Govt likely to allow 2 gas-based fertilizer plants’ operations for further two months

ISLAMABAD: The government is likely to allow operations of two fertilizer plants on Sui Northern Gas Pipeline Limited (SNGPL) system for a further two months, i.e., Feb-March 2022 to meet demand of urea, as farmers are still struggling to get fertilizer for their crops at controlled rate of Rs 1860/bag.

Official documents seen by this scribe show that a Fertilizer Review Committee (FRC) meeting was convened to assess the situation on December 24, 2021, wherein Minister for Industries and Production after detailed deliberations announced that SNGPL-based plants would run till March-2022, so that demand for urea fertilizer is met domestically.

National Fertilizer Development Centre (NFDC) was accordingly requested to furnish information with the scenarios, i.e., FFBL (full capacity) and SNGPL-based plants running after January 31, 2022, and without operations of FFBL and SNGPL-based plants during Feb-Mar, 2022.

NFDC has estimated that if SNGPL-based plants and FFBL continue operations from Jan-Mar 2022, then at the end of Rabi season 2022, country would have adequate stocks. Further, NFDC has estimated that local production of 1 00,000 MT would be beneficial to the national exchequer against same quantity imported by Rs 12.69 billion (if gas price to plants is at Rs 805/ MMBTU), whereas if gas price to plants is at Rs 839/ MMBTU, local production would be beneficial by Rs 12.79 billion.

In view of current situation, Ministry of Industries and Production (MoI&P) has proposed that ECC of the Cabinet may allow operations of SNGPL-based plants (i.e. Fatima Fertilizer Sheikhupura plant, and Agritech) for a further two months’ post Jan-2022, i.e., Feb-March 2022 at gas rate of PKR 839/ MMBTU.

Ministry of National Food Security and Research (NFS&R) has supported the proposal for operations of two plants (Agritech and Fatimafert) for a further period of two months, i.e., February and March, 2022 to meet demand of urea.

Finance Division has also supported the proposal with the condition that the subsidy worked out would be paid from the funds of Rs. 6 billion allocated for this purpose in CFY in the demand of MoI&P and Rs. 11 billion approved by ECC on January 5, 2022 while considering a summary submitted by the Petroleum Division. The requirement of additional funds (if any) may be allocated in the next FY through the budgetary process.

On December, 24, 2021, during FRC meeting, Additional Secretary-II, MoI&P stated that due to low pressure of gas being supplied to FFBL in December, the cumulative urea production during December would be around 560,000 MT against estimation of 583,000MT done by NDFC.

Further he contended that if FFBL and SNGPL-based plants are kept operative for the rest of the Rabi months, i.e., Feb and March at the end of Rabi season country would be having healthy inventory of urea fertilizer.

Chief Secretary Punjab Kamran Afzal, via Video Link, stated that currently there is a gap between demand and supply and the demand for urea fertilizer is not based on actual requirement, as the expected demand is augmented. On the basis of daily dispatch data available, district administrations are selling urea fertilizer under their supervision. He maintained that they would require daily supply of around 20,000MT urea whereas they are being supplied with 13000-14000MT urea per day.

Chief Secretary Punjab requested that supply may be further increased so that situation can be brought under control. He also highlighted the issue of fertilizer slippage from border districts of Punjab and Sindh to Balochistan and from there onward to Afghanistan which needs to be addressed as price in Afghanistan for urea fertilizer is around Rs 6000/bag.

Secretary (Agriculture) Sindh emphasized that Sindh is also facing acute shortage of urea fertilizer due to hoarding. He requested that supplies need to improve so that the demand for urea fertilizer may be met.

CEO (Agritech) stated that country is facing a production shortfall of around 180,000 MT on account of closure of two SNGPL plants during the summer months.

The Cabinet in its meeting held on January 11, 2022 while ratifying minutes in the case titled “import of urea from China by TCP” allowed import of urea (Granular / prilled) upto 100,000 MT (+/- 5% MOLSO) @ $ 556 PMT (Granular) and @ $ 548 PMT (Prilled) on FOB basis, subject to the condition that last shipment of 50,000 MT can finish legal clearance and start loading by January 30, 2022, failing which both the seller and buyer have the right to cancel the second lot.

However, in case the 2nd lot is cancelled, the first lot of 50,000 MT shall be @ $ 596 PMT (Granular) and $ 588 PMT (Prilled). The shipment arrangement within $ 50 PMT through Pakistan National Shipping Corporation (PNSC) was also approved.

Copyright Business Recorder, 2022