ISLAMABAD
The cabinet has aired serious concerns over alleged fleecing of farmers by fertiliser manufacturers despite getting heavy subsidy on gas supply.
According to sources, the cabinet in a recent meeting noted that a high subsidy was being given to fertiliser companies, but its impact was not being passed on to farmers, who were compelled to buy fertiliser at very high prices.
It was mentioned that there were other factors affecting fertiliser prices such as price control by provinces, curbing smuggling and using tax measures.
It was proposed that the issue of urea supply and prices should be taken up in a separate meeting with all stakeholders to be chaired by the prime minister.
The Economic Coordination Committee (ECC) of the cabinet recently approved a basket price mechanism for locally manufactured and imported urea following refusal by provinces and the finance ministry to share the burden of subsidy.
During the ECC meeting, it was observed that fertiliser manufacturers would charge the cost of financing on their entire production of 6.2 million tons per year, which gave them undue benefits and increased prices of fertiliser.
Furthermore, the relevant ministry should resolve the issue at its end. It was responded that the financing cost would be charged only on 220,000 tons of imported urea.
Regarding the supply of gas to fertiliser manufacturers, the ECC was apprised that as per past practice, the Petroleum Division would assess the existing arrangement and provide gas/ re-gasified liquefied natural gas (RLNG) to them on a “best endeavour basis”.
The cabinet body agreed that National Fertiliser Marketing Limited (NFML) should determine the release price of imported urea while the Finance Division reiterated that no additional subsidy would be provided on the supply of urea, once the proposed basket price mechanism was enforced.
The Ministry of Industries and Production briefed the meeting that the ECC had allowed Trading Corporation of Pakistan (TCP) to import 220,000 tons of urea from Azerbaijan’s Socar company in a government-to-government (G2G) arrangement, which was ratified by the cabinet.
The ECC had decided that the cost of subsidy on imported urea would be borne by provinces. In another decision, it agreed that the recovery of the cost of imported fertiliser would be made from provinces.
