KARACHI: Two fertilizer plants in Pakistan have been shut down, an official said on Tuesday, as renewed tensions between the United States (US) and Iran in the Middle East threaten to renew fuel supply constraints for the South Asian country.
Islamabad imports a major chunk of its Liquified Natural Gas (LNG) from Qatar. However, since the US and Iran have exchanged missile and airstrikes against each other since earlier this month, uncertainty has surrounded the Strait of Hormuz waterway through which nearly 20 percent of the world’s oil and gas trade took place before the war.
Pakistan has relied on spot LNG cargoes from the international market, which are comparatively costlier, to avoid gas shortages. LNG is a major contributor in the manufacturing of fertilizers.
“Two fertilizer plants have been shut down,” an energy ministry official told Arab News on condition of anonymity as he was not authorized to speak to media.
He did not specify which fertilizer plants were closed.
Pakistan has 10 urea manufacturing plants with a combined production capacity of 9.73 product tons per annum, according to Economic Survey of Pakistan 2025-26.
These fertilizer plants consume about 70 million standard cubic feet per day (mmcfd) of gas, the official explained.
“The closure of these (two) gas-based manufacturing plants will help us save about 68 percent of cargo equivalent,” he said.
Fertilizer is a critical input in Pakistan’s crop production, accounting for around 15 percent of the cost of major crops and contributing 30 to 50 percent toward the enhancement of crop yield as per official figures.
The chief of a leading farmers association said the production facilities that closed down belonged to Agritech Limited and Fatia Fertilizer Company Limited.
“Two plants have been shut, Agritech and Fatima Fertilizer,” Khalid Mehmood Khokhar, president of the Pakistan Kissan Ittehad (PKI), told Arab News.
Agritech had notified the Pakistan Stock Exchange (PSX) earlier this week that the gas supply to its plant, which has the capacity to produce 433,000 tons of urea, has been suspended since July 18.
“Agritech Limited informs that Sui Northern Gas Pipelines Limited (SNGPL) has suspended RLNG supply to its urea plant,” the company said in a PSX filing on July 20.
’VERY NEGATIVE IMPACT’
Ahsan Mehanti, chief executive officer at Arif Habib Commodities Limited, warned that the prevailing gas crisis may create a shortage of fertilizers and hence inflate prices of agriculture inputs in the country.
“If this conflict lingers, the shortage of fertilizers will lift local prices of agricultural produce and trigger inflation and shortages,” Mehanti said.
He said a peace deal between the US and Iran, as well as Pakistan’s foreign relations with other countries can help ease the crisis.
Khokhar said the closure of the fertilizer producing plants will have a “very negative” impact on the agriculture sector, which contributes more than 23 percent in Pakistan’s gross domestic product and provides jobs for 37 percent of the country’s workforce.
“Now it will affect our rice crop while next season, especially in October, November December, it will hit the wheat crop,” he said.
The PKI president warned that a 50-kilogram bag of urea, which was now being sold for about Rs4,500 ($16.2), may become even pricier.
“Earlier in the black market, urea has been retailed with a hike of Rs1,500-Rs2,000 ($7.2),” he said. “When there is a shortage, we cannot predict how much of it will be black-marketed.”
Given the prevailing conditions, Khokhar said urea will be “totally short” during the wheat season.
He lamented that the government was prioritizing power generation over food security.
“There is no gas shortage. It’s about priorities. The priority should be that IPPs (independent power producers) are not important,” Khokhar said.
IPPs are private power producers, who under a long-term agreement generate electricity from gas. Pakistan generates 17 percent of its power from gas, including six percent from imported LNG.
The energy ministry official said the government is trying to buy LNG from the spot market mainly to generate power.
“Power generation needs five cargoes. We arranged two from the spot [market] and around two through local gas,” he said.
Last week, the Pakistan LNG Limited (PLL) invited bids from international suppliers for the purchase of 140,000 cubic meters of LNG to meet the country’s gas requirements.
TotalEnergies Gas & Power Limited appeared as the lowest bidder offering $21.8800 per mmbtu rate for July 27-28 LNG delivery.
