The federal government and the fertilizer industry has finally reached an agreement on a process to resolve the fertilizer-subsidy crisis in Pakistan. This mutual decision was made after a high-level meeting held between the government officials and the leaders of the fertilizer industry, at the Prime-Minister’s office. A progress report on this matter will be shared by the relevant authorities within two weeks of this decision. The fertilizer producers have praised the Government for providing the much needed support to this essential industry, hence giving relief to the deprived farming community.
The Chairman of ‘Fertilizer Manufacturers of Pakistan Advisory Council (FMPAC) – Lt. Gen (R) Shafqat Ahmed stated that: Apart from the claims for FY 2015-2016, there are additional unpaid claims of around Rs. 18 Billion on account of subsidy and Rs. 11 Billion held up in GST refunds from FY 2016-2017. This has created a liquidity crunch for the manufacturers. These payments have been delayed due to an unnecessarily complex process adopted for verification of subsidy-claims, being submitted by the urea producers.
The Secretary to the Prime Minister – Mr. Fawad Hasan Fawad chaired this meeting and stated that: Utility of this subsidy is reflected by the 3.5% growth in agricultural production during the last financial year. All the stakeholders must develop a sense of ownership towards this subsidy scheme.
The meeting was concluded, when a way-forward was clearly defined to resolve the subsidy issues of the previous financial years 2015 to 2017 and the swift implementation of the scheme in 2017-2018. After detailed analysis of the issue, the participants agreed that; prices of all types of fertilizers will be maintained, while ensuring regular supplies of Urea in the market. The Federal Board of Revenue (FBR) will immediately notify each manufacturer about the status of their claims and give reason for delay in verification and payments.
For the subsidy claims of Financial Year 2016-17 – FBR will forward claims to Ministry of National Food Security & Research (MNFS&R) which will immediately authorize payment of 80% of the amounts, while 20% of the claims will be cleared within 90 days, against Indemnity Bonds, after 3rd Party Validation by the ministry. The FBR and FMPAC will hold a separate meeting regarding the clearance of GST refunds.
The same method will be used for the FY 2017-2018. The primary aim of this Fertilizer Subsidy is to ensure uniformity in domestic pricing and ensuring substantial benefits for the farmers community. The Finance Division (GoP) will issue the required notifications within this week. Modalities of the audit will be kept simple. No more verification of claims and documents will be required at the provincial governments’ level. The stakeholders expressed their hope that the Subsidy crisis will be resolved soon, to benefit the agricultural sector during the peak season for cultivation.