BANGLADESH’S decision to undertake major expansion of its sugar industry offers Pakistan an opportunity to sell sugar mill machinery provided the sale is supported by credit lines. Prime Minister Hasina Wajed recently announced to make the eight loss-incurring sugar mills profitable through undertaking balancing, modernisation and replacement (BMRE) and diversifying the products/bye-products by installing ethanol refineries and distilleries in another three sugar mills.

Bangladesh wants that Pakistan should offer a credit-line to finance the mill machinery. Pakistan can play an active role by offering supplier’s or state credit to Bangladesh, within the framework of the existing Pakistan-Bangladesh Joint Economic Commission, for having its share of the BMRE of sugar industry through the Heavy Mechanical Complex (HMC).

The HMC commissioned two sugar mills in Bangladesh on turn-key basis - one in Natore in 1984-85 and another in Pabna in 1996-97 with a capacity of 1,500-2,000 tcd each. Orders were procured against international competition, offering suppliers’/state credit.

Bangladesh’s sugar industry is dominated by the public sector and all the 15 integrated sugar mills are managed by the Bangladesh Sugar and Food Industries Corporation (BSFIC). The cumulative installed capacity of these sugar mills is 7.5 million tons of cane crushing, or 215,000 tons of sugar, annually.

Except Natore and Pabna sugar mills, all others owned by the state are old and inefficient, incurring financial losses for many years.

The BSFIC is satisfied with the performance of both the Pakistani installed sugar plants that are operating efficiently. Natore Sugar Mills, which produced record sugar of 25,725 tons in 1994-95 against its installed capacity of 14,408 tons, received the award of best sugar mill in Bangladesh.

Generally, this mill is operating at about 25 per cent above its capacity. Sugar mills produced by Pakistan are known for reliable and efficient performance not only in Bangladesh but also in Indonesia and African countries. Other Pakistani engineering units have also supplied main machinery to North and South America. Currently, HMC is negotiating an order for sugar mill to be installed in Sri Lanka.

Pakistan offers a full range of complete sugar mills from 500 tcd to 12,000 tcd capacity based on various processes. The scope of supply and services covers plant design, engineering, manufacturing, supply, civil works, installation, commissioning and trial-runs and after-sales services.

The HMC, Taxila, alone has installed 28 complete sugar mills within the country and has undertaken BMRE of another 29, with supply of various equipment, spares and accessories on a regular basis.

Sugar industry plays a crucial role in Bangladesh, particularly in improving the socio-economic conditions of the people. In 2010, the country produced 62,250 tons of sugar. The current demand for sugar, however, is much higher, in the vicinity of 1.4 million tons annually. To meet the demand, the government resorts to massive sugar imports, whereas seven refineries in private sector process imported raw sugar.

The BSFIC plans to double the current sugar production to about 119,000 tons per annum. The target will be achieved by carrying out major modernisation of existing sugar mills, setting up of new mills and increasing sugarcane cultivation, for which additional land has already been acquired.

For long, the BSFIC had plans to undertake BMRE of its sugar mills, most of which were installed in the fifties and sixties by the British and the European suppliers, and have now outlived their useful life as the machinery is obsolete and technology outdated.

Practically, there has not been any significant BMR of these sugar mills in the past. In the first phase, BMRE of the Carew and Company Sugar Mills having 1,150 tcd installed capacity was planned, way back in the 1980s. The deal was negotiated with HMC exclusively, but the promise of state credit of around $8 million to finance the supply of sugar mill machinery could not be arranged by Pakistan on required soft terms. Later international tenders were invited based on suppliers credit.

Besides Pakistan, China and India also offered low prices and attractive financing but contract could not be awarded. Bangladesh again asked Pakistan to provide state credit, which was denied. The project was revived in 1999, and again in 2004 in favour of HMC. But negotiations between the two governments on credit terms were again inconclusive.

Likewise, the BMRE of another three sugar mills, Zeal Bangla, Faridpur and Panchagar sugar mills, each with 1,016 tcd, were planned years ago, to be carried out in parallel. Based on HMC’s technical and commercial proposal, tender on ICB basis was called for these projects on supplier’s credit in late eighties.

Again, the HMC was unable to arrange finance on Bangladeshi terms, and the Indians carried out the BMRE. Nonetheless, the job was not done satisfactorily, and these mills are again on the BMR list. In 1988, a new sugar mill of 2,000 tcd, Mohammadi Sugar Mills, was planned by the BSFIC near Dhaka as a joint venture with the private sector.

The project was approved by the Bangladesh ECNEC and local financing was made available. Offers from China, India, former Czechoslovakia and Pakistan were received and evaluated. HMC’s offer was considered the best in terms of fully meeting plant specifications and price competitiveness, but unfortunately, it could not arrange suppliers’ credit again. Though in an advanced stage, the project could not see light of the day.

The HMC has also installed a cement clinker grinding and packing plant of 65 tph capacity for Sena Kalyan Sangstha (welfare trust for ex-servicemen). Located near Mongla seaport, it is known as Mongla Cement Factory and has its own clinker ship handling facility.