Pakistan Plan to import 300,000 tons of urea

ISLAMABAD: The federal government has decided to hear the viewpoint of the fertilizer sector prior to finalisation of its plan to import 300,000 tons of urea for Rabi season.

This was the crux of a meeting on fertilizer import plan presided over by Deputy Prime Minister, Ch. Pervez Elahi, and attended by the Prime Minister’s Adviser on Petroleum and Natural Resources, Dr Asim Hussain, and representatives of the Ministry of Finance and Planning Commission. In its meeting on October 3, the Economic Coordination Committee (ECC) of the Cabinet, had approved import of 200,000 tons of urea immediately under a facility  offered by Saudi Arabia and formed a committee to finalise modalities for further import of 300,000 tons urea for Rabi. The ECC meeting was held under the chairmanship of Finance Minister Dr Abdul Hafeez Shaikh.

The committee’s terms of reference included: (i) a mechanism for provision of subsidy so that it actually reaches the farmers; (ii) ways and means for bringing down the prices of domestic fertilizer; and (iii) a mechanism for provision of gas to fertilizer factories.

Though the committee had to submit its report to the ECC on October 24, it failed to implement the decision of the forum. Local fertilizer plants are being accused of selling urea at exorbitantly high rates despite getting gas at cheaper prices.

The Ministry of Industries, in its summary, had apprised the ECC that price of domestic urea is Rs1,659 which is selling at Rs 1,691 per bag in the market. The price of imported urea is Rs1,600 per bag.

“Committee’s meeting remained indecisive with regard to taking a decision on import of urea and decided to summon the representatives of fertilizer plants on Thursday (today) to hear their viewpoints,” the sources continued. According to sources the fertilizer plants will be asked as to how much gas they would need to manufacture 0. 3 millions tons of urea for Rabi season so that the government is not compelled to import it.

Fertilizer plants will also be asked how they would stabilise domestic urea prices as the benefit of cheaper gas prices were not being passed onto farmers. The ECC was informed on October 3 that about 2.745 million tons of fertilizer, including already allowed import of 300,000 tons, would be available for the Rabi 2012-13 crop against an estimated demand of 3.052 million tons and there would be a shortfall of 307,000 tons.

According to the Ministry of Industries if a buffer stock of 200,000 tons was maintained, the shortfall would increase to 507,000 tons. Subsequently, the Ministry of Industries sought permission for importing 500,000 tons. The Ministry of Industries failed to implement its own decision regarding printing of prices on urea bags.

The government has extended Rs77 billion subsidy on urea in three years so far .