ISLAMABAD-Fertiliser industry has asked the government to review the enforcement of track and trace system, which is suffering from serious operational issues.
The industry is of the view that the system appears to be imported without technical feasibility study in relation to the obtaining environment in Pakistan. Moreover, no reliable evidence of global performance has been found in the fertiliser industry. The fertiliser industry was forced to make a huge investment in the installation of the system despite apprehensions expressed in various meetings. The performance of the system has been dismal in the open environment, and the consortium that provided equipment has been unable to attend to the issues. The fertiliser industry demands replacement of the system or a refund of the amount so invested. Moreover, industry is of the view that enforcement of the system in its present form will lead to a serious disruption in the supply of fertiliser. In a letter to Federal Finance Minister Ishaq Dar, fertilizer manufacturers of Pakistan Advisory Council (FMPAC) requested the government to review the enforcement of non-compatible track & trace system installed on the fertilizer manufacturing facilities.
According to FMPAC letter to finance ministry, in compliance with S.R.O. 250(I)/2019 dated 26 February 2019 and Sales Tax General Order No 3 of 2021 dated 11 March 2021, issued by the Federal Board of Revenue (FBR), the Track & Trace System [TTS] deployment project was initiated for the fertilizer industry in February 2022. Tri-partite agreements between the manufacturers, FBR and FBR licensee (M/s AJCL/MITAX/Authentix Consortium) were signed on 14 April 2022 and the TTS was made operational across the entire fertilizer industry from a given deadline of 01 July 2022.
However, the fertilizer industry has raised serious concerns about the suitability of the system for fertilizer production facilities after confronting multiple technical issues during, and post implementation of T&T system project.
Letter states that the incompatibility of the system with the harsh and humid outdoor environment of the fertilizer industry renders it ineffective and unfit for continuous use. The stamp detection efficiency is far less [as low as 50%] than guaranteed value of more than 99%. Stamps reconciliation also generates error with actual production reporting, etc. Despite the best efforts of the FBR licensee, FBR and industry, these technical issues remain unresolved.
Commenting on the matter, Executive Director FMPAC, Brig ® Sher Shah Malik said that the fertilizer industry is one of the most compliant sectors of Pakistan and has always supported the government’s efforts on documentation of the economy. He further stated that the Track & Trace system is neither considered suitable for the fertilizer industry nor is serving any of its stated objectives of enhancing tax revenue, reducing counterfeiting, and preventing smuggling of illicit goods. He explained that fertilizer is exempted from GST and fertilizer sector as a whole is a compliant and transparent sector and pays its all taxes with no understatement of its sales and production, hence T&T system has no impact on revenue collection.
ED FMPAC claimed that there is no evidence of counterfeiting urea and other fertilizers. The domestic prices of urea have always been substantially lower than the international market, hence there is no possibility of smuggling of illicit goods into the country. Moreover, it is worth noting the complete system including spares and tax stamps are imported and are an undue recurring cost under the prevalent foreign exchange reserves situation. Fertilizer industry cautioned the govt that the enforced obligation of the T&T system with its unreliable operational efficiency can disrupt the fertilizer supply chain leading to serious consequences for the agriculture sector.