Gas shortage: Fauji Fertiliser Bin Qasim urea plant shuts down

Di-ammonium phosphate production cut to 50%.

KARACHI: Fauji Fertiliser Bin Qasim Limited (FFBL) has shut down its urea production plant due to shortage of natural gas while production of di-ammonium phosphate (DAP) has been slashed to half, say industry sources.

Company officials were unable to say when production will be restored. However, a spokesperson for the Sui Southern Gas Company (SSGC) told The Express Tribune that supply of gas is limited in winter and it has been curtailed to the plant in order to continue uninterrupted supply to residential consumers who are the company’s top priority.

The timeline for restoration of normal production could not be ascertained as the SSGC has not intimated when gas supply will be fully restored to the plant.

However, an industry expert informed that “the plant has an allocation of 80 million cubic feet per day (mmcfd) of gas which had been reduced to 57 mmcfd about a week ago.” He said that due to further deterioration in gas supply, FFBL is now receiving only about 45 mmcfd of gas.

“Their urea plant needs about 40 mmcfd to operate while DAP plant needs about 20 mmcfd,” he added.

“This plant is the sole producer of DAP in the country,” commented an energy sector analyst of InvestCap, adding that at present the supply of DAP is low in the local market. “So it makes sense for the company to forego the production of urea in order to continue producing DAP,” he added.

Fertiliser manufacturers have pressed the government to direct both SSGC and its counterpart in the northern part of the country, the Sui Northern Gas Pipelines Limited, to change their priorities in order to ensure the supply of gas to fertiliser plants.

“We have conclusively proven to the government that the import of furnace oil for running power plants is cheaper than the import of urea and DAP to make up for shortages between local production and demand,” Chief Financial Officer Engro Fertiliser Naz Khan said.

Published in The Express Tribune, December 29^th, 2010.