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Gas re-allocation to fertiliser sector: MoP facing resistance from other ministries




  • The Petroleum Ministry is reportedly facing stiff resistance from other ministries in re-allocation of gas to fertilizer sector which has also refused to print prices on bags due to uncertain supply of feed gas, sources close to Secretary Industries told Business Recorder. 

    Prime Minister”s Advisor on Petroleum and Natural Resources, Dr Asim Hussain who is heading a sub-committee of the ECC panel, has convened a meeting of stakeholders on Tuesday (today) to finalise recommendations for the Economic Co-ordination Committee (ECC) of the Cabinet. The sources said ECC”s panel headed by Deputy Prime Minister, Chaudhry Pervez Elahi had called a meeting of public sector stakeholders and representatives of fertiliser industry which remained inconclusive because neither the public sector stakeholders showed any flexibility nor fertiliser sector showed any willingness to print prices on urea bags. 

    The Deputy Prime Minister, sources said, urged the fertiliser sector to reduce price of one bag of urea by Rs 100 to Rs 150 but the response from fertiliser plants representatives was not encouraging. Local fertiliser plants are being accused of selling urea at exorbitantly high rates despite getting gas at cheaper rates. 

    The government has already extended Rs 77 billion subsidy on urea in three years so far. According to sources, Prime Minister”s Advisor on Petroleum and Natural Resources, who was the author of the summary to the ECC discussed in the previous meeting but not approved, assured the committee that he would arrange about 75 mmcfd gas for the power sector. 

    The Petroleum Ministry also requested some private TV channels to run a ticker which states that 75 mmcfd gas has been allocated to the fertiliser sector. This claim, however, has been challenged by one of the officials, who said that no decision had been taken by the sub-committee. The representatives of fertiliser sector, sources maintained, argued that they can manufacture 0.1 million tons of urea from the quantity of gas committed by the Petroleum Advisor. 

    They also clearly conveyed to the committee that printing of price on bags is not guaranteed as a reduction in gas supply does not allow them to make such commitments. The committee, however, assured that there will be no cut whatever in supply of gas committed by the government. 

    The government had prepared a plan to import 0.3 million tons of urea for Rabi keeping in view the capability of local fertiliser plants which are facing massive shortage of gas. Fertiliser sector is making all-out efforts to block import of urea with the promise that local plants can meet urea requirements if natural gas is made available to them. 

    The ECC, in its meeting on October 3, had approved import of 200,000 tons of urea immediately under a facility offered by Saudi Arabia and formed a committee to finalise modalities for further import of 300,000 tons of urea for Rabi. The ECC meeting was held under the chairmanship of Finance Minister Dr Abdul Hafeez Shaikh. 

    The committee”s terms of reference included: (i) a mechanism for provision of subsidy so that it actually reaches farmers; (ii) ways and means for bringing down the prices of domestic fertiliser; and (iii) a mechanism for provision of gas to fertiliser factories. The Ministry of Industries, in its summary, had apprised the ECC that price of domestic urea is Rs 1,659 which is selling at Rs 1,691 per bag in the market. The price of imported urea is Rs 1,600 per bag. Fertiliser plants have also been asked to stabilise domestic urea prices as the benefit of cheaper gas prices were not being passed onto farmers. 

    According to the Ministry of Industries if a buffer stock of 200,000 tons was maintained, the shortfall would increase to 507,000 tons. Subsequently, the Ministry of Industries sought permission for importing 500,000 tons. The Ministry of Industries failed to implement its own decision regarding printing of prices on urea bags. 

    Copyright Business Recorder, 2012

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