Pakistan. No subsidy: export of urea fertiliser may be allowed

07.11.2016

The government is likely to allow export of 0.8 million tons of urea fertilizer by June 30, 2017 sans subsidy on the proposal of domestic fertilizer industry which claims a surplus due to sufficient supply of gas by the incumbent government, sources close to Secretary Industries and Production (MoI&P) told Business Recorder.

The surplus quantity of urea was firmed up at a recent meeting of Fertiliser Review Committee (FRC) presided over by the Secretary MoI&P, Khizer Hayat Gondal. Commerce Ministry would submit a summary to the Economic Co-ordination Committee (ECC) of the Cabinet in its forthcoming meeting.

According to Secretary Industries, fertiliser industry has approached the Finance Division for export of surplus urea. Accordingly, Finance Division has advised the MoI&P to work out demand - supply situation of urea fertiliser in the country during the Rabi 2016-17 and surplus quantity of urea fertiliser in the country, if any, may be recommended to ECC for export.

Secretary Industries inquired about the inventory position and expected production of each company to calculate the total availability and expected offtake of urea fertiliser in the country to workout estimated surplus. Fertiliser companies intimated following details of estimated production and the current stock available with them during the current Rabi season 2016-2017 (October 6-Mar.17) plus reserves of 273,000 tons of imported Urea available with NFML: (i) FFC including FFBL- opening stock would be 0.540 million tons- estimated production 1.1 million tons- total stock 1.640 million tons;(ii) Engro- opening stock 0.480 million tons- estimated production 0.870 million tons-total 1.350 million tons;(iii) Agritech-0.046 million tons- estimated production 0.090-total stock 0.136 million tons;(iv) Fatima including Pak Arab and Dawood Hercules- 0.400 million tons- estimated production 0.525 million tons- total stock 0.925 million tons and (v) NFML- 0.275 million tons. The total opening stock was 1.739 million tons whereas estimated production would be 2.585 million tons totalling to 4.324 million tons.

The committee worked out expected offtake in the country keeping in view the following estimated demand of provinces: (i) Punjab- 2.25 million tons;(ii) Sindh- 0.78 million tons;(iii) KPK- 0.21 million tons and ;(iv) Balochistan 0.06 million tons, totalling it to 3.30 million tons.

The representative of Ministry of Petroleum & Natural Resources (MoP&NR) noted the expected gas supply to the fertiliser sector. In accordance with the gas supply situation for Rabi 2016-17 all the representatives of the private producers provided their current stock and expected production up to March 2017. It was calculated that the total availability of urea fertiliser during entire Rabi season 2016-17 will be around 4.3 million tons against an expected offtake of 3.3 million tons. The expected offtake was calculated factoring in 11% excess demand due to reduction in urea price. The expected availability as well as offtake was endorsed by National Fertiliser Development Centre (NFDC).

The expected surplus urea fertiliser was worked out to be 0.8 million tons up to June 30, 2017, after calculating the increased offtake due to decrease in prices of urea in the country and maintaining a strategic reserve of 0.2 million tons.

It was also discussed that the production of urea would be around 1.5 million tons during April-June 2017. The offtake would be 1.1 million tons during this period, keeping in view the consumption pattern in corresponding period of last three years.

The representatives of Finance Division expressed the opinion that export of urea fertiliser may be granted without any kind of subsidy.

The committee after detailed deliberation on inventory, expected production, future offtake and strategic reserves in the country evolved a consensus on the estimated surplus urea in ongoing Rabi season 2016-17 and recommended that surplus urea fertiliser i.e. 0.8 million tons be recommended to the ECC of the cabinet for export upto June 30, 2017.

When contacted a representative of fertiliser industry told this scribe that the local industry had not yet worked out modalities for export of surplus urea.

"We are still evaluating if there will be any international buyer on the existing price in Pakistan and what will be the cost to transport urea to the port etc," he said.

Pakistan''s local industry has been established neither on export-oriented approach nor near the ports and now the government has to weigh how this can be made possible.

"We can export urea to Afghanistan and India in bags but not to other countries. The government has to work with local fertiliser industry closely to make the export proposal feasible" he continued.


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