Impact of gas shortage : SNGPL-based fertiliser plants face 89% output loss

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LAHORE: Sui Northern Gas Pipelines Limited (SNGPL) based fertiliser plants had faced 89 percent production losses due to suspension of gas supply during last year by producing only 256,500 tonnes of urea (11.6 percent) against their overall capacity of 2.2 million tonnes.

Fertiliser Manufacturers Pakistan Advisory Council (FMPAC) spokesman said on Thursday currently, all the four SNGP-based fertiliser plants- Pakarab, Dawood Hercules, Engroís new plant and Agritech were facing a complete shutdown, resulting in huge production and financial losses to the sector.

While the combined urea production on SNGPL and Mari gas network was 4.1 million tonnes in 2012 compared to 4.8 million tonnes in 2011 against an installed capacity of 6.9 million tonnes, he added.

Giving break-up of the production, the spokesman said the fertiliser sector had been on steep decline in production as it produced 5 million tonnes of urea in 2009 against 5 million tonnes capacity, 5.15 million tonnes in 2010 against 5.6 million tonnes capacity, 4.9 million tonnes in 2011 against 6.9 million tonnes capacity and 4.1 million tonnes in 2012 against 6.9 million tonnes capacity.

Despite gas shortage, he said urea manufacturing plants had provided Rs 365 billion benefit to farmers over the last five years by keeping local urea prices significantly below international levels.

The spokesman claimed the government subsidy in the shape of reduced feed gas prices to fertiliser manufacturers was used to be passed on to the farmer through reduced prices.

Based on current feed and fuel gas prices, subsidy per bag of urea worked out to be Rs 228 per bag, while, difference between price of domestic and international urea was more than Rs 1,000 per bag, he cited.

Pakistanís agriculture sector contributes around 24 percent to the GDP, besides providing raw materials to all the major industries of Pakistan including textiles and sugar.

The spokesman urged the government to review the vital agri sector and take appropriate measures for its development to increase crops yields, which was possible only through application of fertilisers in right quantity at right time.

The decline in urea production posed a severe threat to the crops yield that might hit hard the exports and put at risk the food security of the country due to dependence on imported food items, he concluded.

Courtesy: Daily Times

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