ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet has allowed export of 500,000 tonnes of sugar and imposed 20 per cent regulatory duty on its import to facilitate the industry’s cash flows and earn foreign exchange.

In a meeting, presided over by Finance Minister Ishaq Dar on Wednesday, the committee also allowed the price of gas from the Mari field to be gradually increased by almost three-fold in five years and formally approved an increase in wheat support price of Rs100 per 40kgs.

According to sources, a delegation of Pakistan Sugar Mills Association (PSMA) recently met the minister and demanded permission for export and 25pc duty on import to discourage price reduction.

They had warned that in view of surplus stocks and cash constraints, the millers might not be blamed for delay in the crushing season and financial problems of growers.

The minister had agreed to the demands and directed the ministries of commerce and industries to move a formal case.

An official statement said that the ECC allowed export of 500,000 tonnes of surplus sugar on the request of the commerce ministry and also supported by the ministry of industries and production. The exporters will be required to export the commodity against irrevocable letters of credit (LCs) or a firm contract with 15pc non-refundable advance payment.

The millers or exporters will be required to ensure shipments of sugar within 45 days after registration of a contract and in case of failure, the non-refundable advance payment shall be forfeited by the government. The quota, as allocated, must be exported by March 31, 2015.

The ECC decided to impose 20pc regulatory duty on import of sugar so that cheaper commodity might not enter into the country to the benefit of consumers and disadvantage of the millers.

The committee allowed sugar exports by land against payments in dollars to Afghanistan and beyond as an incentive.

It asked the provincial governments to ensure that as a consequence of the financial ease arising out of the exports, the mill owners pay all dues to sugarcane growers and that the crushing should start on time.

WHEAT PRICE: The ECC legalised the increase in wheat support price from Rs1,200 to Rs1,300 per 40kgs as unilaterally approved by the finance minister two weeks ago.

MARI GAS: It approved dismantling of the gas purchase agreement of the Mari Gas Company that would allow an increase in price from about 80 cents per mbtu to $2.17 by 2019 in phases.

As a consequence, the share price of the Mari Petroleum Company, a subsidiary of the military’s commercial arm Fauji Foundation and the government of Pakistan, jumped by 29pc in a single day and touched upper locks in the stock exchange.

This was enabled through replacement of the cost plus gas agreement with a market-oriented crude oil-linked formula as had been allowed a few years ago to the Pakistan Petroleum Limited for Sui and Kandhkot fields.

The committee decided that 88pc of the un-distributable balance (about Rs9 billion) would be transferred to the government as redeemable preference share capital after fulfilling all legal and corporate formalities, while 12pc would be issued to the general public, ensuring that their interests in the company were fully protected.

The decision will allow the Mari company to acquire fresh exploration blocks and make joint ventures abroad like any other exploration and production company given the fact it was earlier barred from investment of more than $37 million a year.

The company welcomed the decision, saying it would get an even playing field with other major exploration and production companies of the country and open new avenues of growth and development in the petroleum sector. It had earlier told the government that its existing formula would result in wiping out the company from business in a few years.

Published in Dawn, November 13th, 2014