LAHORE - The finance ministry, in a bid to minimise the subsidy, has shifted the load of Rs14 billion to growers by raising bag rate from Rs1300 to Rs1600, as more than 10 million bags of urea have to be sold to farmers in current Rabi season.

The government has increased the rate of imported urea by Rs 300 per bag and now the 50kg imported urea bag is available to the farmers at the price of Rs1,600 instead of Rs1,300 previously.

According to the sources, the government took the decision a couple of days back while the sale of the imported urea was halted for the last one month.

They said that in a meeting to review the urea availability and pricing mechanism, representatives of finance ministry on the influence of private fertilizers companies, urged the ECC that price difference of imported urea and locally produced urea should be reduced up to Rs50 per bag as the price difference was around Rs495 per bag.  The finance ministry wanted only difference of Rs50 between local and imported urea but due to the strong opposition of industries ministry the cabinet had to okay the raise of Rs300, now showing a gap of Rs200 per bag.

Sources said that sale is still stopped as no notification has yet been issued while industries ministry wants some relaxation for farmers even after the raised approved by the ECC. According to market sources, the NFML was selling urea at 27 percent discount to the domestically produced urea. Trading Corporation of Pakistan (TCP) has been importing urea to ensure that growers get the input in time at reasonable prices.

Difference between domestically produced urea and imported urea has now been reduced to approximately Rs200 per bag (11 per cent) compared to Rs490 per bag (27 per cent) during January and early February and Rs280 per bag (18 per cent) in December 2011.

This slash will reduce pressure on the sale of domestically produced urea in the country, and will be shifted to the farmers. According to them, TCP had incurred a subsidy of Rs 26 billion during July-February compared to the budget allocation of Rs12 billion for financial year 2012.

Sources said that the ban on sale of imported urea by the National Fertilizer Marketing Limited is continuing, depriving the Rabi crops growers of this vital input at the time when it is need the most. Resultantly, the extreme shortage and price-hike of the urea have created much hue and cry among the farming community in the country.

Sources revealed that this decision has resulted into a criminal delay in delivery of 250,000 tons of urea, as the supply of fertilizer has been pending to the dealers as well as the growers from the last over one month.

As per sources, it was ordered to the NFML that urea, which already stands booked at Rs1300 per 50 kg bag, will be released only after payment of the differential amount of Rs300 per bag between old and new prices. They said that the NFML was asked that all deliveries should be halted till the issuance of the notification.

Several representatives of farmer bodies have asked the ECC to withdraw raise in imported urea rates to facilitate the growers. They appreciated the role of Minister of Industries and Defence Production Chaudhry Pervaiz Elahi for resisting the decision of price hike in imported urea.

Sources said that Senior Minister Chaudhry Pervaiz Elahi wants the government to continue giving subsidy on fertilizer to the growers while Advisor to PM on Finance Dr Hafeez Sheikh and his financial team are constantly forcing the government to stop giving the subsidy. The sources further informed that the NFML has been directed to halt the sale from last 30 days.