The Economic Coordination Committee (ECC) is expected to make a decision in its meeting on Friday that will save farmers Rs 34.2 billion annually and keep food inflation in check in the country.
Officials said that in a meeting with the top government officials, Engro Corporation offered to reduce urea prices by Rs. 300 per bag if government fulfils its contractual obligations to Engro.
In 2012, Engro Fertilizer’s efficient and state of the art $1.1 billion dollar plant received only 9% of its gas allocation in a blatant violation of its water tight gas contract with SNGPL. As a company across all sectors it has received the least amount of gas in the year.
Since 2010, the government has supplied gas to other sectors and vested interest groups, many of whom do not even have gas supply agreements. Furthermore, they have provided gas to other sectors in complete violation of the government’s own Gas Allocation Policy. As a last resort in 2011, Engro went to the Sindh High Court who passed judgment that gas should be given to Engro per its contractual commitment and Article 158 of the constitution. The government did not act on the Sindh High Court order.
As a result farmers have had to bear the brunt of expensive urea which has caused food prices to escalate. In 2010 the price of urea was Rs 800 per bag which is now Rs 1,670 (inclusive of GST). Engro’s offer to reduce price by Rs 300 will bring down the price of a urea bag to 1370 (inclusive of GST).
During the meeting, Engro once again articulated that it is ready to start the Thar coal project and help solve the energy crisis in the country but it could not do so while the government is in breach of its gas contract.
