The Ministry of Industries is planning to import 600,000 tons of urea at a price of $470 per ton which will cause a dent of $282 million to the national exchequer.
The import plan is contrary to an estimate of the National Fertiliser Development Centre (NFDC) which believes that the country does not need to import urea, say industry people. According to NFDC, urea stock of 800,000 tons coupled with domestic fertiliser production will be sufficient for the current Kharif season which started on April 1.
According to sources in the fertiliser sector, the landed cost of imported urea will be Rs2,397 per 50kg bag based on the current cost and freight price of around $470 per ton.
The government will have to bear an additional subsidy of Rs12 billion if it sells the imported urea at Rs1,600 per bag.
Industry people say four fertiliser plants, being supplied with gas from the Mari Gas network, are working at around 88% of capacity while other plants, getting gas from Sui Northern Gas Pipelines Limited (SNGPL), have also been operational since March 6.
That year was the worst for fertiliser plants which could hardly produce 4.9 million tons of urea against installed capacity of 6.9 million tons due to gas shortage. Plants depending on SNGPL gas supplies were particularly hit hard as they could achieve only 31% of production.
“I believe that there is no need to import urea at this stage as the country will produce one million tons by the end of this month at 75% of capacity,” said Bilal Judat, Chief Executive Officer of Agritech, a fertiliser marketing company.
“If the government meets the commitment to provide gas to run plants at 80% capacity, then we will meet annual urea demand of 6.2 million tons against country’s total production capacity of 6.6 million tons,” he added.
According to Judat, the cost of imported urea bag including transportation expenses will be around Rs2,800, forcing the government to pay a subsidy of more than Rs12 billion.
Published in The Express Tribune, April 12th, 2012.