Karachi, January 15, 2020: Urea sales during Dec’19 witnessed a phenomenal jump of 84 percent YoY to 1,307k tons, which is the highest monthly urea offtake historically. On 2019 yearly basis, urea offtake clocked-in at 6.19 million tons.
Last year, the government operated two fertilizer plants on RLNG. Post this, there was no shortfall of urea during 2019 and the country’s urea production clocked-in at 6.2 million, highest ever in the history.
The government provided gas to two fertilizer companies operating on the SNGP network at USD 6.5/mmbtu during 2019, which is 47 percent higher than the weighted average industry rate for fertilizer feed and fuel gas.
Pertinently, these two manufacturers sold urea at the prevalent local price, at a 25 percent discount to the landed cost of imported urea. Moreover, distribution of urea by local manufacturers remains more efficient.
The demand for urea in 2020 is expected at 6.1 million tons while production (excluding two RLNG based fertilizer manufacturers) will be around 5.5 million tons. Having said that, the government should operate both the fertilizer plants for at least 10 months to bridge the expected shortfall of 0.6 million tons of urea in 2020, save foreign exchange reserves and ensure efficient distribution of urea.