Urea import deal runs into trouble: consignment must land this month: ECC

The Economic Co-ordination Committee (ECC) of the Cabinet has decided to scrap urea import agreement with Saudi Basic Industries Corporation (SABIC) if the latter fails to deliver 25,000 MT of urea by end of current month, well-informed sources in Ministry of Industries and Production (MoI&P) told Business Recorder.
The ECC presided over by the Minister for Finance, Dr Abdul Hafeez Shaikh was apprised that the Secretary Economic Affairs Division visited Saudi Arabia on February 5, 2011 and signed the agreement financing facility of urea fertiliser amounting to $100 million with the Saudi fund for development. The commercial agreement between the TCP and SABIC was also signed on February 7, 2011. The loan became operational from February 21, 2011.
It was further revealed that as per concurrence of Agriculture Department of Sindh, 20,000 MT of urea has been lifted by NFML and distributed in Sindh province. Chairman Trading Corporation of Pakistan, (TCP) briefed ECC that the SABIC had confirmed supply of 100,000 MT urea by the end of March, 2011 while balance of 25,000 MT will be delivered in April, 2011.
TCP also apprised that the tendering process for import of 100,000 MT of urea has been completed and the supply has started. The first ship carrying 36,000 MT has arrived and balance will be received in the first week of March, 2011. On a query by the Ministry of Ports and Shipping that presently urea is not being imported through Gwadar Port as per earlier ECC's decision of March 9, 2010 TCP clarified that stevedoring companies of Karachi and shipping companies of Balochistan origin have obtained stay order from the High Court of Sindh for Gwadar is being contested on the basis of ECC decision; while and Karachi's is vacated.
ECC decision of March 9, 2010 specifically mentions that import of urea from SABIC be routed through Gwadar. SABIC imports from Gwadar port will be possible provided stay is vacated. Chairman ECC, Anjum Bashir, requested for decision of ECC, reinforcing its earlier decision of March 9, 2010 that import from SABIC should be routed through Gwadar port which will greatly help in vacating stay for Gwadar.
On another query, it was stated that shipments arrived at Gwadar port are transported to up country destinations through Karachi as the Gwadar-Rato Daro link road is not yet completed. Consequently, an extra expenditure of around Rs 100 per bag of 50 kg will be borne by National Fertiliser Marketing Limited (NFML), a subsidiary of MoI&P on its transportation from Gwadar.
The ECC noted that considering the importance of Gwadar port and Balochistan, export of urea may be made through Gwadar port by availing the facility extended by SABIC. Cabinet Secretary, Nargis Sethi observed that a political decision should be preferred over economic considerations to further Aghaz-e-Huqooq e-Balochistan package announced by the government.
According to sources, ECC reiterated its earlier decision of March 9, 2010 regarding imports through SABIC facility and directed to import the SABIC facility shipment of 125,000 MT of urea through Gwadar sea port. After detailed discussion, the ECC decided that if balance 25,000 MT urea is not delivered by SABIC by the end of March 2011, its procurement may be stopped.
It was also decided that the price differential in import price and sale including incidentals will be picked up by the Finance Division. Ministry of Ports and Shipping will submit a summary to the ECC in its next meeting on cost differential in respect of handling/transportation from Gwadar and Karachi ports and Ministry of Communications to bring a summary to ensure early completion of Gwadar -Rato Dero link road on fast track basis, enabling the port to become fully functional.