Engro blames rival for gas supply disruptions

Prepares ‘alternative gas solution’ to end outages.

KARACHI:

Engro Corporation President and CEO Muhammad Aliuddin Ansari has said that vested interests within the fertiliser industry are behind the continuous gas disruptions that Enven, which is the company’s flagship fertiliser plant, has been facing since its inception in January 2011.

Talking to The Express Tribune, the newly appointed head of the country’s largest private-sector corporation said Fatima Fertilizer CEO Fawad Ahmed Mukhtar had been using his connections with a Multan-based powerbroker to thwart Engro’s efforts to end the gas crisis currently being faced by the fertiliser industry.

Enven is the world’s largest single-train, ammonia-urea plant in Deharki, Sindh, with a production capacity of 1.3 million tons per annum. The plant has been built at a cost of $1.1 billion, which makes it the largest private-sector industrial investment in Pakistan.

Although the government is bound to provide Enven with 100 million cubic feet per day (mmcfd) of gas through Sui Northern Gas Pipelines Limited (SNGPL), it has been diverting gas supplies to other sectors of the industry, which has led to recurring gas suspension for the fertiliser plant.

To resolve the issue, Engro has prepared a detailed proposal for the government that calls for an “alternative non-network gas solution” to end Enven’s gas curtailment problem.

The petroleum ministry, according to Ansari, once moved this proposal for the consideration of the Economic Coordination Committee (ECC) of the cabinet, which is the highest decision-making body for economic affairs in the country. But the summary was “recalled,” claims Ansari, after alleged intervention by the CEO of Fatima Fertilizer.

“The question we should ask is how could one individual assume enough power to put the interests of the entire industry at stake?” says Ansari.

Engro moved the proposal again two weeks ago. “Fatima Fertilizer is once again interfering in the process,” he says.

Besides Enven of Engro Fertilizers, Dawood Hercules, Fauji Fertilizer Bin Qasim, Agritech and Pakarab Fertilizers – which is owned by the Fatima Group – rely on SNGPL for gas supplies.

Fatima Fertilizer Company Limited is a joint venture of Fatima Group and Arif Habib Group. Arif Habib Corporation Chairman Arif Habib serves as chairman of Fatima Fertilizer and Pakarab Fertilizers.

Engro Fertilizers believes that it has a legally sound case, as it was allocated 100 mmcfd of gas upon payment of a licence fee after an international competitive bidding conducted by the government. It also enjoys the SNGPL guarantee of uninterrupted gas supply with a right to have the first 100 mmcfd of gas production from Qadirpur field.

Engro’s alternative non-network gas solution calls for shifting Enven from the Qadirpur field to Lateef and two other adjacent gas fields. Another suggestion that is part of Engro’s proposal is to shift gas supplies of the plant to Mari field which, like many other major gas fields, is located within 50 km of Enven.

Speaking to The Express Tribune, Fatima Fertilizer CEO Fawad Ahmed Mukhtar termed the allegations of the Engro CEO “baseless and immature.”

“No one else has ever accused us of such things in the past,” Mukhtar said, adding Pakarab Fertilizers – which is owned by the same group – was itself a victim of gas curtailment by SNGPL, as it received gas for only 55 out of 170 days in the current year.

As for Fatima Fertilizer, which is on the Mari field, Mukhtar said it was subjected to regular 12% gas curtailment like other plants that operate on the Mari field, including the old plant of Engro Fertilizers.

“Engro’s demands are unfair. Why should other companies give up their allocations because of Engro? It made a bad decision and is now making the rest of us suffer,” he said.

Published In The Express Tribune, June 21^st, 2012.