The price of urea fertiliser, which is already being sold at Rs 1800 per 50kg bag in the local market, can further go up if gas curtailment to fertiliser sector is continued. On the other hand, farmers are facing shortage of urea, which is feared to result in less production of all crops and can lead to even bigger crisis- shortage of food.
Industry sources told Business Recorder here on Thursday that the SNGPL decision to run plants on 15-day rotation basis had created severe shortage of the fertiliser in local market. For Kharif season, in which major crops like sugarcane, cotton and rice are sown, the requirement of urea has surged from 350,000 to 400,000 tons while it is being forecast that for coming Rabi season, the country would be required to import 1.2-1.3 million tons urea to meet the domestic demand for crops especially the strategically important wheat crop.
"The government should make all out arrangements to ensure the availability of urea in wheat sowing season and importing urea at high international prices is not the answer to the problem," they added. Sources added that the only solution of the problem was continuous supply of gas to the fertiliser sector by restoring the preferred gas allocation status for the sector. "Urea prices will start to come down in the market once the gas is fully restored to fertiliser plants," they noted.
The decision regarding gas curtailment to fertiliser plants was first taken in April 2010 when it was decided to curtail gas to fertiliser plants at 12 percent to plants at Mari network and 20 percent at SNGPL/SSGC network for three months. In July 2010, the decision was extended for another three months. On December 2010, SNGPL/SSGC based plants were completely shutdown from end December, 2010 for 45 days while in July 2011 SNGPL announced that they would operate four fertiliser plants on rota basis of 15 days which is not feasible technically and economically.
If the government maintains the same policy regarding the curtailment of gas to the fertiliser plants, then the already cash-strapped country would have to spend $850-900 million on import of the commodity from the international market at much higher prices. This will necessitate a subsidy worth Rs 50-52 billion by the government to make the prices of fertiliser affordable to the poor growers.
Current urea production capability of Pakistan is 6.9 million tons per annum while its demand is 6.4 million tons per annum. "The present capacity makes Pakistan self sufficient in urea. Rather it can meet growing urea demand of the country for next 3-4 years," the sources said.
They said that Ogra had granted 476 licenses to set up CNG stations during last two years, despite the ban due to gas shortage in the country. Out of these, 306 licenses were granted in 2009-10 and 170 in 2010-11 but there is no solution with the government for the fertiliser plants.
There are reports that the Ministry of Petroleum has proposed a 'Gas Utility Act 2011' proposing severe punishments for both domestic & industrial consumers for illegal gas connections. The proposed legislation recommends sic months to 14 years imprisonment for gas theft for different consumers along with hefty fines. "This act will drastically reduce the Unaccounted for Gas (UFG) on system and make this gas available for the use of key development sectors like Fertiliser, Textile, and Power etc," the sources added.