ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has allowed the import of 125,000 metric tons of urea from China on a government-to-government (G2G) basis on deferred payment of 90 days besides an import of 35,000 metric tons on G2G basis from Azerbaijan to meet domestic demand.
The ECC meeting presided over by Finance Minister Ishaq Dar, on Friday, was requested by the Ministry of Industries and Production to allow import of 75,000 metric tons of urea fertiliser from Azerbaijan to meet the demand for December 2022.
However, the ECC allowed the import of 35,000 metric tons through M/s Socar from Azerbaijan and directed the Trading Corporation of Pakistan (TCP) to explore feasible options for the import of the remaining quantity of urea fertiliser to meet the strategic reserves of 200,000 metric tons.
The ECC also allowed the TCP to proceed ahead with the import of 125,000 (+/- 5,000 MT MOLSO) on G2G basis from China for meeting the demand of urea fertiliser for the month of January 2023 at US$ 480/MT (FOB) on 90 days deferred payment basis inclusive of mark-up.
Ministry of Industries and Production submitted a summary for the procurement of 200KMT urea and stated that it negotiated on various options including import from Chinese firms that have committed to supply the negotiated quantity of urea fertiliser at the lowest rate.
On October 27, 2022, the TCP was allowed to proceed ahead with the lowest offer received from M/s Makhdoom Logistics Services @USS 520/MT for the import of 300,000 metric tons of urea fertilizer but M/s Makhdoom Logistics Services has not confirmed any cargo till date.
The TCP initiated the process of encashment Bank Guarantee submitted by the supplier. As the procurement through tender was unsuccessful, the TCP suggested various options which after being examined by the Ministry of Industries and Production in consultation with the Ministry of National Food Security and Research discovered that the price offered by M/s SOCAR and PACIFIC are higher than the intentional market price, as well as, the price quoted by Chinese firms.
The ECC meeting was informed that based on the quoted prices by the three suppliers, the G2G option from China is considered the most viable. The Ministry added that additionally, the TCP may continue to explore the option of procuring urea fertiliser through fresh tendering/ G2G option required during December 2022. Following a lack of response from M/s Makhdoom Logistic, Ministry of Industries and TCP negotiated with Chinese firms nominated by the National Development and Reforms Commission (NDRC), China for the export of 300,000MT urea fertiliser to Pakistan.
The ECC considered a summary submitted by the Ministry of Energy, Petroleum Division on high-speed diesel (HSD)/ gas oil premium. Considering the increasing demand for the HSD in the country, the ECC recommended that the PSO’s weighted average premium (KPC and Spot) may be applied for the HSD price computation as per federal government applicable policy guidance and in case of higher HSD premium paid by importing OMCs other than PSO, the differential of premium will be computed in the price.
The ECC also approved a technical supplementary grant of Rs115 million in favour of the Ministry of Housing and Works.
Copyright Business Recorder, 2022