Government anticipates 200,000 tons of urea shortfall

LAHORE: Government is expecting 200,000 tons of urea shortage for the summer crops, as fertiliser makers fall short of adequate gas supply, the feedstock to manufacture the agriculture key input, officials said on Saturday.

“We anticipate shortage of around 0.2 million tons of urea this kharif season,” chief spokesman of the Punjab Agriculture Department told The News. “We have proposed in writing to the federal government to allocate re-gasified liquefied natural gas (RLNG) to three closed fertiliser manufacturing plants on subsidised rates to offset urea shortfall,” the spokesman said.

He said it is viable to give subsidy on supply of RLNG to locally-manufactured urea plants than let import of costly fertiliser and then subsidise it to make it cheaper for farmers.

Officials said Miftah Ismail, adviser to prime minister on finance, also supported proposal of ensuring the required gas supply to fertiliser plants in a meeting held last week. Ministry of industries, foreseeing urea shortfall, has already moved a summary to the cabinet for restoration of gas supplies to local plants.

Fertiliser firms demanded supply of local gas for urea manufacturing. They said an expected shortfall of around 0.2 million tons in kharif could only be bridged though the measure.

Food ministry and state-owned National Fertilizer Development Centre hold different views on urea demand and supply outlook for the current sowing season. The ministry estimates showed that kharif 2018 is expected to begin with 0.30 million tons of opening inventory. Total available urea would be around 3.22 million tons, including 2.92 million tons of domestic production, while consumption is expected at around 2.95 million tons. So, the ministry expected 0.27 million tons of urea stock at the end of the season. Sources claimed the next fertiliser review committee meeting is expected to be held next week in which urea availability estimates for the current crop season would be deliberated. Delay in start of the three local urea manufacturing plants would entail shortfall, they argued.

Industry officials said some people are seeing an opportunity in the impending shortfall for importing urea and therefore, they are against gas supply to local fertiliser plants. Notwithstanding, government does not favour any such idea that leads to increase in import bill coupled with higher burden on national kitty due to high subsidy cost. Fertiliser manufacturers are wary of levying gas infrastructure development cess on feed gas. They said additional financial costs will ultimately lead to higher costs of production and increase input costs for the farmers if tax relief is not provided.