FAUJI Fertilizer Company (FFC) is planning to significantly enhance the local production of DAP, the inorganic fertilizer, by setting up a new plant. In this regard, the Fauji group has approached the Petroleum Division seeking government commitment of 30mmcfd natural gas at a concessionary rate of $0.77 per mmbtu for the first 10 years.
The current demand for DAP in the country stands at 2.2 million tons of which 800,000 tons is met through domestic production and the rest is fulfilled through imports. The country’s annual import bill due to these imports stands at $570 million at the current DAP price of $410 per ton. In this backdrop, it is really important that the government supports the FFC’s initiative of building a new plant which aims to produce approximately one million tons of DAP. This would result in significant decline in the country’s import bill. The concessionary tariff sought by the FFC should not be a big matter as the same is currently being availed by other companies including Fatima Fertilizer and Engro Fertilizer Limited. DAP prices soared to Rs4,550 per bag from Rs3,500 per bag in the domestic market due to shortfall during the wheat sowing season in the wake of lower imports by traders amid the lockdown when prices were at historic lows. Meanwhile, global prices are rising now due to short availability of the product as production in China has declined due to coronavirus induced lockdowns. Pakistan normally imports majority of its DAP shortfall requirement from China but this time companies are importing the expensive product from other sources due to short availability of products internationally. It is really unfortunate that despite being an agrarian country we have to rely heavily on the import of fertilizers. Whilst the present government has shown some seriousness to uplift the agriculture sector and is also formulating a strategy in this regard, it is important that the local production of fertilizers is given importance as it will help stabilize their prices and provide relief to the farmers. We have to move towards total self reliance in the fertilizers production to achieve the cherished goal of enhancing production of various crops. To accomplish this, incentives should be given not only to the existing companies to further expand their production base but also to the new entrants.
