The country will import 0.2 million tons of urea from Saudi Arabia Basic Industries Corporation (Sabic) under the $ 100 million credit facility provided by the Saudi Fund for Development (SFD) to curtail urea shortage during Rabi season.

Following the directives of Economic Coordination Committee of cabinet, the Trading Corporation of Pakistan is to continue import of urea on urgent basis to meet the local demand.

In this regard, the TCP signed a commercial agreement with Sabic at Karachi on Wednesday to import urea under credit facility provided by SFD. The agreement was signed by Sabic's agents for Pakistan Jaffer Brothers (Pvt) Ltd, and TCP Director.

"The agreement covers supply of approximately 200,000 metric tons of urea to Pakistan under the $ 100 million credit facility provided by the Saudi Fund for Development (SFD)" said an official of TCP.

In this regard, an initial agreement between the Government of Pakistan and Saudi Fund for Development (SFD) had already signed earlier at Islamabad on December 29, 2011. As per agreement, first urea shipments under the Sabic credit facility will arrive during this month, he added.

Market sources said that natural gas shortfall during the winter has seriously hurt local production of urea and the government is compelled to import huge quantity of urea.

"The government has planned to import over one million tons of urea for Rabi season because the local urea producers are unable to cater the local demand due to inconstant gas supply" they said.

Currently, urea prices are on higher side in the world market and to ensure cheap availability of commodity in the domestic market, the federal government is paying huge subsidy on imported urea. According to sources, urea is being imported by TCP at approximately $538 to $540.75 per ton (average Rs 48,600 per ton), while it is being provided to National Fertilizer Corporation at a price of Rs 10,760 per ton, following the decision of ECC.

With the import of 0.2 million tons of urea from Saudi Arab overall import of commodity for Rabi reason will reach 1.2 million tons, as some 700,000 tons of urea has already been imported for Rabi Crop 2011-12. An international tender for import of 300,000 tons urea was floated by TCP on December 28, 2011.