Fertilizer industry: Miftah asks Finance secy to release Rs 4.74 billion as urea subsidy

Federal Finance Minister Dr Miftah Ismaeel has reportedly directed the secretary Finance to release the latest requisition of Rs 4.74 billion to the fertilizer industry under the head of subsidy on urea. The direction was issued in a recent high-level meeting between the government and the fertilizer industry whereby the industry expressed its optimism that government will fulfill its commitment by releasing the full subsidy payment to the industry before leaving the office.
Fertilizer industry sources said this direction and assurance by the Finance minister will help restore the receding confidence of the industry in the subsidy scheme. This will also avert the embarrassing position of hiking urea prices, which the government seems to be least concerned about. Minister Food Security Sikandar Khan Bosan had facilitated the meeting with the Finance minister, the sources claimed.
The Finance minister also expressed his concern on delayed processing of 2017/18 claims already submitted to MNFS&R. Presently, over Rs 11 billion are still overdue from 2016/17 subsidy scheme and a similar amount is due for the current financial year. The timid approach of the Ministry of Food Security is beyond the industry's comprehension in spite of legal protection provided by the notification and FBR verification of claims, the sources added.
The sources further said that the industry has already absorbed losses of Rs 106 per bag in recent times since the subsidy regime was introduced to support the farmers' community. It would be recalled that the subsidy was reduced from Rs 156 to 100 in 2017/18 and it alone necessitated the industry to absorb Rs 6.72 billion, not mentioning the cost of financing required due to delayed subsidy payments and earlier contribution of approximately Rs 6 billion during FY 2016/17 for a total of approximately 12 billion, including similar amounts for the current financial year. Presently, the input taxes vary from 5 to 17 percent; hence, over Rs 14 billion are already awaiting adjustment/refund.
Fertilizer companies are not only producing an essential agricultural input like fertilizers domestically to significantly reduce imports and save precious foreign exchange for the country. It is also creating robust revenue streams for the government of Pakistan by contributing billions of rupees every year. When it comes to paying all the due taxes on time, fertilizer companies are raising the standards for corporate and financial performance for other progressive organizations in Pakistan to follow.
Over the years, this essential industry has been suffering due to some unfavourable policies. Thus, the government should strategically extend more support for the fertilizer sector, enabling it to play a more authoritative role in national food-security. The government should expedite the cash-flow challenges caused by large amounts mired in overdue refunds and sluggish re-imbursement of subsidy to the fertilizer companies, the industry sources concluded.