Engro Fertilizers, FFC reduce urea prices

Engro Fertilizers and Fauji Fertilizer Company (FFC) have reduced urea prices by Rs 160 per bag and Rs 300 per bag respectively to pass on reduction in GIDC. According to the notifications of both companies, Engro, s new rates will be applicable from Saturday (today), whereas FFC reduced rates from January 28.

According to the Engro Fertilizers (EFL, it welcomes the decision of government of Pakistan to reduce GIDC on urea. In line with the decision and to support the farmers of the country, Engro Fertilizers has decided to fully pass on the benefit of change in GIDC rates by announcing a 160/bag reduction in urea prices, effective February 1, 2020.

The company maintains that the impact of reduction in GIDC varies for different fertilizer manufacturers. Engro Fertilizers is passing on the full impact of the government decision given the particular mix of gases being received by the company.

Engro Fertilizers also claims that it has been a trusted partner of Pakistani farmers for over 50 years and is committed to their well-being by promoting improved farm economics.

On account of its massive investment of over a billion dollars into the setting up a state-of-the-art new fertilizer plant, the company receives gas under fixed price contracts which do not attract GIDC. The impact of a prospective reduction in GIDC is lower in the case of EFL, as compared to Fauji Fertilizer Company (FFC).

Moreover, owing to ongoing litigation on the applicability of the GIDC, EFL has not fully recovered GIDC from the end consumers. Despite this, the company has decided to support both the government and valued farmers by being the first one to reduce overall urea prices by fully passing on the impact of prospective reduction in GIDC on its old plant.

The company, which took a lead in reduction of gas prices, also claims that timely price reduction by it, will alleviate any negative market sentiments in the wake of uncertainties post the government's decision to prospectively reduce GIDC, adding the prompt action will ensure timely application of fertilizers in the on-going Rabi season and curb any loss in crop yields for the farming community.

In 2019, the local urea industry witnessed a substantial increase of approximately eight percent versus the prior year, with urea offtake closing at 6.2 million tons. However, this was primarily owing to significant pre-buying by the channel in anticipation of urea price increase post the news of gas price hike recommended by OGRA in December 2019. FFC has already welcomed reduction in GIDC rates from Rs 405 per bag to Rs 400 per bag.