ISLAMABAD: The Ministry of Industries and Production (MoI&P) has proposed a rate of Rs 839/MMBTU for operations of SNGPL-based plants, ie, Fatima Fertilizer (Sheikhupura plant) and Agritech for the period October 2021 to January 2022, official sources told Business Recorder.
The government has already decided to place domestic fertilizer sector at par with export sector in gas supply priority list till March 31, 2022.
Sharing the details, sources said, Ministry of Industries and Production submitted a summary on the urea fertilizer requirement for 2021, with the proposal that SNGPL based plants, ie, Fatima Fertilizer (Sheikhupura plant) and Agritech may be operated for the period Mar-Dec, 2021 at gas rate at Rs 805/MMBTU. The ECC of the Cabinet while considering the summary approved the proposal with the modification that both the plants be operated for the period Mar-Nov, 2021.
According to sources, RLNG supplies to both the SNGPL based plants remained suspended during the period June 28 to Sept 16, 2021. Later on the MoI&P again requested ECC for restoration of RLNG supplies and operations of these two plants for a further two-month period i.e. Dec-2021 and Jan-2022, so that demand for urea fertilizer during the Rabi season 2021-22 can be met through domestic production. However, gas rate for this period, ie, Dec-2021 and Jan-2022 is yet to be decided.
The Ministry argues that price for urea fertilizer was increased by all manufacturers, therefore gas rate for two SNGPL based plants needed revision.
In view of current scenario, the MoI&P has proposed that gas rate for operations of SNGPL based plants, ie, Fatima Fertilizer (Sheikhupura plant) and Agritech for the period October 2021 to January 2022 may be kept at PKR 839/MMBTU (with Variable Contribution Margin@ 186/bag) already approved by the ECC.
The National Fertilizer Development Centre (NFDC) is projecting negative inventory for Urea fertilizer from Dec-2021 till Feb-2022. The NFDC has further noted that due to high C&F prices for urea fertilizer, MoI&P may take up the matter with MoE (Petroleum Division) to make necessary arrangement for provision of additional gas/LNG to urea plants especially FFBQL.
The Petroleum Division argues that most of the fertilizer plants, having large market share in fertilizer manufacturing are on dedicated network, ie, Fauji Fertilizer Ltd. Engro Fertilizer Ltd and Fatima Fertilizer Ltd with a cumulative gas demand of up to 582 MMCFD whereas other plants like Fauji Fertilizer Bin Qasim Ltd, Pakarab Fertilizers Ltd, Fatimafert Ltd and Agritech Ltd were on the gas network of SNGPL and SSGCL with cumulative gas demand of up to 22l MMCFD.
The Petroleum Division maintained that for meeting the demand of fertilizer it would be in the national interest to effectively utilize indigenous installed capacity of fertilizer production which will help achieve import substitution besides saving forex and subsidy and costly imports.
Copyright Business Recorder, 2021