ECC allows Russian wheat import on G2G basis

ISLAMABAD: The Economic Coordination Committee (ECC) of Cabinet on Monday allowed import of 300,000 metric tonnes of wheat from Russia on government to government (G2G) basis at $372 per metric tonnes besides deciding to open Pakistan Energy Revolving Fund (PERF) to resolve pending matter of CPEC-IPPs ahead of Prime Minister’s visit to China.

The ECC meeting presided over by Finance Minister Ishaq Dar was asked by ministry energy to approve Rs50 billion technical supplementary grant for opening of assignment account for energy revolving fund.

The energy ministry in a summary to ECC stated that in order to resolve pending matters related to China Pakistan Economic Corridor (CPEC) independent power plants (IPPs), a high-level working group was constituted by ministry of planning development & reforms.

During the 3rd meeting of the working group for Prime Minister’s upcoming visit to China held on October 17, 2022, the power division and finance division were directed to expedite issue of delayed payments to Chinese IPPs before the high-level meeting.

In this regard, finance division and power division jointly convened a meeting with China Export Credit Insurance Corporation (Sinosure) on Oct 26, 2022 in which Sinosure emphasized early resolution of revolving account agreement pending between Pakistan’s Central Power Purchasing Agency (CPPA) and CPEC IPPs since 2017.

Pakistani and Chinese governments signed CPEC energy project cooperation agreement for development of power projects under CPEC arrangement on Nov 08, 2014.

Pursuant to aforesaid agreement, the CPPA and IPPs agreed on the terms of revolving account agreement (RAA) for CPEC projects.

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In this regard, the power division initiated a summary on July 13, 2018; however, due to various technical and financial constraints, the RAA could not be implemented.

Subsequently, another summary moved by the Power Division in May 2022 was deferred by the ECC.

The CPEC authority and IPPs had been raising the issue of delay in revolving account at various forum and similar requests from CPEC IPPs were also communicated through the foreign affairs ministry.

Subsequently, a meeting was held on October 31, 2022 at Finance Division wherein the Power Division was advised to initiate opening of an assignment account under the title of Pakistan Energy Revolving Fund (PERF) till such time matters pertaining to revolving account agreement are resolved.

The Finance Division advised that account may be operated by CPPA and allocation may be re-appropriated from existing budget allocation with monthly limit of Rs4 billion on withdrawals from such account.

The ECC meeting was informed that such proposals may not fully fulfil the revolving account requirements under RAA, but it may provide additional comfort to Chinese IPPs.

The ECC was requested to approve opening of an assignment account under the title of Pakistan Energy Revolving Fund (PERF) to be opened with National Bank of Pakistan (NBP) and operated by CPPA and CPPA may be allowed to withdraw to a maximum of Rs4 billion per month.

The meeting was also requested to approve technical supplementary grant of an amount of Rs50 billion for assignment account from existing budgetary allocation against Finance Division. The ECC meeting also approved a summary of commerce ministry for procurement of wheat from Russia on G2G basis. The meeting was told about the offer of M/s. Prodintorg, a state-owned enterprise of Russian Federation, for supply of 300,000 MT of specified milling wheat @ US$ 372/MT for the shipment period from November 01, 2022 to January 15, 2023.

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Ministry of Energy (Power Division) presented a summary on revision of oil marketing companies (OMCs) margins on petroleum products.

After comprehensive discussion, the ECC approved the summary in principle and allowed the agreed revised margin from existing Rs3.68 per litre to Rs6 per litre reflecting an increase of 63.04%; however, its implementation will be subject to fiscal space in POL prices.

Ministry of Energy (Petroleum Division) presented another summary for amendment in Power Purchase Agreement (PPA) for commissioning of designated project – CPEC – TCB–I (On Thar Coal) without financial close.

The summary presented that that project is 90% complete but the company was unable to achieve the financial close due to unforeseen events and reasons which led to delay in Sinosure and lenders approvals.

Therefore, request was made to consider and permit effectiveness of the PPA from the date of its execution, i.e., 27-08-2019 and authorize CPPA to amend the PPA accordingly. The ECC after deliberation approved the summary and added that it must be ensured that there will be no impact on tariff through this decision and this summary is being approved due to exceptional situation.

Ministry of Energy (Power Division) presented another summary on Pakistan Energy Revolving Fund (PERF).

An official said that the ECC after deliberation decided to open the assignment account under the title Pakistan Energy Revolving Fund (PERF) with Stat Bank of Pakistan in Islamabad and operated by CPPA.

The meeting was attended by Minister of Planning, Development & Special Initiatives Ahsan Iqbal, Minister of Commerce Syed Naveed Qamar, Shahid Khaqan Abbasi MNA/ex-PM, SAPM on Finance Tariq Bajwa, SAPM on Revenue Tariq Pasha, Federal Secretaries, Chairman FBR, and other senior officials.

Copyright Business Recorder, 2022