Two Urea Fertilizer Plants on SNGPL System: MoI&P Needs Rs 5 Billion Subsidy for RLNG Supply

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ISLAMABAD: The Ministry of Industries and Production (MoI&P) is to apply for an additional grant of Rs 5 billion to ensure the supply of RLNG to two urea fertilizer plants on the SNGPL system until March 2022.

This decision was made at a recent meeting of the ECC, which was ratified by the Federal Cabinet on January 25, 2022. Sharing the details, sources said, a meeting of the Fertilizer Review Committee (FRC) was summoned to assess the situation on 24 December. 2021, in which the Minister of MoI&P, after detailed deliberations, announced that the SNGPL-based plants would operate until March 2022, so that the demand for urea-based fertilizers would be met by domestic means.

The National Fertilizer Development Center (NFDC) was therefore requested to provide information on the scenarios: (i) Fauji Fertilizer Bin Qasim Limited FFBL (full capacity) and SNGPL-based plants operating after January 31, 2022; and (ii) without the operations of the factories based at FFBL and SNGPL from February to March 2022.

The NFDC estimated that if the SNGPL and FFBL-based factories continued operations from January to March 2022 and then at the end of the 2022 Rabi season, the country would have adequate stocks. Moreover, NFDC estimated that the local production of 100,000 MT would be beneficial for the national treasury against the same quantity imported for Rs 12.69 billion (if the price of gas at the factories is at Rs 805/MMBTU), while if the price of gas at the factories is at Rs 839 / MMBTU, local production would benefit from Rs 12.79 billion.

Government likely to allow 2 gas-based fertilizer plants to operate for another two months

MoI&P has proposed that the Cabinet ECC may allow operations of SNGPL-based factories i.e. Fatima Fertilizer (Sheikhupura factory) and Agritech for two additional months after January 2022 i.e. February-March 2022 at the gas tariff of Rs839/MMBTU for the subject period.

The Ministry of National Food Security and Research has supported the proposal to operate two factories (Agritech and Fatimafert) for a new period of two months, i.e. February and March 2022, to respond to the urea demand. The Finance Division also supports the proposal.

When this proposal was considered at the Cabinet Economic Coordinating Committee (ECC) meeting on January 21, 2022, the Petroleum Division Secretary was of the view that if these plants were to operate for a further two months, a grant of Rs. 5 billion would be needed for this purpose. Therefore, this amount should be provided to the Petroleum Division through an additional grant.

The Ministry of Industry and Production has agreed to urgently move a summary of the additional grant required.

Copyright Business Recorder, 2022

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