Pakistan and China Sign $1.12 Billion Coal-to-Fertilizer Deal Under CPEC 2.0

China and Pakistan have signed a $1.12 billion contract under the second phase of the China-Pakistan Economic Corridor (CPEC 2.0) to convert coal into chemical fertilizer. This initiative aims to reduce Pakistan’s dependence on imported gas and address the country’s urea shortage.

According to released details, coal will be transformed into “synthesis gas” using Chinese gasification technology, which will then be converted through several stages into ammonia and finally into urea fertilizer. This process can replace the use of natural gas in fertilizer production plants, a sector that has faced gas supply restrictions for years.

Pakistan is currently struggling with natural gas shortages, and several fertilizer plants rely on imported liquefied gas. This dependency has put significant pressure on the country’s foreign exchange reserves and increased production costs.

Reports indicate that the new project could cover about one-third of Pakistan’s urea deficit. It is also expected that, once implemented, the plan will save between $500 million and $700 million annually on fertilizer import costs, a figure that could positively impact Pakistan’s trade balance.