Faced with urea shortage of 1.2 million tons for the current rabi crop that requires immediate decision as it might otherwise jeopardise the sowing of country’s main staple food, wheat, the Economic Coordination Committee of the Cabinet (ECC) on Thursday failed to decide the issue as the ministry of commerce and industries engaged in a serious row over mandate for urea import after the devolution of the ministry of food and agriculture.
Two scenarios
An informed source said the ministry of industries has moved a summary for urea imports under two scenarios, one suggested import of 700,000 tons while the other recommended import of 1.2 million tons. However, the ministry of commerce opposed the summary, claiming urea imports fell under its domain after the devolution and industries ministry had no mandate to move the summary. The committee, which met under the chairmanship of the finance minister, could not decide the issue as minister for industries, Chaudhry Pervez Elahi, minister for commerce, Makhdoom Amin Fahim, and secretary commerce, Zafar Mehmood, did not attend the meeting. The meeting decided to set up a two-member committee under ministers for petroleum and production to hold talks with the senior minister for industries to resolve the issue. Pakistan is targeting harvest of 25 million tons of wheat during the current fiscal year. Urea off-take is expected to be more than three million tones during the rabi season. Fertiliser companies have low inventory as they face unprecedented gas shortage during the year. The country has annual urea demand of 6.5 million tons, which could be easily fulfilled by the local fertiliser industry having capacity to produce 6.7 million tones per annum, provided they get feedstock gas supplies. The imported urea will cost Rs3000 per bag, while locally produced urea’s price is Rs2000 per bag. The government will have to give a subsidy on Rs1000 per bag.
Sugar surprise
Another surprise for ECC was seeking of permission to import 700,000 tons of sugar by the ministry of industries, which was earlier projecting a shortage of 400,000 tons for the next calendar year. The committee questioned the moved and decided that only 100,000 tons of sugar would be imported after a month if there was need to bridge the demand and supply gap. The sugarcane crushing season is expected start from middle of November, while existing sugar stocks are expected to last till December end. The private sector is free to import sugar without duties and taxes to meet the country’s requirements, which is estimated at 300,000 per month. While rejecting the summary of the ministry of commerce seeking a ban on the export of livestock, ECC directed it to consult provincial governments of Balochistan and Khyber Pakhtunkhwa before resubmitting the summary. As the main income of the two provinces was cattle breeding, a ban without their consent would affect the major source of income for the people. The meeting directed the ministry to give complete details about the impact of smuggling and steps required for controlling the menace. It also directed that summaries should not be based upon requests of only a single sector, and should present the complete picture prepared in consultation with all stake holders.
Subsidised lending
The ECC allowed removal of the cap on subsidised lending markup rate of nine per cent offered by the Zarai Taraqiati Bank Limited (ZTBL) by gradually increasing the markup rate to current level within three year period. The bank had incurred losses of Rs22.5 billion due to the policy, and ministry of finance has to bear the burden of policy announced in the budget of 2004-05. It also approved the grant of further two years’ extension to ENI Pakistan Limited to retain area “B” of Badhra Development and Production Lease. A press release issued by ministry of finance said the secretary finance, Dr Waqar Masood, briefed the committee about the fertiliser situation and said there is a balance of 122,000 tons of fertiliser available for the rabi crop. He said the stock of the wheat as on October 10 was 8.6 million tons, showing sufficient quantity of local wheat to be released by provincial food departments and PASSCO to flour mills. The meeting was informed that 27 meetings of ECC were held during the 15 month tenure of former finance minister, Shaukat Tarin, in which 242 decisions were made, out of which 237 were implemented, while five remain under implementation. A total 25 ECC meetings were held during the 18 months under the tenure of incumbent finance minister, Dr Abdul Hafeez Shaikh, in which 253 decisions were made, out of which 231 decisions were implemented and 22 decisions are under implementation.
