Pakistan’s manufacturers seek government approval to export surplus urea to India, Afghanistan

KARACHI: Pakistan’s fertilizer manufacturers said on Wednesday they had requested their government to allow them to export surplus urea to India and Afghanistan, adding their industry could earn about $700 million in export revenue for the country.

Addressing a news conference in Karachi, they said the country’s fertilizer sector could export about 700,000 to 800,000 metric tons of urea after meeting the country’s domestic requirement.

“We have approached the commerce ministry and other relevant departments by writing them a letter, asking them to let us export about 0.7 to 0.8 million tons of surplus urea,” Imran Ahmed, chief financial officer of Engro Fertilizers, told Arab News on the sidelines of the press briefing.

Ahmed said the immediate export market of Pakistan could be India and Afghanistan, though he noted other countries could also be potential buyers.

According to the data shared at the news briefing, the overall demand for fertilizer in India was 35 million tons, though it only produced 24 million tons and imported the remaining 11 million tons.

The import was costing India as much as $1,000 per ton, the media briefing was told.

“Pakistan has an opportunity to earn $700 million by exporting urea without any capital outflow,” Ahmed said, adding: “The potential income tax revenue for government through the export process could be $7 million, making the fertilizer sector one of the top exporters.”

Pakistani fertilizer makers said they could produce exportable surplus within six months through their capacity utilization.

“Pakistan can start exporting urea within six months after building security stocks at home,” Ahmed said.

Pakistan’s own urea demand is about 6.2 million tons per annum. The country meets around 84 percent of its requirement through local production while the remaining is met through imports, according to the official data.

The localization of fertilizer production and supply of subsidized gas has made it possible for the country to consume less foreign exchange on the import of urea and absorb higher impact of international prices.

“The price of local urea is Rs1,768 per bag versus its imported equivalent price of Rs9,345 per bag. This means urea is available in Pakistan at a significant discount of 81 percent which is equivalent to Rs7,500 per bag,” Ahmed said.

“Farmers are getting an annualized benefit of more than Rs350 billion and the country is expected to save $3 billion in import substitution in 2021,” he added.

He denied that fertilizer price hike had a major impact on food inflation.

“Urea prices do not have any impact on food inflation since only 2.6 percent of a farmer’s money is spent on it. Every Rs50 increase in the price of a urea bag has an impact of only one paisa on the price of bread,” he said.