Even though the country has a shortage of natural gas, but the government is still aggravating the situation by its involvement in politics, since elections are just round the corner. If the government ensures a 10 and a half month gas supply to fertiliser industry, urea price could be fixed at Rs1,300 per bag. These observations were made by former Sui Northern Gas Pipelines Limited (SNGPL) Managing Director Abdul Rasheed Lone. He was giving briefing to the members of the Agriculture Journalist Association (AJA) on gas distribution and fertiliser industry here on Thursday.
Rasheed Lone, who is now associated with a local fertiliser manufacturing company, underscored that the government was obliging its blue-eyed people by awarding them imported urea quotas at subsidised rates, which had no benefit to farmers and the country. He pointed out due to gas curtailment to fertiliser plants and ill-conceived government policies, urea price in the country had swelled by 140 per cent during the last two years.
Speaking on the occasion, another fertiliser company CEO Ahmed Jaudet Bilal pointed out local fertiliser manufacturing plants had been forced to shut down for over six months last year, causing acute urea shortage and subsequent unprecedented price increase from Rs750 in December 2009 to Rs1,810 per bag as of today.
In addition, the government had imposed two different types of taxes, which included 16 per cent General Sales Tax (GST) and Gas Infrastructure Development Cess (GIDC) of 193 per cent. Bilal pointed out that only the cess had an impact of Rs258 per bag on urea manufacturers, but industry was passing 50 per cent of this impact to farmers. And both of these taxes had an accumulated impact of Rs384 per bag in current urea price, he added.
Bilal further indicated Pakistan had 6.9 million tonnes of urea manufacturing capacity, which made it the seventh largest urea manufacturing country in the world. Despite the fact that the country had two million tonnes of surplus urea manufacturing capacity, Pakistan had imported $783 million urea in 2011. In addition, the government wasted Rs54 billion on subsidising imported urea to make it affordable, he lamented.
He highlighted fertiliser industry had invested $2.3 billion to make the country self-sufficient in the last three years, but the government was still interested to import fertiliser by curtailing natural gas to urea plants. In the whole scenario, he said, farmers were real losers as they had to incur a loss of Rs127 billion due to urea price increase. Drawing a comparison among various sectors of the economy, Bilal emphasised fertiliser industry was the only sector that was adding value to each molecule of natural gas as it used gas to convert it into key input for agriculture instead of burning this precious fuel. He indicated maximum value addition of natural gas was in fertiliser sector in comparison to other sectors, including industries, power generation and CNG. These sectors had other substitutes available, like furnace oil, LPG, LNG, diesel and coal, whereas, fertiliser industry had no alternative available, he maintained.
He said natural gas was transformed through a chemical process into fertiliser, which was used for good output of crops; hence it had a direct impact on agriculture economy, food security, cotton production – and ultimately supplementing textile exports. Besides production of wheat, main staple food also played a role in producing the feed for millions of livestock in the country. Referring to a report prepared by International Resources Group for Asian Development Bank and ministry of planning and development, he pointed out, “The System Level Economic Valuation” indicates that reducing gas to the fertiliser sector costs the economy Rs196 million per MMCFD, while increasing gas to the power sector costs the economy Rs98 million per MMCFD.” Hence, government could save up to Rs23 billion by supplying gas to fertiliser sector as compared with power sector, he concluded.
