ECC’s brain goes on a walk-around

In a perplexing decision the Economic Coordination Committee of the Cabinet (ECC) on Thursday decided to allow import of 300,000 tons of urea for the current Kharif crop even though the meeting was informed that the country has available stocks of 3.5 million tons as compared to estimated off take of 3.2 million tons.
According to an official source, the ECC meeting held under the chairmanship of Finance Minister Dr. Abdul Hafeez Shaikh allowed import of half the quantity even though Ministry of Industries had sought permission for importing 600,000. The Industries Ministry took the plea that the import was necessitated due to gas shortages and the imported commodity could be used as inventory for Rabi crop requirements later this year.
The Kharif season started with an inventory of 0.85 million tons and domestic production is estimated to remain 2.7 million tons but it was subject to gas availability. The committee was informed that for urea imports, $ 100 million Saudi Basic Industries Corporation (SABIC) facility was available along with $ 21 million non project grant aid from Japan. The source said after intervention from a minister from Balochistan, the committee directed import of at least 150,000 tons of urea from the Gwadar port. The government has already imported 1.3 million tons of urea for Rabi crop requirements.
The meeting discussed 12 summaries of the Ministry of Petroleum relating to various projects like LPG air mix, signing of gas sale purchase agreement (GSPA) for the Turkmenistan, Afghanistan, Pakistan, India (TAPI) gas pipeline project and gas infrastructure development schemes. The source said that most of the participants of the meeting were unable to comprehend the complex petroleum related issues, while the Petroleum Minister Dr. Asif Hussain rigidly stressing there approve claiming that there was no other option other than what was proposed by the ministry.
ECC approved the signing of GSPA for TAPI gas pipeline project. The GSPA is expected to be signed on April 19 in Ashgabat. The meeting was informed that a steering committee headed by Minister for Water and Power was working for determination of price of gas pipeline. The committee decided to set up a committee to determine the cost of pipeline in Pakistani territory. It asked the Minister for Petroleum to make full presentation to the steering committee as well as to ECC. The steering committee should meet regularly, the Finance Minister asked the members of steering committee. The source said that Minister for Ports and Shipping Babar Ghouri stressed early completion of the TAPI project to overcome gas shortages.
Discussion the summary for financing of gas infrastructure development schemes, the committee reiterated the decision of Energy Conference held on April 9 for putting complete ban on new connections. The committee decided to consult the Ministry of Law on the new schemes as it was pointed out that the exploration and production also fell under the domain of provinces. The Petroleum Ministry proposed to take the matter to the Council of Common Interests for decision.
The committee approved in principle the proposal regarding amending the policy guidelines on LPG Air Mix, CNG or LNG based pipeline distribution projects undertaken by the Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited. The source said that some members expressed serious reservations over the massive increase in gas price due to proposal of the Petroleum Ministry advocating calculating gas prices on weighted average. Petroleum Ministry’s proposal had said that the price was likely to go up by two percent or Rs 6 per MMBTU from current price of 309 MMBTU if 10 MMCFD system was started.
However, a few members expressed apprehensions saying that the weighted average formula would increase the price massively, which they estimated over 3000 percent and not by mere 30 percent as proposed by the Petroleum Ministry. The argued that the gas prices would increase by Rs 89 MMBTU for a system of 150 MMCFD capacity. They recommended using only the domestic LPG for the projects. The committee decided to constituted a sub-committee comprising Petroleum Minister, Deputy Chairman Planning Commission, Secretary Finance, Secretary Economic Affairs Division and Secretary Petroleum to further deliberate on the economic costing as well as the impact of final consumer price before implementing the policy and committee will present the recommendation to the ECC.
Regarding the summary for pursuing international exploration appointments by Pakistan Petroleum Limited (PPL), ECC directed the Petroleum Ministry to follow the existing procedure prescribed under F.E. Circular No.12 of the State Bank of Pakistan. The meeting was attended by ministers for petroleum, water and power, ports and shipping, railways, textiles and secretaries of the concerned ministries and divisions.