Islamabad: In a recent high level meeting held between the government and the fertilizer industry whereby the industry expressed its optimism that government will fulfill its commitment by releasing the full subsidy payment to the industry before leaving office.
This will provide long overdue support to the industry to become self sufficient and not be put in the difficult position of increasing urea prices.
Finance Minister Dr Miftah Ismaeel directed the Secretary Finance (present in the meeting) to release the latest requisition of Rs. 4.74 Billion in full.
This will avert the embarrassing position of hiking urea prices, which the government seems to be least concerned about. The Minister Food Security Mr Sikandar Khan Bosan had facilitated the meeting with the Finance Minister.
The Finance Minister also expressed his concern on delayed processing of 2017/18 claims already submitted to MNFS&R. Presently, over Rs. 11 Billion are still overdue from 2016/17 Subsidy Scheme and a similar amount is due for the current financial year.
It would be recalled that subsidy was reduced from PKR 156 to 100 in 2017/18 and it alone necessitated the industry to absorb PKR 6.72 billion, not mentioning the cost of financing required due to delayed subsidy payments and earlier contribution of approximately Rs. 6 billion during FY 2016/17 for a total of approximately 12 billion, including similar amounts for the current financial year.
Presently, the input taxes vary from 5 to 17 percent; hence, over Rs. 14 billion are already awaiting adjustment/refund.
Over the years, this essential industry has been suffering due to some unfavorable policies. Thus, the government should strategically extend more support for the fertilizer sector, enabling it to play a more authoritative role in national food-security. The government should expedite the cash-flow challenges caused by large amounts mired in overdue refunds and sluggish re-imbursement of subsidy to the fertilizer companies.
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