The urea fertilizer plants based on indigenous gas have recorded their highest-ever first quarter urea production of around 1.43 million tons. As a result of record production, without the operation of LNG-based plants, the market has sufficient inventory levels in excess of 600,000 tons entering into the Kharif season.
The increasing inventory levels and improving local production of urea will present relief for the farmer community.
According to latest industry estimates for the first quarter of this year, Fauji Fertilizer Company (FFC) produced around 744,000 tons of urea, which is much higher than last few years. Similarly, Engro Fertilizers recorded its highest ever quarterly production of 572,000 tons as well.
Industry sources are of the view that at this pace, the indigenous gas-based urea manufacturers will be able to produce up to 6 million tons of urea during the full year, which is adequate to meet the local demand and maintain sufficient levels of safety stock. With around 200,000 tons of opening industry inventory and 400,000 tons of channel inventory at start of the year, the urea supplies are adequate to meet the country's agronomic demand of around 5.8 million tons.
The Fertilizer Policy of 2001 has played a significant role in encouraging investments in local fertilizer manufacturing to ensure availability of affordable urea in the local market.
The policy has attracted urea manufacturers to make investments to enhance production capacity, which now stands at 7 million tons and exceeds the annual domestic demand.
Industry sources further stated that based on the supply and demand outlook, the government would not be required to operate the LNG-based urea plants in an already oversupplied market as this would further jeopardize the COVID-19 hit economy. For the operation of LNG-based plants, the government will have to bear unnecessary fiscal and foreign exchange burden through import subsidies.
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