After Prime Minister Shehbaz Sharif took notice of the ECC’s decision to import “expensive” urea, the federal cabinet has rejected its Economic Coordination Committee’s import proposal saving Rs16 billion to the national exchequer, reported 24NewsHD TV channel.
After the prime minister’s timely interference, the cabinet overturned the ECC’s decision to import 100,000 metric tons urea, which could have cost about Rs10 billion, sources said, adding then the government would have to grant Rs5.86 billion subsidy on the imported urea.
The sources further said that the 50kg urea sack would have cost Rs2,932 more than the local price.
The ECC had given thumbs-up to the lowest bid of UAE’s West Trade International FZE company which was $358.99 per metric ton, the sources said and added the 50kg sack of the imported urea would have been available for Rs7,332.
The sources further said that the landed cost of the imported urea was estimated at Rs5,832 per 50kg bag with Rs1,500 expenditures of NFML yet to be added.
The sources informed that 50kg urea bag was available for Rs4,400 in the local market.
The Trading Corporation of Pakistan (TCP) had issued the tender for import of 150,000 matric tons of urea which was opened on 29 July, 2024, the sources said and added the TCP received six bids. The lowest bid was approved by the ECC.
The sources said there would a shortage of 351,000 metric tons of urea if the gas supply is suspended to the industry.
The ECC on August 1 had approved the proposal to import 100,000 MT urea aimed at ensuring its sufficient supply in the market as well as stability of prices of fertiliser during the cropping season.
The Federal Minister for Finance and Revenue, Muhammad Aurangzeb, chaired the ECC meeting. While briefing the body, the Ministry of Industries informed that ECC of the Cabinet vide its decision dated 7th May, 2024 had allowed Trading Corporation of Pakistan (TCP) to import 200,000 MT urea on open tender and G2G basis. This decision was ratified by the Cabinet vide its decision dated 14th May, 2024 and Case No 170/20/2024 dated 11th June 2024.
The TCP issued tender of 150,000 MT which was opened on 29-07-2024 with the lowest bid of M/s West Trade International @ USD 358.99/MT G2G of TCP with Malaysia and Azerbaijan, but the offered rate from them is higher from the tender rate. The negotiations with Turkmenistan to procure urea on G2G basis and efforts regarding getting approval form NDRC, China are still under process.
Estimated cost of import of urea for 157,500 would be PKR 18,372,662,565 (PKR 18.489 billion) as per TCP.
Fertilizer Review Committee (FRC) was convened on 01-08-2024 in which data for Kharif 2024 and Rabi 2024-25 was presented by National Fertilizer Development Center. The data showed no shortage during Kharif and Rabi season, provided RLNG-based plants would remain operational during upcoming Rabi season. If the supply of gas to RLNG-based plants is suspended during Rabi season 2024-25, there would be a shortage of 351,000 MT.
Hence it was decided that in view of the absence of decision for provision of gas to RLNG-based plants during Rabi 2024-25, it is imperative to import 100,000 MT of urea for market/price stabilisation.
Reporter Waqas Azeem