Gas supply priority revised for 3 months: The fertilizer sector now at the same level as the export sector

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ISLAMABAD: The federal government has decided to place the national fertilizer sector at the same level as the export sector in the list of gas supply priorities for three months, i.e. until March 31, 2022, informed sources told Business Recorder.

The move came at a time when farmers across the country face serious problems with the availability of urea as hoarders sell it for exorbitant prices.

According to a summary submitted to the ECC on December 16, 2021, the MoI & P informed that there are currently two urea plant networks (namely Fatima Fertilizer and Agritech) and one DAP / urea plant (namely Fauji Fertilizer Bin Qasim Limited) to the SSGCL network.

The ministry said that due to the current order of priority in place, the FFBQL plant of the SSGCL network during the current winter season will experience low gas supplies and start up annually (ATA) n January -2022 due to the non-supply of gas to the system. , because gas from the SSGC network would be diverted to other priority sectors. The FFBQL has informed that if all of the 63 MMCFD gas is supplied to them during the current Rabi season 2021-22, it will add 90,000 to 100,000 tonnes of additional urea to national stocks.

The export sector risks facing gas supply disruptions

The National Fertilizer Development Center (NFDC) predicts a negative inventory for urea-based fertilizers from December-2021 to February-2022. The NFDC further informed that due to the high C&F prices of urea-based fertilizers, the MoI & P may take up the matter with the MoE (Petroleum Division) in order to make the necessary arrangements for the supply of additional gas / LNG to the urea plants, in particular at the FFBQL.

“If the gas supplies of the system are assured to the FFBQL, the position of stocks with the FFBQL producing 53,000 tonnes from October to March during the Rabi season 2021-22 would be around 0.1 million tonnes, but gas is not available due to the current order of merit where supply to the fertilizer sector has been placed after domestic use, exports and energy consumption ”, said the MoI & P in its summary.

The ministry proposed that due to high international fertilizer prices and considering food security, the prioritization of gas supply could be revised with reference to the fertilizer sector and the fertilizer sector could be revised. placed on par with domestic and commercial exporters as an essential import substitution sector. for the SSGCL and SNCPL systems, gas supplies can be ensured to these plants during the current Rabi season 2021-22, thus ensuring the production of urea at the national level.

The Ministry of National Food Security and Research, in its comments, said that to avoid relying on imported urea, the MoI & P can ensure the availability of urea in the domestic market by providing additional gas to manufacturers. urea such as FFBL, FFC and Engro during the Rabi season.

The petroleum division argued that most of the fertilizer factories, holding a significant market share in the manufacture of fertilizers, are on a dedicated network, i.e. Fauji Fertilizer Ltd, Engro Fertilizer Ltd and Fatima Fertilizer. Ltd with cumulative gas demand of up to 582 MMCFD, while other factories like Fauji Fertilizers Bin Qasim Ltd, Pakarab Fertilizers Ltd, Fatimafert Ltd and Agritech Ltd were on the gas network of SNGPL and SSGCL with cumulative demand of gas up to 22l MMCFD.

Gas must be supplied as a priority to industries: main exporters

The Petroleum Division argued that in order to meet the demand for fertilizer, it would be in the national interest to efficiently use the local installed fertilizer production capacity, which will help replace imports in addition to saving costs. currencies, subsidies and expensive imports.

The Petroleum Division supported the MoI & P proposal by stipulating that the fertilizer sector can be placed at the same level as electricity and export in the order of priority of gas supply applicable on the SNGPL and SSGCL networks.

The MoI&P proposed that due to high international fertilizer prices and also due to food security, the prioritization of gas supply could be revised with reference to the fertilizer sector, which may be placed at the same level than domestic and commercial exporters, as an essential import substitution. sector for SSGCL and SNGPL. The system gas supply can be confirmed at these plants, during the current Rabi season 2021-22, in order to ensure the immediate availability of urea fertilizer and the saving of foreign currency, in case of urea import.

After extensive discussion, the ECC approved the MoI & P’s proposal to place the fertilizer sector on par with the export sector. It was further decided that the Ministry of Industry and Production would submit, in consultation with the Petroleum Division, a review for reconsideration of the ECC in March 2022.

Copyright Business Recorder, 2021

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