Economic Coordination Committee approves urea pricing mechanism

In a recent meeting, the Economic Coordination Committee (ECC) of the Cabinet sanctioned a pricing mechanism for urea, endorsing a weighted average price approach.

This directive tasks the National Fertiliser Marketing Ltd (NFML) with ensuring a reasonable price for urea, with the Ministry of Industries & Production providing oversight throughout the process.

The approved mechanism is expected to impact the minimum retail price (MRP) of a 50kg urea bag, raising it from the current range of Rs3,600 to Rs3,980 to a new range of Rs3,770 to Rs4,100.

This adjustment reflects an Rs160-170 increase per bag and is aimed at maintaining economic viability within the fertiliser sector.

The Ministry of Industries, NFML, and local urea manufacturers will collaborate to determine the final sale price, considering a mix of local production and imported fertiliser, alongside other associated expenses.

This decision comes against the backdrop of securing a ‘reasonable price’ for 220,000 tonnes of urea from Azerbaijan’s Socar Trading through a Government-to-Government (G2G) arrangement.

Furthermore, the ECC acknowledged the subsidy on imported urea and determined that provinces would bear the associated costs. The Trading Corporation of Pakistan (TCP) reported the total subsidy cost at approximately Rs27.5 billion, with the landed cost of imported urea at about Rs6,250 per 50kg bag.

Provinces, particularly Punjab and Sindh, have expressed their stance on sharing or bearing the full cost of subsidies.

These economic decisions aim to strike a balance between facilitating the urea market and addressing budgetary considerations. The ECC's actions reflect the government's commitment to managing economic challenges effectively and ensuring sustainable growth.