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ISLAMABAD:

The hybrid Economic Coordination Committee (ECC) of the cabinet on Thursday decided to cancel import of 2.1 million tons of wheat and allowed recovery of over Rs17 billion from electricity consumers for the period when the country had been struck hard by Covid-19.

The decisions were taken by the Shaukat Tarin-led sub-committee of the ECC, which were stamped within minutes by the Omar Ayub-led ECC under a hybrid arrangement.

The ECC hardly met for 10 minutes and rubber-stamped the decisions taken by the sub-committee.

Tarin, who is the Adviser to Prime Minister on Finance, cannot chair any cabinet body meeting due to a decision of the Islamabad High Court. But the government is violating this decision as the prime minister has delayed Tarin’s election as senator after his six-month ad hoc term of finance minister ended on October 15.

Just before the ECC meeting, the Tarin-led committee met and decided on a 15-point agenda, according to ministry officials. After that, Ayub was informed about the decisions, which he endorsed without discussion, except for a summary on provision of gas connections, meeting participants told The Express Tribune.

“The ECC recommended the summary tabled by the Ministry of National Food Security and Research recommending that keeping in view the sufficient current public stock position of wheat flour, demand and supply situation, international wheat prices and local releases to flour mills, there is no need for further import of wheat at this point in time,” said a statement issued by the economic affairs ministry after the meeting.

It added that on the recommendation of the technical advisory committee, the ECC also cancelled the floating of a fresh tender for wheat import.

The ECC had allowed import of four million tons of wheat and Trading Corporation of Pakistan (TCP) has so far awarded a quantity of 1.9 million tons through an international open tendering process in five tenders.

The government has scrapped two tenders of 180,000 tons due to high bids offered by Agro Corp.

The average import price of 1.9 million tons of wheat came in at Rs2,533 per 40 kg, according to the food ministry. The bid in the sixth tender stood at $388.83 per ton, which would have cost the commodity at Rs2,815 per 40 kg in Karachi.

The seventh tender got bid of $394.38 per ton, which would have pushed the price up to Rs2,871 per 40 kg at Karachi Port.

The Tarin-led committee was informed that current wheat stocks stood at 5.4 million tons and with the additional import of 1.572 million tons, the total quantum would increase to 6.934 million tons, which was sufficient for 182 days or till the first week of June 2022.

After meeting the requirements till the start of harvesting in March-April next year, there will be 1.6 million tons of remaining stock, according to the food ministry.

Read Omar Ayub appointed ECC chairman

Wheat production has remained at 27.5 million tons this year, including 20.9 million tons produced by Punjab, according to the food ministry. However, the Food and Agriculture Organisation (FAO) had reported output of 26.44 million tons of wheat.

But national requirements had been estimated at 30.3 million tons, including two million tons of strategic reserves.

Tariff increase

The Tarin-led committee decided to increase electricity prices by Rs2.27 per unit to recover Rs17.2 billion from consumers for the eight-month period when the country had been passing through the first phase of Covid-19.

Instead of fuel cost adjustment (FCA), the money will now be recovered through quarterly price adjustments.

“On another summary moved by the Power Division regarding decision of the authority in matter of fuel charges adjustment for the months of November 2019 to June 2020, the ECC, after due deliberation, recommended that the federal government may issue guidelines to Nepra and also require it to reconsider its decision dated 07 August, 2020 to allow recovery of pending FCA as prior year adjustment in rebasing decision which are under process at Nepra,” said the economic affairs ministry.

The Power Division had proposed that either the government should pick Rs13 billion subsidy or allow increase in prices.

The ECC approved Rs30 million discretionary supplementary grant for parliamentarian schemes, which would be executed in Sindh. It approved Rs34.5 million supplementary grant for Pakistan Air Force as internal duty allowance to protect western borders.

Trade policy

The ECC sub-committee approved, in principle, the Strategic Trade Policy Framework (STPF) as a guiding framework with the directive that budgetary allocation and other related details would be dealt with separately. The decision was endorsed by the ECC.

STPF is aimed at enhancing the ability of Pakistani enterprises to produce, distribute and sell products and services more efficiently than is done by competitors, said the economic affairs ministry.

Read more Tariffs reforms: one step forward, two steps back?

“Pakistan’s exports have been affected due to the low level of competitiveness faced by Pakistani enterprises due to higher cost of doing business and low product sophistication,” said the Ministry of Commerce.

“During last 10 years, Pakistan’s exports have shown a negative compound annual growth rate of 1.3%.

For the current fiscal year, the exports have been projected to increase to $23.1 billion to $29.1 billion, depending on the competitiveness and cost of doing business in Pakistan. No major increase in exports has been shown for the next fiscal year and the range has been given from $25.2 billion to $33 billion.

The targets are based on the assumption that electricity will be available at 7.5 to 9 US cents per unit, RLNG at $6.5 per MMBtu, and system gas at Rs786 per MMBtu till 2024-25.

The ECC sub-committee was allowed to pick Rs1.1 billion late payment surcharge of operations of fertiliser plants at the SNGPL network between September 2018 and November 2019 with the direction to seek prior approval from the board of SNGPL.

The sub-committee recommended the extension of the gas network/rehabilitation of the network in oil and gas producing districts of Khyber-Pakhtunkhwa.

The summary outlined details regarding phase-II of the project that would reduce gas losses in the gas-producing districts of K-P in collaboration with the provincial government. The first phase of the project was completed in the last financial year.

The sub-committee approved a $190 million supplementary grant for the National Disaster Management Authority (NDMA) for the procurement of Cansino and Sputnik vaccines including the transportation and handling charges.

Published in The Express Tribune, November 5th, 2021.

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