ISLAMABAD: The Commerce Ministry is reportedly concerned about the refusal of the Balochistan and Sindh governments to pay their 50% share of the subsidy on imported urea.
According to sources, following decisions by the Economic Coordination Committee (ECC) of the Cabinet on July 20, 2022, and November 18, 2022, both of which were ratified by the Cabinet on July 21, 2022, and November 24, 2022, the Trading Corporation of Pakistan (TCP) imported 200,000 MT and 195,000 MT of urea and supplied it to the National Fertilizer Marketing Limited (NFML). It was agreed that the subsidy on the imported urea would be shared on a 50:50 basis: 50% to be borne by the provinces and 50% by the federal government.
Accordingly, the Ministry of Commerce (MoC) initiated a summary for the ECC and Cabinet on January 21, 2024, which led to the release of Rs 6 billion by the Finance Division. TCP has now approached the Commerce Ministry to obtain approval for the remaining subsidy shares. These include the federal government’s 50% share for the 200,000 MT urea import, amounting to Rs 8.219 billion (including markup up to September 30, 2024), and for the 195,000 MT urea import, amounting to Rs 17.014 billion (including markup up to September 30, 2024), bringing the total to Rs 25.233 billion.
The Commerce Ministry has calculated the provincial governments’ 50% share of the subsidy. This amounts to Rs 14.656 billion for the import of 200,000 MT of urea, and Rs 17.014 billion for the import of 195,000 MT, totaling Rs 31.67 billion. The Finance Division has proposed initiating approval for Rs 10 billion through a Technical Supplementary Grant to cover the subsidy on imported urea. Regarding the recovery of the subsidy from the provinces on a 50:50 basis, the Finance Division has pledged to provide full support for the timely clearance of dues by TCP and NFML.
The Ministry of Industry and Production (MOI&P) has been informed that Punjab and Khyber Pakhtunkhwa (KP) have agreed to share the subsidy on a 50:50 basis, although no funds have been released yet. In contrast, Balochistan and Sindh have expressed their disagreement about contributing their share of the subsidy for imported urea. Given this situation, the Commerce Ministry has proposed the following to the ECC:
(i) Rs 10 billion immediately to MoC and arrange additional funds for settlement of the remaining balance in the Current Financial Year 2024-2025 to reduce the accumulated financial burden on TCP; and
(ii) the Governments of Punjab and KP may again be issued directions for timely release of amounts for their share of the subsidy on 50:50 basis.
In light of refusal of conveyed by the Governments of Sindh and Balochistan to pay their share of subsidy in the imported urea, Finance Division and MoI&P may devise a mechanism for recoveries against each province.
