Being a stakeholder of the agricultural industry and business community in Pakistan, I would urge the government to lower gas prices and sales tax, besides reducing the ‘Gas Infrastructure Development Cess’ (GIDC) to help the local fertiliser industry produce urea at a more competitive cost. Currently, the price of a 50 KG bag of imported urea is 200 Rupees lower than the locally produced urea, whereby many traders are drawn towards importing urea and causing financial challenges for the local fertiliser producers.

A timely response from the government can help the Pakistan’s fertiliser industry in bringing down their cost of production and reduce the price of local urea bags. Strengthening the local fertiliser industry will surely make local urea more affordable for the poor farmers and boost the agricultural production of Pakistan.

Unfortunately, the prices of gas have been going up consistently over the past several years, while a heavy rate of GIDC on feedstock is being charged at the rate of 300 per MMBTU today, which was only Rs 197 in the year 2011. Average gas price in Pakistan for the fertiliser sector is almost double of what is offered in the Middle East. These factors have caused a sharp escalation in the cost of urea production. The government must ensure sufficient supply of gas to the fertilisers industry, on a priority basis, and revise the heavy rate of sales tax and GIDC, to make locally produced fertiliser cheaper, in order to provide relief to the poor farmer and the local urea industry. Otherwise cheap imported urea will soon flood the market, and the inventories of unsold local urea will continue to pile-up, creating serious challenges for the domestic urea producers.


Karachi, April 6.