The government on Thursday approved a Rs15.6 billion bailout package for the ailing Pakistan International Airlines (PIA) and also sanctioned a Rs7.5 billion interest-free loan scheme for the purchase of environmentally-friendly motorbikes.
The Economic Coordination Committee (ECC) has taken decisions worth Rs22 billion, including the indirect impact on the budget in the shape of sovereign guarantees and commercial banks’ loans for the purchase of electronic two-wheeler and three-wheeler motorcycles.
Finance Minister Ishaq Dar presided over the ECC meeting, which also showed leniency and did not penalise sugar millers who breached the commitment of maintaining local sugar prices in return for permission to export 250,000 metric tonnes of sugar.
According to handout from the finance ministry, the ECC approved increasing the sovereign guarantees limit to Rs263.2 billion for PIA. It added the government’s guarantees related to US dollar denominated loans taken by PIACL were approved to increase by Rs15.6 billion. As a result, the existing borrowing limit backed by the sovereign guarantees has been increased from Rs247.6 billion to Rs263.2 billion.
PIA had sought a Rs45 billion bailout package from the government to pay its interest costs and finance its operations. The airline also asked for a Rs22 billion federal injection to pay off interest on its loans, Rs15.6 billion in the shape of additional sovereign guarantees to take more loans, and another Rs7 billion to buy an aircraft, according to the sources.
The ECC on Thursday only took up the issue of sovereign guarantees. The ECC approved the Rs15.6 billion additional guarantees the day the parliament rejected a bill seeking a Rs21 billion budget to hold elections in Punjab and Khyber-Pakhtunkhwa (K-P).
Loan scheme
The Ministry of Industries and Production submitted a summary regarding financing facilities for electric bikes (e-bikes) and e-rickshaws. It presented details on viability, demand and an incentive structure for potential users to make electric bikes affordable.
According to the finance ministry, after discussions, the ECC approved the Prime Minister’s Youth Business and Agriculture Loan Scheme model for e-bikes and e-rickshaws. Under the scheme, clean loans up to Rs500,000 will be given at 0% markup rate for repayment in three years. This facility will be available for up to 15000 E-Bikes and E-Rickshaws in the current financial year.
The modalities of the scheme will be worked out by the Ministry of Industries. The average cost of a lithium battery e-bike is Rs190,000. Accordingly, the ministry proposed a Rs100,000 as subsidy. The finance division, however, did not support the proposals to give up to a Rs100,000 subsidy to buy a bike due to financial constraints.
The Ministry of Climate Change has set the electric vehicles penetration target, of two and three wheelers, to 50% by 2030. There are over 26.3 million motorcycles in the country and the annual market size of locally produced motorcycles is more than 2 million. The existing bikes currently consume fuel worth $3 billion per annum. The ECC approved the summary of the Ministry of Commerce regarding the declaration of Customs Station Angoor Adda as an authorised export land route to Afghanistan and through Afghanistan to Central Asian Republics.
Sugar price issue
The Ministry of National Food Security and Research tabled a summary on the price of sugar during the month of Ramazan.
The ECC was informed that against the commitment to keep the prices low despite export of sugar, the prices in the market have increased to Rs135 per kilogram. The ECC had allowed the export of 250,000 metric tonnes of sugar on the condition that the millers would not increase prices.
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Instead of taking any action, including cancelling the remaining export quota, however, the ECC endorsed a proposal that the Pakistan Sugar Mills Association (PSMA) Punjab Zone has agreed to provide 20,000 metric tonnes of sugar at a retail price of Rs95 per kg during the month of Ramazan. The ECC further directed for arrangements be made with other provincial PSMAs on the same lines for provision of sugar in other provinces/areas.
The price of the sugar will be reviewed again next month.
The ECC also approved a Rs160 million budget for the intelligence bureau to meet its growing operational expenses due to increased activities by “terrorists and anti-state elements” – a charge often labelled against political opponents and social media activists. It also approved Rs261 million for the execution of a development scheme for the construction of railway underpass Jahanian in District Khanewal.
Another Rs250 million budget was approved for the repair and maintenance of the Supreme Court of Pakistan building, judges’ residences, rest houses and sub-offices in various cities, according to the finance ministry. The Ministry of Housing had demanded Rs844.4 million for renovations but the ECC did not approve the entire demand.
The ECC also approved a Rs22 million supplementary budget in favour of the Ministry of Foreign Affairs for the payment of electricity liabilities against the State Guest Houses of Lahore and Karachi. These facilities are used by the president and prime minister of Pakistan. Their electricity connections were frequently disconnected by power distribution companies due to non-payment of bills.
Published in The Express Tribune, April 14th, 2023.
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