Fixation of urea margin: ECC asks ministry to work out transportation cost

May 24, 2014- BR Report


Urea price
Urea price

The Economic Co-ordination Committee (ECC) of the Cabinet has directed the Ministry of Industries and Production (MoI&P) to work out average cost of transportation of 50-kg urea bag from warehouse of National Fertilizer Marketing Limited (NFML) to the dealer so that a reasonable margin may be fixed for them. Well-informed sources told Business Recorder that dealers” are not showing an interest in purchase of powdered urea by the TCP due to which it is feared that billions of rupees imported urea may not be sold.

Giving details, sources said that in a summary titled: Urea Fertilizer Demand Supply Situation and Plan for its import for the incoming Kharif (April-September) season 2014, the Ministry of Finance requested the ECC of the Cabinet that “the country may import up to 0.125 million tons initially and the situation of demand may be reviewed during April 2014 (3rd week) and any corrective action may be taken at that time.”

The meeting was further informed that in pursuance of the above ECC decision, a meeting of Fertilizer Review Committee was held in the Ministry of Industries and Production on April 15, 2014 under the chairmanship of Secretary, Ministry of Industries and Production to review the demand and supply situation of urea in the country. The committee unanimously decided that given the existing stocks, the allowed import of 125,000 metric tons, satisfactory domestic production situation, no further imports were required at this moment.

The Fertilizer Review Committee, however, noted with concern that following the increase in price of local and imported urea, sales of imported urea have declined by 70 percent as compared to last year and the NFML presently holds a stock of 263,000 metric tons of unsold urea from imports for the Rabi season 2013-14.

The meeting observed that urea was available in the market at different rates ranging from Rs 1,825 to Rs 1,875 per 50-kg bag. The NFML was not able to dispose off imported urea due to decrease in demand. The local manufacturers were providing urea bag to dealers at their doorsteps; whereas the NFML sold urea to dealers @ Rs 1,786 per 50-kg bag and the dealers had to bear the transportation cost. The meeting directed the NFML to work out average transportation cost of imported urea which might range from Rs 15 to Rs 20 depending upon distance from warehouse of NFML for delivery at dealers door step. The ECC would allow subsidy to that extent.

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