Engro Fertilizers Ltd (PSX: EFERT), Fatima Fertilisers (PSX: FATIMA), and Fauji Fertilizer Company Limited (PSX: FFC) have announced an investment of over $300 million in gas infrastructure project at the Mari network to ensure the availability of gas for domestic urea production.
Chief Financial Officer EFERT Ali Rathore said at a media workshop on Thursday that Engro Fertilizer’s contribution to the gas project exceeds $100 million.
Rathore underscored the necessity of a consistent and equitable policy for gas pricing in the fertilizer industry. He said establishing large-scale fertilizer plants demands multi-billion dollar investments, and addressing the issue of gas prices would encourage manufacturers to modernize and expand their facilities.
The removal of subsidies for fertilizer manufacturers operating on the Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipeline Ltd (SNGPL) networks, which account for 60% of the total manufacturing capacity, was hailed as a positive step. While gas prices for SSGC and SNGPL networks surged by approximately 200%, manufacturers on the Mari network (FFC, FATIMA, etc.) continue to benefit from subsidized gas prices at Rs. 580 per MMBtu.
The EFERT CFO criticized the current gas pricing mechanism and advocated for a level-playing field for all manufacturers.
It is important to note that both EFERT and Fauji Fertilizer Bin Qasim jacked up their urea prices to Rs. 4,649 and Rs. 5,489 per bag, respectively, after the caretaker government’s massive gas rate hike last month. On the contrary, rates list of FFC and FATIMA still remains unchanged at Rs3,767.
The EFERT CFO stressed the importance of streamlining gas pricing to foster a competitive environment for fostering sustainable growth and affordability in the fertilizer industry.
