ISLAMABAD: Record urea offtake — at 1.22 million tonnes — was witnessed in December 2019 compared to 0.38m tonnes in the previous month.

Analysts say that higher fertiliser sales were due to delay in wheat sowing across the country and rumours of gas prices going up in January.

“The anticipation of increase in urea prices from January — due to rumours that gas prices would go up — led to higher urea offtake in December,” an analyst at a brokerage house said.

Preliminary data by the National Fertiliser Development Centre (NFDC) showed that after incorporating sales for December 2019, total urea offtake for the year 2019 will reach to around 6.1m tonnes with an increase of 3.1 per cent over the previous year, he added.

Meanwhile, analysts said that Fauji Fertiliser Company (FFC) including Fauji Fertiliser Bin Qasim Limited (FFBL) were the major beneficiaries of higher offtake, followed by Engro Fertiliser and Fatima Fertiliser.

Fauji Fertiliser is expected to record sales of 2.44m tonnes. Urea sales by Engro Fertiliser Company Limited are expected to reach 1.98m tonnes due to improved supply of gas from Mai Gas Field.

Engro Fertiliser remains primary beneficiary of lower gas offtake by Guddu Power Plant due to induction of cheaper generation in grid in a time of lower electricity demand.

Sales of RLNG-based fertiliser companies — Agritech and Ex-Dawood Hercules Fertiliser Limited — were limited due to closure of their urea plants in December when the government ended subsidised LNG to fertiliser companies due to liquidity crunch.

At the same time, the amount of subsidy payable to Sui Northern Gas Pipelines Limited (SNGPL) on provision of subsidised RLNG to fertiliser companies has increased to Rs10 billion. Both SNGPL and Sui Southern Gas Company have proposed 135 and 31 per cent increase in gas prices for feed and fuel gas used in fertiliser manufacturing.

Earlier, a statement issued by the Fertiliser Manufacturers of Pakistan said that in case of increase of gas rates, fertiliser companies will increase urea prices and the burden will be borne by the agriculture sector.

Published in Dawn, January 2nd, 2020