FRIDAY DECEMBER 02: PSM given Rs six billion lifeline in form of bank guarantee

ISLAMABAD: The Economic Co-ordination Committee (ECC) on Thursday approved a bailout package of Rs 6 billion in the form of bank guarantee for Pakistan Steel Mills (PSM). It did not approve the proposal for sugar procurement due to high bidding price, it is learnt.
Sources told Business Recorder approval of bailout package for PSM was given by the meeting presided over by Finance Minister Dr Abdul Hafeez Shaikh at the fag end as most of the time was consumed on discussing the sugar price. The ECC refused to approve a summary moved by the ministry of industries for procurement of sugar after the participants pointed out that price quoted by the sugar mills was higher than the market price.
Secretary Cabinet Division, Nargis Sethi was quoted as saying that price quoted in the bids was Rs 5 higher than the market price. She said that sugar price in the bid was quoted at Rs 63 per kg whereas the price in the market was Rs 58 per kg. Some participants reportedly proposed that the government should not go for buying sugar in bulk as there was a possibility that price of sugar will decline in the international market.
The ECC deliberated on the recommendations of the ministry of industries regarding purchase of 0.2 million tons sugar from local market to continue supply of sugar to Utility Stores in coming months and also for strategic reserve. The ECC agreed to purchase sugar but with a strict provision that the sugar will not be purchased at the cost higher than the prevailing market value. In this regard, a sub-committee comprising finance, industries and commerce secretaries, was constituted to formulate a mechanism in a week including the negotiations with the sugar mill owners to purchase sugar below the market prices.
Sources said the ECC also sought the law ministry opinion on a summary moved by the ministry of petroleum and natural resources for approval of Low BTU Policy. According to a statement, the Secretary Finance during a presentation to the ECC on key economic indicators stated that inflation is decreasing with overall Consumer Price Index (CPI) in October, 2011 11.0 % as compared to 15.3 % for the same period of last year. Food items inflation has decreased from 21.0% to 11.7% and non-food items from 11.9% to 10.5% this year. He said prices of most of the food items except rice have decreased.
The ECC was informed that the Large Scale Manufacturing (LSM) has shown positive performance in current fiscal year but the export of the country might be under pressure in coming months because of the current economic crisis in Europe and US. Foreign exchange reserves stand at $16.90 billion on November 28, 2011. He also pointed out that the current decrease in foreign investment can be a matter of concern, but the decrease is mainly in portfolio investment. The ECC directed the Board of Investment (BoI) and the State Bank of Pakistan (SBP) to come up with a brief presentation on foreign investment in next meeting along with method and detailed process of calculating investment in the country, concerns of different companies on the issue as well as reasons of low investment and the remedies to improve the situation.
The ECC also stressed that the current decrease in inflation is not being projected among the general public properly. There is a dire need that this information gap should be reduced, so that people would also be informed about all positive changes as well. The ECC deliberated on the summary proposed by ministry of petroleum and natural resources for laying of 50-km new pipeline from Latif field to Sawan plant where available surplus capacity can be used for processing Latif gas.
According to the summary if new avenues to process raw gas from Latif field are not explored then the gas network will lose additional gas availability to the tune of 50-70 mmcfd. The ECC was informed that the other companies (Kadanwari Joint Venture) has refused to work on it due to low earning, hence SSNGPL and SSGPL be allowed to accept Latif gas into the system by laying 50-km pipeline costing Rs 2.308 billion with certain modalities.
The ECC approved in principle the proposal to go ahead and formed a sub-committee comprising Deputy Chairman Planning Commission and representatives from Finance Division, Petroleum Division and Oil and Gas Regulatory Authority. The sub-committee will meet again shortly and put forward its recommendations to the ECC on the detailed enabling steps of the said proposal and its provisions and adjustments with the petroleum policy. The ECC also reviewed the status of implementation of the decision taken in the meeting of ECC held on 11th November 2011. In this regard, different officials updated the ECC about the progress.
Secretary Finance, Petroleum and Natural Resource, Water & Power, Industries, Commerce, Statistics, Deputy Chairman Planning Commission, Governor SBP, Chairman Trading Co-operation of Pakistan, Chairman Board of Investment, Managing Director Utility Stores and many others high officials were present in the meeting.