The Economic Co-ordination Committee(ECC) of the Cabinet has accused as subsidy is not being passed on to the latter. Sources in the Ministry of Industries told Business Recorder that there is no possibility of supply of gas to fertilizer plants till March 2011. However, three plants--Engro-l, Fatima, and Fauji Jordon-- will continue to get gas.
They, however, cited the ECC as observing that even if gas is supplied to them there will be no reduction in the prices of the commodity, and the manufacturers would earn more profit. According to sources, under a previous ECC decision it was decided that there will be a price differential of Rs 25 only in the sale price of urea. That decision is not being implemented in letter and spirit, they added.
Official documents show that queries were raised in the previous meeting of the ECC with regard to fixing of prices of fertilisers and it was explained that there was no proper mechanism in place. Sources said that middlemen and dealers were also making windfall profits and benefit of cheaper gas supply to fertiliser plants and subsidy by the government is not passed on to the growers.
As the Ministry of Industries has been criticised for its failure to pass on subsidy to the consumers, a dedicated mechanism is being devised whereby prices of fertilizers could be controlled and hoarding of the commodity could be avoided. For this purpose, a committee has been constituted to negotiate with the manufacturers and dealers' association to make the prices of urea affordable to growers.
They further stated that the ECC in its meeting on December 15, 2011 had observed that total requirement of urea for the entire period of Rabi season (October 2011 to March 2012) was 3.469 million tons, against estimated local production of 2.453 million tons, provided that 80 percent gas is supplied to fertiliser plants, leaving a gap of 1.016 million tons, to be filled by import. If no gas is supplied, the gap between demand and supply would be around 1.2 million tons.
The government has already allowed import of 900,000 tons, out of which 700,000 tons will reach Pakistan by December 25, 2011. In the existing circumstance when gas is no more available, the ECC may allow further import of urea and pricing mechanism may be determined by a committee.
The ECC has already allowed additional import of 0.3 million tons of urea for the Rabi 2011-12 seasons. Sources said a committee will be headed by the Minister of Petroleum to negotiate with the manufacturers and dealers' association to make the price of urea affordable to growers. The committee will submit its report to the ECC. The committee may co-opt experts/officials to its deliberation, if needed.
It is pertinent to mention here that ECC in its meeting held on December 12, 2011 had approved a proposal to avail SABIC facility for additional import of urea to the extent of 200,000 tons; while the other proposal relating to gas supply to fertiliser plants during December 2011 and pricing of fertiliser was deferred as the Minister for Petroleum and Natural Resources was on official visit abroad.