ECC approves additional package of Rs 529m for Pak Steel

The Economic Coordination Committee of the Cabinet (ECC) which met on Friday under the chairmanship of Federal Minister for Finance Senator Ishaq Dar approved enhancement in the financial package of the Pakistan Steel by Rs 529 million to cover the expenses on 5 per cent duty on import of iron ore.

The finance minister said the government was determined to put an end to SRO culture and therefore no exemption was being allowed and instead the financial package to Pakistan Steel was being enhanced. The minister said the revenue division had already approved proposals for facilitation to Pakistan Steel allowing three months time for deferred payment of GST as well as exemption from payment of advance income tax on imported raw material in order to help their cash flow and in view of their accumulated tax losses till date. It was noted with satisfaction that with a financial package approved by ECC few months ago for Pak Steel, it has reached around 30 per cent of its production capacity utilization from mere 3 per cent just few months back.

The ECC had detailed deliberations on a summary moved by ministry of industries and production for provision of natural gas as feed stock in the direct reduced iron (DRI) process to Tuwairqi Steel Mills on concessional rates to the tune of Rs 5 billion per annum for the next five years. The minister said there was no justification for the government to extend preferential treatment to any party and there was no room for providing a huge subsidy to the company concerned. He asked the secretary industries and production to submit a realistic proposal, complete in all respects with proper recommendations that could be considered in future meeting of the ECC.

The meeting deferred the matter regarding approval of Draft Energy Purchase Agreement (EPA) and Draft Implementation Agreement (IA) prepared for Biomass Based Projects on IPP mode. A summary in this regard was submitted by the ministry of water and power. The meeting observed that there was no room for approving the proposal that advocated cost plus basis rather it should be redrafted and would be considered keeping in view the principle of upfront tariff.

The ministry of industries and production in a summary indicated there would be a shortfall of 600,000 tons of urea fertilizer for the Rabi season 2014-15 as the production units in the country were not working to the optimal level owing to shortage of gas. The meeting approved import of 185,000 tons of Urea through SABIQ under due process and directed that a detailed proposal to meet the remaining requirement of 415,000 tons may be submitted to next ECC meeting.

The finance minister emphasised to focus on production of urea fertiliser within the country to meet the requirements. He asked the ministry of petroleum and natural resources to ensure provision of gas to fertilizer units in coming winter and beyond. He said the ministry of industries should come up with a comprehensive plan, giving proper proposals for meeting the fertilizer requirements and putting an end to the practice of unnecessary imports, leading to wastage of precious foreign exchange.

The finance minister observed that before submission of summaries to the ECC, there should be detailed in house discussion and deliberations in the concerned ministries together with relevant stakeholders. All cases should be put up in a just, judicious, complete and transparent manner, the minister said.