Fertiliser companies resist urea import

Influx meant to bridge demand-supply gap, push prices down

ISLAMABAD: The fertiliser manufacturers are putting up strong resistance to a proposal that calls for allowing the private sector to import urea for bridging the demand-supply gap and breaking the monopoly of domestic producers.

The reaction came after the minister of national food security and research sent a recommendation in this regard to the Ministry of Industries and Production and the Ministry of Finance for seeking their comments, sources in the industries ministry told The Express Tribune.



National Food Security and Research Minister Sikandar Hayat Khan Bosan suggested that the private sector must also be permitted to import urea as farmers were not only receiving less than the required quantity but were also forced to pay high prices for locally produced fertilisers.

According to the sources, domestic urea manufacturers are lobbying in the power corridors in an attempt to continue to enjoy the monopoly despite low fertiliser prices in the international market.

After the Ministry of Industries and the Ministry of Finance come up with their response, the food security ministry will send a summary to the Economic Coordination Committee for a final decision on urea import.

At present, the country needs 6 million tons of urea annually, but the local manufacturers produce 4.5 million tons and the remaining 1.5 million tons are supposed to be imported by the state-owned Trading Corporation of Pakistan (TCP).

In the local market, a 50kg urea bag is available at Rs1,900 compared to Rs1,500 in the international market. The minister of national food security and research, who himself is a farmer, believes that private-sector importers could fill the gap and stabilise the country’s market.

“Despite receiving gas at a subsidised rate, the urea manufacturers never push the price down,” said an official.

He saw no harm in allowing the private sector to import urea as it also purchased di-ammonium phosphate (DAP) - another type of fertiliser - from the overseas market.

On the other hand, the TCP, which is authorised to import urea to meet the shortfall, does not pursue the matter in an effective manner. It has been learnt that thousands of tons of urea are lying in its storages and no proper mechanism is in place to sell the commodity to the farmers.

“This is the reason why we want to allow the private sector to enter the business as the import of commodities is not the government’s job,” remarked an officer in the Ministry of National Food Security and Research.

Implications

Talking to The Express Tribune, Fauji Fertilizer Company Head of Corporate Communication Colonel Waheed Hamid said any such step by the government for urea import through the private sector would have short and long-term implications for the local producers, who have poured billions of rupees into establishing their plants.

“Once the plants are closed, then what would happen after international prices rise again as has been the case in the past,” he asked.

Hamid suggested that the government must facilitate the local producers by providing cheap gas so that they could fill the demand-supply gap as they produced only 4 million tons against the capacity of 6.9 million tons.

“Fertiliser is the only sector that consumes gas for value addition and it should be provided more gas.”

Published in The Express Tribune, February 13^th,  2016.

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