Urea import for Kharif: $121 million SABIC loan and Japanese aid to be utilised

The government is likely to use $121 million of Saudi Arabian Basic Industries Corporation (SABIC) loan and non-project grant aid extended by the Japanese government to import urea for Kharif 2012, well-informed sources told Business Recorder.
The Economic Co-ordination Committee (ECC) of Cabinet recently allowed import of 0.3 million tons of urea through Trading Corporation of Pakistan (TCP), half of which will be imported through Gwadar port. The ECC revealed that domestic urea production declined as a consequence of gas curtailment to fertiliser industry in pursuance of decisions taken at the Energy Summit in April 2010.
The latest development is that gas has been completely cut off to three ''Sui Northern Gas Network Plants'' except Agric tech. Sui Northern plants produce 156,000 tons of urea per month at a 20% cut. The gas crunch has worsened the situation and a shortfall of around 0.6 million tons of urea for Kharif 2012 is expected. Thus there is a need to plan in advance for plugging likely gaps in urea supply and demand.
The Ministry of Industries supports the import and argues that imports at the eleventh hour result in high priced deals and complications in terms of seeking PPRA rules exemptions. To meet the gaps emanating from curtailment of gas to urea plants the government imported 1.2 million tons for Rabi 2011-12. The Industries Ministry therefore, proposed that 0.6 million tons of urea may be imported for Kharif 2012. In case gas situation improves the imported urea will meet the Rabi 2012-13 shortage confronting growers in a timely fashion. In this regard $100 million SABIC facility is available as well as $21 million as ''Non Project Grant Aid'' extended by government of Japan to import urea.
During ensuing discussion, it was suggested that initially the import of 0.3 million tons of urea may be allowed and the secretaries committee already constituted by the ECC may be tasked to examine the additional requirement of urea and submit its recommendations to the ECC in a subsequent meeting. It was also stated that people of Balochistan have expressed concerns over the ECC''s previous decision to allow import of urea from ports other than Gwadar. It was suggested that in order to address the concerns of people of Balochistan, 50 percent of imports may be carried out through Gwadar Port.