Pakistan has witnessed a sharp rise in the price of fertiliser in the last 18 months as it registered an unprecedented increase of Rs 750 per bag. "A further increase of Rs 464 per bag is anticipated if the issue of gas curtailment is not settled on priority basis.
This would also endanger national food security," said President Engro Corporation, Asad Umar addressing the members of Agriculture Journalists Association (AJA), here on Thursday.
AJA President Zahid Baig and General Secretary Muhammad Luqman also talked about the activities of the association formed for the promotion of agriculture journalism while focusing the issues confronting the agriculture sector.
He observed that 50 percent of price hike was due to gas shortage. The shortage led to the decline in fertiliser production and consequently its production cost per bag increased by Rs 375. "Moreover, Urea deficit had further swelled fertiliser prices by Rs 170 per bag, while imposition of 16 percent General Sales Tax (GST) on agriculture inputs had further added Rs 184 on one bag.
According to the natural gas allocation policy, Engro chief said that fertiliser plants had the highest priority after domestic consumers, but in practical the sector had not given importance. He said that CNG stations were offered five days a week gas while fertiliser sector was provided only three days weekly gas supply during the first half of 2011.
Umar categorically said that if the government made its house in order and exclude the fertiliser sector from natural gas load management plan fertiliser prices could easily be brought down to Rs 935 per bag from the existing prices.
Mentioning fertiliser price in different parts of the country, he said urea was available at Rs 1600 to Rs 1700 per bag in different areas of Punjab while it was selling at Rs 1800 per bag in Khyber Pakhtoonkhwa. However, the same commodity was available at Rs 750 to Rs 800 per bag before the gas curtailment in January 2010.
Umar indicated that after adding the new production capacity of two million tons, it was expected that the country would be able to export some half million tons of urea. The gas shortage had not only killed the export potential but also badly suspended domestic supply, he maintained.
He said that fertiliser was a processing industry and new plants were so advanced that they could run continuously for three years without shutdown, but owing to gas shortage he had to shut down his plant 17 times during this season, which not only decreased production but also posed great risk to machinery.
He estimated that the government had to import some 3.5 million tons of urea, which involved some Rs 130 billion and if the domestic industry shut down this amount could multiply.
He blamed that the World Bank officials were real culprit of Pakistan's problem because they suggested that the country should use natural gas for power generation and import urea. He lamented that policymakers in Pakistan blindly believed in international donors reports, without considering the ground realities. Drawing a comparison among import cost of different energy sources, he estimated that per mmbtu (million British thermal unit) import cost of furnace oil was $18 and diesel $22, while imported urea cost $32 and unfortunately Pakistan had opted for the most expensive option.