Agritech, Fatima Fertiliser: Ministry asks SNGPL to supply gas at discounted rate

ISLAMABAD: The Ministry of Industries and Production has written a letter to the Sui Northern Gas Pipeline Limited (SNGPL) for the supply of gas at discounted rate to Agritech Limited and Fatima Fertiliser Plants from July 26, 2020, in line with the directives of the Cabinet. The AGL and Fatima Fertilizer Plants will commence their operations from July 26th to October 27, 2020, in a bid to produce fertiliser to meet domestic demand. "The decision in case titled "2020-21 projections-urea fertilizer" submitted by Industries and Production Division was ratified with the modification that the three month's period would be calculated from July 26 to October 27, 2020," the document revealed.

The government's share at this gas rate has been estimated by taking RLNG's notified rate for June, which would be approximately Rs0.959 billion.

Further payment by the government for price differential to the SNGPL will vary due to the difference between monthly rates of the RLNG.

The NFDC has projected that the national urea inventory would be below 200,000 tons by the end of December 2020, and had advised the government to either import 200,000 tons or provide subsidy to the closed urea plants. Sources said that the Cabinet had ratified the decision of the Economic Coordination Committee (ECC) of the Cabinet to supply gas to two fertiliser plants at discounted rates for a period of three months.

During the discussion, the Ministry of Industries and Production pointed out that decision in case title 2020-21 projections-urea fertilizer required modification in the dates of the three months period for which gas rate to both units of Agritech and Fatima would be offered as almost 10 days had already passed since decision of the ECC. It was proposed that the period be calculated from July 26 to October 27, 2020.

The federal cabinet has approved supplying re-gasified liquefied natural gas to these plants, which remained closed due to unavailability of feedstock since December 2019.

The ministry has conveyed the decision of the cabinet to the SNGPL through an official letter for resuming gas supply to these plants by the date the Cabinet has permitted the gas supply.

He said that companies had also been conveyed to make arrangements as by July 26, the SNGPL would resume gas supply to their plants. Fatima Fertilizer has gas demand of 45 mmcfd and its fertilizer production capacity is 2800 tons/day, of which the share of urea is 300 tons, Calcium Ammonium Nitrate (CAN) 1,500 tons and Nitro Phosphate Fertilizer of 1,000 tons a day. Agritech's gas requirement is 28.5 mmcfd and can produce urea of 1,200 to 1,300 tons per day. The RLNG would be supplied to Agritech and Fatima Fertilizer at Rs756/mmbtu for three months. This would involve the government's share at Rs959 million much less than the revenue spent previously on using these plants to produce the urea fertilizer to cover up the shortage.

These plants will start its urea production operations from July 26. Further payment by the government for price differential to the SNGPL will vary due to the difference between monthly rates of the RLNG. The government is planning to increase the LNG consumption in power and fertiliser sectors to keep smooth operations of the LNG supply chain.

Copyright Business Recorder, 2020