LAHORE: Fertiliser importers have criticised the government’s decision to regulate di-ammonium phosphate (DAP) import and local pricing via the Trading Corporation of Pakistan (TCP), fearing that it will not only raise prices of the commodity but also lead to corruption and cartelisation due to a lack of competition.

“It is really a surprising decision taken on the pretext of ensuring DAP availability at the regulated price. We have also come to know that the government, while taking this decision, did not table it before the Council of Common Interest (CCI) and the federal cabinet for discussion and approval,” said Dr. Sohail Badar, a commercial importer.

”Moreover, no policy was formulated to introduce the DAP price-regulating model. None of the importers were taken into confidence before making this important decision. It is really unfair,” he added.

It may be mentioned that the country’s total DAP consumption per annum is about 2.2 million tonnes or 44m bags. The total consumption includes 80 per cent of its use for the wheat crop alone in October and November. Of 2.2m tones, 1.5m tonnes are imported each year by a total of 11 main exporters, while nearly 700,000 tonnes of DPA are locally manufactured by the Fauji Fertilizers Bin Qasim Limited (FFBL) with the import of raw material (phosphoric acid).

Under an open competition model, which continued since 1994, the importers used to import DAP according to the country’s needs by independently monitoring the international price mechanism and selling it in the local market on their own at competitive prices.

“Since we started doing this business, I have never seen any shortage of DAP in Pakistan. Moreover, I always witnessed the availability of DAP at competitive prices,” another importer said.

He questioned the government for failing to ensure the availability of the locally manufactured urea in the past due to hoarding and smuggling issues. “Why is it trying to regulate the DAP market which never faced shortage or the price escalation issue since deregulation in 1994 to date?”

He said that, under the decision, the TCP has been assigned to regulate the DAP market price in Pakistan. However, the LCs are to be opened by the importers themselves. He said even today, the DAP price in Pakistan is lower than today’s CFR (cost of freight) price. And this is just because of competition amongst 10-11 importers in Pakistan.

He said the reduction in competition through regulation and consolidation of buying and pricing in one hand of TCP would definitely escalate DAP prices in the country, creating shortages and resulting in the emergence of scams in the future.

Published in Dawn, August 19th, 2022

Now you can follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

An inexplicable delay
03 Oct, 2022

An inexplicable delay

AFTER a flurry of activity a couple of months ago, geared towards filling the vacancies in the apex court — an...
Dire situation
Updated 03 Oct, 2022

Dire situation

If there is any time for the civilian leadership to show unity, it is now.
Russian annexation
03 Oct, 2022

Russian annexation

AS Russia and the West play a zero-sum game in Ukraine, Moscow’s official annexation of four Ukrainian regions it...
Spy games
Updated 02 Oct, 2022

Spy games

The audios leaked so far appear to have been carefully curated: they apply pressure but do not do major damage.
‘Geopolitical football’
02 Oct, 2022

‘Geopolitical football’

THE US-China rivalry is by all measures one of the globe’s most dangerous competitions for power and influence. ...
Fuel price reduction
02 Oct, 2022

Fuel price reduction

ISHAQ Dar is back; so are his signature policies. The reduction of a little over 5pc in fuel prices announced by him...