Govt threatens to cut off gas to fertilizer companies

By Zamir Haider

ISLAMABAD: The government has threatened to discontinue the supply of gas to fertilizer companies if they fail to reduce the prices of their products to a reasonable level.

Sources in the Industries Ministry told Daily Times that during a cabinet meeting on July 19, it was decided that the fertilizer companies would be asked to bring down the prices of their products failing which the supply of gas to these companies would be discontinued. "Federal Industries Minister Liaqat Jatoi and the agriculture minister were not at the meeting. It was decided that Federal Finance Minister Shaukat Aziz should convey the decision to the fertilizer companies," the source said.

Mr Aziz said the decision had been conveyed to Mr Jatoi and the Agriculture Ministry and it was now up to them to take appropriate action. "There is nothing serious about the matter as the prices of imported raw material are coming down and therefore the fertilizer companies are expected to bring down urea prices in due course of time. I am sure the Industries Ministry must have taken steps in this regard," Mr Aziz said.

Meanwhile, the sources said the decision was a hasty one against the fertilizer companies as the pricing issue was already being decided by a committee headed by Mr Jatoi. They said 80 per cent of the production cost of urea involves gas consumption. "The matter is still under consideration and the ministry is still waiting for the cabinet's decision," the sources said.

They said the fertilizer companies had agreed to reduce the prices of urea products but after an increase in the gas tariff from July 1 they demanded the government prepare a special gas pricing formula for the fertilizer industry.

"The industry had agreed to reduce Rs 10 per 50 kg bag, but the gas tariff was raised under the six-monthly gas pricing review formula after which the fertilizer industry fell back on its promise to reduce the 50 kg bag price, the sources added.

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