ISLAMABAD: Fauji Fertilizer Company (FFC) Chief Executive and Managing Director Lt Gen Tariq Khan has lauded the recent decision by the Economic Coordination Committee (ECC) to reduce Gas Infrastructure Development Cess (GIDC) by Rs400 per bag, saying that it will have a direct and positive impact on input cost for farming communities.
Addressing a press briefing on Tuesday, he said as soon as the decision is notified, FFC will reduce urea price between Rs300 and Rs400 per bag.
The FCC chief maintained his company has always favoured the government’s decision to reduce urea prices while providing a level playing field for all fertilizer manufacturers.
“Farmers will have cheaper urea, which is up to 17pc of total input cost for the crop, while fertilizer industry will benefit from higher sales. Higher crop produce will eventually benefit the country by ensuring food security in Pakistan.”
He opined that the government is currently not getting any amount in the head of GIDC, therefore “it is incorrect to say that the national kitty would face loss if GIDC was abolished”.
Similarly, he added, it is also not fair to say that fertilizer prices would remain the same even if the GIDC is reduced.
He said that the fertilizer industry has paid Rs158 billion in terms of GIDC from 2011 to 2016, but the collection by the government stopped in wake of court case since 2016.
“We have accrued the amount of Rs58 billion since 2016, and the money was in the custody of FFC,” he added.
He said following the abolishment of GIDC, the dealer price for each urea bag will be Rs1,620.
The FFC chief dispelled the impression that the government was giving huge subsidies to the fertilizer industry, saying that during the 2010-19 period, the government gave concessions worth Rs177 billion in terms of lower feedstock gas price.
It may be noted that GIDC was imposed under the PPP government in 2011 on commercial gas consumers. Within a year, it was declared illegal by the Peshawar High Court and ratified by the Supreme Court of Pakistan.
Later, the GIDC was re-imposed through legislation in 2015, before industrialists took the government to court over the matter once again. The GIDC, which was imposed to fund the construction of new gas pipelines and LNG facilities, has remained in litigation for almost eight years.