Crackdown ordered against fertiliser hoarders

SIFC asks taxmen to conduct audit of urea companies, dealers

ISLAMABAD:

The Special Investment Facilitation Council (SIFC) has instructed provincial governments to start a nationwide crackdown on hoarders of fertiliser and also asked tax authorities to begin an audit of urea manufacturing companies and their dealers.

Chief of the Army Staff General Asim Munir stressed upon the chief ministers and chief secretaries of provinces to commence the crackdown on the individuals and companies involved in hoarding of urea, said officials privy to the development.

The development came after the federal and provincial governments failed to protect the interest of poor farmers, who had been forced to pay Rs5,500 to Rs6,000 for a urea bag as against the normal price of Rs3,600 to Rs4,000.

The sale of urea at exorbitant rates has limited the capacity of farmers to buy sufficient quantity and its less-than-required use would have an adverse impact on the output of crops, particularly wheat. The Pakistan Bureau of Statistics reported that fertiliser prices were 34% higher in December compared to a year ago.

Concerns were expressed during the eighth SIFC meeting that urea companies and dealers were involved in profiteering. The federal government has long been protecting fertiliser firms through the provision of subsidised gas. However, it failed to recover Gas Infrastructure Development Cess (GIDC) from these firms.

According to officials, the army chief said in the meeting that fertiliser dealers were involved in “unethical” practices, and wholesalers and dealers must ensure transparency in their operations.

Read Fertiliser black marketing alleged

Last week, the federal government had approved an increase of up to Rs171, or 5%, in urea prices to recover the cost of imported fertiliser after both the centre and provinces refused to bear the cost of subsidy. The arrangement was approved by the Economic Coordination Committee (ECC) of the cabinet after entering into an agreement with the local urea manufacturers. According to the ECC’s decision, the manufacturers would pick the imported urea from ports, sell it to consumers and recover over Rs30 billion in one year through an additional Rs160 to Rs171 per bag. The government had imported 220,000 tons of urea to bridge shortfall.

Officials said that the SIFC instructed the Federal Board of Revenue (FBR) to start a tax audit of fertiliser companies and their dealers. The FBR has been tasked to review the cost of production, actual sale price and profits made by dealers and companies by overcharging farmers.

Usually, it takes about three months to audit a firm, give it reasonable time to respond and finally impose penalties, if any wrongdoing is established.

The SIFC also decided that the federal government would stop allocating subsidies in the next fiscal year’s budget for fertiliser and agricultural tube wells, said the officials. In the current budget, the Ministry of Finance has allocated Rs41 billion for agricultural tube wells of Balochistan, supply of cheaper gas to fertiliser plants and subsidising imported urea.

The SIFC agreed that the federal government would not provide budget for the provincial public sector universities from the next fiscal year. The SIFC’s decisions are in line with the country’s constitutional scheme of arrangement, as these subjects fall within the provincial domain and the federal government doesn’t need to provide funds for these areas.

The Ministry of Finance also wanted to transfer all the 323 development projects to the provinces to save money. But the provincial governments refused to take responsibility of those provincial projects that were being constructed with federal funding. As a result, the SIFC could close only 76 projects worth Rs121 billion where no financial progress had been made.

Published in The Express Tribune, January 16^th, 2024.

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