ISLAMABAD: The government approved on Wednesday another Rs13.6 billion bailout package for Pakistan International Airlines (PIA), allowed a Rs56bn pipeline for the transportation of diesel and petrol from Lahore to Peshawar and set the wheat support price at Rs1,300 per bag for 2017-18.

The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Prime Minister Shahid Khaqan Abbasi that also approved salaries of two months for the employees of Pakistan Steel Mills (PSM) instead of four as demanded by the relevant authorities.

The meeting did not take up the issue of Rs11bn sought by PSM for gratuity, provident fund, medical bills and other pension-related dues payable to more than 4,000 employees.

“The ECC approved a proposal to increase the commercial borrowing guarantee limit of PIA by Rs13.58bn,” said an official announcement after the meeting.

PIA is a chronic recipient of bailout packages in the form of capital injections through the budget or commercial loans from banks against sovereign guarantees because of its continuous losses. Its current liabilities are estimated on the higher side of Rs300bn. Most of these liabilities have contingent ramifications on the federal budget.

Two-month salaries for employees of Pakistan Steel to be released

The fresh bailout package was required to roll over its existing maturing loans and liabilities. It has been in continuous default on payments to fuel suppliers, including state-run Pakistan State Oil (PSO).

Early this year, the government increased the guarantee limit for PIA by Rs10.5bn to Rs161.5bn to address its immediate challenges. The guarantee limit was further enhanced to about Rs175bn.

The ECC also approved the minimum guaranteed price (previously known as support price) for wheat. It kept the price unchanged at Rs1,300 per 40 kilograms for the next season. Pakistan witnessed bumper wheat crops over the last few years because the support price is higher than the international market price.

The meeting also approved the supply of 20,000 tonnes of wheat from the Pakistan Agricultural Storage and Services Corporation (Passco) to the United Nations World Food Programme for the temporary dislocated persons of the Federally Administered Tribal Areas.

Tax exemption: The ECC also granted an exemption from the provisions of Section 7B of Income Tax Ordinance 2001 to the recipients of profit on debt from Behbood Saving Certificates and Pensioners Benefit Accounts. As such, the holders of these two schemes will be exempt from the levy of 10pc income tax as already announced by Finance Minister Ishaq Dar.

In order to provide relief to the families of martyrs, the ECC approved a proposal to include words “and Shuhuda Family Welfare Account” in Clause (6) Part III and Clause (36 A), Part IV of the Second Schedule to Income Tax Ordinance 2001 for exemption on income tax.

The ECC also approved a proposal for the construction of Machike-Tarujabba Oil Pipeline Project on the Build-Own-Transfer basis for the transportation of oil from Lahore to Peshawar. “The construction of this pipeline would facilitate easy and inexpensive transportation of oil,” the announcement said. The pipeline will become property of the Interstate Gas Company (ISGC).

The meeting also approved a series of summaries relating to gas field development plans, production leases and gas allocation from newly discovered gas fields to gas utilities — Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGC).

These included a proposal to allocate 14.8 million standard cubic feet of gas — up to 8mmscfd gas from Aminah gas field and up to 6.8mmscfd gas from Ayesha North field — to SSGC was approved. The meeting also granted exemption from Rule 43 of 1986 Rules for development and production leases over Sara and Suri fields.

According to the rules, “The lease may be revoked if regular, commercial production has not commenced within five years from the grant of the lease, or within seven years in the case of an offshore field. The lease may also be revoked if production has terminated for more than 90 days, unless this is due to force Majure”.

The Sara and Suri are located in the northern part of the East Badin (Block B). The fields have potential to produce up to 3mmscfd gas. The meeting approved gas allocation from Shahdadpur East and West Field (Sindh). The government had approved the field development plan for Shahdadpur East and West Field, declaring commerciality of its production on March 15.

The meeting also approved the field development plan and grant of development and production lease for Mubarak Block No. 2769-4 and Gambat Block No. 2668-4. It also approved a proposal of the Petroleum Division that 83.2mmscfd (ie up to 74mmscfd gas from Shahdadpur, up to 2.2mmscfd gas from Shahdadpur East and up to 7mmscfd gas from Shadadpur West D&PL be allocated/regularised to SSGC as its network already existed in the area and that gas from the same block is already being supplied to the company.

Published in Dawn, November 2nd, 2017