ISLAMABAD: The federal cabinet has approved gas allocation for fertiliser plants, transitioning fertiliser production to a Mari-based standalone gas supply system, official sources told Business Recorder on Wednesday. The decision ensures a long-term sustainability of domestic fertiliser production, safeguards national food security, protects farmers from price volatility, and strengthens overall economic stability. The cabinet ratified gas allocation and supply arrangements proposed by the Economic Coordination Committee (ECC). Under the approved plan, gas from new Ghazij/ Shawal off-spec/ raw gas discoveries has been allocated as follows: Fauji Fertiliser Company (Port Qasim) will receive 104 mmcfd of raw gas, translating into 80 mmcfd of processed gas; Fatima Fertiliser (Sheikhupura) will receive 68 mmcfd of raw gas and 52 mmcfd of processed gas; while Agritech (Daudhkhel) will be allocated 50 mmcfd of raw gas and 38 mmcfd of processed gas. Mari’s new reservoirs: ECC approves gas supply to 3 fertilizer plants Additionally, up to 110 mmcfd of gas earlier allocated from HRL to GENCO-II will be de-allocated, while up to 105 mmcfd of gas will be allocated to Engro Fertiliser’s base plant at Mari. Raw gas from Ghazij/ Shawal will be delivered at the Mari gas field. The respective fertiliser companies will install gas processing and compression facilities to enable injection and transportation of processed gas through the Sui companies’ networks to their plants. The required investment for processing low-BTU gas with high CO2 content is estimated at over USD 200 million, which will be borne entirely by the fertiliser industry. Bilateral Gas Sale and Purchase Agreements (GSAs) will be executed with Mari Energies, alongside third-party access arrangements with SNGPL and SSGC under the TPA Rules, 2018, and the Pakistan Gas Network Code. For supply to FFC (Port Qasim), gas swap arrangements will be undertaken as the SSGC network does not extend to the Mari field. The policy intervention addresses a major structural risk faced by the fertiliser sector. Prior to this decision, approximately 32 percent of domestic urea production capacity— over two million tonnes annually— was exposed to uncertainty due to the absence of assured gas allocation. Without timely action, progressive depletion of Mari gas fields would have further heightened production risks, potentially forcing reliance on volatile international markets and resulting in an estimated annual import bill of USD 2–3 billion. Such an outcome would have exerted significant pressure on foreign exchange reserves and domestic fertiliser prices. The fertiliser industry has already invested around USD 500 million in gas infrastructure, including USD 300 million in pressure enhancement, with an additional USD 200 million now committed following this decision. By securing predictable and dedicated gas supplies, the government has pre-empted these risks. The decision ensures uninterrupted domestic urea production, stabilises market supply, and guarantees fertiliser availability to farmers at prices substantially below international benchmarks. Locally produced urea continues to offer a significant cost advantage, supporting agricultural productivity. A defining feature of the policy is import substitution of USD 2–3 billion annually without fiscal cost. Domestic production will replace large-scale imports, conserving foreign exchange without burdening the national exchequer. The decision also optimises national energy use by channelling low-quality, low-heating-value gas— otherwise underutilised— into productive fertiliser manufacturing. The fertiliser industry will continue to invest private capital in pipelines, processing and compression facilities, and plant efficiency improvements, converting marginal gas resources into high-value agricultural output. Rationalisation of gas allocations will also free system gas for other priority consumers while ensuring fertiliser production security. Continued industry investment in upstream development and infrastructure will further strengthen long-term resilience and supply reliability. Copyright Business Recorder, 2025