ISLAMABAD, Feb 10: Having failed to arrest the rising sugar prices the government has shifted the responsibility to the provinces and said that the provincial governments should play a role in tackling the issue as they have powers to regulate the supply of sugarcane, production and distribution of sugar.

The ECC also blamed the Punjab government for the rising wheat flour prices in the country by attributing the slow disbursement of wheat stocks to higher issue price fixed by the province.

A meeting of the Economic Coordination Committee (ECC) of the cabinet was held here on Friday to discuss various issues, including sugar and wheat prices. The meeting was presided over by Prime Minister Shaukat Aziz.

After the meeting, Dr Ashfaq Hassan Khan, finance ministry’s economic adviser, told reporters the ECC noted that unregistered buying of sugarcane was going on in the provinces.

He said that the ECC observed that the provincial governments would have to play a key role in tackling the production and supply of sugar in the country. “The provinces have powers, under the law, to regulate the supply of sugarcane, production and distribution of sugar,” he said, adding that the laws provide ample powers to the provincial governments to take regulatory measures in this regard.

He said the sugar prices recorded by the Federal Bureau of Statistics (FBS) have increased by 8.5 per cent in the week ending on Feb 2, while potato and gur increased by 32 per cent and 38 per cent, respectively, when compared with the previous week ending on Jan 26.

He said the prices of 19 items had registered an increase during the week between Jan 27 and Feb 2, whereas eggs, chicken, tomato, garlic and onion rates have decreased, while 28 items remained stable.

The sensitive price indicator surged by 0.3 per cent during the week, but had increased by 6.9 per cent against the corresponding period of the previous year. He said: “The ECC expressed satisfaction over the price situation.”

Struggling to respond to a series of questions on prime minister’s inability to control sugar prices, alleged role being played by a cartel within the cabinet and increase even in the controlled sugar rates at utility stores, Mr Khan said the whole cabinet worked like a team.

However, he said the government had decided to increase the number of utility stores to 1,000 from the existing 450 sale points through setting up of temporary and mobile outlets.

He said the ECC rejected a proposal of the food ministry to impose 15 per cent duty on export of gur to contain sugar prices on the ground that gur industry was labour intensive and would lead to unemployment.

The NWFP government, sources said, had opposed the move.

Mr Khan said that the prime minister has constituted a committee, led by Dr Salman Shah and comprising deputy-chairman of the planning commission and secretaries of commerce, industries, food, planning and finance and chief secretaries of the provinces, to formulate short- and long-term policies to ensure adequate supply of sugar at affordable rates.

WHEAT: Dr Khan said that official wheat stocks stood at 3.065 million tons on February 5 and the ECC attributed the slow disbursement of wheat stocks to higher issue price fixed by the Punjab government.

He said the ECC directed the Punjab government to rationalize the issue price of wheat to enhance releases to flour mills and begin the coming season with minimum carry over stocks to create adequate storage capacity.

The ECC had fixed issue price at Rs425 per 40-kg from official godowns to flour mills, but the Punjab government unilaterally raised it to Rs440. After including packing and transportation expenses, the issue price reached Rs460 per 40-kg.

The finance ministry’s adviser said that as the imported wheat was cheaper, flour mills owners were not purchasing it from government godowns thus causing increase in the wheat flour prices in the country.

He said that the government was holding about 3.065 million tons of wheat stocks while the new season was approaching fast. He said next year’s wheat target was 22 million tons and a good crop was expected.

The ECC directed Punjab and Sindh governments to procure three million tons and 0.6 million tons of wheat, respectively, in the coming season to ensure that farmers get Rs415 per 40-kg support price fixed by the government.

LABOUR FORCE SURVEY: Mr Khan said the quarterly labour force survey had been completed which put the total unemployment at 6.9 per cent compared with previously recorded 7.8 per cent in 2003-04.

However, he clarified that the two figures could not be compared with each other because the 2003-04 survey was based on 36,000 people against 9,000 people in the latest quarterly survey.

He said the number of employed people had increased to 47.55 million in September last year compare with 42 million in 2003-04.

EARTHQUAKE LOAN: The ECC decided to provide to the Azad Jammu and Kashmir and the NWFP governments a $220 million grant from the Asian Development Bank loan. However, similar loans to Islamabad and Peshawar electric supply companies would be charged at one per cent interest.

He said the ADB was providing $300 million, including $80 million grant, to Pakistan during the current fiscal year, out of a total pledge of $1 billion.

The loan has a repayment period of 40 years including 10-year grace period and one per cent interest.

GAS ALLOCATION: Mr Khan said the ECC allocated additional 80 million cubic feet of gas per day (MMCFD) from new fields to the national gas system, but said the alleged wrongdoings in allocation of liquefied petroleum gas (LPG) in two of the fields were not discussed by the ECC.

LPG POLICY: He said the ECC approved the LPG policy to streamline the supply of LPG in the market and to control its rising prices but did not elaborate the details.

OVERLOADING: He said the ECC considered a summary on overloading of trucks but did not approve 30 per cent reduction in the import of completely built unit of trucks and 10 per cent on completely knocked down units until the next budget.

WIND POWER GENERATION: He said the ECC also approved a policy for wind power generation plants so that their electricity could be purchased by Wapda and the KESC.

Asked as to why the government was making it mandatory for the power utilities to purchase wind power although its rate would be even higher than the thermal power, he said the tariff would be determined by the National Electric Power Regulatory Authority (Nepra).