Govt agrees to release fertiliser subsidy

Does away with condition of verifying subsidy claims from a provincial govt

LAHORE: The federal government and fertiliser producers have reached an agreement on the process to be adopted to resolve the subsidy issue and the condition of seeking verification of claims and documents from provincial governments has been done away with.

The decision was taken in a high-level meeting between government officials and leaders of the fertiliser industry at the Prime Minister’s Office. A progress report will be shared by relevant authorities within two weeks of the decision.

The two sides defined the way forward to resolve the subsidy issue for financial years 2015 to 2017 and implement swiftly the scheme in FY18.



It was agreed that for the subsidy claims of FY17 the Federal Board of Revenue (FBR) will forward claims to the Ministry of National Food Security and Research, which would immediately authorise payment of 80% of the amount.



The remaining 20% will be cleared within 90 days against indemnity bonds and after third-party validation by the ministry.

The FBR and the Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC) will hold a separate meeting on the clearance of general sales tax (GST) refund claims.

The same method will be used for FY18.

The industry agreed that prices of all types of fertilisers will be maintained while ensuring regular supply of urea in the market. The FBR will immediately notify each manufacturer about the status of its subsidy claims and give reasons for the delay in verification and payments.

The primary aim of the fertiliser subsidy is to ensure uniformity in domestic prices and ensure substantial benefits for the farmer community.

The Finance Division will issue the required notifications in the current week. Modalities of the audit will be kept simple. No more verification of claims and documents will be required at the provincial government level.

The stakeholders voiced hope that the subsidy matter would be resolved soon for the benefit of the agricultural sector during the peak sowing season, said a statement issued on Monday.



Fertiliser producers praised the government for providing support to the industry and giving relief to the farming community.

According to Fertiliser Manufacturers of Pakistan Advisory Council Chairman Lieutenant General (Retired) Shafqat Ahmed, apart from the claims for FY16, there are additional unpaid claims of around Rs18 billion on account of subsidy and Rs11 billion in GST refunds for FY17.

“This has created liquidity crunch for the manufacturers. These payments have been delayed due to an unnecessarily complex process adopted for the verification of subsidy claims being submitted by the urea producers,” he said.

Secretary to the Prime Minister Fawad Hasan Fawad, who chaired the meeting, stated that utility of the subsidy was reflected in a 3.5% growth in agricultural production in the previous financial year. “All stakeholders must develop a sense of ownership towards this subsidy scheme,” he said.

Published in The Express Tribune, August 1^st, 2017.

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