Engro follows suit

Engro Fertiliser is reducing urea prices because gas curtailment from the Mari gas network was less than expected.

KARACHI: Engro Fertiliser is reducing urea prices by Rs25 per bag because gas curtailment from the Mari gas network was less than expected. This is after fertiliser companies had increased their prices because they were expecting a reduction of 12 per cent in gas supplies.

The company will reduce urea prices by Rs25 to Rs850 per bag for retailers according to a notification sent to the Karachi Stock Exchange. This is just after Fauji Fertiliser Corporation also announced a reduction in its urea prices.

“Fertiliser companies had opted for an increase of about 9 per cent in prices quarter-on-quarter when the initial plans for gas curtailment were announced” explained BMA analyst Omar Rafiq. “However in recent months, gas curtailment stood around five to seven per cent,” he explained.

Fertiliser manufacturers are entirely dependent on gas supplies for their operations and reduction in these forces them to produce less, thus challenging profitability. This is the first decrease in urea prices for Engro since April 2010 after the company increased fertiliser prices as a result of a gas curtailment.

Published in The Express Tribune, August 13^th, 2010.