LafargeHolcim Bangladesh said yesterday it decided to go to arbitration to settle a dispute with Jalalabad Gas Transmission and Distribution Systems after the state company charged higher than the agreed price for natural gas.
The sales deal came into effect in 2003 for the cement company’s plant located at Chhatak in Sunamganj.
And the listed multinational company in a posting on the website of the Dhaka Stock Exchange (DSE) said that its board of directors had passed a resolution on Wednesday that it would issue a notice of arbitration.
“A dispute has arisen between the parties in relation to the price of gas,” it said, adding that the notice 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 matter is sub judice, and the precise terms of the agreement are confidential, and LafargeHolcim Bangladesh is unable to disclose the details,” it added.
Stocks of LafargeHolcim, one of the biggest cement makers, fell 2.32 per cent to Tk 54 yesterday.
“We found the arbitration notice from LafargeHolcim Bangladesh,” said Md Shahidul Islam, the gas distributor’s general manager.
The company does not want to pay according to the price fixed by the energy regulator of the country, so the dispute arose, he said, adding that he would no more talk on it as it was now under a legal process.
Under the contract signed with Lafarge Surma Cement, the former name used by LafargeHolcim Bangladesh, the natural gas was priced 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 prices for such industrial consumers at Tk 10.70 per cubic metre with effect from 2019, the official added.
Natural gas has various advantages over coal as a fuel, said a top official of an asset management company also preferring anonymity.
If the price rises, then cement production costs will be impacted, so the stock price fell, he said, adding that the stock price was higher a few days ago so this drop has been caused by profit booking too.
The cement maker’s sales dropped 13.8 per cent to Tk 1,142 crore during January to September period of last year compared to the same period of the previous year.
Meanwhile, its profits rose 27 per cent to Tk 149 crore.
Recently, it made a foray into the aggregate business. Aggregate is a broad category of coarse particulate material used in construction, including sand, gravel, crushed stone, slag, recycled concrete and geo-synthetic aggregates.
LafargeHolcim Bangladesh commenced commercial 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 plant in Chhatak, Sunamganj.
It can produce 12 lakh tonnes of clear-sized graded aggregate per annum.
