Fauji Fertilizer says power disruption to affect urea production

Fauji Fertilizer Bin Qasim Limited (FFBL) on Monday announced that its urea production will be affected due to the power supply from FFBL Power Company Limited (FPCL) being cut off.

The company shared the development in its notice to the Pakistan Stock Exchange (PSX).

“The company hereby informs that its power supply from FPCL has been discontinued due to a technical fault. This outage is expected to last for about four weeks,” the notice read.

FFBL said that operations are being managed through its self-generated power and steam using costlier fuel.

Fauji Fertilizer Bin Qasim shuts down DAP plant amid economic downturn

“Urea production will be partially affected depending on volume of natural gas availability from Sui Southern Gas Company (SSGC),” it said, adding that its DAP (Di-ammonium Phosphate) plant is operating normally.

“This is expected to hurt FFBL’s margins as SSGC will charge company on Regasified Liquid Natural Gas (RLNG) tariff for fuel gas,” said Insight Securities, in a note.

“Similarly, lower gas volumes might result in lower urea production as well,” added the brokerage house.

Earlier, FFBL in its financial report for the first quarter of 2023 had said it did not receive gas from SSGC for 36 days on account of winter load management, whereas gas had been available on a continuous basis during the same quarter last year.

The company shared that during Q1 2023, gas curtailment was 51% of the allocation, as against 9% during the same period last year.

DAP production for the quarter was 52,000 tons, a 77% decrease from the same quarter last year. Urea production for the quarter was 89,000 tons, a 26% fall year-on-year.

Fauji Fertilizer posted a loss of Rs5.43 billion in Q1 2023 compared to a profit after tax of Rs1.627 billion the year prior.

For the quarter ended March 31, 2023, the company recorded a loss per share of Rs4.20 in Q1 2023 compared to earnings per share of Rs. 1.26 in Q1 2023.