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Ghee price raised by Rs30 per kg, power surcharge abolished

Finance Minister Dr Abdul Hafeez Shaikh presides over a meeting of the Economic Coordination Committee (ECC) of the Cabinet in Islamabad on Friday. — PID

ISLAMABAD: The government on Friday abolished a 10 paisa per unit surcharge on electricity and increased the price of ghee by Rs30 per kg (15 per cent) for sale at Utility Stores.

The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Dr Abdul Hafeez Shaikh that also approved about Rs850 million technical supplementary grants to various entities.

The committee increased the price of ghee from Rs170 per kg to Rs200 per kg instead of Rs220 per kg demanded by the ministry of industries.

However, the ECC put on hold until after Eidul Fitr increase in the prices of wheat flour and sugar demanded by the Ministry of Industries and Production (MOI) and the Utility Stores Corporation (USC).

The MOI had demanded an increase in the sugar price by over 10pc to Rs75 per kg from the existing rate of Rs68.

It had also demanded that wheat flour price at the USC should be pegged to price notified by Punjab Food Department while those of rice and pulses should be kept Rs15-20 per kg lower than the market price.

The secretary of industries and production “presented various proposals to rationalise prices of wheat flour, sugar and ghee in view of continuous fluctuations in international commodity prices”, an official statement said.

Informed sources said the meeting was told that the cabinet had already fixed the subsidised prices of five essential items on Feb 11. However, it insisted that it was feasible to peg the price of flour with a credible reference price notified by Punjab Food Department but the reference market prices for sugar and ghee were quite amorphous and volatile. Therefore, to avoid frequent price volatility and accounting issues, a hybrid approach should be adopted for revision in prices of the four items.

A statement said,

“After detailed discussion, the ECC approved only partial rationalisation and directed to provide maximum relief to the consumers despite significant price differential between subsidised price offered by the USCs and the prevailing prices in the domestic markets” .

This is in compliance with the Prime Minister’s Relief Package-2020 to provide basic commodities at affordable rates through a network of Utility Stores across Pakistan.

The Ministry of Energy presented another summary about revocation of Neelum-Jhelum surcharge at the rate of 10 paisa per unit of electricity. “The ECC considered and approved the revocation of Neelum Jhelum surcharge with immediate effect.”

The surcharge had been under widespread criticism from various parliamentary bodies because it was imposed for eight years but has remained part of the power tariff for 14 years.

The surcharge was imposed in 2007 for part financing of Neelum-Jhelum Hydropower Project with a sunset clause of Dec 31, 2015 – the completion target of the project started at that time at an estimated cost of Rs130 billion. It was envisaged that half of the financing would be generated through this surcharge on every unit of electricity sold to consumers in eight years.

The cost of the 969-megawatt run of the river project in Azad Kashmir, however, kept on increasing and it was completed in 2018 at a cost of Rs500bn. The 10 paisa per unit surcharge was extended for one year and then another 18 months until July 1, 2018, but has continued until now. By 2018, an amount of Rs75bn had been collected. Depending on power consumption, the annual NJ-surcharge generates about Rs10bn per annum.

The ECC also approved another summary by the Ministry of Industries and Production for outstanding payment of $580,000 to M/s Ocean Wide Shipping Services of Germany from Pakistan Steel Mills to fulfill a contractual obligation for transportation of coal in 2010.

The secretary of Ministry of Information Technology and Telecommunication presented a summary regarding taxation issues of the telecom sector. The ECC had earlier constituted a sub-committee in October last year, under the chairmanship of the Adviser to the Prime Minister Dr Ishrat Hussain, for due deliberation. The sub-committee presented its recommendations before ECC which approved the recommendations as endorsed by the Federal Board of Revenue (FBR).

The ECC considered a summary by the Ministry of Energy (Petroleum Division) regarding tax on payments to the offshore supply contractor to meet the contractual obligation and constituted a sub-committee, comprising the special assistant to the PM on petroleum, the secretaries of law and power divisions and a FBR representative, to evaluate the proposal and present workable recommendations.

The secretary of Ministry of National Food Security and Research (MNFSR) placed a summary before the ECC regarding a mechanism for disbursement of subsidies in line with the Prime Minister’s Fiscal Package for Agriculture in the backdrop of Covid-19 pandemic. The summary was approved by the ECC for timely disbursements of subsidies to the provinces by the MNFSR subject to clearance by the Finance Division.

The ECC also considered and approved a summary regarding the government’s sovereign guarantee for a Public Sector Development Programme project titled National Electronics Complex of Pakistan and executed by National Engineering and Scientific Commission.

The ECC also approved Rs550 million supplementary grant for Special Communications Organisation from Ministry of Information Technology and Telecom, Rs200m to Special Technology Zones and Rs109m to Ministry of Information and Broadcasting to clear outstanding bills related to media campaigns on behalf of Ehsaas Programme during FY2019-20.

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