China and Pakistan have signed a $1.12 billion deal to convert coal into chemical fertilizer under the CPEC 2.0 project, a project that aims to reduce Pakistan’s dependence on natural gas for urea production.
According to this plan, coal will be converted into synthesis gas using Chinese gasification technology, then into ammonia, and finally into urea fertilizer. Officials say this project could make up for about a third of Pakistan’s urea shortage.
Reports indicate that Pakistan has become dependent on importing liquefied petroleum gas to operate fertilizer factories due to gas shortages, and this situation has put great pressure on the country’s foreign exchange reserves.
However, the implementation of this project is expected to save between $500 and $700 million annually in fertilizer import costs.
