The News.................................................................................................................October 21, 2011
LAHORE: Urea prices are expected to decline significantly after the restoration of gas supplies to a leading fertilizer manufacturing plant under the directives of the Singh High Court, market sources said.
The farming community has also welcomed the decision of SHC, terming it beneficial for the fertilizer sector. The SHC on Wednesday directed the Sui Northern Gas Pipelines Ltd. (SNGPL) to ensure guaranteed to a fertilizer plant ran by Engro as per the contract.
However, SNGPL has not yet taken any decision as it is awaiting court orders.
According to market sources, following the judgment issued by the SHC regarding supply of guaranteed quantity of 100 million cubic feet per day gas to the Engro’s plant in Daharki, the urea manufacturer would decrease prices in the range of Rs350 to Rs400 per bag which would bring per bag urea price close to Rs 1200.
The SHB has directed SNGPL to resume full supply in strict accordance with the contract signed between Engro and SNGPL in April 2007.
Engro Fertilizers Limited had filed a writ petition against the curtailment of gas supplies to its new fertilizer plant in Daharki based on its contract with SNGPL.
Engro raised the urea price earlier this month after SNGPL completely stopped gas supply to its new urea plant which has the total annual production capacity of around 1.3 million tons.
Markets sources said that Engro was presently selling a 50-kg bag at a price of Rs1580 per bag inclusive of GST primarily because it was not receiving the full gas as per the contract but now in the light of SHC judgment as soon as SNGPL supplies required gas to Engro fertilizer plant, one can expect an immediate impact of Rs350 to Rs400 reducation in 50-kg bag price.
They said that courtÃs order will result in direct benefit of around Rs600 to Rs700 per bag for farmers as this decision would help increase urea production in the country as Engro is operating the country's largest urea manufacturing plant that can produce 3,750 metric ton urea per day.
However, SNGPL management has not yet taken a decision in the light of court order. An official, who did want to be named, in the sales and distribution department of the gas utility said that the company has yet to receive attested copy of the court’s order. He said as soon as decision of the court was formally received, the management of SNGPL would accordingly take action.
On the other hand, with improved supply of locally-produced urea in the market black marketing and hoarding can be controlled substantially and it would be a win-win situation for farmers who are faced with a projected urea shortage of around 1.2 million tones due to gas curtailment in the current Rabi season.
Market sources said that Rabi season is very critical for farmers as important cash crop like wheat is being sown in the country. This measure is expected to greatly benefit farmers, they said.
All major farmer organizations of Punjab, including Farmers Associates Pakistan (FAP), Agri-Forum Pakistan (AFP) and Kissan Board Pakistan (KBP) have welcomed the decision of court, saying it would greatly help in smoothening fertilizer supply during crucial wheat sowing as well as lead to its price reduction.
Dr Tariq Bucha, President FAP, has that said it was not fair that fertilizer sector had been put on the bottom of priority list and hence subjected to severe and unprecedented gas load shedding. He stressed the need to restore gas supply of fertilizer sector by assigning its second top priority in gas provision after domestic consumers.
Ibrahim Mughal, President AFP, said that in an agrarian economy, the government should not undermine importance of the agriculture sector. He lamented that various anti-farmer steps including urea shortfall would result in serious dent in productivity of farming sector.
Sarfraz Khan, Senior Vice President of KBP, said that the decision of SHC would help in strengthening supply of fertilizer in the domestic market during key wheat cultivation period. He expressed the hope that greater manufacturing of urea would also cause price reduction that had become a serious matter of concern for farmers. Khan was of the view that looming severe crisis of urea could be avoided only by augmenting gas supplies of fertilizer manufactures. He maintained that court decision would also mean less imports of urea and hence less financial burden on federal government in terms of foreign exchange reserves and subsidy.
The farming community has also welcomed the decision of SHC, terming it beneficial for the fertilizer sector. The SHC on Wednesday directed the Sui Northern Gas Pipelines Ltd. (SNGPL) to ensure guaranteed to a fertilizer plant ran by Engro as per the contract.
However, SNGPL has not yet taken any decision as it is awaiting court orders.
According to market sources, following the judgment issued by the SHC regarding supply of guaranteed quantity of 100 million cubic feet per day gas to the Engro’s plant in Daharki, the urea manufacturer would decrease prices in the range of Rs350 to Rs400 per bag which would bring per bag urea price close to Rs 1200.
The SHB has directed SNGPL to resume full supply in strict accordance with the contract signed between Engro and SNGPL in April 2007.
Engro Fertilizers Limited had filed a writ petition against the curtailment of gas supplies to its new fertilizer plant in Daharki based on its contract with SNGPL.
Engro raised the urea price earlier this month after SNGPL completely stopped gas supply to its new urea plant which has the total annual production capacity of around 1.3 million tons.
Markets sources said that Engro was presently selling a 50-kg bag at a price of Rs1580 per bag inclusive of GST primarily because it was not receiving the full gas as per the contract but now in the light of SHC judgment as soon as SNGPL supplies required gas to Engro fertilizer plant, one can expect an immediate impact of Rs350 to Rs400 reducation in 50-kg bag price.
They said that courtÃs order will result in direct benefit of around Rs600 to Rs700 per bag for farmers as this decision would help increase urea production in the country as Engro is operating the country's largest urea manufacturing plant that can produce 3,750 metric ton urea per day.
However, SNGPL management has not yet taken a decision in the light of court order. An official, who did want to be named, in the sales and distribution department of the gas utility said that the company has yet to receive attested copy of the court’s order. He said as soon as decision of the court was formally received, the management of SNGPL would accordingly take action.
On the other hand, with improved supply of locally-produced urea in the market black marketing and hoarding can be controlled substantially and it would be a win-win situation for farmers who are faced with a projected urea shortage of around 1.2 million tones due to gas curtailment in the current Rabi season.
Market sources said that Rabi season is very critical for farmers as important cash crop like wheat is being sown in the country. This measure is expected to greatly benefit farmers, they said.
All major farmer organizations of Punjab, including Farmers Associates Pakistan (FAP), Agri-Forum Pakistan (AFP) and Kissan Board Pakistan (KBP) have welcomed the decision of court, saying it would greatly help in smoothening fertilizer supply during crucial wheat sowing as well as lead to its price reduction.
Dr Tariq Bucha, President FAP, has that said it was not fair that fertilizer sector had been put on the bottom of priority list and hence subjected to severe and unprecedented gas load shedding. He stressed the need to restore gas supply of fertilizer sector by assigning its second top priority in gas provision after domestic consumers.
Ibrahim Mughal, President AFP, said that in an agrarian economy, the government should not undermine importance of the agriculture sector. He lamented that various anti-farmer steps including urea shortfall would result in serious dent in productivity of farming sector.
Sarfraz Khan, Senior Vice President of KBP, said that the decision of SHC would help in strengthening supply of fertilizer in the domestic market during key wheat cultivation period. He expressed the hope that greater manufacturing of urea would also cause price reduction that had become a serious matter of concern for farmers. Khan was of the view that looming severe crisis of urea could be avoided only by augmenting gas supplies of fertilizer manufactures. He maintained that court decision would also mean less imports of urea and hence less financial burden on federal government in terms of foreign exchange reserves and subsidy.