Islamabad: As the Pakistan Bureau of Statistics (PBS) reported up to 170 percent hike in fertilizer prices, the Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) have termed the budgetary measures leading to increase in urea price.
According to a statement issued by FMPAC Executive Director Sher Shah that, “the recent price increase has been mainly on account of amendment in sales tax regime.
Additionally, like many other industries, the rising cost of doing business, inflation, rupee devaluation and considerable increase in finance cost have forced the manufacturers to increase prices.
In the approved budget, the fertilizer sector has been exempted from the application of GST due to which input GST has become part of the cost for manufacturers. Further, the government has not made a clear commitment to clear the GST refunds and subsidy receivables of the fertilizer industry.
Urea prices on May 30, 2022 reduced from upto Rs2,033 per 50kg bag to Rs1,850. This reduction was based on the understanding from government to the industry that the upcoming budget would resolve three outstanding issues, namely payment of pending subsidy and sales tax receivables, resolution of mismatch of sales tax and standardization of gas pricing across the industry.
While previous issues remained unresolved in the budget, 10 percent super tax was imposed on the fertilizer industry on the profits of last year. Further 4 percent super tax has been imposed on the profits of the sector.
He further added that, “In a business environment with increasing operating costs and rising interest rates, the fertilizer manufacturers have been fully cooperating with the government to ensure consistent and affordable supplies of fertilizers to the farmers.
In national interest, the industry had agreed to take a hit on their earnings and reduced the urea prices to Rs1,850 per bag, only on the assurance that the government would soon resolve all pending matters.
Unfortunately, the issues have remained unresolved in the budget and the sector continues to suffer due to the accumulation of GST refunds, subsidy receivables, amendments in the GST regime and imposition of new taxes. Even then, the urea continues to be sold at a discount of over 70 percent against global levels.
He also dismissed the assertion of Sindh Chamber of Agriculture that the manufacturers have increased urea prices to pass on the burden of super tax to farmers.
The Sindh Chamber of Agriculture On Wednesday had alleged that fertilizer manufacturers had increased the urea rates to Rs2,350 per bag from Rs1,950 as the federal government had imposed a super tax on the industry.
They termed the price hikes as illegal and demanded the government to take immediate action to bring down the rates.
