Inside Financial Markets

FPCCI urges govt to allow surplus urea Exports

Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Wednesday said the fertiliser industry was virtually the backbone of the agriculture sector, and the government should allow exporting surplus urea to facilitate exports.

FPCCI Regional Standing Committee Chairman Ahmad Jawad said, “Our urea plants are running on full capacity, and they annually produce 6 million tons, while consumption of the industry is 5.4 million tons. This leaves surplus urea of 0.6 million tons every year.”

If we carry forward last year’s stock, the country could easily export 1.2 million tons, which means earning $220 million dollars. Internationally, per ton price of urea varies from $190-$220 which is an appropriate rate for the local manufactures.

Jawad said currently urea export was banned. In Musharaf regime, the private sector’s proposal to export urea was discussed in detail at an inter-ministerial meeting chaired by Jahangir Khan Tareen, the then Industries and Production Minister, but the deliberations deadlocked when the fertiliser sector declined to give any guarantee on price, he added.

“We can set a mechanism to allow export of urea through imposition of regulatory duty, but keep the prices subsidised for local consumption,” Jawad added. The FPCCI official reminded that from 1983 to 1986, when a large urea surplus existed in the country, Fauji Fertilizer Company (FFC) began exporting, which not only stabilised the domestic urea market, but also earned valuable foreign exchange.

He also said the local fertiliser sector was facing a combination of internal and external challenges, as its prices witnessed sharp corrections in the capital market. “Deteriorating sector fundamentals have taken a toll on share prices of the fertiliser stocks, with FFC, Engro Fertilizer, and Fatima down an average 29 percent from the last 12 month peaks.”

Baqar Hussain

A Wannabe CFO, just had stepped in the corporate sector, willing to explore every aspect here and learn as mush as i can, awareness for those who dont, get the info where ever possible and stay up to date always.

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