“Another decision taken by the PTI government to support the vested interests of big businessmen and capitalist cronies, who have taken over the cabinet,” deplored an industrialist.
In its meeting on Saturday, the Economic Coordination Committee had decided to provide gas at Rs756 per million British thermal units (MMBTU) to two mega RLNG-based fertiliser plants for three months (July to September). The decision will cost the government Rs1 billion. The government claims that this subsidy would help ensure sufficient urea in the country.
Sources say that there was no urea shortage in the country and it would be double the required safety stock even if demand rebounds to 5.8 million tonnes. Local production could match the estimated demand and there was already a starting year inventory of 0.4 million tonnes.
“The government is misleading the public by using the average of old oil prices for subsidy calculation. The actual subsidy will be higher as actual crude oil prices are rising. The decision will also result in Rs6bn ($36 million) foreign exchange outflow,” another source said. “The June inventory of 0.43 million tonnes is higher by 200 per cent compared to the usual level at this time of the year,” he added.
He questioned how the economy could afford this huge subsidy and waste of resources when it is already under pressure from the International Monetary Fund, and Covid-19 has destroyed the economy. “The government is spending Rs1bn for political gain and to please its cronies rather than using the money to fight the pandemic. Where is the much-touted accountability?” he asked.