Gas outages for fertiliser plants to come to an end

Costly imports of urea the reason behind government decision.

Zafar Bhutta August 01, 2011


The government decided on Monday to end gas outages for fertiliser plants in a bid to reduce spending on import of urea and asked fertiliser manufacturers to submit a plan detailing the impact of enhanced gas supply on production, market prices of urea and profits of companies.

However, the government has put on hold a decision on new gas load management plan for compressed natural gas (CNG) stations and industrial sectors in the winter season.

Petroleum and Natural Resources Minister Dr Asim Hussain, who chaired a high-level meeting, said the government expected an increase in gas exploration in some fields and, therefore, a decision on gas supplies for CNG stations and industries would be taken keeping in view the developments taking place before winter.

During the meeting, it was proposed to increase gas outages from three to four days for CNG stations and supply to the general industry for nine months in a year.

Government officials told the fertiliser industry that a decision had been taken to increase gas prices by 100 per cent for old fertiliser plants. The finance secretary said fertiliser plants would be provided sufficient gas to enable them to operate at 80 per cent capacity, which would reduce the need for expensive imports.

The meeting was informed that the government would have to spend a hefty amount of over $927 million per year on import of 1.7 million tons of urea to meet shortages. Besides, an additional subsidy of Rs47 billion would have to be given to farmers due to the difference between imported and locally produced urea prices.

“Now, a high-level meeting that was attended by chief executives of fertiliser plants and finance secretary has decided to ensure uninterrupted gas supply to four fertiliser plants on Sui Northern Gas Pipelines Limited (SNGPL) network for eight months, enabling them to operate at 80 per cent capacity,” a source said.

Sources pointed out that the new gas management plan for fertiliser plants would increase production of urea and government’s import needs would come down to around 0.5 to 0.7 million tons.

“SNGPL will not supply gas to the fertiliser sector for 45 days in the winter season, in addition to suspension of supplies for one month during the annual field maintenance period,” the source said.

Sources said Mari Gas Company would ensure uninterrupted supply of 88 per cent gas to three fertiliser plants including Engro, Fatima and Fauji Fertiliser for the whole year.

It was also decided that Engro plant in Sindh would be provided gas from Sui Southern Gas Company (SSGC) network, which would save 55 million cubic feet per day (mmcfd) of gas and that would be supplied to fertiliser plants on the SNGPL system. Some gas supply would also be diverted from the Karachi Electric Supply Company.

Four fertiliser plants on the SNGPL network have been experiencing 74 per cent gas curtailment from July 15. Under the current gas load management plan, SNGPL is providing gas to Engro, Pak-Arab, Pak-American and Daud urea plants, which have been divided into two clusters and receive gas for 15 days in a month on rotational basis.

Published in The Express Tribune, August 2nd, 2011.