The Economic Coordination Committee (ECC) of the cabinet is likely to give the go-ahead to a plan that will allocate 130 million cubic feet of gas per day (mmcfd) to fertiliser plants from Oil and Gas Development Company’s Kunnar Pasakhi Deep field in an effort to enhance production of urea in the country.
As domestic production of urea has come down because of shortage of gas, Pakistan is banking on imports to meet the needs of farmers.
The ECC, which is slated to meet today (Wednesday), will take up a summary, recommending supply of 130 mmcfd of gas to the fertiliser industry to make the country self-sufficient in urea production and to cater for the demand from the agriculture sector, sources say.
The previous government had approved allocation of 202 mmcfd of gas directly from some fields including 130 mmcfd from the Kunnar Pasakhi Deep field. However, according to sources, Sui Northern Gas Pipelines Limited (SNGPL), one of the two transmission and distribution companies in the country, wants to get the decision about Kunnar Pasakhi Deep field approved from the present ECC as well.
Under the plan, the fertiliser plants will be directly supplied a total of 202 mmcfd from selected fields. Apart from 130 mmcfd from the Kunnar Pasakhi Deep field, they will receive 15 mmcfd from OGDC’s new Bahu field, 10 mmcfd from OGDC’s new Reti Maru field, 22 mmcfd from Mari Gas Company and 25 mmcfd from MOL’s Makori East Tal block.
However, sources believe that the Ministry of Water and Power may oppose the plan as it wants more gas to run power plants in order to cut outages and reduce the cost of power.
The ministry may cite government’s priority order for gas allocation in which power plants stand at second place after domestic consumers and may demand gas for those power plants which have been shut down due to gas shortage.
The previous government had provided gas directly to four fertiliser plants – Engro, Dawood Hercules, Pakarab Fertilisers and Agritech – to enable them to put to use their idle capacity.
According to estimates of the fertiliser industry, dearth of gas has caused an annual production loss of around 2.7 million tons to the four plants and forced the government to import urea.
Pakistan is an agriculture-based country that requires sustainable supply of fertiliser and cannot afford heavy imports. Owing to the closure of fertiliser plants, the cost of urea has gone up, forcing farmers to use the commodity in lesser quantities.
“The closure of fertiliser plants will result in a loss of 15,000 direct and 50,000 indirect jobs and will shave Rs100 billion off the gross domestic product,” a senior government official said.
Published in The Express Tribune, November 6th, 2013.