The Economic Co-ordination Committee (ECC) of the Cabinet has not considered a proposal on the import of fertilizer through open tenders to meet the indicated shortfall of 600,000 tons of urea for the Rabi crops. The meeting chaired by Finance Minister Ishaq Dar approved the import of 185,000 tons of urea from Saudi Basic Industries Corporation (SABIC) and directed Ministry of Industries and production to put up a detailed proposal before the next ECC meeting for the remaining requirement of 415,000 tons.
The ECC was informed that a shortfall of 600,000 tons of urea is anticipated for the Rabi season 2014-15 as a result of less-than-capacity production on account of gas shortage. Sources said that the Finance Minister also reminded that the government has to provide a subsidy on the available stock of imported urea and not to repeat the situation; it is therefore important that available stock of the commodity must be consumed first before seeking approval for the import. An official on condition of anonymity said that the chair was also concerned about the impact the import of urea was going to cause on external account. Dar directed Ministry of Petroleum and Natural Resources to provide gas to the fertilizer sector in the coming winter and beyond with an objective to increasing the indigenous production of urea. The ECC further directed Ministry of Industries to come up with a comprehensive plan, giving proper proposals for meeting the fertilizer requirements and bringing an end to the practice of unnecessary imports, leading to wastage of precious foreign exchange.
The ECC held detailed deliberations on a summary moved by Ministry of Industries and Production for the provision of natural gas as feed stock in the direct reduced iron (DRI) process to Tuwairqi Steel Mills on discounted rates to the tune of Rs 5 billion per annum for the next 5 years.
The Finance Minister remarked that there was no justification for the government to extend preferential treatment to any party and there was no room for providing a huge subsidy to the company concerned. He asked Secretary, Industries and Production to submit a realistic proposal that could be considered in the future meeting of the ECC. The meeting deferred the matter regarding the approval of draft Energy Purchase Agreement (EPA) and draft Implementation Agreement (IA) prepared for Biomass Based Projects in IPP mode. A summary in this regard was submitted by the Ministry of Water and Power. The meeting observed that there was no room for approving the proposal that advocated cost plus basis rather it should be redrafted and would be considered keeping in view the principle of upfront tariff.
The ECC has approved enhancement in the financial package of the Pakistan Steel by Rs 529 million to cover the expenses on a 5% duty on import of iron ore. The Finance Minister said Revenue Division has already approved proposals for facilitation to Pakistan Steel, allowing 3 months for deferred payment of GST as well as exemption from payment of advance income tax on imported raw material in order to help them in maintaining cash flow and in view of their accumulated tax losses till date. The meeting was told that PSM reached around 30% of its production capacity utilisation from 3% within a few months after the provision of a financial package.
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