Engro Fertilizers for removing all subsidies for fertiliser sector

ISLAMABAD  -  Engro Fertilizers has urged the government to completely remove all subsidies for the fertiliser sector. Engro Fertilizers welcomes the fact that the government has taken a bold first step by removing the subsidy for fertilizer manufacturers that get their gas from the SNGPL network, which represents 60% of all fertilizer manufacturing capac­ity. They have done that by increasing the feed stock prices from PKR 580/mmbtu to PKR 1,597/mmbtu, almost a 300% in­crease in the cost of producing fertilizer.

While this is a step in the right direction, the battle is half won, as the remaining 40% of fertilizer manufacturing capac­ity that is on the Mari network, is still on the subsidized price of PKR 580/mmbtu. Pakistan’s current financial position is dis­tressed, it is in a debt crisis, with the debt-to-GDP ratio already above 70 percent and more than USD 27 billion of foreign debt to be repaid by November 2024. The country cannot afford further fiscal pressures or half measures that do not go all the way in solving Pakistan’s problems. The depen­dence on government subsidies must end, for Pakistan to really move forward and break away from the vicious cycle of debt.

With this complete removal, the govern­ment is expected to collect PKR 150 bil­lion, which can then be used for targeted agricultural projects and initiatives that generate economic activity and growth in the country. This is a fantastic opportunity for all fertilizer manufacturers to demon­strate that even without subsidized gas they are globally competitive. In fact, when everyone has the same gas price, it will encourage the manufacturers to become more efficient, lean and encourage capital investment in the fertilizer industry.

In addition, the fertilizer industry will emerge as a role model that can operate efficiently without any subsidies, thereby encouraging the government to potentially look at removing subsidies from other sec­tors of the economy as well. In conclusion, we fully support the government in taking this first step to partially remove the ex­isting subsidy given to fertilizer manufac­turers. We encourage the government to continue with this bold strategy and com­pletely remove all subsidies so that it can reduce its debt burden, promote efficiency, attract new investments, and help build a stronger future for Pakistan.

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