Need or no need, gas or no gas, the government seems more than determined to set up two more fertilizer plants in the country, one each for urea and DAP.
Well, so much for the recently announced plans to curtail gas for the fertilizer sector to bring some respite to electricity load shedding that turns citizens into silhouettes.
Maybe the Federal Minister for Industries and Production, Hazar Khan Bijarani, who has put forward the proposal of two additional fertilizer plants, knows something that others don .
Either he has gotten hold of some information on manufacturing urea without using feedstock gas or he has an insight about some secret gas reserves in the country that will allow the two proposed fertilizer plants to operate.
For those who don know, ,it should be kept in view that natural gas is required as the basic raw material for urea production. The sector already uses 16 percent of the countrys total gas supply on first priority basis and on subsidized rates, which has made rest of the industrial sector extremely critical of the policy.
With the commencement of Engros urea plant next year and that of Fatima this year, consumption of gas as feedstock will rise by 33 percent. Growth in gas production, unfortunately, has been much slower, which would result in more rounds of power and gas load shedding.
The idea of having an additional DAP plant is, nevertheless, good - but has less chances of materializing. Industry experts believe that conditions in Pakistan are not conducive for another DAP plant despite being a highly profitable business.
It is the scarcity of, and entire dependence on imported raw material, phosacid that makes DAP production a vulnerable business. Therefore, it is highly unlikely that any private player would enter such business in the foreseeable future.
The best time for adding new urea plants in the system would be when Pakistan starts generating electricity from Thar coal, because only then can gas be diverted away from the power generation business. But that means at least 7-8 years from now, optimistically speaking.
Agreed, that a fertilizer plant takes at least fours years from planning to execution; so policymakers should plan beforehand.
But it is not that Pakistan would be importing urea worth billions of rupees in the next 5-6 years, given nearly 2 million tons of additional urea would be added to the system by next year. Till then, the government should work on increasing gas production, for which gas pricing needs to be seriously reconsidered.
Moreover, gas conservation incentives should be high, so that its usage is prioritized accordingly. Mr. Bijarani is best advised to synchronize and plan in harmony with other related ministries than treading through uncharted waters.