Two fertiliser plants: PD seeks Rs25.6bn for RLNG supply

ISLAMABAD: Petroleum Division has sought Rs 25.6 billion from Finance Division against supply of subsidized Regasified Liquefied Natural Gas (RLNG) to two fertiliser plants on the instructions of the Economic Coordination Committee (ECC) of the cabinet, official sources told Business Recorder.

Petroleum Division has given a reference to the decision of the ECC of the Cabinet whereby the forum approved extension in operations of M/s Fatimafert and M/s Agritech plants at subsidised RLNG for another period of three months i.e. from October 2022 to December 2022.

The ECC also constituted a committee under the chairmanship of Ministry of Industries and Production comprising of secretary Petroleum, secretary Commerce, secretary Ministry of National Food Security & Research and secretary Finance to examine the possibility of supply of RLNG to Fatimafert and Agritech plants vis-a-vis import of urea to cater to the requirement of urea in the country beyond December 2022. The Committee shall submit viable recommendations to the ECC for consideration.

Two fertilizer plants: Body formed to examine possibility of RLNG supply

According to Petroleum Division, the government had budgeted Rs 15 billion in the demand of Ministry of Industries and Production for supply of subsidised RLNG i.e. Rs 839 mmbtu vis-a-vis $ 13 to $ 14 per mmbtu notified RLNG price for both the fertiliser plants. The budgeted subsidy was only sufficient to cater for the subsidy claims up to August 2022 whereas both the plants remained operational till 3rd January, 2023 when the ECC decided to discontinue RLNG in its meeting held on January 3, 2023.

Petroleum Division has claimed that against supply of subsidised RLNG to both the fertiliser plants, SNGPL’s subsidy claim of Rs 25.635 billion has accumulated till December 31, 2022.

The sources said, Pakistan State Oil (PSO) is the largest LNG importer from Qatar and SNGPL is the sole buyer for the imported LNG, adding that short payment on account of subsidised RLNG supply is severely impacting the financial position of PSO and increasing the likelihood of default in payments to Qatar.

The sources further stated that recently Petroleum Division placed a summary to the ECC highlighting liquidity constraints by the PSO in its payment obligations to international suppliers and ECC approved commercial borrowing of Rs 50 billion backed by sovereign guarantee as well as immediate release of Rs 10 billion out of the budgeted subsidy against diversion of RLNG to domestic sector in the demand of Petroleum Division. However, the ECC decision is yet to take effect. Meanwhile, SNGPL has reported short payments from power sector against RLNG supplies.

Copyright Business Recorder, 2023