Govt, stakeholders fail to reach consensus on urea price

–Fertiliser sector says OGRA-proposed gas price increase will have a direct impact on the cost of urea production

–Govt reaffirms that ‘gas price hike is necessary’, says continuous subsidies in gas prices are not sustainable

ISLAMABAD: A high-level meeting was held on Monday among the members of a committee formed recently by the cabinet to deliberate the supply and price of fertiliser in the country.

Adviser to Prime Minister on Commerce Abdul Razak Dawood, Planning & Development Minister Asad Umar, National Food Security & Research Minister Khusro Bakhtiar and Special Assistant to PM on Petroleum Nadeem Babar represented the government on the occasion, while the senior management of the fertiliser companies presented their stance on behalf of the sector.

The meeting deliberated on the prevalent availability and pricing of urea in the country with special focus on the recent gas price increase recommended by the Oil and Gas Regulatory Authority (OGRA) and its impact on the cost of urea production.

The industry representatives updated the committee over the high urea inventory buildup and current market pricing. They maintained that the OGRA-proposed gas price increase would have a direct impact on the cost of urea production and therefore translate into increased selling prices for the farmers.

The government acknowledged the update but remained firm on its stance that this increase was necessary and that continuous subsidies in gas prices were not sustainable. “These subsidies have to be borne by the government and therefore cause ever-present losses to the government earnings.”

The stakeholders were further briefed that this increase was premised on the additional revenue requirements of the two gas companies namely Sui Southern Gas Company and Sui Northern Gas Pipeline Limited.

Multiple facets of this argument were presented but no conclusion was reached over the gas price increase and the related urea prices. The meeting was adjourned with the notion that a similar meeting would be scheduled in the upcoming weeks for the closure of the subject matter.

Meanwhile, according to officials at the planning ministry, the meeting considered various ways to ensure sufficient supply of commodities while making the prices of the fertiliser affordable for the farmers.

“While the government is providing massive subsidies to keep the fertilisers affordable for the farmers, it seems that the mechanism of subsidy needs more thinking. Direct subsidy to the farmers will be more cost-effective for the government and more beneficial for the farmers,” Planning Minister Asad Umar said. “The government will also consider removing GIDC in the future in order to bring down the fertiliser prices.”

Asad Umar said that the government believed in deregulation of various sectors of the economy, including the fertiliser sector. In this regard, he also solicited proposals from the representatives of the fertiliser industry.


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Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]
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