Fertilizer manufacturing faces hurdles from natural gas shortage

Fertilizer manufacturing faces hurdles from natural gas shortage

Fertilizer industry of Pakistan has fallen victim to the shortage of natural gas even before the start of winter season. Although there are only unnoticeable changes in the weather, the load shedding problem is already showing its vitals.

The Sui Northern Gas Pipelines Limited has stated that alleged load shedding is due to the annual maintenances of the piping network. However, the industrial sector has been experiencing the scarcity of natural gas since mid-September.

Three fertilizer manufacturing companies; Dawood Hercules, PakArab and Engro have shutdown there plants near Lahore because of the shortage of said fuel. Due to no certain timeframe provided by SNGPL to the aforementioned companies, they have locked out for indefinite period of time to avoid the running costs of the facilities.

The shut down plants had the accumulative capacity of producing approximately 200,000 tons of fertilizer. The main concern of the Punjab Agriculture Department was however, the chain reaction that would lead to a complete slump in the artificial compost manufacturing.

Only Punjab needs over 3 million tons of fertilizer to grow the Rabi crops, the process of which is already underway. The running plants are producing 80 percent of their capacity at the moment owing to the shortage and there is an expected deficit of around 40 percent of annual production at the end of this month.

The feasible option to overcome the production loss is to import the fertilizer that will cost in the close proximity of $300 to 400 million to the industry with a cost of around PKR 20 M to the government in terms of subsidies. However, the federal government is still working on the proposal.

The fertilizer market has seen hype in prices of late. The tag price of a bag of fertilizer has risen to the double of what was last year. Moreover, desperate farmers are forced to purchase the agricultural commodity for unprecedented black prices as there is no price control system in place at the retail level.

The dearth in the fertilizing products will certainly effect badly on the crops and their subsequent end products. However, the current issue at hand is the availability of the said product as the absence of it will affect the production of crops itself.

Posted by Usman Khalid on Oct 17 2011. Filed under Business, Pakistan. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry