The Economic Co-ordination Committee (ECC) of the Cabinet has increased the wheat support price of 40kg bag to Rs 1,200 from the existing Rs 1,050 for the next crop after it was informed that international wheat price was much higher, resulting in smuggling. The ECC meeting, which was presided over by Finance Minister Dr Abdul Hafeez Shaikh, considered a summary moved by the Ministry of Food Securities seeking the increase in wheat support.
Analysts said that the increase was likely to fuel food inflation in the country and the government move might be aimed at benefiting its constituents for the forthcoming election. The ECC was of the view that high wheat prices in international market was resulting in smuggling of domestic wheat to neighbouring countries. Additionally, prices of agriculture inputs had gone up considerably over the past year and the increase in wheat support price was necessary to encourage wheat growers.
A statement issued by the Finance Division stated that on a summary moved by the Ministry of Commerce, the ECC approved the export of 400,000 tons of sugar. This includes the already approved export of 200,000 tons and 135,834 tons by the previous meetings of the ECC and approval of another 64,166 tons would take total export of sugar to 400,000 tons. The measure was been approved to improve the liquidity position of sugar mills, enabling them to pay sugarcane growers on time. The ECC also approved a summary of the Finance Division for restoration of subsidy on agricultural tube-wells in Balochistan with 40:60 sharing arrangement.
Tube-well owners would bear Rs 6,000 per month and the federal government would pick up 40% of the remaining amount after deducting tubewell owner share subject to a maximum bill amount of Rs 44,000 a month. In case, the bill exceeds Rs 50,000 any amount over and above would be paid by the tube-well owner.
The provincial government would pay 60% of bill after deducting tube-well owner”s share, subject to a bill amount maximum of Rs 44,000 per month. In case, the bill exceeds Rs 50,000, any amount over and above would be paid by the tube-well owner. The number of tube-wells would be frozen at 15,660. The decision will be effective from December 1 this year. The share given in the above arrangement will be reviewed after two years for proposing further rationalisation in the share of the federal government downwards corresponding to the quantum increase in the divisible pool share of government of Balochistan besides replacing the existing tube-wells with solar tube-wells.
The ECC also decided to abandon the weekly price adjustment of petroleum products. However, a committee comprising Ministers for law and justice, petroleum, science and technology was formed to consider and suggest a practicable mechanism for POL pricing to be considered in the next ECC meeting. The ECC also considered a summary moved by the Ministry of Port and Shipping to strengthen the Pakistan National Shipping Corporation (PNSC).
In this regard, the ECC approved the following recommendations: (i) to reinforce the recommendations of the Kazi Committee with full force. The recommendations were; the policy of the Government of Pakistan is that all Public Sectors” cargoes to be carried by PNSC and all Government Departments, Autonomous and Semi-Autonomous Organisations/ Corporations are to utilise the services of PNSC for carrying their cargoes; (ii) all Contracts and Agreements should be FOB with PNSC nominated as carrier; (iii) PNSC should act as Shipping Agency for all Ministries, Autonomous and Semi-Autonomous departments of the government, and; (iv) Organisations like PSO, TCP, PSM should have long term Contract of Affreightment on a market based formula as is being done successfully with the refineries.
The ECC also approved a summary of the Ministry of Ports and Shipping for granting extension in the grace period till December 30 this year for waiver of demurrage charges on Afghan in transit consignments that arrived during flood and between July, 1 2010 and December 31, 2010. It also authorised for the refund demurrage charges on Afghan transit consignments landed between July 1, 2010 and December 31 and cleared till July 11 last year.