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Ministry of Industries and Production announced Fertilizer Policy 2001. NFDC supplied required information and technical support in the formulation of this policy. For the information of national and foreign investors, policy planners and general user this policy in toto is posted on NFDC website.  FERTILIZER POLICY
2001 Whereas the Fertilizer Policy announced by the Government of Pakistan
in 1989 was successful, assuring reasonable prices of fertilizer to farmers below
import price and in bringing substantive investment to enhance domestic production
and has completed its stipulated time frame, and whereas it is felt that further
investment in fertilizer production is required keeping in view the importance
of fertilizers in increasing the country’s agricultural output, a need is
felt to review and update the policy to encourage new and existing investors to
come forward to invest. Accordingly, the following policy is adopted, after due
authorization by the Cabinet, with effect from 1st July, 2001:
1.
EXISTING PLANTS 1.1. a) To enable local fertilizer price to stay below imported fertilizer
prices, the escalation of existing feed gas prices will be as follows:
Date Annual Increase%
1.7.01 Nil b) Therefore, the price is to be $1.10/MMBTU or prevailing c) Fuel gas price will be the same as for other
industrial consumers in the country. Fuel gas will continue to be defined as gas
which is used for generation of electricity and steam and for usage in housing
colonies. d) Concessional feed gas allowed under the 1989 Fertilizer Policy to companies that undertook expansion will be continued until their 10 year period is exhausted. Thereafter the feed gas price will be same as in 1.1(a) and (b).
2. NEW INVESTMENT
2.1 NATURAL GAS 2.1.1 It is the intent of this policy to provide investors in
new fertilizer plants in Pakistan a gas price that enables them to compete in
the domestic market with fertilizer exporters of the Middle East so that indigenous
production is able to support the agricultural sector’s requirement by fulfilling
fertilizer demand. 2.1.2 The price of feed gas will be the Middle
Eastern Price prevailing on the date of signing of the GSA or $0.77/MMBTU which
ever is higher (less the discount of 10% mentioned in 2.1.3) and shall remain
fixed at such price till the expiry of 10 years from the date of commissioning. The
price will be determined by the Gas Regulatory Authority of Pakistan, from the
published international data, in dollar terms, on the principle of general parity
with the price prevailing in 2.1.3 A discount of 10% will be allowed on such
determined price as at 2.1.2 to facilitate new investment. The discount price
i.e. the price fixed as per 2.1.2 and 2.1.3 will remain fixed, for a period of
10 years from the date of commissioning, in dollar terms. The rupee parity will
be determined as defined in para 2.1.6. This price will
be inclusive of all taxes, duties, levies, fees and charges wheresoever, whether
local, federal or provincial. However, GST or similar duty may be imposed on such
determined price provided it is adjusted against GST, payable on the fertilizer
produced. 2.1.4 The investor may avail this opportunity
to sign GSA (Gas Sales Agreement) as detailed in 2.1.2 & 2.1.3 by 30th
June, 2005. 2.1.5 Fuel gas prices shall continue to be treated as at
par with other Industrial consumers. 2.1.6 For billing purposes, the price fixed in dollars
will be calculated in Pak Rupees, at the average inter bank rate. The average
inter bank rate shall be fixed twice in a year i.e. on 1st January,
and 1st July, based on the average of the previous six months daily
inter bank rate. 2.1.7 Gas Companies will build adequate safeguards in the
GSA to ensure that the investor proceeds without delay in installing the plant
after 2.1.8 Gas will be allocated to new fertilizer plants on
the principle of first come, first served. Recognizing the expected growth in
fertilizer
2.2 IMPORT AND LOCAL
MANUFACTURE OF PLANTS 2.2.1
The Government
of
2.3 IMPORT OF SECOND HAND PLANT 2.3.1
Investors will be allowed to relocate second hand
plant, equipment and machinery, with the same concession/exemption as applicable
to new plants.
2.4 EXPANSION/BMR/DE-BOTTLENECKING 2.4.1.1
If an investor
undertakes an expansion, major BMR or de-bottlenecking of an existing plant, which
results in increase in the production capacity of the plant, such additional feed
gas shall be treated at par with a new plant for 5 years for purposes of
concessions/exemptions outlined in 2.1.2, 2.1.3, 2.1.4, 2.1.5 and 2.2.1, 2.2.2
and 2.3.
2.5 EQUAL TREATMENT All the fertilizer producers, domestic
and foreign, public and private will be treated equally in commercial, fiscal,
corporate and contractual matters.
3. PHOSPHATIC FERTILIZER
3.1 Considering the importance of Phosphatic
Fertilizer, the Government plans to continue to encourage its local production.
For said purpose, the following measures shall be taken: 3.1.1 Rock phosphate and phosphoric
acid importable by manufacturers of fertilizer shall remain importable free of
custom duty.
4. N.P.K.
4.1.1 All raw materials
required for NPK production i.e. Di-Ammonia Phosphate
(DAP), Mono-Ammonia Phosphate (MAP), Triple Supper Phosphate (TSP), MOP, SOP and
micro nutrients are allowed to be imported free of duties & taxes.
5. GENERAL 5.1 Selling price of fertilizer shall remain deregulated on the understanding
that while manufacturers will allow free market forces to prevail they will pass
the benefits in the form of lower price of fertilizer to the farmers. In order
to ensure this objective is achieved a Committee will be set up and shall meet
as and when required, but at least on a regular quarterly basis and take appropriate
steps as necessary. The Committee will be headed by the Minister for Industries
& Production and will include Minister Food, Agriculture, Livestock as well
as a senior representative from the Ministry of Finance. 5.2 Withholding tax collected at the time of import of fertilizer, shall be adjusted against assessed income tax of the year during which such import takes place, in case the fertilizer is imported by a manufacturer of fertilizer. |
