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Nepal urges India to send fertiliser to avert shortage
Nepal has requested India to provide chemical fertilisers through a government-to-government deal to prevent a possible shortage during the winter growing season. This is the second time this year that the government has asked the southern neighbour for crop nutrients to tide over the country.Nepal has requested India to provide chemical fertilisers through a government-to-government deal to prevent a possible shortage during the winter growing season. This is the second time this year that the government has asked the southern neighbour for crop nutrients to tide over the country.
The government fears that the small number of international bidders that were awarded contracts to supply fertilisers may pull out due to sharp price fluctuations in the global market.
Importing fertilisers through a government-to-government deal will eliminate lengthy procedures.
According to officials of the Agriculture Inputs Company (AIC), chemical fertiliser prices have jumped $80-90 per tonne in the global market.
“If the market price of fertilisers rises more than 20-25 percent, the supplier usually forgets the bid bond,” said Narayan Marasini, spokesperson for AIC.
A supplier has to deposit 5 percent of the bid amount as security. “The supplier thinks it better to forfeit the 5 percent deposit than incur losses of 20-25 percent of the contract amount.”
“Two international suppliers have already pulled out of the supply contract due to sharp fluctuations in fertiliser prices,” said Marasini, adding that the AIC had seized their 5 percent bid bonds. “However, we are facing a shortage of fertiliser as no shipments have been made.”
UAE-based Commodities Trading Company reneged on the supply contract after fertiliser prices jumped $25 per tonne in the global market. Consequently, AIC seized the $215,000 performance bond deposited by the company.
Marasini said that they had signed a contract to buy 30,000 tonnes of urea for winter crops and were expecting to receive the shipment within a month. After world prices went haywire, the suppliers fled putting AIC in a fix.
As an immediate and alternative measure, the government has requested India to provide fertilisers under a government-to-government deal.
The government acted uncharacteristically swiftly as a fertiliser shortage during election season could spell a poll disaster.
On Thursday, a high-level delegation led by the joint secretary of the Agricultural Ministry discussed the issue with the Indian ambassador to Nepal. The exact amount of fertiliser requested by Nepal has not been revealed.
As per a treaty signed in 2009, India will supply 100,000 tonnes of chemical fertilisers (60,000 tonnes of urea and 40,000 tonnes of DAP) to Nepal annually at the international parity price to avoid procedural hassles. It normally takes six months to procure chemical fertilisers following a global tender call under the Public Procurement Act.
AIC reported that its fertiliser stock had dropped to 2,000 tonnes. Nepal’s annual fertilizer demand stands at 700,000 tonnes, of which 90,000 tonnes are required for winter crops.
According to Marasini, they have received only 2,500 tonnes out of the 20,000 tonnes of urea granted by the Indian government in February. “The remaining amount is expected to arrive gradually.”
Meanwhile, AIC is expected to receive 8,000 tonnes of DAP within two weeks. Another shipment of 10,000 tonnes of DAP lies stranded at Kolkata port in India due to traffic congestion. A consignment of 15,000 tonnes of DAP has arrived in Singapore, and it is expected to arrive at Kolkata port within a week, he said.