Government Discontinues Gas Subsidy for Fertiliser Industry
May 25, 2024 – In a significant move, the federal government has resolved to eliminate the subsidy on gas provided to the fertiliser industry. This decision was unanimously approved by the Federal Cabinet.
Previously, the fertiliser industry received a subsidy of Rs217 per mmbtu on gas, bringing their gas cost down to Rs1597 per mmbtu. However, the government has determined that this subsidy has not benefited the farming community.
With the subsidy’s removal, the gas rate for the fertiliser industry will increase to Rs1814 per mmbtu. The government intends to redirect this subsidy towards supporting farmers.
Concerns Raised by the Cabinet
The Federal Cabinet expressed concerns that the gas subsidy for the fertiliser industry had not been effective in reducing fertiliser prices for farmers. The government highlighted that the subsidy had primarily benefited fertiliser producers, leading to increased profits without a corresponding reduction in fertiliser costs for farmers.
Measures to Support Farmers
The government has stated its commitment to providing support to farmers amidst the rising costs of agricultural inputs. The Cabinet emphasised the need to explore alternative mechanisms to subsidise fertiliser costs for farmers, ensuring that they receive affordable fertiliser essential for crop production.
Industry Reaction
The fertiliser industry has expressed concerns regarding the government’s decision to end the subsidy. Industry representatives argue that the removal of the subsidy will increase production costs, potentially leading to higher fertiliser prices for farmers.
Outlook
The government’s decision to discontinue the fertiliser industry’s gas subsidy signals a shift in its approach to agricultural support. The government aims to provide more direct support to farmers, ensuring that they have access to affordable inputs necessary for increased agricultural productivity. The impact of this decision on fertiliser prices and the overall cost of agricultural production remains to be seen. The government has assured that it will continue to monitor the situation and take necessary measures to support the farming community.