9th May, 2013 - Sindh Engro, KESC sign accord for 600MW Thar coal power project
Sindh Engro Coal Mining Company (SECMC) has signed a memorandum of understanding with the Karachi Electric Supply Company (KESC) to jointly pursue a power generation project of up to 600 megawatts as a mark of cooperation between the two companies on the development of one of the largest coal reserves around the world in Thar, a statement said. By virtue of this MoU, SECMC, a joint venture company between Engro Powergen Limited (EPL) and the government of Sindh, would develop a 600MW mine mouth power plant at Thar Bloc-II, whereas KESC would off take power from this plant to meet the rising demand in its coverage zone in Karachi city and adjoining areas in the interior of Sindh and Balochistan.
8th May, 2013 - Fertilizer sector: Rise in gas prices to hit farmers
The ministry of industries and production has maintained that the move to enhance gas prices for the fertilizer sector would upset the national policy on agriculture. In a letter to the petroleum ministry, it stated that gas prices have traditionally been determined after thorough deliberations between stakeholders and the oil and gas regulator. However, overnight change in the policy would distort the delicate balance.
Caretaker minister Sohail Wajahat H. Siddiqui had last week chaired a meeting on gas pricing and called for cutting the gas subsidy to fertilizer plants. Mr. Siddiqui had informed the meeting that the exercise was aimed at bringing uniformity in gas prices for all sectors using gas, whereas the ministry of industries maintained that by increasing gas prices for fertilizer sector, the worst sufferer would be the agriculture sector.
Agriculture amounts to 23pc of the total GDP and employs over 43pc of the total workforce; and anything which hurts the agriculture economy can have a significant reaction on all those sectors which rely on agricultural produce, according to the letter. In a recent meeting with the officials of the ministry of industries, a delegation of the fertilizer sector had stated that the proposal would inflict serious blow to the fertilizer industry in Pakistan. They said that fuel prices in Middle East are around $0.75 for 1.75mbtu whereas it is $3.2 for gas and $5.4 for fuel in Pakistan for fertilizer sector. “This would reflect a hike of Rs 800 to Rs 1,000 per urea bag,” said a representative of the fertilizer sector, adding that high prices would eventually make fertilizer import more attractive than local production. The ministry of industries was informed that it would lead to job cuts as well as total reliance on imports and the situation would eventually place farmers and the government functionaries at the disposal of importers and market players. An official of the ministry of industries said that only a developed and blooming industrial sector can ensure economic wellbeing of the country.
2nd May, 2013 - Hubco’s 225MW Narowal plant shut down due to fuel shortage on account of non-payment by government of overdue receivables
The Hub Power Company (Hubco) needs the government to make an upfront payment of Rs 3-5 billion to enable it to resume power generation from its 225MW plant in Narowal. A senior Hubco official said that the company had shut down its Narowal plant on March 26, 2013 after operating it partially since Jan 4 because of non-payment of its dues by the government. The resumption the plant can reduce power cuts in Punjab by 40-50 minutes, he said. The overdue amount for Narowal plant had exceeded Rs 19bn, causing the company to default on its payment of Rs 3.2bn to its Saudi oil supplier, Bakri. The receivables of the Narowal plant are thrice the receivables of other similar IPPs,” he said.
5th March, 2013 - Akram Durrani appointed CEO of DH Fertilizers Ltd
Mr. Akram Durrani, Director HR & Corporate Affairs at Dawood Hercules Corporation Limited, has been appointed Chief Executive Officer of DH Fertilizers Limited with effect from March 1, 2013. Mr. Durrani, who has been intimately concerned with the affairs of DH Fertilizers since September 1, 2012 as Executive Director, will be based in Lahore. He brings a lifetime of varied experiences as a successful professional manager to his new role.
1st February, 2013 - Fertiliser plants faced 89pc output loss in 2012
Pakistan’s fertiliser sector faced yet another year of dismal performance due to unprecedented cut in gas supply, said the Fertiliser Manufacturers Pakistan Advisory Council (FMPAC). Fertiliser plants in the northern region lost production by 89 percent in the year 2012.
Of the total production capacity of over 2.2 million tons, Sui Northern Gas Pipelines Limited (SNGPL)-based fertiliser plants produced only 256,500 tons of urea in 2012, which is the lowest ever production by fertiliser plants in the sector’s history. Producing only 11.6 percent of the total urea production capacity of SNGPL-based fertiliser plants shows the worst ever gas curtailment being faced by fertiliser plants in the country, said a FMPAC spokesman.
The country’s total urea production figures are also dismal as the whole fertiliser sector on SNGPL as well as Mari network produced 4.1 million tons of urea against 4.8 million tons produced last year, as compared with an installed capacity of 6.9 million tons. This shows the overall production loss of 2.8 million tons in a year, which has never been witnessed before. Currently, all four fertiliser plants on the SNGPL network are facing a complete shutdown, which has resulted in severe production and financial losses for the sector.
Four fertiliser plants on the SNGPL network, including Pakarab, Dawood Hercules, Engro’s new plant and Agritech, remained the main victims of the chaotic gas situation in the country. The worst years for the fertiliser sector have been 2011 and 2012 as instead of providing gas to fertiliser plants to produce economical urea domestically, the government preferred to import Urea by spending over $1 billion from the foreign exchange reserves.
The spokesman said that the fertiliser sector has been witnessing a steep production decline as it produced five million tons of urea in 2009 against a capacity of five million, 5.15 million tons against a capacity of 5.6 million tons in 2010, 4.9 million tons against 6.9 million tons capacity in 2011 and 4.1 million tons against a capacity of 6.9 million tons in 2012. He said that there is a misconception that fertiliser manufacturers enjoy raw material subsidy from the government in shape of reduced feed gas prices.
12th December, 2012 - DH Corp announces discontinuation of dialogue with Pakarab Fertiliser
Dawood Hercules Corporation Limited (DH Corp) on Tuesday announced to discontinue dialogue with Pakarab Fertiliser Limited for possible sale of its shareholding in DH Fertilizers plant. With this announcement, DH Fertilizers plant's share sales purchase deal between DH Corp and Pakarab Fertiliser has been lapsed. According to Dawood Hercules announcement sent to Karachi Stock Exchange, the previously announced plan to sell its share in the DH Fertilizers plant by Dawood Hercules Corporation Limited to the Pak-Arab Fertiliser Company, has been shelved. On September 17, 2012, a memorandum of understanding (MoU) was signed between DH Corp and Pakarab Fertiliser in relation to a possible sale of DH Corp's entire shareholding in DH Fertilizers Limited to Pakarab Fertiliser. The consummation of the transaction under the MoU was subject to entering into definitive agreements and under MoU the parties made no bidding agreement in relation to the transaction. While till date no definitive agreement has been entered into. However, now, the board of directors of DH Corp at its meeting held on Monday has decided that DH Corp does not wish to pursue the transaction for commercial reasons. DH Corp has also informed Pakarab of its intention to discontinue the negotiations in relation to the transaction.
The proposed deal has now been confirmed to be off the table and the Dawood Hercules Corporation would continue to own and manage the said fertiliser plant near Sheikhupura. When this deal was announced a due diligence process was also initiated by the Pakarab Fertiliser Company and extensive negotiations were held to finalise the deal. Industry sources claim that the manipulation of gas through Sui Northern Gas Company Limited (SNGPL) by certain elements resulted in the deal not getting through. Due to gas shortage in the country, the Ministry of Petroleum in May, 2012 announced a plan to supply Gas by rotation to two plants at a time for a month each. However, after the first month, the gas rotation formula was abandoned and SNGPL adopted a discriminatory gas supply policy. Engro and DH Fertilizers plants received gas for only 45 and 62 days, respectively during the current year, and Pak Arab Fertiliser and Agritech plants received gas for 110 and 108 days, respectively. Sources further revealed that SNGPL also treated discriminatorily DH Fertilizers and Engro by not providing agreed gas as per formula devised by the Ministry of Petroleum.
6th December 2012 – Transparency International Pakistan receives complaint against SNGPL
Transparency International Pakistan has received a complaint against Sui Northern Gas Pipelines Limited (SNGPL) regarding alleged discrimination and favouritism on its part by preventing the supply of gas to DH Fertilizers Limited (DHFL) and Engro Fertiliser Ltd, by diverting their quota to Pakarab Ltd, thereby causing loss of over Rs one billion per month and further resulting in shortage of locally manufactured urea, which is being imported at the expense of exchequer against precious foreign exchange. TI-Pakistan Adviser, Syed Adil Gilani in his letter sent to the Prime Minister on December 4 has requested the Prime Minister to take immediate action and order SNGPL to comply with the commitments made to Engro Chemical Pakistan Limited in the gas sale and purchase agreement of April 11, 2007 and to implement the Lahore High Court order directing the respondents, through an interim order of February 13, 2012, passed in the writ petition No 3310/2012 to supply gas to DHFL in accordance with the allocation policy and without any taint of discrimination. TI-Pakistan has summarised the allegations made by the complainant against SNGPL as follows:
1) That Sui Northern Gas Pipelines-based fertiliser plants, Engro and DH Fertilizers received gas for only 33 days of operations in the first six months of 2012.
2) That the company's urea sales fell 30 percent to 397,000 tons on a yearly basis due to gas supply issues, thus causing short manufacturing of 800,000 tons of urea fertiliser, which had to be imported by Trading Corporation of Pakistan (TCP) at higher cost of approximately Rs 30 billion, as well as by spending precious foreign exchange from Pakistan foreign exchange reserves.
3) That according to gas sale and purchase agreement of April 11, 2007, Article 3.1 (b), SNGPL is committed to supply Engro Chemical Pakistan Limited 100 MMSCFD specification gas, initially to be obtained by the seller from Qadirpur field under the Qadirpur GSA. And without effecting the seller's obligations under Article 3.1(a), if during the term the volume of gas available under the Qadirpur GSA reduces on a permanent basis below 100 MMSCFD, then the seller shall be obliged to supply any shortfall up to the guaranteed delivery of specification gas to the buyer from the transmission system of the seller (the "System") and to enable such supply the buyer shall be permanently switched to the system (the "Switch").
4) That the Lahore High Court had directed through an interim order of February 13, 2012 ("Interim Order"), in the writ petition No 3310/2012 to supply gas to DHFL in accordance with the allocation policy and without any taint of discrimination. And further due to failure of SNGPL to abide with the court orders, and on filing of the contempt of court application, the Lahore High Court had passed an order on November 21, 2012 wherein para 6 states "DG GAS is directed to hold another meeting at 11 am on November 27, 2012 of all the stakeholders and pass an speaking order either evolving an immediate workable formula for supply of gas to members of fertiliser sector or then furnish detailed reasons for not doing it.".
5) That DG GAS, Ministry of Petroleum and Natural Resources, passed an speaking order on November 28, 2012 that after hearing of all the stakeholders including the petitioner he holds that in the interest of fairness and equity the understanding reached on May 8, 2012 should be followed in letter and in sprit and gas available for fertiliser sector whatever, whenever and wherever technically possible for operation of even single fertiliser plant should be given to the petitioner and other fertiliser plants on turn basis without any recrimination.
6) That in 2012 Engro Fertiliser was supplied gas for 45 days, and DH Fertilizers for 62 days, whereas Pakarab Fertiliser and Agritech Ltd were supplied gas by 100 percent more days for 107 days and 108 days respectively, which is a clear proof of the discrimination and favouritism.
7) That one of the major causes of the blatant violations of the High Court orders and SNGPL's contractual obligations is that the board has directors who are not allowed under the Securities and Exchange Commission of Pakistan (SECP) law to be there, and who are also involved in causing discrimination due to the alleged conflict of interest.
Adil Gilani said: "it is to the credit of the Prime Minster, who since taking oath of his office on June 22, 2012, is successful in taking up governance issues on top priority basis, and has complied with all the judicial orders in letter and in sprit, and has taken prompt notice and acted against all the corruption complaints brought to his notice, e.g. CDA commercial plot sale, Golen Gol Project, and procurement of 75 Railway Engines from China". Transparency International Pakistan is confident, he said, that the Prime Minster will act urgently in this case to stop SNGPL from attracting contempt of court by discrimination, favour, fairness and equity, and also to comply with the court orders and the terms of contractual obligations it has towards Engro fertiliser. Transparency International Pakistan is striving for across the board application of Rule of Law, which is the only way to stop corruption, he said. Copies of the letter have been forwarded for information with the request to take action under the rules and regulations to address the alleged deliberate discriminatory acts of SNGPL, causing loss to the nation in billions of rupees. Chairman, Public Accounts Committee, Islamabad, Registrar, Supreme Court of Pakistan, Islamabad, with the request that the Supreme Court HR Cell take up suo motu notice, as this case may prove to be the tips of the iceberg of corruption in gas sector, which is also causing CNG shortage due to the corruption of mismanagement, Chairman, NAB, Islamabad, Secretary, Ministry of Petroleum and Natural Resources, Islamabad, Auditor General, Islamabad, Chairman SECP, Islamabad, MD, SNGPL, Lahore, Mian Misbah-ur-Rehman, Chairman, SNGPL, Lahore, and Directors SNGPL, Mirza Mahmood Ahmad, Nessar Ahmed, Shabbir Ahmed, Dr Shahab Alam, Ahmad Aqeel, A. Samad Dawood, Muhammad Arif Habib, Muhammad Azam Khan, Wazir Ali Khoja, Mian Raza Mansha, Azim Iqbal Siddiqui, and Shahid Aziz Siddiqui.
1st October, 2012 – Fertilizer plants on SNGPL network: govt accused of violating gas distribution policy
1st October, 2012: The Federal government is reportedly violating its own gas distribution policy for fertiliser plants: plants being run on gas provided by Sui Northern Gas Pipeline Limited (SNGPL) are not getting equal and fair treatment despite already defined distribution and rotation formulas. Sources told Business Recorder that in sheer violation of government's own policy for fair distribution of gas to SNGPL-based fertiliser plants, they are not getting equal and fair distribution by the gas company. "It is obvious from the current decision of resuming gas supply to a Multan-based fertiliser plant, which had already taken gas for 30 days (May 8-June 9) this year," sources said.
In a meeting of the Ministry of Petroleum and Natural Resources held in Islamabad on May 8 this year, attended by representatives of APTMA and Fertiliser plants, it was agreed in principle that four fertiliser plants on SNGPL would get gas on rotation basis for a period of 30 days for two plants at a time. This decision was confirmed by the Secretary of the Ministry Petroleum & Natural Resources in a letter No: NG (1)-7(158)/11-LS-Vol-111 dated May 10, 2012. In the first rotation, Agritech and Pakarab were provided feed gas for 30 days, beginning from May 8 to June 9. Engro Enven and DH Fertilisers were allowed feed gas in the second rota, beginning on June 10. However, their feed gas was suspended on June 16. The government diverted gas from DH Fertiliser and Engro Enven to the power sector much before the completion of their 30 days of rotation on the promise that when gas will be available, plants which had not completed their rotation will have the first right to available gas. However, sources said that now the government has decided in principle to supply feed gas to a Multan-based Fertiliser plant, instead of DH Fertiliser and Engro, which had not completed their rotation. "The government's previous direction to divert gas supplied from fertiliser sector to power sector has been lapse on Sep 30 this year and SNGPL is likely to resume gas supply to the said plant from October 1 (today). As the Multan-based urea plant was instructed to carry out start up activities and run their utilities and gas turbines," they added. According to the previously devised government formula, SNGPL network-based plants were supposed to be provided gas on rotation for a 30-day period at a time. Now, according to sources, the gas is being supplied to a plant which was already provided gas for 30 days without any interruption, instead of resuming gas for the plants, whose gas was abruptly suspended after just six days. "As per the agreed principles, if, for any reason, any network plant is denied gas for the stipulated 30 days per rota, the gas, when supplied, will first be given to such plants to complete the remaining days from the 30 days rota to ensure equal and fair distribution," they maintained.
During 2012, DH Fertilisers and Engro Enven plants had been allowed feed gas for only 45 days compared with 75 days for Pakarab and 80 days for Agritech. Even now, when gas is available, instead of allowing its supply based on principles of fairness and equity, SNGPL once again demonstrated favouritism and blatant discriminatory behaviour and likely to start the supply of feed gas to other plants. In this regard, MD SNGLPL also received written complaint from affected plants, in which they mentioned the above facts and called for gas supply in accordance with already defined formula. During 2011, two plants were extended preferential treatment and were allowed gas for more days than other two plants. Later, a urea plant had approached the court. Despite Lahore High Court's decision on petition against SNGPL's discriminatory gas supply policy, the fertiliser plants are still being subjected to discrimination.
15th September, 2012 – Proposed sale of DH Fertilizers Limited by Dawood Hercules Corporation Limited to Pakarab Fertilizers Limited
15th September, 2012: The Board of Directors of Dawood Hercules Corporation Limited (DH Corp.) in their meeting of 15 September, 2012 approved the execution of a Memorandum of Understanding by and between DH Corp. and Pakarab Fertilizers Limited. As per the terms of the MoU, DH Corp. intends to sell and Pakarab intends to purchase DH Corp’s entire shareholding (100,000,000 ordinary shares of Rs. 10 each) in DH Fertilizers Limited. The consummation of the transaction is subject to execution of definitive agreements and such approvals as may be required to give effect to the sale.
12th September, 2012 – DH Fertilizers increases shareholding in Hubco
12th September, 2012: The aggregate shareholding of DH Fertilizers Limited in the Hub Power Company Limited (Hubco) has increased to 10.12 percent. "DH Fertilizers Limited has bought 4,787,500 ordinary shares of the Hubco in addition to 112,260,000 ordinary shares already held", an information sent to Karachi Stock Exchange on Tuesday said. As per the Listed Companies (Substantial Acquisition of Voting Shares and Take-over) Regulations, 2008 acquisition of shares in excess of 10 percent of the voting shares in the listed company needs to be disclosed in that company to the said company and to the stock exchanges.
1st September, 2012 - Akram Durrani appointed Executive Director of DH Fertilizers Limited
1st September, 2012: Akram Durrani, Director HR & Corporate Affairs at Dawood Hercules Corporation Limited, has been assigned additional responsibility and will take on the role of Executive Director with oversight responsibility for DH Fertilizers Limited with effect from 1st September, 2012. In this role, he will coordinate closely with the CEO but will provide direct oversight of all functions of DH Fertilizers’ on a day to day basis.
27th August, 2012: Urea plants' closure to result in 0.96m tons of output loss: ministry
27th August, 2012: The Ministry of Industries has reportedly informed the Economic Coordination Committee (ECC) of the Cabinet that suspension of gas supply to five urea plants would result in loss of 966,000 tons production in four months and the country may face a shortage of urea during Kharif season, it was learnt.
The issue of fertiliser availability for Kharif 2012 was discussed during the ECC after the Ministry of Industries moved a summary for import of urea, arguing that it was apprised by the Petroleum Ministry that 5 out of 10 urea plants had been shut because of suspension of gas supply. There is no hope of gas restoration to these plants in the near future and subsequently urea shortage would be met through imports, maintained high ups of Ministry of Industries. The Ministry also informed the meeting monthly urea production by four plants on SNGPL system is 207,000 tons provided they get 100 percent gas supply whereas four month closure would result in 814,000 tons less fertiliser production. The ECC was informed that one urea plant on SNGPL system produce 38,000 tons urea if it is provided 100 percent gas supply. The suspension of gas supply for four month would result in loss of 152,000 tons. The Ministry said that five plants, four on SNGPL and one on SSGCL system, would be facing curtailment of gas for four months as a result of gas diversion to the power sector.
The meeting was informed that four plants that had been shut down on SNGPL system included Engro Fertiliser Limited with monthly production capacity of 110,000 tons, Pak Arab fertiliser 9,000 tons, Agritech Limited 39,000 tons per month and Dawood Hercules 51,000 tons per month. Sources said that Ministry of Industries had convened a meeting of all stakeholders on June 21, 2012 and two days after that meeting it was informed by the Ministry petroleum that half of urea plants had been shut down, consequently urea shortage would be met through imports. The Ministry informed the ECC that taking into account SNGPL plants total closure will reduce the urea stock to 443,000 tons in the first week of November 2012. Therefore, prudence demands that 600,000 tons of urea should be imported to maintain strategic reserves of around 500,000 tons immediately to discourage speculation, hoarding and black marketing. The subsidy on imported urea is always meant to bring the commodity within reach of small farmers, ensuring its affordability. However, subsidy on imported urea does not have desired effect as price of imported urea remains beyond the reach of small farmers as was evident from 20 percent less urea consumption in May this year compared to May last year.
The Ministry maintained that in case imported urea price is kept at par with domestic urea price, there is no need for the government to spend scarce foreign exchange. Market forces may meet urea gaps increasing the rate of this agriculture input. The ECC allowed import of 300,000 tons urea. However, the proposal that price of imported urea be reduced to Rs 1,450 from Rs 1,600 per 50 kg bag to facilitate the growers was not approved.
26th July, 2012 - Urea plants suffer Rs 5.5bn loss
2nd July, 2012: In the first half of 2012, all SNGPL-based plants, including Agritech, DH Fertilizers, Pakarab and Engro (new plant), faced a collective loss of Rs 5.5 billion in terms of revenue as their total sales of urea stood at 150,000 tons as against 316, 000 tons in the first half of last year.
In a statement, the fertilizer industry stated that 52 per cent decline in terms of sale translates itself in a revenue loss of Rs 5.5 billion. The total urea production by SNGPL based plants in the first half of 2011 stood at 297,000 tons which declined by 33 per cent (or 198,000 tons) till June this year.
The plants operated at 18 per cent of their capacity during these six months against 25 per cent last year. During the first half, they faced an estimated gas curtailment of 82 per cent in which Agritech and Pak Arab got gas for 63 days each while Engro Enven and DH Fertilizers got gas for 33 days in the first six months of 2012.
In the first quarter of this year, all SNGPL-based and SSGC-based plants faced a loss of revenue by 53 per cent compared with first quarter of 2011, generating Rs 8.16 billion revenue in the first quarter as compared to last years’ Rs 17.29 billion.
In 2012, four plants based on SNGPL as well as SSGC based FFBL lost profitability by 125 per cent and made a collective loss of Rs 1.076 billion whereas the same plants had made profit of Rs 4.3 billion in the first quarter of 2011.
The SNGPL-based plants are facing crisis as 82 per cent gas curtailment was never witnessed before 2012.
Despite making an investment of $2.3 billion in the last four years on new production capacity, making Pakistan world’s seventh largest urea manufacturer, there is an idle urea capacity of over three million tons.
Fertilizer sector officials said that if same gas curtailment continues during the remaining five months of 2012, the SNGPL-based fertilizer plants would be forced to shut down permanently.
23rd July, 2012 - Gas crisis hitting farm yields hard
The recently announced government policy to divert natural gas towards the energy sector and curtail it for Urea manufacturing and other sectors is a decision which may have serious consequences for the agriculture sector and further discourage the investors. The natural gas is a fossil fuel and it will ultimately deplete, this is all the more reason to be careful about its usage.
Manufacturing sector which is directly linked with agriculture is suffering. Urea which is a basic requirement for our crops faces severe production decline due to non-availability of gas. Textiles industry, dependent on cotton for raw material and natural gas is facing problems.
Natural gas is the basic raw material for Urea. Consequently, if gas is not supplied, the Urea manufacturing sector cannot sustain. Urea fertilizer is a very important input in cotton, wheat and virtually every crop grown in Pakistan. There’s no known alternate to it available to farmers currently. During the last decade, the government had encouraged the Urea manufacturing sector to grow and make the country self-sufficient. In this regard, Engro Enven plant and Fatima Fertilizer were the big projects set up during the past five years. About $3 billion worth of investment was made by the corporate sector. This is in doldrums now and will seriously hurt the country’s agriculture.
Local Urea production is under threat and subsequently farmers will suffer. The scenario is that either enough Urea won’t be available in the market or will have to be imported which will definitely raise the input costs and further increase agriculture production costs. Our decision makers seemed to have totally miscalculated the equation and now Pakistan faces serious issues due to Urea shortage in the future.
Any agri-scientist and farmer would tell you that Urea fertilizer is extremely important for agriculture. This is a known fact for all countries with substantial agricultural production. Till the late 1950’s, Pakistan was an agrarian and rural country. Discovery of natural gas in Sui, Baluchistan and subsequently in other parts of Sindh and Punjab encouraged global companies to invest in the Urea manufacturing sector. The Dawood Hercules fertilizer plant set up in Sheikhupura in 1968 was the first project completed with the assistance of World Bank in Pakistan. Over the next 35 years, growth in this sector led to a positive situation whereby, about two-thirds of urea demand was met by local manufacturers and the remaining was imported. Since gas availability was not an issue about a decade back, CNG pumping stations for motor vehicles started coming up with virtually no regulatory oversight or long-term planning. The mushroom and unregulated growth in the CNG stations led to huge conversion of petrol and diesel vehicles to CNG fitted engines and in less than 10 years of time, and now CNG sector consumes more gas than Urea fertilizer manufacturers.
The result for agriculture has been catastrophic. Within two years, urea prices have increased by 141. The GST imposition @ 16 per cent and Gas Infrastructure Development Cess of 193 per cent has added Rs 384/bag. Gas curtailment also resulted in major price increase impact of Rs 537/bag. The increase in urea prices means increase in input costs to farmers and subsequently this will pass onto the consumers.
An argument put forth during the last 2-3 years implies that urea can be imported easily from abroad so why not do that? Definitely, it can be done but the economics make it very difficult for farmers and Pakistani consumers. Imported urea cost is about 3,158/bag and there’s no added value. The government provides a subsidy on this which results in a loss of Rs 55 billion to the national exchequer. The import costs the government $785 million in foreign exchange. Ultimately, the loss on imported urea comes to about Rs 15 billion and thus farmers suffer ultimately as the cost has to be borne by them. Importing Urea, therefore, is a problem not a solution especially in the wake of the fact that Pakistan has sufficient manufacturing capacity.
Local urea manufacturing capacity is 6.9 million tons and this happens to be the 7th largest in the world. The country is unable to utilize 2 million tons of local urea manufacturing due to gas supply issues. Urea is the guarantee to having better yields and food security plus fiber security in case of crops like wheat and Cotton. However, squandering a precious resource like natural gas on fuel burning in individual and transportation vehicles makes no sense.
The energy crisis requires serious attention. Pakistan must work to resolve the circular debt issue and not to make other industrial sectors suffer due to this problem. The continued and ever increasing use of CNG in vehicles is virtually bringing the industrial sector and agricultural manufacturing sector to a halt. Textile and urea manufacturing is getting seriously curtailed down and will have disastrous impact for the economy. It is time to rationalize the usage of precious natural gas resources. Agriculture and related Industry is the key to sustainable economy for Pakistan. If we are unable to rationalize the Natural gas utilization, it would imply and ensure that irrational policies have derailed our industry.
2nd July, 2012: Pracha appointed CEO DH Fertilizers
2nd July, 2012: Shahid Hamid Pracha has been appointed as the new Chief Executive Officer of DH Fertilizers Limited with effect from July 01, 2012. According to an information sent to Karachi Stock Exchange on Monday, Shahid Hamid has replaced A. Rashid Lone. DH Fertilizers Limited is 100 percent owned subsidiary of Dawood Hercules Corporation Limited.
18th June, 2012: DH Fertilizers manufacturing plant shut down
18th June, 2012: DH Fertilizers Limited (a wholly owned subsidiary of Dawood Hercules Corporation Limited) said that it had shut down its fertilizer plant after SNGPL informed them that in view of severe energy crisis and load shedding in the country, they have been advised by the government for immediate suspension of gas supply to the fertilizer sector and diversion of gas to the power sector. Accordingly, SNGPL informed that it will not be in a position to continue gas supply to fertilizer industries till further instructions. Dawood Hercules Corporation in a communication to Karachi Stock Exchange (KSE) today said that as a consequence it has been forced to shut down plant of DH Fertilizers and will inform KSE when gas supply is restored. Engro's new Enven plant has reportedly been shut down as well.
11th June, 2012: Acquisition of shares of The Hub Power Company Limited (Hubco)
11th June, 2012: In an intimation sent to stock exchanges, Dawood Hercules Corporation Limited (DH Corp) informed that with respect to the acquisition of ordinary shares of Hub Power Company Limited (Hubco) from the National Power International Holdings BV, all the regulatory consents and approvals are now in place and the Company is now moving ahead for the acquisition of Hubco shares at a price of PKR 31/- per share as follows:
- 35.48 million ordinary shares of Hubco by Dawood Hercules Corporation Limited; and
- 102.26 million ordinary shares of Hubco by DH Fertilizers Limited (a wholly owned subsidiary of DH Corp)
8th June, 2012: Gas supply resumed to DH Fertilizers Limited
8th June, 2012: In a notification under the material information disclosure provisions of the Listing Rules, Dawood Hercules Corporation Limited (DH Corp) informed the Karachi Stock Exchange that Sui Northern Gas Pipelines Limited vide their letter dated 6th June 2012 had informed DH Fertilizers Limited (wholly owned subsidiary of DH Corp) to start operation from 00 hrs on 10th June 2012, barring unforeseen circumstances.
20th April, 2012: Gas supply to DH Fertilizers plant suspended in accordance with PMs directives
20th April, 2012: Dawood Hercules Corporation Limited in a disclosure statement required under the material information disclosure provisions of the Stock Exchange Listing regulations, today announced that on 19th April, 2012, gas supply to DH Fertilizer plant (A wholly owned subsidiary of Dawood Hercules Corporation Limited) was suspended by the Sui Northern Gas Pipeline Limited (SNGPL).
Gas supply is being discontinued in accordance with the Prime Ministers directives during 2nd National Energy Conference for the purpose of diverting gas to the power sector.
As a consequence DH Fertilizers Limited was forced to shut down.
The Company will inform the Stock Exchanges about resumption of gas supply as and when it is restored.
2nd April, 2012: Gas supply to DH Fertilizers plant suspended by SNGPL
2nd April, 2012: Dawood Hercules Corporation Limited in a disclosure statement required under the material information disclosure provisions of the Stock Exchange Listing regulations, today announced that the gas supply to DH Fertilizer plant (A wholly owned subsidiary of Dawood Hercules Corporation Limited) has been suspended by the Sui Northern Gas Pipeline Limited (SNGPL).
SNGPL has informed that disruption in of gas supply is due to sabotage activity and widening gap between the supply and demand, thus leading to this situation.
The Company will inform the Stock Exchanges about resumption of gas supply as and when it is restored.
16th February, 2012: DH Corp announces dividend
The Board of Directors in its meeting held on 15 February 2012 has announced a final cash dividend for the year ended 31 December 2011 of Rs 1.00 per share i.e.: 10%.
December 26, 2011 Meezan Bank arranges PKR 4.8 billion.
Meezan Bank Ltd. arranged a PKR 4.8 billion syndicated Islamic Finance Facility for DH Fertilizers Limited. DH Fertilizers is amongst Pakistan's leading fertilizer manufacturers and a wholly owned subsidiary of the Dawood Hercules Corporation Limited (formerly Dawood Hercules Chemicals Limited), one of the largest groups and trusted business names in Pakistan.
The PKR 4.8 Billion Syndicated Islamic Finance Facility was mandated to Meezan Bank as a Financial Advisor & Lead Arranger. United Bank and Allied Bank jointly led the consortium while AlBaraka Bank, BankIslami & Burj Bank were Co-Lead Arrangers of the Facility.
A signing ceremony was held at the Dawood Centre to ink the Facility Agreements between DH Fertilizers and the Banks. The ceremony was attended by Mr. Hussain Dawood, Chairmanand Mr. Shahid Hamid Pracha CEO- Dawood Hercules Corporation Limited, Mr. Irfan Siddiqui, President & CEO of Meezan Bank, along-with leading professionals from participating financial institutions including Mr. Shafqaat Ahmed (CEO - Al Baraka Bank), Mr. Ahmed Khizer Khan (President & CEO -Burj Bank Limited).
Speaking on the occasion, Mr. Hussain Dawood said that the Dawood Hercules Group's underlying philosophy is to work on a partnership basis and form long-term relationships. He also emphasised the Group's commitment towards Islamic banking and praised Meezan Bank's support for arranging the Facility.
Adding his words at the occasion, Mr. Amir Ali, Head of Investment Banking Meezan Bank said that DH Fertilizers Limited (then a part of Dawood Hercules Chemicals Limited) was the first company in Pakistan to completely converted its long term bank borrowings to Islamic financing in 2007. The Company at that time had issued the largest ever private sector Sukuk in Pakisan, the issue size of which amounted to PKR 6.5 billion. He thanked the Company for its support at that time which had helped Islamic Banks boost the local Islamic Sukuks' Market.
Meezan Bank is the first and largest Islamic Bank in Pakistan with a branch network of 275 branches in over 80 cities of Pakistan offering a complete range of Islamic banking products and services for individuals and businesses.
28th October 2011: Dawood Hercules Corporation Limited appoints new CEO
The Board of Directors of Dawood Hercules Corporation Limited (DH Corp) in their meeting held on 27 October 2011 approved the appointment of Mr. Shahid Hamid Pracha as Chief Executive Officer in place of Mr. Isar Ahmad with effect from 28th November 2011.
Mr. Isar Ahmad who has been associated with the Company for the last six years has made significant contributions towards institutionalizing the corporate governance framework in the Company, managing the process of creation of the holding company and the demerger of the fertilizer business. Mr. Isar Ahmad will continue to serve on the board of the company and the boards of various companies within the group.
Mr. Shahid Pracha is a graduate electrical engineer from the University of Salford, UK and prior to joining the Group, spent major part of his career with ICI Plc’s Pakistan operations in a variety of senior roles including international assignment. During his association with the Group since last four years he has held the positions of Group Director Human Resources & Public Affairs, Chief Executive Karachi Education Initiative (KEI) the sponsoring entity of the Karachi School of Business & Leadership and Chief Executive Dawood Foundation, the philanthropic arm of DH Corp.
12th August, 2011: Demerger of Dawood Hercules Chemicals Limited
Dawood Hercules Chemicals Limited is pleased to announce that the Honourable Lahore High Court has approved the demerger and transfer of its fertilizer business as per the Scheme of Arrangement, into a wholly owned subsidiary, DH Fertilizers Limited (DHFL) with effect from January 1, 2011. This demerger involves the separation/transfer of assets, liabilities and employees etc. relating to the fertilizer business to DH Fertilizers Limited.
The name of Dawood Hercules Chemicals Limited will be changed to Dawood Hercules Corporation Limited (DH Corp.), which will function as a Holding Company. Requisite regulatory approvals from the Securities & Exchange Commission of Pakistan have been obtained.