Required urea production: Engro Fertilizer seeks 74 MMCFD gas allocation at concessionary rate

ISLAMABAD: Engro Fertilizer Limited has sought formal allocation of 74 MMCFD of gas at concessionary rate to produce required quantity of urea.

In a letter to Secretary Petroleum, Ali Raza Bhutta, CEO, Engro Fertilizers, Nadir SQureshi has said that for formal allocation of 74 MMCFD gas currently being supplied to Engro Fertilizers Limited (EFERT), the base plant from Habib Rahi Limestone (HRL) reservoir by Mari Petroleum Company Limited (MPCL) as swing volume from the undrawn gas volumes of their other customers as allowed by the ECC.

He maintained that during the recent past EFERT has gradually increased its production from 500,000 tons to 780,000 tons to test the capabilities and vulnerabilities of its base plant that has already outlived its useful life.

Based on detailed engineering studies, the company has now concluded for the base plant to continue to operate, significant Balancing Modernization and Replacement (BMR) investment of over $ 50 million is critical.

“If this BMR expenditure is not incurred, we will not be able to operate base plant and the country would lose the entire production from this unit”, he added.

However, with this investment the base plant would be able to safely and sustainably produce enhanced volumes of up to 970,000 tons, an increase of about 200,000 tons from the current operating level. On a monthly basis this corresponds to over 80,000 tons beginning Q4 of this year.

Under clause 2.5 of the Fertilizer Policy 2OO1 (FP 2001), feed gas linked to BMR is entitled to receive the same concessions and exemptions as a new plant for a period of 7 years.

“We request allocation of 74 MMSCFD formally at concessionary gas price in line with the provisions of FP 2001 to enable the company to carry out the requisite BMR within this year thereby ensuring sustainable supplies of 970,000 tons of urea from low BTU indigenous gas resources”, Qureshi said adding that base plant shall cease operations without this BMR of $ 50 million.

The company said that it requires support of secretary Petroleum in allocating the gas for BMR under FP 2001 to ensure sustainability of domestic urea supplies from base plant and thereby enable the long term food security of the nation.

Copyright Business Recorder, 2022