Fertiliser industry has strongly opposed further import of urea for upcoming Rabi season saying there is no fear of any shortage of the commodity as sufficient stocks will be available in the country. Industry sources claimed that urea demand for this Rabi season will be easily fulfilled with domestic production and already planned import of some 0.3 million metric tons.
“During Rabi 2012-13, going to start from October 2012, some 2.93 million tons of urea stocks will be available for domestic consumption as against the demand of 2.8 million tons, which based on higher estimation, despite the fact that same decline is expected in upcoming months,” they said and added that total availability during Rabi season includes opening inventory of 630,000 tons, local production of 2 million tons and an import of 0.3 million tons in Rabi 2012-13.
“Our estimates always based on actual statistics as last year government officials were expecting a consumption of 3 million tons during Rabi, while our projection was 2.8-2.9 million and finally 2.755 million tons urea was consumed during Rabi 2011-12,” they said.
Although, last year SNGPL-based urea plant produced some 0.2 million tons of urea during Rabi season, however current demand and supply scenario of urea is worked out on assumption of no gas supply to SNGPL-based plants in Rabi season 2012-13, industry sources said.
“The fertiliser availability situation would ease significantly in coming months and urea would be available in surplus if the government provides gas to fertiliser industry even on rotation basis,” they added. This year rains have damaged all major crops, cotton sales and prices are on decline and input cost of farmer is on surge, accordingly, it is expected that urea offtake will decline during this Rabi season. Only outright chance that can change industry estimates it will be speculation, they pointed out.
“There is no need for further imports of urea for upcoming Rabi season, especially keeping in view markedly low demand of fertiliser in recent months,” said Shahab Khawaja, Executive Director Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC).
He said same conclusion was also evolved in a recent meeting where stakeholders had agreed that 2.8 million tons of urea would be required during Rabi 2012-13 season against 2.755 million tons utilised in Rabi 2011-12. As per assessment of Kharif 2012 and trend of last Rabi, there would be no need for further imports of urea for upcoming Rabi season, he said. He opined that the import of urea would primarily be required to create buffer stock.
He further said that National Fertiliser Development Center (NFDC), a federal government body, also concluded that the urea shortfall during Rabi 2012-13 to be just 55,000 tons and with 0.2 million tons of buffer stock the total import requirement would be 0.255 million tons. This assumption was also based on high use of urea during September, which is least likely, he said.
In our view, Khawaja said, expected offtake in September 2012 would be 0.3 million tons instead of 0.45 million tons. On behalf of FMPAC, he demanded of the government to avoid import of urea and natural gas should be supplied to fertiliser manufacturing plants on priority basis. “This step would create a win-win situation for whole country and there will be no financial burden on the government while fertiliser plants would also be running ensuring adequate supplies of fertiliser at affordable prices besides alleviating fears of massive unemployment,” he added.
He urged the government to reassess the requirements of urea imports, especially keeping in view its low demand, to save precious foreign exchange required for imports and also subsidy to lower price of imported urea. Current annual demand for urea is between 5.5 and 6 million tons whereas the installed production capacity is 7 million tons. However, due to gas curtailment, producer has tapered to 4.3 million tons consequently resulting in huge import of urea to meet the local demand. In addition, the government has spent $600 million foreign exchange on urea import during the last fiscal year whereas approximately Rs 50 billion has been used to subsidise the expensive urea imports.