LPG policy approved by ECC

The Economic Co-ordination Committee (ECC) of the Cabinet has approved ''LPG production and distribution policy 2011'' and agreed to the proposal of the Ministry of Water and Power for giving operational and maintenance control of four power generation companies (gencos) to the private sector O&M contractors for a period of 10 years.
Secretary Finance Dr Waqar Masood briefed media after the ECC meeting, chaired by Finance Minister Dr Abdul Hafeez Sheikh. He said that the meeting discussed tariff rationalisation study in detail and, in principle, a broad agreement was reached to not allow non-tariff barriers either on import or export. The meeting also approved to do away with the specific duties as well as to reduce import tariff, making it uniform.
Waqar said that maximum tariff has already been reduced from 250 percent to 25 percent during the last two decades with only four tariff slabs--25percent, 15 percent, 10 percent and 5 percent. He said that the government would continue to further liberalise the tariff regime and four committees, constituted in this regard, have been directed to submit their reports on textile, commerce, industry and Federal Board of Revenue (FBR) within two months. Secretary Finance said that final decision about tariff rationalisation would be taken in the light of the recommendations submitted by these committees.
Waqar said that the ECC deferred the summary moved by the Ministry of Petroleum and Natural Resources for distribution of IPI gas between SNGPL and SSGC, but approved ''LPG production and distribution policy 2011'' for linkage of local LPG producer price with the C&F (Karachi) Saudi Aramco Contract Price (CP) that would enable the government to collect differential and other incidental charges in the form of petroleum levy.
The new policy would enhance the local LPG producers'' price from $100 to $120 per ton, being margin and other import incidentals to be collected by the government and would not go into the pocket of local producers. The government would be able to generate Rs 3 billion additional revenue by imposing petroleum levy on LPG.
The ECC also approved a summary moved by the Ministry of Water and Power for giving operation and maintenance of four gencos to the private sector, for a period of 10 years, and constituted an implementation committee to finalise the details and give recommendations.
An official told Business Recorder that gecnos'' electricity generation derated from originally 4829 mw to 3580 mw. Lately, of the derated capacity availability remained very low, hovering between 1450 mw and 2000 mw. They said that $166.87 million in addition to the current USAID funding of $51.621 million would be required for adding additional 245 mw, 38 mw and 595 mw (total 1270 mw) from TPS Jamshoro, TPS Guddu and TPS Muzaffargarh respectively, along with efficiency improvement of 3.41 percent, 1.51 percent and 3.58 percent.
The Ministry of Water and Power viewpoint was that in the presence of huge outstanding circular debt, inefficiencies of power sector and limited fiscal space of the government, additional 166.087 million may not be possible for the government; hence private sector participation is the only viable option. Secretary Finance said that ECC also approved import of 50,000 to 75,000 tons additional urea and increased guarantee for textile city from 1.5 billion to 2 billion.