Urea production: Cabinet approves gas allocation for three fertilizer plants

ISLAMABAD: By transitioning fertilizer production onto a standalone gas supply infrastructure, the government has addressed critical vulnerabilities that have long plagued the production cycle of the critical agricultural input, said Ibrar Khan, Secretary General of the Pakistan Petroleum Exploration and Production Companies Association (PPEPCA).

This strategic policy intervention established a dedicated Mari-based gas supply system, marking a decisive shift toward a long-term sustainability in domestic urea production through cabinet’s ratification of the Economic Coordination Committee’s decision is positive step, he said while talking to Business Recorder.

Under the approved arrangement, gas resources from Ghazij/Shawal discoveries will be systematically allocated among three major fertilizer plants. Fauji Fertilizer Company (Port Qasim) has been allocated 104 mmcfd of raw gas, Fatima Fertilizer (Sheikhupura) will receive 68 mmcfd of raw gas, meanwhile, Agritech (Daudhkhel) has been allocated 50 mmcfd of raw gas. The respective fertilizer companies shall invest in installing facilities for gas processing and compression, for injection and transportation of gas in Sui companies’ network to their respective plant sites. This substantial capital commitment underscored the industry’s confidence in the government’s long-term vision, he added.

While this arrangement involved the deallocation of gas volumes from Sui Company, he said, the transmission companies remain integral beneficiaries of this policy framework. The fertilizer customers will utilize the existing Sui companies’ extensive pipeline network infrastructure for gas transportation, ensuring that SNGPL and SSGC continue to generate substantial revenue streams through Return on Assets (ROA) and capacity charges under the third-party access regime. This arrangement transforms the Sui companies’ role from direct gas suppliers to essential infrastructure service providers, guaranteeing regulated returns on their transmission assets while reducing their supply obligation risks, thereby securing their financial sustainability under this new paradigm.

“The successful formulation and implementation of this policy framework merits special recognition for the tireless efforts of the Petroleum Minister, Ali Pervaiz Malik. Under his stewardship, the ministry has demonstrated exceptional strategic acumen in identifying sustainable solutions to Pakistan’s energy-agriculture nexus. His commitment to balancing competing stakeholder interests, from gas producers and transmission companies to fertilizer manufacturers and ultimately, the farming community, has been instrumental in forging this consensus,” the secretary general said.

The minister’s forward-looking approach extends beyond immediate supply considerations. By championing bilateral Gas Sale and Purchase Agreements (GSAs) with Mari Energies and ensuring robust third-party access arrangements with Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) under the TPA Rules 2018 and Pakistan Gas Network Code, he has established a transparent, rules-based framework that will serve as a template for future energy sector interventions, he said.

Copyright Business Recorder, 2026