ECC to take up removal of duties on textile items

Updated 23 Sep 2020

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The six-point agenda of the meeting also includes two technical supplementary grants of Rs102 million and Rs85m to Islamabad High Court and National Heritage & Culture Division, respectively. — AFP/File
The six-point agenda of the meeting also includes two technical supplementary grants of Rs102 million and Rs85m to Islamabad High Court and National Heritage & Culture Division, respectively. — AFP/File

ISLAMABAD: The government has called a meeting of the Economic Coordination Committee (ECC) of the Cabinet to approve the removal of additional custom and regulatory duties on a number of textile items and consider waiving guarantee fee on about $5.7 billion Chinese loans for nuclear power plants.

To be presided over by Finance Adviser Dr Abdul Hafeez Shaikh, the meeting is also expected to shift immunisation programme from development budget to revenue budget and approve disbursement of salaries to the employees of Pakistan Steel Mills (PSM) for current fiscal year.

The six-point agenda of the meeting also includes two technical supplementary grants of Rs102 million and Rs85m to Islamabad High Court and National Heritage & Culture Division, respectively.

An official said the removal of additional customs duties (ACD) and regulatory duties (RD) on selected items of textile sector were part of efforts to make Pakistani products competitive in the world under the National Tariff Policy 2019-24.

He said the powers for removal of customs duties belong to parliament and hence could only be taken up through the finance bill but it had been decided at the level of Tariff Policy Board that any proposal about change in ACD or RD would be processed at any time through the ECC.

He said Pakistan’s tariff structure was still highest in the neighbourhood which was not only making it difficult to match regional competitors in the global market but also hampering sales in the domestic as there were a number of textile-related raw items which were imported involving ACDs and RDs.

The official continued these duties were being removed in many cases and reduced for other items, with the existing rates of 10 per cent, 20pc and 30pc would be brought down to 5pc, 10pc, and 15pc, respectively.

The Ministry of Commerce had been advocating that ACDs and RDs on those fibres or yarn which are not locally made should be reduced, for example on flax fibre, nylon yarn and jute etc.

Another official said the ECC would take up a request of the Pakistan Atomic Energy Commission (PAEC) for waiver of about Rs15-20 billion loan guarantee fee on about $5.7bn Chinese loans for two Karachi-based nuclear power plants (K-2 and K-3) of about 1,100MW each. The two projects are almost complete now and set to be part of the national grid shortly.

The two plants were approved by the Executive Committee of the National Economic Council (Ecnec) in July 2013 at an estimated cost of Rs958bn for which Economic Affairs Division (EAD) had signed with China Exim Bank three loan agreements of about $6.5bn.

An $810 million loan was taken by EAD as a federal loan while remaining two loans of about $5.668bn were given to PAEC in 2015 as a direct borrower with Government of Pakistan guarantee. This chunk of the loan attracted EAD’s loan guarantee fee at the rate of 0.5pc per annum.

The PAEC had been advocating that Chinese bank had transferred the loan to it on the request of the centre and the guarantee fee was not part of the PC-1 approved by Ecnec and its lateral application would jack up the per unit cost of electricity.

Hence, the fee should be either waived as part of government efforts to reduce power costs.

Published in Dawn, September 23rd, 2020