ISLAMABAD: The Competition Commission of Pakistan (CCP) has released a draft report, “Competition Assessment Study of the Fertilizer Industry in Pakistan,” for public and stakeholder review. The study outlines competition-related issues in the fertilizer sector and offers recommendations for improving efficiency and promoting fair competition.
Pakistan’s fertilizer plants have an annual production capacity of 9.4 million tonnes. Fertilizer production from July to March FY2024 reached 7.1 million tonnes, a 16.6% increase from the same period in FY2023. Fertilizer contributes 30 to 50 percent to crop yields, with the majority used for wheat, cotton, sugarcane, rice, and maize.
The report identifies barriers to competition at three levels—production, distribution, and retail:
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Structural barriers: High capital costs for new plants, reliance on natural gas, and plant location.
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Regulatory barriers: Outdated Fertilizer Policy 2001, discriminatory pricing of feed and fuel gas, and weak policy frameworks.
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Other barriers: Black marketing, hoarding, and smuggling of urea, and insufficient buffer stock.
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Strategic barriers: Disputes such as the Gas Infrastructure Development Cess (GIDC).
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Market behavior: Alleged tie-in sales and anti-competitive conduct by dealers.
The study notes that fertilizer companies continue to report high profits, indicating weak competition in the market. It recommends revising the Fertilizer Policy 2001 to align with changes in the gas sector, ensuring fair access to natural gas and LNG imports, and introducing incentives for energy efficiency and environmental sustainability. The report also suggests strengthening monitoring mechanisms to prevent urea shortages and black marketing, improving coordination among government departments, and enforcing the Competition Act, 2010.
The draft report is available on the CCP’s website. Stakeholders and the public can submit feedback within 15 days of publication. The CCP will continue working with stakeholders to support competition reforms in the fertilizer sector, based on international practices.
The report is available at CCP Fertilizer Industry Report.
