Gas tariff will increase by 14pc for all but domestic consumers


ISLAMABAD: The Economic Coordination Committee (ECC) that met here on Thursday bailed out the sugar mafia by allowing the export of sugar with a massive 7.5 percent cut in federal excise duty and a hefty freight subsidy, thus causing a loss of billions to the exchequer.

Besides the duty cut, the ECC chaired by Finance Minister Hafeez Shaikh, allowed extending the freight subsidy of Rs1.75 per kg of sugar facilitating the sugar mafia to sell its product in the global market and deprive the 180 million consumers of cheaper sugar, a senior official who attended the meeting told The News.


He said that the sugar industry is heavily owned by top political figures and in the ECC meeting there was no one who could come up with any objection on the huge subsidy and decline in revenue on export of sugar on account of freight subsidy of Rs1.75 per kg and reduction of federal excise duty to 0.5 percent from 8 percent.


The ECC took the decision for extending the subsidy and for the loss in revenue to appease the influential sugar junta at a time when the IMF team is in talks with Pakistan authorities and is stressing for steps to increase the tax revenue and end all kinds of the subsidies.


The Federal Board of Revenue (FBR) through its summary solicited the approval of ECC for reduction in rate of Federal Excise Duty for sugar mills as an incentive for export of sugar. The ECC approved the summary allowing export of sugar by providing a reduced rate of federal excise duty leviable on local supply of sugar at 0.5 percent instead of 8 percent leviable on production and supply of sugar.

The reduced rate of duty shall only be applicable on the quantity of local sale of sugar equivalent to the quantity exported by the sugar manufacturers in accordance with the export quota allotted and shall be available on submission of proof of such export. The balance local supply shall continue to be subject to Federal Excise Duty at the rate of 8%.


The ECC approved a summary by Ministry of Commerce seeking approval for grant of freight subsidy to facilitate the export of sugar. The ECC approved Rs1.75 per kg, which will be provided from export development fund.


However, according to the official, amid the stiff opposition by Ogra chairman in the meeting, the ECC has also approved the summary of Ministry of Petroleum and Natural Resources seeking the injection of LPG air-mix equivalent to 50 MMCFD gas into dedicated network for provision to industrial sector. The Oil and Gas Regulatory Authority (Ogra) was of the view that the price of the injected gas in the system is 5 times more than the available gas and it will help increase the prices of the gas manifold.


The price impact will be borne by all categories of the gas consumers except the domestic consumers. “The price of gas will increase by 14 percent and if the domestic consumers are included then the price will increase by 9.9 percent,” the official said.


The ECC was informed that the current hike in price of flour in the market is artificial and speculative. There is no shortage of wheat stock in the country and there are far more stocks available than the requirement. The ECC in order to check the rising trend in flour prices and to discourage hoarding decided to immediately release to the provincial governments, through utility stores corporation and to local traders/flour mills a total of one million tons of wheat at a price of Rs1050/ 40 kg of wheat from crop year 2009-10 and Rs1100 / 40kg of wheat from crop year 2011-12.


The ECC also decided to immediately supply required wheat to all the provinces. The ECC further decided to form a committee comprising Minister for National Food Security, Mir Israrullah Zehri, Minister for Science and Technology, Changez Khan Jamali, Minister of State for Production Khawaja Shiraz, Special Assistant to Prime Minister, Kamal Majeedullah and Secretary, Ministry of National Food Security to explore avenues through provincial governments to ensure availability of required wheat. The finance secretary gave a detailed presentation to the ECC on the state of economy. He informed that in spite of global financial crisis, heavy floods, high oil prices and bad security situation, the government has been able to maintain macroeconomic stability in the country. He informed that there has been unprecedented increase in exports and foreign remittances during the last four years.


The revenue collection is also at the record level and during the last six month there is an increase of 7.1 percent. The government has disbursed Rs218 billion through BISP and Baitul Mal while there has been 120 percent increase in pay and pension of employees during the last four years.


It was further informed that the inflation rate which stood at 25 percent in 2008-09 has now been brought down to 9 percent only. The growth rate has increased from 1.7 percent in 2008 to 4.3 percent projected for year 2012-13. Agriculture sector also showed remarkable growth from 0.6 percent in 2008 to 3.8 percent projected for year 2012-13.


The ECC also approved a summary by Finance Division seeking abolition of investment limits for NIT-State Enterprise Fund. With the approval of the summary NIT has been allowed to trade freely in order to keep balance in the prices of 8 listed companies in which the Government of Pakistan has substantial share holdings.


Secretary Water and Power briefed the ECC over the energy situation in the country. It was informed that there is a generation of 8500MW in the country and the demand is around 12000MW. There is a shortage of 3500MW in the country and the Ministry is working hard to fill in the energy gap.

Courtesy:   The News