In a recent move by the government to adjust the subsidies for the fertilizer sector, Engro Fertilizers has expressed its approval of the revised gas tariff policy.
This revision sees the removal of subsidies for fertilizer manufacturers using gas from the SNGPL network, affecting 60% of the industry’s production capacity.
The new policy raises the feedstock gas price from Rs580 per million British thermal units (mmbtu) to Rs1,597 per mmbtu, marking a significant increase in production costs for the affected manufacturers.
This decision is viewed as an important step towards addressing Pakistan’s ongoing financial challenges.
In a press release issued by Engro Fertilizers, it is stated that ”Pakistan’s current financial position is distressed, it is in a debt crisis, with the debt-to-GDP ratio already above 70 percent and more than $27 billion of foreign debt to be repaid by November 2024. The country cannot afford further fiscal pressures or half measures that do not go all the way in solving Pakistan’s problems. The dependence on government subsidies must end, for Pakistan to really move forward and break away from the vicious cycle of debt.”
Engro Fertilizers has highlighted the partial nature of this policy change, noting that the remaining 40% of the sector’s capacity, which relies on gas from the Mari network, continues to benefit from the previous subsidized rate of Rs580 per mmbtu.
The company argues that a complete removal of subsidies across the entire fertilizer sector is essential for the financial health and autonomy of the country.
“With this complete removal, the government is expected to collect Rs50 billion, which can then be used for targeted agricultural projects and initiatives that generate economic activity and growth in the country.” the company says further.
Engro Fertilizers suggests that this policy shift offers an opportunity for the sector to demonstrate global competitiveness without reliance on government subsidies, potentially setting a precedent for efficiency and investment in the industry.
Furthermore, the company sees this as a chance for the fertilizer industry to serve as an example for other sectors, advocating for a broader reassessment of subsidy policies across the economy.
Engro Fertilizers urges the government to fully eliminate subsidies for the fertilizer sector, aiming to alleviate the national debt burden, foster efficiency, attract investments, and contribute to a stronger future for Pakistan.
After long long first time in the corporate sector a company approves govt policies. Even it hurts this company profits. Hope Pakistani Private Sector Come Forward and Sacrifice Thier Heavy **Profits for the Benifits of The People And Pakistan **.
Engro statement regarding abolishing gas subsidy should be taken as positive step towards. Govt must ensure that unnecessary pressurization by Tax, labor, environment department etc. on the operation not hinder their performance.
it’s great to end subsidies but also end gas and electricity theft by government employees so we can benefit down the line
can anyone tell what would be the 50kg urea Fertiliser bag price after this revision in policy and what would be its effect on food commodoties? Creating a free market may benefit corporates but common man would seriously hurt….
There is nothing to cheer, the next statement they issue will be that they will sell the Urea fertiliser near to landed cost of imported Urea Fertilizer.
These MNCs will pass on increased costs to end user i.e. farmers who in turn will ask Government to increase support prices of output leading to increase in food / commidity prices the poor user will suffer then the Benazir Bhutto Program Ehsaas Program subsidy will be increased at the cost of middle class taxpayers No respite
engro fertilizer would benefit from this new Gas pricing because ENGRO was already paying highest Gas price for its old plant which accounts for roughly 40% of the production,
nonetheless it’s a welcome step
now time comes to learn from India how they managing their economy and far better to Pakistan. Prices are not as higher level as in Pakistan.