Economic Coordination Committee (ECC) recently approved import of 50,000 tones of Urea and also empowered Advisor to PM for commerce and Industry to import additional quantity of 50,000 tones “if required”. On the other side Pakistan is in tight grip of fiscal, trade and other international pressures has been extending its begging bowl to friendly countries to contribute and is also in talks with IMF for loans to rescue our Rupee value and maintain dollar reserves, forex reserves held with State Bank of Pakistan (SBP) decreased by $98 million to $7.68 billion in a matter of just one week ending on November 2, 2018 and total liquid foreign reserves of the country stand at $14.07 billion.
All the statistics and indicators favor policy of indigenous reliance on finished goods and not on imports. With indigenous Urea manufacturing capacity of over (6 million tones) against overall Urea demand of (approx. 5.8 million tones). Pakistan should not have any need to import fertilizer but due to non-supply of agreed upon gas to some plants by Govt and instead importing fertilizer in such a grave economic condition is a travesty of higher order which will not resolve the issues faced by Pakistan. Such actions by Govt, further imply greater debt burden and rupee devaluation in coming months ahead. Govt should utilize these assets of production towards self-reliance and export to help reduce the input cost of fertilizer as imported urea is more costly in comparison to home grown production of urea. Govt should put an end to the vicious cycle of subsidies, debt, imports, price inflation, rupee devaluation and more subsidies debt on and on.
The urea price in international markets is almost double the local price, while imported urea will also involve huge amount of subsidy to sell it in the domestic environment. Therefore, best option is to manage gas for the fertilizer sector at higher priority and ensure its sustainability and affordability.
-Muhammad Sagheer
Quaid e-eazam University Islamabad
