Clearing glut: ECC allows 0.3m tons of urea export after heavy imports
Govt will not provide subsidy of Rs200 per bag on the export
: In August last year, the ECC constituted a committee to ascertain why ‘miscalculation’ was made to allow urea import as NFML had to bear a cost of Rs3.5 million per month and pay handling charges of Rs21 per bag. PHOTO: FILE
ISLAMABAD:
The government on Monday allowed the export of 300,000 tons of urea fertiliser to ‘save’ the industry, but did not fix the responsibility for excessive imports of the urea by acquiring foreign loans, resulting in a glut in the domestic market.
The Economic Coordination Committee (ECC) approved the urea export till April 28, 2017 without any subsidy, according to a statement issued by the Ministry of Finance.
It added the government was providing a subsidy of Rs200 per bag, however, it would not be available on exports.
Although the ECC decided that no subsidy will be given on exports, the government was providing gas to the fertiliser manufacturing plants at subsidised rates and the beneficiary would now be international consumers.
The finance ministry said the State Bank of Pakistan would monitor the urea export volume like the mechanism adopted for sugar exports.
The Fertiliser Review Committee will monitor domestic urea prices on a monthly basis and in case of an abnormal increase in the retail price as per weekly Sensitive Price Indicator, the committee will recommend to the ECC the discontinuation of further exports.
The permission for exports was given in view of around one million tons of surplus urea in the country, it added.
However, the ECC’s decision highlights mismanagement on the part of the government that in 2015 allowed import of 250,000 tons of urea for the Kharif sowing season to meet the shortfall.
“National Fertiliser Marketing Limited (NFML) has a surplus stock of 245,000 tons of imported urea,” said a senior official of the Ministry of Industries and Production.
Pakistan imported the commodity by acquiring foreign loans.
The industry would suffer if exports were not allowed, said Khizer Hayat Gondal, Secretary of the Ministry of Industries and Production.
Gondal, however, said he was not aware of the circumstances and rationale that led to the import of urea. He said export of the commodity would fetch foreign exchange for the country.
Replying to a question, the industries secretary said there was a possibility for further reduction in the prices of imported urea.
In August last year, the ECC constituted a committee to ascertain why ‘miscalculation’ was made to allow urea import as NFML had to bear a cost of Rs3.5 million per month and pay handling charges of Rs21 per bag.
The ECC on Monday did not discuss the issue of fixing responsibility for the excessive import of urea, said an official on condition of anonymity.
The response of Finance Minister Ishaq Dar, who was also the ECC chairman, was awaited till the filing of the story.
Another government official said better availability of gas to the manufacturing plants was one of the reasons behind one million tons of surplus urea. However, this puts a question mark over the inter-ministerial working that could not predict improved gas flows before taking the import decision.
In pursuance of the prime minister’s decision, the ECC endorsed continuation of the previous fertiliser subsidy scheme for fiscal year 2016-17 on the same terms, conditions and modalities, said the finance ministry.
Earlier, the government had withdrawn the subsidy, which invited criticism from all quarters. The finance ministry said the government would keep paying the subsidy of Rs200 per bag to support the farming community and agricultural sector.
The ECC also approved, in principle, payment of an outstanding claim of Pakistan Agriculture Storage and Services Corporation (Passco) on account of wheat supply in 2008-09 and directed the Ministry of National Food Security and Research and Passco to reconcile the outstanding amount with the Ministry of Finance.
The ECC recognised the contribution and services of the recently retired finance secretary Dr Waqar Masood Khan and Federal Board of Revenue chairman Nisar Muhammad Khan. Waqar was the longest-serving secretary.
Published in The Express Tribune, January 24th, 2017.
The government on Monday allowed the export of 300,000 tons of urea fertiliser to ‘save’ the industry, but did not fix the responsibility for excessive imports of the urea by acquiring foreign loans, resulting in a glut in the domestic market.
The Economic Coordination Committee (ECC) approved the urea export till April 28, 2017 without any subsidy, according to a statement issued by the Ministry of Finance.
It added the government was providing a subsidy of Rs200 per bag, however, it would not be available on exports.
Although the ECC decided that no subsidy will be given on exports, the government was providing gas to the fertiliser manufacturing plants at subsidised rates and the beneficiary would now be international consumers.
The finance ministry said the State Bank of Pakistan would monitor the urea export volume like the mechanism adopted for sugar exports.
The Fertiliser Review Committee will monitor domestic urea prices on a monthly basis and in case of an abnormal increase in the retail price as per weekly Sensitive Price Indicator, the committee will recommend to the ECC the discontinuation of further exports.
The permission for exports was given in view of around one million tons of surplus urea in the country, it added.
However, the ECC’s decision highlights mismanagement on the part of the government that in 2015 allowed import of 250,000 tons of urea for the Kharif sowing season to meet the shortfall.
“National Fertiliser Marketing Limited (NFML) has a surplus stock of 245,000 tons of imported urea,” said a senior official of the Ministry of Industries and Production.
Pakistan imported the commodity by acquiring foreign loans.
The industry would suffer if exports were not allowed, said Khizer Hayat Gondal, Secretary of the Ministry of Industries and Production.
Gondal, however, said he was not aware of the circumstances and rationale that led to the import of urea. He said export of the commodity would fetch foreign exchange for the country.
Replying to a question, the industries secretary said there was a possibility for further reduction in the prices of imported urea.
In August last year, the ECC constituted a committee to ascertain why ‘miscalculation’ was made to allow urea import as NFML had to bear a cost of Rs3.5 million per month and pay handling charges of Rs21 per bag.
The ECC on Monday did not discuss the issue of fixing responsibility for the excessive import of urea, said an official on condition of anonymity.
The response of Finance Minister Ishaq Dar, who was also the ECC chairman, was awaited till the filing of the story.
Another government official said better availability of gas to the manufacturing plants was one of the reasons behind one million tons of surplus urea. However, this puts a question mark over the inter-ministerial working that could not predict improved gas flows before taking the import decision.
In pursuance of the prime minister’s decision, the ECC endorsed continuation of the previous fertiliser subsidy scheme for fiscal year 2016-17 on the same terms, conditions and modalities, said the finance ministry.
Earlier, the government had withdrawn the subsidy, which invited criticism from all quarters. The finance ministry said the government would keep paying the subsidy of Rs200 per bag to support the farming community and agricultural sector.
The ECC also approved, in principle, payment of an outstanding claim of Pakistan Agriculture Storage and Services Corporation (Passco) on account of wheat supply in 2008-09 and directed the Ministry of National Food Security and Research and Passco to reconcile the outstanding amount with the Ministry of Finance.
The ECC recognised the contribution and services of the recently retired finance secretary Dr Waqar Masood Khan and Federal Board of Revenue chairman Nisar Muhammad Khan. Waqar was the longest-serving secretary.
Published in The Express Tribune, January 24th, 2017.