Egypt’s Abu Qir Fertilizers suspends operations over gas supply shortage
Earlier in June, the company temporarily suspended its operations after the Ministry of Petroleum and Mineral Resources decision had decided to reduce gas supplies for fertilizer companies to provide this portion to electricity grids due to the high temperatures and the high electricity demand.
Abu Qir Fertilizers, one of the biggest fertilizers producers in the Egyptian market, provides all types of fertilizers and chemical materials, particularly chemical fertilizers and related or derivative products necessary for their manufacturing, packaging, purchase, and sale.
The increasing heatwave in Egypt has negatively impacted the gas network reserves due to an unprecedented rise in energy consumption, which coincided with the halt of some regional gas supply sources, as explained by the company.
Egypt is facing an electricity crisis and a shortage in natural gas supplies, with temperatures exceeding 40 degrees Celsius in several cities, causing frequent power outages.
These conditions are affecting the operational environment for companies.
"To avoid any damage to the company's plants due to these operational conditions, natural gas supplies have been suspended until the operational conditions of the network improve," the company said in the disclosure.
Fertilizer production relies heavily on natural gas as a primary raw material, and its shortage directly impacts plants' production capacity.
In early June, the company announced the gradual resumption of operations at its plants after stabilizing natural gas pressure in the national grid, in coordination with the Egyptian Natural Gas Company (GASCO), following a previous halt.
President Abdel-Fattah El-Sisi instructed the government on Tuesday to take immediate action and implement necessary measures to reduce power outages and ensure their fair distribution.
A high-level source said the president also ordered the government to focus on addressing the crisis in full to end it as soon as possible.
PM Mostafa Madbouly said on Tuesday that the government is working to put in place various mechanisms to end the crisis as soon as possible in coordination with relevant ministries and state bodies.
Consequences of the halt
The company is the sole producer of carbon dioxide used in the cooling processes of the food industry.
Coca-Cola Hellenic Egypt for Beverages and Food Industries has submitted a complaint to the government regarding suspending the carbon dioxide production at the plants of Abu Qir Fertilizers.
The company indicated that stopping the carbon dioxide supply would lead to cessing operations at Coca-Cola's factories and halt production in all beverage and soft drink factories in Egypt.
Moreover, it said this could lead to substantial losses for this industry, especially at the beginning of the summer season.
It would also affect exports due to insufficient products for export contracts.
In March 2015, Abu Qir Fertilizers announced suspending the operation of one of its three plants due to a natural gas supplies shortage.