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Urea to import as domestic output falls

The availability of urea has worsened, with imports becoming costlier and frequent theft of the imported commodity while in transit.

Currently, urea prices in the international market are fluctuating and the prices have shot up to $350 per tonne from$290 in August. Like Pakistan, India and Bangladesh are also facing severe shortages of urea and have plans to import the commodity in bulk to meet their domestic needs. India intends to buy about two million tonnes of urea.

In October, the Economic Co-ordination Committee (ECC) of the cabinet decided to import 500,000 tonnes of urea to meet any shortage during Rabi season (October to March). As a corollary, the Trading Corporation of Pakistan (TCP) has floated five tenders and the first one for 100,000 tonnes was opened on November 8. The foreign suppliers, few in number, were seen reluctant to bid in view of a volatile world market. The prices they quoted were some $40-45 per tonne higher than the previous tender floated in August. However, the lowest bid quoted at $344.73 was accepted by the TCP

The import of urea, though causing a strain on the country’s fragile foreign currency reserves, is the only option before the government since it is unable to provide natural gas to the fertiliser industry as much as it needs. Yet, a spokesman of Fertiliser Manufacturers Pakistan Advisory Council (FMPAC) in a statement on December 20 argued that import is not a permanent solution of the existing predicament and that the government can save precious foreign exchange if it provides gas to local fertiliser manufacturing plants. He, however, did not suggest how more gas can be provided to their plants.

The country’s urea production has been reeling downward from the excessive gas load-shedding in the past three years and the government had to spend $1.5 billion and provide a subsidy of Rs80 billion on imports of 3.4 million tonnes during 2010-12 period. The fertiliser sector’s total production, which was 6.57 million tonnes in 2009-10, went down to 4.25 million tonnes in 2012-13. The industry has an installed capacity of 6.9 million tonnes.

Fertiliser, urea in particular, is an important, though expensive, input in raising a crop as it helps increase the farm yield Industry experts say that soils are believed to be almost 100 per cent deficient in nitrogen. According to them, one kg of fertiliser nutrients produces about eight kg of cereals (wheat, maize and rice), 2.5kg of cotton and 114kg of sugarcane. Soil fertility is also in decline because of mining of essential plant nutrients from the soils under intensive cultivation.

The step is being taken in the backdrop of increasing number of cases of the theft of imported urea while being transported and then sold in the market. The transporters will not be paid any amount unless they produce receipt of the weighing stations. On many occasions the urea bags have been found containing less quantity of the commodity as they reach NFML stores.



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