Lafarge seeks arbitration to end gas cost row with Jalalabad
LafargeHolcim Bangladesh said yesterday it went to arbitration to stay a dispute with Jalalabad Gas Transmission and Distribution Systems after the state firm charged higher than the agreed selling price for natural gas.
The sales deal arrived to result in 2003 for the cement company's plant placed at Chhatak in Sunamganj.
And the detailed multinational company in a publishing on the site of the Dhaka STOCK MARKET (DSE) explained that its plank of directors had approved an answer on Wednesday that it could issue a notice of arbitration.
"A dispute possesses arisen between your parties with regards to the cost of gas," it stated, adding that the find of arbitration had been issued in line with the agreement.
The agreement is valid until the end of 2025, said the cement maker in response to an email from The Daily Star.
The notice has been filed according to the conditions of the agreement and expectations are for this to be resolved through arbitration, it said.
"The matter is sub judice, and the precise conditions of the agreement will be confidential, and LafargeHolcim Bangladesh is unable to disclose the facts," it added.
Stocks of LafargeHolcim, one of the primary cement makers, fell 2.32 per cent to Tk 54 yesterday.
"We observed the arbitration see from LafargeHolcim Bangladesh," stated Md Shahidul Islam, the gas distributor's general supervisor.
The company will not want to pay in line with the price fixed by the energy regulator of the united states, so the dispute arose, he said, adding that he'd no more talk on it since it was now under a legal process.
Beneath the contract signed with Lafarge Surma Cement, the former name employed by LafargeHolcim Bangladesh, the gas was coming in at approximately Tk 7.80 per cubic metre, said a top official of the gas distribution company seeking anonymity.
The energy commission, however, set gas charges for such industrial consumers at Tk 10.70 per cubic metre with impact from 2019, the official added.
Gas has various advantages over coal as a fuel, said a top official of a secured asset management company also preferring anonymity.
If the purchase price rises, then cement development costs will be impacted, therefore the stock selling price fell, he explained, adding that the stock value was higher a couple of days ago which means this drop has been due to profit booking too.
The cement maker's sales dropped 13.8 per cent to Tk 1,142 crore during January to September amount of last year compared to the same period of the prior year.
Meanwhile, its gains rose 27 % to Tk 149 crore.
Recently, it made a foray into the aggregate business. Aggregate is a wide group of coarse particulate materials used in construction, including sand, gravel, crushed stone, slag, recycled concrete and geo-synthetic aggregates.
LafargeHolcim Bangladesh commenced professional production of clear-size graded aggregate, the company said in a filing on the DSE last month.
The company has set up a crushing unit with ancillary equipment on the premises of its existing integrated clinker and cement manufacturing facility in Chhatak, Sunamganj.
It can manufacture 12 lakh tonnes of clear-sized graded aggregate yearly.
