Required information: CCP likely to issue show-cause notices to fertilizer companies

Competition Commission of Pakistan (CCP) is likely to issue show cause notices to fertilizer companies for not providing required information as per the law, well-informed sources told Business Recorder.

The government had directed CCP to conduct cost audit of fertilizer companies as prices were not being revised down despite availability of cheaper gas.

The issue of fertilizer prices came under scrutiny in the last two consecutive meetings of the federal cabinet wherein most of the cabinet members criticised the fertilizer companies for not reducing urea price. Prime Minister Adviser on Commerce, Industries and Production and Investment, Abdul Razak Dawood also came under fire for not implementing the Cabinet decision.

In one of the meetings, Minister for Planning, Development and Special Initiative, who served M/s Engro as CEO criticised the company for not passing on the impact of reduction in GIDC.

On January 28, 2020, the Cabinet directed Industries and Production to ensure that the benefit of the reduction of GIDC on gas consumed by the fertilizer manufactures is passed onto the farmers without delay.

Prime Minister Imran Khan viewed with concern the failure of CCP to effectively play its roles in checking collusive practices. The members of the Cabinet inquired as to when would the impact of reduction of GIDC on gas consumed by fertilizer industry translate into lowering of fertilizer prices. Special Assistant to the Prime Minister on Petroleum, Nadeem Babar stated that necessary notification of GIDC reduction has been issued.

It was explained that the rate of GIDC has been reduced to Rs 5/MMBTU which should lower the price of urea by Rs 400 per bag. It was also noted that while FFC, the major shareholder in the fertilizer sector, had agreed to decrease the prices, Fatima Fertilizer and Engro Fertilizers did not agree to reduce the prices of their urea since GIDC is not chargeable on their new plants.

On February 1, 2020, M/s Engro also announced to reduce prices of urea by Rs 160 per bag despite the fact that the company is exempted from GIDC under 2011 policy.

The sources said, CCP is also conducting cost audit of fertilizer companies as they are earning billions per annum but the companies are not providing requisite information and now the Commission is expected to issue an Order 36 to seek information and in case the fertilizer companies avoid sharing information, CCP can initiate legal action against them.