Gas suspension to increase urea shortage

LAHORE: A huge urea shortage will happen in the next couple of months if the government does not provide gas to fertiliser companies.

It was stated by Bilal Jaudat, CEO Agritech, CEO of Engro Fertilizers, Khalid S.Subhani, CEO Dawood Hercules, Rashid Lone, Fawad Mukhtar, CEO Pak-Arab Fertilizers in a press conference here at a local hotel on Monday.

They said fertiliser companies on the SNGPL network which included Pak Arab, Dawood Hercules, Agritech and Engro`s new plant had been receiving average 70 percent-80 percent of their allocated gas supply since Sept 5, 2011, and the uninterrupted supply helped decrease urea shortage and brought its prices down across the country.

However, the recent curtailment has disturbed the urea supply and the downward pricing trend and it is unclear how long it will continue, they added.

They said the fertiliser industry was aware of the gas crisis in the country but three fertiliser plants had been closed last month and if the situation remained the same farmers would not get urea after two months for wheat sewing.

"Still no summary has been made for importing urea and if the government decides to import it, it will take three or four months to reach Pakistan and by the time the process of wheat sowing would have ended," they added.

They companies were gravely disappointed with the government`s sudden curtailment in the last few days which has resulted in complete stoppage of the gas supply to Agritech, Dawood Hercules and Engro plants, they added.

They said the continued gas curtailment would lead to greater shortage for the Rabi season and beyond. "The government knows how important is the agriculture sector and the shutdown is baffling," they said.

They said that at least 700,000 to 800,000 ton urea would still have to be imported in the next two months if not more, to meet urea demand in Rabi, requiring minimum foreign exchange of at least US$ 320-428 million and subsidy of at least Rs 17-23 billion.

Moreover, they said the gas curtailment would require more imports which could be a costly alternative to taxpayers and create a greater shortage. As a result, urea market prices will reach higher levels during the Rabi season which can increase wheat crop`s cost of production and impact its yield, they feared.

They emphasized the need of immediate and complete restoration of gas to plants on the SNGPL network to ensure the urea demand and supply gap was reduced for the important Rabi season.

Copyright APP (Associated Press of Pakistan), 2011