ECC nods near Rs2bln subsidy on imported urea

ISLAMABAD: Government is estimated to provide two billion rupees in subsidy to keep imported urea prices at an affordable level for the farmers as the Economic Coordination Committee (ECC) of the cabinet on Monday fixed the nutrient price at Rs1,712 per 50-kilogram bag for dealers.

The decision was taken during a meeting presided over by Finance Minister Asad Umar to review the fertiliser demand and supply situation in the country.

“The ECC in consideration of a proposal from the ministry of industries and production approved the price of imported urea at Rs1,712 per 50 kg bag for the National Fertilizer Marketing Limited’s (NFML) dealers,” the finance ministry said in a statement.

A document showed that the government would bear up the subsidy impact of Rs1.729 billion if it provides financial assistance of Rs864.88 per 50kg bag. If it gives subsidy of Rs913.88 per 50kg bag, the subsidy impact is estimated at Rs1.827 billion.

Cost of 100,000 tons of imported urea is estimated at Rs5.111 billion and that excludes NFML’s charges. Without subsidy, the price of imported urea is estimated at Rs2,555/bag, according to the document.

In September, the government had directed the Trading Corporation of Pakistan (TCP) to import 100,000 tons of urea to ensure availability of sufficient stocks in the country to meet the requirements for winter crops as the country was bracing for a likely urea shortage of around 500,000 tons up to mid rabi 2018/19. Alone till January, the fertiliser demand for crops is estimated at two million tons.

Sources said the state-owned NFML had stocked the imported nutrients up in its warehouses and there was a disruption in supply to dealers and farmers because of the absence of the government pricing structure.

Adviser to the Prime Minister on Commerce Razak Dawood, however, said 50,000 tons of urea stocks of the NFML are being released to cater the demands of the rabi season.

“Another 50,000 MT (metric tons) of imported urea has reached Karachi port on December 14,” Dawood said, addressing a meeting of the Fertilizer Review Committee. “There is adequate supply of the urea in the country,” he was quoted as saying in a separate statement.

Pakistan Bureau of Statistics reported price of 50 kg sona urea for the week ending on December 13 at Rs1,778, whereas price of other urea stood at Rs1,757.

The NFML advised that dealer booking price of imported urea should be kept less at least Rs10-150 than local urea price. The government should bear up the financial assistance with existing NFML and handling charges of Rs 21/bag and proposed increase of Rs70/bag by NFML.

The finance division and ministry of national food security and research, in a summary, proposed that selling price of imported urea brag should be fixed at Rs50 less than the prevailing market price of Rs1,707/50 kg bag. It was further proposed that dealer transfer price for NFML may be kept at the existing Rs1,712/50 kg.

The government in September also restored gas supply to two closed fertiliser plants (Fatima Fertiliser and Agritech), which are estimated to cumulatively produce around 80,000 tons of fertiliser per month.