ISLAMABAD: The stubborn potato prices forced the federal government on Thursday to allow duty-free import of an additional 100,000 tons of potatoes to reinforce previous imports of 200,000 tons.

The decision was taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet, presided over by Finance Minister Ishaq Dar. The committee extended the deadline for duty-free potato imports till Nov 15.

The potato prices averaged around Rs70 per kg on Thursday in most of the government-controlled Ramazan bazaars despite repeated threats and policy decisions by the finance minister over the last four months. In the open market, it was being sold at Rs75-80 per kg.

High potato price hits export

The ministry of national food security and research had sought extension in the date for permission to import potatoes with zero duty. The ECC had, on April 25, allowed duty-free import of 200,000 tons of potatoes to bring down the high prices manipulated by hoarders and middlemen. Some participants were of the opinion that if immediate duty-free import is not allowed, potato prices would go sky-high during Ramazan.

On Thursday, the ECC allowed import of 100,000 tons of potatoes, in addition to an already approved 200,000 metric tons at zero duties. The facility will remain in place till Nov 15, a time when the new crop is expected. .

GAS FOR INDUSTRY: The ECC did not approve a summary presented by the ministry of industries and production for the provision of natural gas as feedstock in the direct reduced iron process (DRI) to Tuwairqi Steel Mills on reduced rates.

The Altuwairiqi Group of Companies had signed a memorandum of understanding with the government on May 28, 2004, for provision of 40 MMCFD gas for use as feedstock and 30 MMCFD for use as fuel on the same industrial rates as applicable to other such industrial units.

The ECC formed a committee comprising members from the Finance Division, the Board of Investment and the ministries of petroleum, law and industries to study all aspects of the MOU and present a report to the ECC.

The finance minister said that agreements should be signed only after preparing well thought-out plans and cautioned officials against making unrealistic promises. He also directed the ministries concerned to prepare an integrated energy plan for the next four years which should include parameters for investment, power generation, distribution and transmissions.

The ECC rejected a summary sent by the water and power ministry seeking approval of “standardised security agreements” (project agreements) for biomass-based power generation projects. after it found that the draft agreements for biomass base projects envisaged a cost plus tariff formula.

“There should be no place for cost plus basis purchase agreements,” said the finance minister after discussions between participants. Instead, up-front tariff mode approved by the National Electric Power Regulatory Authority (NEPRA) should also be applied on biomass and bagasse projects, he said.

The ECC further directed that no specific contract between two parties should be brought up before the committee for consideration and only standardised draft agreements would be considered. It also decided to have a presentation from the power regulator (Nepra) before taking a decision.

Published in Dawn, July 18th, 2014