Engro has announced to raise urea price by Rs 210 per bag owing to shortage of gas. With this increase, the price of urea has reached near Rs 1,800 per bag. After imposition of Gas Infrastructure Development Cess (GIDC) and rise in gas tariff, Engro has announced to raise urea price by Rs 210 per bag to Rs 1,790 per bag. However, as it has been previously seen that it may face government's intervention through regulatory bodies.
On the other hand, if things go smoothly it is expected that other urea manufacturers will follow the same price hike and raise their urea prices to Rs 1,790 per bag, according to JS global research report. The report recalled that Fauji group (FFC and FFBL) has already increased Rs 50 per bag to pass on the incremental cost of gas tariff.
Therefore, it is being expected that they will increase the urea prices by another Rs 160 per bag. Fatima Fertiliser may come as a major beneficiary of this price hike as GIDC has not been imposed on its feedstock gas price because of its prior agreement with the government. This increase in price bodes well for the fertiliser sector on the whole, especially after the huge negative impact following imposition of GIDC.
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