Two urea fertilizer plants on SNGPL system: MoI&P needs Rs5bn subsidy for RLNG supply

Ministry of Industries and Production (MoI&P) is to seek supplementary grant of Rs 5 billion to ensure supply of RLNG to two urea fertilizer plants on SNGPL system till March 2022.

This decision was taken at a recent meeting of the ECC, which was ratified by the Federal Cabinet on January 25, 2022. Sharing the details, sources said, a Fertilizer Review Committee (FRC) meeting was convened to assess the situation on December 24, 2021, wherein Minister for MoI&P, after detailed deliberations, announced that SNGPL-based plants would run till March 2022, so that demand for Urea fertilizer is met through domestic means.

National Fertilizer Development Centre (NFDC) was accordingly requested to furnish information with the scenarios: (i) Fauji Fertilizer Bin Qasim Limited FFBL (full capacity) and SNGPL-based plants running after Jan 31, 2022; and (ii) without operations of FFBL and SNGPL-based plants during Feb-March 2022.

NFDC has estimated that if SNGPL-based plants and FFBL continue operations from Jan-March 2022, then at the end of Rabi season 2022, country would have adequate stocks. Further, NFDC has estimated that local production of 100,000 MT would be beneficial to the national exchequer against same quantity imported for Rs 12.69 billion (if gas price to plants is at Rs 805/ MMBTU), whereas if gas price to plants is at Rs 839/ MMBTU, local production would be beneficial by Rs 12.79 billion.

MoI&P proposed that ECC of the Cabinet may allow operations of SNGPL-based plants, i.e., Fatima Fertilizer (Sheikhupura plant) and Agritech for a further two months post Jan-2022, i.e., Feb-March 2022 at gas rate of Rs839/ MMBTU for the subject period.

Ministry of National Food Security and Research supported the proposal for operations of two plants (Agritech and Fatimafert) for a further period of two months, i.e., February and March, 2022 to meet demand of urea. Finance Division also supported the proposal.

When this proposal came under consideration at the meeting of Economic Coordination Committee (ECC) of the Cabinet on January 21, 2022, Secretary Petroleum Division was of the view that if these plants were run for a further period of two months a subsidy of Rs.5 billion would be required for the purpose. Therefore, this amount should be provided to the Petroleum Division through supplementary grant.

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