GIDC reduction: Fertilizer industry quizzed for not passing on full impact

Prime Minister's Advisor on Commerce, Industries and Production, Abdul Razak Dawood Thursday quizzed fertilizer industry for not passing on the full impact of reduced GIDC rate of Rs 400 per bag of urea despite commitment, well-informed sources told Business Recorder.

The Ministry of Industries and Production in its notice has asked Chief Executives Officers (CEOs) of fertilizer companies to attend the meeting in person.

M/s Engro reduced price of urea (DD) to Rs 1,844 per bag and urea (MRP) at Rs 1,880 per bag from February 1, 2020, whereas Fauji Fertilizers Company fixed price of Sona urea (P) at Rs 1,740 per bag and Sona urea (G) Rs 1,724 per bag from January 28, 2020.

The sources said, Prime Minister Advisor on Commerce and Industries and Production and Investment sought the reasons for not passing on the full impact of reduction in GIDC in prices of urea.

The representatives of fertilizer industry, sources said, maintain that since they are expecting increase of Rs 100 in fuel gas price per bag by the government for the fertilizer sector, they cannot bear extra burden that is why they passed on the impact of Rs 300 per bag.

Fertilizer industry further argues that the government should ignore this as market fluctuations is not a positive thing for industry. Fertilizer industry has already faced a financial loss of Rs 4 billion to honour the commitment with the government.

Fertilizer industry, sources said, have stated that if the Advisor gives them an assurance in writing that price of fertilizer fuel will not be increased by the government, they will reduce price by Rs 400 per bag adding that the Advisor did not give any such assurance when the industry asked for issuance of a press release to clarify the position.

The Advisor also enquired from the representative of M/s Engro why it did not pass on the impact of GIDC to the farmers the representative of Engro replied that the company has its own viewpoint on GIDC. He pointed out that Engro reduced urea prices as per their own calculations and if this does not work, they will adjust it accordingly. It was decided to let the market decide about urea prices fixed by Engro. Unconfirmed reports suggest that urea is now being supplied to Sindh from Punjab because of Engro's price differential.

The representative of M/s Fatima said that they will follow the main players as presently the company does not have the product to sell but showed an agreement on Rs 1740 per bag.