Ministry hints at legal challenge to regulate auto prices

ISLAMABAD: Ministry of industries and production on Thursday alluded to a legal challenge it faces in checking car prices, saying automobile sector currently operates under a free market mechanism.

The ministry’s officials told a parliamentary panel that it couldn’t control prices of automobiles in the country, as assemblers are working in the private sector.

The officials said car manufacturers belong to the private sector. There is no legal provision available with the ministry or Engineering Development Board (EDB) to control or fix prices of automobiles in the country, they said in a briefing to the Senate Standing Committee on Industries and Production, presided over by senator Ahmed Khan.

The committee discussed the issue of rising prices of cars being assembled in the country despite the claims by the manufacturers that most of parts are manufactured locally. The committee heard the ministry and the EDB on the matter and decided to call vehicle manufacturers to hear their viewpoints before reaching a conclusion.

Most of engine and other critical parts, which require heavy investment and hi-tech engineering, are imported in the country, while parts, including structure, interior, exterior, suspension and brake system are manufactured locally, the officials said.

The officials further said exchange rate and imposition of levies fall within the purview of the Federal Board of Revenue. The committee was further told that a number of steps had been taken time and again to overcome financial crisis of Pakistan Steel Mills and the issue of pending salaries and outstanding dues of former employees, which have sharply increased to Rs20.87 billion.

The meeting was told that a fresh summary for the amount had been moved. Finance division, in various meetings, considered proposals to develop a comprehensive plan for settlement of dues and liabilities, it was told.

The senate panel decided to continue discussing the matter until the grievances of retired employees are addressed. Utility Stores Corporation (USC) Managing Director Umer Lodhi briefed the committee on a matter relating to taxation and subsidy being given by the government to USC. The committee was told that the government had released six billion rupees for subsidy and procurement to USC.

The government launched a relief package, which includes subsidy on five basic food items: wheat, sugar, ghee, rice and pulses. The food items are available at the utility stores on prices lower than the open market. The government has also allocated an additional Rs15 billion to the USC; of which, five billion rupees would be used for inventory purchases and Rs10 billion for subsidy on essential commodities.

The ministry of industries and production presented before the meeting a bi-annual review of budgetary allocation and its utilisation, with a special focus on public sector development program (PSDP) allocation for 2019/20 along with details of PSDP proposals for 2020/21.

The ministry has so far utilised Rs7.5 billion, which is half of the Rs14.3 billion allocated to it for the current fiscal year.