Engro Fertilizer Ltd., Pakistan’s biggest urea producer by capacity, is ready to invest as much as $100 million to source alternative natural-gas supplies as the country’s energy crisis cuts provision of the fuel.
“We are just waiting for government approval,” Chief Executive Officer Khalid Mansoor said in an interview in Karachi. “If there is a shortage at the Qadirpur field, we can link up to other fields near it.”
Engro, which has spent $1.1 billion to build a fertilizer plant as demand for crop nutrients expands in rural Pakistan, is looking for new sources of gas as a shortfall curbs production. Demand for the fuel in the country, where farming employs more than 45 percent of the workforce, exceeds output by as much as 15 percent, according to the central bank.
Industries such as fertilizer production should be prioritized for gas supply to boost incomes in rural areas, said Asim Wahab Khan, an analyst at Foundation Securities Ltd. in Karachi. Engro could tap gas from a field near Daharki in southern Pakistan where it operates, Khan said, citing a pipeline from the Latif deposit as the most feasible option.
Engro’s plant, the company’s single largest investment, can produce as much as 1.3 million metric tons of fertilizer a year.
Parent company Engro Corp. (ENGRO) has dropped 33 percent in Karachi trading in the past 12 months, and traded down 2.4 percent at 100.04 rupees yesterday.
“If the gas-supply issue is resolved, it will surely be in a position to recover, but for the time being it’s in bad shape,” said Farid Aliani, an analyst at BMA Capital Management. “Due to advanced technology and the size of the plant, Engro’s per-ton production cost is lower compared with the competition.”
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