ISLAMABAD, Jan 21: The Economic Coordination Committee (ECC) of the Cabinet on Tuesday discussed in detail the energy management plan to meet contingencies in the event of a war in the Middle East.

The meeting, presided over by prime minister’s adviser on finance Shaukat Aziz, reviewed the overall stock position of various commodities, energy sector policies, oil management plan, role of the National Logistics Cell in transporting and monitoring POL stocks, revenue generation, monetary policies, import and exports, industrial production, performance of PIA and other related issues.

The meeting decided to give a final waiver for up to Dec 31, 2003, on demurrage charges to clear the consignments lying at the ports.

According to an official announcement, the ECC restored exemption previously available to permanent imports under the SRO 236 (i)/98 through amendments to SRO 367(i)/94 dated 9.5.1994 to encourage investment in the energy sector.

It noted with satisfaction the comfortable position of wheat, sugar, oil and fertilizer stocks. It expressed satisfaction that the stocks of these commodities had been strengthened to meet any eventuality. The ECC directed that a continuous monitoring of stocks to maintain them at a comfortable level should be adopted.

The meeting observed that during the winter months production at most of the gas-fired fertilizer plants remained intact. However, production at four fertilizer plants had been affected due to diversion of gas supply to domestic consumers. Since these plants usually synchronise timing of their annual maintenance with reduced supply of gas, the impact on production of urea would be minimal.

Similarly, the ECC noted that the gas supply for electricity production had to be curtailed to meet increased demand of gas by the domestic consumers.

The meeting observed that the NLC should aggressively market itself for carrying goods to Afghanistan, Iran and beyond on competitive rates. In this regard, the meeting was informed that the NLC had moved 52 containers to Afghanistan and several trucks to Iran. Further, it was tapping the potential exporters and suppliers to secure carriage contracts for Iran and Afghanistan.

The committee noted that the revenue collection was on target with an overall increase of 15.5 per cent. Sales Tax in the first six months registered an increase of 25 per cent and customs duties 53 per cent as compared to the corresponding period of last year.

The increased collection of customs duties was attributed to increase in imports and lower tariffs, which encouraged the import of raw material and machinery. This, the meeting noted, would generate economic activity in the country.

The State Bank governor informed the meeting that the gross foreign exchange reserves stood at around $9.4 billion. He said that remittances touched $2.1 billion mark and were likely to surpass $3 billion by the end of current financial year.

Similarly, the foreign direct investment was around $570 million. In view of the improved position of foreign exchange reserves, the ECC discussed foreign exchange medium to long-term loans to exporters from commercial banks. This will allow more industrialization and investment in the country.

Shaukat Aziz informed the meeting that the government was actively working with international export credit agencies and the OECD for improving the availability of ECA credits at lower costs. This would lower the cost of financing and encourage establishment of industrial units in the country.

The meeting noted that trade deficit which stood at $1.7 billion in the year 2000-2001 was brought down to $1.2 billion in the last fiscal year. The trade deficit target of $0.59 billion would slightly exceed due to increase in oil prices and edible oil rates in the international markets.

The meeting was told that Pakistan was expected to import goods worth $11.1 billion by the end of current financial year. The imports from July to December registered an increases of 18.7 per cent. Non-oil non-food imports increased to 22 per cent. Import of machinery registered an increase of 34 per cent, textile raw material 31 per cent, agriculture and chemicals 16 per cent, fertilizer 31 per cent.

Similarly, exports increased by 16.6 per cent in the last six months. Pakistan exported goods worth $5 billion from July to December as compared to $4.4 billion in the corresponding period of last year. The exports were mainly driven by the textile sector which registered an increase of 16.4 per cent.

The ECC noted that the Pakistani wheat was now fetching better price in the international market. It was being sold in the region of $134-145 per ton.

The ECC noted increased industrial production due to increased domestic and export demand. To further promote indigenous industrial production, the government would further rationalise tariff structure. The growth-led strategy of 2002-03 led to increased production in the first half of the year for sugar by 14 per cent, cement 18 per cent, soda ash 23 per cent, cotton cloth 14 per cent, deep freezers 10 per cent, refrigerators 20 per cent, TV sets 23 per cent, HR sheets/strips 15 per cent, CR quails/sheets 15 per cent, cars 42 per cent, motorcycles 38 per cent, light commercial vehicles 44 per cent, buses 92 per cent, trucks 140 per cent, motor tyres and tubes 11 per cent, paper board 28 per cent, paper printing 42 per cent, chipboard 12.9 per cent, urea 0.9 per cent, bicycles 58 per cent and consumers’ goods 20 per cent.

The meeting noted that the PIA had become a profitable organization and posted a profit of Rs2.5 billion. The meeting also noted the impact of 9/11 on air traffic.

To modernize PIA’s aircraft fleet and make it an even more profitable organization, the ECC agreed that the government would issue guarantee for the term finance certificates of Rs15.14 billion, covering payment of principal amount and profit for eight years, issue guarantee for the bridge financing of Rs3 billion and provide equity contribution to the PIA.

The meeting noted that the wheat flour prices in Pakistan were the lowest in the region. It said that on average prices of various items during the week commencing Jan 16, 2003, were generally found to be satisfactory. Average price of 17 items registered increase, while those of 12 decreased with the remaining 24 items prices unchanged.

To promote export of wheat, the ECC decided to reconstitute its committee on wheat disposal which would now be presided over by minister for food and agriculture.

The meeting decided to instruct the provincial food departments and Pasco to strictly adhere to wheat cascading price system for supply of wheat to the flour mills.

The meeting was attended by ministers for commerce, petroleum, education, information technology, governor State Bank, deputy chairman Planning Commission, chairman BOI and federal secretaries.