Mismanagement behind fertilizer crisis!
March 17th, 2012 | Technology Times | No Comments
THE PERSISTING natural gas shortage in Pakistan indirectly inflicted heavy loss to the national agriculture sector during the year 2011 when the natural gas supply to fertilizer plants remained drastically low or suspended forcing these plants to hardly produce 4.9 million tons of urea against an installed capacity of 6.9 million tons. In financial terms, the natural gas shortage inflicted billions of rupees loss to the fertilizer industry which has so far invested $2.3 billion. The government preferred to import 1.45 tons of urea by spending a hefty amount of $783 million; this could be a temporary relief, but not a lasting solution. The government even paid a huge subsidy of Rs 54 billion on the imported urea to keep it at the price of locally produced urea, but the farmers witnessed entirely discouraging circumstances, as they had to purchase the imported urea from the black market at sky-high prices. This negative situation erupted when the government, despite its repeated assurances to provide smooth and fair natural gas supply to the fertilizer plants, failed to honour its words and adopted unfair approach in this regard. Agriculture contributes around 24 per cent to the GDP and also provides raw materials to all the major industries of Pakistan including, textiles and sugar. Decline in production poses a severe threat to the yield on the crops. All fertilizer manufacturing concerns have signed a Gas Sale/Purchase Agreement (GSPA) for supply of natural gas to their respective plants. The GSPA is for a 12-month supply of an agreed quantity of gas. On the contrary, the gas supply to the fertilizer sector got cut off while the general industrial consumers, with only 9-month GSPA, are being provided gas even in winters for four days a week. The government-run National Fertilizer Development Center (NFDC), which was established with the main task of ensuring chain supply of fertilizers in the country, has bitterly failed to deliver. It should have come up with an effective fertilizers demand and supply mechanism far before the severe shortage of this agriculture input had hit the country last year. Though the fertilizers shortage has inflicted heavy losses in terms of reduction in farm production, however, the NFDC needs to do its homework properly for the next crops, as the situation could turn more critical in case the natural gas shortage to fertilizer plants persists next year. The LNG import could be an alternative solution, however, this process would take months. Pakistan is an agrarian state on which over 65 per cent of the national economy depends and any mishandling with this sector cant be affordable in any case.
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