Maintaining Urea Price: Subsidized gas supply to AGL, Fatima approved
Ibn-e-Ameer
The government is going to give another subsidy of Rs 17 billion to keep the price of urea at a low level in Pakistan. It has approved the supply of gas at discounted rates to two fertilizer plants-AGL and Fatima Fertilizer. The government will run these two fertilizer plants at LNG.However, gas utilities will provide LNG at lower rates that would require Rs 17 billion subsidies.
Ministry of Industries had proposed the economic coordination committee (ECC) to set gas prices at discounted rates for operations of SNGPL based plants i.e. Fatima Fertilizer (Sheikhupura plant) and Agritech.
This gas price will be applicable for the period October 2021 to January 2022 at PKR 839/MMBTU with a variable Contribution Margin of 186/bag to maintain urea price in Pakistan.
ECC approves gas supply at subsidized rates to AGL and Fatima
ECC had already approved this rate for past operations of fertilizer plants in an order to keep the affordable price of urea in Pakistan.
During the ensuing discussion, the Petroleum Division proposed a revision to cover the gas supply rate through the budgeted subsidy.
It aimed at avoiding the accumulation of arrears as well as enabling PSO and PLL to import LNG for supply to subject plants.
Industries ministry informed that it would require a subsidy of Rs 17.127 billion in the current financial year (CFY) at the proposed rate of Rs 839 per MMBTU.
The petroleum division said that ministry of industries and production should address the financial implication aspect relating to the subsidy.
The economic decision-making body observed that urea was a very important commodity and stressed ensuring its availability.
Moreover, the import of urea will be a more costly option.
The Economic Coordination Committee (ECC) of the Cabinet considered the summary submitted by the Ministry of Industries and Production regarding “Gas Rate for Operations of Fatima Fertilizer (Sheikhupura Plant) and Agritech” and approved the proposal.
It further directed the Ministry of Industries and Production to calculate the financial implication of keeping the price of urea at lower rates.
Farmers buy DAP at record price of Rs 10,000 per bag
Ministry will move a separate summary for the ECC seeking supplementary grant against the supply of subsidized RLNG for the operation of Fatima Fertilizer (Sheikhupura Plant) and Agritech.
The operations of these two fertilizer plants will enable the provision of urea to the farmers at lower prices in Pakistan.
This is the cost of hoarding and blackmailing by fertilizer mafia that country was going to face a cost of Rs 17 billion on account of subsidy.
The fertilizer exploiters had made billions by hoarding urea and DAP. They had also overcharged prices from the farmers.
