Fertiliser industry still waiting for subsidy release

One month has passed since PM Office directive to clear subsidy claims

LAHORE: The government is still dragging its feet on the fertiliser subsidy claims as billions of rupees worth of payments are stuck because of bureaucratic hurdles and institutional lethargy, say players of the fertiliser industry.

In a statement, fertiliser manufacturers pointed out that an entire month had passed since the Prime Minister’s Office directed the Ministry of National Food Security and Research to release all pending subsidy claims urgently, but nothing had been done to ease the industry’s financial burden.

It was decided at a high-level meeting at the Prime Minister’s Office, chaired by secretary to the PM Fawad Hassan Fawad, on July 24 that 80% of the subsidy claims would be immediately cleared and the remaining 20% would be paid within three months after third-party verification.

However, the payments were still pending, though the Finance Division had released the requisite amount, said the industry players.

For future subsidy claims, the government has included a clause in the scheme, which requires every fertiliser dealer to provide his National Tax Number (NTN).“This clause makes the scheme unviable as it ignores that a big majority (over 90%) of small dealers are not registered with taxation authorities and do not have NTNs,” they said.

Moreover, the subsidy claims are based on sales tax, which has no relationship with the NTN. “Such a step may ultimately hamper the distribution of urea, denying subsidy benefits to the farmers,” they said.

The industry decried that the authorities had not even started an external audit, required to resolve the subsidy crisis. In this regard, the food security minister has not yet issued terms of reference for the external audit.

Although more than Rs20 billion was outstanding in subsidy payments, the fertiliser manufacturers said they had kept urea prices down in the Pakistan market.

“Fertiliser producers are cooperating with the government by absorbing Rs106 per bag to keep prices low, though the government has promised to pay a subsidy of Rs100 per bag,” they said.

“We have not disrupted the supply of subsidised fertiliser to the farmers, despite a major cash flow problem we are facing,” commented an official of the Fertiliser Manufacturers of Pakistan Advisory Council.

Published in The Express Tribune, August 30^th, 2017.

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