As piling up of circular debt in the power sector was not enough to trouble the economic manager, the national trading agency disclosed on Wednesday that its outstanding liabilities in the commodity sector increased to Rs265 billion.
Trading Corporation of Pakistan (TCP) chairman informed the Economic Coordination Committee of the Cabinet that, against a credit line of Rs143 billion from various banks which was near exhaustion, an additional amount of Rs122 billion has been accumulated on account of subsidy in the last ten years.
These subsidies were unpaid on account of trading of fertilizer, wheat, sugar and other commodities, the chairman told the ECC, which was enough to panic the chairman, who happened to be Finance Minister Ishaq Dar.
The finance minister seriously objected over the accumulation of outstanding dues of the TCP and observed that officials should have brought attention to the issue earlier, according to a statement issued by the Ministry of Finance.
The officials said Rs143 billion credit lines were covered by various commodities in the stock. But according to sources, the stocks were not verified. The trouble was the Rs122 billion pending subsidies, which if the government decides to bring on books, will increase the budget deficit.
The Ministry of Finance official said that for the current fiscal year Rs36 billion have been allocated for TCP subsidies and if required more money can be allocated.
The ECC has constituted a committee under Minister for National Food Security Sikandar Bosan to verify the claims, as there was possibility that the TCP may overstate the claims. The committee would also suggest proposal for resolution of this lingering issue as well. The committee will also review the incidental cost on import of urea including the role of National Fertilizer Manufacturer Limited (NFML).
The piling of the circular debt was also troubling the Ministry of Finance that has again increased to Rs225 billion, according to Dar. However, according to media reports, the circular debt has increased to Rs460 billion.
In a move to facilitate the cement manufacturers, the ECC allowed the import of Pet Coke from India via land route through the Wagha-Attari border. The pet coke is used as raw material in cement production. According to the handout, the government will amend its import policy of 2013 to facilitate the import.
The Federation of Pakistan Chambers of Commerce and Industry (FPCCI) has forwarded requests of All Pakistan Cement Manufacturers Association for allowing the import of Pet Coke Non-Calpine from India through land route by trucks.
Earlier, Pet Coke was allowed to be imported only via rail and sea routes.
The finance minister also observed that secretaries of the economic ministries should come to the ECC meeting fully prepared and bring their cases after completing consultations with other divisions, where necessary, so that a timely decision can be made.
The various ministries are bringing their cases in the ECC at the eleventh hour and often do not observe the condition of sending their summaries 15-day prior to the ECC meeting.
The finance minister said that budgetary discipline should be maintained by all ministries and no cases for regular supplementary grant be moved unless critical. He said secretaries will be responsible to remain within the reduced budgetary allocation and exercise austerity instead of moving cases for supplementary grant.
The ECC also took notice of arbitrary increase in urea prices by the manufacturers. During the meeting, Minister for National Food Security informed the meeting that Fertilizer Companies have arbitrarily increased the prices of urea by Rs150 per 50 kilogram bag. It directed to call the meeting of fertilizer companies to discuss the matter.
ECC appreciated the humanitarian assistance of $ 1.86 million for purchase of wheat being provided by the World Food Programme for assistance of earthquake affectees of Balochistan and its purchase from PASSCO at cost.
The ECC decided to allow Lucky Cement Limited to remit $ 40 million in four quarterly installments of US $10 million each as equity investment for setting up a cement manufacturing plant in Congo from the interbank market. The ECC had earlier allowed them to purchase it from open market.
The ECC approved the summary to award the balance works and additional works of rehabilitation including construction of four bridges to Frontier Works Organization by National Highway Authority and relaxed the rules regarding competitive bidding.
Published in The Express Tribune, January 9th, 2014.
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