The government has spent around Rs. 45 billion as fertilizer subsidy during last 10 months of the current fiscal year aimed at boosting agriculture and achieving its targets.
The fertilizer industry, being provider of the key input for crop production, has significant importance in the country’s economy and to meet the deficit 1.6 million tonnes of urea was imported during the year.
Due to the curtailment of natural gas (the raw material for urea manufacturing), some urea plants produced substantially less than their production capacity. It was assumed at the beginning of this year that the country would attain self-sufficiency at least in urea because of the operationalizing of two new plants which added annual production capacity of 1.8 million tonnes to the national installed capacity taking it to 6.3 million tonnes per annum.
When contacted an official source on Monday said in addition to spending foreign exchange for imports, the government had to pickup the price difference to equalize the prices of domestic and imported urea, and for this purpose, it provided subsidy.
He said the fertilizer sector is the second largest consumer of gas after the power sector. Natural gas is used as feed-stock as well as fuel in the manufacturing of nitrogenous fertilizers.
The official said three companies namely Sui Northern Gas Pipeline Limited, Sui Southern Gas Company Limited and Mari Gas Company Limited are providing gas to the fertilizer sector. The intensity of the prevailing energy crisis specifically in relation to the supply of natural gas to supply curtailment (20 percent on Sui Network plants and 12 percent on Mari Network) to the fertilizer industry since May 2010, has meant that the winter load shedding has increased from normal 45 days to 60 days.
And on the SNGPL system the rotational load management (shedding) of 15 days for fertilizer plants has also been observed, he said and added this policy of gas supply is adversely affecting domestic production of fertilizer and resulting in a price hike and increase in the import bill.
Smooth supplies of natural gas to urea plants are essential to run the plants at 100 per cent of their installed capacity for making urea available (as per requirement) at stable and affordable prices and for avoiding its import, he added.
