The federal government is planning to import 0.763 million tons of urea for Kharif 2011 and Rabi 2011-12 due to gas curtailment, which involves Rs 18.374 billion subsidy, this is in addition to 150,000 tons fertiliser being imported from Saudi Arabia under Saudi facility, informed sources in Ministry of Industries told Business Recorder.
The sources said that supply and demand situation of urea was assessed in a meeting held in the Ministry of Industries, wherein it was noted that urea production capacity of 6.8 million tons was sufficient to meet the demand of approximately 6.3 million tons. However, due to curtailment of gas supply to fertiliser plants, they were operating at around 80 percent capacity, resulting in gap between supply and demand.
The government had already decided to import 150,000 tons of urea for Kharif crop to fill the demand-supply gap. However, the Ministry of Petroleum and Natural Resources suggested that demand-supply gap of urea be worked out on the basis of 15 days closure of gas supply to fertiliser plants per month in addition to existing gas load shedding. Accordingly, shortage of urea (in addition to 0.150 million tons of urea, which is under import) under two scenarios would be as under:-
Scenario -I: (i) 20 percent gas curtailment on an open ended basis on Sui network; (ii) l2 percent curtailment on an open ended basis for fertiliser plants being operated on gas from Mari Gas Field; and (iii) 45 days winter gas load shedding. The sources said, import requirement for current Kharif will be 0.050 million tons whereas requirement for Rabi has been estimated at 0.713 million tons for which $455 million foreign exchange will be required. The government has to extend Rs 18.374 billion as subsidy on urea.
Scenario- II:(i) 20 percent gas curtailment on an open ended basis on Sui Network; (ii) 12 percent curtailment of gas on an open ended basis for fertiliser plants operated on gas from Mari Gas Field; (iii) 45 days winter gas load shedding; and (iv) 15 days monthly gas load shedding proposed alternately for fertiliser plants on SNGPL network.
Under this scenario shortage of urea for Kharif 2011 and Rabi 2011-12, as forecast by the fertiliser industry, would be as follows; import requirements will be around 1.587 million tons( 0.387 million tons in Kharif and 1.2 million tons in Rabi) for which $941 million foreign exchange will be required. In this way total subsidy will be around Rs 37.88 billion.
To overcome the shortfall of urea, ministry of industries has sought approval of ECC to allow additional import of urea as follows: Scenario-1 - 0.050 million tons for Kharif and 0.7 million tons of urea for Rabi 2011-12 or scenario-2 (already begun) - 0.38 million tons for Kharif 2011 and 1.2 million tons for Rabi 2011-12. The sources said, the ECC was informed that schedule of gas load management for fertiliser plants had already been provided to the ministry of industries. It was intimated that other regional countries particularly India and Russia were heavily subsidising various inputs, especially fertiliser, for agriculture sector.
It is also reported that India would be importing 1.1 million tons of urea during the current year and subsidy will be picked up by the government of India. The ECC was also informed that imported urea costs Rs 2900/- per bag including all incidentals, whereas urea is provided to the farmers at a subsidised rate of Rs 1225 per bag. Thus each bag of urea involves a subsidy of Rs 1675. It was suggested that in view of importance of the matter, it would be better that a small group should deliberate upon it in next 2-3 days and come-up with a viable proposal.
The ECC was also apprised that a subsidy of Rs 17 billion would be involved for import of urea, to be picked up by the government. One view point was that the amount of subsidy involved could be better utilised, by diverting gas to fertiliser plants and using subsidy as alternate fuel. However, it was considered essential to resolve this issue expeditiously, to facilitate farming community timely.
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