The fertilizer industry is likely to increase urea prices by Rs 80 per bag due to a raise in gas prices approved by a high level meeting presided over by Prime Minister, Imran Khan, well informed sources told Business Recorder.
"The current maximum price of urea which is Rs 1610 per bag will touch Rs 1690 per bag with adjustment of fresh hike in gas prices," the sources said, adding that earlier adjustment in prices was made in post-subsidy withdrawal scenario.
Fertilizer industry which is scheduled to hold a meeting with the Prime Minister's Advisor on Commerce, Textile, Industries and Production and Investment, Abdul Razak Dawood, on Thursday (today) will request him to reconsider the increase in gas prices for the fertilizer sector which is already heavily taxed, raising price by Rs 300 per MMBTU for feed gas. The meeting will discuss the modalities of financing the operation of plants.
On September 3, 2018, Ministry of Industries and Production revealed that pursuant to ECC decision of August 29, 2018, a meeting of stakeholders was held on August 30, 2018, under the chairmanship of Prime Minister's Advisor on Industries and Production to discuss issues relating to demand and supply of urea.
Ministry of National Food Security and Research in its presentation made to the ECC on August 29, 2018 stated that total expected shortfall of urea in Rabi till end December 2018 was anticipated to be 580,000 tons inclusive of 200,000 buffer stock. With the reconciled data, the anticipated shortage towards end December 2018 would stand at 316,000 tons.
Three fertilizer plants i.e. Fatimafert, Agritech and Pak Arab are not operational for the last one year. Pak Arab produces a mix of fertilizers and its urea production capacity is about 8500 tons per month. Fatimafert and Agritech are exclusively urea plants with production capacity of 44000 tons and 35000 tons per month respectively. Installed capacity of all 19 fertilizer plants in the country is 6.23 million tons per annum while the annual consumption, on average, comes to 5.9 million tons. The shortfall has occurred due to the export of 635,000 tons urea last year after approval by the ECC and shut down of three plants for want of system gas for the last about one year. By operating three plants for four months, September to December, 2018, an additional 348,000 tons can be achieved. The net Variable Contribution Margin has been worked out in consultation with fertilizer industry and comes to Rs 606 per bag.
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