ISLAMABAD: Amid continuous rise in flour prices, the government on Wednesday decided to immediately release another 650,000 tonnes of wheat to Sindh, Balochistan and Khyber Pakhtunkhwa (KP) to ease out demand and supply equilibrium in the market.
The decision was taken at a meeting of the Economic Coordination Committee (ECC) of the cabinet presided over by Prime Minister’s Adviser on Finance and Revenue Dr Abdul Hafeez Shaikh which also offered incremental power consumption at a flat rate of Rs11.91 per unit.
The ECC was informed that wheat flour price was continuously rising almost across the country due to an insignificant buffer in demand and supply situation. It was reported for example that national average for 20kg wheat four stood at Rs1,140 on October 26 compared Rs1,100 exactly a month ago in September.
Likewise, the 20kg price of flour was recorded at Rs1,050 on October 26 in Hyderabad compared to Rs1,000 on September 26 while 20kg flour price had increased from Rs750 on August 25 to Rs1,030 on October 26 in Faisalabad.
The ECC also approved a uniform seasonal pricing structure of “Use more electricity-pay less”
The ECC noted the rising trend in wheat prices, and “approved a proposal by the Ministry of National Food Security and Research (MNFSR) for release of 300,000 tonnes each to governments of Khyber Pakhtunkhwa and Sindh and 50,000 tonnes to the government of Balochistan,” an official statement said.
Rs2.75bn for Passco approved
The ECC also approved an amount of Rs2.745 billion to be paid to Pakistan Agricultural Storage and Services Corporation (Passco) as incidental charges at the ratio of 50:50 to be equally shared by the federal and respective provincial governments.
The latest release follows an earlier release of 250,000 tonnes of wheat to the governments of Sindh and KP governments – 100,000 tonnes for the former and 150,000 tonnes to the latter –from Passco stocks on an ECC decision taken in its meeting on Oct 2, 2019. The Passco incidental charges for the previous release had also been shared at the ratio of 50:50 equally by the federal and respective provincial governments.
The MNFSR informed the ECC that Passco and provincial food departments had reported their stocks at 6.44 million tonnes as compared to 10.09m tonnes of the corresponding period of the last year. However, despite the fact that the total availability of wheat this year was estimated at 28.26m tonnes, including the leftover stock of 3.78m tonnes as compared to the national requirement of 26.91m tonnes of the country, the prices of wheat and flour showed upward trend in the local market.
‘Use more electricity-pay less’
On a proposal of the Ministry of Energy, the ECC also approved a uniform seasonal pricing structure of “Use more electricity-pay less” to be applicable during the four winter months from November 2019 to February 2020. Under the decision, a flat rate of Rs11.9 per unit will be applicable on all units consumed over and above the units consumed in the corresponding months last year by the consumers. The facility will be applicable to domestic consumers (5kW and above), Time of Use (ToU) meters, commercial consumers 95kW and above), ToU meters, and all except temporary industrial consumers.
The ECC was told that the proposal was aimed at utilising the massive surplus electricity during the winter months when the demand plunges to 8000-9000 MW from an installed capacity of 35,000 MW. The energy ministry said the proposal was expected to lead to utilisation of additional electricity to the tune of Rs24bn in four months.
Wapda, PSO issue
The ECC constituted a committee led by Minister for Economic Affairs Hammad Azhar to resolve within two weeks the issue of outstanding payments to the port authorities by Wapda and Pakistan State Oil (PSO). The meeting was informed that Wapda owed an amount of Rs1.076bn to Karachi Port Trust (KPT) after 52 consignments imported by the power authority were cleared by the KPT Board on Wapda’s request on deferred payment and following approval of the federal government. Wapda paid a sum of Rs334m as against Rs1.41bn while the remaining Rs1.076bn is still pending.
Likewise, the Petroleum Division owed an amount of Rs1.696bn to Port Qasim Authority (PQA) for wharfage charges against the LNG imported by Pakistan State Oil. The Ministry of Maritime Affairs requested the ECC to direct Wapda and the Petroleum Division to make their respective payments to the PQA.
On a proposal by the Ministry of Energy, the ECC extended the timeline by another one and a half year for the commencement of Competitive Market Operations/commercial operation date (COD) of the Competitive Trading Bilateral Contracts Market (CTBCM).
The ECC was told that the CTBCM model and plan prepared by the Central Power Purchasing Agency Limited (CPPA) following an ECC decision for transition of the power market to a Competitive Trading Bilateral Contract Market, had been submitted to Nepra for review and regulatory approval and the approval was anticipated by December 2019.
Therefore, the ECC allowed that the full operations should begin 18 months after the Nepra’s approval i.e July 2021 as required under Schedule-I of the National Electric Power Regulatory Authority (Market Operator Registration, Standards and Procedure) Rules, 2015.
Gas supply to HCPC
The ECC also took up an issue regarding the supply of gas to Habibullah Coastal Power Company (HCPC) and approved a proposal by the Petroleum Division for supply of indigenous gas for the interim period of 3 to 6 months, purely on ‘as and when available basis’ with no Liquidated Damages attached, to HCPC.
During this period the supply of RLNG would be evaluated together with commercial terms, if CPPA agreed to switch the plant on RLNG and extend the Power Purchase Agreement (PPA) accordingly.
The Ministry of Energy informed the ECC that no long term firm commitment of supply of indigenous gas to HCPC could be offered in view of the depletion of indigenous gas and the widening gap between demand and supply. However, considering the plant location of Quetta and voltage issues, the abrupt suspension of gas supply upon expiry of GSA might not allow CPPA to make alternate arrangement to stabilise the grid which is neither in the interest of Balochistan nor the country.
The ECC also approved allocation of up to 8 mmcfd gas from Chabbaro and up to 10 mmcfd gas from Gundanwari to the M/s SSGCL with the price of gas as per the applicable Petroleum Policy.
Published in Dawn, October 31st, 2019