FERTILISER is a key input for our agriculture sector, and this industry is a driving force behind the national economy.

The agricultural sector generates 24pc of the country`s GDP and 65pc of foreign exchange earnings through exports, while it provides employment to over 50pc of the employed worl(force and also ensures food security for the country.

The local fertiliser industry promises a bright future as its demand in Pakistan is expected to grow by four to five per cent per annum in the long run. This essential industry has invested heavily in Pakistan to install additional capacity for producing surplus urea. Thus, this commodity also offers a great potential for exports and foreign-exchange earnings.

Erratic gas supplies and increase in gas prices are proving detrimental for this industry since natural gas normally accounts for over 50pc of urea production costs. The fertiliser plants also use gas as a primary raw-material for producing urea prills, not just as fuel to run factories. Urea producers have also been passing on the gas subsidy benefit to the local farmer in the shape of price markdown. Thus, the government must maintain a sustainable subsidy on natural gas prices for the fertiliserindustry tokeep theirproduction costs low.

Another major challenge for the fertiliser industry is that it has been subjected to a standard rate of general sales tax like other non-essential industries. Moreover, the recent imposition of a gas infrastructure development cess (GIDC) has been detrimental. GIDC is a special tax, originally meant to ensure sufficient gas supplies. However, the fertiliser sector has not received any tangible relief or assurance,regarding consistentgas supplies, despite bearing a heavy financial burden of the GIDC.

Ironically, the fertiliser policy of 1991 officially provides incentives, tax holidays and regulatory support to the fertiliser industry. Therefore, the government is supposed to guarantee feed-gas supply at concessional rates for fertiliser plants, on priority, to increase productivity and growth of this sector and reduce fertiliser imports.

Muhammad Sagheer Islamabad