Karachi, November 19, 2012 (PPI-OT): The Ministry of Industries has devised a new urea pricing formula in consultation with fertilizer industry which includes reducing Gas Development Surcharge (GDS) by PKR 68 per MMTBU, PKR 75 per bag or 4.7% reduction in GST and provision of 200 mmcfd uninterrupted gas supply to urea plants. It is estimated to result in a reduction of urea price by PKR 150 per bag. The issues under consideration include devising a mechanism to provide subsidy in such a manner that directly benefits the farmers, methods to lower the urea prices and mechanism for provision of gas to fertilizer factories. It is recommended that the urea prices must be printed on the bags to avoid customer exploitation.
With the implementation of the revision the urea prices which are currently hovering at PKR 1,659 per bag would be brought down to around PKR 1,500 per bag. It would result in higher offtakes of urea without much affecting the margins of the fertilizer companies which bodes well for fertilizer sector.