The Economic Coordination Committee of the Cabinet (ECC) on Friday directed the Zarai Taraqiati Bank Limited (ZTBL) to resume loaning facility to farmers with immediate effect, approved debt swap of Rs160 billion on behalf of Independent Power Producers with the commercial banks and allowed purchase of 100,000 tonnes of sugar directly from millers to ensure timely payment to growers.
Chaired by Finance Minister Dr Abdul Hafeez Shaikh ECC also approved the natural gas efficiency project, and principally approved the Low BTU Gas Pricing Policy 2012, but made subject to concurrence with the Law Division. It also formed a sub committee to look into Gas Sale Purchase Agreement with Turkmenistan and constituted a group to look into procedure for gradual increase of sales tax of 5 per cent to 16 per cent on agricultural tractors, in the next three years.
An official source said ECC directed ZTBL to resume loan financing facility to the farmers as it was pointed out that the bank loan releases during the first half of the current fiscal year have declined to 20 per cent as compared to two years back. The committee noted with concern that the bank had enough reserves but its slow releases were increasing worries for the farmers. The committee also approved debt swap of Rs160 billion with the commercial banks on behalf of the IPPs. The power producers were unable to retire their debt due to the issue of circular debt. Under the debt swap, the liabilities of IPPs would be shifted to the government and it would be paying directly to the banks. This would allow IPPs to get new credit lines from banks for oil purchases and allow banks to finance upcoming energy projects, as their balance sheets would be cleared.
ECC allowed purchase of 100,000 tonnes of sugar. The committee has already approved procurement of 378,000 tonnes directly from the millers. The government wants to maintain strategic sugar reserves of 700,000 tonnes for the current year. According to an official statement ECC directed Trading Corporation of Pakistan (TCP) to make the payment to millers expediently and asked them to make sure to avoid any lapse since the payments will ultimately go to the farmers. Chairman TCP informed that eight millers have been paid, and rest of the millers would be positively paid by the end of this month.
ECC principally approved Low BTU Gas Pricing Policy 2012, but made subject to concurrence of the Law Division. The Ministry of Petroleum maintains that the policy will be instrumental in providing sufficient incentives to the investors. It constituted a sub-committee comprising Ministers for Water and Power, Petroleum, Deputy Chairman Planning Commission, Secretary Finance to look into Gas Sale Purchase Agreement with Turkmenistan along with the gas pricing formula.
The committee constituted a group comprising Adviser to PM on Agriculture Kamal Majidullah and Chairman FBR to look into procedure for the gradual increase of sales tax of 5 per cent to 16 per cent on agricultural tractors in next three years. Earlier a committee comprising Adviser to PM on Agriculture, Secretary Finance, Secretary Industries, Chairman FBR had unanimously agreed to recommend reduction in sales tax on tractors from 16 per cent to 5 per cent and gradually enhance on yearly basis. ECC also paid rich tributes to the outgoing Chairman FBR Salman Siddique who will retire this month.
