Engro Fertilizers raises urea prices by Rs210

Other industry players expected to follow suit.

KARACHI: Engro Fertilizers has increased urea prices by Rs210 to Rs1,810 per 50kg bag on Friday citing rising cost of production as the culprit.

Talking to The Express Tribune on Friday, an official of Engro Fertilizers said that the company wanted to raise the price of urea by Rs300 to completely offset the pressures of hike in feedstock gas and fuel-stock costs but it finally decided at Rs210.

The fertiliser industry, like other industries is facing acute gas shortage, which is prime raw material for manufacturing.

Gas Infrastructure Development Cess (GIDC) imposed on gas users caused a jump of Rs197 per mmbtu on old plants. Keeping the new urea plant EnVen’s production in view, Engro expected to raise urea prices at least by Rs225 per 50 kg bag (excluding GST), InvestCap said in its research report.

The mentioned number comprises Rs191 per 50kg bag increase owing to the impact of GIDC on feed gas, which suggests that company’s price pass-on is still Rs44 short of the required level.

Fauji Fertilizer Company (FFC) and Fauji Fertilizer Bin Qasim Limited have to increase urea prices by an even higher magnitude to cover their cost increases on account of GIDC and rise in gas cost.

FFC requires to increase the prices by Rs244 per 50kg bag (excluding tax), to completely pass the above mentioned increase in costs. On the other hand, FFBL, being the least efficient, requires an even higher price increase of Rs325 per 50kg bag.

Published in The Express Tribune, January 7^th, 2012.