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Subsidized Gas Supply to Fertiliser Plants: A Never-Ending Cycle of Incompetence and Exploitation

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Editorial

The Ministry of Industry and Production’s proposal to extend subsidized gas supply to two SNGPL-based urea fertilizer plants for another six months has raised eyebrows. The Economic Coordination Committee of the Cabinet had earlier allowed the plants to operate for the Jan-Mar 2024 period at the gas rate of PKR 1,239/MMBTU and price differential with RLNG. However, the exact reason for the extension of the subsidy remains unclear, leaving room for speculation.

The subsidy disbursement mechanism, which involves an endless list of ministries and bureaucratic procedures, is inefficient and ineffective. The subsidy is not provided to farmers but to industrialists running fertilizer plants, and the circus continues while farmers are forced to turn to the black market for vital nutrients, resulting in expensive imports.

The food ministry has supported MoI&P’s proposal, saying that the closure of the SNGPL-based plants during the Kharif season will result in a production loss of about 445,000 tons. However, this cycle of incompetence and exploitation continues, with powerful politicians, influential industrialists, and corrupt bureaucrats exploiting farmers and end consumers.

The country has enough plant capacity to produce fertilizer in excess of demand, yet farmers are forced to turn to the shadow market every winter, especially for a crop as important as wheat. The nexus between influential industrialists, powerful politicians and corrupt bureaucrats continues to thrive while those on the ground continue to suffer.

With the economy on the edge and subsidies becoming a thorny issue in IMF programmes, it remains to be seen if this madness will finally come to an end. Only the strongest political will can dislodge this entrenched system, but it is unlikely to happen soon. Furthermore, Pakistan should make strong decisions to reform and restructure various organizations and procedures. Without reforming the systems, Pakistan will not be able to deliver the goods.  

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