ISLAMABAD: Amid rising prices despite subsidised imported stocks, the Economic Coordination Committee (ECC) of the Cabinet on Tuesday directed the Ministry of Industries and Production (MoIP) to chalk out a plan for continuous and smooth operation of urea plants in the country throughout the year.
The meeting presided over by Finance Minister Asad Umar also could not take a conclusive decision on two other major agenda items — signing of fuel supply agreement with Azerbaijan and payment of dues to employees of Pakistan Machine Tool Factory — owing chiefly to lack of prior consultations.
While reviewing the fertiliser demand and supply situation, the ECC directed MoIP for easy availability of sufficient urea stocks to meet demand of the farmers’ community.
Advises further consultations on fuel supply deal with Azerbaijan
Sources said the meeting was informed that while reasonable urea stocks were available in the country augmented by 100,000 tonnes of imports last month, the price did not fall below Rs1,850-1,860 per 50 kg bag in the market against a price set at Rs1,712 per bag for imported commodity.
It was observed that some fertiliser plants were not releasing their stocks to the desired level due to upcoming annual maintenance schedule. Also, the subsidies on account of imported and domestic gas blend on a long-term basis was also an issue as existing arrangements would come to an end by close of this month for two fertiliser plants — Fatima and Agritech.
The meeting was informed that the provincial government did not intervene into the matter as required. It was pointed out that a crackdown on hoarders was delayed on the request of some fertiliser companies and their distribution networks and the fertiliser review committee or the ECC had also not pressed for such a move in their respective meetings last month to avoid an impression of harassment.
Sources said some members of the committee were of the view that decision making on transaction to transaction would be an inappropriate course of action given the fact that gas suppliers, fertiliser producers and the end consumers and policy makers keep changing their positions month after the month.
While about Rs4.7 billion supplementary grant had been approved by the federal cabinet for gas supply and its subsidy mechanism until end-January for domestic production imports, there should be clear line of action based on all the factors on a year-long basis. It was also highlighted that an early decision was required on allocation of about 66 million cubic feet per day (mmcfd) of additional gas from Mari field.
The ECC while considering the proposal regarding provision of funds for personnel related dues in the Pakistan Machine Tool Factory (PMTF), directed the Ministry of Industries and Production to come up with a strategy to revitalise the unit.
The ECC observed that the PMTF had done great service for the engineering sector and had the potential to effectively carry on this role, for which it needed to be strengthened.
The ECC approved proposal of Ministry of Energy (Petroleum Division) for supply of up to 25mmcfd additional gas from Adhi Gas Field to Sui Northern Gas Pipelines Ltd. (SNGPL) to meet the existing gas demand on the system.
ECC also discussed proposal of Ministry of Energy (Petroleum Division) for fuel supply agreement between Pakistan State Oil (PSO) and State Oil Company of Republic of Azerbaijan (Socar). The Committee advised Ministry of Energy to carry out further consultations with stakeholders including Ministry of Commerce and Public Procurement Regulatory Authority before a final decision in the matter.
The meeting was informed that PSO and Socar had finalised a term sale and purchase agreement (TSPA) for supply of petroleum products under an inter-governmental agreement (IGA) signed by the two governments in February 2017.
After vetting the TSPA, the Law Division had desired its approval by the board of directors of the PSO. While approving the TSPA, the PSO board directed the company to ensure its approval from the federal cabinet as required under Rule 5 of Public Procurement Regulatory Authority Rules 2004.
The Rule 5 required that whenever PPRA rules come in conflict with an obligation or commitment of the Federal Government arising out of an International treaty or an agreement with a State or States, or any international financial institution, the provisions of such international treaty or agreement shall prevail to the extent of such conflict.
The Petroleum Division had proposed to the ECC that since the TSPA was finalised under a bilateral government agreement and the two companies were owned by the two states, the ECC and the cabinet should clear the commercial arrangement between the two companies. The ECC desired that opinion of the commerce ministry in terms of import and that of procurement authority in terms of exemption of competitive bidding should be obtained before reaching a final decision.
Published in Dawn, January 2nd, 2019