The ministry of industries (MoI) has been accused of mismanagement in supply of urea across the country, well-informed sources told Business Recorder. National Fertiliser Marketing Limited (NFML), a subsidiary of the industries ministry is responsible for supply of urea to farmers through its dealers' network, but for last several years, farmers are not getting urea at rates fixed by the government.
A number for federal ministers raised hue and cry in the previous meeting of the Economic Co-ordination Committee (ECC) of the Cabinet over the flawed urea price fixation system as well as its distribution mechanism. The Federal Investigation Agency (FIA) also investigated the matter and held a number of officials responsible for massive mismanagement. Now, the federal government has directed local urea manufacturers to print price on each 50-kg bag, in an effort to curb overcharging by dealers.
A committee, headed by minister for petroleum and natural resources has also been constituted to negotiate with urea manufacturers and dealers to bring down price of the commodity. The sources said there is no possibility of supply of gas to fertiliser plants till March 2012. However, three plants, namely Engro-1, Fatima and Fauji Jordan will continue to get gas.
It was observed that even if gas is supplied to them, there will be no reduction in price of the commodity and the manufacturers will earn more profit. It was also stated that under the previous ECC decision, it was decided that there will be a price difference of Rs 25 only in the sale price of urea but that decision was not implemented in letter and spirit. Queries were raised with regard to fixing of prices of fertiliser and it was explained that there was no proper mechanism in place.
It was further stated that middlemen and dealers were making windfall profits and benefit of cheaper gas supply to fertiliser plants and subsidy by the government was not passed on to growers. Thus there is a dire need to put in place a dedicated mechanism whereby price of fertilisers could be controlled and hoarding of the commodity could be avoided.
The committee will suggest workable pricing formula and viable distribution mechanism. Official documents reveal that in November 2011, on a summary submitted by the industries ministry, the ECC constituted a committee to decide how much urea be imported for Rabi, 2011-12. The committee met on October 19, 2011 under the chairmanship of senior minister for industries and recommended import of 0.7 million tons of urea. The Finance Division accorded approval to this recommendation on October 20.
The TCP awarded tender to import urea as follows: on October 2, 60,000 tons and on November 10, 2011, 440,000 tons. According to the industries ministry, if gas supply to fertiliser plants is as decided in the meeting in the ministry of petroleum, no further import is required, however, Sabic facility will be availed to import additional 200,000 tons of urea as strategic reserves in case of gas curtailment/emergency.
The sources revealed that 550,000 tons of urea would be imported through Gwadar and 150,000 tons through Bin Qasim Karachi. The industries ministry with the National Productivity Organisation and Enercon will conduct the energy efficiency audit estimated cost of which is Rs 10 million, which will be borne by the ministry of finance. Gas supply to all four SNGPL-based urea plants (80 percent) should continue till December 31, 2011 to ensure urea availability and affordability.