Pakistan DAP demand paralysed by subsidy talk

17 July 2008 17:40  [Source: ICIS news]

LONDON (ICIS news)--Pakistani demand for further phosphate fertilizer imports is being paralysed by rumours of potential changes to the level of subsidy on a bag of diammonium phosphate (DAP), fertilizer importers said on Thursday.

There was speculation that the government may double the subsidy from PRs 1,000/50 kg bag ($14/50 kg bag) to PRs 2,000-2,500/50 kg bag, said traders.

The current price of a 50 kg bag of DAP was PRs 3,050 ex-Karachi, but the government had reportedly expressed a desire to reduce the price to PRs 2,500/50 bag to aid farmers facing high fertilizer prices.

An Economic Coordination Committee meeting on 15 July deferred any decision on the issue, according to one importer.

The conflicting news confused some market observers, who said that the subsidy would have to rise substantially more than the numbers cited in order to meet current replacement costs of fresh DAP imports at equivalent to PRs 5,700/50 kg bag.  

Other reports that the government may increase the level of subsidy given to Fauji Fertilizer Co (FFC) for its domestic production alarmed other importers who were pushing for a level playing field.

($1 = PRs 71.6)

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By: Mike Nash
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