January 12, 2012
High production cost prompts Engro to raise fertiliser prices
The Engro Fertilizer Company Limited has stated that the recent price hike for urea, PKR210/bag (US$2.33), is due to lower supply of natural gas to the plant and imposition of 17% General Sales Tax (GST) that resulted to high production cost.
"We are not getting government guaranteed 100 mmcfd gas to our ENGRO new fertiliser plants by the Sui Northern Gas Pipeline Limited (SNGPL) as per agreement which has increased our cost of production that has been passed on to consumers", Lt Col (Retd) Jamshed Afzal Khan resident Manager ENGRO and Aman ul Haq Corporate Communications and Public Affairs Manager told Daily The Pak Banker here Wednesday (Jan 11).
"If we will get uninterrupted supply of gas to our new fertiliser plants according to the agreement, we assure the government and farmers that we would provide Urea fertiliser bag within PKR1100-1200 (US$12.2-$13.31) range", they remarked.
They said their plants are producing 2.25 million tonnes of fertiliser per annum in the country.
"If all the fertiliser companies in the country are provided gas, they can produce 6.9 million tonnes against the country''s demand of 6.3 million tonnes of urea fertiliser, hence saving precious foreign exchange for the benefit of the country", they claimed.
Aman ul Haq Corporate Communications and Public Affairs Manager of the Engro fertiliser company explained that they were operating the company feed gas to old plant where the price of the gas has been increased from PKR102.1 per mmbtu (US$1.13) to PKR313.27 mmbtu (US$3.47).
Similarly the price of fuel gas in old and new plants has been increased from PKR434.18 per mmbtu to PKR507.86 mmbtu (US$4.82-$5.63) that led to rise in cost of production of urea to PKR4,648 (US$51.55) per tonne. He said the cost of per bag has also increased by PKR257 (US$2.85) per bag.
Instead of passing the cost of PKR257 (US$2.85) per bag, the company has only increased PKR210 (US$2.33) per bag.
Replying to a question, he said that Lt Col (Retd) Jamshed Afzal Khan resident Manager ENGRO assured that his company would reduce the prices if the cost of the production would come down by getting un-interrupted supply of gas to the fertiliser company according to the agreement.
Engro Fertilizers Limited is a wholly owned subsidiary of Engro Corporation and a renowned name in Pakistan''s fertiliser industry.
Engro is also a leading importer and seller of Phosphate products, which are marketed extensively across Pakistan as phosphatic fertilisers.