August 13, 2012
Pakistan''s fertiliser plants face US$58 million revenue loss
Following their total urea sales of 150,000 tonnes as compared to 316,000 tonnes of the period last year, the Sui Northern Gas Pipeline Limited (SNGPL)-based fertiliser plants including Agritech, DH Fertilisers, Pak Arab and Engro''s new plant faced a collective revenue loss of PKR5.5 billion (US$58.1 million) in the first half of 2012.
While, the total urea production of the plants operating on SNGPL in the first six months of 2012 remained at 198,000 tonnes against 297,000 tonnes in first half of 2011, again showing a decline of 33%. These plants were operated only at 18% of their capacity during January-June 2012 contrary to 25% last year.
This year, the fertiliser plants faced an estimated gas curtailment of 82% in which Agritech and Pak Arab got gas for 63 days each, while Engro Enven and DH Fertilisers got gas for 33 days each, the fertiliser sector sources said.
They said that in first quarter of year 2012, all SNGPL based plants that included Agritech, DH Fertilisers, Pak Arab, Engro''s new plant as well as Sui Southern Gas Company (SSGC) based FFBL (Fauji Fertiliser Bin Qasim Limited) faced 53% revenue loss compared with first quarter of 2011. As the revenue generation remained at PKR8.16 billion (US$86.2 million) in first quarter of 2012 against last year''s PKR17.29 billion (US$183 million).
The fertiliser sector''s sources further disclosed that in 2012, SNGPL based four plants as well as SSGC based FFBL lost profitability by 125% and made a collective loss of PKR1.076 billion (US$11.4 million), whereas the same plants had made profit of PKR4.3 billion (US$45 million) in first Quarter of 2011.
To a question, they said, if the gas curtailment continues during rest of the current year, the SNGPL-based fertiliser plants would be forced to shut down permanently, resulting in a massive lay-off skilled manpower, in addition to huge burden on the national exchequer for urea import to balance its demand and supply chain.
They said the government needed to support fertiliser industry to ensure cheap local urea to farmers and import fuel for the power sector and the industry which is more cost effective.