Urea requirement for Rabi season: ECC allows 2 SNGPL-based plants to run till Mar 31

ISLAMABAD: The Sui Northern Gas Pipelines Limited (SNGPL)-based plants, ie, Fatima Fertilizer (Sheikhupura) and Agritech have been allowed to operate beyond 31st August 2023 till 31st March 2024 for the requirement of urea production for Rabi season 2023-24.

The decision to this effect was taken by the Economic Coordination Committee (ECC) of the Cabinet on a summary moved by the Ministry of Industries and Production (MoIP).

The Ministry of Industries and Production submitted a summary to the ECC for operations of SNGPL-based fertiliser plants and import of 200,000 MT of urea fertiliser on the recommendations of the Ministry of National Food Security and Research (NFS&R) for meeting the demand of urea fertiliser for the annual year 2023.

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The meeting was informed that the ECC has decided in May 2023 that the SNGPL-based plants, ie, Fatima Fertilizer (Sheikhupura) and Agritech shall be allowed to operate beyond May 31, 2023, till August 31, 2023, and this decision was ratified by the federal cabinet in June 2023.

The ECC was further told that the subject decision by the ECC was in continuation to its previous decision of March 2023, wherein, the ECC decided that both the plants to operate on indigenous gas and there will be no subsidy involved in the supply of gas to fertiliser plants.

The Finance Division’s suggestion to the MoIP was that it should hold consultations with provincial governments and seek their consent in writing to lift the imported urea on a full-cost basis with no financial implications for the federal government before placing the matter for final decision of the ECC. In this regard, an FRC meeting was convened in May 25, 2023, wherein, provinces were requested to give their consent in writing for lifting imported urea on a full-cost basis.

The ministry communicated to the ECC of provincial government responses in June with the government of Sindh stated, “If its demand is met from domestic production, no imported urea is required”. The Government of Balochistan informed the ministry that the chief minister Balochistan has turned down the proposal to bear the financial burden of imported urea fertiliser on a full-cost basis due to prevailing financial constraints. The government of Punjab is ready to lift imported urea provided the subsidy cost is shared on an equal basis by the federal and provincial governments, as per previous practice.

The ministry added that in order to review the situation, a meeting of the Fertilizer Review Committee (FRC) was convened in July 2023, which after deliberations, recommended that the MoIP move a summary for extension in operations of SNGPL plants till March 31, 2024. Additionally, the ministry should apprise the ECC regarding the input of provincial governments on the import of 200,000 MT for the upcoming Rabi season 2023-24. Moreover, the Petroleum Division to ensure that maximum gas pressure is provided to the FFBL for maintaining optimum production of urea fertiliser.

The ministry in view of the recommendations of the FRC, proposed that the SNGPL-based plants, Fatima Fertilizer (Sheikhupura) and Agritech may be allowed to operate beyond 31 August 2023 till 31st March 2024, and since no commitment has been made by the provinces regarding the lifting of imported urea on a full-cost basis, the ECC may decide regarding import of 200,000 MT of urea fertiliser latest by October 2023.

The Petroleum Division will ensure that gas pressure to all fertiliser plants may be maintained at the maximum for optimum production of urea fertiliser and that the SNGPL must ensure uninterrupted supply of RLNG to 525 MW Nandipur Power Plant so as to cater to the system demand.

Copyright Business Recorder, 2023