ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday approved Rs55.48 billion for the first fortnight of May 2022, against the total demand of Rs118.60 billion, as a supplementary grant for the payment of subsidy to the oil sector.
The ECC also allowed importing 200,000 tonnes of urea fertiliser on deferred payment to meet the domestic demands. Federal Minister for Finance and Revenue Miftah Ismail presided over the ECC meeting at the Finance Division.
Oil prices have been increasing in the international market since September, 2020, resulting in a substantial increase in the consumer prices of petroleum products in the country, officials told the ECC meeting.
Former prime minister Imran Khan had announced a relief package on February 28, 2022, which included a reduction in the consumer price of motor spirit (MS) and high-speed diesel (HSD) by Rs10/litre each effective from March 15, 2022, committing freezing the prices at that level on 1st March, 2022 till the end of the fiscal year.
Due to this fixation, the rate of Petroleum Levy and Sales Tax on MS & HSD were broughtdown to 0 percent.
This generated PDCs (Price Differential Claims) of OMCs (oil marketing companies) and refineries being paid to them by the government as a subsidy.
Resultantly Rs100. 47 billion has been allocated and transferred to the government-run PSO's (Pakistan State Oil) Assan Assignment Account for payment to the oil sector for the month of March and April 2022, including PDCs from Nov 1-4, 2021.
According to OGRA, due to the continuously rising trend of oil prices in the international market, the PDCs amount for the month of May 2022 was initially projected at Rs102. 28 billion. The oil and gas sector regulator has now projected the PDCs for the month of May 2022 at Rs118. 60 billion, based on the current international prices.
It was proposed that 118.60 billion may be allocated through supplementary grant for disbursement of PDCs for the month of May as per the procedure approved by the ECC. The Petroleum Division placed a summary before the ECC regarding reimbursement of oil sector PDCs.
The ECC, after deliberation, approved a supplementary grant of Rs55.48 billion for disbursement of PDCs to OMCs/refineries for the first fortnight of May, 2022. Due to the soaring oil prices in the international market, the quantum of subsidy has been on a higher side.
The Ministry of Industries and Production in its summary asked the committee to allow urea imports to ensure smooth supply of the fertiliser and stabilisation of the local market in the next financial year.
Furthermore, the ECC after discussion gave go-ahead to Trading Corporation of Pakistan (TCP) to explore the possibility of importing 200,000 tonnes of urea on G2G basis and on deferred payment.