ISLAMABAD: The Economic Coordination Committee of the Cabinet that met here on Tuesday under federal minister for finance & economic affairs Dr. Abdul Hafeez Shaikh accorded approval to review of POL prices on a weekly basis for three months, on trial basis, to examine impact on general public and oil marketing companies.
However, the much-touted LNG project could not get the blanket approval as the meeting approved in principle the short and long term liquefied natural gas (LNG) import framework proposed by ministry of petroleum & natural resources.
The ECC formed a technical group comprising secretary petroleum, secretary finance, secretary water & power, deputy chairman Planning Commission, chairman Board of Investment and chairman State Bank of Pakistan to work further on the mechanism, bidding details, guarantee matters and legal issues as raised by minister of law and to present the report in the next ECC meeting.
“With the approval of POL prices review, the activity to hoarding the POL products by petrol pumps will be reduced and the accumulative affect of POL prices in the global market on the consumers will also reduce. In fact the government wants the POL price revenue on a daily basis and then on hourly basis as being practised in the developed countries.
Keeping in view the increasing food needs of a growing population and gas suspension to SNGPL and SSGPL-based urea plant, the ministry of industries proposed import of 0.6 million tons of urea for Rabi season 2012-13 with price reduction of Rs1450 to Rs1600 per 50kg bag. After due deliberation, the ECC approved import of 0.3 million tons of urea and decided not to change existing pricing formula.
The forum 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 ministry of law & justice. After removal of IFEM the ex-depot price of HOBC will vary from location to location across the country contrary to other oil products.
The ECC approved import of furnace oil by Pakistan State Oil (PSO) under term contract. However, it asked the ministry of petroleum & natural resources to work for detailed calculations on the subject with consultation of ministry of finance.
The matter of terms of settlement with IPPs regarding delays in payments by power purchaser under power policy 2002 was also discussed in the meeting. The ECC approved the payment schedule of Rs24 billion which is overdue for more than 45 days, as proposed by ministry of water & power. It also constituted a committee comprising secretary petroleum & natural resources, secretary finance and deputy chairman Planning Commission to work further on other aspects of the said proposal.
The committee approved in principle the summary of ministry of water & power seeking GoP guarantee to the tune 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. It also approved in principle the said summary, however, the retiring of loan will be decided by a committee headed by deputy chairman Planning commission including secretary finance and chairman Wapda.
The meeting also approved summaries regarding “donation of wheat to the food-deficient 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 price differential of $20 per ton 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. The ECC approved the recommendation of the ministry of water & power that the issue of determination and payment of lost capacity incurred by the IPPs be resolved through “joint expert mediation” between the gas supplier, power purchaser and IPPs (guidelines for joint expert mediation).
The ECC also approved in principle the sale of wheat to Iran under barter trade system and asked governor State Bank to get ministry of foreign affairs’ viewpoint in the context of international trade restrictions faced by Iran.