ISLAMABAD: The Federal Cabinet has allowed operations of two fertilizer plants on rotation, following the Petroleum Division's assurance that it will provide upto 30 mmcfd gas as long as weather permits, well-informed sources told Business Recorder.
Earlier, Petroleum Division had refused to provide gas to M/s Fatimafert and M/s Agritech after November 30, 2020, but Secretary Industries contested the case of both fertilizer plants at the Cabinet Committee on Energy (CCoE) and the Minister for Industries and Production, Hammad Azhar, sought relief for them from the Cabinet, the sources added.
At a recent meeting of Cabinet, Minister for Industries and Production noted that stock projections suggest a dip in the buffer stock of fertilizers. Two additional weeks of gas supply to the two units namely Agritech and FatimaFert would ensure sufficient buffer stocks. To this Petroleum Division stated that it cannot commit any gas on firm basis, but would try to provide upto 30 mmcfd as long as weather permits and industries Division can operate the plants on rotation.
During the meeting, Secretary Petroleum Division presented the current status of the demand and supply along with projections till January, 2021. Major steps taken by the Petroleum Division are as follows:- (i) new 17 Km pipeline to carry additional LNG for January is targeted to be completed between 15th -20th Dec, 2020;(ii) arrangement of additional LNG cargoes for January, 2021 at both terminals so that both can operate at maximum physical capacity i.e. terminal-1 = Average 650+ and Terminal-2 =Average 690.;(iii) retrieval of natural gas from the shut-in wells by work-over / overhauling and allocation of volumes by the end of December, 2020 which include upto 90 MMCFD for SSGCL and 16 MMCFD for SNGPL respectively and ;(iv) arrangement of additional gas from MPCL for injection into SNGPL system on 'as and available basis' i.e. upto 15 MMCFD (phase-I) in December, 2020 and upto 50 MMCFD (phase-II) by early January, 2021 and installation of compression facility by MPCL in the process.
The Secretary Petroleum Division further highlighted the Curtailments Order, after interventions as follows ;(i) CNG stations will be curtailed first;(ii) thereafter, Captive Units of non-export industry will be curtailed; (iii) next, general industry will be curtailed for one day a week and ;(iv) finally, in case the measures do not suffice, captive units for export sector will be curtailed.
The Cabinet also directed that no new gas connections may be allowed to industrial units solely for power generation through domestic gas or LNG where grid connectivity is available.
The Cabinet further directed that Petroleum Division shall continue to provide gas to two fertilizer plants (Agrotech and FatimaFert) as long as it does not compromise the Gas Mitigation Plan and Ministry of Industries and Production shall keep an eye on the fertilizer stocks. According to official estimates of National Fertilizer Development Center (NFDC) presented in Fertilizer Review Committee meeting held on October 02, 2020, urea availability will become an issue in peak Rabi season.
Currently, market is not carrying extra stock which means that higher off-take of October and November has been absorbed. NFDC projected 320,000 for October while the actual October amount was 413,000 this year. November was initially projected at 493,000 and in last meeting 512,000 with actual closing is 533,000. Every month is registering higher than projections. Now December is projected at 985,000 with total stock availability of only 1.1 million which leaves stock at much lower than buffer level. More area of sowing, higher price of wheat (Rs.1650 Vs Rs.1400) and much lower price of urea this year are likely to result in much higher off-take which makes this current availability of 1.1 million very risky.
International Urea price is $ 269-282 which would translate into Rs. 2840/bag of imported urea, at the lower end of international urea price range. Discontinuation of gas/RLNG supply would lead to expensive urea imports resulting in foreign exchange outflow of US$8.5 million per month and subsidy burden of Rs. 700 million per month (based on 30,000 MT monthly production).
The Cabinet approved the operations of Fatima Fertilizer (Sheikhupura plant) at 33 MMCFD on "as and when available basis". Agritech would be operated on agreed rotation basis next month.
Copyright Business Recorder, 2020