea
product is salable at import price, NGFF is able to gain sufficient income.

Depending on low cost aid fund from overseas in natural gas development, the
Government was successful in lowering gas price politically. Thanks to shortage of
electricity caused by increase of its demand, additional construction of power station and
development of natural gas to be supplied to such power station become necessary.
Reflecting the Government ’s introduction of foreign fund under product & sharing
contract, natural gas price began to rise up to the level of international price. Since urea
product price is of importance for lowering rice price, the Government decided 4,000
Taka of urea price per ton in respect of 50 kg bagged product as control price which has
been kept for the past several years. With the above measure, rice price is stable in such
low price as around 15~20 Taka (30—40Yen) per kg. NGFF ’s payment to gas supply
company is in arrears due to accumulated deficiency, and gas supply company gives a
warning of stopping gas supply, unless gas rates in arrears are settled.

11-77-
(5) Operation guarantee for minimum 10 years

According to Bangladesh Government’s policy, NGFF ’s operation is expected to

continue for at least 10 years after completion of the project. Payback of investment
fund for the project and total CO2 reduction volume in 10 years are, therefore, attainable.
With regard to economic calculation on investment fund for the project, its economic
efficiency has been ascertained in each item of implementation, such as process
improvement and rehabilitation, on the assumption that the project’s life comes up to 15
years.

(6) Technical problem

From technical viewpoint, there is not any particular question. Close attention and
security are required to maintain usual operation during the period of local works. To
minimize opportunity loss, such device as adjusting the process of connecting work for
process improved parts in parallel with other works in short term is needed.

2.7 The Project’s Implementation Schedule

Details of business and schedule until materialization of the project (See Figure 11—12)

The project’s implementation is projected in 3 phases.

1) 1st Phase: Until adoption of the project

0 Procedures required mutually in the offices for the project’s materialization and
preparation of basic memorandum.
® Negotiation and conclusion of the above basic memorandum.
(3) Preparation of basic plan for CDM project.

® Application for the project to Bangladesh Government related agencies.

(5) Application for finance ,such as ODA Environment Special Yen Credit, to
Japan.
© Technical support relating to the above application.

© Communication, negotiation and adjustment business with Bangladesh

Government (Ministry of Industry and Ministry of Environment & Forest, etc)
in respect of the project.
® Communication and adjustment business with Japanese Government related
agencies.

11-78-
 (9) Application for tax exemption or tax breaks of import duties and VAT in
Bangladesh.

2) 2nd Phase: Until completion of commissioning after adoption of the project ’s

implementation
The period of 16 months is required until completion of commissioning after
adoption of the project’s implementation.

(D Conclusion of loan agreement.

(2) Conclusion of construction contract.
(3) Detail plan and design for machinery & materials.

@ Procurement business for machinery & materials.

© Loading & transport business (marine transport, custom clearance in
Bangladesh, domestic transport in Bangladesh).
© Construction works at plant site(concrete foundation work, machinery
installation work, spare parts exchange work and repair & inspection).
© Construction commissioning.
® Guidance on maintenance & inspection method for machinery & equipment.

3) 3 rd Phase: After completion of construction commissioning in the project

© Monitoring and evaluation on CO2 reduction volume.
© Monitoring and evaluation on energy saving volume.

® Implementation of environmental assessment.

Based on the above businesses, the whole schedule in the project ’s implementation
is shown in Figure 11—12.

Since definite implementation method of CDM for greenhouse gas reduction is not
agreed internationally and the policies of both of Japanese and Bangladesh
Governments are not yet decided, it is not good timing at present to set up
implementation schedule, based on calendar year. Particularly, conditions, timing,
and period required for lender’s review and examination on the project ’s F/S are not
clarified at all. On the condition that 14 months are needed for the period from
commencement of procedures in the offices through effectuation of the project ’s
construction contract, the process for the period until commissioning completion
after effectuation of the project’s construction contract is drawn up accordingly.

Until completion of renovation work, 16 months from effectuation of contract and

commencement of design work and 9 months from commencement of local works,
such as inspection on the existing machinery & equipment, exchange of spare parts
and preparation & repair, to completion of new process machinery installation are
required, respectively. In respect of training, teaching on maintenance &
inspection method for machinery & equipment is made at plant site under guidance
of instructors to be delegated from Japan.

Monitoring and evaluation for CO2 reduction volume and energy reduction volume
as well as implementation method of environmental assessment are clarified at the
stage of final conclusion of international agreement. This project is promoted in
accordance with agreed method and 2 months are required for the project’s
completion after finishing of local works.

-11-80
 Figure 11-12 The project’s implementation schedule
Partial Necessary month
Phase Item responsibilit
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32
y of the work
Procedures mutually required in the
KSL/NGFF
offices. Preparation of basic
Negotiation and conclusion of basic m
KSL/NGFF
memorandum
Preparation of basic plan for joint mm
KSL/NGFF
implementation project
Application for the project to m
NGFF
Bangladesh Government related
1

Application for finance, such as ODA, Gavament of

Phase

to Japan Bangladesh
Technical support relating to the above Adoption of the
KSL/NGFF project s ’
application. Communication
negotiation and adjustment business \7
NGFF
with Bangladesh Government (Ministry
Communication and adjustment
KSL
business with Japanese Government
Conclusion
Application for tax exemption of tax
NGFF of
breaks of import duties in Bangladesh
11-81

Conclusion of loan agreement

NGFF
, Cn f
Conclusion of construction contract \Am,
Japan/NGFF
\7
1 Effectuation of
|
Detail plan and design for machinery &
Japan
materials
Procurement business of machinery & (Japan) /
Phase 2

materials NGFF
Loading & transport business (marine
NGFF
transport (marine transport, custom
Local construction works foundation
NGFF
work, machinery installation work.
Construction commissioning
Japan/NGFF
rare
Guidance for maintenance and repair &
Japan .....
inspection on machinery & eouioment
Monitoring and evaluation on C02 Japan/NGFF
reduction volume
Phase 3

Monitoring and evaluation on energy

Japan/NGFF
saving volume
Implementation of environmental
Japan/NGFF
assessment

(Note) NGFF means Fenchuganj Fertilizer plant and is inclusive of BCIC and Ministry of Industry, its upper organization. Meanwhile, KSL is principal executor for this project.
3. Materialization of Financial Plan

3.1 Financial Plan for the Project’s Implementation

(Amount of Necessary Fund, Fund Raising Method, etc.)

(1) Amount of necessary fund

The fund required in thee project amounts to approximately 2 billion Yen (19 mullion US
$ ). Detail a and preconditions are indicated below.

The results of summarizing capital expenditures in this renovation project are shown in
Table II —15. In this summary, the following matters are taken into account.

(D In view of situation that NGFF is a government body and this project is materialized
on the basis of aid fund from overseas, exemption of import duties for materials
imported from overseas appears available and they are not posted in our estimation.
® The following exchange rate is adopted.

1 US$= llOYen =54 Taka

(3) Since delegation of consultants from Japan is strongly desired by our customer,
expenses for delegation of consultants are posted.
® Expenses for domestic transport, domestic engineering and installation are estimated,
by targeting NGFF and local companies.
© As necessary fund for the project, addition of interest payable for construction period
in accordance with borrowing condition is needed. Also, expenses before startup of
operation and working capital at the beginning of operation startup are required in
usual project. As the project aims at renovating the existing plant, raw materials, fuel
and utilities are not posted particularly, assuming that they are prepared sufficiently
for daily operation.

11-82-
 Table 11—15 Summarized budget
unit yen
Marine &
domestic
No. Section Amount Packing FOB cost Installation Total
transport
cost
1 Ammonia section 693,460,170 20,803,805 3,467,301 70,732,937 138,692,034 927,156,247
2 Urea 106,537,700 3,196,131 532,689 10,866,845 21,307,540 142,440,905

3 Power plant 169,304,150 5,079,125 846,521 17,269,023 33,860,830 226,359,649

4 Demi-section 22,155,000 664,650 110,775 2,259,810 4,431,000 29,621,235

5 Water preparation 16,569,000 497,070 82,845 1,690,038 3,313,800 22,152,753

6 Repair shop 54,248,280 1,627,448 271,241 5,533,325 10,849,656 72,529,950

7 Repair shop 95,025,000 2,850,750 475,125 9,692,550 19,005,000 127,048,425
8 Electricity equipment 123,690,000 3,710,700 618,450 12,616,380 24,738,000 165,373,530
9 Heavy machine 2,625,000 78,750 13,125 267,750 525,000 3,509,625

10 Laboratory 26,513,550 795,407 132,568 2,704,382 5,302,710 35,448,616

11 Local engineering 50,000,000 0 0 0 0 1950,000,000

12 Consultant 300,000,000 0 0 0 0 300,000,000

1,660,127,850 39,303,836 6,550,639 133,633,041 262,025,570 2,101,640,935

us$ 19105827

(2) Method of fund raising

Since Bangladesh has not internal reserves for the project’s construction fund
particularly, the total amount of required fund is raised through BCIC’ s head office.
BCIC’ s head office is desirous of raising fund on most favorable conditions in volume
and borrowing cost. While BCIC has to rely aid fund from borrowing from overseas for
foreign fund, borrowing from the Government (Ministry of Finance) is available for
domestic fund portion.

3.2 Prospect for Fund Raising

(1) Possibility of fund raising

As the result of discussion with BCIC and JBIC, thee following 3 cases are considered at
present.

(D Yen Credit to be provided by Japan

(2) Gratuitous fund for remedy of financial obligation
(3) Fund on the former EXIM base

-11-83-
 According to opinions of persons concerned in JBIG and others, ® and (2) are
appear to be most practical, and details are mentioned below.

CD Yen Credit to be provided from Japan

With regard to loan commitment, made by Prime Minister Mori last year, including
Lupsha bridge construction project in the amount of 80 million US$, Haripur rural
district infrastructure development project in the amount of 40 million US$, Kaputa
hydraulic power plant expansion project in the amount of 20 million US$ and Rural
District Electrification Bureau’s 13 billion US$ project, relevant loan agreements
are in progress. Although Bangladesh is not treated as annual recipient country,
there is a possibility of receiving aid fund from Japan once in every 2 or 3 years.

The financial conditions of these loans were as follows.

Interest: 1 %, Grace period : 7 years, Repayment period : 25 years,

In case of Special Yen Credit and Environment Yen Credit to be provided specially
as Yen Credit, such favorable conditions as Interest: 1%, Grace period: 10 years.
Repayment period: 40 years, are applied. Since application of such favorable
conditions for this project is not foreseeable, calculation on returns in this
investigation is made on the basis of common Yen Credit

® Gratuitous fund for remedy of financial obligations

As such gratuitous fund is now on hand in Bangladesh, it seems to be suitable for

this type of small size project, in which machinery & equipment account for
project’s major element. The parties are required to do their best, since there is an
order of priority in Bangladesh. According to Bangladesh Government’s document
delivered to relevant agencies (Public Corporation, etc), the borrowing conditions
are as follows.

A borrowing institution is needed to deposit cash, equivalent to 25 % of loan, and

the remaining 75 % is loaned at 0.25 % of interest rate.

(3) JBIG fund (the former EXIM fund)

In 2 types of credit, such as suppliers credit and buyers credit, the followings are
usual conditions.

-11-84-
 Down payment : 5 %, Repayment period : 7^10 years (Max.) on deferred payment
method.

Interest : Yen denominated loan-CIRR (1.9 %) + premium, Dollar denominated

loan-CIRR (6.2 %) + premium

Since solution of question how to arrange down payment portion as well as bank
guarantee required for borrowing is needed in this fund, its utilization seems to be
difficult.

(2) BCIC’s attitude

BCIC’ s responsible person expressed the following opinion at the time when JBIG’
intention was reported by us.

He had a strong interest in this project and, in consideration of the following matters,
intended to ask Japanese Government for provision of Yen Credit by advancing order of
priority in Bangladesh immediately after completion of this report.

- This report would be in line with CDM’s purpose and also acceptable to NEDO.
- Credit line set forth in loan would remain within 2 billion Yen.

Meanwhile, gratuitous fund, another choice, would be studied as domestic matter in

Bangladesh.

(3) Principal executor’s (Kobe Steel, Ltd.) attitude

In the case that details of CDM’ s rule is determined and value assessment becomes
available after ratification of international agreement, Kobe Steel, Ltd is able to
materialize its plan for making investment of fund and technology and bearing expenses
on the basis of CDM scheme as a principal executor. Under the present circumstances,
it is, however, impossible.

11 85
- -
4. Matters Relating to Joint Implementation Conditions

4.1 Adjustment Matters with the Targeted Country for Materialization of CDM,
Including Provision of the Project’s Implementation Conditions and Share
of Business Responsibility in View of Actual Situation in the Project’s
Execution Sight.

As conclusion of Chapter 2-6 “Preconditions and points at issue” is considered as

precondition for implementation of CDM and adjustment is needed in parallel with
development of international agreement on CDM, including establishment of monitoring
system, provision of relevant information is required at all times. The indication of
conditions from the counterpart country has not been made.

Although Ministry of Environment & Forest and NGFF Fertilizer Plant at execution site are
extremely positive for environmental measures through the project’s implementation and
energy efficiency improvement, the following main points are to be clarified as execution
conditions.

® In respect of CDM implementation, Japanese Government’s direct official contact in the

future as well as establishment of definite approach and agreement on CO] sharing
(2) Establishment of liaison office in Bangladesh Government in connection with CDM
project (either in Ministry of Industry or in Ministry of Environment & Forest)
(3) Availability of soft loan provision from Japan to promote joint implementation project

® Adjustment matters with counterpart country for materialization of CDM, including

business sharing.

4.2 Possibility of the Targeted Countries Consent on the Project’ s Joint

Implementation
(Requirements for Obtaining the Targeted Countries Consent, Based on the
Approach of the Targeted Country’ s Government Related Agencies and
NGFF Fertilizer Plant)

In this CDM project, requirements made by Bangladesh Government and NGFF Fertilizer
Plant are included at the maximum. By minimizing operation stoppage period attributable to
execution of works and by concentrating on investment with economic effect, total
investment amount is controlled to the utmost. Bangladesh Government and NGFF
Fertilizer Plant have strong intention of materializing this project.

- 11-86
Bangladesh and the targeted company have not proper understanding on CDM, while
Ministry of Environment & Forest understands it rightly. As realization of this CDM project
is a very attractive step for country and companies, which don’t have money enough to make
investment for modernization, they have strong intention to materialize this project without
fail.
 CHAPTER 3

PROJECT EFFECT
 CHAPTER 3
PROJECT EFFECT

1. Energy Saving Effect

1.1 Technical Ground for Positive Energy Conservation Effects

(1) Energy saving effect due to improvement of operation rate

With a lapse of 40 years after start-up, NGFF has often to stop its operation due to
different kinds of troubles caused mainly by super-annuation in various places of
equipment. The present operation rate (on 1999 / 2000 year base) has come, therefore,
down to about 78%, while energy basic unit of urea product has increased by around
16%. Even if breakdown of a part of machinery result in such situation that shutdown
of plant is needed, NGFF continues usually a partial operation of equipment, such as
reforming furnace. In case of a large size heat engine, such as reforming furnace, being
stopped once, it entails plenty of time for restart of operation and a large quantity of
thermal loss in the process of cooling and re-heating. Such being the case, it is difficult
to stop supplies of fuel for warm air operation, process steam and process natural gas,
and they are successively emitted into the atmosphere with generation of excessive
energy loss. Thanks to difficulty in following immediately load change of electricity
and steam on the process side at the time of stoppage in emergency, restart of power
generation equipment, or during operation for reducing production volume and
shutdown, excessive energy is generated and removed, while natural gas being burned.
Provided that stoppage gains in its number and stoppage time becomes longer,
production volume decreases and energy loss increases accordingly. Sometimes, much
time is required in each repair, even if stoppage decreases in its number. For example,
much time is needed for repair, in case of operation being stopped due to occurrence of
relatively large size trouble. Although operation rate, or production volume, decreases
considerably in such condition, energy loss, or increase of energy basic unit, is relatively
small in its quantity. Since energy loss occurs mainly at the time of shutdown, restart or
operation of warming machine under repair, such loss is comparatively small, because of
warning machine operation being stopped in the case of long-term shutdown, as far as
operation is not stopped so often.

NGFF suffers, however, from production volume reduction and energy loss due to
repeated shutdown caused by different kind of troubles in super-anuated machinery &
equipment and repeated conditions that several hours or days are required for repair
during continuation of warming machine operation.

— Ill— 1 —
 With recovery of function by means of inspecting the whole equipment and making
adequate preparation & examination through implementation of this project, long-term
and successive operation is attainable. In respect of energy saving effect obtainable by
operation rate improvement, energy basic unit is expected to decrease by 14.3% (285
Nm3/ MT) from 1,820 Nm3/MT of actual value in 1999/2000 to 1,525 Nm3/MT.

A graphic chart for relation between operation rate % (production record/ equipment
capacity) and natural gas basic unit (annual average Nm3) for 15 years from 1985/1986
^ 1999/2000 is shown in Diagram III-1. When operation rate comes up to 100%,
natural gas basic unit of urea decreases to 1,535 Nm3/MT, as indicated in the graph. (See
asterisk)

♦
2 85

1400 1500 1600 1700 1800 1900

Natural gas basic unit Nm3/MT

Figure III-1: Relation between operation rate and urea natural gas basic unit

(2) Energy saving effect due to process improvement in Ammonia Plant

1) Synthesis gas refinery process improvement (Plan A)

Energy saving is achievable through the following steps. As energy consumption

volume is extremely large in the existing synthesis gas reforming equipment, in
which CO and CO2, poison for catalyst, is removed by means of washing synthesis
gas with lean solution, installation of new synthesis gas refinery equipment,
consisting of low temperature CO converter and methanator, is scheduled.. In
addition, in the process of CO2 removal, catalyst is added to thermal carbonic acid
potassium solution. Through this process improvement, natural gas basic unit in
 urea product decreases by 54 Nm3 per ton, and technical ground for production of
energy saving is as follows.

(D As cooling of lean solution down to 0°C in ammonia refrigerator is needed for

increasing absorption efficiency, energy for refrigerator is usually required.
Since such process becomes unnecessary in improved process, energy for
refrigerator is not required.

(2) Since , in comparison of moving power of absorbed liquid cycling pumps,

absorption capacity for CO in lean solution is relatively low, compared with
absorption capacity for CO2 in thermal carbonic acid potassium solution, and
liquid cycling volume is comparatively large, a larger moving power of pump is
needed. Strictly speaking, 7 times larger moving power is required, as 140
kg/cm2 in operation pressure is extremely high, compared with 20 kg/cm2 in
absorption & removal process of CO2 contained in thermal carbonic acid
potassium solution.

(3) At present, rich gas, absorbed and removed by lean solution, is used as fuel. In
improved process, 2.0% of CO remained in process gas is reduced to the level
of 0.12% by low temperature CO conversion reaction (CO + H2O = CO2 + H2)
and it generates additionally H2, usable as raw material for ammonia.
Necessary volume of process natural gas, equivalent to hydrogen generated in
this stage, becomes reducible and necessary volume of process steam and
thermal load in 1st reforming furnace decrease proportionately. Although
necessary volume of natural gas increases due to lack of CO rich gas, usually
used as fuel, overall effect attributable to energy volume reduction becomes
comparatively larger.

© Since steam required for regeneration of lean solution becomes unnecessary and
catalyst is added to thermal carbonic acid potassium solution, reduction of steam
needed for regeneration of solution is achievable.

2) Collection of hydrogen from synthesis purge gas (Plan B)

As synthesis gas, which is used as fuel for 1 st reforming furnace after being reduced
in its process, contains a large quantity of hydrogen, such hydrogen is collectable
through installation of hydrogen separator with diffusion film method. Hydrogen
collected in this stage is returned to absorption side of synthesis gas compressor 2nd
stage and recycled. Necessary volume of process natural gas, equivalent to

-III-3-
 collected hydrogen, becomes reducible, and necessary volume of process steam and
thermal load in 1st reforming furnace decrease proportionately. Although
necessary volume of natural gas increases due to lack of CO rich gas, usually used
as fuel, overall effect attributable to energy volume reduction becomes
comparatively larger. With collection of hydrogen from synthesis purge gas,
natural gas basic unit in urea product decreases by 19 Nm3 per ton.

1.2 Baseline for Energy Saving Effect Calculation Base

The values in NGFF’s operation result data for one year from July, 1999 to June, 2000 are
used as baseline for energy saving calculation base.

(1) The idea of adopting one year operation result data as baseline
(D Although production volume and energy consumption volume are kept nearly at the
level of the value originally established during NGFF Fertilizer Plant’ s operation,
reduction of operation rate and increase of energy basic unit in recent years are
caused by frequent stoppages attributable to equipment troubles and mainly due to
production decrease during the period of startup, shutdown and repair as well as
useless burning of fuel. Although at least 1 week or 10 days are required as
shutdown period for repair, it is hard to say that mean values in short term, for
example 1 month, reflect actual condition in determining numeral values for ground
of baseline. Such being the case, mean value of data, which is not affected by
short- term operation stoppage due to trouble and measured in relatively long-term
period, should be established as a standard.

(2) In parallel with progress of super-annuation in NGFF Fertilizer Plant, reduction of

operation rate and increase of energy basic unit make their rapid progress year by
year. Such trend of changes in past years is, therefore, not reflected exactly, if
relatively long-term operation data is adopted.

For reason of the above conditions, adoption of data for 1 year operation result is
appropriate.2

(2) The idea of adopting data in 1999/2000

CD Sometimes exceptional trouble, in which 1 month or longer term period exceeding 1
month is required for its repair, occurs. As production volume and energy
consumption volume are kept nearly at the values originally established during
NGFF Fertilizer Plant ‘s regular operation, production rate is considerably
 deteriorated by such trouble, but influence to basic unit is relatively small. In the
graph (Diagram III-1) indicating relation between operation rate and energy basic
unit, there is a scatter, reflecting the above situation. Since no long-term and
successive shutdown attributable to unexpected trouble occurred in 1999/2000,
adoption of data for that year is decided, as it seems to reflect actual condition.

(2) With reduction of operation rate and increase of energy basic unit advancing
annually in parallel with progress of super-annuation in NGFF Fertilizer Plant,
results of 1999/2000 year have become worst in the past 10 years. Judging from the
data up to now, results of 2000/2001 is estimated to become much worse than those
of the previous year and such trend is expected to continue in the future, too.

Based on such situation, it is appropriate to adopt data for 1999/2000.

(3) The idea of adjusting the period, such as July, 1999 ~ June,2000, to fiscal year in
Bangladesh
With introduction of maintenance fund into super-annuated plant, adequate
improvements of its operation rate and energy basic unit are attainable. In NGFF, a
maximum maintenance is continued within the limit of its budget allocated in each fiscal
year. It is suitable, therefore, to set up baseline, based on operation results in the period
corresponding to such allocated fund.

(4) Actual figures in operation results of 1999/2000, obtained from NGFF Fertilizer Plant
and established as baseline, are as follows.
-Ammonia production volume :<J> : 56,623 MT/Y
-Ammonia as raw material for ammonia sulfate : (D :2,112MT/Y
-For process and refrigeration :® : 532 MT/Y
-For outdoor sale of liquid ammonia :© : 212MT/Y

-Ammonia as raw material for urea :© : 53,765 MT/Y

-Natural gas consumption volume in ammonia equipment :© : 57,8655,000 Nm3/Y
-Electricity consumption volume in ammonia equipment :© : 72,805,000 KWH

-Basic unit of natural gas for power generation :® : 0.577 Nm3/KWH

-Natural gas consumption volume in the whole fertilizer plant :® : 158,423,000 Nm3/Y

-Urea production volume :® : 84,275 MT/Y

—III—5 —
In NGFF Fertilizer Plant, around 5% of ammonia intermediate product for ASP raw
material & makeup of cooled catalyst in refrigerator and a minimum quantity of liquid
ammonia are used for outdoor sales, respectively. Under the circumstances, some
revisions are needed for determining figures as baseline of energy basic unit.

As revision method, the volume of natural gas ©, required for production of ammonia,
excluding ammonia used for raw material of urea, is calculated at first and, after then, net
natural gas consumption volume in urea production © is found by deducting © from
consumption volume of all natural gas in the Fertilizer Plant. Finally, natural gas basic
unit in urea ® is obtainable by means of dividing © by urea production volume.
The above calculation for revision is summarized and shown below.

Total of ammonia, excluding ammonia used for raw material of urea:

©=®+®+®:2,858 MT/Y
Ammonia electricity basic unit HD/(D: 1,286 KWH/MT

Ammonia electricity basic unit

(natural gas conversion) :742 Nm /MT
Ammonia natural gas basic unit : 1,022 NnT/MT
Total ammonia natural gas basic unit 1,764 Nm7MT

Consumption volume of ammonia, excluding ammonia for raw material of urea

: 5,042 Nm3/Y

Natural gas required for urea production

©=©-©: 1533,381,000 Nrtr’/Y

Natural gas basic unit in urea 1,820 Nm3/MT

Steam used in fertilizer plant is divided into 2 kinds of steam, such as steam generated in
plant and steam supplied from power generation plant. All quantity of natural gas
supplied to NGFF Fertilizer Plant(including natural gas for power generation) becomes
energy source and is included in (9). Since steam supplied from power generation plant
is included in basic unit of natural gas for power generation® required for calculation of
ammonia basic unit, it is unnecessary to consider energy for steam separately.

Consequently, baseline (the idea of estimating energy consumption volume, in case of

the project being not executed), required as ground for energy saving effect calculation,
is fixed by values calculated from NGFF Fertilizer Plant’s operation results data and
shown below.

—Ill — 6
 Urea natural gas basic unit : 1,820 Nm3/MT@

Product urea production volume : 84,275 MT/Y©

The composition of natural gas for calculation of energy saving effect is as follows.

CO2: 1.0%, CH4: 97.0%, C2H6:2.0%,Total: 100.0%

Heat generation volume of natural gas value calculated from the above gas
composition:8,612 Kcal/Nm3 ©

1.3 Actual Volume, Period of Pro and Accumulated Volume of Energy Saving
Effect

(1) Actual volume of energy saving effect

With operation rate increasing from 78% of present level up to 100% through
implementation of NGFF renovation work, 84,275 M/T of urea production rises up to
108,265 MT/Y© of equipment capacity and natural gas basic unit in urea product
decreases by 285 Nm3/ MT from 1,820 Nm3/MT of present level to 1,535 Nm3 /MT of
originally projected value, as mentioned in paragraghl.l.(l) of this chapter “ Energy
saving effect due to improvement of operation rate”. 108,265 M/T of equipment
capacity © is the figure obtained on the condition that 320days are counted as operation
days in a year under production capacity of 111 LT/D in each line of 3 in total.

As mentioned in the preceding paragraph (2) “ Energy saving effect due to process
improvement in Ammonia Plant”, natural gas basic units decrease by 54Nm3/MT and
19 Nm3/MT respectively, through implementation of Plan A and Plan B for process
improvement, and 73 Nm3/MT is reducible in total. Consequently, total 358 Nm3 /MT
(=285+73) of reduction is achievable as a whole. Natural gas basic unit in urea product,
including energy saving effect, comes up, therefore, to 1,462 Nm3/MT (=1,820 - 358).

Estimated energy saving effect with implementation of NGFF renovation project is as

follows.

1) Urea production volume & energy consumption volume (standard value) at present.

Annual urea fertilizer production volume :

© 84,275 MT/Y

-III-7-
 Annual natural gas consumption volume :
@84,275 x @1,820=153,380,000 Nm3/Y

Heat volume conversion:

153.380.000 x ©8,612= 1,320.9 G Kcal (5,526,700 GJ/Y)

Crude oil conversion:

1.320.900.000.000 4-10,000 = 132,090,000 kg/ Y (132,090toe/Y)

2) Energy saving after renovation work

Production increase effect(annual base):

®=84,275 MT/Y

Annual natural gas consumption volume:

@84,275 MT/Yx 1,462= 123,210,050 N3/Y

Heat volume conversion:

123,210,050 x © 8,612 = 1,061.1 G Kcal / Y(4,439,600 GJ/Y)

Crude oil conversion:

1.061.1100.000.000 -r-10,000 = 1,061,110,000 kg( 106,110 toee/)

Energy saving effect (annual natural gas conversion):

123.210.000 - 153,380,000 = A30,170,000 Nm3 /Y(up)

Energy saving effect (heat volume conversion):

1,061.1 = 1,320.9 = A259.8 G K cal/Y(l,078.00 GJ /Y)
Energy saving effect (crude oil conversion):
106.110 - 132,090 = A25,980 toe /Y

The above calculation results are shown in Table III-1

Table III-l: Table on the total of energy consumption volume,

energy saving effect and greenhouse effect gas:

Energy consumption volume

Annual urea
heat volume crude oil
production natural gas
conversion conversion
T/Y lO^NmVY G Kcal/Y toe/Y
Present standard value 84, 275 153, 380 1,320.9 132, 090
In case production After completion of work 84,275 123,210 1,061. 1 106, 110
increase is not
considered Effect (difference) 0 ▲ 30, 170 ▲ 259. 8 ▲ 25, 980

III—8 —
 Although 23,990 MT of annual urea production increase effect is achievable as a
result of around 28% increase in production volume through NGFF renovation
work, additional energy consumption volume, required for production increase
portion, exceeds slightly credit obtainable from energy saving effect, and rises by
4,903,000 Nm3 annually, compared with present consumption level.

(2) Energy saving production period

NGFF’s fertilizer production equipment is such equipment as super-annuated
considerably in nearly 40 years after start-up of operation. BCIC is desirous of
continuing NGFF’s operation with at least 10 years of prolongment in its equipment life.
Our proposal of this time takes results of examination into account to meet BCIC ’s
requirements. So at least 10 years of energy saving effect production period after
completion of renovation work is, therefore, estimated.

(3) Accumulated volume of energy saving effect

In 10 years of energy saving effect production period after completion of renovation
work, it is possible to maintain present energy saving with establishment of system, in
which adequate spare parts are supplied without delay. As mentioned below,
accumulated energy saving volume in 10 years is expected to become 10 times as much
as present annual energy saving production volume.

Energy saving effect (natural gas):

49,030,00 Nm3/10 years (up)

Energy saving effect (heat volume conversion):

422 G Kcal/10 years (1,765,000 GJ/ ©years) (up)

Energy saving effect (crude oil conversion):

42,200 toe/ 10 years (up)

1.4 Actual Method for Ascertaining Energy Saving Effect

It is possible to ascertain energy saving effect only by comparing measured value of flow
volume of all natural gas supplied to fertilizer plant and baseline numerical value of urea
production. In the case that ammonia is extracted for ammonia sulfate production or outdoor
sales of liquid ammonia according to the circumstances, such revision as mentioned in
paragraph 1.2.of this chapter “Baseline for energy saving effect calculation base” is required.
Energy saving effect is, therefore, ascertained with acquisition of operation data, including
operation date needed for such revision, through the following method.

Ill-9
(1) Timing & period: By targeting 3 periods, such as 3 successive days, 2 months and 1 year,
accumulated volume in each period is measured.

(2) Measurement method: Record keeping is made as operation record (daily report, monthly
report and annual report) by applying measurement place and numerical value, usually
executed by NGFF.

(3) Measurement item: With simultaneous acquisition of data required for revision,
including temperature, pressure and others relating to each measure, the following items
are measured and necessary revisions are made.

a. Flow volume measurement

- Receiving volume of natural gas in NGFF, natural gas use volume in ammonia
plant (process & refining furnace fuel) and natural gas use volume in power
generation plant

- Ammonia ‘s urea makeup volume

- Urea production volume
- Supply volume of steam turbine evaporated steam
- Supply volume of steam supplied to fertilizer plant, except steam for ammonia
sulfate plant

b. Electricity volume measurement

- Total electricity generation volume in power generation plant
- Electricity use volume in electricity generation equipment

- Volume of electricity transmission to fertilizer plant, except ammonia sulfate

plant

- Operation time in ammonia plant (record of operation stoppage and its reason)

- Operation time in urea plant (record of operation stoppage and its reason)

c. Analysis of natural gas

Analysis of natural gas composition is made more than one time in a day. Mean
value in one analysis made on 3 samples is determined as value of that day. Gas
composition in long-term period, exceeding one day, is found from weighted
average of daily natural gas use volume and gas analysis value in that day. Natural
gas heat volume is obtainable from calculation of gas analysis value. Since a part

III-10-
 of ammonia intermediate product is extracted for other uses in the Fertilizer Plant,
treatment of such intermediate product is made carefully during the period of energy
saving effect ascertainment, and energy saving effect volume is ascertained by
making revision of measured values through the method mentioned in the above
paragraph 1.2.of this chapter.

2 Effect due to Greenhouse Effect Gas Reduction

2.1 Technical Base for Production Effect Due to Greenhouse Effect Gas
Reduction

Except CO2 produced by natural gas burning, there is not any other product of greenhouse
effect gas in this project. Technical base for production of effect due to greenhouse effect
gas reduction is the same to paragraph 1.1. of this chapter “Technical base for production of
energy saving effect “. The reason is as follows.

Although only natural gas is supplied to NGFF Fertilizer Plant as energy source, all necessary
energy is covered by necessary electricity and steam generated by means of burning heat of
natural gas sent to this Plant. Meanwhile, natural gas used in ammonia plant is divided into
process gas (PNG) for raw material of ammonia & urea and fuel gas (FNG) required in
reforming furnace. Carbon atom, contained in natural gas used in the process, is collected in
the state of CO2 as raw material for urea synthesis and all quantity of such CO2 is fixed inside
urea molecular. A small quantity of CO2, generated from natural gas used as fuel, is
collected for covering shortage of CO2 coming from Ammonia Plant and also used for urea
synthesis. The remaining portion of CO2 is diffused into the atmosphere.

With regard to volume of CO2 emitted as greenhouse effect gas from the Fertilizer Plant, the
remaining portion after deducting volume of CO2 fixed by urea from volume of CO2, obtained
by burning of all carbon atom contained in natural gas supplied to the Plant, is emitted in the
air.

2.2 Baseline for Greenhouse Effect Gas Reduction Effect Calculation Base

As mentioned in the above paragraph 2.1, data required for calculation of greenhouse effect
gas reduction effect is the same to data needed for calculation of energy saving effect. It is,
therefore, the same to data for baseline mentioned in paragraph 1.2. of this chapter “Baseline
for energy saving effect calculation” as the idea of estimating energy consumption volume , in
case of the project being not implemented and it is also indicated below.

-Ill-11
 Urea natural gas basic unit 1,820 NnrVMT ©

Product urea production volume 84,275 MT/Y ©

Composition of natural gas required for calculation of energy saving effect is as follows.

CO2: 1.0%, CH4: 97.0%, C2H6: 2.0%, Total: 100%

Heat generation volume of natural gas : 8, 612Kcal/Nm3 @

2.3 Actual Volume, Period of Production and Accumulated Volume of

Greenhouse Effect Gas Reduction Effect

(1) Actual volume of greenhouse effect gas reduction effect

In this report, composition of natural gas supplied to NGFF is as follows.

CO2:1.0%, CH4: 97.0%, C2He:2.0%, Total: 100.0%

Greenhouse effect gas is produced by air diffusion of CO2 generated through burning of
hydrocarbon in natural gas. As a result of burning methane and ethane, 1 mole and 2
moles of CO2 are produced through the following reaction formula, respectively.

CH4 +202 = CO2 + 2HzO

C2H6 + 3.500% = 2CO2 + 3H2O

Since 1% of CO2 is contained in natural gas, 1.02 mole {=(0.97 x 1) + (0.02x2) + (0.01)}
is finally produced by burning 1 mole of natural gas. Greenhouse effect gas generated
in NGFF Fertilizer Plant is produced only by the above 2 kinds of burning reaction.
Actual volume of greenhouse effect gas reduction effect is obtainable by calculation
made through the following method.

On the precondition that actual volume of greenhouse effect gas reduction effect is
equivalent to the volume obtained by deducting volume of CO2, fixed to urea due to
production increase effect, from volume of greenhouse effect gas (CO2), generated at the
time of burning the reduced volume of natural gas due to energy saving effect, such
actual volume is calculable. As volume of natural gas required for production increase
exceeds volume of natural gas reduced through energy saving, 4,903,000 Nm3 /Y
increases inversely, as shown in Table III-1. It is 4,220 Toe/Y increase on crude oil
conversion basis. Accordingly, production volume of greenhouse effect gas CO2
 increases seemingly by 9,824 M/Y(= 1.02 x 44 x 4,903,000/22.4/1,000). With annual
increase of 23,990 MT/Y of urea production volume due to production increase effect,
volume of CO2 fixed to increased portion of urea comes up to 17,592 MT/Y (=23,990 x
44/60). Such being the case, annual reduction volume of greenhouse effect gas amounts
to -7,768 MT/Y (= 9,824 MT/Y - 17,592 MT/Y) and 7,768 MT/Y of reduction is
attainable.

(2) Production period of greenhouse effect gas reduction effect

NGFF’ s fertilizer production equipment is such equipment as super-annuated

considerably in the past nearly 40 years after start up of operation. BCIC is desirous of
continuing NGFF’s operation with at least 10 years of prolongment in its equipment life.
Our proposal of this time for renovation takes results of examination into account to meet
BCIC’s requirements. In 10 years of energy saving generation period after completion
of NGFF ‘ s renovation work, maintenance of the present greenhouse effect gas reduction
effect is achievable with establishment of system, in which adequate spare parts are
supplied without delay.

(3) Accumulated volume of greenhouse effect gas reduction effect

From (1) actual volume of greenhouse effect gas reduction effect and (2) generation
period of greenhouse effect gas reduction effect, annual greenhouse effect gas reduction
effect is calculable and indicated below.

Net annual reduction volume of greenhouse effect gas CO2, calculated from natural gas:
7,768 MT/Y

Meanwhile, accumulated volume of energy saving in 10 years comes up to 10 times as

much as present annual energy saving production volume and is shown below.

In the case of natural gas: 7,768 MT/Y x 10 = 77,680 MT/ 10 years.

2.4 Actual Method for Ascertaining Greenhouse Effect Gas Reduction Effect

(1) Greenhouse effect gas reduction volume

Except CO2 produced by natural gas burning, there is not any other production of
greenhouse effect gas in this project. It is, therefore, difficult to measure exactly
absolute volume of CO2 diffused into air through smoke dust. In actual method for
ascertainment, the remaining volume obtained by deducting volume of carbon, fixed by

-III-13
 urea, from total volume of carbon atom contained in all quantity of natural gas is
estimated to be equivalent to volume of gas diffused into the air in the state of
greenhouse effect gas (CO2), as mentioned in paragraph 2.3 of this chapter “Actual
volume of greenhouse effect gas reduction effect”.

Natural gas reduction volume, ascertained by measurement method mentioned in

paragraph 1.4 of this chapter ” Actual method for ascertaining energy saving effect” and
reduction volume of greenhouse effect gas, calculated from its composition, are as
follows.

(2) Data collection

Data to be collected is the same to data required for ascertaining natural gas reduction
volume attributable to energy saving effect. With measurement method and
measurement items, mentioned in paragraph 1.4 of this chapter “ Actual method for
ascertaining energy saving effect”, effect of greenhouse effect gas is, therefore, actually
confirmed. Such data collection is made by NGFF by use of instrument and method
mutually agreed by both of Japanese and Bangladesh parties. NGFF is expected to
provide such data in the form mutually agreed with BCIC and Ministry of Industry.

(3) Communication in respect of data collection

Data is submitted monthly to Ministry of Industry and quarterly to Japan by NGFF.
Ministry of Industry makes data-check monthly and notifies Japan quarterly of results of
comparison with greenhouse effect reduction target value. Also, details of
unaccomplished volume due to trouble, such as equipment trouble, are notified to Japan.

(4) Ascertaining method

In view of international character of CDM, it is necessary to turn to related agencies of

both governments for their guidance at the time when ascertainment of greenhouse effect
gas reduction effect is required. Since in Bangladesh there are Ministry of Industry and
Ministry of Environment & Forest, both of which have such function as corresponding to
that of Ministry of Economy, Trade and Industry in Japan, formation of new organization
appears unnecessary.

The existing organizations of both countries are indicated in the following Diagram III-2.
In this Diagram, NGFF and Japanese promoter (company) surrounded by heavy lines are
principal promoters in the project and lines connecting each department mean
transmission route of information or instruction. To ascertain greenhouse effect gas
 reduction effect by means of transmitting such information, guidance of related agencies
of both governments is required.

Organization on the side of Bangladesh Organization on the side of Japan

Ministry of Ministry of
Ministry of Industry
Environment & Economy
confirmation Forest confirmation

Environment
BCIC Trade & Industry
Department

Resources & Energy

Agency

support support Department in

Energy Efficiency charge of new
NGFF
Office energy

Japanese promoter (company), report

Figure III-2 Monitoring system

3. Influence to Productivity

With increase of operation rate, production increase effect is attainable. Thanks to shutdown
of operation, caused frequently by equipment trouble due to super-annuation of equipment,
inadequate preparation and lack of spare parts as well as by accumulated time of stoppage,
following successive shutdown, operation rate has decreased. In NGFF’ s renovation plan,
reduction of shutdown time, curtailment of total down time and recovery of production up to
full capacity of equipment are proposed, on the condition that provision of emergency spare
parts & adequate preparation and renewal of considerably super-annuated equipment are
executed. On the basis of present production volume, production increase effect, due to
betterment of operation rate after NGFF renovation work, rises up by about 28% to 23,990
MT of annual urea production.

In respect of ammonia production equipment, more than 5% of production increase is

achievable, compared with usual equipment capacity, through process change (Plan A & B) in
gas generation part. Despite more than 5% increase effect at the part of front end, there are a

III-15-
lot of bottlenecks for capacity -up in down stream equipment, particularly synthesis gas
compressor and compressor for cooler. Although a large amount of additional investment is
required for increasing equipment capacity with removal of such bottlenecks, additional new
investment is considered to be restricted in economic aspect, on the assumption that only 10
years of equipment life remains.

In NGFF Fertilizer Plant, ammonia intermediate product is used for ASP and outdoor sales.
At present, such volume amounts to approximately 5%. Since ammonia, used for other than
urea production, is covered by surplus production capacity, exceeding the existing equipment
capacity, a lot of benefits are brought about to NGFF. In addition to production increase
effect, energy saving and environmental betterment effect, synergy effect, such as
simplification of operation management & maintenance, is obtainable, through partial process
change in ammonia equipment.

— Ill —16 —
 CHAPTER 4

PROFITABILITY
 CHAPTER 4
PROFITABILITY

1. Economical Effect Due to Investments Payback

1.1 Preconditions for Calculation and Financial Plan

(1) Premise of Financial Analysis

Foreign Exchange Rate : 1 US$ = 54 TK= ¥ 110

Construction Cost : US$ 19,106,000 (2,102 Million Yen)

Annual Increase of Production : Urea 23,990 T/Y(Increase of production from 84,275

T/Yto 108,265 T/Y)

Sales Price of Urea : Government regulated domestic price at 1998-99 is

4,800 TK (88.89 $/Ton)N This is intentional low price
to protect farmers. For your reference, present
international price of Urea (CIF DHAKA)seems to be
$110^120 per ton.
Therefore, for diversified analysis Economical
Financial Analysis is made on the following four cases.
CASE-1 : 88.89 $/T (Actual Government price of
fiscal year of 1998-99)

CASE-2 : 100.00 $/T

CASE-3 : 110.00 $/T
CASE-4 : 120.00 $/T

Variable Cost : Actual Unit Cost of Natural Gas at 1998-99 is 1.93

TK/Nm3

Method of Depreciation : Straight-line method, Depreciation period 1 Oyears

Salvage value : 0

Project Life 15 years

(2) Financial Plan

The sources for the required funds have not been fixed yet at present time. However, if
we take the situation of financial possibility in Bangladesh, they shall depend all
construction cost on the soft finance from foreign countries. Possible finance conditions
from Japan (Yen Credit) is chosen for calculation purpose as below-mentioned ;
Coverage: 100% of construction cost including local portion Interest: 1% per annum
Grace period: 7 years Repayment period: 25 years Local Finance: Interest 10% if finance
short occures during operation period

1.2 Investment Amount and Effects

(1) Total Investment Cost and Total Fund required

Captioned Cost and Fund is mentioned in table IV — 1

IV — 1 Total Investment Cost and Funds

(Unit:US$ 1,000)
CASE-1 CASE-2 CASE 3 CASE-4
Construction Cost 19,106 19,106 19,106 19,106
Pre-Operating Cost 105 105 105 105
Interest during Construction 109 109 109 109
Total Investment Cost 19,320 19,320 19,320 19,320
Cash 44 50 55 60
Total Fund Required 19,364 19,370 19,375 19,380

(2) Energy Saving and Production Increase Effect

1) Energy Saving Effect
Present annual consumption of natural gas is 153,380,000 Nm3 (for Urea Plant)

By energy saving modification^ unit consumption for Urea production decreases

from 1820 Nm3/T to 1462/ Nm3 by 358 Nm3/T. Therefore total decreased volume
is calculated as below;

358 Nm3 X 84,275 T/Y=30,170,000 Nm3/Y

=>Amount 1,077,000 $/Y(30,170,000 Nm3/Y X 1.93 TK/Nm3 / 54 TK/$)

— IV —2 —
 2) Production Increase Effect
The production increase from 84275T/Y to 108265T/Y will be 23990T/Y.Marginal
profit will be 590,000$/Y on (CASE I base)

1.3 IRR Calculation Results and Appraisal

Based on Premise, Total Investment Cost, Effect of energy saving and Production Increase,
IRR figures are calculated as shown in Table IV-2

TablelV — 2 IRR on each case

Construction Cost Sales Price of

IRR(%)
(1000$) Urea
CASE-1 19,106 88.89 $/T 3.43
CASE-2 19,106 100.00 $/T 5.55
CASE-3 19,106 110.00 $/T 7.34
CASE-4 19,106 120.00 $/T 9.04

Following is summary;

IRR on CASE I (88.89 $/T) is 3. 43 %. This case, even if small profit due to regulated price
by government, is judged “feasible”. IRR on case 11(100 $/T) is 5. 55 %. Both case are
feasible due to be over interest rate 1%. In case of 110 $/T, CASE-3 or!20 $/T , CASE-4, IRR
sharply upward to7.34%, 9.04% respectively. From the point of profitability, depreciation
cost factor occupies very high rate, so 1-10 years is not profitable but cash flow is plus. After
depreciation is 100% done, considerable profit can be got starting from 11 years to 15 years
even in CASE-1 „ 2. In all cases there will be no big shortage of finance.

Profitability of this project and status of cash flow is described on the out-put from computer
enclosed.

For your refrence, IRR for the project is calculated as discount rate, by which the present
value of cash out flow and that of cash flow in the following concept become equal value.

Outflow : Plant construction cost + Pre-operation expense + Working capital + Interest

during construction

Inflow : Profit after tax + Interest + Depreciation + Differed assets + Amortization cost.

IV —3
2. Cost Reduction Effect in this Project

2.1 Energy-saving Effect

As mentioned in Chapter 3, the energy saving effect in this project is indicated in the
following table.

Table IV —3 Annual enrgy saving

item Natural gas
Annual reduction in volume 30,170,000 Nm3/Y
Annual reduction $ 1,077,000
amouunt in US$
Annual reduction in calorie 259. 8 Gkcal
Annual reduction 25,980 toe/Y
on crude oil equivalent
(Note) Annual reduction volume indicated in the form of sum of money
(Natural gas 30,170,000 Nm3/Y X 1.93 TK/54= 1,077 K$)

Followings are evaluation on annual energy saving per investment cost.

Energy saving in crude oil equivalent

: 25,980 toe/y(toe; ton oil equivalent)
Total Investment Cost
: US$ 19,106,000(2,102 million yen)
Annual energy saving per investment cost
: 1,360 toe-y/million-$ (12. 36 toe-ymillion yen)

Annual cost saving per investment cost

: 0. 564 $ (1,077,000 -Tl9,106,000)

2.2 Effects of Greenhouse Gas Reductions

The evaluation of green house gas reduction is indicated as follows;

Annual Reduction volume of Greenhouse Gas

: 80,388 t- COz/y
Total Investment
: US$ 19,106,000(2,102 million yen)

— IV —4 —
Annual CO2 reduction per total investment cost
: 4,207 t-C02-y/million-$ (38. 25 t-C02-y/milIion yen)

Annual CO2 reduction equivalent crude oil considering production Increase

: 10,3580 t -CO2/ y

Annual reduction CO2 per total investment

: 544 t- CO2 /y/million-$(4.92 t-C02-y/million yen)
 CHAPTER 5

CONFIRMATION OF DISSEMINATION EFFECT

 CHAPTER 5
CONFIRMATION OF DISSEMINATION EFFECT

1. Possibility of Spread of the Technology Introduced in the Project

The technology adopted in this project i.e. “cryogenic co conversion process advanced CO2
removal process,synthesis gas refining process by methanater (Plan A)”, have been already
been introduced in the other big capacity fertilizer plants of BCIC in Bangladesh. Therefore,
they are already proven process in Bangladesh. But, hydrogen removing process(Plan B) is
having high possibility to be introduced in the fertilizer plants without using this process so
far.

Maintenance technology adopted in this project must spread to fertilizer plants of BCIC with
low rate operation and high unit consumption

2. Effects Reflecting the Diffusion of Technologies

2.1 Energy Saving Effects

Annual urea production by four big size fertilizer plants in 1999 is 1,520,000 ton. This is
600,000 ton less than designed capacity. Those for each plant are CUFL: 82%, ZFCL: 68%,
UFFL: 68%, JFCL: 67%.

Unit consumption of the natural gas for each fertilizer plant in Bangladesh is 918N3, 90%
operating rate at highest level and 1121N3 60% operating rate at lowest level.(This figure is
weight-averaged by picking up highest figure and lowest figure for each plant of last five
years) According to the data in 1992,they are 1021N3 at 71.7% operating rate in average.

Provided that maintenance technology described in this project is introduced in the big size
major 4 plants, as a result, unit consumption can be revived to 918N3 at 90% operating rate
(highest figure in last five years) from 1021N3 at 71.7% operation rate(average in
1999),following energy saving will be achieved;

(1021 Nm3-918 Nm3) *1,520,000 MT/Y= 156,560,000 Nm3/Y

In other word, 156,560,000 Nm3/Y will be saved. This figure can be converted to 1350 G
Kcal/Y and (1,350)/( 10,000 Kcal/kg) = 135,000,000 kg (135,000 toe/Y) in crude oil
equivalent.

-V-l-
2.2 Effects Due to Greenhouse Gas Reduction

Based on 1.02 mol green house gas is generated when burning of 1 mol green house gas,and
156,560,000N3/Y gas is saved as per 2.1 section, following green house gas will be reduced;

156.560.000 (Nm3/Y)X 1.02 = 159,691,000 Nm3/Y

159.691.000 (Nm3/Y)X44/22.4 = 313,679,000 kg/Y equivalent,313,679 MT/Y.

 CHAPTER 6

INFLUENCE TO OTHER ASPECTS

 CHAPTER 6
INFLUENCE TO OTHER ASPECTS

1. Environmental Aspect

Thanks to super-annuation in NGFF’s equipment, the surrounding area is badly affected by a

large quantity of leakage of environmental pollution matters. Lean solution, ammonia gas
and ammonia water solution are mainly included in these matters. Also, leakage of product
urea solution from equipment, falling of grained product during handling and flow of
dissolved product into side ditch are often recognized. With air for cooling, urea grain is
diffused like smoke into the atmosphere from the top of grain production tower. In addition,
there are K2CO2 solution and MEA solution, absorption solution in CO2 removal equipment
as well as Sox and Nox from power generation boiler and reforming furnace. Among these
environmental pollution matters, lean solution and ammonia come into question particularly.
In respect of environmental pollution caused by lean solution, it is possible to solve such
question through implementation of this renovation work by application of low temperature
CO conversion and methanator method after synthesis gas refinement being stopped for
reason of process change. Also, environmental pollution due to leakage of ammonia can be
prevented by adequate preparation of machinery & equipment. There is not any other
matter, which becomes a subject of discussion due to bad influence to environment. With
implementation of NGFF renovation work, a substantial reduction of environmental pollution
matter leakage is attainable, as relevant machinery & equipment are adequately prepared.

2. Economic Aspect

2.1 Foreign Currency Saving

In Bangladesh, around 500,000 tons of urea is imported annually. In case of production

volume reduction attributable to super-annuation of other fertilizer plants in the future,
increase of increase of import volume will become necessary. In NGFF, around 12,000 tons
of ammonia sulfate is also produced annually. In the case that NGFF ‘ s operation is
stopped, import of around 100,000 tons of urea and about 12,000 tons of ammonia sulfate,
equivalent to NGFF’ s production volume, is needed for their coverage. In the event that
120 USS/t of import urea price and 100 US$/t of import ammonia sulfate price are assumed
respectively, Bangladesh Government is expected to suffer from around 13.2 million US$ of
foreign currency loss yearly, and Bangladesh will be badly damaged by such loss.

-VI-1
2.2 Reduction of Production Cost

With implementation of NGFF renovation work, production cost of urea product is

anticipated to decrease from around 6,000 Taka of present cost to 3,572 Taka, owing to
energy saving effect and production increase effect. As a result of economic calculation,
approximately 169,398,000 Taka (3,137,000 US$) of accumulated income increase is
estimated in 15 years. Up to the present, NGFF has recorded losses and continued deficit
operation, due to back spread between production cost and sales price, every year. With
implementation of this renovation work, a remarkable improvement of such deficit structure
is attainable.

2.3 Sales Price

Supply price of 50kg bagged urea product amounts to 4,800 Taka/ton on ex-factory basis. In
sales price to customer, freight is added to the above supply price. In neighborhood area,
fertilizer is, therefore, obtainable at relatively low price. NGFFs urea product freight comes
up to around 700 Taka/ton. So sales price of urea, delivered to farm houses and managers of
tea plantation in the neighborhood of Sylhet district, amounts to around 5,500 Taka/ton.
Thanks to Bangladeshi road conditions, particularly worst in rainy season, plenty of time and
expenses are required for transport. In case of NGFF s operation stoppage, fertilizer could
be delivered from ZFCL in Ashuganj, locating at nearest point to customers in Sylhet district.
In this case, sales price of urea in Sylhet district is expected to rise up to around 6,000
Taka//ton.

3. Social Aspect

3.1 Guarantee for Livings of Employees and their Families

Until the time when NGFF Plant was built up 40 years ago, Fenchuganj had been a deserted
village, having some tea plantations. In such place, a fertilizer plant, deemed as large sized
plant at that time, appeared unexpectedly. Since then, Fenchuganj has prospered as business
castle town for about 40 years. More than 10,000 people, including about 1,150 employees
of NGFF, trade-men who come regularly to NGFF and their families, are now living in
Fenchuganj. In case of NGFF being closed by Bangladesh Government, compensations for
these people’s livelihoods are required. As NGFF ‘s labor union has a strong consciousness
of rights, it is obvious that conflict between party in power and non-government parties will
become serious.

-VI-2
In Fenchuganj, construction plan of a new plant adjacent to NGFF, called as Shahjarar
Fertilizer Plant, is in progress. Bangladesh Government is desirous of continuing NGFF ‘s
operation until completion of this new plant construction. Under the circumstances,
measures for 10 years prolongment of NGFF ‘s life were asked for by the Government.
Unfortunately, F/S for construction of a new fertilizer plant has, however, come to a negative
conclusion, due to transport problem of products. If such situation hasn’t changed even after
10 years, the Government will ask certainly for prolongment of NGFF ‘s life again.

3.2 Function as a Supply Base of Fertilizer in Fenchuganj Area

Tea plantations and farmhouses in the suburbs of Fenchuganj, mainly using urea fertilizer,
depend on NGFF as supplier of such fertilizer. In rice farming and tea plantation, ammonia
sulfate is needed, since sulfur increases fertilizer effectiveness. Except urea, NGFF has
around 12,000 tons production of annual ammonia sulfate, mainly supplied to tea plantations.
In Bangladesh, NGFF is only a plant where ammonia sulfate is produced. Such being the
case, NGFF is an important supplier of fertilizer to rice farming and tea plantation houses in
Sylhet district. In case of NGFFs operation being stopped, a serious influence to local
agriculture is inevitable.

-VI-3-
CONCLUSION
 CONCLUSION

With NEDO’s entrustment for “Investigation on Renovation Project of Fenchuganj Fertilizer

Plant, Bangladesh”, Kobe Steel, Ltd investigated energy saving and its resultant greenhouse
effect gas reduction volume through local investigations executed 3 times since September,
2000 and implemented investigations on the possibility of COM (Clean Development
Mechanism) and F/S for the purpose of combining this project with future CDM project in
Japan.

Consequently, our investigation has revealed that reductions of consumption energy and
greenhouse effect gas would be achievable, as assumed in original proposal, by means of
implementing NGFF Fertilizer Plant’s renovation project as CDM project. In addition,
NGFF Fertilizer Plant at execution site, BCIC, its upper organization, Ministry of Industry
and Ministry of Environment & Forest have strong intentions for promoting this project as
CDM project and continuing their activities for materialization of this project in cooperation
with us. Also, the above matters have been confirmed mutually by the parties in both
countries.

Major technical points on the basis of investigation results are as follows.

CD Construction cost of NGFF Fertilizer Plant renovation project amounts to 19,106,000

US$. This amount is expected to be fully covered by soft loan with terms of 1.1%
interest rate, 25 years repayment period and 7 years grace period, under such construction
conditions as 2 years construction period, 10 years amortization period and 10 years
installment payment. Also, coverage of insufficient fund is made by domestic short-term
borrowings (10% interest rate). As a result of financial calculation, this project has
proved to be profitable, since 3.43% of income, in case of 4,800 Taka (equivalent to 88.9
US$) of domestic urea official price, and 9.04% of income, in case of 120 US$ of sales
price (equivalent to import price), are estimated respectively.

(2) Energy reduction volume increases yearly by 4,220 toe on crude oil basis with 4,903,000
Nm3 of annual natural gas consumption increase, as natural gas required for urea
production increase exceeds the reduced volume of natural gas due to energy saving
effect.

(3) In respect of greenhouse effect gas in the state of CO2 as a whole, its reduction effect
comes up to 7,768 MT(CO]) annually.

-1
Bangladesh has supported its domestic economy by means of receiving foreign aids as aid
recipient country. Thanks to financial difficulty under such conditions, NGFF Fertilizer
Plant, a state-run company, is severely restricted in its capital expenditures required for plant
modernization and maintenance & inspection. Since sales price of urea product is extremely
lowered by the Government for protection of farmers, NGFF suffers from back spread
between production cost and sales price. With implementation of this project, contribution
to CO2 reduction in Japan as well as favorable effects, such as adequate correspondence to
environmental standards, betterment of equipment productivity, foreign currency saving and
guarantee for livings of local residents, and economic effect in Bangladesh are attainable. It
is, therefore, appraised as excellent project.

The parties in Japan and Bangladesh intend to tackle the problem of materializing the project
positively. Since provision of ODA (Yen Credit) is eagerly desired, the parties are expected
to continue their activities for its realization.

2
 APPENDIX-1

LIST OF SOURCE BOOKS

APPENDIX-1

List of source books

1) JETRO Asia Economic Research Center HP

http: //www.. ne .j p/asahi/bhalo/newa/

2) Ministry of Foreign Affairs, Japan

http://www.mofa. go.in/mofa/area/bangladesh/data/html

3) NEDO

South Asia Area(Bangladesh) Energy Massive Consumption Industries Basic Research

Business

Research Report for 1999, entrusted with Japan Consulting Institute

— A— 1 —
 APPENDIX-2

SITE SURVEY SCHEDULE

1st Site Survey

Sept 3rd to September 14th

Members: Y.Tanaka,Leader
J. Nada, Process Engineer
Y.Yabunaka, Marketing Manger
T.Yoshikawa, Mechanical Engineer

Content of schedule
day date Lodge
AM PM
1 9/3 Sun Leave Narita Arriv. Dacca Dacca
2 4 Mon Visit JBIG Japanese Embassy Dacca
Meeting with Ministry of Environment Meeting with Ministry of
3 5 Tue Dacca
and Forest Indsutry/BCIC
Arriving Fenchuganj
4 6 Wed Leave Dacca Fench
Make up schedule with NGFF
5 7 Thu Survey facility and plant operation Survey facility and plant operation Fench
6 8 Fri holiday holiday Fench
7 9 Sat Survey Power Plant of NGFF Survey NGFF facility and operation Fench
8 10 Sun Survey NGFF facility and operation Finnl Meeting withNGFF Fench
Arriving Dacca
9 11 Mon Leave Fench Dacca
Collect Information
Visit Polash Fertilizer
10 12 Tue Visit Polash Fertilizer Dacca

Visit JETRO Office to collect Visit and report to BCIC survery

11 13 Wed -
information report, Leave Dacca
12 14 Thu Arrive Ja;pan -

-A-3
2nd Site Survey

Members: Mr. Y. Tanaka Leader

J. Nada Process engineer
T. Yoshikawa Mechanical engineer

Content of schedule
day date Lodge
AM PM
1 10/22 Sun Leave Japan Arriv. Dacca Dacca
2 10/23 Mon Ministry of Environment and Forest BCIC Dacca
Mr. Nada/Yoshikawa leave Dacca Arriv. Silhet and visit NGFF Fenchu
3 10/24 Tue
Mr. Tanaka visit BCIC BCIC Dcca
Mr.Nada/Yoshikawa inspect operation
NGFF Fenchu
4 10/25 Wed NGFF
at
Mr. Tanaka leave Dacca visit ZFCL Dcca

5 10/26 Thu Mr.Nada/Yoshikawa at NGFF NGFF Fenchu

Mr. Tanaka leave Dacca visit JFCL Dcca
6 10/27 Fri Mr. Nada/YoshikawaHoliday Holiday Fenchu
MR. Tanaka Holiday Holiday Dcca
7 10/28 Sat Mr.Nada/Yoshikawa NGFF NGFF Fenchu
Mr. Tanaka collect information Nissho Iwai Dacca Ofice Dacca
8 10/29 Sun Mr.Nada/Yoshikawa NGFF NGFF
Fenchu
Mr. Tanaka collect information Leave Dacca , Arriv. Fenchuganj
9 10/30 Mon NGFF NGFF Fenchu
10 10/31 Tue NGFF NGFF Fenchu
Final Meeting with NGFF including Final Meeting with NGFF including
11 11/1 Wed Fenchu
GM GM
Final Meeting with NGFF including Final Meeting with NGFF including
12 11/2 Thu Fenchu
GM.confirm repairing items GM.confirm repairing items
13 11/3 Fri Leave Silhet Arriv. Dacca Dacca
14 11/4 Sat Nissho Iwai Dacca Visit BCIC Dacca
15 11/5 Sun Leave Dacca,
16 11/6 Mon Arriv.Japan
3rd Site Survey

January 10 to January 18th

Members: Y.Tanaka,Leader
J.Nda Process Engineer
Y. Yabunaka Markting Manager

Content of schedule
day date Lodge
AM PM
1 1/10 Wed Leave Japan Arriv Dacca Dacca
Meeting with JETRO Dacca and JBIC
2 1/11 Thu Ministry of eEnvironment and Forest Dacca
DACCA
3 1/12 Fri Leave Dacca Arriv Fenchuganj Fenchu
4 1/13 Sat Confirm Modification Items at NGFF Confirm Modification Items at NGFF Fenchu
5 1/14 Sun Confirm Modification Items at NGFF Confirm Modification Items at NGFF Fenchu
Final Meeting with NGFF Top people
6 1/15 Mon Final Meeting with NGFF Top people Fenchu
including MD
Visit BC1C and Report to Planning
7 1/16 Tue Leave Fenchuganj Dacca
Director BCIC
8 1/17 Wed Nissho Iwai Leave Dacca (23:55)
9 1/18 Thu Arriv. Japan
Any part or a whole of the report shall not be disclosed
without prior consent of International Cooperation Center,
NEDO.

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