Bumper crop: ECC extends wheat export deadline in bid to sell surplus

Country had been facing surplus stocks; meeting also fixes profit margins for LNG import.

ISLAMABAD:

After Punjab and Sindh took the federal government to task for allowing wheat import at a time when the country has surplus commodity, the Economic Coordination Committee on Saturday extended the deadline to export 1.2 million tons until the end of next month. 

Headed by Finance Minister Ishaq Dar, the ECC also fixed profit margins of Pakistan State Oil, Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited on import of Liquefied Natural Gas. The PSO has been allowed to charge up to Rs40 per mmbtu margin, while SNGPL and SSGCL margins are set at Rs5 per mmbtu.

Meanwhile, the ECC gave approval to the export of wheat until July 31, according to an official handout. The original deadline for the export of the commodity was March this year, which has thrice been revised.

Instead of subsidising domestic consumers, the federal government is providing $55/ton rebate on wheat export from Punjab and $45/ton on wheat export from Sindh aimed at compensating their losses. The ECC had allowed Punjab to export 800,000 tons while Sindh has been allocated an export quota of 400,000 tons.

It has so far given Rs1.6 billion subsidy to international consumers of wheat, according to budget documents.

Despite the country having four million tons in surplus wheat, a business tycoon reportedly managed to import 700,000 tons last year. This angered Sindh and Punjab’s chief ministers who took the federal government to task in the National Economic Council meeting for allowing wheat imports, said sources.

Both chief ministers blamed the Finance Ministry for not taking timely action, which has resulted in a situation where they were unable to sell wheat lying in official stores. This year, wheat production remained at 25.4 million tons, far above domestic requirements.

Sources said Finance Minister Ishaq Dar claimed in the NEC meeting that due to his action, the private sector could not import an additional 500,000 tons. Dar promised to hold an inquiry as to how 700,000 tons were imported when the country had surplus commodity, added sources.

After the private party imported 700,000 tons, the ECC first banned imports before slapping 25% regulatory duty.

LNG margins

The ECC also approved the pricing parameter for RLNG which includes PSO’s margin up to 4% or Rs40  and SNGPL/SSGL administrative margin up to $ 0.05/MMBTU  or Rs5. The ECC decided that their margins will be reviewed again after three months by a Committee consisting of Secretary Finance, Secretary Petroleum, Secretary Water and Power and Secretary Law.

For the import of LNG and use of FSRU to pick the next four cargoes of LNG on FOB basis from RAS LAFFAN Qatar, the ECC decided that PSO being a corporate entity may decide on the issue of buying LNG till finalisation of the LNG supply agreement with Qatar.

It also allowed PSO to import petroleum products and low sulphur furnace oil by taking responsibility from Pakistan National Shipping Corporation. The PNSC does not have vessels to import the petroleum products and was hiring vessels for the purpose. However, the PNSC was allowed to import high sulpher furnace oil.  The ECC also allowed Port Qasim Authority to follow the SIGTTO Standards or to decide on its own technical parameters for berthing LNG ships and vessels, as its berthing terminal is not capable to dock LNG ships.

The ECC also approved the proposal sent by the Ministry of States and Frontier Regions (SAFRON) for the provision of 85,000 tons to the temporarily displaced people of FATA and Khyber-Pakhtunkhwa.

Published in The Express Tribune, June 7^th, 2015.

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