Created on Friday, 26 April 2013
Written by Business Recorder
Fertiliser Manufacturers Pakistan Advisory Council (FMPAC) has warned if full and uninterrupted gas supply to all domestic Fertiliser Plants; especially the SNGPL based four plants that faced more than 300 days of gas curtailment in year 2012 is not restored, country would have to import around 1.0 million tons of urea in 2013.
Copyright Business Recorder, 2013
This can cost national exchequer US $450 million dollars and a subsidy of Rs 21 billion to match the imported urea price to domestic urea prices. Massive loss in urea production due to excessive gas curtailment in the past 3 years has cost significantly to the country as GOP had to spend foreign exchange of US $1.5 billion and subsidy of around Rs 80 billion on the imports of 3.4 million tons during 2010-12.
Pakistan is self-sufficient in urea production and with consistent gas supply to these plants, Government can ensure timely availability of this key farm input to farmers at the cost-effective rates and would also help GOP to reduce its fiscal deficits as well as subsidy spend.
Executive Director FMPAC, Shahab Khawaja said that in current tight fiscal position of the country, Pakistan cannot afford to spend hundreds of millions of dollars on a commodity in which we are fully self-sufficient and can even export the surplus production to earn precious foreign exchange for the country. He said that SNGPL based fertiliser plants that include Pakarab, DH Fertilisers, Agritech and Engro's new plant faced around 90% gas curtailment in 2012 that significantly brought down the urea production to 4.2 million tons against 4.8 million tons production of 2011. Pakistan currently has the 6.9 million tons urea production capacity. He said that SNGPL based fertiliser plants were completely shut for 4 months in winter hoping to get gas post winter but currently only 2 are operating at 75% of capacity corresponding to 2 days a week supply only.
He said that Fertiliser sector is not burning the gas to run the plants, it offers maximum value addition by converting the raw gas into precious urea grains and country hugely benefits from the fertiliser industry. He informed that by not producing urea locally we are not only hurting the interest of poor farmers, who ensure food security of 190 million people of this country, but we have to import urea which is the most expensive form of energy on MMBTU basis, costing around $23/MMBTU, whereas RFO and LNG would be 30-50% less expensive than urea on a MMBTU basis. Isn't it good for the economy of the country to utilise the already available domestic fertiliser production capacity and supply cheaper fertiliser to the farmers and ensure food security for 190 million masses of the country, he added.
He said that for the economy of Pakistan to prosper, it is important for agricultural yields to go up which is only possible through the application of fertilisers in the right quantity at the right time. The decline in urea production poses a severe threat to the crops yield, resultantly the country might miss its agriculture and export targets and also aggravate inflation in the country which is already higher than the regional peers and would also threaten the food security of over 190 million people.-PR