Fertilizer plants likely to get gas in winter

ISLAMABAD - Keeping in view the severe gas shortage during upcoming winter season, fertilizer plants along with Ministry of Industries and Production (MoP&I) are all set to get exemption from gas loadshedding, it has learnt. Sources informed on Friday that fertilizer plants are likely to remain closed for four months in winter season due to likely shortage of gas in the country. Fertiliser plants powered by Sui Northern Gas Pipelines Limited (SNGPL) will remain closed from August 28 to September 17. In addition, they will face gas suspension for three months on account of gas loadshedding from January 1 to March 31 next year. However, the Ministry of Industries is reportedly gearing its efforts up to make it possible that fertilizer plants get exemptions from loadshedding, sources said adding that the Ministry of Industries has requested Prime Minister Yousaf Raza Gilani to exempt fertilizer plants from gas loadshedding. The Ministry had informed the Prime Minister that country would have to import 1.2 million tons of urea due to gas loadshedding for fertilizer plants in the Rabi season, which started in October and ended in April every year, sources added. They informed that the Ministry of Industries has asked the Prime Minister to exempt fertilizer plants from gas loadshedding in the upcoming winter season so that they can be operated at full capacity to meet local requirements. However, the Industries Ministry has not received any response from Prime Minister so far. They were of the view that the gas shortage could lead to further imports of urea, costing the country $660 million. Economic analysts argued that at present, the cost of imported urea is $550 per ton. The country will require $660 million to import 1.2 million tons of urea to meet domestic requirements in the upcoming Rabi season. Furthermore, the imported urea would cost Rs3,000 per bag in the market. They also told that the government would have to bear the subsidy of Rs1,615 per bag, which would be in addition to $660 million it would spend on the import of urea. It is relevant to mention that various proposal in the Industries Ministry are under process to get exemption for the fertilizer plants. The fertilizer industry has been proposing the government to suspend gas supply to the general industry for three months in the winter to save 500 million cubic feet per day (mmcfd). The other proposal, the fertilizer industry has made, is to increase gas loadshedding for CNG stations in the winter to save 75 mmcfd. If the plants are allowed to operate at full capacity, the country will need no extra import of urea in the Rabi season, sources said, adding, that due to the low production of urea, there will be a revenue loss of Rs40 billion to fertilizer companies while the national exchequer will lose Rs10 billion in taxes. It is worth mentioning here that according to sources the price of urea has gone up to over Rs1,700 per bag from last years Rs700 per bag. Any import of urea will result in further increase in the urea price. The urea shortage has led to black marketing, as farmers are now paying between Rs1,800 and Rs2,000 per bag. This may lead to higher prices of crops, fuelling inflation.

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