ISLAMABAD (May 26 2007): The federal government has refused to lift ban on urea export until fertiliser industry submit written guarantee that prices would remain unchanged, well-placed sources in Minfal told Business Recorder here on Friday.

The proposal floated by the private sector regarding urea export had been discussed in detail at an inter-ministerial meeting chaired by the Minister for Industries and Production, Jahangir Khan Tareen a few days ago but deliberations deadlocked when fertiliser sector declined to give any guarantee on price, the sources added.

The representatives of fertiliser industry informed that a huge stock of urea was lying with them as monthly average production of urea is around 4,30,000 tons and with subsidy on DAP, the demand of urea has suffered.

The sources said that Dawood Hercules, one of Pakistan's top urea manufacturers, said that they have already participated in a tender floated by India for import of urea for 40,000 tons quoted prices of $438 per ton through Wagah border. The representative of Dawood Hercules was of the view that export of urea would reduce trade imbalance between the two countries but on what price, he remained silent.

However, his proposal was turned down on the grounds that one company could not be allowed. It would rather take a transparent decision across the board.

They said that the government listened fertiliser industry's viewpoint on inventory position and showed willingness to allow urea export subject to the condition of written guarantee on prices. "When the Industries Ministry asked would the manufacturers given written guarantee that prices of urea would not increase if export of urea is allowed. The manufacturers responded that it would not be possible for them to do so," the sources continued.

The sources further said, Minister for Industries and Production, who heard views of officials and fertiliser industry, remarked that if urea export is considered by the government, regulatory duty would be imposed as heavy subsidy on urea production in the shape of subsidy on feedstock gas.

He was of the opinion that difference of local and international price would be picked as regulatory duty, the sources maintained. According to sources, Minfal is to review the proposal after detailed analysis of production, stock position and off takes of urea. Chairman, National Fertiliser Corporation (NFC), Major General Zafar Abbas also gave a detailed presentation on the fertiliser sector.

Copyright Business Recorder, 2007