The Economic Co-ordination Committee (ECC) of the Cabinet, has, reportedly unearthed scams worth billions of rupees due to price differential of local and imported urea, well informed sources in the Ministry of Industries and Trading Corporation of Pakistan (TCP) told Business Recorder.
"National Fertiliser Marketing Limited (NFML) is supplying imported urea at Rs 1300 per 50-kg bag while the locally produced urea is available to farmers at Rs 1700-1750 per bag. The middleman is clearly benefiting," the sources added. According to sources, the ECC decided a while ago that the price differential between imported and locally manufactured urea should not exceed Rs 25 per 50-kg.
However, official documents disclose that the Ministry of Industries and the ECC did not implement the decision due to which local manufactures are selling urea at Rs 400-450 over and above the price set by the federal government.
Pakistan Agri Forum Chairman Ibrahim Mughal told Business Recorder that the fertiliser mafia in the Ministry of Industries, its attached department NFML and close political mates of one of the federal ministers are putting additional burden of Rs 150 billion on the growers.
He claimed that local fertiliser manufacturers are selling urea up to Rs 1900 per 50-kg which implies the rate of local urea is higher by Rs 600 per bag which is a grave violation of the ECC decision. The most powerful local fertiliser sector is also resisting printing the price on urea bags and the Ministry of Industries appears powerless to take appropriate action because of their alleged influence - an influence evident from the fact that the gas load management plant approved by the ECC for the fertiliser sector was summarily reversed.
Official documents reveal that the ECC of the Cabinet was informed that in pursuance of 1 February 2011 decision 23,497.3 tons of urea of which 70,000 tons reserved for flood affectees of Sindh for Rabi 2010-11 was diverted to Punjab from TCP stocks with an understanding that this quantity would be replenished on arrival of imported urea. At the time, price of urea charged by NFML was Rs 780 per 50 kg bag. Later the price increased to Rs 1,300 per bag. The matter was taken up with the government of Punjab for return of same quantity of urea to Sindh, but the government did not agree. However, on the directions of the Senior Minister for Industries, 5068.75 tons of urea costing Rs 13.18 billion has been supplied to the government of Sindh, leaving a balance of 18,428.55 tons, cost of which at the prevailing rate of Rs 1,300 per 50-kg bag comes to Rs 479.14 million. The ministry of industries has proposed that this amount may be reimbursed by the Finance Division.
During ensuing discussion, it was observed that transfer of urea to Punjab was a good gesture on the part of the government of Sindh and needs to be reciprocated. It was observed that the ECC decision relied upon the Ministry of Industries (case no-ECC-20/03/2011), and no mention was made of the transfer of urea to Punjab or the risk the recovery. Thus, the government of Punjab cannot be forced to return the urea. It was suggested that the matter should again be taken up with the government of Punjab for an amicable solution.
It was suggested that in order to ensure the farmers benefit, the ECC decision to ensure a minimum price differential between imported and local urea be strictly enforced. However, the price differential may be adequately enhanced as it was observed that the transport charges and other incidentals are not included in the price mechanism to determine the cost effectiveness of the price differential.
After detailed discussion on urea, the ECC decided that Secretaries of Finance and Industries should jointly have a meeting with the Chief Secretary Punjab, and if needed with Punjab Chief Minister Mian Shahbaz Sharif to persuade the latter to reciprocate the good gesture of the government of Sindh. The ECC further decided that the price differential between imported urea and selling price of locally manufactured urea should, in no case, be more than Rs 50 per 50-kg bag.