Home »Top Stories » Gas supply back to normal: Closed urea plants resume production

  • News Desk
  • Sep 26th, 2018
  • Comments Off on Gas supply back to normal: Closed urea plants resume production
After the restoration of gas supply, two urea plants have resumed production after one year.

Three urea plants operating on the SNGPL network remained shut for last 12 months due to unavailability of basic raw material - natural gas. The closure of three urea plants resulted in the shortage of essential commodity and price escalation in the domestic market. The overall short production was some 85,000 tons per month due to the unavailability of gas. In order to avoid any shortage in the domestic market, the federal government already decided to import some 0.1 million tons of urea.

Shortage of local gas and high prices of imported LNG in the country has created major challenges for fertilizer sector, which is among the biggest revenue contributors to the exchequer.

However, the newly-elected PTI government has addressed the gas curtailment issue and decided to restore gas to closed plants and now after the resumption of gas supply two plants, ie, Agritec and Fatimafert, these plants have started production. These two plants will produce some 70,000 to 75,000 tons urea monthly.

Industry sources said that there is need for supporting the domestic urea producers to avoid price volatility, shortage and costly imports. Pakistan''s fertilizer industry has the capacity to meet national demand, if the cost of production remained within the viable limits.

The industry has showed concern over the higher gas price and said that world over gas is provided to the fertilizer sector at a much lower rate compared to Pakistan. It is $4.78 US dollar per MMBTU in Pakistan, while internationally it is between 2 to 3 dollars per MMBTU. The recent decision to increase the gas prices for fertilizer sector by 40-50 percent is going to result in increase in Urea price by Rs 128 per bag, as calculated by Ministry of Industries, they maintained.

The industry is already suffering on account of subsidy of Rs 20 billion, withheld by the government, of which the profits have also dwindled to their lowest levels over the past six years regardless of record revenues achieved by major players.

Governments, around the world, have the responsibility to protect and favor their essential indigenous industries, to create more employment opportunities and reduce their imports bills.

Industry has demanded that the government should work towards relief through adjustment in GIDC and other taxes to the fertilizer sector offering a competitive advantage vis-à-vis international market, thus supporting own farmers through affordable prices. Pakistan should also formulate an ingenious tax regime to nurture its agriculture sector, while strengthening the supply of its basic inputs, like fertilizer, they suggested. Industry has appreciated the efforts by the ministries of Industries and Production, and Finance and Petroleum is appreciated. "No doubt, Abdur Razzak Dawood the Advisor to Prime Minister on Industries and Asad Umer the Finance Minister having realized the need for operationalisation of underutilized domestic production capacity have played the leading role in saving local industry, foreign exchange and subsidy element, in view of higher international prices," they added.

Copyright Business Recorder, 2018


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