ISLAMABAD             -          Federal Minister for Planning, Development and Special Initiative Asad Umar said that the mechanism of the subsidy to Fertilizer industry needs to be more rationalized as it seems that direct subsidy to the farmers would be more cost-effective for the government and more beneficial to the farmers. In the Fertilizer Committee Meeting which was held here Monday, the government has asked the fertilizer industry to come up with proposal for keeping the Fertilizer prices stable and affordable.

The fertilizer committee including Federal Minister for Planning, Development and Special Initiative Asad Umar along with Minster for National Food Security & Research Makhdoom Khusro Bakhtiar, Adviser for Commerce, Textile, Industry & Production and Investment Abdul Razak Dawood and SAPM on Petroleum Nadeem Babar held a meeting with representatives of the fertilizer industry to discuss matters related to the fertilizer supplies and pricing.

 The meeting considered various ways and means to ensure sufficient supplies of the commodities while making the prices of the fertilizer affordable for the farmers. Official sources privy to the meeting told The Nation that the government has asked the Fertilizers Industry to reduce the commodity price, equivalence to the huge subsidy they are getting.

Asad Umar said that the government is providing huge subsidies to keep the fertilizers affordable, it seems that the mechanism of the subsidy needs more thinking. It seems that direct subsidy to the farmers would be more cost-effective for the government and more beneficial to the farmers. The minister said that the government would also consider removing the GIDC for the future to bring down the fertilizer prices.

Federal Minister Asad Umar said that the government believes in deregulation of various sectors of the economy. In this regard, he also solicited proposals from the representatives of the fertilizer industry for deregulation of the fertilizer sector. The meeting was focused over the prevalent Urea availability and pricing in the country with special focus over the recent gas price increase recommendation by OGRA and its impact of Urea cost of production.

The industry representatives updated the committee over the high urea inventory buildup and current, market pricing. They also mentioned that the aforementioned OGRA gas price increase will have direct impact on the  cost of production of urea and therefore translate into increased selling prices to the farmers. The Fertilizer industry is forecasting up to Rs600 per bag increase in Urea prices, in case the government increases the Gas prices as recommended by Ogra.

The Government firmed up its continuing stance that this gas price increase is necessary as the continuing subsidies being provided as relief in gas prices are not sustainable. The representatives of the fertilizer industry briefed the ministers on the capacity and potential of their units and the issues faced by them. They assured that they would deliberate and present their proposals to the government within two weeks.