Tuesday August 16, 2022

Govt mulls unified feed gas price; urea to get affected

August 04, 2022

ISLAMABAD: Government would table a workable solution and proposal regarding provision of feed gas to the industry at a unified price.

It was decided on Wednesday after inputs from fertiliser manufacturers that followed discussions with three relevant ministries.

It is to be noted that currently gas was being supplied to the fertiliser plants under different policies, including petroleum policy, and fertiliser policy and some plants were getting RLNG-subsidised gas.

On Wednesday, Federal Minister for Industries and Production Syed Murtaza Mahmud along with the Minister of State (Petroleum Division) Musadik Masood Malik held a meeting with fertiliser manufacturers on the pricing of feed gas to fertiliser plants. Seniors officials of the Ministry of Food Security and Research also attended the meeting.

A representative of a fertiliser company, who attended the meeting said that input was taken from manufacturers on the fertiliser and gas feed pricing and other issues, as the government has decided to provide feed gas at unified prices.

“It was concluded that the Ministry of Industries after discussing with the Ministry of Food Security and Research and Petroleum Division, will bring a workable solution and proposal on unified feed gas pricing and will again discuss it with the sector players in the next meeting to reach an amicable price.”

He said that since the end-sale price of urea by the manufacturers was the same, unified feed gas price was needed.

The ministers said that the government highly values the fertiliser sector as it helps in the food security of the country.

An official of the Ministry of Industries also said that after the unified feed gas price, fertiliser (especially urea) might go up further.

It should be noted that Fauji Fertilizer Company Limited (FFC) on Wednesday increased diammonium phosphate (DAP) price by Rs1,000/bag, saying that increase was made due to the devaluation of rupee against dollar. This price is effective from August 6, 2022. After the increase, DAP would be sold at Rs14,843/bag.

The Economic Coordination Committee (ECC) of the Cabinet had given directions to the ministries to hold meetings with the industry and provide feed gas to manufacturers at a unified price. On Monday too, Minister of Food Tariq Bashir Cheema chaired a meeting to discuss the new plan with federal minister for industries and minister of state for petroleum. The government wants to give direct subsidies to farmers, and a track and trace system for fertiliser bags could help in this regard.

Ministry of Industries had submitted a summary to ECC on issues faced by Fatima Fertilizer (Sheikhupura Plant) and Agritech. Both the Sui Northern Gas Pipeline Limited-based plants are operated by provisioning of RLNG on a cost-sharing basis.

Gas rate for operation of these plants was worked out on the basis of variable contribution margin (VCM). Due to increase in fuel prices and other factors, both plants had approached Ministry of Industries for revision of VCM and capping of GST at the price paid by the plants.

The ECC after discussion approved the proposal to ensure compliance with the earlier decision of the ECC and the federal cabinet of shifting both plants to indigenous gas.

The ECC further directed Ministries of Petroleum, Finance, National Food Security and Industries to work out the gas price/VCM for fertilisers. The ECC also decided that sales tax may be charged on the actual price of the gas being paid by the company.