ISLAMABAD: The federal government on Tuesday extended for two months the supply of cheaper Liquefied Natural Gas (LNG) to two Punjab-based fertiliser plants with an additional subsidy of about Rs20bn and subsidised supply of essential items in Khyber Pakhtunkhwa until June 2023 with Rs17bn additional funds.
The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by Finance Minister Ishaq Dar which also approved Rs9.8bn additional funds for the defence ministry and Rs1.26bn for payment of 14-month gas charges on behalf of Pakistan Steel Mills to Sui Southern Gas Company.
Ministry of Industries and Production submitted a summary on the continuation of Prime Minister’s Relief Package (PMRP) and Sasta Atta initiative for Khyber Pakhtunkhwa beyond Aug 31, 2022. The schemes were introduced in January 2020 and June 2022 but were partially unfunded.
After discussions, the ECC approved the continuation of PMRP and Khyber Pakhtunkhwa Sasta Atta initiative from Sept 1 to Nov 15 on the existing model of untargeted subsidy at the prevailing rates and allocation of additional funds amounting to Rs4.908bn over and above the regular budgetary allocation through supplementary/technical supplementary grant to recoup the amount already spent by the Utility Stores Corporation (USC).
Secondly, the ECC also allowed the continuation of PMRP on a hybrid model for a period starting Nov 16 to June 30, 2023 (excluding Ramazan) and allocated additional funds to the tune of Rs10.755bn through a supplementary grant. Third, the ECC also approved the continuation of the Khyber Pakhtunkhwa Sasta Atta initiative and provision of subsidised Atta from Nov 16 to June 30, 2023, after rationalising some stores, with the allocation of funds of Rs1.561bn through a supplementary grant.
The ECC also approved a summary of the Ministry of Energy on the continuation of subsidised RLNG supply to Fatima Fertiliser and Agritech Ltd from October to December with an additional subsidy worth Rs20bn to be picked by the government to ensure domestic urea production.
The meeting was told that the government had provided a total of Rs71bn worth of subsidy to the two plants to ensure LNG at cheaper rates (of Rs839 per mmBtu).
This also included about Rs33.7bn subsidy already extended during the last fiscal year as of September. Further current fiscal year, Rs15bn had been allocated for the said subsidy which was considered drastically insufficient as pending claims for June to October had already reached Rs24bn.
The committee approved Rs9bn outstanding subsidy and Rs10.4bn for the November-December period. The meeting was told that import tenders fetched Rs5,980 per 50kg bag for 300,000 tonnes compared to local fertiliser of Rs2,150 per bag. The combined production of the two plants was about 70,000 tonnes per month, hence the justification for Rs20bn additional subsidy until the end of December.
Ministry of Industries and Production submitted a summary for the release of funds for SSGC for gas supply to Pakistan Steel Mills (PSM). The meeting was told that the production of PSM had been at a halt since 2015 and low flame gas of 2 million cubic feet per day (MMCFD) was being supplied to PSM primarily to preserve the Coke Oven Batteries and refractory kilns. The ECC approved Rs1.258bn for 16-month gas bills from the already approved budgetary allocation of Rs10bn to PSM for FY23 and released of an amount Rs298.248m for the period from March to June 2022.
Published in Dawn, November 16th, 2022