July 30, 2012
Pakistan''s urea firms face 52% revenue loss
All urea plants linked with Sui Northern Gas Pipelines Ltd. (SNGPL), including Agritech, DH Fertilisers, Pakarab, Engro''s new plant are facing huge revenue losses as their total sales stood at 150,000 tonnes, 166,000 tonnes less than 316,000 tonnes urea sold in the first half of 2011, showing a decline of 52%.
The plants claimed that the total urea production by SNGPL-based plants in first half of 2011 stood at 297,000 tonnes which declined by 33% to 198,000 tonnes in first half of 2012. SNGPL based plants were only operated at 18% of their capacity in first half 2012 versus 25% last year.
During first half of 2012 SNGPL-based fertiliser plants faced an estimated gas curtailment of 82% in which Agritech and Pak Arab got gas for 63 days each while Engro Enven and DH Fertilisers got gas for 33 days of operations in first six months of 2012.
In first quarter of year 2012 all SNGPL based plants that include Agritech, DH Fertilisers, Pakarab, Engro''s new plant as well as SSGC based FFBL faced a loss of revenue by 53% compared with first quarter of 2011, generating PKR8.16 billion (US$169 million) revenue in first quarter 2012 compared to last years'' PKR17.29 billion (US$183 million). In 2012, SNGPL-based four plants as well as SSGC-based FFBL lost profitability by 125% and made a collective loss of PKR1.07 billion (US$11 million), whereas the same plants had made profit of PKR4.3 billion (US$46 million) in first Quarter of 2011.
The urea manufactures said that plants are facing the worst-ever crisis of their history as 82% gas curtailment was never witnessed before 2012. They said that despite making an investment of US$2.3 billion in last four years on new production capacity, making Pakistan world''s seventh largest urea manufacturer country is sitting on an idle urea capacity of over three million tonnes.
Fertiliser sector official said that if the same gas curtailment continues during remaining five months of 2012, the plants would be forced to shut down permanently resulting laying off highly skilled manpower, in addition to huge burden on government exchequer, to import urea to meet the urea shortfall.