Urea Price Hike Alert
Pakistan's urea prices may rise by Rs100 per bag due to an IMF-backed semi-annual gas tariff hike. Increased gas prices are set to impact fertilizer costs on the Sui network, with wider effects expected.
Urea prices in Pakistan are projected to increase by at least Rs100 per bag as part of the government’s commitment to the IMF to introduce a semi-annual gas tariff adjustment by February 2025. This adjustment aligns with the government's plan to announce revised tariff rates every six months to fulfill the revenue needs of Sui companies.
Recently, Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Ltd (SNGPL) requested gas price hikes of up to 50%, which may significantly impact fertilizer producers, especially those connected to the Sui network. Earlier this year, fertilizer manufacturers on the SNGPL network saw a 175% rise in gas prices, resulting in a urea price increase of roughly Rs900 per bag.
Analysts suggest that fertilizer companies on the Sui network will likely have to adjust their urea prices upward to offset the additional gas costs. Other fertilizer producers could also raise prices, even if their own input costs remain steady.
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