ISLAMABAD: Ministry of Industries and Production (MoI&P) has proposed import of 0.2 million tons of urea on G2G basis, and uninterrupted gas supply to SNGPL-based urea fertilizer plants till December 2023, well informed sources told Business Recorder.
Ministry of Industries and Production submitted a summary to the ECC for operations of SNGPL-based fertilizer plants, which was based on the recommendations from Ministry of National Food Security and Research (MoNFS&R) for meeting the demand of urea fertilizer during the Kharif Season 2023.
The ECC on March 15, 2023 directed Petroleum Division to supply indigenous gas to Fatima Fertilizer (Sheikhupura) and Agritech (Mianwali) plants immediately for bridging gap between demand and supply of urea fertilizer for Kharif season 2023, up to May 31, 2023.
Urea production: Fertiliser plants to get gas till May 31st: ECC
Furthermore, there shall be no subsidy involved in supply of gas to fertilizer plants. The decision was ratified by the Cabinet in its meeting on March 17, 2023. The decision was conveyed to Petroleum Division on March 20, 2023 after which gas was restored by SNGPL to the subject plants on March 24, 2023. Subsequently, plants started production between March 27 and 28, 2023.
MoNFS&R had earlier projected annual off-take for urea fertilizer at 6.508 MMT, but later, through its letter of April 3, 2023 revised the annual off-take estimates for urea fertilizer due to higher off-take of urea fertilizer in March-23 by 86,000 MT and production loss of 22,000 MT by Fauji Fertilizer Bin Qasim Limited (FFBL) due to gas pressure issues.
The ministry is projecting an import requirement of 800,000 MT if both SNGPL based plants are shut down by May 31, 2023. Further, M/o NES&R was requested to reconfirm the revised off-take estimates through M/o Industries and Production letter of April 10, 2023. MoNFS&R, in its letter of April 11, 2023 endorsed their working.
In order to review the situation, a meeting of Fertilizer Review Committee (FRC) was convened on April 6, 2023 wherein after detailed deliberations, FRC recommended the following: (i) FRC endorsed the proposal of MoNFS&R for Import of 200,000 MT of urea fertilizer by May 15, 2023;(ii) Fatima Fertilizer (Sheikhupura Plant) and Agritech to be provided uninterrupted gas supplies beyond May 31 till December 2023; and (iii) Petroleum Division to ensure that gas pressure to all fertilizer plants may be maintained at the maximum for optimum production of Urea fertilizer.
In view of the recommendations by FRC, Ministry of Industries and Production has proposed that: (i) SNGPL based plants, i.e., Fatima Fertilizer (Sheikhupura) and Agritech may be allowed to operate beyond May 31, 2023 till December 31, 2023; and (ii) TCP may be allowed to initiate process for import of 200,000 MT of urea on G2G basis and international open tender. On receipt of offers, Ministry of Industries and Production will place the matter before ECC for the final approval.
The sources said that in line with the proposal of MoI&P, Ministry of Commerce has proposed the following: (i) TCP may be allowed to invoke Rule 5 of PPRA for G2G procurement and be granted exemptions from Rules 8,9,13,35,38 and 40 of PPRA for doing international tenders; (ii) TCP may be allowed to land the whole quantity of urea till end June 2023; (iii) NFML be declared as the recipient agency; (iv) Finance Division be advised to allocate Cash Credit Limit (CCL) to TCP for urea procurement; (v) MoI&P should make arrangements for providing Technical Supplementary Grant(TSG) equivalent to total procurement done by TCP in order to repay the loan and avoid accumulation of mark-up OR (vi) Finance Division to allocate amount for federal share already worked out by TCP for the CFY 2023-24 in the demand of Ministry of Commerce for avoiding accumulation of mark-up.
Petroleum Division is to ensure that gas pressure to all fertilizer plants may be maintained at the maximum for optimum production of urea fertilizer.
Ministry of National Food Security and Research has supported the proposal with the comment that imported urea should land in the country latest by mid-May-2023.
Ministry of Energy (Power Division) agrees to the diversion of natural gas from Guddu Thermal Power Station till 31 August, 2023.
Finance Division has supported the proposal provided that system gas is supplied with no subsidy requirement from Federal Government, MoI&P may hold consultation with Provincial Governments and seek their consent in writing to lift the imported on full cost basis with no implication for the Federal Government before placing the matter for final decision of the ECC. The quantity of imported urea should be limited to the quantity so agreed by the Provincial Governments.
In order to address the observation raised by Finance Division, MoI&P would be convening a meeting with Provincial Governments and Federal Government stakeholders, i.e., Finance, NFS&R and Commerce for formal consultation and the outcome of the meeting will be shared with the ECC.
Copyright Business Recorder, 2023
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