Urea pricing issue lingers on, manufactures refuse to budge

Government continues to propose reduction of Rs200 per 50kg bag

Peer Muhammad April 29, 2016
Government asked the companies to give relief to the farmers by reducing their profit margin. PHOTO: APP

ISLAMABAD: The government’s impasse with fertiliser companies seems to be never ending as the latter has rejected yet another attempt to reduce urea prices.

At a meeting held in the finance division on Wednesday, fertiliser companies flatly turned down the government’s proposal to bring down prices of urea by Rs200, said a senior government officer who was part of the meeting.

The meeting was attended by officials from the finance division, Ministry of National Food Security and Research, Ministry of Industries and Production, petroleum ministry and representatives from major fertiliser producing companies.

The government had proposed to reduce the urea prices by at least Rs200 for a 50kg bag, but fertiliser companies agreed to a cut of Rs60, which is less than the effect of a recent cut in gas tariff for the sector.

According to an officer, the government asked the companies to give relief to the farmers by reducing their profit margin.

Sources said that the move could not be successful due to the strong lobbying of manufacturers and special favours for the manufacturers by the ministry of industries and production. Presently, the price of urea in international market is at its lowest. equivalent to $203 per ton or Rs1,076 per 50 kg bag. After inclusion of freight and other incidental charges, ex-Karachi price of imported urea works out to be around $293 per tons or Rs1,554 compared to domestic market price of Rs1,850 per bag.

During the meeting it was established that in order to protect the local industry from cheaper imports it is important that the industry agree to reduce urea price per bag by Rs200. It proposed that the reduction in prices would benefit the agriculture sector and will also protect the domestic industry from competition with cheaper imports.

Published in The Express Tribune, April 29th,  2016.

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