ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Tuesday granted approval for a supplementary grant of Rs27 billion for meeting obligations of PSO to avoid international default. The losses have been incurred on account of exchange rate losses in the wake of increased rupee-dollar parity last year.
These funds will save PSO from facing default by paying outstanding dues in order to utilise credit facility from Kuwait for imports.
The ECC also approved a summary for release of 25,000 metric tons of wheat for Gilgit-Baltistan (GB) to avoid shortages during Ramazan.
Federal Minister for Finance and Revenue Senator Ishaq Dar presided over the meeting of the Economic Coordination Committee of the Cabinet.
The credit facility for import of diesel for the last year expired on December 31, 2022. However, four transactions were still due for which available funds beyond March 20, 2023 would be short. The National Bank of Pakistan (NBP) account has witnessed huge exchange losses owing to prevalent upheaval in the rupee-dollar parity during the last 12 months. The NBP account has balances of Rs14.3 billion, while these payments require about Rs42 billion.
There is a definite possibility of international default unless an injection of Rs27 billion is made before March 20, 2023. The ECC sought a supplementary grant of Rs27 billion for the transfer of funds in the NBP account in order to avoid international default. NBP may also be directed to arrange payment through bridge financing, if required.
The Ministry of Finance, in a statement after the ECC meeting, said the Ministry of Energy (Petroleum Division) submitted a summary of credit facility from Kuwait, saying the government was utilising a credit facility extended by Kuwait Petroleum Corporation (KPC) against supply of diesel oil under the term contract with PSO since 2000, and the term contract is extended every year.
PSO deposits the rupee equivalent with NBP after 30 days from the bill of lading date of each shipment and NBP transfers the cargo cost to KPC, Kuwait.
In the current situation, this account has witnessed huge exchange losses due to upheaval in the rupee-dollar parity during the last 12 months. The GoP is committed to covering these exchange losses. Considering the above situation, the ECC approved a technical supplementary grant of Rs27 billion for the Kuwait Petroleum Company.
The ECC considered a summary of Ministry of Kashmir Affairs and Gilgit-Baltistan on wheat supply to Gilgit-Baltistan and approved release of 25,000 MTs to GB for the months of March and April, 2023 to avoid shortage of wheat in the region. Keeping in view the current wheat price, the ECC granted additional amount of Rs2.9 billion through Technical Supplementary Grant to meet urgent requirement of Gilgit-Baltistan.
The ECC further directed the Ministry of KA&GB to submit a comprehensive plan for price rationalisation in consultation with concerned stakeholders for consideration of ECC within 30 days.