The Trading Corporation of Pakistan (TCP) requires an immediate financing of some Rs 25 billion from federal government to open letter of credit (LCs) for import of urea. Sources told Business Recorder on Friday that growing commodity operation may create some financial difficulties for TCP, which credit limit has almost exhausted and its billions of rupees payments have been pending with federal government, Utility Stores Corporation (USC) and other institutions.
On the other hand, following the directives of federal government, TCP is engaged in importing another 0.3 million tons of urea to avoid any shortage in the domestic market in Rabi season. Recently, TCP awarded contracts for import of urea, but it does not have sufficient funds to open LCs for import of the commodity, they said and added that TCP has finalised deals at $399.38 per tons for import of 0.3 million tons of commodity and it requires huge funds for opening of LCs.
Urea import at this stage, when urea prices are at low level will result in less financial burden on the TCP as well as on the exchequer in terms of subsidy, they said. “Although, lower international prices have supported the state run grain trader as it has successfully finalised contact at even lowest price of this calendar year, however, still this import needs billions of rupees amount for import process,” they informed.
Sources said it has been estimated that TCP sought Rs 25 billion for overall import operation of 0.3 million tons of urea. Out of this amount approximately Rs 12-13 billion will be the commodity cost and the remaining amount will be utilized for payment of taxes, duties and other expenses viz urea import.
“TCP has asked ministry of finance for Rs 25 billion financing through increase in its credit limit for smooth urea import operation. It has asked for enhancing credit limit from Rs 115 billion to Rs 140 billion to establish LCs, they said. Presently, TCP enjoys a strengthened financial position; however it may face some shortage of funds to import urea as its over Rs 50 billion of urea subsidy payment is pending with federal government.
