Fertiliser sector: Gas shortage may fall 10% in two years

Slowdown in local production results in import of fertiliser.

KARACHI:

The fertiliser sector will find some relief as the existing gas shortage of 25 per cent is expected to fall to 15 per cent in two years, once additional gas supply of 400 to 450 million cubic feet per day (mmcfd) becomes operational, according to Topline Securities.

The sector is currently facing gas shortage of approximately 25 per cent or 200 mmcfd against average demand of 800 mmcfd.

The government earlier this week decided to import 50,000 tons of fertiliser on urgent basis to meet the demand of the Kharif season following slowdown in local production owing to gas cuts.

The fertiliser sector consumes 15 per cent of the country’s natural gas, according to the latest economic survey.

The gas networks

The country’s gas distribution network is segmented into three companies namely Sui Northern Gas Company (SNGPL), Sui Southern Gas Company (SSGC) and Mari Gas with market share of 46 per cent, 29 per cent and 15 per cent, respectively, says a Topline Securities research note.

Total gas supply from Sui networks remained stagnant at around 2,600mmcfd while gas supplies from Mari have increased by three per cent to 504 mmcfd in the last three years.

Interestingly, Mari is the biggest supplier of gas to the fertiliser sector with a massive share of 70 per cent followed by SNGPL with 19 per cent and SSGC with 11 per cent.

Published in The Express Tribune, June 17^th, 2011.