ECC approves Rs5.2 billion for industrial sector’s gas subsidy claims

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Thursday approved Rs5.2 billion worth of four months subsidy claims of the industrial sector related to gas supply.

The ECC took the decision during a meeting presided over by Adviser to the Prime Minister on Finance and Revenue Hafeez Shaikh. The decision was taken on a summary regarding gas/re-gasified liquefied natural gas (RLNG) supply to industrial sector, including exporters of formerly five zero-rated sectors in the light of the committee’s decision in October 2018 of supplying system gas/RLNG to export-oriented sector, its process units and captive power plants.

The ECC approved the subsidy claims for March, based on 100 percent RLNG supply, April, May and June 2019, amounting to Rs5.173 billion based on actual verified bills/claims of Sui Northern Gas Pipelines Limited (SNGPL).

The ECC also approved a proposal for allowing SNGPL to raise verified subsidy bill/claim of preceding month by 8th of every month and the finance division to release the subsidy within seven days of receipt of claim from the petroleum division.

“Upon receipt of subsidy amount, SNGPL shall promptly issue adjusted invoices to export-oriented sector in the next bill cycle,” the finance ministry said.

The committee also approved the proposal for the export-oriented sector to pay the invoices at ECC approved tariff of $6.5 per million metric British thermal unit along with applicable taxes. The ECC approved waiver of interest/late payment surcharge (LPS) charged by SNGPL on the amounts over and above the tariff during the last fiscal year, which was due to delayed subsidy release by the government.

“For FY2020, LPS shall only be charged on the delayed payment of $6.5 per MMBtu and it will not be applicable on the subsidy amounts to be released by government to SNGPL.”

The ECC further directed the ministries of energy, finance and commerce and the Federal Board of Revenue (FBR) to convene a meeting on the subject and resolve the issue regarding clarification of nomenclature of export-oriented sector so that benefits of concessional tariff be limited to exporters under previous notified zero-rated regime and to ensure that any exporter that was previously not beneficiary of concessional tariff would need certification of falling under the clarified regime from the FBR.

The committee constituted a price review committee under the chair of adviser ministry of commerce and textile to review and suggest the indicative price and other measures to be taken in case of abnormal fluctuations in cotton prices.

The Ministry of National Food Security and Research told the ECC that Pakistan Agricultural Storage and Services Corporation and provincial food departments reported wheat stocks at 7.519 million tons as on 2 August 2019 as compared to 11.183 million tons a year earlier.

The committee directed the ministry to regularly monitor the wheat prices, availability of wheat stocks in the country and ensure release of wheat stocks to the local market throughout the year and to check tendency of increase in wheat price particularly in the winter season.

The ECC directed the ministry of finance to look into the food ministry’s request for supplementary grant of Rs530 million for locust control.

The ministry of energy also submitted a summary to the ECC for extension of gas network and rehabilitation of existing network in oil and gas producing districts of Khyber Pakhtunkhwa at a cost of Rs9.039 billion out of which SNGPL was to bear the cost equal to Rs4.668 billion while the provincial government was to chip in with Rs4.371 billion. The provincial government has already released Rs694.5 million as the first tranche. The ECC discussed the proposal and in the light of input from the members and directed the ministry of energy to resubmit the proposal after taking input from the planning and finance divisions.

Special Assistant to PM for Petroleum Division Nadeem Babar said 16,148 tons of diesels have already been moved inland through the Pakistan Railways in July. It was expected to increase to 35,000 tons in August after assessment of decanting facilities available with Shell, Parco and Hascol.