Daily Times

Agritec after a closure of almost a year has started production of urea. In addition Fatima Fertiser is also likely to resume production shortly.

The gas supply to closed fertiliser plants has been resumed.

Shortage of local gas and high prices of imported LNG in country has created major challenges for this sector, which is among the biggest revenue contributors to Pakistan’s exchequer.

This was made possible after realising need for operationalisation under utilised domestic production capacity by ministries of industries and production and finance and petroleum.

Razzaq Dawood, advisor to Prime Minister on Industries and Asad Umer, Finance Minister having realised this have played lead role in saving local industry, foreign exchange and subsidy element, in view of higher international prices.

Furthermore, if domestic production is not supported, shortage of urea may occur, forcing costly imports and volatility in prices.

Gas to manufacturers on SNGPL has remained highly erratic, causing major disruptions and shut-downs in production of these enterprises suffering heavy financial losses, opined by spokespersons of these units.

Pakistan’s fertilizer industry has capacity to meet national demand, if cost of production remained within viable limits. It should be noted that world over gas is provided to fertilizer sector at a much lower rate compared to what it is in Pakistan. It is $4.78 per MMBTU in Pakistan, while internationally it is $2 to $3 per MMBTU.

The recent decision to increase gas prices for fertiliser sector by 40-50 percent is going to result in increase in urea price by Rs 128 per bag, as calculated by Ministry of Industries. The industry is already suffering on account of subsidy of Rs 20 billion, withheld by government. The profits have also dwindled to their lowest levels over past six years regardless of record revenues achieved by major players. Therefore, any perception regarding windfall gains through price adjustments in past was highly misplaced and unfounded.

Governments, around world, have responsibility to protect and favour their essential indigenous industries, to create more employment opportunities and reduce their imports bills.

The government should work towards relief through adjustment in GIDC and other taxes to the fertiliser sector offering a competitive advantage vis-a-vis international market, thus supporting own farmers through affordable prices. Therefore, Pakistan should also formulate an ingenious tax regime to nurture its agriculture sector, while strengthening supply of its basic inputs, like fertiliser.

Country earned $26.37 million by exporting fertiliser during first quarter of current financial year as compared exports of corresponding period of last year.

The fertilizer exports witnessed 100 percent increase during period from July-September, 2017-18 as compared exports of same period of last year, according data of Pakistan Bureau of Statistics.

During this period, about 120.549 metric tonnes of fertiliser manufactured worth of $26.37 million exported as compared exports of first quarter of last financial year.

Published in Daily Times, September 26^th 2018.