SNGPL-based fertiliser plants face collective revenue loss of Rs 5.5 billion
In first half of year 2012 all SNGPL based plants that include Agritech, DH Fertilizers, Pakarab and Engro’s new plant faced a collective loss of Rs. 5.5 billion in terms of revenue.
The total urea sales by SNGPL based plants stood at 150KT, 166KT less than 316KT urea sold in 1H of 2011 showing a decline of 52% and revenue loss of Rs.5.5 billion.
The total urea production by SNGPL based plants in first half of 2011 stood at 297KT which declined by 33% to 198 KT in 1H of 2012. SNGPL based plants were only operated at 18% of their capacity in 1H 2012 vs 25% last year. During 1H 2012 SNGPL based fertilizer plants faced an estimated gas curtailment of 82% in which Agritech and Pak Arab got gas for 63 days each while Engro Enven and DH Fertilizers got gas for 33 days of operations in first 6 months of 2012. In first quarter of year 2012 all SNGPL based plants that include Agritech, DH Fertilizers, Pakarab, Engro’s new plant as well as SSGC based FFBL faced a loss of revenue by 53% compared with 1Q of 2011, generating Rs. 8.16 billion revenue in 1Q 2012 compared to last years’ Rs. 17.29 billion rupees. In 2012, SNGPL based four plants as well as SSGC based FFBL lost profitability by 125% and made a collective loss of Rs 1.076 Billion, whereas the same plants had made profit of Rs. 4.3 billion in first Quarter of 2011. According to fertilizer sector official, SNGPL based plants are facing the worst-ever crisis of their history as 82% gas curtailment was never witnessed before 2012.
He said that despite making an investment of US$ 2.3 Billion in last 4 years on new production capacity, making Pakistan world’s 7th largest urea manufacturer country is sitting on an idle urea capacity of over 3.0 million tonnes. Fertilizer sector official said that if the same gas curtailment continues during remaining 5 months of 2012, the SNGPL based fertilizer plants would be forced to shut down permanently resulting laying off highly skilled manpower, in addition to huge burden on GoP exchequer, to import urea to meet the urea shortfall. Fertilizer sector official said that it’s not just Fertilizer plants that will face the burn, the whole farmers’ community as well as the government would be the ultimate losers if fertilizer plants with over 2 million tonnes of capacity are shutdown. He said that Government needs to support fertilizer industry to ensure cheap local urea to farmers and import fuel for the power sector and the industry which is more cost effective.
