Engro Fertilizers increases base plant urea capacity to 950,000 tons

ISLAMABAD: Engro Fertilizers Limited (EFERT), in a notice to the Pakistan Stock Exchange (PSX) on Thursday, announced that its base plant is now capable of producing urea up to 950,000 tons per annum.

“As previously disclosed, to ensure long-term reliability and sustainable safe operations of the Base Plant, Engro Fertilizers Limited (the “Company”) undertook various maintenance, debottlenecking, balancing, modernization, and replacement activities. Following that the Company has been testing plant performance and based on assessment we are pleased to disclose that the Base Plant is now capable of producing urea up to 950,000 tons per annum”, read the notification 

The base plant (Plant-1) was previously scheduled for maintenance starting September 27 for a period of 60 days. On time after 60 days, on November 28th, the base plant resumed commercial operations after successful completion of maintenance activity.

It should be noted that the base plant had already outlived its useful life. Last year, the base plant production capacity was increased from 500,000 tons to 780,000 tons per annum to test the capability of the plant. Now, the increase to 950,000 tons per annum is significant because it ensures long-term reliable and sustainable production of the plant. Without such regular maintenance of the plant, there is a risk of losing a major chunk of the production capacity, which can be detrimental to the agriculture sector of the country.

The company has a total of 3 plants, out of which 2 Urea plants are located at Daharki (Base plant and EnVen) and 1 NPK plant (Zarkhez) is located at Port Qasim, Karachi. The total capacity of EFERT’s urea plants is 2.275mln MT (Base plant: 975,000 MT p.a and EnVen: 1,300,000 MT p.a). Zarkhez has a total capacity of 100,000MT.

In the last quarter ending 30th September, EFERT posted a Profit After Tax (PAT) of Rs. 2.5 billion, against a PAT of Rs. 4.3 billion last year. The decline was primarily due to the super tax imposed on the fertilizer industry. For the year ended 31 December 2021, EFERT posted a PAT of over Rs. 21 billion, a 25% increase on a yearly basis.

Company background

EFERT set up the first urea production facility in Pakistan, a landmark event in the agricultural sector of the country, with a production capacity of 173,000 tons per year in 1968. With various debottlenecking and expansion steps, production capacity increased to 975,000 tons per year. In 2007, EFERT started construction of the world’s largest single train urea plant of 1.3 Mn tons capacity – EnVen. The EnVen plant started commercial operations in 2011.  

On 1st January 2010, Engro Chemical Pakistan Limited (ECPL) changed its name to Engro Corporation Ltd, and demerged and transferred its fertilizer business into a separate wholly-owned subsidiary—Engro Fertilizers Limited. EFERT is engaged in the manufacturing, purchasing, and marketing of fertilizers, seeds, and pesticides and providing agri services.

EFERT is majorly owned by Engro Corporation Limited (Engro Corp) (~56%), the largest conglomerate in Pakistan. The rest of the ownership lies with the general public (~19%), financial institutions (~4%), mutual funds (~3%), insurance companies (~2%) and others (~16%).

EFERT also had a change in top management earlier this year. Mr. Ahsan Zafar Syed became CEO from July 1, 2022, after the completion of tenure of the previous CEO Mr. Nadir Salar Qureshi (2018-2022).

The new CEO has previously been associated with ENGRO for over 30 years. Ahsan started his professional career with Engro (then Exxon Chemical Pakistan Limited). He has vast experience of leading multi-billion-dollar, mega-scale projects and stakeholder management for Engro.

He played a key role in the construction of the USD 1.1 Billion EnVen Project, the world’s largest single train urea plant, for Engro Fertilizers. After EnVen’s commissioning, in 2011, Ahsan spearheaded the operations of Pakistan’s largest rice processing facility in Muridke for Engro Eximp Agriproducts. Since 2014, Ahsan had been the bedrock of Engro’s Energy vertical, responsible for taking the Thar project to its commercial operations in 2019 and developing a path for the company to operate in a liberal market using renewable fuels as the source. He served as the CEO of Engro Energy, overseeing investments, operations, and business development at Engro Powergen Qadirpur Limited (EPQL), Engro Powergen Thar Limited (EPTL), Sindh Engro Coal Mining Company (SECMC), Engro Energy Services Limited (EESL), and Siddiqsons Energy Limited. By establishing the CPEC-endorsed Thar power and mining projects, the Engro Energy vertical has been able to successfully unearth Pakistan’s large coal reserves in Thar and contributed significant foreign exchange savings for the Country’s progress.

Engro Fertilizers Limited is a public company incorporated in Pakistan on June 29, 2009 as a wholly owned subsidiary of Engro Corporation Limited (the Holding Company), which is a subsidiary of Dawood Hercules Corporation Limited (the Ultimate Parent Company).