ECC approves Rs5.57 billion to share urea subsidy with provinces

By Staff Reporter

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has given its approval for a technical supplementary grant of Rs5.57 billion for the government’s share of subsidy on imported urea fertilizer.

The decision was made during a meeting chaired by Finance Minister Ishaq Dar.

Under the approved plan, the subsidy on imported urea will be divided equally between the provinces and the federal government, with each entity bearing 50 percent of the cost.

The Trading Corporation of Pakistan (TCP) has imported 100,000 metric tonnes of urea from China, which has been distributed to provincial governments through the National Fertilizer Marketing Limited (NFML).

Due to loans obtained by the TCP from commercial banks, interest has been accruing on these loans. The total subsidy payable by the government, including interest up to April 30, 2023, amounts to Rs5.358 billion. This figure is expected to increase to Rs5.568 billion by June 30, 2023.

The ECC was informed that the Finance Division currently holds Rs6 billion for the payment of urea import subsidies. Accordingly, it is proposed that a TSG of Rs5.57 billion be released to the Ministry of Commerce, which oversees the TCP, to cover the current financial year.

However, there might be a time lag between the approval of the TSG and the release of funds to the TCP. Any excess funds released to the TCP will be deposited into the government exchequer.

The Ministry of Industries and Production has been instructed to ensure the prompt clearance of subsidies payable by the provinces for imported urea.

During the meeting, it was noted that the Finance Division has agreed to the allocation of the TSG. The Ministry of Industries and Production informed that the governments of Punjab and Khyber-Pakhtunkhwa have agreed to share the subsidy on a 50:50 basis but have yet to release any funds.

On the other hand, the government of Balochistan has declined to share 50 percent of the subsidy cost, and the government of Sindh has not responded to the matter.

Therefore, the Ministry of Finance has been advised to take the lead in resolving the payment issue with the provinces in accordance with the ECC’s decision.

The ECC further advised the Ministry of Industries and Production to ensure the timely clearance of subsidies payable by the provinces for imported urea.