ISLAMABAD, May 7: An agreement between the industries ministry and fertilizer industry to reduce the prices of fertilizer by Rs20 per bag is in doldrums due to refusal by the finance ministry to share Rs10 per bag.

An official of the industries ministry told Dawn the cabinet committee on fertilizer had approved proposal submitted by the manufacturers to reduce prices by Rs20 per bag and had submitted to the finance ministry.

The finance ministry, said the official, has expressed its inability to provide tax relief because of its agreements with the International Monetary Fund (IMF).

The fertilizer manufacturers had promised that they could reduce prices by Rs20 per bag provided the government offered them Rs10 per bag concession in taxes and duties coupled with a freeze on fertilizer feedstock for a year instead of a proposed 7.5 per cent increase with effect from July 1, 2003.

The sources said the manufacturers had also advised the government to check import of fertilizer because cost of production was highest in Pakistan when compared with its competitors including those in the Middle East and Bangladesh mainly because of low and subsidised gas prices in those countries.

The prime minister had constituted a ministers’ committee to provide relief to the farmers to encourage them to enhance agricultural production.

The committee considered various options and recommendations of the manufacturers to bring down the prices of fertilizer and provide maximum relief to the farmers as desired by the Prime Minister.

The committee led by Liaqat Ali Khan Jatoi, comprised Privatization Minister, Dr. Abdul Hafeez Sheikh, Chairman NRB, Danyal Aziz and Minister of State for Food and Agriculture, Sikandar Hayat Bosan.