ISLAMABAD: The Economic Coordination Committee (ECC) on Friday approved import of 100,000 tonnes of urea from a UAE-based firm through open tender to ensure stable prices in the market.

The decision was taken at an ECC meeting presided over by Finance Minister Mohammad Aurangzeb. The move is “aimed at ensuring sufficient supplies of urea in the market. This will also ensure stability of prices of fertiliser during the cropping season”, according to an announcement issued later.

Minister for Industries and Production Rana Tanveer Hussain, Minister for Petroleum Musadik Masood Malik, Minister for Power Sardar Awais Ahmad Khan Leghari, Minister for Economic Affair Ahad Khan Cheema, State Bank governor, SECP chairman, Planning Commission deputy chairman, Passco managing director, TCP chairman, federal secretaries and other senior officials attended the meeting.

The participants in the meeting were earlier informed that the ECC had allowed the Trading Corporation of Pakistan (TCP) on May 7 to import 200,000 tonnes of urea on an open tender and G2G basis. The decision was ratified by the federal cabinet on May 14 and June 11.

Move aimed at avoiding shortage in Rabi season as decision on gas supply to RLNG-based fertiliser plants is still awaited

Accordingly, the TCP issued tender of 150,000 tonnes which was opened on July 29.

The TCP told the meeting that six bids were received within the stipulated time with the lowest bidder being M/s West Trade International FZE of the UAE that offered rate $358.99 per tonne.

The trading corporation also told the ECC that it had made G2G negotiations with Malaysia and Azerbaijan, but the rate they offered was higher from the tender rate. On the other hand, negotiations with Turkmenistan to procure urea on G2G basis and efforts regarding getting approval from the National Development and Reform Commission of China were still underway.

The TCP reported that cost estimates for import of urea for 157,500 tonnes would be about Rs18.489 billion.

The landed price of urea had been estimated at Rs5,832.59 per 50kg bag. After adding incidentals of National Fertiliser Marketing Limited (NFML) at the rate of Rs1,500 per bag, the cost will be Rs7,332.59 per bag. This would entail a subsidy requirement of around Rs5.865bn when to be comparable with prevailing local price.

First shipment

That first ship from the import cargo is expected to reach Karachi port on August 16. The total dollar requirement for 157,500 tonnes urea import was reported at $56.540 million while another $35.899m would be required for additional 100,000 tonnes. In view of the bid expiry due on August 3, the ECC approval was required for the go-ahead to the bidder.

The committee was also told that a meeting of Fertiliser Review Committee (FRC) held on August 1 examined the data for Kharif 2024 and Rabi 2024-25 presented by National Fertiliser Development Centre (NFDC) of the Ministry of National Food Security and Research.

Steps to avoid shortage

The ministry of industries, in its summary, said the FRC data showed no shortage during Kharif and Rabi seasons, provided RLNG-based plants would remain operational during the upcoming Rabi season.

However, if the supply of gas to RLNG-based plants is suspended during Rabi season 2024-25, there would be a shortage of 351,000 tonnes. Hence, it was concluded that in view of the absence of decision for provision of gas to RLNG-based plants during Rabi 2024-25, it was imperative to import 100,000 tonnes of urea for market price stabilisation.

Therefore, the ECC approved procurement of 100,000 tonnes of urea on open tender for market price stabilisation purpose from lowest bidder i.e. M/s West Trade International FZE of the UAE at the rate of $358.99 per tonne.

Published in Dawn, August 3rd, 2024