Three fertiliser manufactories find it difficult to start their operations due to a lack of natural gas in their operations.
Natural gas is the main and preferred feedstock in the manufacturing of urea fertilisers. The three companies are Helm AG of Germany, Ferrostal Industries Project GmbH of Germany and Capital DW Fertiliser Company of Egypt.
The Citizen understands that in 2016, Helm AG Company of Germany showed interest in setting up a $1.5 billion (about Sh3.3 trillion) fertiliser plant in Tanzania and that the company was allocated 400 hectares for developing the project in Mtwara.
The plant is expected to produce 2,200 tonnes of ammonia and 3,850 tonnes of urea. Similarly, Ferrostal Industries Project GmbH, has registered $1.9 billion (about Sh4.2 trillion) fertiliser project at TIC but things have been moving at a snail’s pace.
The Tanzania petroleum Development Corporation (TPDC) says natural gas was there but they had not yet agreed on the price.
TPDC acting managing director Kapuulya Musomba told The Citizen that the agreed price still seems too expensive for fertiliser companies to operate profitably.
“After prolonged discussions between government and the companies, they (fertiliser companies) have agreed to purchase natural gas at $2.6 per cubic feet,” he said.
He said however that the price was still too high for the companies to make meaningful business from there and thus the need for the government to issue subsidies.
“Natural gas will be used as energy to power the factories. It will also be used as raw materials to produce fertilisers especially Urea,” he said noting that if the price of remains at $2.6, the price of fertiliser will also rise when actual production starts.
Tanzania Gas Supply Company acting general manager Balthazar Mrosso said though the coming of fertiliser companies will raise usage of natural gas, the available infrastructure was not conducive to the extraction of natural gas and oil in the country.”At the moment gas supply is ahead of demand but we are currently counting on these fertiliser plants as per the industrialisation drive,” he told The Citizen.