Di-ammonium phosphate: Fertiliser importers to increase price by Rs300 per bag

Decision taken after govt failed to establish mechanism for subsidy payments

ISLAMABAD: Fertiliser importers are all set to increase the price of di-ammonium phosphate (DAP) by Rs300 per 50kg bag as the government has not been able to establish a subsidy mechanism and transfer funds to the importers for three months.

The price-revision decision was taken at a meeting of the Fertiliser Importer Council on Friday.

The council also wrote a letter to the minister of national food security and research, informing him about its intention to push the DAP price up by Rs300 per bag.

The importers pointed out that the government had failed to finalise the mechanism for processing subsidy claims and disbursing funds to DAP importers even three months after issuing a notification for subsidy payments on June 25, 2016.

“Although the importers have been passing the subsidy on to farmers by giving a concession of Rs300 per bag since June this year, they have not received their claims so far,” said the letter.

It said the Federal Board of Revenue, which had been tasked with putting in place the required mechanism, could not perform the task.

“The federal government also did not take any steps to deposit the subsidy in the State Bank of Pakistan,” the importers added.

“We are working on very narrow margins and our finances are choked for months due to government’s failure to establish a comprehensive mechanism. The subsidy amount is higher than the profit margins and we have little motivation to continue with the concession.”

As a result of the liquidity crunch, they were forced to increase the DAP price by Rs300 per bag.

An importer, speaking on condition of anonymity, told The Express Tribune that a meeting had been slated for Monday between government departments and fertiliser importers to find a solution to the issue.

In the meeting, the importers would take a final decision on whether to go ahead with the subsidy or suspend it. “We will not push ahead with the subsidy if the government gives us another deadline or resorts to delaying tactics,” said the importer.

“On the one hand, the FBR is not ready to develop the payment mechanism despite taking responsibility, while on the other, the provinces are not ready to contribute their 50% share in the total subsidy of Rs10.8 billion as announced in the budget,” remarked a source in the Ministry of National Food Security and Research.

Last year, only the federal and Punjab governments managed to deposit their share of Rs17 billion out of the total Rs20 billion subsidy. The remaining provinces did not contribute their share amounting to Rs3 billion. The official feared that the three provinces would be reluctant this time too.

Published in The Express Tribune, September 18^th, 2016.

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