The Ministry of Industries and Production has been accused of not properly monitoring progress on Fatima Fertiliser Plant at Sadiqabad despite the fact that its delay is costing the national exchequer an estimated Rs 3 billion annually, official sources told Business Recorder.
"The first target set by the Economic Co-ordination Committee (ECC) for this unit to come into production by August 23, 2006 could not be met and delay in production of urea by Fatima Group cost the national exchequer an estimated Rs 3 billion per annum," the sources added.
The Fatima Fertiliser Plant, a joint venture of Fatima Group and Arif Habib Group, was discussed in the previous Parliament because of close ties of its sponsors with former prime minister Shaukat Aziz.
The government had allocated 75 mmcfd of feed gas from Mari Gas Field with the agreement that the plant would start commercial operations in August 2004, a deadline given by the ECC.
The ministry had recommended that since the company has failed to set up the urea and phosphatic fertiliser project within the stipulated time given by the ECC in August 2004, the allocation of 75 MMCFD of feed gas from Mari Gas Field may be revoked and allocated to the already qualified bidders.
Sources said the ministry had also proposed that in case of extension in the completion period to August 31, 2008, the government should impose penalties as noted in the agreement.
The issue resurfaced in the ECC meeting on September 10, when Ports and Shipping Minister Qamar-Uz-Zaman Qaira raised his voice against the much delayed projects, saying that the consortium had got gas allocation for fertiliser plant, which is to be commissioned in 2009 in accordance with the extended deadline. The ECC has directed the Industries Ministry to review gas allocation to Fatima Fertiliser as the sponsors have, so far, erected the boundary wall only at the site of the plant.
The minister also said that old machinery was lying inside the boundary wall, which indicates that the proposed plant is unlikely to be operational even within the extended deadline line of December 2009.
According to sources the, minister was of the view that the Ministry of Industries and Production should submit a report to the ECC in its next meeting. The government should further extend the deadline to 2010 and if the sponsors do not complete the project in time, gas allocation should be cancelled and the earmarked gas of 75 mmcfd should be allocated for power generation.
Earlier, the ministry had recommended that if the Fatima Fertiliser delays its production beyond August 31, 2008, it must pay a penalty equal to 1 percent of the import subsidy paid by the GoP on the installed capacity of 240,000 tonnes of urea, which was to be produced during the first month of the production, 2 percent for the second month and so on up to a maximum of 10 percent.