Fertiliser companies brace for higher gas prices
Govt considers price hike, saying other sectors are at a disadvantage.
Fertiliser manufacturers threatened that they would increase urea prices for the farmers in line with the rise in gas rates. DESIGN: FAIZAN DAWOOD
ISLAMABAD:
The caretaker government is considering increasing gas prices for fertiliser companies in an attempt to bring them at par with other industries, but this can lead to increase in urea prices for the all-important agriculture sector.
The proposal came up for discussion in a meeting on gas pricing for fertiliser plants here on Friday, chaired by Federal Minister for Petroleum and Natural Resources Sohail Wajahat H Siddiqui and attended by heads of fertiliser firms and senior officials of the ministry, say sources.
The petroleum minister was of the view that the fertiliser industry was paying a low gas rate, a practice that discriminated against other sectors which were paying higher prices.
Reacting to the suggestion, the fertiliser manufacturers threatened that they would increase urea prices for the farmers in line with the rise in gas rates.
“We are ready to face the hike in gas prices, but we will shift its impact to the farmers by pushing up urea prices,” sources quoted a representative of fertiliser firms as saying.
The warning from the fertiliser manufacturers came in the backdrop of recent imposition of a hefty fine running into billions of rupees on the fertiliser industry by the Competition Commission of Pakistan over charges of forming a cartel.
Two main groups of the industry, Engro and Fauji, have already made billions of rupees by increasing urea prices because of gas shortage.
“Now, the fertiliser industry has taken the stance that they will increase urea prices if gas rates go up,” a senior government official told The Express Tribune.
According to a statement issued here, the petroleum minister told the meeting that uniform rates of gas for the industrial sector needed to be introduced to end discrimination among different sectors. However, he assured the participants that all stakeholders would be taken on board before going for any such mechanism. Siddiqui underlined the need for concerted and all-out efforts to tackle the energy crisis faced by the industries.
“As energy and industrial sectors are interdependent, the win-win solution will be that both sectors make small adjustments for optimum utilisation of available resources,” he said.
Emphasising that national interest was the prime consideration of the interim government, he said “decisions are taken in order to ensure that the entire nation benefits and the effects are transferred to the common man.”
He stressed that energy was a key input for the industrial sector and its even distribution was vital for the industry to thrive. “Only a developed and booming industrial sector can ensure the economic wellbeing of the nation as a whole,” he said.
Published in The Express Tribune, May 4th, 2013.
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The caretaker government is considering increasing gas prices for fertiliser companies in an attempt to bring them at par with other industries, but this can lead to increase in urea prices for the all-important agriculture sector.
The proposal came up for discussion in a meeting on gas pricing for fertiliser plants here on Friday, chaired by Federal Minister for Petroleum and Natural Resources Sohail Wajahat H Siddiqui and attended by heads of fertiliser firms and senior officials of the ministry, say sources.
The petroleum minister was of the view that the fertiliser industry was paying a low gas rate, a practice that discriminated against other sectors which were paying higher prices.
Reacting to the suggestion, the fertiliser manufacturers threatened that they would increase urea prices for the farmers in line with the rise in gas rates.
“We are ready to face the hike in gas prices, but we will shift its impact to the farmers by pushing up urea prices,” sources quoted a representative of fertiliser firms as saying.
The warning from the fertiliser manufacturers came in the backdrop of recent imposition of a hefty fine running into billions of rupees on the fertiliser industry by the Competition Commission of Pakistan over charges of forming a cartel.
Two main groups of the industry, Engro and Fauji, have already made billions of rupees by increasing urea prices because of gas shortage.
“Now, the fertiliser industry has taken the stance that they will increase urea prices if gas rates go up,” a senior government official told The Express Tribune.
According to a statement issued here, the petroleum minister told the meeting that uniform rates of gas for the industrial sector needed to be introduced to end discrimination among different sectors. However, he assured the participants that all stakeholders would be taken on board before going for any such mechanism. Siddiqui underlined the need for concerted and all-out efforts to tackle the energy crisis faced by the industries.
“As energy and industrial sectors are interdependent, the win-win solution will be that both sectors make small adjustments for optimum utilisation of available resources,” he said.
Emphasising that national interest was the prime consideration of the interim government, he said “decisions are taken in order to ensure that the entire nation benefits and the effects are transferred to the common man.”
He stressed that energy was a key input for the industrial sector and its even distribution was vital for the industry to thrive. “Only a developed and booming industrial sector can ensure the economic wellbeing of the nation as a whole,” he said.
Published in The Express Tribune, May 4th, 2013.
Like Business on Facebook to stay informed and join in the conversation.