Over the last few years, the government has provided liquefied natural gas (LNG) at reduced prices to two fertiliser factories, amounting to a sizeable subsidy of more than Rs 70 billion.
The lifestyles of farmers, who continue to pay increased urea fertiliser costs, don’t appear to have changed, though. Sources claim that the government began providing LNG to Fatima Fertilizer and Agritech Limited in 2018 and has since kept up the practise. A subsidy of Rs 70.4 billion was given to the fertiliser factories for the delivery of imported LNG between January 2018 and September 2022.
While fertiliser producers adhere to a uniform pricing strategy, the cost of urea, an essential component for sowing crops, has increased despite the subsidies. A 50kg bag of urea cost Rs 1,500 in 2018, but the cost has since risen to Rs 2,300.
The fertiliser factories received a subsidy of Rs 1.3 billion in 2018, which increased to Rs 14.5 billion in 2019. The subsidy decreased the next year to Rs3.7 billion but increased the following years to Rs 17.7 billion and Rs 33.7 billion till the end of September.
The government has extended the discounted LNG supply, which would increase the cost of the subsidies. It was made public during a recent meeting of the cabinet’s Economic Coordination Committee (ECC).
In 2018, the Ministry of Industries and Production requested the ECC’s approval for the delivery of subsidised re-gasified LNG to Fatima Fertilizer and Agritech Limited while taking Pakistan’s urea needs into account. The administration chose to designate the difference in the gas pricing as a subsidy in the annual budget.
With the agreement of the ECC and in accordance with the Ministry of Industries’ assessment of the nation’s urea inventories, the distribution of subsidised LNG has occasionally been increased.