THE Economic Coordination Committee (ECC) recently approved import of 50,000 tonnes of urea and also empowered adviser to the prime minister for commerce and industry to import additional 50,000 tonnes ‘if required’.

On the other side, Pakistan is in tight grip of fiscal, trade and other international pressures.

All the statistics and indicators favour policy of indigenous reliance on finished goods and not on imports. With indigenous urea manufacturing capacity of over (6 million tonnes) against overall urea demand of (approximately 5.8 million tonnes), Pakistan should not have any need to import fertiliser.

But owing to non-supply of agreed upon gas to some plants by the government and instead importing fertiliser in such a grave economic condition is a travesty of higher order. This will not resolve the issues faced by Pakistan.

Such actions by the government will increase debt burden and rupee devaluation in coming months ahead. The government should utilise these assets of production towards self-reliance and export to help reduce the input cost of fertiliser as imported urea is more costly in comparison to homegrown production of urea.

The government should put an end to the vicious cycle of subsidies, debt, imports, price inflation, rupee devaluation and more subsidies debt.

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 fertiliser sector at higher priority and ensure its sustainability and affordability.

Muhammad Sagheer

Islamabad

Published in Dawn, November 21st, 2018