ISLAMABAD: While authorizing an already approved Rs7.5 billion subsidy package for the forthcoming Ramadan, the Cabinet’s Economic Coordination Committee (ECC) was unable to decide how to recover Rs100 billion in extra funds from gas consumers in the last four and a half months of the current fiscal year, as the commerce minister pressed for reducing the cross-subsidisation burden on industry.
The meeting of the ECC, presided over by caretaker Finance Minister Dr Shamshad Akhtar, discussed the Petroleum Division’s summary for increasing gas tariffs, which ranged from Rs70 to Rs300 per unit (mmBtu, or million British thermal units) for various slabs of residential consumers, among others.
According to sources, caretaker Commerce Minister Gohar Ejaz has urged for reducing the burden of cross-subsidies on the manufacturing sector. He is also said to have advocated for the continued supply of gas to some industrial Captive Power Plants (CPPs), despite previous decisions to relocate industries away from their CPPs and onto the national grid, which had surplus power production and dwindling demand.
Several meeting participants inquired about the size of the price of gas increase for various sectors and dwellings slabs, as well as additional data on captive power plants and cross-subsidy effects on the energy sector and its impact on other consumers in the event of subsidy reduction, and how to cover the Rs100 billion profits gap estimated by the regulatory body for the two gas appliances for the current fiscal year.
Approves Rs7.5 billion Ramadan Relief Package.
As a result, the meeting decided to reconvene, most likely on Wednesday, to pursue comprehensive discussions and data sets needed during a lengthy debate on gas pricing in response to the International Monetary Fund’s (IMF) pledge to alter gas rates by mid-February.
The IMF has also advocated for a complete limit on gas supply to CPPs in order to discourage gas consumption in primarily unproductive industries.
Earlier this month, the gas regulator approved a 9 percent to 35 percent hike in gas tariffs for gas utilities Sui Northern Gas Pipeline Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL) to extract an additional Rs100 billion from consumers over the next four months. This is on top of a 1,100 percent increase in November last year, according to the Pakistan Bureau of Statistics, which included a 193 percent increase in gas rates and a 3,900 percent increase in fixed gas costs.
According to an official release, the ECC also approved the Ramazan Relief Package 2024, which will give subsidies to targeted beneficiaries of the Benazir Income Support Programme (BISP) in the amount of Rs7.493 billion, as budgeted for in the 2023-24 budget.
Wheat imports authorized
The ECC also accepted a proposal titled “Permission to Import Wheat and Export of Wheat Flour according to Export Facilitation Scheme 2021” that would allow registered enterprises to import wheat for re-export of added value wheat products.
The ECC approved the idea and asked the appropriate ministries to develop comprehensive proposals to increase possibilities for value-added exports.
The meeting was informed that a prohibition on wheat and wheat product exports was imposed in 2019 to ensure an adequate amount of wheat and wheat products, such as flour, fine, maida, suji, and so on, in the local market.
However, some food processing companies have requested that they be allowed to export processed wheat products with 20 to 25 percent value addition made from imported wheat via the Export Facilitation Scheme (EFS) 2021 in order to participate in international tenders for the delivery of wheat flour to international donor firms such as the World Food Programme, as well as provide to various international markets due to consistent demand.
Thus, by permitting Pakistani enterprises to compete in such international tenders for the supply of wheat goods, Pakistan can gain significant foreign cash. To ensure that the facility did not distort wheat supply in the domestic market, the commerce ministry suggested that exporters be obligated to import the raw substance (wheat) from international sources under EFS 2021 (import-cum-export), subject to compliance with national import regulations and quality standards set by procuring donor agencies.
According to the proposal, the facility would be available only to EFS-registered enterprises, and they would not be permitted to purchase wheat from the local market. Export and import of wheat and wheat flour, among other things, would be subject to the FBR’s Track and Trace System.
The ECC also approved a summary from the Commerce Ministry’s Tariff Policy Wing on “Individual Tariff Rationalisation Proposals from Various Sectors for Review of Custom Duties” and instructed that tariff rationalisation be coordinated with trade policy. It also accepted the Power Division’s account on the commissioning of the 1,263MW combined cycle power plant at Punjab Thermal Power (Pvt) Ltd, Jhang (PPTL).
Another proposal from the commerce ministry, a Rs6 billion supplemental grant for splitting the subsidy on imported urea 50:50, was also approved.
SOURCE: DAWN NEWS
