Fertiliser plants lose profitability by 139 percent

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LAHORE: In nine months of 2012, SNGPL fed plants that include Agritech, DH Fertilizers, Pakarab, Engro’s new plant as well as SSGC fed FFBL, lost profitability by 139 percent and suffered a collective loss of Rs4.8 billion, whereas the same plants had made a profit of Rs12.3 billion in nine months of 2011, reported a statement issued by the Fertiliser Manufacturers Pakistan Advisory Council (FMPAC).


In nine months of 2012, all SNGPL fed plants and SSGC-based FFBL faced a loss of revenue by 31 percent compared with nine months of 2011, generating Rs44.5 billion in revenue in nine months of 2012, compared to Rs64.3 billion last year.


In first nine month of year 2012, all SNGPL fed plants collectively suffered revenue loss of Rs10.1 billion against the same period of 2011 due to gas curtailment and lower urea sales.


The total urea sales by SNGPL fed plants during the period stood at 216,000 tons, which is 346,000 tons less than 562,000 tons urea sold in nine months of 2011 – showing a decline of 62 percent.


Total urea production by SNGPL fed plants in the first nine months of 2011 stood at 564,000 tons, which declined by 60 percent to 226,000 tons in nine months of 2012. SNGPL fed plants were only operated at 13 percent of their capacity in nine months of 2012 against 33 percent last year.


According to an FMPAC official, SNGPL fed plants are facing the worst-ever crisis of their history as gas outages in excess of 200 days in the first nine months of a calendar year have never before been witnessed.


He said that despite making an investment of over $2.3 billion on new production capacity, making Pakistan the world’s seventh largest urea manufacturing country, it is sitting on an idle urea capacity of 2.7 million tons.


A fertiliser sector official said that if gas curtailment continues during 2013, the SNGPL fed fertiliser plants will be forced to shut down permanently.


This will result in the laying off of highly skilled manpower, in addition to a burden on the national exchequer, to import urea to meet the shortfall.


The country can become self-sufficient in urea production if uninterrupted gas supply is ensured for SNGPL fed fertiliser plants and it can even export urea to the tune of one million tons every year instead of importing, he said.


The official further said that it was not just fertiliser plants that would face the brunt; the entire community of farmers as well as the government would be the ultimate losers if fertiliser plants with over two million tons of capacity were to shut down.


He said that the government needed to support the fertiliser industry to ensure the provision of cheap local urea to farmers and import fuel which was more cost-effective.


Courtesy:  The News

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