Wednesday, September 16, 2009

Heavy subsidy on urea import approved

The government will subsidise the import at a rate of Rs750 per 50kg bag. A meeting of the ECC, presided over by Petroleum and Privatisation Minister Naveed Qamar, also withdrew a 35 per cent regulatory duty on export of wheat products in order to provide a level-playing field to local exporters.

The decision was taken in the light of a bumper wheat crop this year, which will not only meet domestic requirements but also enable the country to export surplus stocks.
Mr Qamar said the subsidy would be provided to private sector importers of urea on a first-come-first-served basis.

The subsidy will be paid at the time of release of consignments on submission of bill of lading to the State Bank. The bank will monitor and withhold the issuance of letter of credits (LCs) on the achievement of set target —400,000 tons.

Competition Commission of Pakistan (CCP) chairman Khalid Mirza briefed the meeting on cartelisation in various sectors, including cement, sugar, milk and automobile, and the action so far taken.

He said the government should not collude with the industry while fixing prices of commodities. He said the CCP felt that sugar mills represented a powerful political lobby and proceedings against any wrongdoing would require full support of the government.

Khalid Mirza said the government should support and assist the CCP in carrying out a detailed competition assessment of the sugar sector to identify and address abuses.

The CCP plans to carry out a detailed study of the automobile sector, including an analysis of competition issues. It would also examine the dairy sector, he added.

The ECC approved the conversion of $13 million credit into grant for Tajikistan to improve bilateral economic and political relations.

It approved additional 20mmcfd low Btu gas from the Kandra field to be upgraded by the producer to 300 Btu/Scf to be allocated to SSGC which, along with additional 5mmcfd pipeline quality gas from SSGC’s system, would be placed at the disposal of PPIB for setting up a new IPP of 120MW.

The following are conditions for the new IPP: additional 5mmcfd pipeline quality gas from SSGC’s system will be for 15 years starting from January 2012 and thereafter on a best effort basis.

The signing of gas sales agreement between the project sponsor and SSGC will be within six months of gas allocation or any other time specified by the Ministry of Petroleum and Natural Resources, failing which the allocation shall become ‘null and void’.

The total cost of pipeline system and measuring station will be borne by the project sponsors. The gas allocation/supply would be under the Natural Gas Allocation and Management Policy, 2005, and the sponsors must make combined cycle arrangements for the project.

The Ministry of Commerce briefed the meeting on the Reconstruction Opportunity Zones project.

The ECC was informed that wheat stock on Sept 7 was 9.216 million tons, compared to 3.458 million tons during the same period last year —an increase of about 5.758 million tons.

The trade deficit declined by 38.5 per cent to $2.19 billion in July-Aug 2009-10 from $3.56 billion in the same period last year.

Workers’ remittances amounted to $1,525.4 million in July-August 2009-10, compared to $1,219.5 million over the same period last year, showing an increase of 25.1 per cent.
Foreign exchange reserves stood at $14.4 billion on Sept 10 —up from $6.4 billion on Nov 25 last year.

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