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Kathmandu Wednesday June 27, 2001 Ashadh 13, 2058.
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Govt re-establishes AIC
dealers
Post Report
KATHMANDU, June 26 - Bothered by the plunging
consumption of fertilizer, the government has decided to re-establish fertilizer dealers
of Agriculture Inputs Corporation (AIC), which were dissolved some four years ago.
Officials said that the move was taken with an aim to encourage private sector
participation in the fertilizer transaction.
The government recently issued ‘Selling
Management Procedures 2058’ replacing the similar procedures enforced some years
back. "As per the newly issued procedure, the AIC has started appointing dealers
throughout the kingdom," said Nitya Raj Koirala, General Manager of NIC. He also
informed that the decision to re-establish dealers was taken under the approval of the
Asian Development Bank (ADB), the principal lender of Nepal in the agricultural sector.
The decision to re-establish the local level
dealers is the major policy reversal the government made in the economic liberalization
era. The ADB in 1998 had persuaded the government that inadequate fertilizer supply is one
of the major causes of low agriculture output and allowing private sectors in imports and
distribution of fertilizer would ensure adequate supply and enhance productivity. In line
with the ADB’s recommendation, the government made extensive procedural changes and
opened fertilizer business to the private sector, ending years long monopoly.
The ADB had argued that the presence of the
government dealers would obstruct in creating competitive environment for the private
sectors. Accepting ADB’s logic, the government had dissolved more than 3,000
well-trained dealers of AIC, spread throughout the kingdom. The government had also agreed
to restructure the AIC and also cut down the number of offices to 71 from 88.
However, the scenario was different over the
last four years as none of the private sectors turned to rural sector to establish
distribution centers. On this background, not only the use of fertilizer declined but the
low graded Indian fertilizer imported illegally filled the vacuum, which created negative
impact on agricultural productivity.
Concerned officials claim that the new procedure
has made easy terms and conditions to the new dealers. Koirala informed deposit amount for
the dealers has been lowered considerably to ensure maximum participation of local people
in fertilizer distribution.
Similarly, districts have been classified into
four categories based on the demand of fertilizer and the deposit has been set accordingly
from Rs 5,000 to Rs 1,000. Dealers falling under category "A" are required to
purchase at least Rs 100,000 worth of fertilizer, whereas such limitation for dealers
under category "D" has been set at Rs 25,000. As per the procedure, Rs 6 has
been fixed as the commission for the dealers, while such commission in DAP and Phosphate
is Rs 5.
Likewise, as per the procedure, the dealers are
required to be registered with the sellers’ list of Agriculture Development Office
and must have acquired necessary certificates. The dealers appointed are also required to
display price list of the varieties of fertilizers.
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