Engro raises urea price by Rs400
Decision taken after govt failed to provide required gas to new plant.
KARACHI:
Engro Fertilizers has increased the price of urea by Rs400 to Rs1,980 per bag inclusive of general sales tax effective from October 31.
The decision was taken after the government’s failure to provide required gas to Engro’s new plant even after the orders of Sindh High Court, the company said in a statement on Monday.
Engro, which has a 20% market share, won the case on October 18 in which the court ordered the government to provide 100 million cubic feet per day (mmcfd) of gas to the new plant.
This is the fifth time, excluding the impact of sales tax and fuel price revisions, that Engro has raised urea prices in 2011 due to gas curtailment and other issues. The latest price hike is the highest amongst all previous rises. However, the local price is still 35% lower than international prices.
On its part, the government says it does not have enough gas to meet the demand of fertiliser industry. Just last week, Petroleum Minister Dr Asim Hussain said that the government would appeal in the Sindh High Court against the decision on providing 100 mmcfd of gas to Engro Fertilizers. “We do not have much gas. Every industry wants to get gas on priority basis which we cannot provide owing to temporary shortage of the commodity,” he said.
“Had the government followed the legal judgment, more urea production would have resulted and farmers would have got a benefit of Rs600 to Rs700 per bag due to more urea supply in the market. Engro had officially stated that it would reduce prices by Rs350 to Rs400 per bag (under Rs1,200),” Engro said.
Engro plant, set up in December 2010 with an annual production capacity of 1.3 million tons, has not received gas for 148 days in 2011, the statement added.
Following the latest rise, retail price of urea has jumped by Rs1,083 per bag or 117% in 10 months of 2011. Ex-factory urea prices have increased by more than Rs890 per bag (up 99%) in 2011.
It is expected that other fertiliser producers would also increase prices in the next few weeks in line with past practices.
Analysts say that plants with relatively less gas curtailment like Fauji Fertilizer Company and Fatima Fertilizer will continue to be the major gainers while Fauji Fertilizer Bin Qasim, which is on Sui Southern Gas Company’s network where gas curtailment was lower than that at Sui Northern Gas Pipelines, would also benefit.
Published in The Express Tribune, November 1st, 2011.
Engro Fertilizers has increased the price of urea by Rs400 to Rs1,980 per bag inclusive of general sales tax effective from October 31.
The decision was taken after the government’s failure to provide required gas to Engro’s new plant even after the orders of Sindh High Court, the company said in a statement on Monday.
Engro, which has a 20% market share, won the case on October 18 in which the court ordered the government to provide 100 million cubic feet per day (mmcfd) of gas to the new plant.
This is the fifth time, excluding the impact of sales tax and fuel price revisions, that Engro has raised urea prices in 2011 due to gas curtailment and other issues. The latest price hike is the highest amongst all previous rises. However, the local price is still 35% lower than international prices.
On its part, the government says it does not have enough gas to meet the demand of fertiliser industry. Just last week, Petroleum Minister Dr Asim Hussain said that the government would appeal in the Sindh High Court against the decision on providing 100 mmcfd of gas to Engro Fertilizers. “We do not have much gas. Every industry wants to get gas on priority basis which we cannot provide owing to temporary shortage of the commodity,” he said.
“Had the government followed the legal judgment, more urea production would have resulted and farmers would have got a benefit of Rs600 to Rs700 per bag due to more urea supply in the market. Engro had officially stated that it would reduce prices by Rs350 to Rs400 per bag (under Rs1,200),” Engro said.
Engro plant, set up in December 2010 with an annual production capacity of 1.3 million tons, has not received gas for 148 days in 2011, the statement added.
Following the latest rise, retail price of urea has jumped by Rs1,083 per bag or 117% in 10 months of 2011. Ex-factory urea prices have increased by more than Rs890 per bag (up 99%) in 2011.
It is expected that other fertiliser producers would also increase prices in the next few weeks in line with past practices.
Analysts say that plants with relatively less gas curtailment like Fauji Fertilizer Company and Fatima Fertilizer will continue to be the major gainers while Fauji Fertilizer Bin Qasim, which is on Sui Southern Gas Company’s network where gas curtailment was lower than that at Sui Northern Gas Pipelines, would also benefit.
Published in The Express Tribune, November 1st, 2011.