Liquidity crisis for fertiliser importers
View(s):The Treasury recently paid Rs.3.5 billion to settle last year’s arrears of fertiliser subsidy re-imbursements but still owes at least Rs. 10 billion to importers A. Baur & Co, CIC Agri Business, Hayleys Agro Fertilisers, AgStar Fertilisers Ltd and McLarens International, a senior official of the National Fertilizer Secretariat (NFS) said.
A spokesperson for one of the importers noted that the companies find it difficult to survive as the industry is faced with a lack of liquidity due to the delayed subsidy settlement in excess of the agreed payment period of six months.
The NFS official said the Treasury is burdened with the task of making these payments from the annual budget allocation with the assistance of the NFS.
He told the Business Times that the delay in making subsidy re-imbursements was due to heavy paper work and financial constraints of the government.
The Finance Ministry has already issued a directive to all relevant institutions to manage the fertilizer subsidy more effectively and efficiently, targeting only the farmers, who are in need of the subsidy.
Meanwhile the Treasury is looking at alternate ways to reduce its fertilizer subsidy burden in which some Rs.50 to 60 billion is paid out annually, Finance Ministry sources said.
At a recent meeting chaired by Treasury Secretary Dr. P.B. Jayasundera, with the participation of officials of the Ministry of Agriculture and representatives of the state-owned fertilizer companies, ways of easing the subsidy burden of the Treasury were spelt out.