Giving the background of this proposal, the sources said, an inter-ministerial Fertilizer Review Committee (FRC) has been constituted in the Ministry of Industries and Production which periodically meets to review the supply-demand situation of fertilizer in the country. MoI&P revealed that a meeting of the FRC was held on October 19, 2016 to review fertilizer demand and supply situation for Rabi season 2016-17(from October 17 to March 17). The meeting was chaired by the Secretary Industries and attended by the representatives of Ministry of Finance, Commerce, Petroleum, National Food Security and Research, Planning, National Fertilizer Development Centre (NFDC), Fertilizer Manufacturers Advisory Council of Pakistan and domestic fertilizer sector.
FRC, sources said, was informed in the meeting that there was 1.839 million tons stock of urea available with the fertilizer companies including 0.273 million tons imported urea available with National Fertilizer Marketing Limited (NFML). On the basis of gas supply position reported by the Ministry of Petroleum, the estimated production up to March 2017 would be around 2.585 million tons which makes the estimated production up to March 2017 of around 2.585 million tons giving total availability of urea at around 4.324 million tons (1.739 million tons stock plus 2.585 million tons production).
The expected offtake for the Rabi season, as estimated by the FRC, after factoring in 11 per cent excess demand owning to reduction in urea prices, would be around 3.3 million tons. The total surplus urea fertilizer would be around 1.0 million tons ie 4.325 million tons available minus 3.3 million tons offtake, after maintaining a strategic reserve of 0.2 million tons, around 0.8 million tons surplus would be available for export up to June 30, 2017, the sources continued.
For period beyond Rabi (ie April-June 2017), as per the findings of the FRC, the production of urea would be around 1.5 million tons whereas the offtake, on the basis of last three years' consumption pattern in the corresponding period, would be around 1.1 million tons, the sources maintained.
In view of the position regarding inventory, expected production, future offtake and strategic reserves in the country, the FRC unanimously concluded that: (i) in ongoing Rabi season 2016-17 availability of urea would be comfortable; and (ii) expected surplus urea fertilizer ie 0.8 million tons be recommended to the ECC for export up to June 30, 2017.
According to sources, Ministry of Commerce approached the MOI&P noting the likely upward pressure of urea exports on domestic prices and advisability of generating a future surplus by utilising subsidised gas while the export-oriented industries are facing gas shortages and running on expensive RLNG.
The Ministry of Production, however, has reiterated that 0.8 million tons urea fertilizer is likely to be surplus till June 30, 2017. However, the urea fertilizer manufacturers unanimously stated that they would be able to meet domestic demand even if the permission is granted for the export of 0.5 million tons urea.
On the matter of upward pressure on prices, the sources said, the MoI&P has stated that it is "not the domain of Industries Ministry".
Under serial number 13 of the schedule-1 of Export Policy Order, 2016, export of urea is not allowed; however, it may be exported subject to the approval of the ECC on case to case basis.
The Commerce Ministry , sources said, has proposed export of 0.3 million tons of urea , after considering the likely impact on domestic prices and gas supply situation, subject to the following conditions: (i) the contract of export of urea will be registered with Trade Development Authority of Pakistan (TDAP) on first come first serve basis; (ii) export would be effected within 45 days of registration of contract but not later than March 31, 2017; (iii) FRC will meet immediately after March 31, 2017 to review exported quantities and if the exported surplus materialises then additional quantity for export may be recommended; and (iv) FRC would monitor the domestic prices of urea on monthly basis and in case of more than 5 per cent upward variation in retail price as per week sensitive price index the committee would recommend to the ECC the discontinuation of exports.
Copyright Business Recorder, 2017