Inside Financial Markets

Govt offered Rs 290.39 b subsidy to Urea imports, production from 2005-12

ureaGovt offered Rs 290.39 b subsidy to Urea imports, production from 2005-12

ISLAMABAD Nov 17 (APP) The government had offered Rs 290.39 billion subsidy to import of Urea and its indigenous production in the last seven years, says a document of the Ministry of Industries and Production. According to the document, Rs 107.99 billion subsidies had been paid from financial year 2005-06 to 2011-12 on the import of 5,984 ton urea.

According to breakup, Rs 8 billion subsidy had been paid on the import of 825 ton urea in 2005-06, Rs 3.4 billion subsidy paid on importing 281 ton urea in 2006-07, Rs 3.1 billion subsidy paid on import of 181 ton urea in 2007-08, Rs 14.3 billion subsidy paid on importing 933 ton urea in 2008-09, Rs 19.4 billion subsidy paid on import of 1525 ton urea in 2009-10, Rs 9.2 billion subsidy paid on import of 635 ton urea in 2010-11 and Rs 50.59 billion subsidy paid on import of 1604 ton urea in 2011-12.
The government had also paid Rs 182.4 billion subsidy from 2008-09 to 2011-12 on import of feedstock gas for urea production.
However, the document said the effects of the subsidy had been eroded due to gas curtailment and heavy taxation including the imposition of General Sales Tax (GST) in the last five years.
The Urea price had increased from Rs 820 per 50 Kg bag in July 2010 to Rs 1701 on April 2013 by manufactures claiming gas curtailment and losses in production. The Competitive Commission of Pakistan (CCP) had started investigations to probe the unprecedented price-hike in Urea prices.
After investigations, the Competitive Commission of Pakistan (CCP) had imposed a plenty of Rs 3.14 billion to Engro Fertilizer Limited and Rs 5.5 billion to Fauji Fertilizer Company on proving anti-competitive practices
and maneuvering unprecedented hike in the price of Urea Fertilizer starting December 2010 onwards. Presently the matter is sub-judice in Sidh High Court.
Moreover, the prices of fertilizer were deregulated in 2001 on the promise that the farmers would be given benefits of competition and subsidies.
As pr deregulation policy, a Committee had been assigned to ensure implementation on the policy. The committee should be headed by the Ministry of Industries & Production and includes Minister for Food & Agriculture, livestock as well as a senior representative from the Ministry of Finance.


Sanie Khan

Sanie Khan holds a deep knowledge of the financial markets in Pakistan. Based in Karachi, he has over 20 years of hands-on management experience in financial technologies and managing operations in the financial sector. He was the General Manager at the Pakistan Stock Exchange (PSX) for 17 years. He along-with senior members of Exchange

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Inside Financial Markets was a joint publication of Pakistan Stock Exchange (PSX)and Society of Technical Analysts Pakistan (STAP)