RLNG at discounted rates to Agritech and Fatima approved

Aftab Ahmed

Islamabad: The Economic Coordination Committee (ECC) is likely to approve the supply of RLNG at discounted rates to Agritech and Fatima fertilizer plants to resume operations to produce urea in a bid to meet the shortfall.

The ECC will take a decision in its meeting scheduled on Wednesday.

Gas rate of PKR 756/MMBTU (with variable contribution margin @119% of the revenue) may be offered to both the units of Agricteh and Fatima for three months w.e. July-Sept. (GoP’s share at this gas rate has been estimated by taking RLNG’s notified rate for June which would be approx. PKR 0.959 billion, the further actual payment by GoP for price differential sum to SNGPL may vary due to difference in the monthly rate of RLNG), ministry of Industries and Production said in a summary moved to ECC available with Newztodays.com.

As per the latest data furnished by National Fertilizer Development Centre (NFDC), it has been projected that national inventory for Uren fertilizer would be below the buffer stock level of 200,000 metric tons (MT) in the month of Dec-2020 and Jan-Feb 2021.

In another option, the ministry of Industries said that ECC may allow the import of 200,000 MT Urea ensuring that the national stocks remain above 200.000 MT. (Total subsidy on import by GoP at current C&F price has been estimated at PKR 3.440 billion with a forex requirement of US$ 47.60 Million).

The ECC in its decision on June 10, 2020, wherein it was decided that is committer be constituted under Chairmanship of Industries and Production Division with representatives from France, Petroleum and National Food Security & Research Divisions to review and recommend the appropriate Variable Contribution Margin (VCM).

The subject committee met on June 16, 2020, wherein a request from two shut plants at the SNGPL network for Agritech and Fatima fertilizer (Shiekhupura plant) was considered. Committee after going through the costing breakup provided by both plants and previously used in calculation of Variable Contribution Margin (VCM) recommended gas price of PKR 756/MMBTU and Variable Contribution Margin (VCM) of PKR 186/bag.