Gas outages bring fertiliser industry on the verge of collapse

ISLAMABAD – Persistent gas shortages and unilateral decision of gas utility companies to curtail feedstock gas supplies to urea plants, for a fortnight per month, have brought fertiliser industry on the verge of collapse.
The perturbed chief executives of fertiliser industry presented this horrific scenario at a meeting chaired by the Minister for Industries Mir Hazar Khan Bijarani.
They said that the shutdown of gas supplies for 15 days every month would completely damage their ammonia plants, which could not be stopped once started. They found no justification for fortnight gas supplies as their ammonia plant requires four days to heat up.The minister was amazed to know that gas utilities companies had unilaterally decided to cut off gas supplies to all five fertiliser plants, without consulting the Ministry of Industries or Agriculture.
Parallel committees, set up by various ministries, forced the Minister to direct that the fertiliser sector would be given an opportunity to directly brief the Economic Coordination Committee of the Cabinet (ECC) in its next meeting for a timely decision. They stated that persistent gas curtailment and imposition of general sales tax have increased urea price to Rs 1264 per 50 kg bag in April this year from Rs 800 per bag price in April last year.
The price of Di-Ammonium Phosphate (DAP) has risen to Rs 4053 per bag from Rs 2609 per bag in April last year. The government was collecting revenue of Rs 184 per bag of urea and Rs 547 per bag of DAP. All fertiliser companies have rejected the government’s plan of 15 days supply of feed stock gas. They demanded that the government should give them a proper schedule of gas supply otherwise indefinite gas shutdown would result in less production and would massively increase fertiliser prices.
They warned that this could lead to a rise in urea prices to over Rs 2000 per bag during the current Kharif season. Currently, domestic fertiliser sector has a share of 16 percent in the total consumption of gas in the country. Annual fertiliser demand is estimated, at 6.4 million tonnes, while production capacity is of 6.7 million tonnes.
According to a press release issued by the Ministry of Industries, a meeting was held to review availability of urea and its increasing prices. The Agriculture Ministry and Trading Corporation of Pakistan told the meeting that currently there were sufficient stocks of urea and DAP available for Kharif crops. But if the shutdown of gas supply to fertilizer companies continued, a shortage of fertilizers at the end of August might exist.