Engro urges fair urea pricing

KARACHI: Engro Fertilizers has called on its dealers to strictly adhere to the official pricing guidelines to ensure urea availability for farmers, the company said on Friday.

During dealer conferences held in Lahore, Multan, and Hyderabad, Engro Fertilizers’ vice president marketing, Atif Muhammad Ali, emphasised the company’s commitment to integrity and its expectation for dealers to support farmers’ prosperity by maintaining urea prices at the government-mandated rates.

“Engro Fertilizers has always adhered to the highest standard of integrity and holds the same expectations from its dealers. To support the prosperity of farmers, Engro dealers must ensure urea availability at official prices. Further, Engro Fertilizers has not increased the selling price of imported urea to facilitate the government in providing support to farmers,” Ali said

At the conference, the dealers were also updated on the recent gas price hike and the disparity of gas prices that exists among different fertilizer players. Feedstock gas prices for fertilizer manufacturers on the SNGPL and SSGC network, which produce 60 percent of the total capacity, have increased from Rs580/mmbtu to Rs1,597/mmbtu. On the other hand, the remaining fertilizer manufacturers on the Mari network, which produce 40 percent of total capacity, are still on the subsidized price of Rs580/mmbtu.

As a result of this discriminatory gas tariff, price distortion has been created in the market with multiple urea prices existing in the market based on different gas input costs for the fertilizer manufacturers. This price distortion has provided the middleman with an opportunity to earn excessive profits of Rs80 – 100 billion.

Ghulam Ahmed, Patron in Chief of the All Pakistan Fertilizer Dealer Association, advocated for a uniform gas price for all fertilizer manufacturers to eliminate market speculation and normalize urea prices.

“It is in the country’s wider interest that a uniform gas price should be set for all fertilizer manufacturers. This will allow a single urea price to prevail, end market speculations and normalize the urea prices.”

By equalizing gas prices for all fertilizer manufacturers, the government can help stabilize urea prices for the farmers and earn Rs80 – 100 billion in revenues that would otherwise be pocketed by the middlemen. This can further be used by the provincial government to issue direct subsidies on fertilizer to farmers or develop modern farming practices to uplift overall agricultural productivity.