Mismanagement and inefficiency in the energy sector have started to jeopardise the national food security. Like electricity, Pakistan is likely to face the worst ever fertiliser crisis this year, despite the fact that the country is self-sufficient or and can even generate a surplus in both the commodities.
Pakistan has a world class fertiliser manufacturing infrastructure. The country has the fifth largest urea production facility in the world. It has the largest single stream fertiliser manufacturing plant, the tallest prill tower (used to agglomerate ammonium nitrate and urea for use as fertiliser) in the world. In terms of installed capacity, domestic industry is capable of producing 6.9 million tonnes of urea fertiliser against the national requirement of 6.3 million tonnes.
However, the industry estimates that the country will suffer a urea shortfall of around 1.4 million tonnes as it will hardly produce some 4.9 million tonnes of fertiliser, mainly because of natural gas curtailment. Industry experts believe that if the government does not import urea fertiliser in the next 60-80 days the country will face a severe urea shortage during the forthcoming Rabi season.
Fertiliser usage statistics show that urea is a major fertiliser used in the country, owing to its high nitrogen content of around 46 per cent. Figures indicate that some 90 per cent fertiliser requirements were met through urea in 2010, while the rest were fulfilled through diammonium phosphate (DAP) and other types of fertiliser.
Despite all these significant statistics the domestic fertiliser industry is a victim of mismanagement in the energy sector along with having to bear the brunt of ad-hocism in government policies. Fertiliser manufacturers point out that the industry had to face 128 no-gas-days this year, which is not only a violation of their agreements with utility companies but also a deviation from the Economic Coordination Committee (ECC) of the Cabinet and court of law decisions.
Figures show that some 4.1 million tonnes of fertiliser manufacturing units are connected with Mari Gas Field, whereas four fertiliser manufacturing plant, including Dawood Hercules, Agritech, Fauji Fertilisers Bin Qasim and Engro Fertilisers new plant, having an accumulated capacity of 2.8 million tonnes are connected with gas utility companies − Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL) – and are in major trouble.
Industry leaders point out that according to Natural Gas Allocation and Management Policy, 2005, fertiliser industry has the highest priority after domestic and commercial consumers, but it is being meted out with worst treatment on the SNGPL network. They underscore that in contrast to the government’s own policy fertiliser industry is getting on average of three days gas supply. Highlighting gas curtailment issue, industry points out that in April 2010’s Energy Summit, it was decided that fertiliser plants gas would be curtailed by 12 and 20 per cent from Mari Gas Field and SSGC/SNGPL networks, respectively, for three months, but later this decision was extended for another three months in July 2010. In December 2010, fertiliser plants connected on Sui networks were again denied natural gas for 45 days on pretext of winter curtailment. Similarly, in first half of 2011, curtailment intensified on SNGPL based fertiliser plants, which resulted in the industry having to run on 50 per cent capacity for six months. In end-June, ECC made a decision to operate fertiliser plants on SNGPL at 80 per cent load on a continuous basis but unfortunately this decision could also not get implemented.
Later, in July 2011, the SNGPL announced that it will provide natural gas to four fertiliser plants on rotation basis of 15 days, which is not economically viable as on every shut down industry requires minimum four days to restart its production again due to multiple industrial procedures involved in restarts.
Complete mess in the energy sector and the practice of ad-hocism has not only pushed the domestic fertiliser industry on the brink of default but also caused massive increase in urea prices. Price statistics show that urea prices in the country have witnessed an increase of Rs900 per bag in the last 24 months, while the commodity historically showed Rs750 per bag increase in the last 32 years.
