The government has decided to form a working group to solve issues relating to Egypt’s fertiliser industry, including solving a fertiliser production shortage and declining amounts of gas supplied to fertiliser plants, Prime Minister Ibrahim Mehleb said.
During a meeting held on Tuesday with the Ministers of Petroleum, Investment, Agriculture, Planning, and Finance, as well as fertiliser company officials, Industry Minister Mounir Fakhry Abdelnour said that the fertiliser industry is facing four main problems. The first issue involves a gas shortage that negatively affects nitrogen fertiliser production, as the failure to provide gas supplies harms production and raises costs.
He said, “The second problem is that a different system exists for the price of gas sales: some companies obtain a definitive price while others received a price based on an equation, which consequently results in unfair competition.”
Sherif El-Gabaly, President of the Chamber of Chemical Industries at the Federation of Egyptian Industries (FEI), said, “Many fertiliser plants stopped operating as a result of gas failing to be supplied at the contracted quantities and pressures, which impeded some companies from fulfilling their export agreements. This in turn led to the creation of a black market for nitrogen fertilisers, exerting a negative impact on farmers due to companies not being able to supply fertilisers to agricultural associations that they have contracted with.”
According to Abdelnour, the third problem lies in the Ministry of Agriculture’s purchase of fertilisers at a price lower than the price of production, which causes fertiliser companies to incur great losses and renders them incapable of maintaining production lines. The fourth problem, he said, “has to do with export restrictions in place in the form of a fee, claiming that the goal is to protect the farmer.”
Petroleum Minister Sherif Ismail said that an agreement has been reached to develop specific mechanisms for providing gas to fertiliser plants directly by the Ministry of Petroleum during the meeting that will take place after Eid Al-Adha.
According to El-Gabaly, “Fertiliser companies record losses worth EGP 450 per tonne, as the cost of production increased following the rises in gas prices to EGP 1,900 per tonne, whereas they are supplied to agricultural associations at EGP 1,450 per tonne.”
The next crop year, which begins each October, will require 4m metric tonnes of fertiliser, equivalent to 12m tonnes of urea and nitrate fertilisers.
El-Gebaly said gas is a raw material essential for the fertiliser industry and not just a source of energy to operate plants, a fact that makes a lack of gas supplies doubly dangerous.