Editorial

> Editorial

Why Fauji Fertilizer & Fatima Fertilizer are so Profitable?

8 April 2026

The ancient business mantra is; BUY LOW, SELL HIGH. Sounds intuitive, but not easy in a fair market place. But for few well connected in Pakistan, it is easy.

To produce fertilizer, natural gas is required as feed stock (Process gas). Well head price of feed stock is fixed by Oil & Gas Regulatory Authority (OGRA). Fauji Fertilizer and Fatima Fertilizer obtain gas from Habib Rahi Limestone (HRL) reservoir of Mari Energy. This gas is priced at Rs. 580 per mmBTU. Please note Mari Energy is also a Fauji company. Therefore it is like right hand buying from the left hand. It is called self dealing, not allowed in accounting. It is to be noted that additional small (80 MMscfd) amount of gas is from Port Qasim at US$ 5.37 per mmBTU (roughly Rs. 1,490 – 1,510).

Competitors of Fauji Fertilizers & Fatima Fertilizers is ENGRO and others. They all receive gas at Rs. 1,597. Therefore Fauji Fertilizer and its cohort Fatima Fertilizer have an advantage of about Rs. 1,000/mmBTU! Even IMF has taken notice of such differential and huge advantage.

There seem to be tight business relationship between principals of Fatima Fertilizer (Arif Habib Group) and Fauji businesses. Please note that Arif Habib Group bought Pakistan International Airways (PIA) with Fauji Foundation in the back. Perhaps a future takeover.

Pakistani Army is selling its (nay! the Pakistani Public’s) crown jewels to foreigners.  It is not privatization but a fire sale !

29 December 2025

Pakistan is entering a critical economic and strategic phase as the United Arab Emirates (UAE) converts about $1 billion of its deposits into equity stakes in companies under the army-linked Fauji Foundation, effectively turning a maturing loan into ownership of key productive assets. The move offers short-term debt relief, supports Pakistan’s foreign exchange position, and helps with IMF-related stability signals, especially as an additional $2 billion UAE exposure is being discussed for rollover or investment. Markets have reacted positively, but this masks deeper structural concerns about foreign penetration into Pakistan’s military-economic core and the long-term erosion of economic sovereignty.

Fauji Foundation occupies a unique position as a major military-controlled conglomerate whose profits finance welfare for ex-servicemen, with holdings across fertilizer, cement, food, banking, and energy. Allowing an external state investor into this opaque ecosystem gives the UAE influence over dividends, reinvestment, and strategic decisions, potentially shaping pricing and investment patterns in critical sectors. While foreign equity can bring capital, discipline, and technology, Pakistan’s vulnerability raises the risk of profit outflows, reduced policy autonomy, and a “creditor‑shareholder veto,” where key decisions must appease Abu Dhabi and other financiers such as Saudi Arabia and China.

The deal also reshapes regional geopolitics. It gives UAE Crown Prince Mohammed bin Zayed an edge over Saudi Crown Prince Mohammed bin Salman in accessing Pakistan’s military economy, intensifying Gulf competition for influence in Islamabad and Rawalpindi. This heightens pressure on Pakistan to align with Gulf preferences over Yemen, Iran, intra‑Gulf disputes, and potential Israel normalization paths. Simultaneously, China’s stakes through CPEC and Gwadar create a tense triangle in which Beijing, Abu Dhabi, and Riyadh all seek leverage over Pakistani infrastructure and port development.

In net terms, Pakistan gains tactical debt respite and possible FDI, but gradually trades away slices of military-economic sovereignty. The Fauji deal exemplifies a broader trajectory where relying on Gulf and Chinese lifelines stabilizes the present while deepening long-term dependency and constraining Pakistan’s strategic maneuvering space.

Gas Price Discount: A bonanza for Fauji Fertilizer Company (FCC)!  The Illegal Discount gives an unfair advantage!

23 September 2025 Fauji Fertilizer Company (FFC) currently receives natural gas for fertilizer production at a subsidized price of Rs 580 per MMBtu, while most other fertilizer companies in Pakistan are paying a significantly higher rate of Rs 1,597 per MMBtu as of 2024 and 2025. The lower gas price for FFC and Fatima Fertilizer (both on the Mari gas network) has continued since at least October 2023, whereas other companies on the SNGP/SSGC networks saw their prices increase in early 2024. All fertilizer companies require natural gas as a feedstock to produce fertilizer.  Local gas companies supply this necessary product. They are Sui Northern Gas Pipelines Limited (SNGP), Sui Southern Gas Company Limited (SSGC) and Mari Petroleum.  SNGP & SSGS have a government majority share while Mari Petroleum have majority share ownership by Fauji Foundation. The Pakistani government sets and regulates the price of natural gas in Pakistan. The Oil and Gas Regulatory Authority (OGRA), under the directives of the federal government, notifies and approves gas prices for various consumer categories, including domestic, industrial, and power sectors. Recent government decisions included raising fixed gas charges and revising gas sale prices for the fiscal year 2025-26 as part of broader economic measures and IMF structural benchmarks. This regulation includes gas produced and supplied by companies like Mari Petroleum (now Mari Energies Limited). Since Mari Petroleum is a key player in Pakistan’s upstream gas sector and its output feeds into the national gas grid, the pricing ultimately falls under government-regulated frameworks. Gas prices in Pakistan are managed to balance domestic demand, supply constraints, subsidies, and sectoral priorities, with government involvement in tariff setting. Thus, Fauji Fertilizer Company (FFC) has a tremendous advantage.  This price differential is illegal and completely disrupts the market parameters.  The IMF has commented on the price differential in natural gas for fertilizer companies in Pakistan. The Fund has pushed for the rationalization of gas tariffs and the removal of subsidies.  We endorse this decision and would like FFC to pay the full price of the feedstock.

Pak Fauj must not be allowed to acquire PIA

16 July 2025 The acquisition of PIA by the Fauji Foundation or the Bahria Foundation would not be in the national interest. It may not ensure a complete financial separation of PIA from the government.  This separation is required by the IMF. PIA is being privatized at the request of the IMF in order to free the government of future losses.  But acquisition by Fauji Foundation or the Bahria Foundation does not free the government from financial entanglement.  First of all, fauji businesses will obtain loan guarantees from the State Bank for acquisition, which makes the government liable in case of failure.  Secondly, in case of operational losses, the fauji businesses ask for a bailout.  Therefore, acquisition by the fauji foundations does not meet IMF requirements. The current state of PIA is largely due to mismanagement, compounded by political interference.  It became a place of employment for those who had connections.  I know of a retired Navy Commodore, with no airline skills, employed in a senior position.  Fauji businesses are unsuitable owners of PIA, especially since their dismal performance at Shaheen Air International.  It suffered mismanagement and was overloaded with retired servicemen.  The same malady which PIA now suffers. The army already owns a substantial portion of the economy. An estimate suggests that 10% to 20% of GDP is controlled by the army.  Any addition will create a powerful entity in the marketplace, disrupting the normal power balance.