Proposal to reduce car prices dropped: Oil refinery near Hub approved
By Khaleeq Kiani
ISLAMABAD, Oct 31: The Economic Coordination Committee (ECC) of the cabinet on Tuesday said the recent rise in onion, potato and tomato prices was a temporary phenomenon and dropped a proposal seeking reduction in car prices due to strong opposition from local manufacturers.
The meeting presided over by the prime minister appreciated the monitoring of prices of essential commodities in the month of Ramazan. The meeting lauded the efforts of provincial and local governments which maintained stability in prices during the holy month, economic adviser to the finance ministry Dr Ashfaq Hassan Khan told newsmen after the meeting.
He said the prices of onion, potatoes and tomatoes have increased after Eid but the ECC was of the view that the temporary hike was due to transportation problem owing to closure of markets for about 10 days for Eid. He claimed that the prices of these items have started to come down and the prices of onions averaged Rs36.88 per kg on Oct 30.
The ECC also allowed setting up of an export-oriented oil refinery at Khalifa Point near Hub by the Abu Dhabi Group of UAE with an investment of $4 billion, besides reshuffling of gas allocations for a couple of sectors.
He said a proposal of the industries ministry on new automotive policy was referred back for taking on board all stakeholders of the sector as the meeting felt the new policy required more work which should be completed in about a month.
The industries ministry had proposed about 15 per cent reduction in tariff on imported cars over a period of five years to help reduce car prices and make them more affordable to the common man.
The ministry had proposed to cut down tariff on CBU (completely built units) from the existing 50 per cent to 35 per cent and CKD (completely knocked down) from 35 per cent to 20 per cent during the next five years in a gradual manner.
Sources said the supporters and opponents of the policy presented their strong arguments before the ECC.
The supporters of tariff reduction contended that this policy will help in providing cheaper cars to Pakistanis while the opponents feared that it might harm the local industry and discourage the future investment in the expansion projects of the existing manufacturers in the country.
The import policy being adopted by the government during the last couple of years helped reduction in prices of locally manufactured cars as their premium dropped substantially, although their ex-factory prices did not fall.
Dr Khan said the international petroleum and investment company (IPIC) of the UAE government has agreed to set up a $4-5 billion coastal refinery at Khalifa point which would have the capacity to process 200,000-300,000 barrels of oil per day.
The project will have a 75 per cent sharing from the UAE government while another 25 per cent stakes would come from Pak- Arab Refinery (Parco-another joint venture between UAE and Pakistan).
The 75 per cent stakes of the export refinery would be equally shared by the IPIC and the Abu Dhabi government, of which the Abu Dhabi government would be at liberty to sell its shares. He said the Asian Development Bank has also expressed interest to become a shareholder in the refinery that would be completed in 2010-11.
He said the ECC also decided to make an amendment in the petroleum policy to enable the government to place performance bonuses of gas discoveries at the disposal of provincial governments for onward utilisation in areas of actual discoveries through district governments.
These bonuses used to be collected by the federal government from the gas producers for the development of local areas of gas production but seldom utilised for the purpose these were collected.
