January 20, 2014
The federal government has reportedly decided to wind up National Fertilizer Corporation (NFC) and National Fertilizer Marketing Limited (NFML), subsidiaries of Ministry of Industries and Production (MoI&P), due to massive corruption in the handling of imported urea, well informed sources in the Industries Ministry told Business Recorder.
This issue, sources said, was discussed threadbare in a committee headed by the Minister for National Food Security and Research, Sikandar Hayat Bosan and subsequently in a meeting of the Economic Co-ordination Committee (ECC) of the Cabinet on January 16, 2014.
“Imported urea will now be distributed through manufacturers. The NFC/ NFML will be wound up as previously decided long ago,” said one of the senior officials on condition of anonymity.
The decision on distribution of imported urea through domestic manufacturers has been made to remove corruption due to differential in price of imported and local urea and thereby end exploitation. This will not only eliminate a source of corruption but also save farmers from exploitation of middlemen, besides providing relief to the common man, said an official statement.
The NFML regular employees, whose strength is about 70, argue that corruption was unleashed by the deputationists brought in the organisation by the former ministers of Industries and Production, ie Mian Manzoor Ahmad Wattoo, Mir Hazar Khan Bijarani and Ch Pervez Elahi.
The Federal Investigation Agency (FIA) and National Accountability Bureau (NAB) also held inquiries against the “plunderers”. NAB recovered a few million from the accused but the FIA made the NFML a source of permanent income, said another official.
“Those who succeeded in getting one truck of imported urea during the shortage became millionaires. Urea permits were issued by the top brass of the MoI&P and also from the office established in State Guest House Lahore,” the sources maintained.
Former caretaker minister for Industries and Production, Shahzada Ahsan Sheikh removed some deputationists despite a massive political pressure but when he left the office deputationists returned to “lucrative” positions.
Incumbent Minister for Industries and Production, Ghulam Murtaza Jatoi suspended at least five officials posted at different urea storages and ordered an inquiry against them.
However, all the influential accused are still free. In December 2013, Secretary Industries had directed the Managing Director NFML to pursue the cases of those involved in hoarding of 93,000 tons of imported urea in Karachi, but his instructions were not implemented by the NFML management.
The minister also recovered Rs 570 million from fertilizer transporters and deposited the money in the national exchequer. Furthermore, the case of a company, which has an outstanding amount of Rs 450 million was given one month time to deposit the amount but the company was unable to deposit the money within the stipulated time. Therefore, the MoI&P referred the case to NAB for further action.
Last week, Secretary Industries said he had already ordered those responsible be suspended and their cases be sent to FIA. “If the NFML has not sent these cases to the FIA, I will take them to task,” he stated.
The official documents presented before the ECC on January 16, 2014 and available with Business Recorder reveal that the ECC in its meting on January 8, 2014 constituted a committee under the chairmanship of the Minister for National Food Security and Research with Secretary Finance as Convenor. Members included Secretaries, National Food Security & Research, Commerce, Industries & Production, Chairmen Trading Corporation of Pakistan (TCP) and National Fertilizer Marketing Limited (NFML). The committee was charged with holistically reviewing the matter regarding incidentals and financial cost on imported urea and make recommendations within 15 days for consideration of the ECC. The secretariat support was to be provided to the committee by the Finance Division.
In pursuance of the decision, the Minister for National Food Security and Research convened a meeting on January 15, 2014 and held threadbare discussion on the issue. While deliberating on the origin of the shift in the policy of distributing imported urea through the manufacturers, it was noted that proper record was not available that could assist in understanding the rationale behind the policy change. Although, the NFML was inducted in the process somewhere in 2008, it was September 2009 when the ECC, while approving import of urea, authorised the NFML to engage in distribution.
The chairman, at the outset noted that his personal experience over the last several years is that the NFML has failed to ensure the passage of exceptional level of subsidy (beyond the difference between the local and imported prices) to the farmers. There are also widespread reports of abuses by influential people in the distribution system of the NFML. The problems of settlement of accounts as highlighted by the chairman TCP were also a factor that rendered the efficacy of the whole arrangement doubtful.
After extensive deliberations, the meeting maintained that the erstwhile system of distribution of imported urea through manufacturers based on their relative production be restored. It was emphasised that a proper system would be evolved with the manufacturers to ensure transparency in operations under the system. The new system, it was argued, would eliminate price distortion as only a single price would prevail in the market.
The meeting was told that the imported urea which was being supplied at the price of Rs 2,337 per bag would be sold at the current market price of Rs 1,786 per bag which was agreed by the manufacturers at a meeting with the Finance Minister, Ishaq Dar in the chair. Accordingly, a subsidy of Rs 541 per bag would continue to be paid by the government.
The documents further reveal that the government decided in principle to restore the previous arrangement of distributing imported urea through the manufacturers according to their share in total domestic production. The exact modalities and timings will be worked out in consultation with the manufacturers and other stakeholders, and will be placed before the ECC for approval.
Courtesy Business Recorder