FG blames increase in fertiliser price on high cost of natural gas, others

The Federal Government has stated that the reasons for higher prices of fertiliser are an increase in the cost of natural gas, a component needed in fertiliser production, and post-COVID-19 shutdowns of key raw materials in manufacturing plants. 

This was disclosed by Nigeria’s information minister, Lai Mohammed, at a press conference at the National Press Centre, Abuja on Thursday, according to NAN.

The minister was reacting to an allegation by former Vice President, Atiku Abubakar, that farmers now pay 200% more for a bag of fertiliser. 

What the minister is saying

The minister stated that the reasons for the increased costs of fertilisers, which have risen between 110 and 150%, include a three-fold increase in the cost of natural gas, a primary feedstock in fertiliser production and post-COVID-19 shutdowns of key raw materials manufacturing plants. 

He also blamed sanctions imposed on Belarus and Russia, caused by the Russian invasion of Ukraine and the impact of significant domestic inflation on global and in-country logistics and transportation of fertiliser raw materials. 

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He stated that the present administration negotiated a fixed price for Phosphate at $290/MT and a fixed discount of $15/MT for Potash from the governments of Morocco and Russia, which was purchased under the Presidential Fertiliser Initiative (PFI) for four years between 2017 and 2020. 

He noted that from 2021, upon the restructuring of PFI, raw material purchases were undertaken at globally-traded prices. 

He said, “Phosphate prices increased 332.7 per cent from $290/MT in 2017 to $1,255.0/MT in 2022; Potash prices rose by 364 per cent moving from $256.0/MT in 2017 to $1,187.5/MT in 2022. 

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“Urea prices rose by 246 per cent from about $300/MT in 2018 to $1,037.5/MT in 2022. 

“Under this development, no magic can keep the price of fertiliser at what it was before the astronomical increase in the cost of production.’’ 

He stated that Atiku’s statement was “unfortunate and a reflection of total lack of understanding of the issues at stake. 

“Shockingly, the former vice president seems to know little or nothing about the Buhari administration’s unprecedented efforts to make fertiliser available at affordable prices to Nigerian farmers. 

“He also seems to know little or nothing about how global developments have negatively impacted on the price of fertiliser today, when he said ‘farmers now pay 200 per cent more for a bag of fertilizer – if they see it – than they did in 2020”. 

He noted that the Presidential Fertiliser Initiative (PFI) delivered on key outcomes, including over 30 million bags of 50kg NPK 20:10:10 equivalent during the project period and price reduction on fertiliser from over N10, 000 to under N5, 500. 

“Over its 5-year run, the programme succeeded in increasing the number of blending plants from only four to 72 through the rejuvenation of 68 moribund blending plants,” he added.

What you should know 

  • Nairametrics reported earlier this year that the governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, revealed that the number of fertilizer-blending plants in Nigeria, has risen from 7 to over 48, since the assumption of office by President Muhammadu Buhari in 2015. This is as 35 million blended bags of fertilizer have been produced in the country within the last 5 years. 
  • Emefiele disclosed this while speaking at the official commissioning of the $2.5 billion Dangote Fertilizer plant at Ibeju-Lekki