Pakistan allocates $21.5mn to subsidize distribution of imported urea in 2024

Pakistan’s government has announced the allocation of a PKR 6 billion ($21.47mn) subsidy for the importation of urea fertilizer for the fiscal year 2023-24. The decision is the product of a comprehensive strategy, formulated after extensive discussions with key stakeholders, that seeks to stabilize urea prices and ensure the product’s availability for local farmers. The subsidy will facilitate the distribution of imported urea alongside locally produced urea through a network of channels operated by fertilizer companies. This approach aims to maintain a uniform price for urea throughout the agricultural season, thereby aiding farmers and ensuring food security.

National Fertilizer Marketing Limited (NFML) recently received a shipment of 220,000 tonnes of urea fertilizer from Azerbaijan, which was imported under a government-to-government agreement. The shipment was made by SOCAR, the state-owned Azerbaijani company, which supplied the urea at a competitive rate of $388.50 per tonne. The deal had a deferred payment mechanism, which did not require interest or guarantees.

Pakistan’s Economic Coordination Committee of the Federal Cabinet, under the leadership of Federal Minister for Finance, Revenue, and Economic Affairs, Dr. Shamshad Akhtar, has endorsed the distribution of this imported urea through private manufacturing entities. These include Fauji Fertilizer Company Limited, Fauji Fertilizer Bin Qasim Limited, Engro Fertilizers Company Limited, Fatima Fertilizer Company Limited, and Agri Tech Limited, which signed a formal agreement with NFML.

To support this initiative, the Economic Coordination Committee has approved a cost-sharing strategy for the subsidy, wherein 50% will be borne by the federal government and the remaining 50% by the four provinces. This decision was facilitated by a technical supplementary grant to the Ministry of Commerce, with the ECC approving a release of PKR 6 billion ($21.47mn) to support the distribution of the imported urea.