Urea? Seriously?


The fertilizer manufacturers in Pakistan have urged the government to take advantage of their offer to buy locally manufactured urea instead of buying the same from international market by spending huge foreign exchange. Government should immediately stop importing urea in the country, which is already available for the current season and rather spend the foreign exchange for importing furnace oil for the power sector to overcome the energy crisis in the country.
There is a huge financial crunch in the ministry of Finance and it is extremely difficult to comprehend why the Government is willing to spend money on importing urea when the fertilizer sector has already offered the same at nearly (half) the price – saving Government precious foreign exchange.
A fertilizer sector sources maintained that in light of a huge power crisis with a gap of nearly 7000MW, the Ministry of Finance needs to ensure that the country’s precious foreign exchange should be spent on furnace oil to run the power sector which is cheaper than imported urea which is more expensive and is easily available in the domestic market.
Fertilizer officials say that we want to help the government in this time of difficult economic conditions in the country by solving the power crisis in the most economically beneficial and cost effective manner.
If government postpones the decision of importing urea, which is already available in the country, it can spend the same foreign exchange for importing furnace oil for the power sector and bridge the demand and supply gap.
TCP has already awarded a tender for importing 1 lakh tons of urea from the international market at a price of US$ 522.86 and it is planning to import 2 lakh tons of more urea in the country. Official informed that fertiliser sector had offered the government to buy 300,000 tons of urea at Rs 33,000 per ton inclusive of GST against government’s plan to import 300,000 tons of urea at Rs 48,103 per ton but it seems that instead of importing furnace oil to curb the severe energy crisis in the country, government is interested in importing urea by spending heavy foreign exchange which can be used to import furnace oil for the power sector. The import of 300,000 tons of urea will cost 14.4 billion (at $522.86 rate) of foreign exchange and the Government will have to provide a subsidy of approximately Rs 5 billion for the import of 3 lakh tons of urea. On an energy basis, it is wiser for the Ministry of Finance to import furnace oil for the power sector which is cheaper than import urea.
Industry sources revealed that the fertiliser industry had sent a letter to the Ministry of Finance and requested it to buy the proposed 300,000 tons of urea from the domestic market at a reasonably lower price. Referring to ECC’s decision to import 300,000 tons of urea in the country, the industry sources says that the fertiliser industry had urged the government to avoid importing urea at such exuberant price and instead buy the same from domestic urea manufacturers at a very nominal price.
Industry sources said that Fertiliser industry was given some hope at highest level that the government might defer the decision of importing urea if domestic fertiliser industry offered the same at a reasonable price but all in vain.
The letter also said that the fertiliser industry had a urea stock readily available and if government agreed to their cost-saving proposal, it could immediately deliver the required urea at government’s nominated warehouses against 100% advance payment. After receiving the offer from fertiliser sector, the Finance Ministry informed that it was seriously weighing its options, as this offer seems lucrative in terms of saving foreign exchange as well as to avoid giving the subsidy on imported urea.
Fertiliser industry was hoping to receive a positive feedback from the government on this lucrative business offer by the domestic industry, source said. Already two fertiliser plants on SNGPL network, Pakarab and Agritech have started production from May 12, 2012 which would improve the availability of urea in the market. “The government should rather make a win-win situation for the industry and farmers both, an opportunity to save billions of rupees in a single import transaction the official said.