Farmers to bear brunt of fertiliser plants closure

LAHORE : Farmers will have to pay additional Rs7 billion in a month on urea purchase if fertiliser plants are closed by suspending gas supplies.

The Petroleum Ministry, during Fertiliser Review Committee (FRC) meeting held on Monday, recommended that gas should be diverted from Urea fertiliser manufacturing plants to other sectors. The recommendation will be discussed in the Economic Coordination Committee (ECC) meeting scheduled to be held today (Tuesday).

However, astonishingly, Sui Northern Gas Pipelines Ltd (SNGPL) on Monday evening asked fertiliser plants running on RLNG-local gas mix to close manufacturing unit even before approval of the ECC.

The FRC meeting was chaired by secretary industries and attended by secretaries of food security MD NFML, MD SNGPL, and representatives of provincial agriculture departments.

The Petroleum Division of Energy Ministry has been hell bent to close fertiliser plants from January 19. The move will create acute urea shortages and prices may go up to Rs2,000 per 50kg bag or above, said sources privy to the proceedings of the meeting.

Sources added that we have already witnessed peak gas demand this winter and 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, sources observed.

The petroleum ministry did not share any demand supply figures of natural gas. They only said that there was no option but to close fertiliser plants, sources added. Such step would lead to urea shortage with immediate effect.

If two plants close production in January fertiliser availability will be 410,000 with opening stock of 160,000, including imported fertiliser. The overall availability will stand at 570,000 and demand will be 510,000 to 550,000. Therefore, stock level comes down to less than 50,000 tons.

If urea gets short in January and market price of urea goes up to Rs2,000 per bag, farmer will have to pay Rs600 per bag higher than what price of urea was in Kharif. For only January off-take, farmer will bear around Rs7 billion extra cost on Urea, it is feared.

Meanwhile, Pakistan Kissan Ittehad expressed fear that if fertiliser plants are closed, then this will have disastrous impact on the agriculture of the country and the farming community. This will increase urea fertiliser price to around Rs2,000 to 2,200 per bag from the current Rs1,850 per bag and Rs1,370 per bag in December 2017. The price of Urea in India is equal to Pak Rs536 per bag.

Urea fertiliser is already short in the main Rabi season and farmers are suffering badly due to its shortage. The current wheat crop is already suffering due to lack of urea, claimed Khalid Khokhar, President PKI.

The closure of urea plants due diversion of gas to other sectors will reduce the production of wheat. Also, the farmers of the country will be dealt a severe blow. Pakistan Kissan Ittehad strongly protested the closure of Urea plants and demanded that all urea plants be kept operational throughout 2019.