ISLAMABAD, July 19: Undeterred by highest ever production and government warnings, the private sector is currently hoarding an estimated two million tons of wheat, causing a price hike in the country, a top government official disclosed on Thursday.
So rampant is the black-marketing by ‘fly-by-night operators’ that even the space available at petrol pumps and similar other facilities is being used for stockpiling the commodity.
Dr Ashfaq Hassan Khan, economic adviser to the prime minister, said at a news briefing that even petrol pump owners were using their premises for wheat hoarding and added that hoarders were holding up an estimated two million tonnes of the commodity.
He was, however, prompt to claim that flour price, at an average of Rs14.63 per kg, was still lowest in the region. It cost Rs24.32 per kg in New Delhi.
Without ordering criminal investigations into the matter, the Economic Coordination Committee (ECC) of the Cabinet, which met here on Thursday with Prime Minister Shaukat Aziz in the chair, constituted a six-member committee to look into the unreasonable increase in wheat and flour prices.
Dr Khan said the meeting deliberated upon rising wheat and flour prices and constituted a committee comprising ministers of commerce, industries, food and agriculture, adviser to the prime minister on finance, the State Bank of Pakistan governor and the deputy chairman, planning commission, to look into the matter. The committee would also consult the prime minister in reaching a conclusion.
He said the wheat stocks in the public sector on July 15 stood at 4.8 million tonnes, including the provincial governments and the Pakistan Agricultural Storage and Supplies Corporation (Passco). He did not provide exact size of wheat stocks at this time of last year but said they were quite higher.
Dr Khan said Pakistan produced 23.5 million tonnes of wheat this year against total requirement of about 21.5-22 million tonnes and hence there was a reasonable surplus. He said there were reports that the private sector was holding up about two million tonnes of wheat.
Dr Ashfaq Hassan Khan said the ECC approved providing federal guarantees to the Water and Power Development Authority (Wapda) to raise Rs36 billion from the market at a mark-up ranging between 9-11 per cent to meet its cash shortfalls.
He said that Wapda has arranged Rs24 billion short-term financing including Rs16 billion since April this year. These loans would attract interest of 9-11 per cent. In addition, the ECC also allowed Wapda to raise up to Rs12 billion through Islamic Sukuk bonds for the development of three hydel projects in the NWFP of a total 323MW capacity. The projects, which include 72MW Khan Khwar, 120MW Alai Khwar and 130MW Duber Khwar, would cost Rs23.7 billion.
He said the meeting reviewed economic indicators and noted that overall inflation during 2006-07 had increased by 7.8 per cent against a target of 6.5 per cent and preceding year’s inflation of 7.9 per cent. The food inflation increased by an average 10.3 per cent during the year ending June 30, 2007 compared with 6.9 per cent a year before. Core inflation, however, stood at 5.9 per cent at the end of the last fiscal year compared with 7.5 per cent of 2005-06.
The economic advisor to the PM said the sensitive price indicator (SPI) registered an increase of 7.4 per cent on the week ending on July 12 when compared with the week ending on July 12 of last year. The prices of 19 items increased in this period while seven items declined and 27 remained stable.
Dr Khan said the ECC meeting was informed that according to the half-yearly labour survey unemployment rate has declined to 5.3 per cent as of December 31, 2006 as against 6.5 per cent of the same period a year before.
The ECC also allowed companies investing up to $25 million to import three duty- and tax-free vehicles including a 1600cc car, a coaster and a truck or cargo vehicle. This facility will, however, not be available to companies with less than $10 million investment.
The meeting deferred a proposal offering a set of incentives for the setting up of Export Processing Zone at Gwadar and another proposal relating to local crude transportation.
