ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet is expected to revive on Thursday subsidy on sale of sugar through Utility Stores Corporation (USC), approve Ramazan Relief Package and allow 3.8 million tonnes of urea for the upcoming Kharif season.

The ECC meeting, to be presided over by Finance Minister Ishaq Dar, is also expected to take up teething problems in smooth supply, operational port problems, pricing and sale of imported Liquefied Natural Gas (LNG).

The government had suspended subsidy on sale of sugar through USC outlets in April last when oversupply of the commodity brought down retail prices in the market. As a result, overall sales of other essential products at USC dropped significantly, leading to net losses to the state-owned corporation.

In contrast, the government diverted much higher subsidies–at the rate of about $100 per tonne–to the sugar mills to facilitate export of surplus production.

Now, the Ministry of Industries and Production has recommended to the ECC to provide Rs5 per kg subsidy on sale of sugar through USC as an incentive to people. This would cost government about Rs1.8 billion per year.

The other option was to close down about 2,100 USC outlets across the country because of their running expenses resulting in losses. The number of customers at USC shops had dropped because large private superstore chains were offering incentives on many products taking advantage of their economy of scale, affecting USC market share.

RAMAZAN PACKAGE: The ECC will also consider a relief package for upcoming Ramazan for sale of essential commodities at cheaper rates through USC outlets.

The sources said the government was expected to provide subsidy on 13 major essential kitchen items. These items would be 5-10pc cheaper at USC stores than the open market.

The ECC would consider a proposal to reduce prices of cooking oil and vegetable ghee by Rs10 per kg while prices of wheat flour, sugar, pulses, rice, drinks and some other products would be reduced by Rs5 per kg.

The relief package is expected to be started from June 16.

The ECC is also expected to allow import of 3.8m tonnes of urea for the coming Kharif season to meet domestic shortage and provide it at subsidised rate to customers.

Informed sources said the ECC was also likely to accord ex-post facto approval of an agreement for import of LNG from Qatar and discuss other outstanding issues relating to its pricing, allocation of LNG quantities and a host of other associated issues in view of contractual obligations to import second LNG ship by end of next week.

Published in Dawn, April 9th, 2015

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