The ECC has approved a price disparity of 48% for urea.
Also gave in to the demands of OMCs and retracted their determination to cap the premium on diesel.
After a private bidder failed to meet its requirement, the government of Pakistan approved on Friday the import of 160,000 metric tonnes of urea via government-to-government (G2G) arrangements at two different prices of $480 and $710 per metric tonne.
It also gave in to the requests of oil marketing companies (OMCs) and reversed its earlier decision to set a ceiling of $16.75 per barrel for the premium on high-speed diesel (HSD). This will result in an additional cost of billions of rupees being placed on consumers.
In order to satisfy the requirements of the agricultural sector for inputs, the Economic Coordination Committee (ECC) of the Cabinet had to make the challenging decision on Friday to import urea with a price difference of 48% between two different deals. This was done in an effort to meet the demands of the sector. The urea has a total import value of $84.9 million, which is equivalent to Rs19 billion.
The ECC awarded M/s Makhdoom Logistic Services the contract for the import of 300,000 metric tonnes of urea at a price of $520 per tonne on October 28. The shipment was scheduled to take place in December. On the other hand, the ECC was notified that the party had failed to pay for its supplies.
A report on the acquisition of 200,000 metric tonnes of urea was provided by the Ministry of Industries. According to the Ministry of Finance, the Ministry of Industry also revealed that it negotiated various options, including the option of importing from Chinese companies that committed to supplying the negotiated quantity of urea fertilizer at the lowest rate. This information was shared, according to the Ministry of Finance.
According to the Finance Ministry, following talks, the ECC granted permission to the Trading Corporation of Pakistan Limited (TCP) to proceed with importing 125,000 metric tonnes of urea fertilizer from China on a G2G basis. This was done in order to meet the demand for urea fertilizer.
In addition, the ECC authorized the importation of an additional 35,000 metric tonnes from Azerbaijan via the ship M/s Socar on a G2G basis. In addition, it instructed the TCP to investigate potential avenues for importing the remaining quantity of urea in order to reach the target of 200,000 metric tonnes for strategic reserves.
At a cost of $480 per tonne, China will supply the required 125,000 metric tonnes of urea through the companies M/s Sinochem and M/s CNOOC. The secretary of the industry was successful in persuading the Chinese enterprises to lower their pricing by $90 per tonne, which resulted in savings of almost Rs2.5 billion for the national exchequer. Additionally, the nation would have the option of delaying payment for the item for a period of three months after it has been delivered.
The government, on the other hand, was forced to take the bitter pill of accepting the Azerbaijan offer at $710 per tonne for 35,000 metric tonnes, which was 48% more expensive than the deal negotiated with the Chinese enterprises. On the other hand, the ECC was informed that Azerbaijan will supply the urea within the next five days.
The ECC authorized the importation of 300,000 metric tonnes of urea at a cost of $156 million during the month that just ended. The TCP had been given the authority to sign a contract to import 300,000 tonnes of urea at a price of $520 per tonne, which was the lowest bid received. The recommendation to proceed with the transaction came from the Ministry of National Food Security and Research.
Urine is a crucial input, and there is now a severe lack of it, making it imperative that more be imported immediately. This is especially true for wheat planting.
A summary on high-speed diesel (HSD)/gas oil premium that was submitted by the Ministry of Energy was also taken into consideration by the ECC.
According to the decision, “Considering the increasing demand for HSD in the country, the ECC recommended that Pakistan State Oil’s (PSOs) weighted average premium (KPC and Spot) may be applied for HSD price computation as per the applicable policy guidance of the federal government.” This recommendation was made in light of the fact that the demand for HSD has been growing in the country. Also, the discrepancy in premium will be incorporated into the price in the event that importing OMCs other than PSO pay a greater HSD premium.
By virtue of the new judgment, the ECC has retracted its previous decision to cap the OMCs margin first at $15 and later at $16.75, which it had made in accordance with the earlier decision. At this point in time, it is anticipated that the OMCs will receive a margin of at least $22 per barrel.
In addition, the Economic and Financial Commission (ECC) approved a technical extra grant in the amount of Rs115 million to be given to the Ministry of Housing and Works for the purpose of building the Gujrat-Lalamusa Road, which was a plan that was suggested by a lawmaker.
