June 10, 2014
RIZWAN BHATTI- BR Report –
The Ministry of Finance (MoF) released Rs 6 billion of urea subsidy to the Trading Corporation of Pakistan (TCP). Sources told us on Monday that as the fiscal year 2013-14 (FY14) is ending this month, the ministry of finance is quickly disposing of the payment cases of different departments. The allocated funds in the budget 2014 will be lapsed if not utilised before June 30, 2014, they added.
The state-run grain trader is continuously making efforts for timely release of pending urea subsidy as the delay in payment increases the lending cost. Presently, TCP”s billions of rupees claims are stuck up with ministry of finance on account of various payments, particularly urea subsidy. The federal government allocated some Rs 30 billion on account of urea subsidy in the budget 2014, of which some Rs 6 billion have been released during last week and accordingly same amount has been transferred into TCP account on June 6, 201, sources said.
“Yes, TCP has received some Rs 6 billion of urea subsidy from the ministry of finance last Friday,” a TCP official confirmed. However, he said billions of rupees urea subsidy claims are still due towards the ministry. “We are making efforts for early release of further pending payments as the allocated amount will be eliminated in next three weeks,” he added.
Following the directives of the federal government, the state-run grain trader is engaged in urea import from the international market to meet the domestic demand as the local urea plants are unable to produce sufficient urea due to gas curtailment. The imported commodity is much costlier than locally produced urea, therefore the federal government is compelled to pay subsidy on the imported commodity to ensure cheap input for the agricultural sector.
Presently, international urea prices are on the lower side for last one year, however the government is still required to pay subsidy on imported urea as the maximum price of imported urea has been fixed at Rs 1,786 per 50-kg bag. Sources said subsidy on imported urea was estimated at Rs 25 billion during FY11, Rs 57 billion during FY12 and Rs 26 billion in FY13. The federal government has also allocated some Rs 25 billion in the next fiscal year budget on account of subsidy to TCP for urea import.