Finance Minister Ishaq Dar has reportedly refused to consider a proposal for reduction in price of imported urea to sell out the surplus stock and stated that price reduction is not a solution to the issue. Sources said that a meeting of Economic Co-ordination Committee (ECC) of the Cabinet chaired by the finance minister considered a proposal for reduction in price of imported urea available with the National Fertilizer Marketing Company Limited (NFML) to Rs 1,000 per 50-kg bag.
The meeting observed that the price of the commodity for 50-kg bag was earlier reduced from Rs 1,310 to Rs 1,200 but there was no increase in its sale.
They said that officials of Trading Corporation of Pakistan (TCP) commented if the proposal is considered and price is reduced to Rs 1,000, difference between TCP's procurement price and selling price would have a financial implication of Rs 24,050 per metric ton by adding the mark-up till December 2016. The current price of urea is Rs 1,200 per 50-kg bag.
There is a surplus stock of 1.6 million metric tons with industry in Rabi 2016-17 and NFML has taken a number of measures to increase the sale of the commodity, which included publicity through mass media regarding availability of imported urea at reduced price of Rs 1310 per 50-kg bag through NFML countrywide network as well as offering dealer's price to the provincial agriculture departments and so on and so forth. However, the NFML was unable to offload the surplus stock despite reduction in price and other measures.
The disposal of imported urea at the current price of Rs 1,200 per 50-kg bag is very difficult and the ECC was requested for further reduction in price to counter the aggressive marketing strategies of private producers.
The meeting was informed that by the end of December 2016, the industry would have sold an estimated 2.2 million metric tons of urea against estimated off take of 3.3 million metric tons for Rabi 2016-17.
Therefore in the remaining three months January-March 2017, the NFML would be required to dispose off around 263,000 metric tons against the estimated balance demand of 1.1 million metric tons. As a result, the NFML task was three times more difficult as compared to the time when the Rabi started and any reduction in price should take this fact into account as well. As the current Rabi season is ending fast, the ECC was requested to reduce the price of imported urea stock of NFML to Rs 1,000 per 50-kg bag.