Sudden gas curtailment to fertilizer plants: 50kg urea bag price expected to rise by Rs 100-175

Karachi: After another sudden curtailment of gas to Sui Northern Gas Pipeline Limited SNGPL based fertilizer plants, 50kg urea bag price is expected to rise by Rs 100-175 due to supply shortage as imports are delayed and may not fully cater to peak demand of ongoing Rabi seasons.

Fertilizer companies are currently selling 50-kg bag at around Rs 1480 inclusive of GST. Local manufacturing plants refrained from increasing price of fertilizer primarily because they were provided gas lately by Sui Northern on directives of Prime Minister. Intervention by federal government was aimed at encouraging production of local urea to overcome fertilizer shortage crisis in ongoing Rabi season and gas supply to fertilizer plants even also resulted in price decrease in market as augmented supplies limits trend of hoarding.

Now, when gas is once again not available for urea production and supply started shorter in market with every passing day, hoarding, black marketing tends to increase again. Although fertilizer manufactures say they have no plan to increase urea prices in near future, one can expect urea price increase if non-supply of gas continues further.

Fertilizer industry reduced per bag urea price to Rs 1,480 from previous Rs. 1580 about a month back after government assured to fertilizer sector that in order to meet demand for Rabi season government would continue to supply gas till December 31, 2011. But in contrast to commitment, two out of four fertilizer plants on SNGPL network were shutdown abruptly with start of December.

Sources said 50kg urea bag price had touched highest official price of Rs 1,900 per bag this year but government’s better and timely action brought price down to Rs 1480 per bag and urea earlier expected to be available to farmers on same prices. This decision to discontinue gas has raised chances of a price raise in coming days.

Despite spending millions of dollars to import urea, government is unable to manage its smooth, timely supply to farmers on reasonable prices. Government imported around 1.45 million urea this calendar year, which is highest ever import in a single year.

Farmers say they already started to feel brunt, as dealers on account of less production, started fleecing. With improved supply of local urea in market black marketing, hoarding can be controlled substantially and it would be a win-win situation for farmers facing shortage. Rabi season is very critical for farmers as important cash crop like wheat, oilseed and sugarcane is being sown in the country.

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