2008 Melbourne Hafiez Slides

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FERTILIZER SUBSIDY IN PAKISTAN

Lt Gen. Munir HAFIEZ (Retired)

Fauji Fertilizer Company Ltd., Pakistan

Fauji Fertilizer Company Ltd.

93 Harley Street, P.O. Box 253, PakistanTel: 92 51 9272301 - Fax: 92 51 9272519

E-mail: [email protected]



(content as provided for distribution in Melbourne)

All the papers and presentations prepared for the

2008 IFA Crossroads Asia-Pacific in Melbourne will be

compiled on a cd-rom to be released in December 2008.



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FERTILIZER SUBSIDY IN PAKISTAN

Munir Hafiez

Chief Executive & Mana in Director

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Fauji Fertilizer Company Ltd. Pakistan

CONTENTS

Brief History

Fertilizer Subsidy Regime

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Outlook



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CONTROLLED/ REGULATED PHASE1955 - 1985

Regulated Fertilizer Prices

Controlled Farm Output Prices

Dominating Public Sector InManufacturing / Marketing / Import

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Pakistan (GOP)

Provincial Quotas

DEREGULATION PHASE1986 - 1995

ncen ves or r va e nves men

Guaranteed Return On Investment

Tax Holidays

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Duty Free Import Of Raw Material /

Machinery



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DEREGULATED PHASE

1986 ONWARDS Deregulation By GOP

Phosphatic 1993 Potassic 1995

Increased Emphasis On Privatization ofFertilizer Business / Manufacturing

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Support Price For Major Crops By GOP

Quotas Abolished

Elimination of Subsidies

CHANGE IN INTL. FERTILIZER MARKETIMPACT ON PAKISTAN: 2004 ONWARDS Pakistan dependant on fertilizer imports to

supplement domestic production for meeting local.

Increasing international fertilizer prices oblige GOP

to consider subsidy on fertilizers. Need for subsidy to:

Provide fertilizers to farmers at affordable

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pr ces.

Promote balanced fertilizer use.

Maintain growth in agriculture sector.

Provide raw materials for local industry.

Ensure food security.



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RE-INTRODUCTION OF FERTILIZER

SUBSIDES

2004: Increase in international urea price.

,

itself & subsidizes difference between

domestic & international price

2006: Steep rise in international

phosphatic & potassic fertilizer prices.

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GOP allows subsidy to private sector ondomestic production & import of these

fertilizers also.

SUBSIDY ON FERTILZERS

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* Budget figure

** Calculated on prevailing exchange rate



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FERTILIZER SUBSIDY - OUTLOOK Two new urea manufacturing facilities expected

on stream in Pakistan during 2009 & 2010 afterw u w ucountry.

Subsidy on urea likely to continue during 2009.Total outlay will go down due to decrease ininternational prices.

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prices subsidy on these fertilizers expected to beeliminated during 2009.

Subsidy on potassic fertilizers likely to continue.

Thank YouThank YouThank YouThank You

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Documents

2008 Melbourne Hafiez Slides