Letters of credit (L/Cs) may be being used in scams in Bangladesh's volatile urea market according to local sources.

The alleged scams take place against a backdrop of soaring world urea prices, government subsidies and accusations of corruption in the state-owned Bangladesh Chemical Industries Corporation (BCIC).

Soaring prices

The global price of urea has soared to more than US$800 per tonne compared with prices of US$150-200 last year.

Local media in Bangladesh, however, is reporting that organised racketeering outfits are making alluring offers of between US$200-250 per tonne to buyers on L/C terms such that the racketeers are able to cash in L/Cs without delivering the ordered goods.

Market sources say that buyers should not take seriously any offers of urea for sale at a price of less than US$500 per tonne.

More reports

Another report suggests that L/Cs may feature in suspect dealings between one of the country's largest private sector urea dealers and BCIC.

Few details are available, but it appears that shipments from the private sector supplier to the state-owned buyer are not being completed, even though the L/Cs covering these shipments may have been cashed.

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