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Govt increases gas tariff for 3 fertilizer plants to unify rates

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11 months ago

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  • Plants to pay Rs580/MMBtu for feedstock, Rs1,580 for fuel stock.
  • Petroleum division official says unification will save over Rs85bn. 
  • Mari Petroleum Company also inked deal with three plants last year. 

ISLAMABAD: In a bid to unify feed gas prices for fertiliser industry with industrial rates, the government has increased the gas sale prices for three fertiliser plants that use gas from Mari Petroleum Company Limited (MPCL), The News reported Tuesday. 

The Oil and Gas Regulatory Authority (Ogra) notified the three plants — Engro Fertiliser, Fauji Fertiliser (Rahim Yar Khan), and Fatima Fertiliser — which are effective from October 1, 2023. 

The plants will pay Rs580/MMBtu for feedstock and Rs1,580/MMBtu for fuel stock. The move comes amid concerns that the fertiliser industry is accused of not passing on subsidies to farmers. After the decision, these companies might further increase urea prices despite having substantially increased prices.

A senior official of the petroleum division said that although the unification will save over Rs85 billion, the allocation of these funds to small farmers remains unclear. With this revision in the gas sale price for fertiliser, the estimated annual net positive differential margin from the fertiliser sector would be over Rs16 billion for FY 2023-24.

It is to be noted that last December, Mari Petroleum Company inked a deal with three major fertiliser firms to sustain MPCL’s Habib Rahi Limestone gas production.

Mari said, “Mari Petroleum Company Limited has executed a Framework Agreement for the installation of Pressure Enhancement Facilities at Mari Gas Field, Daharki, Sindh with FFC, ENGRO, and FATIMA.”

The project entails constructing pipeline infrastructure, optimising the surface pipeline network, and installing compressors within the Mari Field.

Under the Ogra Ordinance, gas sale prices for fertiliser plants on SSGCL and SNGPL systems are revised from time to time; however, prices for MPCL’s plants have not been revised since October 23, 2020.

It is to be noted that there are 10 fertiliser plants in Pakistan, and six of them receive dedicated supplies from Mari’s network. Gas Supply Agreements for six Mari-based plants are valid until June 2024.

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Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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