Business Recorder.......................OCT 11, 2011.
LAHORE: Vice President Marketing Engro Fertilizers Limited Mohammad Khalid Mir has said continued gas curtailment and closure of plants operating on SNGPL network is leading to fertilizer crisis.
He was talking to a group of journalists from Lahore and Karachi during their visit to Engro Fertilizer plants in Daharki (Sindh).
According to fertilizer manufacturing sector, the government will have to provide at least 80 percent of the allocated gas supply from now onwards till December 31, 2011 to ensure Urea for the Rabi season otherwise continued gas curtailment might create shortage of 700,000 to 800,000 tonnes of Urea. The farmers need around 3.2 million tons of Urea fertilizer for Rabi crops and industry circles are estimating production around 2.1 million tons.
The government will have to import 700,000 to 800,000 tons before December. Farmers need 900,000 tons of Urea in December alone and if present trend of gas supply to the manufacturing units continues and timely imports were not assured then there would be acute shortage of Urea during this month, said Mir. He said that Pakistan has a world class fertilizer manufacturing infrastructure with fifth largest Urea production facility in the world. New Engro plant in Daharki is the largest single stream fertilizer manufacturing plant. Mir feared that the country would suffer a shortfall of around 1.4 million tonnes Urea, as the sector would hardly produce around 4.9 million tons of fertilizer this year, mainly because of the gas curtailment.
Fertilizer is the key input for agricultural productivity and its usage statistics show that Urea is a major fertilizer used in the country, owing to its high nitrogen content of around 46 percent. Figures indicate that some 90 percent fertilizer requirements were met through Urea in 2010.
Despite all these significant statistics the domestic fertilizer industry is suffering due to mismanagement in energy sector and wrong policies of the government. Fertilizer manufacturers point out that the industry had to face 128 no-gas-days this year, which is not only the violation of their agreements with utility companies but also a deviation from the Economic Coordination Committee (ECC) of the Cabinet.
Figures show that some 4.1 million tons of fertilizer manufacturing units were connected with Mari Gas Field, whereas four fertilizer manufacturing plant, including Dawood Hercules, Agritech, Fauji Fertilisers Bin Qasim and Engro Fertilisers' new plant, having an accumulated capacity of 2.8 million tons are connected with gas utility companies Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL).
Sources in the industry said that according to Natural Gas Allocation and Management Policy, 2005, the fertilizer industry has the highest priority after domestic and commercial consumers, but it is being treated badly. They underscore that in contrast to the government's own policy fertilizer industry is getting on average three days gas supply.
Talking about gas curtailment issue, Mir disclosed that in April 2010's Energy Summit, it was decided that gas supply to fertilizer plants would be curtailed by 12 percent from Mari Gas Field and 20 percent from SSGC/SNGPL networks, for three months, but later this decision was extended for another three months in July 2010. In December 2010, fertilizer plants connected on Sui networks were again denied natural gas for 45 days in winter.
Gas curtailment intensified on SNGPL based fertilizer plants during the first half of 2011, due to which four plants on SNGPL operated on 50 percent of their capacity during Jan-Jun 2011. By the end of June 2011, ECC made decision to operate fertilizer plants on SNGPL at 80 percent load on continuous basis but this decision could also not get implemented. Later, in July 2011, the SNGPL announced that it would provide natural gas to four fertilizer plants on rotation basis of 15 days, which is not feasible technically or economically as on every shut down industry requires minimum four days to restart its production again due to multiple industrial procedures involved in restarts. Mir suggested that all fertilizer plants as per 2005 Gas Allocation Policy should be operated at least at 80 percent of their allocated gas supply from now till December 31 to ensure Urea availability for farmers.