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KARACHI – The Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) has submitted a proposal to the Ministry of Industries and Production, seeking a dedicated allocation of Mari Gas for the fertilizer industry. This request comes as urea offtake shows a slight decline in the first seven months of 2024.
FMPAC Executive Director Brig (retired) Sher Shah Malik highlighted the sector’s significant contributions to Pakistan’s economy, including a $0.5 billion investment in a dedicated distribution network for non-pipeline quality, low-heating value gas used in urea production.
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However, Malik warned of potential risks facing the industry:
- Unsecured gas supplies impact 30% of the industry, threatening production of 1.9 million tonnes of domestic urea.
- This figure could rise to 2.8 million tonnes in the coming decade due to agricultural sector growth.
- Lack of allocated gas may lead to a $1 billion foreign exchange outflow for urea imports.
- Continued operation of RLNG-based plants could cost SNGPL Rs3.8 billion monthly.
- Limited product availability might spark black market trade and price hikes.
To address these concerns, FMPAC proposes:
- Dedicated natural gas allocation for all fertilizer plants.
- Utilization of Mari Petroleum Company Limited’s (MPCL) capacity to deliver over 850mmscfd of non-pipeline quality gas.
- Bilateral agreements between MPCL and fertilizer companies until 2035.
This strategy aims to secure Pakistan’s food security and reduce the Rs20 billion cross-subsidy burden on other consumers for RLNG plant operations.
Market Data:
- July 2024 urea offtake: 611,000 tonnes (down 3% year-on-year, up 27% month-on-month)
- 7M2024 urea sales: 3.648 million tonnes (down 2% year-on-year)
- July 2024 DAP sales: 161,000 tonnes (up 43% year-on-year, 31% month-on-month)
- 7M2024 DAP sales: 706,000 tonnes (up 12% year-on-year)
The fertilizer industry awaits the government’s response to their proposal, which could significantly impact the sector’s future and Pakistan’s agricultural productivity.
