In a move to facilitate consumers in the holy month of Ramazan, the federal government on Tuesday approved a relief package worth Rs2.53 billion to enable 5,700 state-run utility stores to sell groceries at subsidised rates from later this month.
The decision was taken by the cabinet’s Economic Coordination Committee. The package is said to be 26.6% higher than the finance ministry’s estimates and a supplementary budget of Rs532 million will be needed to cover its cost.
The package will be effective from July 15 and extend to 5,700 utility stores across the country. It is an effective way to provide relief to downtrodden masses, but has suffered in the past due to limited reach. Under the approved proposal, the government will provide Rs6 subsidy on one kilogram of flour, Rs15 subsidy on each unit of cooking oil and Rs10 subsidy on each commodity of daal channa, baisun, dates, basmati rice, sella rice and broken rice.
The ECC, headed by finance minister Dr Abdul Hafeez Shaikh, also approved a natural gas load management plan, citing an increasing shortage of the fuel. The final decision in this regard, however, will be taken by Prime Minister Raja Pervaiz Ashraf.
According to the new rationing formula, those plants which have not entered into any agreements with the government and have been given a low priority for gas allocation will be given due consideration. It is said this could result in the generation of an additional 839 megawatts of electricity.
In another move, the ECC allowed mixing of two fuels, natural gas and liquefied petroleum gas. This is likely to result in a 10 to 30% increase in overall gas prices due to the higher cost of LPG.
The committee has also approved import of LPG equivalent to nearly 250 tonnes, with its cost computed on the basis of Weighted Average Cost of Gas.
However, it has directed the petroleum ministry to bring up the procurement methodology and tendering at the ECC platform in the next meeting. The move is aimed at reducing alleged kickbacks and ensuring transparent transactions. It has also asked the law ministry to deliberate over the price determination of LPG on a monthly or six-monthly basis.
In a bid to resolve the Nandipur power plant issue, the ECC has allowed granting Rs19.15 billion worth sovereign guarantees in favour of local bank syndicates. The measure is to serve as a stopgap arrangement till foreign loans and additional waiver of demurrage and detention charges worth Rs856.6 ease the crunch.
The plant has the ability to produce 425MW of power, but is currently lying idle due to outstanding issues of finance and demurrage charges.
The ECC has taken notice of the issues arising in the functioning of luxury train service the Business Express and constituted a committee to address the matter.
The railway ministry had earlier raised objections, saying the company managing the train, JV Partners, had failed to honour pledges by not paying guaranteed revenue of Rs3.19 million in advance. The ministry said the company pledged to pay the sum regardless of the amount of revenue it generates.
The ECC has approved a summary to reconstitute the Pakistan Central Cotton Committee and increase the rate of cotton cess with a provision that a thorough functional restructuring plan of the cotton committee be presented in the next ECC meeting.
Published in The Express Tribune, July 4th, 2012.