Fertilizer Industry seeks gas supply
Karachi: The fertilizer manufacturers have warned the government to either restore full supply of gas to the industry or to import significant amount of fertilizers in order to cope up with the demand of farmers in the Rabi season.
According to Alfalah Securities, fertilizer manufactures have claimed that the Sui Northern Gas Pipelines (SNGP) has stopped gas supply to Agritech, Dawood Hercules and Engro Fertilizers which would hamper the fertilizer production badly and is a violation of agreement.
The fertilizer shortage could result in a severe food shortage in the country and the government if decides to import fertilizer then it would require a huge foreign exchange of USD 720 mn while also spending PkR 34 bn as a subsidy to overcome the gap between international and domestic prices. Hence, it would be feasible for the government to fully restore the gas supply up to their allocated level as the foreign exchange and subsidy amount would be saved while the domestic prices may also come down to PkR 1,100 per bag. Fertilizer manufacturers also expect urea prices to reach up to PkR 3,000 per bag if the prevailing situation continued and would hamper the yield of crops in the rabi season.
Buy on dips.