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ISLAMABAD, Aug 9: The Economic Coordination Committee (ECC) of the cabinet on Monday banned export of urea fertiliser and approved a Rs18 per bag reduction in urea prices to overcome its prevailing shortage and stabilise domestic prices.
An agreement has already been reached between the ministry of industries and the fertiliser industry to reduce the urea prices by Rs18 per 40-kg bag, under which the government reduced taxable deemed price by Rs9 to Rs333 per bag and the industry would provide relief in the dealer transfer price by Rs9 per bag.
The ECC meeting, presided over by Finance Minister Shaukat Aziz, approved the agreement so that the farmers could get a total price reduction of Rs18 per bag, whose price had increased to over Rs470.
"The ECC discussed the fertiliser situation as well as increase in urea prices in the country and decided to put a complete ban on the export of urea," said an official announcement.
The meeting also decided that to enhance production of urea, an un-interrupted and continuous gas supply to entire fertiliser industry by three gas companies - SSGCL, SNGPL and MGCL with immediate effect be ensured.
The ministry of petroleum was also asked to ensure that there was no gas curtailment to fertiliser industry in winter months. The ministry of food, agriculture and livestock had informed the meeting that a total of 100,000 tons of fertiliser shortage was expected by December 2004.
On the other hand, the manufacturers had told the government that they were running at low capacity at present and if gas supplies are improved, production could increase by 50,000 tons by December 2004 and further to 175,000 tons by March 2005 due to further investment and expansion in the industry.
This meant that their demand for additional gas supply was guaranteed by the government. However, if the local production increased by 50,000 tons by December in view of uninterrupted gas supply during winter, the country would still need to import about 50,000 tons of wheat, for which the government would have to provide some subsidy.
On this count, an official said the government would start gradual import of the commodity to stabilise domestic prices as soon as stocks reduce. The ministry of industries was asked to ensure that all fertiliser plants run on full capacity by manufacturers and no hoarding takes place anywhere in the country.
PRICES: The committee reviewed the sensitive price indicator for the week ended on Aug 5, 2004, and noted that prices of 12 essential commodities had registered an upward trend compared to corresponding prices during last year.
The ECC took notice of rising meat prices and decided to bring provincial governments on board to enforce a ban on export of livestock. Generally, the SPI showed a decline of 0.07 per cent last week when compared with previous week. The decline occurred in all groups and income categories. There was a light decline in the SPI for food group including wheat.
DUTY EXEMPTIONS: The ECC discussed the issue of relief in duties and taxes for clearance of long held-up imported goods of Heavy Mechanical Complex, Taxila, in view of its continuously deteriorating conditions.
It decided to allow relief in payment of duties and taxes by allowing release of goods on payment of 30 per cent of the total leviable duties and taxes as full and final settlement, thus providing a waiver of 70 per cent in duties running into millions of rupees. The ECC also re-validated the relief earlier approved by the ECC regarding Karachi Port Trust storage charges.
