ISLAMABAD – The pro-agriculture PPP government is indecisive regarding setting up a new fertiliser plant as gas availability in the next five years, the minimum time for a new plant set up, is uncertain.
A source, privy to the development, said that the country would be dependent on urea imports after 2013, if the process did not start immediately. This would be exploited against PPP in the next general elections and would be termed as the current government’s failure to protect interests of the farming community, the major voting base of the party.
Estimated growth in population is 19 percent by 2025, however, arable land will decline by 25 percent per capita. The required increase in fertiliser supply is, hence, 70 percent by 2025. He further said that the import bill for urea and Di-Ammonium Phosphate (DAP) peaked to Rs 82 billion due to a high consumption of fertilisers in 2008.
The National Fertiliser Strategy 2010-2025, drafted by the management consultancy Arthur D Little for the Ministry of Industries in 2009, had recommended the need for establishing at least one 0.5 million tonnes of urea plant every five years to meet the country’s rising urea demands.
Currently, domestic fertiliser sector has a 16 percent share in the total consumption of gas. If all domestic fertiliser companies produce at optimal levels, demand of urea can be catered by 2016, the source said. The source maintained that gas deficit had forced a delay in the commission of a newly built 1.3 million tonnes capacity urea plant, by Engro, in Sindh.
The Ministry of Petroleum, he said, had refused gas allocation for new fertiliser plants on the pretext that allocation of any gas quota, for setting up a new fertiliser plant in the next five years, was not possible. A fertiliser plant requires at least five years from the date of approval for provision of feedstock gas, integral raw material, to the urea plant after its completion.
With commission of 0.5 million tonnes of Fatima Fertiliser and 1.3 million tones of Engro plant, the country’s urea output is estimated to increase from 4.9 million tonnes to 6.7 million tonnes. Annual national demand is estimated at 6.4 million tonnes during the next few years. Shortage of gas has delayed expansion of existing fertiliser plants and has put Fauji Fertiliser’a plan to establish an integral fertiliser complex, possessing capacity to produce ammonia, urea and DAP at the existing plant site at Bin Qasim, he said.
He said that another urea plant must be operational in the next four years in order to avoid huge foreign exchange spending on urea imports. An immediate momentum for gas exploration in the country is necessary. However, the prevalent security situation remains the main impediment.
