Import of 550,000 tons of wheat given the nod

ECC okays continuing subsidies at Utility Stores for one more month, turning down proposal for three

ISLAMABAD:

The government on Thursday approved the import of over half a million tons of wheat at $377 per metric ton or Rs65 per kg price and permitted continuing subsidies at Utility Stores for one more month, turning down a request to extend the current rates for three months.

The Economic Coordination Committee (ECC) of the cabinet gave the nod to a summary on the award of the fifth international wheat tender to import 550,000 metric tons -- after matching process -- of wheat for the FY 2021-22, read a statement issued by the finance ministry.

A senior government official told The Express Tribune that the lowest bid was $377 per metric ton or Rs64.4 per kg at the current exchange rate.

The last tender had been signed at $383.5 per ton or Rs65 per kg but the $6 per ton benefit had been lost due to a fall in the value of the rupee that closed at Rs170.7 against a dollar on Thursday.

The 40kg import price will be roughly Rs2,576 at the Karachi port, excluding the impact of the inland freight.

The federal government has decided to import four million metric tons of wheat to meet domestic shortfall and build some strategic reserves.

The industries and production ministry tabled a summary before the ECC on the continuation of the prime minister’s relief package-2020 for the provision of five essential items at Utility Stores on subsidised rates till December 2021.

“The ECC granted an extension for a month with directions to present a detailed summary before the committee, keeping in view the international price hike in essential food commodities,” according to the finance ministry.

The statement suggests that the government might again have to increase prices of these five items to cut subsidies.

“The government will give Rs2 billion to Rs3 billion subsidy for the month of October.” The industries ministry, however, had sought permission for up to Rs8 billion subsidies for three months,” a senior government official said.

A few months ago, the ECC had increased the prices of wheat flour, sugar and cooking oil in the range of 19% to 53% at Utility Stores by reducing subsidies for the poor.

The wheat flour price had been increased by 19% or Rs150 per 20 kg to Rs950.

The ECC decided to increase the price of ghee by 53% or Rs90 per kg to Rs260.

The market price has increased to Rs340 per kg due to flawed taxation policies and a surge in prices in the international market.

The sugar prices were increased to Rs85 per kg -- an increase of 25%.

On another summary moved by the industries and production ministry, the ECC approved the import of 100,000 metric tons of urea for building strategic reserves during the Rabi season FY 2021-22.

The industries ministry had requested that the ECC should allow enhancing the provision of gas to Bin Qasim fertiliser plant from the existing 53 MMCFD per day to 63 MMCFD to manufacture an additional 100,000 metric tons of urea.

However, instead of increasing the gas supply due to its shortage, the ECC decided to import the commodity.

The price of fertiliser diammonium phosphate (DAP) has almost doubled in the past one year, increasing the cost of production coupled with higher prices of diesel being consumed in agriculture tube wells.

The ECC referred the matter of adjusting over Rs100 billion receivables from the K-Electric to the National Electric Power Regulatory Authority  (Nepra). The decision was taken due to a disagreement between the Power Division and the Finance Division.

The committee decided that the Power Division might approach Nepra to review its earlier decision on the issue and present an updated summary before it for consideration, the finance ministry said.

The Power Division tabled another summary for the levy of sales tax on subsidy granted by Federal Government to electricity distribution companies (DISCOs). After seeking input from all the stakeholders concerned, the ECC decided that the matter might be referred to the Law Division for seeking its opinion and legal interpretation, which could be presented before the committee for further deliberations.

The ECC members were of the view that legal interpretation could not be done through the cabinet body’s decision.

They were of the view that the government might introduce legislation to address the issue. The FBR is claiming sales tax even on the amount that the government gives in subsidies to a class of consumers.

The ECC approved a summary by the Power Division on the payment mechanism for TNB Liberty Power Limited.

The committee gave the nod to the proposal as part of settlement with other independent power producers (IPPs) after the company agreed to give similar concessions.