ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Friday approved the issuance of Rs9 billion standby credit for the Sialkot-Lahore motorway, one-month salary to Pakistan Steel Mills’ (PSM) employees and extension in incentives for exporters.

In a meeting presided over by Finance Minister Ishaq Dar, the ECC also approved the allocation of a small gas field to Sui Northern Gas Pipelines Ltd (SNGPL) and transportation of crude from an oilfield.

Informed sources said the motorway project was being developed on a build-operate-transfer basis at an estimated cost of Rs45.4bn. The contract has already been awarded to the Frontier Works Organisation (FWO).

Under the agreement signed by the National Highway Authority with a project company wholly owned by the FWO, the government of Pakistan is required to arrange a financing gap of Rs18bn to make the project viable. The FWO is required to arrange about Rs21bn, while the NHA has to provide for about Rs1.6bn as overhead expenses and Rs5bn as loan outside the public sector development programme (PSDP).

PSM employees to get one-month salary, exporters more incentives

The sources said the government was required to release a Rs9bn first tranche, of which Rs5bn has already been disbursed while Rs4bn was being re-appropriated from the PSDP allocation to NHA for the current year.

For the second tranche of Rs9bn for the next fiscal year, the government has committed to provide letter of comfort to the National Bank of Pakistan or any other financial institution to provide standby letter of credit as the Planning Commission declined to make this a part of the next year’s PSDP.

Because of the dispute, Prime Minister Secretariat intervened and directed the ministries of communication and finance to issue letter of comfort on an emergency basis to ensure that concessionare can achieve financial close. In view of the directives, the ECC approved issuance of letter of comfort to provide for Rs9bn standby letter of credit.

The meeting also approved payment of salaries amounting to Rs380 million for January to PSM employees “on compassionate grounds”.

The ECC approved a proposal of the Ministry of Petroleum and Natural Resources for the allocation of 10 million cubic feet per day (mmcfd) of gas from the Tolang gas field, located in the Kohat district of Khyber Pakhtunkhwa, to the SNGPL. The price of gas will be as per the applicable petroleum policy.

The meeting also approved a proposal of the Ministry of Commerce with respect to the Prime Minister’s Package of Incentives for Exporters. For export shipments until March 31 under the package, the ECC approved extension in deadline for submission of claims from 90 days after shipment to 120 days after shipment.

The ECC also approved inclusion of certain finished leather projects in the drawback on local taxes and levies order under the package.

The committee also approved a proposal of the petroleum ministry regarding transportation of crude oil from Adhi oilfield, and authorised the company concerned to deal with the transportation arrangement of crude oil from the field on an open-competition basis without any involvement of the government.

Published in Dawn, April 15th, 2017