Urea Imports: Govt In Talks With Russia, China, and Azerbaijan

Pakistan is actively negotiating with Russia, China, and Azerbaijan to buy 0.2 million tons of urea fertilizer for the Rabi season.

Both the Public Procurement Regulatory Authority (PPRA) Board and the caretaker federal cabinet have approved the proposal presented by the Ministry of Industries and Production, reported Business Recorder.

The Economic Coordination Committee (ECC) is yet to grant approval for the negotiated price range.

According to Asad ur Rehman Gilani, the Additional Secretary (Incharge) of the Ministry of Industries & Production, the country is facing a shortage of 200,000 metric tons of urea fertilizer due to the closure of local plants for two months.

Urea demand spikes during December and January, coinciding with the demand for Wheat sowing season, and the Ministry states that the minimum required stock is 200,000 metric tons of urea. Since July 2023, the Ministry has submitted five summaries addressing the shortage.

The ECC deliberated on the matter of urea shortage, considering two options. The first involved local production, which requires gas, but domestic gas is unavailable so the government went for the second option, allowing the import of 200,000 metric tons of urea, subject to G2G agreements and ensuring a price discovery mechanism.

Gilani informed the PPRA Board that the Trading Corporation of Pakistan (TCP) would handle the price discovery mechanism through tendering. While the standard international tendering time is 45 days, TCP aims to expedite the process to 15 days by relaxing five PPRA rules.

He highlighted that Argus, a leading market intelligence provider, indicated low urea pricing at present, attributing it to the absence of significant tenders, except for a partial Indian tender. Sources in China, Russia, and Azerbaijan suggest urea pricing within the range of $415 to $420 CFR Karachi, which might increase, considering the Ministry imported urea at a higher price last year.

Gilani justified the request for exemptions from certain provisions of the Public Procurement Rules, 2004, citing ongoing G2G agreements with State-Owned Enterprises (SOEs) in Russia, China, and Azerbaijan, emphasizing the need for a quick tendering process.

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