ECC opens up another border crossing for trade with Afghanistan

Updated 24 Sep 2020

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The ECC approved notification of Kharlachi as another border crossing with Afghanistan for trade.
The ECC approved notification of Kharlachi as another border crossing with Afghanistan for trade.

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Wednesday approved notification of Kharlachi as another border crossing with Afghanistan for trade, removed duties on selected textile items and waived Rs13 billion loan guarantee fee on Chinese loans for nuclear power plants.

Presided over by Adviser to PM on Finance and Revenue Dr Abdul Hafeez Shaikh, the ECC also approved purchase of about Rs10bn worth of vaccines on behalf of provinces and payment of salaries to employees of the Pakistan Steel Mills (PSM).

The ECC allowed notifying the Kharlachi border crossing between Pakistan and Afghanistan as a rebatable border point for export of goods to Kabul. Earlier, the opening of this border point helped in the release of congested transit trucks at the Afghan border due to Covid-19 restrictions.

The meeting also allowed to abolish the additional customs duty and regulatory duty on selected harmonised codes of textile items to increase the share of man-made fibres in the textile goods for better unit prices in the international markets, product diversification and value addition. The total revenue impact of these exemptions will be Rs533 million.

Approves waiver of duties on textile items; guarantee fee on nuclear power plants

The ECC also approved the transfer of federal Expanded Programme on Immunisation (EPI) from development budget to revenue expenditure with an allocation of Rs9.903bn through a technical supplementary grant. This will facilitate centralised procurement of vaccine in current fiscal year to avoid interruption in the immunisation programme.

Now the vaccine would be procured by the federal EPI on behalf of the provincial governments and later reimbursement would be made by Punjab and Sindh governments while deduction at source would be made from the shares of Khyber Pakhtunkhwa and Balochistan.

The meeting also waived guarantee fee on foreign loans of Karachi-based nuclear power plants (K-2 and K-3) of 1,100MW each. According to a report prepared by the Pakistan Atomic Energy Commission (PAEC) and Economic Affairs Division (EAD), there will be a benefit of Rs0.07 per KWh to the general public by the waiver.

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 the EAD had signed with China Exim Bank three loan agreements of about $6.5bn.

An $810m loan was taken by the EAD as a federal loan while remaining two loans of about $5.668bn were given to the 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 0.5 per cent per annum.

The ECC also allowed the exemption from re-lending of funds for Pakistan National Emergency Preparedness and Response Plan for Covid-19 to cover the country’s requirements for 12 months through emergency operations. In order to administer the programme, the Asian Development Bank (ADB) would provide a $100m loan and an additional $5m will be from Norway as a grant administered by the bank. The ADB has already signed a loan agreement with the EAD to finance the said project.

The meeting took up two separate summaries of the Ministry of Industries and Production for the disbursement of salaries of the employees of the PSM and for clearing the liabilities of the retired employees who have not approached the Sindh High Court.

The ECC approved an amount of Rs3.85bn due to the employees of the PSM for the financial year 2020-21 to be disbursed every month.

However, on the second summary, though the ECC agreed in principle that the dues to the retired non-litigant employees should be paid, the meeting decided to seek a detailed report from the Ministry of Industries and Production on the nature of liabilities due to the PSM on account of retirement dues, the liabilities that will accrue as a result of the retrenchment plan and other expenditures on account of utilities or any other charges due on the PSM.

The meeting was told that earlier this month, retired employees of the PSM were paid Rs12.741bn as dues but the court directed similar payments to the non-litigant retired employees as well with an addition of Rs11.68bn to the expenditure of the federal government.

The committee also approved two technical supplementary grants for the Ministry of Interior amounting to Rs111m for clearing various liabilities of the Islamabad Capital Territory administration. Two other supplementary grants were approved including Rs102m for Islamabad High Court and Rs85m for the National Heritage and Culture Division for various expenditures.

Published in Dawn, September 24th, 2020