Weighted average price mechanism: Local, imported urea put in one ‘basket’

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved a mechanism for urea weighted average sale price by treating locally and imported urea as one basket.

The ECC meeting presided over by the caretaker Finance Minister Dr Shamshad Akhtar considered a summary of the Ministry of Industries and Production for approval of the mechanism for sale of urea on Tuesday.

The disposal mechanism stated would result in following price adjustments by different manufacturers;(i) Agritech proposed manufacturing price Rs4,095/bag, after an increase of Rs159/bag; (ii) Engro proposed price Rs3,766/bag, following an increase of Rs171/bag; (iii) FFC proposed price Rs3,766/bag, subsequent to an increase of Rs171/bag; (iv) FFBL proposed price Rs4,139/bag after an increase of Rs158/bag; (v) Fatima (SDQ) proposed price Rs3,839/bag following an increase of Rs168/bag; (vi) Pak Arab proposed price Rs4,095/bag after an increase Rs160/bag; and Fatima (SHP) proposed price Rs4,095/bag subsequent to an of increase Rs160/bag.

45,000MTs of imported urea arrives

The meeting was informed the landed price of imported urea would be Rs6,248/bag.

The mechanism for disposal of imported urea that has been agreed upon includes; (i) urea manufacturers shall lift bagged imported urea of 220,000 14/-) MT from the port and NFML warehouses, based on their share of local production as a one-lime arrangement; (ii) all incidentals related to idling and NFML’s associated cost shall be built in the current urea prices based on weighted average sale price concept for cost recovery which would be spread over 12 months time by local manufacturers; (iii) manufacturers will make payment of lifted imported urea respectively within 45 days from the date of product lifting to NFML which is approximately Rs30.344 billion.

Since the industry will bear the financing cost, it would include financing cost in price calculation for recovery period till December 2024, etc.

An official on condition of anonymity said that based on previous practice regarding local urea and full cost recovery of imported urea matrix will be determined for local manufacturers of urea.

The ECC approved the mechanism for weighted average price with the direction to NFML for ensuring reasonable price for urea and Ministry of Industries and Production to provide oversight to the whole process.

The ECC considered and approved a summary of Intelligence Bureau for provision of additional funds of Rs250 million TSG during the current financial year 2023-24 after IB briefed the committee about recent surge of terrorism which needed effective counter measures to thwart nefarious designs of terrorists.

The ECC approved the funds as technical supplementary grant (TSG) for up gradation, technical enhancement and field activities of IB with releases on a need basis.

The ECC considered and approved the summary of National Health Services Regulation and Coordination for the provision of TSG amounting to Rs3.568 billion in favour of the Federal Directorate of Immunization (FDI), and urged the provinces to clear their pending liabilities. The ECC also considered the summary of Finance Division for signing the addendum to the subsidiary grant agreement (SGA) regarding financial inclusion and infrastructure project and exemption from re-lending policy of release of funds to the State Bank of Pakistan (SBP) and accorded its approval.

A summary from the Ministry of Inter-Provincial Coordination was also tabled for approval of release of grant for participation of Pakistan’s Hockey team in international events and other sports promotion activities.

This grant, the ECC was told would also be utilised for Davis Cup (Tennis) with India and other mind games like scrabble and chess. The committee approved provision of additional funds amounting Rs100 million as TSG for fiscal year 2023-24.

The meeting was attended by the Minister for Privatization and Inter-Provincial Coordination Fawad Hasan Fawad, Minister of Planning, Development and Special Initiatives Sami Saeed, Deputy Chairman Planning Commission Dr Muhammad Jehanzeb Khan, Minister for Law and Justice, Water Resources and Climate Change Ahmed Irfan Aslam, Advisor to PM on Finance Dr Waqar Masood, federal secretaries, and other senior government officers of the relevant ministries.

Copyright Business Recorder, 2024