Chairman National Assembly Standing Committee on Industries and Production, Asad Umar, has urged Prime Minister Nawaz Sharif to provide relief to farmers through import and sale of urea through National Fertiliser Marketing Limited (NFML), a subsidiary of Ministry of Industries and Production. Well-informed sources in Ministry of Industries and Production told Business Recorder that Chairman Standing Committee made this demand in a letter to the Prime Minister, a copy of which has also been sent to the Industries Minister.
NFML has severe governance issues with imported urea of Rs 1.96 billion having been stolen or missed due to connivance of NFML staff mostly hired during the tenure of the previous government and carriage contractors. Presently, two former senior officials dealing with imported urea have been arrested by the National Accountability Bureau (NAB). According to sources, Asad Umar, in his letter referred to a meeting of the National Assembly Standing Committee on Industries and Production, wherein the issue of urea came under discussion. The meeting was attended by the representatives of NFML.
He quoted the officials of NFML as saying that urea fertiliser can be imported and sold in mid-country, inclusive of freight cost at Rs 1490 per bag of 50 kg. When a question was asked from the representatives of NFML about urea sale price, they informed the committee that the current price in the market was more than Rs 1700 per bag.
"If NFML imports and sells urea at the lower price currently prevailing in the international market, it will substantially reduce the price of all urea being sold in the country. The total volume of imported urea required to effect this change will not be large. Even a few imported consignments will ensure a change in price by all the sellers in Pakistan due to competitive market forces," he added.
The total annual consumption of urea fertilizer in Pakistan is approximately six million tons. A price reduction of Rs 250 per bag will put approximately Rs 30 billion in the farmers'' pockets without any cost to the government or offering any subsidy. Farmers are going through a very difficult period. They have suffered heavily due to low crop prices, impact of weather and also high cost of farm inputs such as urea fertilizer.
Local urea producers'' margins will drop by Rs 250 per bag but their margins will still remain very healthy. Their annual profit after tax is still substantial, even after the price drop. Documents attached by Asad Umar with the letter indicate that the annual profit of local urea manufacturers has increased by 53 per cent in 2015 as compared to 2014.
These documents also indicate that the profit of Engro fertilizer increased by 87 per cent to Rs 15.02 billion in 2015 from Rs 8.02 billion in 2014. Likewise, the profit of Fatima Fertiliser has increased by 147 per cent to Rs 22.84 billion in 2015 from Rs 9.25 billion in 2014. However, the profit of Fauji Fertiliser declined from Rs 18.17 billion in 2014 to Rs 16.76 billion in 2015. "If the government wants, it can provide relief to the urea manufacturers directly but making the farmers pay this additional amount is unjust," the letter argues.