Meeting on subsidy on fertilizer tomorrow

Finance Minister Senator Ishaq Dar has convened a meeting of Economic Co-ordination Committee (ECC) of the Cabinet on Saturday (tomorrow) to formally approve continuation of subsidy on fertilizer for 2016-17 as decided by the Prime Minister despite the fact that three provinces have refused to contribute their share as agreed earlier, well-informed sources told Business Recorder.
Giving details, sources said, in continuation of the Kissan Package of 2015-16, the Government of Pakistan announced the fertilizer subsidy scheme 2016-17 in the budget speech of the Finance Minister for providing relief to farmers through a reduction in the cost of production. The total cost of the scheme was Rs 27.96 billion (Rs 17.16 billion for urea and Rs 10.80 billion for DAP) and was envisaged to be equally contributed by the federal and provincial governments. Finance Division made necessary budgetary provisions accordingly. The notifications issued in consultation with the Finance Division for implementation of the scheme had an in-built provision that "the scheme will remain in force till the amount available in the Special Account is exhausted."
On the basis of the information provided by fertilizer companies regarding their claims for subsidy up-to November, 2016 and projected expenditure for December, 2016, it was anticipated that Rs 27.946 billion would stand utilised against the total allocation of Rs 27.96 billion by the end of December, 2016. In line with the provision for winding up of the scheme on expected exhaustion of funds, the matter was reported to the Prime Minister''s Office on January 02, 2017 through a summary moved through Finance Division. The Competent Authority was pleased to allow the discontinuation of the scheme and M/o NFS&R issued a "notification" on 09-01-2017 accordingly.
This reflected that the Prime Minister, or the Secretary to Prime Minister approved discontinuation of subsidy on fertilizer. However, pressure from Chief Minister Punjab, Shahbaz Sharif, political parties and farmers compelled the Prime Minister to revert his earlier decision.
The sources said winding up of the scheme caused unrest within the farm community and the Prime Minister requisitioned the summary and decided as follows: "In reconsideration of his orders, the Prime Minister has desired that the fertilizer scheme for FY 2016-17 will continue. Ministry of National Food Security & Research will engage the provincial governments afresh and re-determine the date till which the scheme shall continue during the CFY."
In compliance with the order of the Prime Minister, the M/o NFS&R issued a notification on 13-01-2011 for withdrawal of the earlier Notification dated 09-01-2017 for continuation of the fertilizer subsidy scheme 2016-17. Simultaneously, the process of consultation with all stakeholders, including Finance Division and provincial governments, was commenced to determine the additional financial outlay, contribution of the provincial governments and the date till which the scheme will continue. The process may take some time to conclude.
Finance Division, which has to arrange funds for the federal share in fertilizer provision, will share their views during the meeting. The sources said Ministry of National Food Security and Research on Wednesday discussed the fertilizer subsidy proposal with the stakeholders and sent a summary for approval to the ECC for continuation of the fertilizer subsidy scheme 2016-17 as decided by the Prime Minister of Pakistan.