Friday, 03 September 2010
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Government to pay Rs6.25bn subsidy on urea import
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Shabbir Kazmi
KARACHI: Last year around this time farmers were facing a double threat of rising urea prices in the international markets and government's failure in containing the black marketing and smuggling of the commodity. Despite the government paid subsidy worth billions of rupees, farmers had to bear the brunt.
This year the situation seems reasonably under control due to Trading Corporation of Pakistan (TCP) opening L/Cs just in time, while prices are also touching halfway mark as against the rate in 2008. According to sources privy to the TCP, ample stock of urea is available in the country but in an attempt to avoid any untoward incidence lately 300,000 tonnes of urea have been imported and tenders have been approved for the import of another 250,000 tonne. The price approved ranges from $280-294 per tonne CIF Gwadar.
This will translate into Rs1,250 per bag of urea against retail price of about Rs720 per bag of locally produced urea. However, there are couple of concerns that import of about half a million tonnes of urea would deplete foreign exchange reserves by approximately $150 million and also cost Rs6.25 billion in terms of subsidy.
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