This is primarily due to non-availability of gas to Engro’s new plant Enven since last 13 days, informed a company official. Retail price for farmers will now be close to Rs1,600 a bag.
The government after meetings with the company had decided to provide gas in December to meet fertiliser demand for the Rabi season. Engro on the basis of the government’s commitment had taken back a hike of Rs400 per bag on November 2.
Four fertiliser plants based on the Sui Northern Gas Pipelines will face a complete cut-off of their gas supply following a new gas load management plan agreed upon last week. The four plants include Engro Corporation’s Enven, Pak-Arab Fertilizer, Agritech Fertilizer and Dawood Hercules Fertilizer.
Other fertiliser producers are also expected to follow suit and increase prices in the next few days, said Topline Securities analyst Farhan Mahmood.
If new prices remain the same for the next year, Fauji Fertilizer Company’s annual earnings will increase by Rs2.8 per share. Similarly, earnings of Fauji Fertilizer Bin Qasim and Fatima Fertilizer will increase by Rs0.55 per share and Rs0.35 per share, respectively.
With regards to Engro, increase in urea price will improve 2012 EPS by Rs3.5, added Mahmood.
The imposition of recent gas duty, likely to be effective from January 2012, continues to pose a risk to fertiliser earnings unless manufacturers increase urea prices in line with increase in feed stock prices.
Published in The Express Tribune, December 22nd, 2011.
COMMENTS
Comments are moderated and generally will be posted if they are on-topic and not abusive.
For more information, please see our Comments FAQ