The SNGPL-based fertiliser plants will invest $100 million for long-term development of lower BTU gas fields that would ensure better gas supply to fertiliser plants to get better production from local plants instead of depending on costly imported urea spending hundreds of millions of dollars of foreign exchange every year.
Fertiliser sector has been deprived of gas since April 2010 and has been one of the worst affected sectors, said Shahab Khawaja, Executive Director Fertiliser Manufacturers Pakistan Advisory Council (FMPAC) in a statement issued here on Wednesday. He said that the new gas allocation through long-term arrangement is just a replacement of current allocation through which Fertiliser plants based on SNGPL network will get gas through different small fields as a replacement of gas which would be discontinued from existing sources and which is our legal right as all the fertiliser companies have agreements in place GSPA (gas sales purchase agreement) with the utility providers.
He said that the decision to supply gas to fertiliser industry through dedicated small fields is in line with the strategy to reduce burden from the SNGPL network, and to ensure continuous supply to general and industrial consumers in the country. This decision has been taken after detailed deliberations from all the stakeholders concerned in the larger interest of the country. Agriculture contributes around 24 percent to the GDP of Pakistan and it also provides raw materials to all the major industries of Pakistan, including textiles and sugar.
He said that successful implementation of the long-term plan will ensure self-sufficiency of country in fertiliser production and would also bring substantial savings of half a billion dollars of foreign exchange annually and a subsidy of approximately Rs 20 billion. He informed that the post ECC approval, GSAs between gas fields and fertiliser plants were inked carrying the reservoir risks and gas transportation agreements with both Sui companies were signed under OGRA's TPA Rules, these agreements strictly comply the TPA rules. The arrangement is beneficial for Sui companies with additional stream of tolling income and saving on 240 mmcfd of gas allocated to 4 fertiliser plants under existing GSAs with SNGPL.
While dispelling the impression that fertiliser sector would get dedicated gas from different small fields without any additional investment, he informed that to facilitate this transaction Fertiliser plants are investing more than $100 million in increasing the pipeline capacities of Sui companies where bottleneck exists. The SNGPL based plants being large scale units are now at verge of closure with over 100 billions of rupees of payable bank loans. Current arrangement is a win-win for all stakeholders as fertiliser plants upon receiving the regular gas from different small fields would provide farmers with cheaper local urea and gas companies would be selling this gas to new customers with better rates.
He informed that fertiliser plants will also pay a higher gas price than the gas price available to them under the existing GSAs, and will also have to incur significant additional investment for the smooth transportation of gas from respective gas fields to their plants.
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