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| May 27, 2005 | Friday | Rabi-us-Sani 18, 1426 |
Industrial sector allowed to produce electricity
ISLAMABAD, May 26: The Economic Coordination Committee (ECC) of the Cabinet on Thursday allowed the industrial sector to produce power for their own consumption to reduce input costs as well as pressure on power utilities. The meeting presided over by Prime Minister Shaukat Aziz also advised the State Bank of Pakistan to closely monitor inflation and brief the ECC on monetary policy, interest rates and inflation on a regular basis.
Dr Ashfaq Hassan Khan, economic adviser to the federal government, told newsmen after the meeting that if inflationary pressure subsided, as expected, the SBP would revise its current stance on tightening of monetary policy.
Responding to a question, he said the central bank would adjust its policy in the light of inflation but it could not be predicted at this stage as to when the policy would change into an accommodative stance.
He said the industries would now be allowed to generate electricity for their own consumption but they would not be allowed to sell it to others even in case of surplus. The sources said that Wapda and KESC had opposed the move because they thought it would deprive them of a cream of consumers. Mr Khan, however, said that all the stakeholders, including Wapda, KESC and the Private Power and Infrastructure Board (PPIB), were on board the decision of allowing industries to generate electricity for self-consumption.
Inflation at an eight year peak was a major cause for concern for the government. Mr Khan said that discussion on inflation consumed almost 90 per cent time of the ECC meeting. He said the inflationary trend had started to decline and the Sensitive Price Indicator (SPI) had shown reduction in four out of five weeks since April 14.
He said the prices of five essential items, which have been allowed to be imported from India without duties and taxes, have already come down although imports have not yet arrived. These items include meat, garlic, tomato, potato and onions.
He said the monthly inflation measured by the Consumer Price Index (CPI) was expected to decline in May (month-on-month) which had increased in April when compared with the corresponding month of last year.
He said the Federal Bureau of Statistics (FBS) had been directed to provide average price trends to provincial chief ministers along with the federal government to apprise them of province-to-province price difference.
The prime minister directed the provinces to review the price trends on their own and take appropriate measures while the federal government will provide them all possible assistance in this regard, Mr Khan maintained.
The ECC also allowed the setting up of a dry port in Sheikhupura to ease pressure on dry ports of Lahore which have been over-burdened with the increase in economic activities.
Similarly, the ECC directed the relevant authorities to examine and analyze the feasibility of a dry port in Sukkur.
The ECC also reviewed the wheat situation. It noted that 74 per cent of the procurement target for the commodity had so far been achieved. The target was 4.73 million tons. “Till May 23, about 3.5 million tons of wheat has been procured,” it noted.
The ECC was informed that wheat stocks as of May 23, 2005 stood at 3.83 million tons against 3.1 million tons of last year. This means that this year’s wheat stock is higher than last year’s by 0.7 million tons. This would keep prices stable.
Mr Khan said the second estimate provided to the National Accounts Committee put the total wheat production at 21.1 million tons but provinces suggested the third and final estimate would result in higher output.
The ECC was informed that the government had lost Rs60 billion since May last year as a result of non-recovery of Petroleum Development Levy. However, he said he did not know exactly about the higher collection of general sales tax and other taxes as a result of higher oil prices. He said the availability of fertilizer was also satisfactory as 1.1 million tons of DAP had reached the country while 2.5 million tons of urea would be reaching by July 10.
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