ECC approves 73 mmcfd LNG supply to AGL, Fatima

Aftab Ahmed

Economic Coordination Committee (ECC) has approved the supply of 73 mmcfd LNG to AGL and Fatima Fertilizer plants to produce fertilizer.

However, it has directed the industries ministry to consult stakeholders to find out the demand of urea in the country. It also further directed to work out the possibility of import of urea to meet the demand.

Last year, the cabinet had also approved gas supply at a discounted rate to Agritech Limited and Fatima fertilizer plants from July 26, 2020.

Following the cabinet’s decision, AGL and Fatima fertilizer plants would start operations from July 26 to October 27, 2020, in a bid to produce fertilizer to meet domestic demand.

The cabinet had ratified the decision of the cabinet’s economic coordination committee to supply gas to two fertilizer plants at discounted rates for a period of three months. It modified the decision to calculate the three-month period from July 26 to October 27, 2020.

During the discussion, the Ministry of Industries and Production had pointed out last year that decision in case of title 2020-21 projections-urea fertilizer required modification in the dates of the three months period for which gas rate to both units of Agritech and Fatima would be offered as almost 10 days had already passed since the decision of ECC. Members had proposed to calculate the period from July 26 to October 27, 2020.

The government had offered a gas tariff of Rs756 per million British thermal units (MMBtu) – with a variable contribution margin of 119% of revenue to Agritech Limited and Fatima Fertilizer for three months, July to October.

Industries ministry had also estimated the government’s share at this gas rate by taking RLNG’s notified rate for June, which would be approximately Rs0.959 billion. Further payment by the government for price differential to Sui Northern Gas Pipelines Limited (SNGPL) will vary due to the difference between monthly rates of RLNG.

The NFDC has projected that the national urea inventory would be below 200,000 tons by the end of December 2020 and had advised the government to either import 200,000 tons or provide subsidies to the closed urea plants.