Govt mulling over deregulating fertilizer sector

ISLAMABAD: The federal government is considering the deregulation of the fertilizer sector, which may lead to a jump in prices of local fertilizer.

Insiders said that this matter was deliberated upon in a recent high-profile meeting, presided over by the caretaker prime minister. During the meeting, the Ministry of Industries and Production was instructed to formulate the necessary modalities for this prospective policy shift.

The deregulation could potentially pave the way for manufacturers to import fertilizers to bridge the demand-supply gap. Should this transpire, it is anticipated that local fertilizer prices could witness an extraordinary surge.

Farmers are currently grappling with acquiring Urea and other fertilizers through unofficial channels due to the failure of district administrations in ensuring the availability of fertilizers at government-specified rates.

Reports indicate that farmers are compelled to purchase Urea in the black market at prices ranging from Rs4,500 to Rs5,000 per bag, significantly higher than the government-notified rate of approximately Rs3,500.

Similarly, DAP is reportedly available at prices between Rs12,000 to Rs13,000, in contrast to the official rate of Rs11,000. Nitrophos is priced at Rs7,500, and potash at Rs9,000, both surpassing the official rate of Rs11000.

According to sources, the country’s fertilizer production stands at 6.5 million tons, slightly below the consumption figure of 6.7 million tons. In a bid to meet the demand, the government imported 0.2 million tonnes of Urea from different countries over the past six months.

Notably, the federal government, previously offering a subsidy of Rs1,000 to farmers in coupon form, has discontinued this support. Additionally, farmers are now burdened with a charge of Rs37 per unit, including taxes on tube wells.

Documents reveal that the Fauji Fertilizer Company has preemptively announced revised fertilizer prices effective from January 4, ahead of the government’s official plan. The new prices include Urea Pearl at Rs 3598, Gold Urea Granular at Rs 3981, Gold DAP at Rs 12,793, FFCD AP at Rs 12,743, Gold Rust at Rs 2250, Gold Boron at Rs 2365, Gold Urea Pearl at Rs 3846, and FFC SOP at Rs 12,551.

Brigadier Sher Shah Malik, the Executive Director of the Fertilizer Manufacturers Advisory Council, voiced concerns over the industry’s challenges. He cited a 60% increase in fares post-implementation of the axle load control regime, coupled with logistical difficulties. Malik criticized provincial governments for their failure to ensure fertilizer availability at government-specified rates, despite companies updating fertilizer statistics daily.

According to Brigadier Sher Shah Malik, Pakistan’s fertilizer consumption stands at 900,000 tons, representing 10% of global consumption. The impending rise in gas prices is expected to further escalate fertilizer costs, posing a significant challenge for small-scale farmers unable to afford expensive fertilizers.