ECC likely to approve urea import through TCP

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KARACHI – The Economic Coordination Committee (ECC) is likely to approve the import of over 0.225 million tonnes of urea through the Trading Corporation of Pakistan (TCP) to ensure prompt availability of urea in the market and averting the current urea crisis in the country.
According to source, the ECC was likely to allow the TCP to import the urea given that the private sector has evinced little interest in the matter, sources told Pakistan Today. The meeting of ECC which is scheduled to be held today would decide the import of urea through private sector or TCP to avoid the urea fertiliser crisis across the country and meet the demand in imported for the Rabbi season. The domestic market is beginning to face a deficit in urea supply causing the increase in the price of the vital commodity. The ECC, which was earlier in favor of importing fertiliser through the private sector is now likely to task the TCP with assignment with the State Bank of Pakistan (SBP) willing to import urea through the corporation because of the involvement of subsidies.
According to sources, keeping in view the increasing market price and prevailing supply situation and persistent gas supply cuts to the industry, the ECC might decide to import of around 0.225 million tons urea which is critical to maintain adequate buffer stocks for ‘market stability.
The ECC, sources said, in earlier meetings was also informed that ongoing load shedding would result in a shortage of 0.225 million tonnes of urea by the end of December 2010 and early January 2011, and would adversely impact on the market.
ECC had also constituted a committee with the task to ensure timely import, through Saudi Arabia Basic Industries Corporation (SABIC)/ Saudi Fund for development on deferred payment, but according to sources, the SABIC has refused to extend the facility to Pakistan. However, the government, sources claimed, was still trying to convince the Saudi authorities with regards to the facility. It is pertinent to mention that urea exports on deferred payment were pledged by Saudi Arabia during a donors’ conference in Tokyo.
Almost $200 million was pledged by Saudi Arabia during the Tokyo Donors Conference in April 2009 for export credit. Out of this amount, the import of fertiliser from Saudi Arabia worth $100 million was made during 2009-10 and the remaining $100 million were to be utilised for this purpose because of urea shortage in the country due to gas load shedding to the fertiliser industry. In addition, local fertiliser manufacturers have also refused to import the item.
Beside the shortage of urea in the domestic market, according to representatives of the fertiliser industry, the increase in the price of available urea was due to winter gas load shedding extending to 45 days, instead of 30 days, gas curtailment of 20 percent on Sui-based plants and 12 percent gas curtailment on Mari-based plants since May 2010.