Farmers likely to cough up Rs7bln on urea purchase in Jan

Lahore: Farmers are feared to pay an additional seven billion rupees on urea purchase in January as the government on Monday discussed a proposal to suspend gas supplies to the fertiliser plants – a move that will fuel price hike.

The Petroleum Ministry recommended that gas should be diverted from urea fertiliser manufacturing plants to other sectors. The proposal was discussed at a fertiliser review committee’s meeting attended by secretaries of industries and production and food security, managing directors of National Fertilizer Marketing Limited and Sui Northern Gas Pipelines Limited and other officials.

The recommendation will be discussed during a meeting of the Economic Coordination Committee (ECC) of the cabinet scheduled on Tuesday (today).

It was learnt that Sui Northern Gas Pipelines Ltd had already asked fertiliser plants running on regasified liquefied natural gas-local gas mix to close manufacturing units even before the ECC’s approval.

Sources told The News that the Petroleum Division of Energy Ministry is hell-bent to close fertiliser plants from January 19. The move will create acute urea shortages and prices may rise up to Rs2,000/50 kilograms of bag.

The sources said the country has already witnessed peak gas demand during the current winter. By last week of January, demand of gas used to start decreasing further. The intensity of gas shortage remains less if compared with the level witnessed a week earlier, they added.

The petroleum ministry did not share any demand supply figures of natural gas during the meeting.

“Yet, they said that there is no option but to close fertiliser plants,” a source, privy to the meeting, said. “Such step would immediately lead to urea shortage.”

An estimate showed that if two plants close production in January fertiliser availability will be 410,000 tons with opening stock of 160,000 tons, including imported fertiliser. The overall availability will stand at 570,000 tons and demand will be in the range of 510,000 to 550,000 tons. Therefore, stock level would come down to less than 50,000 tons.

If urea gets short in supply in January and market price of urea goes up to Rs2,000/bag farmers will have to pay Rs600/bag higher than the price in kharif. Alone in January, farmers are estimated to bear extra cost of around seven billion rupees.

Fatima Fertilizer and Agritech are already closed due to gas shortage, while Fauji Fertilizer Bin Qasim, running on domestic gas, is closed too.

Meanwhile, Pakistan Kisssan Ittehad feared that if fertiliser plants are closed it will have disastrous impact on the farming community.

It will increase urea fertiliser price to around Rs2000 to 2,200/bag from the current Rs1,850 and Rs1,370/bag in December 2017. Urea price in India is equal to Pakistani Rs536/bag.

Khalid Khokhar, president of Pakistan Kisssan Ittehad said urea fertiliser is already short in the winter season and farmers are badly suffering due to its shortage.

“The current wheat crop is already suffering due to lack of urea,” Khokhar added.

The closure of urea plants due to diversion of gas to other sectors will reduce the production of wheat.

Also, the farmers of the country will be dealt with a severe blow. Pakistan Kissan Ittehad strongly protested the closure of urea plants and demanded that all urea plants should be kept operational throughout this year.