Ministry reluctant to probe fertiliser plants’ windfall

Industry made profit by charging farmers high prices

ISLAMABAD: The Ministry of Industries and Production seems reluctant to press ahead with a probe into the affairs of fertiliser giants who made a windfall by charging farmers higher prices and through exports during the tenure of previous Pakistan Muslim League-Nawaz (PML-N) government.

A senior official of the ministry told The Express Tribune that the Economic Coordination Committee (ECC), in its meeting held on September 3, had directed the industries and production ministry to determine the gains reaped by the fertiliser industry as a result of high prices as well as through exports in financial years 2017-18 and 2018-19.



The ECC noted that the exceptional gains may be adjusted against the subsidy outstanding in favour of the fertiliser industry for the preceding three financial years. It also asked the ministry to gather figures and data of actual production and consumption of urea in 2017-18 and also provide estimates for 2018-19 in consultation with the Ministry of National Food Security and Research and submit a report. The industries ministry was also instructed to facilitate the restart of three closed fertiliser plants - Fatima Fertilizer, Agritech and Pakarab Fertilizers - on 100% liquefied natural gas (LNG) supply for urea production for four months from September to December 2018.

The ministry would also assess the impact of running the three plants solely on LNG with 50% of the cost to be paid by the government in subsidy while the remaining 50% cost would be borne by the fertiliser plants. The official added that the issue was taken up again by the ECC in its meeting on September 10, but the industries ministry did not share any details on how the fertiliser barons made billions by charging farmers higher prices and through exports.

“However, the ministry gave figures of urea production and consumption,” he added. It revealed that a consultative meeting under the chairmanship of the adviser to prime minister on commerce and textile was held on September 6 with all stakeholders.

It was agreed to run the three fertiliser plants on a blend of 62% domestically produced gas and 38% imported LNG for two months - September and October 2018 - to produce 215,733 tons of urea.

It was pointed out that operating the three plants for four months on 100% LNG was not a viable option. It was because the total impact of the subsidy to run the plants on 100% LNG for four months would be Rs9.4 billion.



The industries ministry said the total subsidy impact based on the blended formula would be lesser at Rs835 million. A review will be made in mid-October in order to run the plants for two additional months - November and December 2018 - on the blended formula. The ECC directed the ministry to ensure maximum availability of urea in the Rabi sowing season through domestic production. It allowed the functioning of Fatima Fertilizer and Agritech for 60 days from the start of actual operation on the blend of 62% local gas and 38% LNG to meet the urea shortfall.

The decision-making body also allowed import of 100,000 tons of urea through the Trading Corporation of Pakistan (TCP) immediately to meet the requirement for Rabi crops.

Published in The Express Tribune, October 14^th, 2018.

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