Agriculture sector facing acute urea shortage due to continuing gas outages, curtailment on fertilizer manufacturing plants across the country

Karachi: Agriculture sector is facing an acute shortage of urea due to continuing gas outages and gas curtailment on fertilizer manufacturing plants throughout the country.

According to a position paper of Engro Fertilizers Limited & Engro Corporation Ltd., 80% supply to plants on Sui Northern Gas Pipelines Limited SNGPL as per Government ECC decision in end June 2011 has not been followed. Continued curtailment and plant shutdowns will lead to greater urea shortages, it warns.

It is estimated that in Kharif 2011, about 120 kilo-tonne (KT) lesser urea will be produced as compared to same period last year. This is despite increase in capacity of 1.3M tons by Engro and 0.5M tons by Fatima Fertilizers.

“Imports during Kharif last year (2010) were 560KT more than current Kharif so far. This coupled with higher demand that we have seen, will require an additional 250KT imports of urea during balance Kharif 2011,” it says.

The above requirement is based on notified gas curtailment of 12% on Mari based plants and 20% on Sui based plants and a 20-day outage of Qadirpur gas field starting end of August 2011 for their annual turnaround, affecting all plants on the SNGPL network.

Similarly, if notified gas curtailment continues and a three-month winter outage (Jan 1st to Mar 31st) on Sui based plants takes place, “we are looking at an import requirement of 900KT urea during Rabi 2011-12. This is based on 3% increase in Rabi demand vs. last Rabi and reasonable (200 KT) closing inventory in the pipeline which is necessary to keep prices under check. We have a total import requirement of 1.15 M tons for balance Kharif 2011 and upcoming Rabi 2011-12,” according to position paper.

It is imperative, therefore, that the Government import the above mentioned 250KT urea for Kharif 2011 urgently and 900KT urea for Rabi in a timely manner; by early November. These are essential imports not only for agricultural sector but also for Pakistan’s economy as a whole. Adequate imports will restore farmer’s confidence in market by controlling prices and discouraging black marketing of urea.

Curtailment intensified on SNGPL based plants in first half of 2011 and its four plants operated at 50% of capacity during January, June 2011. In end June, 2011 ECC made decision to operate fertilizer plants on SNGPL at 80% load on continuous basis but the decision could not be implemented, according to Engro position paper. In July 2011, SNGPL announced that it would operate four fertilizer plants on Rota basis of 15 days which is not feasible technically and economically, it contended.

Pakistan’s total installed capacity of 6.9 million tons per annum urea production is sixth largest in the world. Present capacity on full potential makes it self sufficient in urea and can meet growing demand of the country for the next 3-4 years with annual present demand of 6.4 million tons.

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