Fertilizer is a basic ingredient in modern agriculture and being an agricultural country, Pakistan is always in need of high quality Fertilizer. At present Pakistan produces 80% of fertilizers form domestic plant. However due to lack of production facilities import of fertilizer also plays an important role in fulfilling the needs of farmers. The energy situation in the country and non-availability of natural gas, used as basic ingredient in fertilizer production, has caused many firms to search for other options.
One such firm, Fatima Group of Pakistan has planned to setup a fertilizer plant in US itself. The plant will be situated in Posey County, Indiana and the Indiana Finance Authority has already issued more than $1.25 billion in tax-exempt bonds. The plant is expected to start production by the end of year 2016. This proposition from a Pakistani firm has been met by opposition within the US senate, where fertilizer production has been linked to homemade bombs and IEDs.
On the other hand locals in Indiana are optimistic about opening of new plant as it will create new jobs and economic opportunities for locals. This plant is expected to create 309 permanent positions with at a high average wages by 2015. The plant will primarily produce calcium ammonium nitrate (CAN) which may be used for making of IEDs. Congressman Duncan Hunter has accused the firm of reject a proposed control on CAN production at its plant within Pakistan.
Responding these threats from Duncan Hunter, Fatima Fertilizer’s Representative has clarified that these allegations are baseless and there are 6 steps in production of CAN and all have been fulfilled at their plants inside Pakistan. The only precaution yet to be implemented is dyeing of the CAN product which has been explicitly forbidden by Government of Pakistan due to quality of the fertilizer. Such baseless allegation against Pakistani Firm wanting to expand their business in U.S. is a clear indication of dual standards being followed by US and western countries against Pakistan.
Another point to be focused upon is the lack of business opportunities in Pakistan which have forced these firms to invest outside Pakistan. The unavailability of electricity and natural gas as an ingredient has forced such companies to invest in countries other than Pakistan. Moreover total cost of Ownership (TCO) and operating expenditures involved in producing electricity have caused shrinking of Profit margins for such firms. Ongoing uncertain security situation has further worsened the situation. The best approach by Pakistani Government would be to ensure business facilitation for these firms and availability of cheap and adequate energy so that their products can compete in international market with their rivals.