ISLAMABAD, Jun 27 (APP):Pakistan's planned coal-to-urea project under the China-Pakistan Economic Corridor (CPEC) 2.0 framework can help diversify the country's fertiliser feedstock base and reduce long-standing supply vulnerabilities linked to natural gas shortages. The prospect gained attention after Fauji Fertiliser Company signed a Front-End Engineering Design (FEED) agreement with China's Hualu Engineering and Technology Co. Ltd. for a $1.12 billion coal-to-fertiliser project under the CPEC 2.0 framework. The proposed plant …
New CPEC project aims to bolster fertiliser security in Pakistan
ISLAMABAD, Jun 27 (APP):Pakistan’s planned coal-to-urea project under the China-Pakistan Economic Corridor (CPEC) 2.0 framework can help diversify the country’s fertiliser feedstock base and reduce long-standing supply vulnerabilities linked to natural gas shortages.
The prospect gained attention after Fauji Fertiliser Company signed a Front-End Engineering Design (FEED) agreement with China’s Hualu Engineering and Technology Co. Ltd. for a $1.12 billion coal-to-fertiliser project under the CPEC 2.0 framework. The proposed plant is expected to produce 717,000 tonnes of urea annually, consume around 2.1 million tonnes of locally mined coal each year, and begin commercial operations in 2030-31.
The proposed facility is expected to become Pakistan’s first major coal-to-urea project. It could help reduce the fertiliser industry’s dependence on natural gas, which remains the primary feedstock for domestic urea production.
According to the Pakistan Economic Survey 2025-26, agriculture contributes 23.44% to the gross domestic product (GDP) and accounts for 33.1% of employment. The survey also notes that an uninterrupted and affordable supply of farm inputs remains important for sustaining agricultural performance.
Recent fertiliser-sector data highlights the importance of ensuring adequate domestic supplies to meet agricultural demand. During July-March FY2025-26, fertiliser nutrient offtake stood at 3.795 million tonnes, up 11.4% from the same period last year. Domestic fertiliser production in nutrient terms declined 0.5%, while fertiliser availability fell 2.8%. Urea availability during Rabi 2025-26 stood at 4.382 million tonnes against an offtake of 3.564 million tonnes.
Speaking with Wealth Pakistan, Muhammad Umar Farooq, Senior Research Associate at the Pakistan-China Institute, said Pakistan’s first coal-to-urea project could strengthen fertiliser security by diversifying an industry that still depends heavily on natural gas as its primary feedstock.
He said domestic urea production has periodically faced gas shortages, seasonal demand pressures and import requirements. A coal-based production route using indigenous resources could provide a more predictable supply during sowing seasons while reducing exposure to international fertiliser prices and foreign-exchange pressures.
Farooq said the project’s broader value would depend on whether additional output reaches small and medium-sized farmers through timely distribution, competitive pricing and reliable access, rather than merely increasing national production figures.
Farooq stressed that the partnership with Hualu Engineering should facilitate technology transfer in coal gasification, chemical processing and plant management, helping build domestic expertise rather than creating long-term dependence on imported technology and equipment.
Talha Nasir, Research Associate at Engro Fertilisers, told Wealth Pakistan that the project could enhance fertiliser security by reducing dependence on imported natural gas and urea while ensuring a more stable domestic supply for farmers.
He said stronger local production could support price stability, improve agricultural productivity and reinforce Pakistan’s food-security framework through greater self-reliance in fertiliser manufacturing.
Nasir added that policymakers should encourage local resource utilization through transparent and consistent industrial policies, a stable investment environment, stronger infrastructure and logistics networks, environmental safeguards and continued technology upgrades. Long-term policy continuity and support for domestic manufacturing, he said, would be essential for building a resilient fertiliser sector.
If implemented successfully, the project could become a significant component of Pakistan’s fertiliser supply chain while advancing CPEC 2.0’s industrial cooperation agenda.
