Sabic refuses $100 million facility for urea import: anger at dumping duty on caustic soda supply

The Saudi Arabian Basic Industries Corporation (Sabic) has declined the previously approved $100 million facility to Pakistan for import of urea reportedly due to anger against the charge of dumping duty on its 5000 tons caustic soda supply to Pakistan, sources in Industries Ministry told Business Recorder.
Documents available with Business Recorder refer to ''Unforeseen development on account of Sabic being chagrined about anti-dumping investigations by the National Tariff Commission on its 5000 tons caustic soda to Pakistan'', as the reason for Sabic''s decision on the facility for urea imports by Pakistan.
Pakistan is to import a 0.255 million tons of urea on a war footing for Rabi season and any delay in import will send a negative message to the farmers'' already criticising the government for increase in the price of this commodity. A committee, headed by the Deputy Chairman of Planning Commission, Dr Nadeem-ul-Haq, and comprising Secretaries of concerned Ministries including Economic Affairs Division (EAD) recently allowed Trading Corporation of Pakistan (TCP) to import urea. This decision has been ratified by the Economic Co-ordination Committee (ECC) of the Cabinet.
Earlier, the Deputy Chairman of Planning Commission was determined to oust TCP from the commodities'' business due to massive corruption, but he was compelled to change his decision when the private sector refused to import urea due to the element of subsidy.
Giving the background, sources said that the ECC in its meeting held on December 7, 2010 approved import of 0.225 million tons of urea, in principle, to meet the likely shortage of urea in the Rabi season and constituted a committee to submit its report to ECC Chairman recommending the option of utilising Sabic facility to be pursued through Economic Affairs Division, Finance Division and Commerce Division.
The ECC was further informed that Minister for Industries and Production held an inter-ministerial committee meeting with all stakeholders and the industry to discuss the availability of fertiliser for Rabi season and the unprecedented increase of Rs 190 per urea bag. Based on the recommendations of the committee a summary was moved to the Prime Minister, who desired that a special meeting of the ECC be convened to resolve this issue.
It also emerged that all Sui network fertiliser plants and new Engro plant stood shut from December 27, 2010 and January 7, 2011, respectively. It was also stated that Rabi requirement was about to reach its peak period in the following week. The committee recommended that industry be allowed to produce 250,000 tons of urea in 30 days to meet the immediate requirement of the Rabi season. It would save Rs 4.5 billion as subsidy to the government - being net difference between imported (SABIC facility) urea price and domestic price, besides ensuring timely availability of urea in the market.
Different alternatives were also discussed in the meeting on January 4, 2011: (a) reducing winter gas load shedding from 45 to 15 days may result in additional production of 250,000 tons of urea (price reduction Rs 48 per bag); (b) reducing winter gas load shedding from 45 to normal 30 days (Sui network) will produce 1,50,000 tons of urea (price reduction Rs 48 per bag); (c) restoring 60 mmcfd gas to Mari- based plants for 30 days will produce 25,000 tons of urea (price reduction of Rs 38 per bag); (d) delay in winter gas load shedding by one month will make available 2,50,000 tons of urea in the peak period (price reduction Rs 48 per bag).
It was observed that demand of the urea for the current wheat crop is at peak and there is shortage of urea due to which prices have reached Rs 1150 per bag. Urea demand will further increase when the canals after de-silting will reopen in the second week of February 2011. The surplus gas at Mari Deep Gas Field meant for Star Power Project could be utilised, to feed fertiliser factories, but laying of pipeline to connect factories would take minimum of six months, whereas urea is essentially required immediately for Rabi crop. However, there was consensus in the ECC for the timely availability of urea up to February 15, 2011 to avoid any harm to standing wheat crop.