Pakistan’s $340m DAP subsidy to prompt price cuts

13 October 2008 11:45  [Source: ICIS news]

LONDON (ICIS news)--The Pakistan government is widely expected to provide importers and producers with a Pakistan rupees (PRs) 27bn ($340m) phosphate fertilizer subsidy package, precipitating a reduction in domestic fertilizer prices, market sources said on Monday.

 

Engro, a major importer of diammonium phosphate (DAP) fertilizer, had earlier hiked its price to PRs5,010/50 kg bag ex-Karachi from the capped price of PRs 3,050/50 kg, a move designed to heap pressure on the government to start releasing the PRs 2,200/50 kg bag subsidy owed, sources said.

 

The assurance of aid by Mian Manzoor Wattoo, adviser to the prime minister on industries and production, was given at a press conference held on Friday in Islamabad.

 

The subsidy was agreed at the beginning of September but Pakistan’s chronic financial situation had led many to fear that the monies would not be paid.

 

Local press reports indicated that Wattoo cited “technical reasons” why Engro had increased its price but added that all issues had been resolved between the government and manufacturers and importers had agreed to provide DAP to farmers at the subsidised rate.

 

It was confirmed that Engro had subsequently rolled back its price to PRs 3,050/50 bag following “strong assurances given by the government”, according to one producer.

 

“There is an economic coordination committee meeting tomorrow which will be chaired by the prime minister at which we expect the finance ministry to ratify the subsidy,” added the source.

 

According to Wattoo’s statement, the price of DAP would remained unchanged through to the end of December and would be reviewed in January 2009.

 

Wattoo also assured farmers that those involved in black market profiteering would be severely dealt with. 

 

($1 = PRs78.76)

 

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By: Mike Nash
+44 20 8652 3214

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