ECC meeting: Govt keeps wheat support price at last year’s level

Maintains it at Rs1,300 per 40kg, allows export to reduce domestic surplus

ISLAMABAD: The government Tuesday decided to keep the wheat support price at last year’s level of Rs1,300 per 40 kilogrammes - a decision that will help keep overall inflation in check while allowing the commodity’s export to reduce the domestic surplus.

The Economic Coordination Committee (ECC) of the Cabinet took the decision to maintain the price at Rs1,300 per 40 kg, which is almost double than the price in the international market. The contracts in international market were signed at around Rs714 per 40 kg on Monday. The decision to maintain the prices would not provide a sigh of relief to the farming community that has been adversely affected due to plunge in commodity prices.

However, it will keep the overall inflation rate under check as a 10% increase in wheat prices causes 3% increase in overall inflation rate.

The Ministry of National Food Security and Research proposed the ECC to maintain the price at Rs1,300 per 40 Kg for wheat crop 2016-17. The Federal Committee on Agriculture (FCA) has fixed the wheat production target at 26.01 million tonnes for the 2016-17 Rabi season.

The ECC also approved an extension in the export of wheat date from November 30 to December 31, 2016. It was also approved that the same rate of rebate would be given on export of wheat products like Suji, Maida and wheat flour fine (Aata) as available on per-Kg wheat export.

In July this year, the ECC had allowed export of 900,000 tons of wheat with a Rs11-billion subsidy to circumvent a domestic price fall. The decision to extend the rebate on other wheat products would also increase the government’s financial burden.

As more than 3 million tons exportable surplus wheat is available, the Ministry of National Food Security and Research proposed to allow export of the equal quantity of Suji, Maida and wheat flour Fine (Aata)/ equivalent to the quota of wheat issued, said the Finance Ministry.

Small farmers

The ECC also waived off withholding tax on small farmers’ schemes. The government would not collect withholding taxes on the Crop Loan Insurance Scheme and livestock Insurance Scheme, which are aimed at providing risk cover to mitigate losses in case of natural disasters, according to the Finance Ministry.

The ECC also approved new relending rates for foreign-funded projects of the Pakistan Atomic Energy Commission. This will provide significant relief to the PAEC that has recently undertaken mega nuclear-fuel based power plants.

Earlier, the government was charging the PAEC interest rates that were significantly higher than the rates it was paying to international creditors. The reduced rates will also be applicable to loans obtained from China Eximbank that PAEC obtained for Chashma Nuclear Power Projects 3 and 4. The Chinese loans will be re-lent to PAEC at actual terms and conditions available to the Government of Pakistan. However, unlike the past, the PAEC will now bear the exchange rate risks.

The Ministry of Petroleum and Natural Resources apprised the ECC regarding increase in natural gas production of more than 83 to 84mmcfd from Nashpa field. It also stated that SNGPL is also keen to receive the additional gas due to demand-supply imbalance of natural gas on its system. The ECC approved the Ministry of Petroleum & Natural Resources proposal for allocation of the additional gas up to 84mmcfd produced from Nashpa field to SNGPL to cope with demand-supply imbalance on its system.

CNG deregulation

The ECC also allowed deregulation of CNG prices in Khyber-Pakhtunkhwa and Sindh, ending the role of the Oil and Gas Regulatory Authority in determining prices. In Punjab CNG prices are already determined by the market forces.

The ECC approved the Memorandum of Agreement signed on May 20, 2016 between the Ministry of Petroleum and Natural Resources and the Balochistan government for extension of Sui gas mining lease agreement for the next 10 years.

It returned a summary that had been moved to change the implementation strategy for Gwadar Nawabshah LNG Pipeline and Terminal. The matter will now be placed before the Executive Committee of National Economic Council.

Published in The Express Tribune, December 14^th, 2016.

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