As domestic supplies begin to run low, the government plans to import 1.2 million tons of urea and 400,000 tons of sugar to meet rising demand.
Sources told The Express Tribune that the Economic Coordination Committee (ECC) of the cabinet is expected to approve the urea and sugar import plan during its meeting on October 13. The import will likely take place through the state-owned Trading Corporation of Pakistan.
Sugar
Domestic reserves of sugar stand at 1.2 million tons, as of October 5. At a domestic consumption rate of 350,000 tons per month, the government expects supplies to last until the middle of January next year.
The government’s sugar advisory board recommended building up reserves of sugar after it was expected that domestic production would not be able to meet demand. While the Punjab and Khyber-Pakhtunkhwa governments say they expect production in their provinces to meet targets for fiscal year 2012, Sindh’s crop was devastated by the summer floods, with as much as 30% of the sugarcane crop lost.
Faced with scathing criticism of its handling of sugar imports in previous years, the government appears to be moving towards handling the situation before it becomes a crisis.
Urea
The shortage of gas in the country, meanwhile, has debilitated the production capacity of domestic manufacturers of urea, forcing the government to contemplate spending approximately $660 million on import of up to 1.2 million tons of urea. The ministry of finance has thus far allocated Rs12 billion ($136 million) for the purpose.
“The industries ministry is seeking ECC approval to import urea for the current Rabi growing season,” said one source familiar with the matter, adding that the Punjab government was demanding that urea be imported now in order to avoid a shortage.
After consultation with the provincial governments, the industries ministry came up with a plan – submitted to the ECC for consideration – to import urea in increments of 300,000 tons per month in October and November, with another assessment of the ‘urea gap’ in December, when the final purchases would be made.
Loan guarantees for Pakistan Steel Mills
The production ministry (the truncated half of the ministry that used to be known as the industries and production ministry) is also expected to seek ECC approval for sovereign guarantees for Rs2 billion worth of loans for Pakistan Steel Mills. The state-owned steel manufacturer will use the loan to procure iron ore.
PSM has lost over Rs42 billion over the last three years and has attracted considerable criticism for constantly requiring government bailouts. The production ministry, however, downplayed the significance of the loan guarantees.
“Such guarantees are sought every year for the bank loans obtained by Pakistan Steel,” said Javed Iqbal, the production secretary.
Published in The Express Tribune, October 11th, 2011.
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