TCP floats tender for strategic urea import

KARACHI: The Trading Corporation of Pakistan (TCP) on Tuesday floated an international tender for the import of 100,000 tonnes of urea, as the country seeks to build strategic urea reserves given higher commodity prices in the international market. The tender will be opened on November 22, 2021.

Earlier this month, the Economic Coordination Committee (ECC) of the Cabinet approved the import of urea fertiliser for building strategic reserves during the Rabi season of FY 2021/22. The projected requirement of urea fertiliser is estimated at around 3.2 million tonnes for the Rabi season of 2021/22, which would be met by domestic production.

Analysts said the government’s fertiliser policy incentivised manufacturers to expand capacity and upgrade plants by offering gas at lower rates. That attracted investments of around Rs162 billion from Engro Fertilizers and Fatima Fertilizers, and enhanced the local urea production capacity by 1.9 million tonnes/annum.

Pakistan, which was a net importer of urea till 2011, did not make any imports of urea last year, as the domestic industry has the capacity of around seven million tonnes, compared with the average annual demand of 5.8 to 6 million tonnes.

However, the increase in the prices in the local markets is discouraging farmers to apply required quantity of urea on their crops, posing threat to outputs of both the ongoing winter and incoming summer seasons, growers said.

They also expressed concerns over the inability of the government to subsidise fertiliser prices.

Most fertiliser prices soared in 2021, particularly phosphates and urea, driven by strong demand and higher input costs. According to the World Bank, the fertiliser prices are projected to average more than one quarter higher in 2021 than last year, before easing in 2022.

“Risks to the forecast include the pace of capacity expansions, geopolitical tensions, and, in the medium-term, environmental policies on fertiliser use.”

According to the Ministry of Industries and Production, domestic production of urea fertilisers would slash the urea imports; thus, would have huge relief on the import bill and the balance of payments position.

Moreover, it would ensure availability of fertiliser for the farmers at affordable prices.

Urea to be supplied would be strictly in accordance with the standards and specifications prescribed by the Pakistan Standards and Quality Control Authority and import policy order presently in force, according to the terms and conditions of the tender.

Sher Shah Malik, executive director of the Fertiliser Manufacturers of Pakistan Advisory Council (FMPAC), said: “To fully support the government’s initiatives for agricultural growth, the fertiliser industry has been providing urea at now only one-fourth the price of the international market. Due to the significantly lower prices, the industry has delivered nearly Rs300 billion in value to the farmers and averted a recurring balance of payments crisis through import substitution.”