Govt releases Rs13bln in subsidy to fertiliser markers

LAHORE: The government paid Rs13 billion as subsidy to fertiliser manufactures in the first eight months of the current fiscal year as part of its efforts to bring the key input prices down in the domestic market, officials said on Thursday.

The government, in the budget 2016/17, announced around Rs27 billion as the price support subsidy on urea buying for the farmers.   This allocation was in addition to reduction of the general sales tax on fertiliser bag to five percent from 17 percent.

The manufacturers also came forward in support of this positive initiative and voluntarily cut urea bag prices. “Fertiliser industry appreciated the subsidy scheme and offered its full support to the government’s initiative to help boost agro economy and national food security,” said Brig (Retd) Sher Shah Malik, executive director of Fertiliser Manufacturers of Pakistan Advisory Council.

“The industry acted in good faith to make the scheme successful and has been passing on the subsidy to the farmers in line with the spirit of Kissan package since June 2016.”  

Malik, however, said the government took eight months to “return our money”.

Recently, the ministry of national food security and research released around Rs6.5 billion, while a similar amount was disbursed at the time of subsidy announcement.

Malik said it has been a generous incentive for the farmers by federal and provincial governments to reduce the prices of various types of fertilisers, including urea and phosphates.

Officials said fertiliser manufacturers filed claims of Rs21 billion.  Sources said the complexities of food ministry’s subsidy disbursement mechanism caused a delay in disbursement.

The procedures require sales verification from the provincial authorities instead of relying on data provided by companies or available with the National Fertiliser Development Centre. 

Now, the government is waiting for data from the provinces. Besides Punjab, other provinces have yet to respond, said a source.  Officials said companies are submitting sales reports to provincial agriculture departments on daily basis.

Malik said because of the delayed fund disbursal, the fertiliser manufacturers and importers had to arrange funds from other sources to manage their expenditures. He hoped that the food ministry would be able to overcome the ongoing procedural complexities that caused undue delays and process the payment of remaining of subsidy claims at the earliest. 

He urged the provinces to support the process of subsidy disbursement mechanism through timely reports of sales in the interest of farmers community. “There is a dire need to bring down the cost of inputs and ensure availability of gas to enable the domestic industry in long term to sustain prices of locally produced fertilisers,” Malik said. 

He said the upward trend in international prices has already rendered the sale of diammonium phosphate at the present prices unviable. “The federal and provincial governments should allocate adequate funds well in time, if the scheme has to be continued for the benefit of the agriculture sector.”