Government’s Level Playing Field Policy Could Spur Investment in Fertilizer Sector

Karachi, In an effort to stimulate new investments and enhance efficiency within the fertilizer sector, the Pakistani government has been urged to eliminate discriminatory gas pricing among fertilizer manufacturers. This change is seen as crucial to ensuring ample urea availability for the nation’s farmers, a key component for agricultural productivity.

According to Engro Fertilizer Limited, Ali Rathore, the Chief Financial Officer of Engro Fertilizers, detailed the significance of a strong domestic fertilizer industry, its current challenges and opportunities, and recent governmental reforms aimed at sectoral improvement during a media workshop. Rathore emphasized the importance of equitable gas pricing across the sector, highlighting the disparity that currently exists between manufacturers on the SSGC and SNGPL networks, which account for 60% of the sector’s capacity, and those on the Mari network, including FFC and Fatima, who still benefit from subsidized rates.

Rathore pointed out that such pricing discrepancies have led to a variation in market prices for urea, allowing middlemen to profit significantly at the expense of the government’s fiscal objectives and the farming community. By standardizing gas prices, the government could not only level the playing field for all fertilizer manufacturers but also stabilize urea prices nationwide.

Moreover, Rathore suggested that the complete removal of subsidies and the unification of gas prices across the industry could potentially generate an additional PKR 80 – 100 billion in government revenue. This, in turn, could be redirected towards targeted initiatives aimed at supporting the agricultural sector and directly benefiting farmers.

The briefing further highlighted the urgent need for long-term policies to bolster the domestic fertilizer industry, thereby supporting Pakistan’s economic growth and the ambitions of the Green Initiative Pakistan. Despite the significant global standing of Pakistan’s urea consumption and the growing demand driven by population increase, investments in capacity expansion have been slow. Rathore called for consistent and equitable gas pricing policies to encourage significant investments in the modernization and expansion of fertilizer production facilities, enhancing efficiency and ensuring the sector’s global competitiveness.

Engro Fertilizers, alongside other major players in the industry, is investing in Gas Pressure Enhancement Facilities (PEF) projects to maintain domestic urea production levels critical for Pakistan’s food security. Engro’s commitment to this project is marked by a capital expenditure exceeding USD 100 million, underscoring the industry’s dedication to sustaining agricultural growth and productivity.

The post Government’s Level Playing Field Policy Could Spur Investment in Fertilizer Sector appeared first on Pakistan Business News.