ISLAMABAD: Engro Fertilizers on Tuesday slashed urea price by Rs240 per bag – the second reduction this year following a cut in gas tariffs – to Rs1,600/bag in what the company said a move to support farmers amid coronavirus outbreak.
Engro said the latest price cut would result in an overall price reduction of Rs400 per bag since the beginning of the year.
“With the outbreak of COVID-19, Pakistan’s farmers are facing unprecedented challenges. In this difficult time, Engro Fertilizers stands firm with the people of Pakistan and the government to prioritise the sustainability of agriculture sector to ensure our nation’s food security,” the company said in a statement. “In this pursuit, the company has made an additional price reduction to support our valued farmers in these trying times.”
Earlier this year, Engro Fertilizers become the first company to fully pass on the benefit of revision in gas infrastructure development cess (GIDC) rates by announcing a price reduction of Rs160/bag.
“With that price reduction, Engro passed on more than the entire impact of reduction in GIDC given the company’s particular gas mix, which varies significantly from other players in the industry,” Engro said. “After this additional price reduction of Rs240/bag, the dealer transfer price of Engro Fertilizers urea bag will be around Rs1,600.”
In January this year, the Economic Coordination Committee of the cabinet sheared GIDC on gas supplied to fertiliser makers. The government move was aimed at providing price relief to farmers. Now fertiliser markers are charged Rs10 per million metric British thermal unit for both feed and fuel stocks.
Analysts said price reduction by fertiliser makers would alleviate any negative market sentiments in the wake of uncertainties. The action would ensure timely application of fertilisers in the farming and curb any loss in crop yields for the farming community, they added.
Last year, the urea industry witnessed a substantial increase of approximately eight percent year-over-year in offtake to 6.2 million tons. However, this was primarily owing to significant pre-buying by the channel in anticipation of urea price increase after the reports of gas tariff hike recommended by the Oil and Gas Regulatory Authority in December last year.
Engro Fertilizers has been in the business of locally manufactured urea for over 50 years. “This latest price reduction is in line with the company’s purpose as articulated in its central Idea of addressing the most pressing issues of our time,” the company said. “COVID-19 is a national crisis and Engro Fertilizers is responding to it by supporting the government’s priority of sustaining the agriculture sector of Pakistan.”