Economic Co-ordination Committee (ECC) of the cabinet on Thursday agreed to grant seven years tax holiday to the refurbished oil refineries to be relocated to Balochistan subject to application of admissible regulations. Petroleum Ministry had recommended ten years concession and some other incentives for the refurbished refineries.
Official sources told Business Recorder that the Petroleum Ministry argued in the ECC meeting that the same incentives cannot be offered to the second hand refurbished relocated refineries as given to the brand new refineries because of cost difference. However, the case of Bosicor Refinery is different which will install diesel hydrotreater and isomerization plant to produce environmentally friendly low sulphur diesel as well as low benzene motor gasoline.
Petroleum Ministry, in its summary, a copy of which was made available to this newspaper, had proposed that old relocated refurbished refineries should be allowed to be set up in Pakistan in accordance with the policy guideline worked out by the committee under the chairmanship of the then Deputy Chairman, Planning Commission and subsequently by Planning Commission on December 22, 2008:
(ii) The Bosicor refinery or any other refurbished relocated refinery, if set up along the coastal belt of Balochistan should be given 10 years tax holiday incentives instead of 20 years tax holiday. Waiver of 5 percent WPPF subject to the condition that the entire proceeds will be exclusively spent for the benefit of the local labour and their welfare, through a Board of Trustees, to be specially established for this purpose to build confidence level.
(a) Waiver of Development Surcharge @ 0.5 percent of the value of exports under the EPZA Rules, 1981, if refinery is declared as EPZ.
(b) The government would not pay any freight on inland transportation of crude oil and petroleum products and the refinery project would have its own arrangements for crude import handling/Single Point Mooring etc to avoid back freighting of crude oil.
c) They would observe the terms and conditions of their licence issued by the independent regulator ie Ogra and other rules, laws and regulations etc. The sources said, incentives would be available to the projects if oil refinery will be commissioned at the end of 2011.
Presided over by the Prime Ministers Advisor on Finance Shaukat Tarin in the chair, ECC directed the Petroleum Ministry to get cabinet approval for Iran-Pakistan-India (IPI) gas pipeline as the gas price offered by Iran is irrational given the future expected fluctuations in the price of furnace oil.
The ECC directed provincial governments to take action against hoarders of food items as per law in order to provide relief to common man, adding that provinces must keep a persistent vigil on food items supply chains mechanism in the market to ensure availability of all consumer items at sales outlets. Relief to common man should be the primary focus of provincial governments at district level, it added.
ECC constituted a surveillance committee under Ministry of Food and Agriculture (Minfa) comprising representatives from relevant federal and provincial government organisations, local governments and concerned DCOs to look into the price control matters and submit actionable recommendations for ECC decisions.
ECC considered Ministry of Commerce summary seeking permission for bilateral trade with India through Wagah-Attari road link and approved the proposal in the light of a decision taken in an earlier meeting between the President of Pakistan and the Prime Minister of India at New York on 24 September 2008, advising the concerned to implement it in phased manner commensurate with parallel development of infrastructure on both sides of the border.
While reviewing Ministry of Communications summary proposing leasing of right of way (ROW) by National Highways Authority according to an approved leasing policy, ECC directed the Communication Division to revisit the draft leasing policy, and constituted a committee comprising Ministers for Information, Privatisation and representatives of Communication Division to technically/commercially examine the proposal and resubmit its recommendations to ECC for approval.
ECC deliberated on Ministry of Petroleums summary seeking extension in Uch Gas Field Development and Production Lease earlier granted to OGDCL for a period of 25 years, and approved Uch-II Expansion Project for commitment of gas supply for 25 years from the start-up date in relaxation of Rule - 32 of Pakistan Petroleum Exploration and Production Rules - 1986, advising the Petroleum and Natural Resources Division to seek Prime Ministers approval as per law.
The committee also authorised Federal Board of Revenue(FBR) to waive regulatory duty @ 20 percent on potato chips fries to be imported by International Franchise Food Chains (IFFC) operating in the country.
The ECC also allowed the Ministry of Water and Power to waive the coal-based power projects from the requirement of firm Energy Performance Cost (EPC) contract in the light of ECCs earlier decision of May 23, 2007.
ECC considered Ministry of Water and Power proposal for power transmission enhancement multi tranche facility project, based on an earlier signed GoP-ADB agreement of May 20, 2008, seeking financing for a power transmission enhancement investment program and approved ADB loans re-lending proposal to NTDC at an interest rate of 12.0 percent, including exchange risk coverage.
ECC allowed Ministry of Finance proposal for equity based investment abroad by resident Pakistanis comprising a request of M/s Educational Services Pvt Limited (ESL) of Beacon House School System to remit an amount of $17.5 million to its wholly-owned UK based subsidiary (ESL) titled New Silk Route UK and approved the proposal.
ECC approved Ministry of Food and Agriculture proposal seeking GoP collaboration with M/s Monsanto USA in Bt Cotton technology transfer along with an action plan mutually agreed by all stakeholders. It allowed Minfa to enter into agreement/MoU with M/s Monsanto of USA for implementation of a collaboration-based action plan that would lead to Bt. cotton technology transfer.
According to Minfa, the said technology transfer has been found successful in saving the cotton crop from bollworm losses and finally leads to increased cotton crop yield by economising on cost of production. ECC, however, constituted a steering committee under Minfa to look into the follow-up technical issues based on the action plan.
ECC reviewed implementation status of its earlier decisions made on 10th February, 2009 and expressed satisfaction over the decisions implemented, advising Ministries/Divisions to expedite implementation formalities on items reported as implementation in progress.
ECC reviewed Key Economic Indicators (KEI) and overall price situation in the country and noted that overall Consumer Price Index (CPI-based) inflation has registered a deceleration of 0.4% during July 2008-February 2009 over last month. ECC further noted that forex reserves as on 16 March 2009 stood at $10.2 billion that included impact of IMFs first tranche disbursement and other positive inflows. It noted that inflationary pressures are likely to ease in next few months owing to sharp decline in commodity prices particularly POL and Palm Oil.
ECC noted that overall workers remittances during July 2008-February 2009 amounted to $4918 million showing an increase of 19.2%. ECC was informed that FBR has collected Rs 702.5 billion during first eight months of CFY (July 2008-February 2009), posting an increase of 20.0 percent compared with same period of last year.
The committee was informed that as on March 8, 2009 domestic wheat stock stood at 1.051 million tones, showing higher stock of about 0.422 million tons compared with last year. The wheat procurement target from 2008-09 crop has been fixed as 6.55 million tons. The government has decided to import 2.5 million tons of wheat in phases this year to augment domestic wheat supplies. Out of 2.5 million tons, TCP so far has imported 2.039 million tons of wheat. The remaining quantity is in the pipeline.
ECC directed TCP to complete provision of required wheat stock to Sindh to meet any shortfall. It noted that existing sugar stock was reported to be around 2.553 million tons to supplement open market needs. ECC noted that 76 percent of planned quantity of urea (570,007 million tones) has arrived; whereas 24 percent is due to arrive at ports. Minfa briefed ECC that by the coming Kharif season it will have a surplus stock of urea after combining domestic production and foreign imports.
ECC expressed satisfaction over current account balance recording a surplus of $169 million in February 2009 which is a tremendous improvement upon the deficit in October 2008 prior to the release of the first tranche of the 7.6 billion dollars International Monetary Fund stand-by arrangement.