Trading Corporation of Pakistan (TCP) has allegedly imported powdered urea worth billions of rupees which is not being procured by farmers and it is apprehended that a huge loss will be inflicted on the national kitty in case the volume of sales remains at the existing level, well informed sources told Business Recorder.
Questions such as 'why powdered urea was imported', 'who evaluated the urea shortage' and 'how to dispose the powered urea' came under discussion in the Economic Co-ordination Committee of the Cabinet, in its meeting on Friday last (May 16, 2014).
The sources said TCP had imported 0.5 million tons of urea from Saudi Arabia, Russia, Ukraine and other countries. Out of 10 ships of urea, 50 tons each, 5 ships imported powdered urea. Urea in granular form was sold immediately after its arrival but the sale of powdered urea has been found to be negligible.
Commerce Ministry, which controls TCP administratively, argued that the powdered urea will be sold in June when rice cultivation will start. The counter argument given in the ECC meeting was that the sale trends of powdered urea indicate that farmers will not buy it and would still prefer local manufactured granular urea.
Finance Minister, Senator Ishaq Dar who is also chairman of the ECC, has refused to slash price of imported urea but at the same time he was reportedly disturbed by the situation.
According to the prevalent practice, Ministry of National Food Security and Research, Ministry of Industries and Production and Ministry of Commerce calculate urea shortage after taking provinces and NFC on board.
The Punjab Government indicated a urea shortage in the province due to which local urea manufacturers are selling urea at exorbitant prices. "If the assumption of Punjab Government is truthful that local urea is being black marketed, then there is no doubt that farmers are not interested in buying imported powered urea," said an official on condition of anonymity.
Analysts maintained that if the price of powdered and granular urea is the same then why did the TCP top brass import powered urea which is now a liability.
National Fertilizer Marketing Limited (NFML)- a subsidiary of Ministry of Industries and Production, has informed the federal government that sale of imported urea has been badly affected due to increase in price.
Statistics show that NFML sold 123,311 tons urea in February 2013 whereas its sale remained at 32,384 tons on February, showing a difference of 90927 tons. Urea sale was 12068 tons in March 2014 against 58516 tons during the same month last year, indicating reduction of 46448 tons in sale. NFML sold 7511 tons of urea in April 2014 against 29781 tons in April 2013, showing a difference of 22,270 tons.
Two vessels each carrying 30,000 tons through Saudi Basic Industries Corporation (SABIC) have arrived while 3rd and 4th vessels would arrive by the end of current month in spite of the massive stocks (0.35 million tons) currently held by NFML. To accommodate fresh incoming urea, new temporary stores have been hired which will cause additional financial burden on NFML.
Fresh urea received from Saudi Arabia is also in powdered form like the existing unsold stocks which is considerably less popular among the dealers and farmers. Besides, shelf life of this type of urea is less and lack of demand for it is expected to pose a severe danger in terms of loss to the national exchequer.
Ministry of Industries and Production in its summary to the ECC has recommended that a margin of Rs 50 per bag should be fixed for the dealers on the pattern of local urea manufacturers' to attract buyers. However, the ECC did not approve the proposal because the new Secretary Industries and Production, Raja Hasan Abbas did not offer arguments in favour of the summary floated by his predecessor, Shafqat Naghmi.
NFML has been accused of massive corruption and dumping of urea in the past. An inquiry recently conducted by a committee headed by a senior official of the Ministry of Industries and Production has certified that few officials of NFML (now sidelined ) inflicted huge financial loss to the national exchequer.
National Fertilizer Corporation which procures bags for imported urea, has also been reportedly complicit in corruption.
National Accountability Bureau (NAB) and Federal Investigation Agency (FIA) are investigating corruption in NFML and NFC.