The government is mulling over recovering billions of rupees in gas infrastructure development cess (GIDC) from the fertiliser industry by making some changes in the new proposed fertiliser policy.
Sources told The Express Tribune that Federal Minister for Energy Hammad Azhar had raised the issue of GIDC recovery from the fertiliser manufacturers in a meeting.
He said that a fertiliser company was paying GIDC but another producer did not contribute.
Earlier, the government had decided to waive 50% GIDC collection from the fertiliser industry. However, the Supreme Court ruled that GIDC should be recovered from the fertiliser and other industries in instalments and the amount would be spent on the proposed North-South Gas Pipeline.
The Pakistan Peoples Party (PPP) government had imposed GIDC on gas consumers in a bid to develop megaprojects such as the Iran-Pakistan gas pipeline, TAPI gas pipeline and liquefied natural gas (LNG) schemes.
However, the fertiliser and other industries got stay orders from courts. Following this, the current Pakistan Tehreek-e-Insaf (PTI) government waived 50% GIDC, but it sparked controversy.
At a meeting held on Thursday, different ministries conducted a review of the new proposed fertiliser policy.
Federal Minister for Industries and Production Makhdum Khusro Bakhtyar presided over the high-level meeting, which was attended by Minister for Energy Hammad Azhar, Minister for National Food Security and Research Syed Fakhar Imam and senior officials of the two ministries.
Read: Govt to import 100,000 tons fertilisers from China
According to sources, the energy minister raised the issue of non-payment of GIDC by the fertiliser industry and suggested that the government should make adjustment in the cess in the new fertiliser policy.
Besides no receipt of GIDC, the government is struggling to tackle hoarding of fertiliser and its black market. The Punjab government has identified several dealers involved in hoarding and creating black market.
The government has asked fertiliser manufacturers to blacklist these dealers.
According to sources, it was pointed out in the meeting that some fertiliser plants were receiving cheaper gas but they were charging higher prices of fertiliser.
The industries and production minister emphasised that the issue should also be addressed in the new fertiliser policy.
Furthermore, it was highlighted that some fertiliser plants were receiving cheaper gas whereas some others were getting expensive LNG, which resulted in filing of price differential claims.
The industries minister was of the view that the government should take decision whether it wanted to provide domestically produced gas or imported LNG for the fertiliser plants.
According to a statement, the meeting deliberated on the framework of fertiliser policy. It was briefed that the upcoming policy would be structured on three broad areas, ie demand, supply and pricing of soil nutrients.
It was discussed that the issue of rationalisation of gas sale agreements and supply chain maintenance through domestic production or imports in conjunction with demand projections would be addressed in the new policy.
Bakhtyar noted that unlike the past, the current government utilised the optimal capacity of urea plants to meet demand in the outgoing Rabi plantation season.
“The industry has made record production of 6.3 million tons of urea this year due to timely actions taken by the government,” he said.
The minister emphasised the need for encouraging the application of balanced soil nutrients to enhance the productivity of cultivated areas across the country.
In that regard, he called for formulating a comprehensive policy framework in relation to infrastructure development and farmer support mechanism for the long term.
The energy minister laid stress on efficiency analysis of the manufacturing plants vis-a-vis gas consumption in order to maximise the production of fertiliser.
The meeting concluded with the constitution of three sub-committees, which would work on fertiliser supply, demand and pricing strategy under the existing agronomic practices.
The sub-committees will comprise officials of the Ministry of Industries and Production, Ministry of National Food Security and Research, Ministry of Energy (Petroleum Division) and Ministry of Planning as well as technical experts of the field.
The sub-committees were directed to present a collaborative policy draft in the next meeting.
Published in The Express Tribune, February 11th, 2022.
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