Govt increases gas prices for Fatima Fertilizer

Engro obtains Stay Order from Sindh High Court due to dispute with SNGPL

Ibn-e-Ameer

Islamabad: Government has increased the prices of gas for Fatima Fertilizer to continue gas supply effective from July 1, 2021.

New fertilizer plants have been paying prices of gas at 70 cents per MMbtu whereas old plants pay Rs 302 per MMBtu.

Now, the prices of gas for urea will be higher for Fatima Fertilizer Plant after revision.

Earlier, it has been receiving gas supply at a discounted rate of 70 cents per MMBtu under Fertilizer Policy 2001.

Under Fertilizer Policy 2001, for all other fertilizer plants, the gas price was Rs. 302/MMBtu except for Fatima and Engro’s new plant.

However, the agreement expired on June 30, 2021.

Following the expiry of the gas sale agreement, the government has revised the gas sale price at Rs 302 per MMBtu at par with old fertilizer plants.

Now the agreement with Fatima Fertilizer is intact. After the expiry of 10 years of concession on the gas rate expired for Fatima on June 30, 2021, the government has revised the gas price and notified them.

Engro Fertilizer Plant’s gas prices

Engro Fertilizer and Sui Northern Gas Pipeline Limited (SNGPL) have been in dispute over the supply of gas.

SNGPL claims a period of 30 days while Engro claims a period of 900 days of non/less gas supply.

Due to this dispute, Engro extension is subject to the decision on what is the remaining period during which SNGPL had not provided concessional feed gas.

Now, Engro has obtained a stay order from Sindh High Court.

The government has booked Rs 81 billion against two new fertilizers plants-Fatima and Engro on account of Gas Infrastructure Development Cess (GIDC).

The government has been providing gas to Fatima and Fatima Fertilizers Plants at discounted rates at 70 cents. However, these fertilizer plants collected huge money from farmers but did not pay the government.

However, these two fertilizer plants have been charging the rate of fertilizer from the fertilizer at par with other fertilizer plants who were paying a higher rate of gas.

They had received Rs 81 billion from the poor farmers.

The Engro fertilizer plant has paid dividends to the shareholders but did not pay any single amount to the government. The same is the case with the Fatima fertilizer plants.

These two fertilizer plants have collected Rs 81 billion from January 2012 to June 2020.