TCP to import 0.7 million tons of urea

The government on Wednesday decided to import 0.7 million tons of urea for Rabi, through Trading Corporation of Pakistan (TCP) in November, for which a gallop tender will be floated within a couple of days. Consensus was developed at a meeting held at Prime Minister''s Secretariat under the chairmanship of Industries Minister Pervaiz Elahi. The import will be exempted from PPRA Rules 2004.
These recommendations will be submitted to the ministerial committee, headed by Finance Minister. Sources told Business Recorder that the Ministry of Industries (MoI) had failed to plead its case for 50 percent share in import of urea, through National Fertiliser Corporation (NFC), which is already under investigation for alleged black marketing of urea in the past.
"The MoI had proposed to allow import of 50 percent of urea through NFC and 50 percent by TCP. It wanted to assign import and distribution tasks to the NFC/NFML, but the top brass failed to convince the participants, including Finance Secretary and Commerce Secretary," sources added. Prime Minister''s Advisor on Industries, Muhammad Basharat, had also supported allocation of 50 percent urea import share to NFC.
"The committee agreed to continue with the previous practice of import and will recommend to the ministerial committee accordingly," said an official. The TCP, which was represented by its Chairman, Anjum Bashir, had sought following exemptions to meet the deadline: (i) a gallop tender of one week would be required, instead of 30 days timeline; (ii) price matching with the second lowest bidder onwards to achieve the desired quantity; and (iii) assurance of funds from Finance Division for prompt opening of L/C would be required.
Approximately $175.5 million foreign exchange and rupee cover of 13.880 billion, at the rate of $525 per ton, would be required for opening of L/C. At present, the TCP has around Rs 9 billion available under commodity finance operation. In case these exemptions are not made available, the import of 300,000 tons urea will at least take 60 - 70 days from the date of tender to arrive in Pakistan, he added.
Sources said that the TCP Chairman had contested the demand of 50 percent import share by the MoI, saying that his organisation has export and import expertise besides pre-qualified bidders. His viewpoint was supported by the Commerce Secretary.
According to official documents, exclusively made available to this scribe, a meeting was held in the MoI on September 23, 2011, and supply and demand position of urea was discussed. The meeting was attended by Punjab Chief Secretary, and representatives of Finance, Commerce, Petroleum and Natural Resources Divisions and Sui Northern and Sui Southern companies.
The two scenarios were discussed in detail. Both gas companies cautioned that gas supply position to fertiliser sector may further worsen. They were apprehending 60 days of winter gas load shedding, instead of 45 days, suggesting that urea be imported at the earliest. The minimum requirement for import of urea was estimated at 0.713 million tons under scenario -I and 1.2 million tons under scenario-II, involving a subsidy of Rs 24.41 billion and 41.08 billion respectively.
According to an official announcement, the committee decided that it would review fertiliser requirements from time to time to ensure its availability to the farmers. Pervaiz Elahi, according to official announcement, stated that transparency in import and distribution of urea would be ensured. He added that if the government continued to supply gas to the fertiliser plants till November 15, local production would be sufficient for the Rabi season.