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Business

January 6, 2015

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Fauji Fertilizer seeks justification for gas supply to Engro

LAHORE: Fauji Fertilizer Company (FFC) is mulling a legal recourse on a dispute over the distribution of 60 million cubic feet/day (mmcfd) by the government to a fertiliser manufacturer, Waheed Hamid, a company spokesperson said on Saturday.
Almost two years back, the government curtailed the gas volume allocated to three fertiliser manufacturers: FFC, Engro Fertilizer and Fatima Fertilizer for electricity generation at Guddu power station.
Guddu power plant is being run on 304 mmcfd combined gas allocations from Kandhkot, Mari Shallow and Mari Deep. Out of this allocation, 60 mmcfd gas has been diverted to Engro Fertilizer Daharki in July 2013.
The government assured the manufacturers of returning the gas after the new exploration.
“However, the gas was not proportionally reverted to all the three companies,” Hamid said. “Engro Fertilizer was given the total supply.”
Engro Fertilizer accounted for only 12.5 mmcfd in the total curtailed volume. The FFC share was 34 mmcfd.
“We have already raised this issue with the relevant ministry,” the FFC spokesman said. “FFC may consider the option of knocking at the doors of the courts to get a justified decision.”
Chief Executive Officer at Engro Fertilizers Ruhail Muhammad said the government gave 60 mmcfd to the company as Guddu power station was not using this.
“Engro Fertilizers had firm contracts for both [of its] plants (old one with Mari and new one with SNGPL). Unfortunately, due to gas shortage, we only got 90 percent gas on one plant and hardly 10 percent gas on new plant,” he said. “The government supplied us the gas partly to compensate non-supply by Sui Northern Gas Pipelines Limited.”
Reportedly, Engro Fertilizer committed with the government to install two gas boosters to improve gas pressure from Kandhkot field, a city of Sindh bordering Balochistan, in return of 60 mmcfd till December 2015.
The gas from Kandhkot has a pressure of 23 Bar, which is

suitable for operation of old power plants, while Guddu power plant needs a minimum pressure of 35 Bar for its new gas tribune unit. Engro promised to complete the installation within six months with possible curtailment of time frame up to 31 March, 2015.
The Economic Coordination Committee, in a meeting held last week, supported the Engro’s proposal of establishing two compressors for gas provision to Guddu.

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