LAHORE: 2011 was the worst year for domestic fertiliser plants as they produced just 4.9 million tons of urea against an installed capacity of 6.9 million tons due to announced and unannounced gas shortages. SNGPL based fertiliser plants were the worst hit and managed capacity utilisation of just 31%.
Currently, all four fertiliser plants on the SNGPL network are facing a complete shutdown, which has resulted in a huge production and financial loss to these fertiliser plants.
The Dawood Hercules plant achieved capacity utilisation of 39% of capacity, PakArab produced 27% of capacity, Agritech’s output was 34% of capacity and Engro’s new Enven plant managed to achieve 27% of capacity.
CEO Dawood Hercules Fertilizer, Rashid Lone said that SNGPL based plants could only produce 31% of their installed production capacity which resulted in billions of rupees of loss to the fertiliser industry which has invested over $2.3 billion in enhancing its production capacity in last three years.
The government has had to import 1.45 tons of urea at a cost of $783 million and has also paid Rs54 billion subsidy to maintain the price parity with locally produced urea.
Published in The Express Tribune, February 28th, 2012.
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The title seems to be incorrect after reading the content. The capacity seems to have fallen BY 71% not TO 71%.
The fertilizer companies have formed a cartel that restricts supply to keep prices high. That is why they enjoy high profits despite the low output.
The government contracts guaranteed supply of gas to fertilizer plant at the commencement of operations. While, fertilizer manufacturers pass on adverse impact of gas cuts to farmers which is eventually borne by the final consumer in the shape of hike in food prices. The righteous and more logical treatment should be that the fertilizer industry charge the negative impact on their profitability directly to the government and not on to the consumer. But, who cares.
Yeah but their profits are at an all time high - so what's that tell you?