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Economy

ECC Approves Rs7.8b Ramazan relief package

Govt Agrees to rationalize electricity subsidies to meet IMF prior action

ISLAMABAD: The federal government has endorsed Rs7.8 billion worth of Ramazan relief package to provide essential food items at controlled prices at special outlets across the country during the holy month that is expected to start from April 12.

The Economic Coordination Committee (ECC) of the Cabinet gave the nod to the package in a meeting held on Wednesday. Minister for Finance Dr Abdul Hafeez Shaikh chaired the moot.

During Ramazan, the Utility Stores Corporation (USC) will subsidize 19 essential items under the proposed relief package entailing subsidy equivalent to approximately Rs7.8 billion.

However, a major chunk will be spent on giving subsidies on wheat flour, sugar and ghee which have significant differential vis-a-vis prevailing prices in the domestic markets.

The ECC approved a proposal to provide 70,000 metric tons wheat flour at Rs30 to Rs50 per kg reduced rates. The 50,000 metric tons sugar will be provided at Rs40 per kg lower than market rates, and the 30,000 metric tons ghee will be sold at rates that will be sold Rs43 lower than the market rates.

The USC managing director told the ECC that procurement would start from April 1 to ensure availability of basic items at discounted prices across 4,000 outlets of the USCs throughout the country.

The ECC also approved the proposal to rationalize electricity subsidies to meet a prior action of the International Monetary Fund (IMF). It also upward revised the profit margins of the oil marketing companies besides approving a Rs13.6 billion subsidy for two fertilizer plants.

In an official handout, the Ministry of Finance said the Power Division submitted a summary about re-targeting power sector subsidies in phase-I.

“The committee considered and approved the proposals recommending that Power Division will complete the analysis based on the listed principles and submit specific recommendations on thresholds and rates for the consumers before the ECC by 31st March, 2021,” it added.

Rationalization of all power subsidies is among the prior actions that the IMF had set for Pakistan for the sake of the revival of the stalled $6 billion bailout programme.

The ECC approved the principles for giving targeted subsidies to the people consuming electricity from 50 units to 100 units and withdrawing from those who do not fall in the revised criteria. The principles were also approved for categories of above 100 units to 300 units per month consumption.

The ECC allowed providing subsidized gas to the Agritech and Fatima Fertilizer plants from March till November, 2021 to produce urea from Sui Northern Gas Pipeline Limited (SNGPL) plants.

The government will give a Rs13.6 billion subsidy to these fertilizer plants to produce 70,000 metric tons of urea. The ECC was informed that the local production will be 50% cheaper than imports.

 The ECC approved proposal to abolish 27% taxes on the raw material being imported for manufacturing of auto disable syringes in the country.

The secretary health briefed the forum about efforts underway to switch from conventional syringes to auto disable syringes as reuse of conventional syringes leads to blood borne diseases in Pakistan such as hepatitis, HIV etc.

The ECC approved the summary, in principle, and directed the Ministry of Health to hold a follow-up meeting with the Law Division to fine-tune details.

It constituted a committee to review the possibility of giving Federal Excise Duty exemption to 10 soft-skin vehicles imported by the Food and Agriculture Organization (FAO) to be used by the Department of Plant Protection (DPP) for locust control operations.

The Ministry of Commerce tabled a summary before the ECC seeking permission for import of cotton from Afghanistan and Central Asian States through land route via Torkham border to bridge the gap between supply and demand and to ensure sufficient availability of cotton for promoting textile exports.

It had granted such permission earlier to work out necessary arrangements with reference to Plant Quarantine Rules to meet Sanitary and Phyto-sanitary (SPS) requirements for import of cotton via land routes.

The Ministry of Commerce requested the ECC to extend the permission for import of cotton via land route during the current financial year. The ECC approved the said request subject to fulfillment of codal formalities.

It approved a proposal to increase the margins of the oil marketing companies (OMCs) and the dealers by 5.9%, which would further increase the prices of petroleum products.

The ECC approved revising OMCs and dealers margins on the basis of 85% of the latest average core inflation with immediate effect, and directed to expedite a study by PIDE, said the Ministry of Finance.

It also approved Rs9.7 million for the Pakistan National Shipping Corporation to clear the dues of M/s Coniston against the Pakistan Steel Mills.

The government had allocated Rs149 million in the budget to pay off the dues of the South African firm but the finance ministry had cut the Rs9.7 million as part of the austerity drive. The ECC also approved Rs.67.4 million for the Cabinet Division for maintenance of high security vehicles.

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