29 July 2004	Thursday	11 Jamadi-us-Saani 1425

ISLAMABAD, July 28: The government and manufacturers on Wednesday agreed to reduce fertilizer prices by Rs18-20 per bag immediately and to consider subsidised import of the product to meet local demand and contain rising local prices , Dawn learnt through reliable sources.

The agreement to this effect was reached here at a meeting presided over by Minister for Industries and Production Liaqat Ali Jatoi and attended by a number of parliamentarians, secretaries and representatives of various government agencies and the fertiliser manufacturers.

The impact of reduction would be borne equally by the government and the industry at the rate of Rs9-10 per bag each. The fertiliser prices have increased in the market by about Rs40 per bag due to an impact of general sales tax and gas price increase in the aftermath of budget 2004-05. This has resulted in short supplies and black-marketing of the product.

The minister conveyed to the meeting the serious concern of the government and farmers for recent increase in the market price of urea and desired that price of urea be reduced in order to provide relief to farmers as agriculture sector is the backbone of the economy.

A fertiliser manufacturer told Dawn after the meeting that the agreement was subject to final approval by another meeting to be presided over by finance minister Shaukat Aziz on Thursday.

He said the government agreed to bring down the price of urea back to previous month's level of Rs6660 per tonne from the current rate of Rs7900 per tonne. This will reduce the per bag fertiliser price by Rs9. An equivalent reduction would be made by manufacturers to bring down the total price by Rs18 per bag.

On the demand of industries minister and the manufacturers, secretary petroleum Ahmad Waqar assured the meeting that there would be no shut down of natural gas to the fertiliser industry during the winter season.

This would result in increased capacity utilisation and production would increase by 50,000 tonnes by December 2004 and further to 175,000 tonnes by March 2005 due to further investment and expansion in the industry.

The Ministry of Food, Agriculture and Livestock informed the meeting that a total of 100,000 tonnes of fertiliser shortage was expected by December 2004. This meant that if the local production increased by 50,000 tonnes by December in view of uninterrupted gas supply during winter, the country would still need to import about 50,000 tonnes of wheat, for which the government would have to provide some subsidy.

A government official said the Chairman, Central Board of Revenue (CBR), informed the meeting that the total impact of the GST and gas prices had been calculated at Rs20 per bag but the prices in the market had gone up by up to Rs40 per bag.

He said the urea price should have been Rs457 per bag after including the impact of the increase in gas price, but the market price was hovering around Rs475 per bag. At this, the minister for industries criticised the manufacturers saying such an unjustified increase in a basic agricultural input was against the spirit of the agriculture package announced by the president last month.