Out of three main gas distribution companies, SNGPL is currently facing severe gas crisis. Dawood Hercules, Engro’s new urea plant and Agritech are catered by the SNGPL network while FFBL comes under the SSGC network. FFC, Fatima and Engro’s old urea plant comes under Mari network.
Major brunt of gas shortages is currently being faced by the fertiliser manufacturers being catered by the SNGPL network as they face gas curtailment of 20 per cent (as directed by the government). This has resulted in a shortfall in urea production. As per the latest numbers, urea sales have declined by 4 per cent in 8M2011. Engro’s new urea plant comes under the SNGPL network and is facing gas shortfall since the very beginning. Moreover, extended gas curtailment for winter is also on the cards. As a result of uncertainty on gas supply issue and its negative impact on its stock price, Engro has also shelved its plans for the fertiliser IPO for now. Fertiliser sector have been the blue eyed industry in governments view and have always received gas at subsidised rates.
Under the IMF Program, the government has been asked several times to abolish the gas subsidy enjoyed by fertiliser sector, however, the recommendations have not been fulfilled.