Bogus claims: Ministry withholds imbursement to fertilizer companies until audit

The Ministry of National Food Security and Research has reportedly withheld imbursement to fertilizer companies against supply of fertilizer until audit of their claims are finalised and verified by the respective provinces, as some of the claims are bogus, well-informed sources told Business Recorder. Federal government had announced a subsidy of Rs 27 billion for the agriculture sector for fiscal year 2016-17, of which the share of provincial government was Rs 13.50 billion.
After the subsidy announcement, the price of urea reduced to Rs 1400 from Rs 1,850 per bag whereas price of DAP fertilizer slashed to Rs 2,500 from Rs 2,800 per bag. Fertilizer companies submitted their claims to the respective provincial governments. Of the Rs 27 billion subsidy, the government has already paid Rs 13 billion to the fertilizer companies. Some payments are in the pipeline and some doubtful claims have been sent back to the provinces for re-verification.
A team of about 7-8 officers of the Ministry of National Food Security and Research is engaged in audit of claims of Rs 21 billion submitted by the fertilizer companies. Ministry of National Food Security sends claims to the concerned departments of provincial governments for verification. Federal government clears the payment of Fertilizer Company after claims are verified by the provincial governments. "To be on the safe side and avoid fake billing or extra payment, we get certificate from FBR regarding payment of sales tax and verification from provincial governments that the product has been delivered in the respective district aimed at controlling fake billing and payment of due bill to the fertilizer company," the sources continued.
Due to hectic verification process, there are three types of delays. Firstly, fertilizer companies submit claims with returns each month to the FBR which also takes time to process the cases. This exercise takes two months time. Secondly, federal government also seeks verification from the provinces and thirdly Ministry of National Food Security and Research also re-verifies the claims from provincial governments.
Previously, Ministry of National Food Security and Research had sent eight bills back to Punjab government which were on the higher side vis-à-vis delivered product. Punjab has also claimed that it paid extra amount to Fatima Fertilizer vis-à-vis the claim. Another company M/s Reliance has claimed that its bill is submitted in Multan's Group whereas the latter claims that its bill is included in bill of M/s Reliance. Some fertilizer companies have sent sales details of even those products which are not covered in subsidy scheme.
"Sometimes discrepancies are found in multiplication of fertilizer and claimed amount. In case of discrepancy, Ministry of National Food Security and Research sends the claims back to the respective provinces for correction as sometimes provinces verify claims over and above the claims submitted by the fertilizer companies. In such instances, verification takes time and delays occur," the sources added.
Ministry of National Food Security and Research maintains that it is an issue of billions of rupees and the Ministry has to face audit at every forum and it is the responsibility of the Ministry not to allow unverified payment. "We have received complaints which indicate that fertilizer companies are submitting fictitious claims. We have no other option to verify claims other than provinces which are recipients of the fertilizer," the sources maintained.
Ministry of National Food Security and Research has also received bills for December 2016 but interestingly some companies have also clubbed bills of October and November 2016, the sources said adding that according to the prescribed procedure, fertilizer companies have to submit claims on monthly basis.
The source said fertilizer companies are responsible for delay in payment as they the companies send flawed bills. The sources also cited an example of the government extending subsidy on four items, while the company sent claim of six items. When the bill was calculated it was found over and above the approved amount and when this issue was raised, the company acknowledged that the billing was incorrect.
"Fertilizer companies are also facing accountancy issues. It's a matter of billions of rupees, the companies should be extra careful," the sources said, Ministry of National Food Security and Research argues that when the government slashed prices, growers used more fertilizer as compared to previous years due to which production of main crops increased. The use of DAP and urea increased by 25 per cent and 20-22 per cent respectively due to decrease in price, due to which allocated funds diminished quickly.