ISLAMABAD: Pakistan has planned to import 200,000 tonnes of urea to mitigate the impact of any possible shortage during peak Kharif demand amid the anticipated global supply disruptions due to the Ukraine crisis.

The fertiliser manufacturers, however, want the government to take effective steps to control the smuggling of urea.

The decision was taken at the fertiliser review meeting chaired by Federal Minister for Industries and Production Makhdum Khusro Bakhtyar on Tuesday. Food Security and Research Minister Syed Fakhar Imam joined the meeting through a video link.

The meeting discussed the domestic production and urea demand for the kharif season.

Manufacturers seek an end to smuggling

Mr Bakhtyar said the government had stepped up efforts to ensure a smooth, adequate and timely supply of key soil nutrients to farmers in the kharif season.

For mitigating the impact of urea shortage in May and June when sowing starts for kharif crops after the wheat harvest, the meeting decided that the Ministry of Industries and Production will forward a summary for the import of 200,000 tonnes of urea in the next meeting of the Economic Coordination Committee (ECC) of the Cabinet.

The meeting also directed the manufacturers to maintain an inventory for 200,000 tonnes of urea in the ongoing month. The cost of inventory loss of manufacturing companies will be adjusted in the government’s controlled price of urea, which is likely to be Rs2-3 per 20kg bag.

However, representatives of the fertiliser companies informed the meeting that maintaining the 200,000-tonne inventory was difficult for the manufacturers due to high demand from dealers.

Currently, fertiliser plants in Pakistan are operating at their maximum capacity and producing around 600,000 tonnes of urea per month.

“But the dealers were lifting all bags and there was negligible stock at plants,” one of the manufacturers told the meeting.

The committee was informed by the manufacturers that administrative measures have to be taken to prevent market manipulations and smuggling of urea as it is selling at Rs1,768 per bag, around 75 per cent cheaper than international rates.

The minister for industries also directed all provincial agriculture departments to prepare a district-wise supplies plan as per agronomic demands for the kharif crops.

While, the local production was up to 6.5 million tonnes, and the average annual urea consumption was around 6.1 million tonnes equally divided between rabi and kharif seasons.

However, the industry maintains that the shortage of urea in the country during the rabi season was due to a huge price differential between international and local rates which encouraged smuggling to Afghanistan, and possibly further to some other states of Central Asia.

He also directed his ministry to submit a summary of the gas supply situation from April to June to urea plants in the northern part of the country in the next ECC meeting.

Published in Dawn, March 9th, 2022