KARACHI: To guarantee the supply of gas for domestic urea production and protect food security, a consortium including Engro Fertilizers Ltd (EFL), Fatima Fertilizers, and Fauji Fertilizers would invest more than $300 million in the Gas Pressure Enhancement Facilities (GPEF) project at the Mari network.
“We anticipate spending more than $100 million on capital projects,” Engro Fertilizers Chief Financial Officer Ali Rathore said during a press conference on Thursday. He emphasized that despite a sharp increase in population, Pakistan is not investing in capacity expansion, despite having the fifth-highest urea consumption in the world. A uniform and unified gas pricing policy for the sector is desperately needed to incentivize fertilizer makers to expand their capacities even further.
He claimed that multi-billion dollar investments are necessary to establish a large-scale, globally competitive fertiliser plant. Fixing pricing anomalies in gas will incentivize firms to make large expenditures in plant modernization and growth, all the while increasing efficiency to achieve the best possible use of gas allotted.
The government can ensure that farmers have access to enough urea by facilitating new investments and promoting efficiency by eliminating discriminatory gas pricing among fertilizer plants.
According to Mr. Ali, the elimination of subsidies for producers of fertilizer on the networks of the Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline Ltd (SNGPL), which account for 60% of the world’s capacity for producing fertilizer, is a positive move.
Gas prices on the SSGC and SNGPL networks have gone up by over 200 percent, but the Mari network’s manufacturers, Fatima and FFC, continue to receive gas at the discounted rate of Rs580 per mmBtu. He made the observation, “This industry’s discriminatory gas pricing has led to multiple prices in the market and will not help the government achieve its fiscal objectives.”
Before the increase in gas prices, the prices of urea for Fauji Fertilizer Bin Qasim and Engro Fertilizers were Rs4,139 and Rs3,767 per bag, respectively. Now, they are Rs5,489 and Rs4,649 per bag. However, the cost of urea bags from Fatima Fertilizer and Fauji Fertilizer Company (FFC) remains at Rs3,767.
He claimed that the intermediaries now have a chance as a result of the pricing difference. According to Ali, a uniform gas price will help stabilize urea pricing nationally and provide a level playing field for all fertiliser makers in terms of input costs.
