Fears of shortage: Urea may be imported from KSA on emergency basis

If immediate action is not taken, Pakistan may need to import wheat worth $1b.

ISLAMABAD: An SOS message is being quietly sent to Saudi Arabia for a loan from the Saudi Arabian Basic Industries Corporation (SABIC) to import urea fertiliser to cover the emerging gap between supply and demand. The gap emerged after the fertiliser dealer mafia created an artificial shortage to make massive profits at the cost of the domestic agriculture sector.

Things are so grave now that in case supply is not arranged by end February, disastrous consequences are feared. Pakistan may have to import wheat worth more than $1billion this year, as was done in 2007-2009.

During that period, the country had to spend more than Rs200 billion on import of wheat to meet its domestic requirements.

Panic-stricken participants of the Economic Coordination Committee (ECC) meeting held this month warned that the country was set to suffer huge financial losses of up to “trillions of rupees” on account of shortfall in wheat production this year. The situation worsened after fertiliser dealers duped wheat farmers of about Rs28 billion over the past two months by hiking urea prices by Rs200 per bag ahead of the harvest season in April.

The likely bleak scenario presented in the last ECC meeting on February 1 was said to be so alarming that Finance Minister Dr Hafeez Sheikh directed the secretary of the economic affairs division (EAD) to immediately rush to Saudi Arabia with the chairman of the Trading Corporation of Pakistan (TCP) to seek the possibility of importing urea via a SABIC loan.

According to documents available with The Express Tribune, decrease in fertiliser consumption was said to be a major factor behind the possible shortfall.

One official said that the government’s inability to import required quantity of urea on time was “fully exploited by fertiliser dealers”. During the ECC meeting, one minister had claimed that there was no  fertiliser shortage. He argued that hike in fertiliser price could be tackled via good governance. The meeting was said to have been informed that TCP was in the process of tendering and bidding for purchase of 225,000 tons of urea and the tender would be opened on February 7.

It was decided that a mechanism should be devised for making available 48,000 tons of urea from the stock of the TCP. In this regard, ministers for food, agriculture and livestock, as well as industries and production, may immediately negotiate with the Sindh chief minister for disposal of existing urea stocks to be adjusted against imported urea, they said.

Published in The Express Tribune, February 7^th, 2011.