Sindh, Balochistan: MoC seeks MoF’s support for recovery of urea subsidy share

ISLAMABAD: The Commerce Ministry has sought the Finance Ministry’s support to recover 50pc share of cost of imported urea from Sindh and Balochistan as both provinces have refused to pay their shares, sources close to Secretary Commerce told Business Recorder.

Sharing the details, sources said, in pursuance of ECC of the Cabinet’s decision of July 20, 2022 and November 18, 2022 duly ratified by the Cabinet on July 21, 2022 and November 24, 2022 the Trading Corporation of Pakistan (TCP) imported 200,000 MT and 195,000 MT of urea and supplied it to National Fertilizer Marketing Limited (NFML). It was also decided that subsidy on imported urea would be shared at 50:50 basis, i.e. 50% to be borne by Provinces while other 50% by the Federal Government.

Accordingly, TCP worked out subsidy share of the Federal Government on account of sold quantity by NFML for import of 200,000 MT to be Rs. 12.547 billion by December 31, 2023. Moreover, the Federal Government subsidy share for the import of 195,000 MT would be Rs. 14.454 billion by December 31, 2023.

ECC approves Rs5.57bn TSG for urea subsidy

The Ministry of Industries and Production (MoI&P) noted that the Federal Cabinet on October 11, 2022 directed Ministry of Commerce to obtain Technical Supplementary Grant (TSG) with the approval of the ECC.

In view of this , the following proposals were shared with Finance Division and MOI&P for their views/comments: (i) Technical supplementary grant of Rs 12.547 billion for 200,000 MT urea and Rs 14.454 billion for 195,000 MT urea including the markup till December 31, 2023 may be released to Ministry of Commerce being the administrative division of Trading Corporation of Pakistan by Finance Division for the current financial year and ;(ii) Finance Division and Ministry of Industries and Production may be advised to coordinate with the Provincial Government for early clearance of subsidy payable by the Provinces on imported urea.

Finance Division agreed to release Rs. 6 billion allocated for subsidy on urea Fertilizer in the current FFY 2023-24. As regards the recovery from the provinces, Finance Division agreed to extend all support for timely clearance of the dues of TCP and NFML. MoI&P noted that Punjab and KP had agreed to share the subsidy on 50:50 basis, however, no amount has been released so far. Whereas, Balochistan and Sindh have conveyed their dissent to share the 50 percent.

Commerce Ministry proposed that Finance Division and Ministry of Industries and Production may be advised to coordinate with the Provincial Government for early clearance of subsidy payable by the Provinces on imported urea.

Foregoing in view, the following proposals have been placed before the ECC of the Finance Division to release Rs. 6 billion immediately to MoC and arrange additional funds for settlement of the remaining balance in the Current Financial Year 2023-24 to reduce the accumulated financial burden on TCP.

It has also been recommended that the Governments of Punjab and KP may be issued directions for timely release of amounts for their share of the urea subsidy on 50:50 basis.

The sources said, in light of the refusal conveyed by the Governments of Sindh and Balochistan to pay their share of subsidy in the imported urea, Finance Division may devise a mechanism for recoveries against each province.

Copyright Business Recorder, 2024