Imported urea sale: Punjab government investigates malpractices

The Punjab government is probing malpractices in sale of imported urea. The federal government is providing Rs 25 billion subsidy on imported urea for sowing this year's Rabi crops including wheat, grams, lentils, sunflower, maize, vegetables and fodder, sources told Business Recorder, here on Thursday.
They said that there was a difference between the price of locally manufactured urea and the heavily subsidised imported urea by the Trading Corporation of Pakistan (TCP). The federal government was providing subsidy of about Rs 1800 per 50kg, which was being marketed by the public sector NFML agencies and stores in Punjab and other provinces. The current price of locally produced urea in the black market was nearly 2,000 per 50kg sack whereas price of the imported urea had been fixed at Rs 1480 per bag.
The Punjab government had alleged that the Federal Industries Minister and the Q-league is distributing the fertiliser quota among their ticket holders, legislators and its favourites to get political mileage. The sources said that the Punjab government had asked the federal government to ensure availability of 2.4 million tons of urea fertiliser for the current Rabi season but as the government had not taken measures to increase local production or import the costly urea fertiliser in time, which created shortage of the agri input in the country, price of urea bag which was Rs 850/- in December 2010 has now increased to Rs 2,000, they said.
Meanwhile various farmers associations have demanded of the government to withdraw the GST on the fertiliser which will automatically bring down the prices of this important input Rs, 200 per bag on which largely depends per acre yield of various crops. The Ministry of Industries has directed the fertiliser manufacturing companies to print Rs 1,480 price tag on each urea bag to discourage black marketing and help farmers get the farm input at affordable price.
A spokesman of the ministry said that gas supplies to fertiliser manufacturing factories under the new gas load management plan have been resumed, the government has further brought down the urea prices to Rs 1,480 from Rs 1,580 per 50kg bag. Fertiliser marketing experts told Business Recorder that the month of November started off with Urea stocks of 90,000 tons with government as well as companies.
Major stock was available with National Fertiliser Marketing Limited (NFML), a government entity and all urea stocks were sold by November 10, 2011 practically bringing Urea inventory in the country to NIL triggering panic in the market, despite the fact that TCP had booked 700,000 tons of imports from Middle East, Russia and China which started with the arrival of first vessel on November 18, 2011.
The government responded well by supplying gas to all fertiliser plants to increase the local production to enhance Urea supply in the country. Due to this decision around 90,000 to 100,000 tons of additional Urea production will be achieved in the month of November. Government's current import schedule shows arrival of around 130,000-140,000 tons of urea in November, 2011, they added. They said the additional Urea production due to gas restoration to fertiliser plants coupled with imports of 130,000-140,000 tons will manage the November's off takes requirement of 650,000-700,000 tons. However, the stock at the end of the month will still remain NIL.
They emphasised that managing urea off takes of December, 2011, is extremely critical for December being the biggest Urea demand month which is expected to further intensify due to the delay in wheat sowing. Expected Urea December demand is around 850,000 - 900,000 tons. From Mari Network the government will be able to get December production of 300,000 tons leaving a shortfall of 550,000-600,000 tons to be covered through imports and production from Sui Network based plants.
They said that it is expected that with utmost efforts on the part of the government, some 250,000 tons of imported urea will be brought into the country which in given circumstances will be a big achievement on the part of the government. If all this 250,000 tons urea is made available to farmer in December (maximum import in a month in the last 20 years has been 265,000 tons in December 2009), then shortfall of Urea will be at 300,000-350,000 tons to be bridged from additional production from Sui based plants. If all Sui based plants are run for the whole month of December at 80 percent of their load they could add around 200,000 tons of Urea production bringing December shortfall to 100,000-150,000 tons which seems the best case scenario at this moment in time, and this way the government will be able to manage the urea shortfall if not fully eradicate it. Moreover, if gas availability permits these plants to operate entire fertiliser industry at full load for one month, the additional Urea production will be around 115,000-120,000 tons, they hoped.