Fertilizer usage decreases to 5.3 million tons

July 30, 2013

Fertilizer usage in the country which touched 6.5 million tons mark in 2009 has phenomenally decreased to 5.3 million tons in 2012-13 depicting lower consumption/demand due to unavailability and higher urea prices owing to imposition of GST, GIDC and unprecedented gas curtailment for SNGPL based four Fertilizer plants with an aggregated production capacity of approximately 2.3 million tons.

Urea application on soil contributes to around 25 percent in crop yield and unavailability of urea for Pakistani farmers can result in at least 40 kg less wheat production per acre costing the country Rs 24 billion a year and would also increase the price of flour (Atta) substantially, increasing food insecurity of 190 million population.

Total per acre Fertilizer cost in 2008-09 was Rs 4,450 which increased by 83 percent in 2012-13 to Rs 8,125 per acre for the average farmer hence Pakistani farmers are paying heavily besides increase in prices of all important input items including diesel, water, Fertilizer, seeds and pesticides. Being an agriculture economy, Pakistani Government should seriously address to the genuine problems of the farmers who grow important crops to feed the countrymen as well as prevent the government from expensive imports.

“Tackling power crisis with full might is indeed need of the hour but we must not forget the important agriculture sector of the country which is the backbone of the economy as well as provide all important raw materials for Pakistani export based industries too,” said Shahab Khawaja, Executive Director Fertilizer Manufacturers Pakistan Advisory Council (FMPAC) while briefing the newsmen here on Monday.

New government is very serious in attracting new investment in Pakistan hence it is imperative to protect local industries to give foreign investors a positive signal. Fertilizer sector invested US $2.3 billion in last 5 years with the help of several foreign financial institutions to make country self sufficient in urea production.

Shahab Khawaja said “our current economic condition doesn’t allow us to spend approximately 452 billion rupees on urea import while our country is self-sufficient in urea production and we can even export our additional production for earning foreign exchange for the country.”

He said urea was the most expensive form of energy; the cost of imported urea was significantly higher than other forms of energy including coal, and RFO. Pakistan currently has installed capacity of 6.9 million tons of urea, which is not built over night and has been result of concerted efforts of last 40-50 years of the GOP making self sufficient in this important crop input. Apart from urea the capacity of other fertilisers like DAP, NP and CAN also exist substituting imports saving precious foreign exchange reserves, he added.

Gas curtailment to Fertilizer industry in the past three years has resulted in imports of three million tons with foreign exchange spending of US $1.5 billion and subsidy of Rs 85 billion. He said gas allocation for Fertilizer sector was not just for the seven Fertilizer plants as claimed by some vested interest but it was for the agriculture sector of the country that represented 21.4 percent in the GDP and also ensured food security of 190 million population of that country.

Fertilizer industry sector is the most energy efficient in comparison to others which include power sector (including government operated power generation companies Genco’s, IPPs etc), industries, captive power plants and CNG sector. If government curtails/minimises gas losses in the country, the current gas crisis can be brought under control without reducing supplies to any sector at all. The ‘system inefficiencies’ in SNGPL and SSGC distribution networks are the crux of the problem and have never been addressed properly.

Using gas for producing urea is the most efficient and judicious usage as Fertilizer sector offers maximum value addition by converting the raw gas into precious urea grains and country hugely benefits from this import substitution. Gas should be provided as priority to the sector which creates maximum value addition he added. Fertilizer is the only sector which has zero percent ratio of Unaccounted for Gas (UFG), it never defaults on its payment obligations to gas utilities which are positive for cash flow of SNGPL/SSGC. All other industries have alternative fuel options except Fertilizer sector that uses gas as raw material to produce the key farm input, urea.

He warned that so far we have only seen the anger of people deprived of electricity and should avoid actions that would result in experiencing the wrath of public with empty stomachs. If we permanently shut down our Fertilizer plants as advised by some vested interest groups, not only more than US $10 billion investment in Fertilizer sector will be lost, national exchequer would also be deprived of Rs 28 billions of tax money annually as Fertilizer Industry has paid over Rs 140 billion taxes in last five years. Courtesy:Business Recorder
Published in ZaraiMedia.com

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