Urea prices to go up by Rs200 if govt fails to release subsidies

LAHORE: Fertiliser manufacturers have informed the government that companies may further increase the price of urea by Rs200/50kg bag in case the government failed to release the unpaid subsidy worth Rs20 billion to the industry.

The disclosure was made on Friday at a meeting between industry representatives and Ministry of National Food Security and Research, with Minister Sikandar Bosan as the chair.

An official, who was part of the meeting, said that National Food Security and Research Minister Sikandar Bosan was annoyed with the industry for the recent increase in prices of urea, and pointed out the recent “favours” the government had granted to the manufacturers. Bosan reminded about the general sales tax restructuring on inputs in the budget, and called the increase in prices an embarrassment for the outgoing government, the official said. The minister also asked the industry to not increase urea and other fertiliser prices any further.

Secretary of the Ministry of National Food Security and Research also reiterated Bosan’s stance and further informed that the government had given permission to export, while resisting imports, and had also subsidised gas for the industry.

Representatives of the industry pleaded their case by pointing out their contribution of Rs106/bag since the inception of the subsidy scheme in 2016, as well as the complications faced in the processing of claims and resultant financial cost due to delayed payments.

The industry appreciated the efforts of the ministry, but expressed remorse over non-fulfilment of commitment by the government and reluctance of the Ministry of Finance in releasing the funds, the official said.

Industry representatives lamented that 80 percent of the payments were still pending, despite the Prime Minister Office directives given on July 24, 2017 for immediate release of 80 percent payments, and 20 percent after third-party validation process.

The minister was informed that to recover the exact amount, besides subsidy and industry’s contribution, and recurring financial cost, inflation and other factors, the price needed to be raised by over Rs200 per bag.

“The PM office was sensitised on March 29, 2018 regarding the rise in prices after April 15, 2018 in case of non-payment of pending amount,” they disclosed, and said the industry had exercised prudence all these days.

“Now, with no response by the government, industry was constrained to revise the prices to partially mitigate the liability and recover losses,” they added.

The secretary apprised the meeting that the Ministry of National Food Security and Research has processed a case for the release of 80 percent claims from 2017/18 up to February, and hoped to receive the amount to the tune of Rs4.74 billion within a couple of days.

Bosan also called the finance minister during the meeting and asked him to release the amount and further payments. The minister urged the industry to not increase the prices of urea and promised of concerted efforts for getting the remaining payments released to the industry against the favour of not increasing the prices.

The official said industry officials might oblige the minister and secretary if concrete steps were being taken to release the payments. However, it seems impossible in this short time before the government departs. “Unfortunately, the government is likely to go embarrassed on this account and farmers will be the ultimate sufferers,” the official added.