Federal Cabinet which met with Prime Minister Syed Yousuf Raza Gilani in the chair, on Wednesday approved Sugar Policy 2009-10, paddy procurement plan and four-month gas load management plan 2009/10 (from November 15, 2009 till March 15, 2010).
The gas load management programme envisages the closure of industrial sector as well as Compressed Natural Gas (CNG) stations for two days a week on rotational basis in accordance with predefined zones. The much publicised austerity measures tailored by the Finance Ministry in accordance with the country's worsening revenue generation capacity and in consultation with the provincial governments, did not come under consideration due to time constraint.
After the Cabinet meeting, which was also attended by Chief Ministers and Chief Secretaries, Minister for Information and Broadcasting Qamar Zaman Kaira briefed newsmen about the decisions taken in the meeting.
Talking about gas load management plan, Kaira said the Cabinet, after detailed discussion decided that domestic and commercial sectors would continue to get normal gas supply even during winter months, without any curtailment. However, all industrial units would have two holidays a week on rotational basis in accordance with predefined zones.
This measure is expected to save approximately 120 MMCFD gas for diversion to other zones: Lahore-1 (Day 1 & 2), Lahore-2 (Day 3 & 4), Faisalabad (Day 5 & 6). Multan, Gujranwala, Islamabad, Peshawar, Abbottabad (Day 7 & 8) [8th day being 1st day of next week and so on].
The CNG sector will also be subjected to two-day gas holiday on the basis of a predefined schedule to be provided by SNGPL, which will save approx. 25 MMCFD gas for diversion to other sectors: (i) Lahore (Day 1 & 2); (ii) Islamabad (Day 3 & 4); (iii) Gujranwala and Peshawar (Day 5 & 6); (iv) Multan, Abbottabad, Faisalabad and Bahawalpur (Day 7 & 8) [8th day being 1st day of next week and so on.
Currently, the three fertiliser units on SNGPL system are consuming approx. 22 MMCFD gas as fuel stock. Fertiliser sector will be encouraged to arrange alternate fuel for its fuel stock requirements during curtailment period. SSGCL would divert 38 MMCFD gas to SNGPL for utilisation by three new IPPs namely Orient, Saif and Sapphire or Rental Power Plants/ GTS Faisalabad.
The IPPs would carry out performance testing on staggered basis during the winter months ie November 2009 to February 2010, in consultation with SNGPL. According to the approved policy, any saving of gas due to measures proposed above would be diverted to the industrial sector preferably to export-oriented textile industry. Despite gas savings from above measures, partial gas curtailment would remain inevitable due to seasonal swings during the peak winter months.
Moratorium on extension of gas to new towns/villages would be imposed till the present backlog was cleared, except in those towns/villages, which are located in districts of gas producing wellheads including Balochistan, he added. In this regard, the government has decided to adhere to article 158 of the Constitution of Pakistan, he added.
SUGAR POLICY Kaira said the Cabinet discussed the sugar policy 2009-10 in detail, after it was discussed with the representatives of sugar mills and sugar cane growers. According to Kaira, the government has fixed sugar cane price at Rs 100 per 40 kg. The new sugar policy will be implemented by the provincial governments. Sugar policy states that the market forces will decide sugar price, the vulnerable must be protected, and lower income groups will be provided assistance. As a matter of principle, sugar price would be determined by market forces.
The Cabinet concurred with the opinion of the Competition Commission of Pakistan appointed by the Supreme Court of Pakistan in CP No 1709 et al that the cost of production of sugar varies from mill to mill, region to region and from province to province.
BENAZIR INCOME SUPPORT PROGRAMME (BISP) FOR THE VULNERABLE The government is seriously considering shielding the targeted vulnerable groups, comprising around 34 percent of the population living on or below the poverty line, through BISP.
The transparent scheme would subscribe to international standards monitored through debit cards where the holder would be able to purchase sugar at a subsidised price from the designated Utility Stores Corporation (USC) outlets or depot/fair price shops/mobile stores to be set up with the assistance of the provincial governments.
The Ministry of Finance would supervise the scheme and provide updates on implementation periodically to the Cabinet. It would entail the essential interventions to ensure that the delivery was free of any misuse and reaches the target population. The policy further reveals that the BISP would initially provide 10-20 percent relief in price from the market price of sugar. The cost of the differential would be shared equally between the government and the PSMA.
USC INTERVENTION TO PROVIDE RELIEF TO THE LOW-INCOME GROUPS The government intervention to provide sugar at affordable prices would continue through Utility Stores Corporation (USC). The USC would be financed to make purchase of 0.5 million tons direct from sugar mills so as to avoid the complications of payment and getting supplies from the Trading Corporation of Pakistan (TCP).
UNIFORM PRICE OF SUGAR For the 11th month of the calendar year 2009 sugar meant for household consumption would be sold at the uniform price of Rs 40/kg in every nook and corner of the country; the respective provincial governments would designate kiryana/retail shops/any other arrangement in appropriate localities as, 'sale point/ration depots'. This countrywide intervention would require 100,000-115,000 tons of sugar to be supplied by sugar mills meant for household consumption.
RAW AND WHITE SUGAR IMPORT AND TIMING In view of the PSMA unwillingness to import raw sugar, 0.5 million tons of raw sugar would be imported this season by the TCP/private sector to arrive in January 2010. Its release would be monitored by a committee headed by the Finance Minister.
Additionally, 0.5 million tons of white sugar would be imported by TCP. To ensure that the quantity is not over-procured, the State Bank of Pakistan would not open Letters of Credit (LCs) beyond 0.5 million tons each for white and raw sugar. The detailed modalities of import of white and raw sugar would be worked out by the secretaries committee.
SMUGGLING AND GUR BAN ISSUE Manufacturing of Gur in NWFP may continue; however, export of Gur might be banned forthwith. Provincial governments would ensure that the crushing season annually commences latest by 1st November in Sindh and 15th November in Punjab and NWFP.
The domestic market would be integrated with the international market by providing necessary tariff protection. A study might be undertaken to redefine details of achieving fully competitive market for sugar trade. According to the policy, mechanism of pricing sugarcane on sucrose content would be introduced in all the provinces.
As recommended by the Sugar Advisory Board (SAB), the prices would be fixed variety-wise initially and afterwards the pricing methodology would be upgraded in phases in accordance with the best international practices. To achieve this purpose as a test case two to three mills in each province would be encouraged to subscribe to this practice during 2009-10.
Cane Purchase Receipt (CPR) would be used as a 'negotiable instrument' subject to an operational procedure and legal evaluation as advised by the State Bank of Pakistan (SBP). Provincial Agriculture Research Institutes in collaboration with the private sector would evolve site/area specific sugarcane varieties through research and development of high-yield/high-recovery characteristics.
To supplement the existing initiatives two dedicated projects with latest technology based on public-private partnership are being set up to be executed by the Ministry of Food and Agriculture. Sugar production from sugar beet would be encouraged as a Small and Medium Enterprise (SME) activity to supplement domestic sugar needs.
This would be incentivized through fiscal measures under the supervision of Minfa. Provincial governments should encourage the requisite technology shift for the existing mills from sugarcane to sugar beet and consider setting up of new sugar beet mills.
To redress complaints of manipulated weighbridges that deprive farmers of their just payments, provincial governments might inter alia use the 'Sugar Cess Fund' to monitor 'kunda' (scales/weigh bridges) and sucrose variety testing stations to ensure impartial testing and weighing facility for growers.
Kaira said the Cabinet approved paddy procurement plan and directed the SBP to facilitate Passco in procuring commodity financing from the commercial banks. Passco would procure 1 million tons rice for which 50 centres have been established throughout the country, which would be doubled in days to come. Provincial governments have been directed to intervene in the procurement plan as per need.
According to Kaira, the government has also acceded to the logical demands of rice exporters, which include extension in payment schedule of their loans taken from the banks. The Finance Ministry will deliberate with the banks. He said the government has been informed that rice export surplus will be around 5.76 million tons. According to official sources, Passco's cost differential claim would be paid back, as Reap is really under this unbearable burden and is paying exorbitant markup of Rs 9.4 million per day.