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November 21, 2019

Urea exports proposed to reduce trade imbalance


November 21, 2019

LAHORE: Pakistan has an exportable surplus urea manufacturing capacity of almost 20 percent above the local demand of 5.8 million tons, presenting an excellent opportunity to earn up to $250 million in foreign exchange, industry officials said on Wednesday.

The sources observed that improving the utilisation of these facilities by providing them with Re-Gasified Liquefied Natural Gas (RLNG), the country had been able to build up

urea inventories of 900,000 tons.

At present Pakistan suffers from precarious balance of payment situation. Its exports are too paltry to finance imports. Though, remittances are reasonable, meeting debt service obligation has got out of control.

Even the recently acquired facility from International Monetary Fund (IMF) and other countries will soon prove insufficient, they added. In the prevailing situation the country has to expedite the two-pronged strategy of boosting exports and containing imports.

It must be noted that while boosting exports may not be easy, one industry stands apart in terms of its ability to support the cause and that industry is urea manufacturing. Through production of one million tons of exportable urea, the industry is well poised to fetch $250 million per annum for the country, at the least.

For any other industry, developing such capability will require significant outflow of foreign exchange for capital investment and substantial time.

In a recent meeting in Beijing, Haroon Sharif, former minister of state and chairman of Board of Investment had said Pakistan-China industrial cooperation should focus on technology transfer, textiles, agriculture, and Information Technology sectors.

According to the China Customs, the total import volume of urea has increased by 41.95 percent in 2018 from previous year. This turns out to be great opportunity to export Urea to China. Other countries across the region can also be targeted to boost exports of Pakistan.

Reportedly, the nameplate aggregate capacity of urea manufacturers in Pakistan is 7 million tons. At present, urea production on locally available indigenous gas hovers around 5.5-5.8 million tons, enough to meet the local demand.

This below optimum capacity utilisation is because of interruption/non-supply of gas to plants, which include Engrofert base plant, Fatimafert and AgriTech, the aggregate unutilised capacity of these three plants is in excess of 1 million tons per annum, the sources maintained.

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