General Fertilizers Company: From Syrian stumbling and Iranian competition to Russian takeover
When the economic sector has become characterized by political and military features in the world of the Syrian conflict, Syrian agriculture has entered into a whirlwind that has made it the most affected part in that conflict. This is in addition to the suspension of the activities of the General Fertilizers Company in Homs and then its discontinuous operation resumption, in a way that has made the farmers lose their balance, and look for alternatives of a company that has been servicing the agricultural sector throughout Syria and that has become today under unhidden Russian hands.
The General Fertilizers Company in Homs has gradually resumed its operations since mid-2017 by launching its three plants (Ammonia Urea Plant, Ammonium Nitrate Fertilizer Plant, and Phosphate Fertilizer Plant) after suspending its activity for more than two years. General Fertilizers is the largest chemical industrial complex in Syria and it secures the agricultural sector’s needs of all types of fertilizers.
|General Fertilizers Company
The General Fertilizers Company was established in the 1970s, when former Syrian President Hafez al-Assad inaugurated the company’s first plant on the occasion of the Labor Day on May 1, 1972.
The company is located on the banks of Qattinah Lake, 10 km away from the west of the city of Homs. It employed previously about 3,000 workers, technicians and experts, which then decreased by half after 2011.
Iranian alternative companies alternating with local ones
The General Fertilizers Company produces various types of fertilizers for agricultural production in Syria, most notably the fertilizers of Urea, Ammonium Nitrate and Phosphate. The company then delivers the produced fertilizers to the Agricultural Cooperative Bank, which in turn sells them to farmers at a subsidized price, in accordance with the available plan in each season.
However, with the suspension of the General Fertilizers Company’s activities in 2015 due to the lack of production requirements, including gas, phosphate, electricity and spare parts, the local agricultural market lost several types of fertilizers, mainly the Urea. This has negatively affected the quantities and quality of production, and prompted the farmers to resort to the black market.
The Agricultural Engineer, Youssef al-Brik, told Enab Baladi that the suspension of the activities of the Fertilizers Company’s plants led to a decrease in the amount of fertilizers provided by the Agricultural Bank for farmers, and thus affected agricultural crops and increased production costs for farmers, due to the external importation of the required fertilizers at prices close to those available in the black market.
Al-Brik, who works for Masrrat Foundation, added that all these effects, in addition to the high fuel prices, caused large losses to farmers, who have been forced to raise the price of agricultural crops to keep pace with fertilizers’ prices, and thus earn the profits they need.
A farmer from the city of Homs (who preferred to remain anonymous) said that the Urea fertilizer, which is used to improve the quality and yield of agricultural crops, has been missing from the local market since 2015. He pointed out that farmers have resorted to the black market, which contains imported Urea fertilizers from Iran, but at high prices.
The farmer, who owns a land in the city of al-Qusayr, added that during the years of the company’s suspension of its activities, it continued to provide certain types of fertilizers, especially the Ammonium Nitrate, which had not been cut off from the market due to the availability of sufficient stock. In contrast, the Urea fertilizer had been discontinuously available, and had sometimes the Agricultural Bank replaces it with imported Iranian fertilizer.
A bag of Syrian Urea Fertilizer, which contains 50 kilograms, used to cost about 2,500 Syrian liras before 2011 and rose to 5,500 Syrian liras in 2015, i.e. before the company stopped manufacturing the product; while the cost of one bag of Ammonium Nitrate Fertilizer, which is today sold at about 8,500 Syrian Liras, cost 2,000 Syrian liras before 2011.
According to the farmer, the Iranian Urea Fertilizer bag, which is sold in the government’s agricultural directorates, costs 12,000 Syrian Liras, and its price in the black market is 18,000 Syrian Liras. He also pointed out that the Iranian fertilizer is not as refined as the Syrian one.
He added that the Agricultural Cooperative Bank promised farmers to provide Syrian Urea Fertilizer this month after the Ammonium Urea factory was reopened. However, the bag of this type of fertilizer will be sold at 9,500 Syrian Liras.
Agricultural engineer Jamal Kalash, the Minister of Agriculture in the Interim Government, stated that the farmers’ dependence on the black market to ensure their needs of agricultural fertilizers has negatively affected the quantity and quality of national agricultural production, and transformed farmers, who used to be providers for the local market, to mere consumers in general.
Kalash told Enab Baladi that this phenomenon has other dimensions that may affect the Syrian people in the future, especially with regard to food security and self-sustainability. Thus, many alimentary products have disappeared from the local market, and the Syrian regime is obliged to import agricultural products, which used to be exported due to its abundance in the local market.
Russian hands monopolize fertilizers
Among many other Russian investments in Syria, we find OAO Stroytransgaz, which owns shares in GFC. The Russian company has signed a renewable contract with the government of the Syrian regime in November 2018, to exploit the Syrian Fertilizer Company and its three plants for 40 renewable years.
Under the contract, OAO Stroytransgaz will re-maintain the three plants, and will commit to boost its productivity, until reaching the plants’ design capacity within two years. Thus, the Syrian Fertilizers Company’s share of profits will be 35 percent compared to 65 percent for the Russian side, according to the terms of the contract published by governmental newspaper, Tishreen.
The Director General of the General Establishment for Chemical Industries, Usama Abu Fakhr, told Tishreen newspaper that the aim of the Russian investment in the company is to reach the design capacity, which is estimated at 1,600 tons of fertilizers per day. The Russian company is then entitled to export fertilizers abroad.
As the contract was signed recently, the consequences of the Russian company’s control of the fertilizer production sector in Syria have not yet been clarified, especially as some terms of the contract remain unclear.
However, concerns are rising regarding Russia’s possible role in lifting subsidies on agricultural fertilizers in the future, which will result in increasing prices due to exports activities, especially that the contract allows OAO Stroytransgaz to export fertilizers “in case the needs of the local market are completely fulfilled.”
Farmers also consider that the GFC is a national institution which is not supposed to be shared with other countries.
According to Kalash, the investment companies seek to make profits and prioritize their interests. He added to Enab Baladi that the farmer in this case is the weakest party, despite the fact that he is the main purchaser of fertilizers.
Kalash said that the Syrian farmer will not benefit from the investment of the Russian company of the Syrian Fertilizers Company (SFCO), unless sufficient quantities of fertilizers are provided in each agricultural season at subsidized prices, which makes him no more in need for the black market.
Three plants covering the need of Syrian farmers … What happened to them?
The General Fertilizers Company (GFC), which is the largest chemical industrial complex that believes in the need of the agricultural sector in Syria, has three factories for the production of agricultural fertilizers: Ammonia Urea Plant, Ammonium Nitrate Fertilizer Plant and Phosphate Fertilizer Plant, which were affected during the war years in Syria.
Ammonia Urea Plant
Ammonia Urea plant, which is the basis for the work and operation of the two other plants, stopped production in 2015 due to gas cuts as a result of disputes in Syria, and the lack of production requirements of phosphate, electricity and spare parts, which caused damage to agricultural crops throughout the Syrian territory.
In July 2017, the Ammonia Urea Plant resumed service with a production rate of 900 tons per day, after the Ministry of Oil supplied 1.2 million cubic meters of gas per day to produce fertilizers, the company said.
It added that the activation of the plant will contribute initially to the production of 25,000 tons per month of Urea Fertilizer, in addition to the other products, for the operation of industrial facilities of the public and private sectors, especially the cooling industry that needs Ammonia.
Ammonium Nitrate Fertilizer Plant
After Ammonia Urea Plant resumed service, Ammonium Nitrate Fertilizer Plant, which is the nucleus of the General Fertilizers Company and its oldest plant, was activated and launched in 1972.
The daily production of Ammonium Nitrate Fertilizer reaches 400 tons, according to data SANA agency obtained from the General fertilizers Company Director.
However, this plant does not work periodically and regularly, but it is run on demand for production, especially as it suffers from the accumulation of stocks because of the lack of fertilizer as required, the Director of the Ammonium Nitrate Fertilizer Plant, Engineer Nasrallah Suleiman, told governmental newspaper Tishreen last August.
The plant sells some by-products such as Ammonia and Nitrogen Acid for the public and private sectors, but suffers from a “severe shortage” of workforce and expertise as a result of a decline in the number of workers from 400 in 2010 to 230 in 2018, Suleiman added.
Phosphate Fertilizer Plant
The Phosphate Fertilizer Plant was officially activated on January 3, after completion of maintenance work of production lines.
The plant resumed work on December 19, and started production on the 30th of the same month, to monitor the production situation, which reached 400 tons per day of Phosphate Fertilizer necessary for agriculture in Syria, according to the Provincial Council of Homs.
The Phosphate Fertilizer Plant comprises three sections: Sulphuric acid, Phosphoric acid and fertilizer production. These sections were reactivated after the General Fertilizers Company received quantities of raw phosphates from the Sharqiyah Phosphate mines in Palmyra countryside.
Russian “TransGas”: An ongoing history of investments in Syria
The name of “Stroy Trans Gas” Russian company has been mentioned in a number of Russian projects that dominated the economic sector in Syria, when the Syrian regime was receiving the Russian military, political and economic support.
TransGas is a global company operating in the field of oil and gas, especially in pipeline construction and the establishment of gas processing factories.
The name of the company was not new to foreign investments in the country, for “Stroy TransGas” has introduced economic projects and investments into Syria starting from 2005. Back then, the company established the largest gas project, the Arab Gas Pipeline, which generated considerable economic gains for the country then, because it enabled the country to link Arab and regional gas networks.
Despite the security and economic events that took place in Syria after the 2011 revolution, TransGas continued implementing the project that was already established before the revolution. It has also concluded new contracts and investments with the Syrian regime, especially in the field of energy, which Russia is seeking to control now.
In March 2018, the Ministry of Oil of the Syrian regime signed a contract with the Russian company for the extraction of raw phosphate in the city of Palmyra in eastern Homs countryside, mainly al-Sharqiya and Khunayfis mines.
The contract allows Russian Company to produce and invest in Syrian phosphate in exchange for giving a 30 percent share to the Syrian General Establishment of Geology & Mineral Resources.
It also signed a contract with the Syrian regime last October to invest the General Fertilizer Company and its three plants for up to 40 renewable years.
The Russian billionaire Gennady Timchenko owns 31 percent of Stroy TransGas. He is known as a childhood friend of Russian President Vladimir Putin, although they have not publicly appeared before the media.
Gennady holds the Russian, Finnish and Armenian nationalities and owns the Volga and Gunvor Groups. He has a long history of investing in the energy, transportation and infrastructure sectors and owns a number of sports clubs.