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ISLAMABAD: The Directorate General of Gas (Petroleum Division) has directed Sui Northern Gas Pipeline Limited (SNGPL) to supply gas to two urea fertilizer plants for interim period sans subsidy as per decision of ECC.

Director General Gas, Abdul Rasheed Jokhio in a letter to Managing Director, SNGPL referred to a letter of Ministry of Industries and Production of March 20, 2023 conveying the following decision of ECC of March 15, 2023 (ratified by Federal Cabinet on March 17, 2023: “The Economic Coordination Committee (ECC) of the Cabinet considered the summary of March 15, 2023 submitted by the Ministry of Industries and Production regarding ‘urea fertilizer requirement tor Kharif 2023’ and directed Petroleum Division to supply indigenous gas to Fatimafert (Sheikhupura) and Agritech (Mianwali) plants immediately for bringing 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.

According to Director General Gas, in compliance to decision of the ECC of the Cabinet, Petroleum Division held number of meetings with the Industries and Production Division i.e. March 22, 2023 & March 24, 2023 wherein it was informed that as per the decision of the ECC 110 mmcfd Mari Shallow gas (having quality of 730 btu-/scf) allocated to Guddu power plant has been made available for the fertilizer plants till May 31, 2023.

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

It was highlighted during the meetings that out of said 110 mmcfd Mari Shallow gas, currently Engro Fertilizer Ltd (Base plant on MPCL) is consuming up to 45 mmcfd gas while upto 65 mmcfd (equivalent to 47 mmcfd pipeline quality), cannot be technically made available into SNGPL system due to system constraints.

He further explained that with the availability of 47 mmcfd pipeline quality gas, only one plant with maximum allocation of gas can operate till May 31, 2023.

However, considering the request of the Ministry of Industries and Production in the wake of urea demand Petroleum Division explored the possibility of additional gas out of SNGPL’s current gas allocations, ie, Mari Deep. It was agreed in the meeting that requirement of gas for another plant would be met by SNGPL out of its current gas supplies from Mari Deep.

The gas availability from Mari Deep for use in fertilizer would be on ‘as and when available basis’ to be subject to review by April 15, 2023.

In respect of price of gas to be charged to both the fertilizer plants for the interim supply period it shall be charged at Rs 1,050/mmbtu without involving any subsidy in line with the decision of the ECC of the cabinet.

On March 15, 2023, 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 MTs. Shortfall between demand and supply was estimated at 0.3 Million MT.

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

Ministry of Industries and Production further noted that these recommendations were agreed by all Provincial Agriculture Departments. The 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.

The ECC 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 subject plants have not been provisioned with indigenous gas till date.

Ministry of Industries and Production submitted the following proposals for consideration and approval of the ECC: (i) Petroleum Division may be directed to supply indigenous gas to both the plants at SNGPL network, ie, Fatimafert (Sheikhupura Plant) and Agritech (Mianwali) immediately for bridging the gap between demand and supply of urea fertilizer for Kharif season 2023; (ii) matter of gas pricing/allocation of indigenous gas to both plants on long term basis may be decided by the committee constituted by the ECC under chair of Shahid Khaqan Abbasi, MNA.

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

Copyright Business Recorder, 2023

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