Petroleum Division’s opposition: No gas supply to two SNGPL-based urea fertiliser plants:, says ECC

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has refused to approve gas supply to two SNGPL-based urea fertilizer plants till March 31, 2026 due to opposition by the Petroleum Division, well-informed sources told Business Recorder.

The Ministry of National Food Security & Research (MoNFS&R) briefed the ECC that urea is the most widely used nitrogenous fertilizer accounting for 65 per cent of total fertilizer use in the country.

Production capacity of ten urea plants operational in Pakistan is around 6.6 million tons per annum. This capacity is sufficient to meet the domestic demand, provided that all plants operated continuously throughout the year with an uninterrupted gas supply.

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Out of ten plants, eight receive gas from the Mari Gas Field and SSGCL networks and generally remained operational year-round.

However, the remaining two plants, ie, Fatima Fertilizer and Agritech-are supplied with gas through the SNGPL network and have a combined annual production capacity of about 900,000 tons.

Since October 2018, these plants have been operating on RLNG due to the non-availability of natural gas. The supply of RLNG to these plants is contingent upon the decisions of the Economic Coordination Committee, based on the country’s urea requirements. The intermittent closure of these plants has led to production losses and created a supply- demand gap, which has ultimately been bridged through costly imports.

The MoNFS&R apprised the ECC of Cabinet that these two plants have been operational since April 2023, resulting in the buildup of sufficient buffer stocks of urea (over 300,000 tons per month).

Consequently, a downward trend in domestic urea prices has been observed since July 2024. Currently, the price of urea stands at Rs. 4,311 per 50 kg bag (PBS) compared to Rs. 4,705 per 50 kg bag in July 2024, reflecting a decrease of 8.4 percent. In contrast, urea prices in the international market have increased by 14.1 percent during the same period. The ex-Karachi price of imported urea was Rs. 7,275 per 50 kgs bag as of October 16, 2025.

Assuming that the two SNGPL-based plants remain operational until March 31, 2026, the supply -demand analysis indicated that the total availability of urea during Rabi 2025-26 will be around 4,399,000 tons, comprising 1,148,000 tons of opening stock and 3,251,000 tons of domestic production.

The projected urea demand for the season is around 3,486,000 tons, ensuring adequate stocks of over 300,000 tons per month throughout the Rabi season.

However, if these two plants are closed after October 30, 2025, a production loss of 401,000 tons is anticipated, reducing the closing balance for the Rabi season to 512,000 tons. This shortfall may lead to urea shortages and potential price escalation during the upcoming Kharif and Rabi seasons, as urea demand is expected to increase due to improved farm economics- driven by incentives such as interest-free loans and cash support announced by the Provincial Governments of Punjab and Sindh-and the adoption of high-yielding crop varieties.

The ECC was informed that the comments on the draft summary were sought from Petroleum Divisions. In response, Petroleum Division supported the proposal for operation of the two plants till December 31, 2025 only. Further, Petroleum Division has informed that a summary is also in the process for allocation of indigenous gas to fertilizer plants and arrangement for supply of RLNG to these fertilizer plants would also be reviewed.

In view of the foregoing, MONFS&R proposed that the supply of gas to Fatima Fertilizer and Agritech may be continued under the existing arrangement, without interruption, until March 31, 2026.

During the ensuing discussion, the Ministry of National Food Security & Research apprised the forum of the background of the proposal. The forum recommended the extension of gas supply till December 31, 2025 to review the overall situation of supply of gas and urea by December 15, 2025.

After detailed discussion, the ECC did not approve the proposal to continue gas supply to two SNGPL based urea manufacturing plants (Fatimafert and Agritech) and did not approve the proposal of continuation of supply of gas to Fatima Fertilizer and Agritech, under the existing arrangements till March 31, 2026

The ECC directed Ministry of National Food Security and Research to submit the case to the ECC by December 15 2025 for review of overall situation of gas supply and availability of urea in the country.

Copyright Business Recorder, 2025