Subsidy issue: Fertiliser industry, govt in price printing dispute

Govt links subsidy to printing of fixed price on bags.


Peer Muhammad December 15, 2014

ISLAMABAD: The issue of Rs14 billion subsidies on the fertilisers remains a matter of dispute between the government and the manufacturers, as they differed over the fixing of the price.

The federal government has announced Rs14 billion subsidy on fertiliser in budget 2014-15 and out of the total amount, 50% was to be paid by the provinces.

However, the issue remains unresolved due to differences between the government and the manufacturers over fixing a price of fertiliser.

Sources said that the provinces are ready to pay the 50% of the amount on the condition that the manufacturers should print the fixed price on each fertiliser bag ensuring that the farmers would not be overcharged at any stage.

However, the manufacturers disagree, justifying that it is an international commodity and due to the fluctuation of the dollar rate, it is not possible for them to fix a single price and it would vary due to market forces.

The provincial governments have opposed the idea and urged the manufacturers to fix any single acceptable price of fertiliser. The issue has created difficulties for the farmers as the Rabi season sowing has already started in Punjab and Sindh and they are forced to purchase fertiliser at high cost.

The manufacturers add that the government’s step to subsidise the fertiliser sector remained useless amid absence of implementation of the special subsidy package.

So far, the manufacturers face four hurdles and the federal and provincial governments have failed to resolve the issue, said a senior officer in the ministry of National Food Security and Research.

The officials said that a six-member committee has also been constituted by the government for evolving a middle way to resolve the issue between the government and manufacturers. The committee comprises two representatives each from the fertiliser sector, dealers and from the local manufacturers.

He said that the government has told the committee to find a middle ground to resolve the issue at the earliest.

The government has made it clear to the committee that a mechanism should be adopted that could easily be implemented in the better interest of the farmers, said the officer.

The officer further added that the federal and provincial governments are ready to immediately release Rs14 billion funds to the manufacturers in the fertiliser sector if it develops a consensus mechanism for fixing prices.

Published in The Express Tribune, December 16th, 2014.

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COMMENTS (3)

Jameel ur Rasheed | 9 years ago | Reply

@Khan: The fertilizer sector receives subsidies as an incentive to serve the local markets. Without subsidies they can simply sell their produce in rest of the world at much attractive rates. Learn the difference. India, alone, can but the entire fertilizer produced by Pakistani companies collectively.

While the excuse given by fertilizer producers about dollar instability is the most vague one. I would rather believe Imran Khan's blatant lies over it!

Karachiwala | 9 years ago | Reply

What about the long pending case of gas subsidy on first steel (DRI) PLant at port qasim waiting for the gas subsidy for the last one year with a foreign investment of 350 mio dolor.

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