ECC allows gas loadshedding

ISLAMABAD - Reviewing prices, economic indicators and energy security, the Economic Coordination Committee of the Cabinet under Finance Advisor Shaukat Tarin has permitted the Petroleum Ministry to manage gas supply and demand gap by loadshedding.
Ministry of Petroleum and Natural Resources briefed the ECC about the significance of gas especially between its supply and demand during the peak winter season in the country. The ECC considering the Ministry's Natural Gas Load Management Plan (NGLMP) for Winter Season (2008-09) approved it and also directed the Ministry to ensure the provision of gas to the domestic consumers. However, the burden of reduced supply will be equitably divided between power sector and industry, an official handout issued here about the details of ECC meeting.
The ECC earlier upheld the recommendations of the Water and Power Ministry regarding the expeditious development of pioneering projects in the private sector. Therefore, the tariff provisions of 2002 power policy and the mechanism developed by National Electric Power Regulatory Authority (NEPRA) were extended to hydropower projects under 1995 Hydel Policy with minimum changes to the project agreements. For increased availability of power, the ECC allowed rental power projects to adopt the same tax treatment as was applicable to rental power projects under WAPDA's jurisdiction.
According to the handout the committee was concerned about the anomalous situation of local and international price differentials. Despite the phenomenal decrease in international commodity prices, including petroleum products and their consequent reduction in Pakistan, commensurate decrease in local prices was not evident, noted the Committee.
Therefore, it constituted a secretaries committee to closely monitor the behaviour of domestic prices linked to the international tariffs. The committee is supposed to take measures to ensure that reduced prices are transferred to the people in Pakistan. The ECC also directed the Provincial Governments to activate the local price control committees and price magistracy to keep a vigilant eye on the prices. In particular it required the transport fares to come down as the present situation was not acceptable to the ECC. It also directed the Ministry of Interior to take appropriate measures to ensure that fares are reduced immediately, the handout added.
Ministry of Food, Agriculture and Livestock (MINFAL), informed the ECC that currently 2.6 million tonnes of wheat were available and that the import of 2.5 million tonnes of wheat would be completed by 31 December 2008. The ECC decided to constitute a committee under the Minister for Agriculture including Secretary Commerce and other stakeholders to investigate the problem of slow transportation of wheat from ports to destinations across the country.
The Ministry also informed the ECC that Trading Corporation of Pakistan was processing tenders for import of 250,000 tonnes of urea while the import of 100,000 tonnes of urea will be completed by December 15, 2008. The ECC advised the MINFAL to make a schedule for availability of urea in the market and ensure its timely supply to the growers. It further directed the MINFAL to closely monitor the sugar stocks in the country and come up with its recommendations, if any, for ECC's consideration in its next meeting.
The ECC approved the market intervention price of Rs.1,465 per 40 kg for seed cotton during 2008-2009 season based on current export parity price. It directed the MINFAL and the Ministry of Commerce to jointly work to devise an efficient procurement plan so that the small farmer benefits from this price and also the prices in general are stabilized. It further directed the MINFAL to ensure that farmers' facilitation was given top priority and intervention price was announced at the right time in order to motivate the farmers.
The ECC further allowed procurement of 750,000 tonnes of additional wheat with better specifications, directing the MINFAL to take into account any possible inflow of US wheat in a manner that our domestic requirements are met satisfactorily and wheat stock position remains adequate.
The ECC noted that the foreign exchange reserves of the country stood at $9.1 billion on November 30, 2008, bolstered by the receipt of first IMF tranche of $3.1 billion. It also noted that the workers' remittances during July-October 2008 increased by 12.7 per cent to $2346.0 million while foreign direct investment grew by 0.2 per cent to $1321.2 million as compared to the same period last year. However, the portfolio investment declined by $145 million for the same period.
With a view to lessening the difficulties being faced by the automobile sector, the ECC allowed exemption from 35 per cent cash margin on Letter of Credit (LC), while it directed the Ministry of Industries to form a committee comprising representatives from FBR, Finance Division and other stakeholders to firm up the proposals that could further ease the problems of the automotive sector.
With a view to speeding up the work of making the Gwadar Port fully operational, the ECC directed that all import consignments of wheat and fertilizer would be carried out through this port whereas cement could also be exported from this port.
The ECC also approved a credit guarantee scheme for small banks in order to help them maintain liquidity through availability of credit facilities from SBP. The scheme will be implemented by SBP, which will ensure its effective utilization with the objective to ensure sound operation of the banking system.