May 182017

One of the challenges currently faced by the fertiliser industry is cash flow problems. This is because of long delays in the reimbursement of subsidy worth billions of rupees. The government commits to pay the amount within 15 days, but it fails to release the payment on time because of the complex verification process practised to verify subsidy claims. At present, the fertiliser industry has outstanding subsidy claims of nearly 15 billion rupees. This is because of unnecessary complexities and overworked staff carrying out the scrutiny of claims at the concerned departments.

Since the timely verification and payment of the fertiliser subsidy-claims has not been possible, the government is now being urged to consider the industry’s suggestion to exempt the general sales tax on input and outputs of fertiliser industry. This way, the next budget will pass the same price advantage to the farmers, without putting any financial pressure on the fertiliser companies. The GST is almost equivalent to the current subsidy on urea. At present, Pakistan has an inventory of nearly 1.5 million tonnes of urea. The industry’s experts have suggested to export 1 million tonne by the end of 2017, to earn precious foreign exchange revenues and avoid the financial burden of maintaining a huge inventory.

Adnan Ali Mughal


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