ISLAMABAD - The Economic Coordination Committee (ECC) of the Cabinet on Tuesday allowed weekly adjustment of petroleum products prices on a trial basis in order to examine its impact on general public and oil marketing companies.
The move came after the Ministry of Petroleum and Natural Resources (MP&NR) moved a summary to the ECC on the subject. Federal Minister for Finance and Economic Affairs Dr Abdul Hafeez Shaikh chaired the ECC meeting, which discussed various agenda items of national importance. The ECC also approved in principle the sale of wheat to Iran under barter trade system and asked the State Bank of Pakistan (SBP) governor to get Ministry of Foreign Affairs viewpoint in context of international trade restrictions faced by Iran.
Arguing on the increasing food needs of growing population and gas suspension to the SNGPL and fertiliser plants, the Ministry of Industries proposed for import of 0.6 million tonnes of urea to be utilised in Rabi 2011-13 with price reduction of Rs 1600 to Rs 1450 per 50 kg bag. After due deliberation, the ECC approved importing 0.3 million tonnes of urea and decided not to change existing pricing formula.
The meeting also approved in principle the removal of high octane blending component (HOBC) from inland freight equalisation margin (IFEM) regime, subject to consultation and endorsement from the Ministry of Law and Justice. After removal of IFEM for HOBC, the ex-depot price of HOBC will vary from location to location across the country contrary to other oil products.
The cabinet committee also approved the short and long-term liquefied natural gas (LNG) import framework proposed by the MP&NR. However, it formed a technical group comprising secretaries of petroleum, finance, and Water and Power besides the Planning Commission deputy chairman, Board of Investment chairman and SBP governor to work further on mechanism, bidding details, guarantee matters and legal issues raised by the law minister and to present a report to ECC at the next meeting.
The ECC also approved import of furnace oil by Pakistan State Oil (PSO) under term contract. However, it asked the MP&NR to work for detailed calculations on the subject with consultation of Finance Ministry.
The matter of terms of settlement with IPPS regarding delays in payments by the power purchaser under the Power Policy 2002 was also discussed in the meeting. The ECC approved the payment scheduled of the amount of Rs 24 billion which is overdue and payable more than 45 days, as proposed by Ministry of Water and Power. The ECC also constituted a committee to work on the other matters of the said proposal.
While arguing the need of energy in the country, Ministry of Water and Power proposed a summary for issuance of GOP guarantee in the sum of Rs10 billion to be raised in the form of loan from the banks/institutions by WAPDA for water sector projects and the repayment of loan along with interest shall be made through PSDP as concurred by the Finance Division. ECC approved in principal the summary; however, the retiring of loan will be decided by a committee.
ECC also approved summaries regarding “donation of wheat to the food-poor and malnourished people of Pakistan through the World Food Programme on cost sharing basis and declaration of Biaxially-Oriented Polyethylene Terephthalate (BOPET) Film Projects of M/S Novatex and M/S Astro Plastic (PVT) Limited as pioneer industry.
The ECC also allowed 30000 tons of sugar export to Tajikistan on government-to-government basis at prize differential of $ 20 per tonnes from international market.
The summary on “reduction in capacity payments to IPPS during February-May 2011 owing to Gas Supply curtailment by SNGPL” was also discussed in the meeting. ECC approved the recommendation given by Ministry of Water and Power that the issue of determination and payment of lost capacity incurred by the IPPs by resolved through “Joint Expert Mediation” between the Gas Supplier, Power Purchaser and IPPs.