Pakistan. Fertilizer companies: ECC allows conditional export of CAN

02.09.2016

Economic Co-ordination Committee (ECC) of the Cabinet has allowed export of Calcium Ammonium Nitrate (CAN) to fertilizer companies on the condition that they do not increase price domestically and provide an end user certificate that the product would be utilised only for agriculture purposes. Official documents available with Business Recorder revealed that the Ministry of Commerce informed the ECC on August 29, 2016 that exportable surplus of CAN and Calcium Nitrate (CN) was available with M/s Pak Arab Fertilizer which has sought permission for export of the said fertilizer.

It was stated that export of fertilizer was banned under serial number 13 and 14, schedule-I of the Export Policy Order 2016. The Fertilizer Review Committee (FRC), constituted a technical committee to look into the request for export of CAN. The technical committee in its meeting held on April 26, 2016, taking into consideration the production, off take and inventory position, observed that sufficient quantity of CAN was available in the country beyond domestic requirement.

The committee recommended that the government may consider the request for export of CAN subject to: (i) maintenance of a buffer stock of 0.1 million tons to ensure price stability; (ii) adjustment of lower GST, zero GIDC and subsidised gas, if any;(iii) assurance from manufacturer not to increase domestic price of CAN; (iv) an end-user certificate for use of CAN for agricultural purposes; (v) no grant of subsidy for export in any shape; and (vi) exports to be effected in 2016-17 and review of situation in July 2017.

Ministry of Commerce proposed that in order to monitor the exports of CAN effectively, a committee comprising Secretaries of Commerce, Industries & Production and Food Security & Research and Chairman FBR may be constituted to review the demand-supply situation every month and to recommend to ECC the stoppage of further exports as and when pressure on supplies or escalation in prices was observed.

MoC also proposed that export of CAN, except to Afghanistan, may be allowed with the following implementation mechanism: (i) Manufacturers-cum-exporters will provide a certificate issued by their bank to the effect that a stock of 0.1 million MT is available at the time of loading of export consignment;(ii) FBR shall determine the impact of lower GST, zero GIDC on RLNG and subsidised gas, if any, to the Manufacturers-cum-Exporters and make adjustments accordingly; (iii) Manufacturers-cum-Exporters shall submit an undertaking to the effect that the national average price of CAN as tabulated in Sensitive Price Index shall not increase from the price level on the day of ECC''s decision; (iv) an end-user certificate will be provided by the importer that the CAN will be utilised for agricultural purposes only; and (v) data of each consignment will be shared by the Exporters-cum Manufacturers with the National Authority on Chemical Weapons Convention, Ministry of Foreign Affairs.

During ensuing discussion, it was stated that Pak Fertilizer Limited and Fatima Fertilizer Company Limited were manufacturing Calcium Ammonium Nitrate (CAN) in the country. Their aggregate production capacity of CAN was 870,000 ton annually. It was pointed out that at present stock of the CAN was 327,000 metric tons, out of which only 127,000 metric tons would be utilised in the country and 200,000 metric tons CAN would be surplus.

The meeting observed that as sufficient quantity of CAN was available in the country therefore, its export should be allowed subject to the condition that manufacturers would not increase domestic price and would provide an end-user certificate that CAN would be utilised only for agriculture purposes. After detailed discussion the ECC allowed export of 100,000 MT Calcium Ammonium Nitrate (CAN).


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