Inside Financial Markets

Fertilizer importers seek payment of Rs 5 billion DAP subsidy

Fertilizer importers have approached the Prime Minister for immediate payment of pending DAP subsidy claims of over Rs 5 billion to continue the scheme. They said that fertilizer importers are facing financial difficulties due to delay in payment of billions of rupees subsidy for the last four months and unable to further participate in DAP subsidy scheme.

In a letter to Prime Minister Nawaz Sharif, Fertilizer Importers Council (FIC) has raised the DAP subsidy payment issue. According to the letter, fertilizer importers have done their best to wholeheartedly participate in the subsidy scheme and assist the government in its objective by selling imported DAP fertilizer at subsidized prices at their entire risk and cost in the hope of being refunded the subsidy by the government within 15 days as envisaged under various notifications.

However, for reasons unknown and unexplained, the Ministry of NFS&R is delaying the forwarding of claims to the SBP for payment in clear violation of the subsidy notifications mentioned below which has put all the importers in a position that we cannot further fund the subsidy for the government and may not be able to continue business, the letter said.

According to FIC, the government has announced a subsidy of Rs 300 per bag on DAP and as per procedure subsidy claims will be sent by the Ministry of National Food Security & Research (NFS&R) to the State Bank of Pakistan (SBP) for payment immediately upon receipt from the Federal Board of Revenue (FBR) and it is the government’s commitment that the subsidy claims will be paid within 15 days of receipt.

September 2016 claims were received by the Ministry of NFS&R in the 1st week of November 2016 from the FBR. These are still with Ministry of NFS&R after more than two months and not forwarded to the SBP for payment.

In addition, October claims were received by the Ministry of NFS&R in the 1st week of December 2016 from FBR. These are still with Ministry of NFS&R after more than a month and also not forwarded to the SBP.

Similarly, November claims have also been received by the Ministry of NFS&R and are yet to be forwarded to the SBP. December claims are still pending with the FBR and not yet forwarded to Ministry of NFS&R.

The FIC said as of January 14, 2017, subsidy claims of around Rs 5.1 billion are pending payment to importing companies for all imported DAP sales from September to December 2017. “These huge pending amounts are not allowing us to contribute to the subsidy scheme anymore. Starting January 13th we are not in a position to participate under the existing DAP subsidy scheme anymore,” it added.

Fertilizer importers have proposed to the government to devise a DAP subsidy scheme where fresh DAP subsidy can be given directly to farmers instead of through importing companies.

Out of the 2.2 million tons of DAP offtakes in calendar year 2016, around 64 percent was supplied to farmers through imports. The importers have wholeheartedly supported the government’s objective by ensuring availability of DAP fertilizer at subsidized prices.

“However, our subsidy claims are delayed in clear violation of the government’s own notifications and process. We are under severe financial stress. Our banks are now blocking our financing lines which will not allowing us to import DAP for the Kharif season. This will result in a shortage of DAP in the Kharif season,” the FIC said.

Fertilizer importers requested the Prime Minister to urgently intervene and order payment of subsidy claims for September, October, November and December to the importing companies.

They said that farmer-friendly policies that have not only helped farmers to obtain subsidized fertilizer but also increased the consumption of fertilizer that will raise the farm productivity in coming years and usher in an era of prosperity in rural Pakistan.

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.

Add comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

The Canadian Securities Institute


CSI is part of Moody's Analytics Learning Solutions, which offers educational programs and credentials throughout the world.

Email Newsletter

Subscribe to receive inspiration, news, and ideas in your inbox.

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