ISLAMABAD, Nov 22: In an apparent move to woo the farming community in the lead-up to the general election and formalise a barter trade deal with Iran, the Economic Coordination Committee (ECC) on Thursday raised the support price for wheat by Rs150 per 40 kilograms to Rs1200, up by 14.3 per cent over the existing price of Rs1050 per 40kg.
The hurriedly called and thinly attended meeting of the ECC, presided over by Finance Minister Abdul Hafeez Shaikh, also allowed export of 400,000 tons of sugar, took measures to discourage import of cars, restored subsidy on agricultural tubewells in Balochistan and directed public and private companies to utilise services of Pakistan National Shipping Corporation so that it could tide over its financial crisis.
Informed sources said the meeting, which was earlier put off to Nov 26 from Nov 21, was called on a short notice on Thursday (Nov 22) in order to smoothen out a barter trade dealwith Iran to take advantage of the presence of a delegation led by President Mahmoud Ahmadinejad attending the D-8 conference.The sources said the Iranian side had earlier expressed reservations over purchase of wheat at a Pakistani offer of $300 per ton, but had changed its mind when international prices started going beyond $350 per ton. Iran stands to make a substantial saving if it imports wheat from Pakistan, instead of the international market, thanks to a lower transportation cost.
Even though a total of five ministers attended the ECC meeting, the ministerial strength did not go beyond three at any given time because of the short notice and engagements related to the D-8 summit. Under the barter trade deal, Iran has to purchase one million tons of wheat and 500,000 tons of rice. In return, it will sell raw iron ore and fertiliser to Pakistan.
According to an official statement, the ECC increased the support price for coming wheat crop to Rs1200 per 40 kg from Rs1050 on the recommendation of the ministry of food security “to facilitate and encourage wheat growers”.
The decision comes at a time when higher prices of the commodity in neighbouring countries tend to encourage smuggling. Moreover, prices of inputs have risen over the past one year.
IMPORTED CARS: The meeting also approved recommendations of a committee, led by Deputy Prime Minister Pervez Elahi of PML-Q, to reduce the age limit of imported used cars from five to three years in an attempt to discourage import of cars and protect domestic industry.
The ECC decreed implementation of the decision from Dec 15 to facilitate delivery of those cars for which orders had already been placed. “The measure will provide relief to the local auto vendors industry, which is being hurt badly by the import of used cars,” a statement said.
SUGAR EXPORT: The meeting approved a summary prepared by the commerce ministry to allow export of 400,000 tons of sugar. The ECC was informed there was “a huge surplus of sugar in the country and a bumper sugarcane crop is expected this year”.
The decision is expected to help improve the liquidity position of sugar mills and ensure timely payment to sugarcane growers at rates prescribed by the government.
SUBSIDY: The meeting endorsed a recent announcement made by Prime Minister Raja Pervez Ashraf to restore huge subsidy on 15,660 tubewells in Balochistan and worked out its sharing mechanism.
Under the decision, tubewell owners will pay a flat rate of Rs6000 per month as electricity bills. The federal government will pay 40 per cent of the remaining amount after deducting tubewell owner’s share, subject to a maximum of Rs44,000 per month. In case the bill exceeds Rs.50,000, any amount over and above will be paid by the tubewell owner.
The Balochistan government will pick up the 60 per cent of the remaining amount after deduction of tubewell owners’ share and subject to a maximum of Rs44,000 per month. In case the bill exceeds Rs.50,000, any amount over and above will be paid by the tubewell owner.
The committee decided to limit the number of tubewells allowed to avail this facility to 15,660. The decision will be effective from Dec 1.
OIL PRICING: The ECC accepted a resolution of the National Assembly and directives of the Supreme Court to discontinue the practice of weekly price adjustment of petroleum products. As a consequence, the price of high speed diesel was reduced from Rs113.29 per litre to Rs109.77 per litre while the price of petrol was raised from Rs101.07 per litre to Rs102.65 per litre.
A committee comprising ministers for law and justice, petroleum and science and technology was constituted to suggest a mechanism for petroleum pricing for consideration of the ECC at its next meeting.
BAILOUT: The ECC also approved a number of steps to bail out the Pakistan National Shipping Corporation (PNSC). The meeting decided that all public sector cargo will be carried by PNSC’s ships and all government departments, autonomous, semi-autonomous organisations and corporations shall utilise its services for overseas shipment of their cargo.
All contracts and agreements will be made on the basis of freight on board (FOB).
The PNSC will be nominated as carrier and it should act as shipping agency for all ministries, autonomous and semi-autonomous departments of the government. Likewise, organisations like Pakistan State Oil, Trading Corporation of Pakistan and Pakistan Steel Mills (all having regular shipments) will also be required to have long-term contracts with PNSC on a market base formula, as was being done with the refineries.