LAHORE: The Ministry of Production and Industries has directed the Sui Northern Gas Pipelines Ltd (SNGPL) to continue the supply of heavily subsidised regasified liquefied natural gas (RLNG) to two urea companies in Punjab until the end of November.

The supply of subsidised RLNG to urea manufacturers for a certain period is allowed by the Economic Coordination Committee (ECC) of the Cabinet, which had earlier approved the supply of and price subsidy on RLNG to the two urea companies for a period ending on Aug 31.

A senior SNGPL official told Dawn on Saturday that the ministry had issued the direction to avoid disruption to the supply of 70mmcfd RLNG for Fatima Fertiliser and Agritech Ltd from Sept 1.

According to industry sources, the two companies are receiving subsidised imported gas for almost a year now and the government has been bearing a cash subsidy of around Rs1,200 per bag of urea — or almost Rs18 billion on their total annual production of 750,000 tonnes — produced by them.

“The ministry letter says that it is moving a summary for seeking the approval of the ECC to continue the supply of the subsidised RLNG to the two plants for the next three months,” the official added, requesting anonymity.

A bag of urea produced from RLNG costs Rs2,400 and from local gas Rs1,000.

“The production of RLNG-based urea is costing the country even more than the imported fertiliser,” said the executive of a urea company, who also requested anonymity.

The urea industry had unused manufacturing capacity of almost half a million tonnes at the moment because of non-availability of local gas to some plants. Total domestic production is estimated to be 5.6 million tonne (exclusive of RLNG-based production of 750,000 tonnes) a year against the demand of 5.8 million tonnes.

The National Fertiliser Development Centre (NFDC) has estimated that the availability of the fertiliser during the upcoming kharif season to be about 3.4 million tonnes (exclusive of RLNG-based urea) against the demand of three million tonnes.

Published in Dawn, September 1st, 2019