The Ministry of Industries and Production (MoI&P) has sought over Rs. 2 billion supplementary grant for subsidy for two urea plants on the SNGPL system, a national daily reported.
The subsidy is demanded on the provision of gas for the production of 0.7 million tons of urea, said the report.
They also revealed that a meeting of the Fertilizer Review Committee (FRC) was held on February 19, 2021, under the chairmanship of the Minister for Industries and Production, Hammad Azhar, during which a potential shortage of around 370,000MT in December 2021 was reported.
To address this possible shortage in the country and to ensure buffer stocks above 200,000MT, the meeting discussed the options of either importing the said amount or increasing production from SNGPL based urea plants.
National Fertilizer Development Centre (NFDC) was requested to work out the comparative analysis for both the options for the period of March to December 2021.
According to the NFDC report, the option of import is far more expensive as compared to local production. The calculated difference in the cost stands at Rs. 13.6 billion, the report said.
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MoI&P also prepared a summary, which highlights that if production is increased from the two plants in concern, around 700,000MT more gas can be added to the national inventory. The ministry’s report also said that it would help maintain downward pressure on prices.
The total budget allocated for FY 2020-2021 was Rs. 6 billion, under the head ‘Fertilizer Subsidy.’ The existing balance under the head Fertilizer Subsidy is Rs. 2.881 billion, which is not sufficient for operationalization of these plants, and if the proposal of gas allocation to these two plants is approved, a supplementary grant of approximately Rs. 2 billion may also be required.
The cost for operationalization for 3 months in this FY would be Rs. 4.071 billion. The billing of the total cost of running of two plants would be Rs. 13.57 billion for 10 months.
