No subsidized gas for fertilizer plants after May

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has decided to do away with subsidized gas to fertilizer plants after May 31, 2023, well informed sources told Business Recorder.

The decision was taken at a recent meeting of the ECC when supply of subsidized gas to two urea fertilizer plants in Punjab came under discussion.

Sharing details, sources said the Ministry of Industries and Production informed the ECC that a meeting of Fertilizer Review Committee (FRC) was convened on March 9, 2023 to review the fertilizer situation for upcoming Kharif Season 2023, wherein Ministry of National Food Security and Research (MoNFS&R) projected that demand for Urea fertilizer was estimated to be 3.2 Million MT, whereas production had been estimated to be around 2.9 Million MT. Shortfall between demand and supply was estimated at 0.3 Million MT.

Urea production: Fertiliser plants to get gas till May 31st: ECC

In view of the shortfall between demand and supply, Ministry of National Food Security and Research recommended the following: (i) SNGPL based fertilizer plants, i.e., Fatima Fertilizer (Sheikhupura plant) and Agritech may be operated immediately or (ii) import of 300,000 MT of urea fertilizer may be concluded by May 2023.

Ministry of Industries and Production further noted that recommendations were agreed by all provincial agriculture departments. MoNFS&R had already requested Ministry of Industries and Production for ensuring operations of SNGPL-based plants for meeting demand of urea fertilizer in the country.

ECC of the cabinet, in its decision of March 30, 2022 had already directed Petroleum Division to shift the SNGPL-based plants to indigenous gas by September 30, 2022; however, both plants have not been provisioned with indigenous gas till date.

Ministry of Industries and Production submitted following proposals for consideration and approval of the ECC: Petroleum Division may be directed to supply indigenous gas to both the plants at SNGPL network, i.e., Fatima Fertilizer (Sheikhupura Plant) and Agritech (Mianwali) immediately for bridging the gap between demand and supply of urea fertilizer for Kharif season 2023.

Matter of gas pricing/ allocation of indigenous gas to both plants on long-term basis may like be decided by the committee constituted by the ECC under chair of Shahid Khaqan Abbasi, MNA; a report of which may be submitted to the ECC by the Petroleum Division.

After detailed discussion, the ECC directed Petroleum Division to supply indigenous gas to Fatima Fertilizer (Sheikhupura) and Agritech (Mianwali) Plants immediately for bridging the gap between demand and supply of urea fertilizer for Kharif season 2023, up to May 31, 2023.Furthermore, there shall be no subsidy involved in supply of gas to fertilizer plants.

The ECC further directed Ministry of Industries and Production to submit viable recommendations to the ECC for continuation of indigenous gas supply beyond May 31, 2023 to Fatima Fertilizer and Agritech Plants, in consultation with Petroleum Division, by May 15, 2023.

The ECC also directed that the committee under Shahid Khaqan Abbasi, MNA shall expedite submission of its recommendations on gas allocation and pricing for fertilizer sector to the ECC. The Committee will also make a comparative analysis of gas utilization between fertilizer, power and industrial sectors.

Copyright Business Recorder, 2023