Local plants selling urea at exorbitant rates: ECC
October 09, 2012: The Economic Co-ordination Committee (ECC) of the Cabinet has accused local fertiliser plants of selling urea at exorbitantly high rates despite getting gas at cheaper prices, well-informed sources told Business Recorder. A high-level committee has been authorised to twist the arm of fertiliser manufacturers so that some relief may be extended to farmers.
According to official documents ex-mill price of domestic urea is Rs 1,659 which is selling at Rs 1,691 per bag in the market. The price of imported urea is Rs 1,600 per bag which is Rs 59 per bag higher compared to domestic urea. The ECC was informed on October 3, 2012 that about 2.745 million tons of fertiliser, including the already allowed import of 0.30 million tons of fertiliser, would be available for the Rabi 2012-13 crop against estimated demand of 3.052 million tons and there would be a shortfall of 0.307 million tons.
If buffer stock of 0.20 million tons is maintained the shortfall will increase to 0.507 million tons. Consequently, Ministry of Industries sought permission for import of 0.50 million tons. During the ensuing discussion it was suggested that only four plants were not operational due to gas shortage. However, gas supply to one of these plants has already been restored and efforts are already afoot to restore gas supply to remaining plants and a summary to this effect would be brought before the ECC shortly. Thus, it would be premature to allow import of fertiliser at this stage.
It was suggested that subsidy on fertiliser should be targeted so that it benefits the farmers. The sources said Economic Affairs Division (EAD) has already approved the Saudi Development Fund (SDF) for arranging $0.1 million for importing 0.2 million tons urea from Saudi Arabia.
On a query, it was intimated that at present, Pakistan owed $437 million to SDF. The ECC was also apprised that 0. 3 million tons of fertiliser would be required to meet the farmers” demand. Though the ECC approved import of 0.2 million tons urea under SABIC facility, the ECC constituted a committee comprising Deputy Prime Minister/Senior Minister, Chaudhry Pervez Elahi( convenor), Advisor to Prime Minister on Petroleum and Natural Resources, Deputy Chairman Planning Commission and Secretary Ministry of Industries to suggest: (i) a mechanism for provision of subsidy so that it actually reaches farmers; (ii) ways and means for bringing down the prices for domestic fertiliser; and (iii) a mechanism for provision of gas to fertiliser factories. The committee will submit its recommendations in the next meeting of the ECC.
The Ministry of Industries has failed to implement its own decision regarding printing of prices on urea bags as the fertiliser industry is more influential than the ministry. The government has extended Rs 77 billion subsidy on urea in three years so far but at the same time farmers were compelled to purchase fertiliser in the black market.