Engro increases urea price by Rs70 per bag

Entire fertiliser sector expected to follow suit.

KARACHI:

Engro Fertiliser, the country’s second largest fertiliser maker, has increased urea prices for the third time in four months as Sui Northern Gas Pipelines Limited (SNGPL) stopped gas supply for an indefinite period, a company official said on Friday.

Engro increased prices of urea, a type of fertiliser, by Rs70 to Rs1,225 per 50kg bag from Rs1,155 per bag.

“We were getting 80 million cubic feet per day (mmcfd) of gas against the allocated quantity of 100 mmcfd before it was completely stopped on Wednesday,” said Engro Corporation Public Affairs Manager Amanul Haque.

Plants on the SNGPL network, including Engro new plant, Pak American Fertiliser, Pak Arab Fertiliser and Dawood Hercules, were forced to halt operations.

Engro’s new plant in Daharki, the world’s largest single train ammonia-urea plant, established at a cost of $1.1 billion, is the second largest industrial investment in the country’s history.

Other fertiliser firms will follow Engro and increase their prices soon, said Topline Securities analyst Farhan Mahmood.

In January, prices of urea rose Rs190 per bag due to gas curtailment and then after the imposition of 17 per cent sales tax in March another hike of Rs135 per bag was passed on to the farmers.

SNGPL gas supply has been cut down owing to lower supplies from Qadirpur and other major gas fields.

However, the increase in prices will not have a major effect on urea consumption due to improving farmer income, informed Mahmood. This hike will have a positive annual impact of approximately Rs3.5 per share on Engro Fertiliser’s earnings, he said.



Published in The Express Tribune, April 16^th, 2011.