Of gas and fertilisers: Engro’s plant to be shut down for 45 days

Engro fertiliser plant Daharki scheduled to shut down for 45 days adhering to government’s gas load management plan.

KARACHI: Engro’s newly-inaugurated fertiliser plant at Daharki is scheduled to shut down for 45 days, within two weeks of starting production, adhering to the government’s gas load management plan.

“The facility will shut down from January 7 to February 21,” a company official told The Express Tribune.

The plant, which is the world’s biggest single-train facility for ammonia and urea production, initiated  output on December 26 and December 29, respectively.

“Under the gas load management plan announced by the Economic Coordination Committee (ECC), all fertiliser plants have to shut down for a specified time period,” explained Engro Corporation Vice-President Communications Tahir Jawaid.

The new plant has a capacity to produce 1.3 million tons of urea a year but output has not reached peak levels. “All operations have been initiated successfully and we will gradually increase output,” said Jawaid.

He added that the company’s older fertiliser plant, powered by Mari gas field, is currently receiving 12 per cent less gas supply.

Engro Fertiliser Chief Financial Officer Naz Khan had said the new plant would help the company cater to 31 per cent of total domestic  urea demand, which stood at 6.4 million tons last year.

Local production, however, tallied at just 5.2 million tons and the shortfall had to be met through imports.

CCP probes fertiliser companies

The Competition Commission of Pakistan (CCP) has sent letters to all local fertiliser manufacturers asking them to explain the rationale behind the recent increase in prices.

A CCP official confirmed that letters have in fact been sent to the companies but clarified that these were not legal notices. He added that legal notices may be issued to manufacturers if the responses were not satisfactory, or if the commission suspects price manipulation through cartelisation.

The issuance of letters comes just days after the Fertiliser Price Review Committee (FPRC) of the federal ministry of industries and production asked for an explanation from Engro Fertiliser about why it had increased urea prices by Rs190 per 50-kilogramme bag. “Representatives of the company met with federal and provincial secretaries and other relevant officials on Tuesday to explain the hike,” a company official told The Express Tribune.

He explained that gas load management had forced plants to operate at inefficient levels of production, driving up the price of fertiliser.

Recommendations forwarded to PM

The Fertiliser Price Review Committee (FPRC) has recommended to the prime minister that gas load management be curtailed to 30 days instead of 45 days as per practice of previous years. The committee has also recommended that the decision of providing gas to fertiliser manufacturing companies from the Mari gas field should be implemented immediately.

Under directives of FPRC Chairman Mir Hazar Khan Bijarani – who is also the federal minister for industries and production, a summary concerning both recommendations has been prepared and sent to the prime minister for approval.

If the recommendations are implemented, it is estimated that about 200,000 tons of urea can be manufactured locally within a 15-day period.

The meeting was attended by a delegation of fertiliser manufacturers, led by Engro CEO Asad Umar. They assured the committee that prices of urea would be reduced once the government improved gas supply.

Moreover, a two-member delegation comprising the federal secretary industries and production and federal secretary food and agriculture has been tasked to negotiate with Saudi authorities for the immediate import of 225,000 tons of urea through the Saudi Basic Industries Corporation (Sabic).

Published in The Express Tribune, January 6^th, 2011.