[Business Recorder 14 November 2019] ISLAMABAD: A meeting of the Economic Coordination Committee (ECC) of the Cabinet has increased minimum support price of wheat by Rs 50 and fixed it at Rs 1,350 per 40kg for the next crop, and sought a presentation from Finance Ministry on Rs 450 billion commodity operation circular debt.

The ECC meeting chaired by Advisor on Finance Dr Abdul Hafeez Shaikh, sources said, was presented a proposal for fixing minimum support price of 40kg wheat at Rs 1,325, Rs 1,350 or Rs 1,375.

The ECC approved Rs 1,350 per 40 kg after the meeting was informed that minimum support price has not been enhanced for the last five years and different factors including world wheat situation, cost of production, export-import parity prices and domestic producers’ prices were cited.

The ministry on the basis of these factors requested the ECC that an appropriate support price for the next wheat crop was necessary to meet the cost of production and also referred to findings of the Agriculture Policy Institute, which said the cost of production increased to Rs 1349.57 per 40 kg in Punjab in 2019-20 and Rs 1315.72 per 40 kg in Sindh. The meeting was also told that the world wheat price has been around Rs 1,575 per 40 kg with duties and is Rs 1440 per 40 kg without duties and other taxes.

The ECC asked the food Ministry to approach the provinces and ask them to make adequate wheat procurement in the coming season; otherwise, any request from provinces for releases from Pakistan Agricultural Storage and Services Corporation (PASSCO) would cost 100 per cent payment of incidental charges.

The meeting decided that provincial chief secretaries or their representatives would be invited to attend the next ECC meeting and directed Ministry of Finance to present a detailed presentation on the rising circular debt on the commodity operations which had already crossed Rs 450 billion.

The ECC also took up and approved a four-year circular debt capping plan presented by the Power Division to address the flow of the circular debt through efficiency improvement under the National Electricity Policy 2019.

The plan measures would be taken to improve power distribution collection, 100 % collection by five distribution companies, a reduction in line losses, rationalization of subsidy allocations, reduction of running and permanent defaulters and reducing power sector flows to less than Rs 75 billion per annum from the current level of Rs 465 billion per annum. 

The ECC directed the Petroleum Division to provide necessary provisions of gas, electricity and other facilities at the SEZs and also constituted a committee headed by Prime Minister’s Adviser on Commerce and Investment, Abdul Razak Dawood with representatives from the Petroleum Division and the Board of Investment to resolve certain minor issues as pointed out during the discussion, and to bring up the proposal in the next ECC meeting for a decision.

The ECC also considered a proposal of Power Division for execution of amendment to the implementation agreement governing Thal Nova Power Thar (Private) Limited and Thar Energy Limited by increasing the time period for exercise of government of Pakistan’s right to terminate the both projects from 400 days to 490 days. There was no financial implication involved in the proposal.

The ECC approved the proposal with a proviso that the Cabinet Division would take further input from the Planning Division and bring the matter back to ECC if there were substantive and fundamental issues requiring further discussion and any change in the ECC approval.

The ECC also considered and approved a proposal by the Ministry of Interior for release of funds through a technical supplementary grant to the tune of Rs 670.553 million to HQ Frontier Corps KP (North) Peshawar for the completion of laid down codal, financial, procedural and legal formalities for various Project Implementation Letters (PILs), including the up-gradation of FC KP (North) training centre at Warsak Peshawar and construction of FATA Levies Training Centre at Shakas and 10 X FATA Levies check posts.

The ECC also considered Ministry of industries and Production proposal of Rs 6 billion technical supplementary grant – transfer of Rs 4 billion from BISP and Rs 2 billion by Finance Division for Utility Stores Corporation (USC) for providing subsidy on essential commodities flour, sugar, ghee, rice and pulses in line with directive of the Prime Minister of November 8, 2019.

A committee was constituted with Advisor on Commerce Razak Dawood, Railways Minister Sheikh Rashid, Privatization Minister Muhammad Mian Soomro, Governor State Bank of Pakistan Reza Baqir, Special Assistant to the Prime Minister and Chairperson BISP Dr Sania Nishtar, secretary finance, secretary industries, and MD Utility Stores Corporation to come up within the next few days with a foolproof mechanism involving use of information technology to ensure that the poorest get access to essential subsidized items from the 3,600 Utility Store outlets spread across Pakistan.

The ECC also considered a proposal of Ministry of National Food Security & Research for release of 200,000 tons of wheat @ Rs 1,375 per 40 kg from the PASSCO stocks to the USC to compensate vulnerable segments of society and to discourage hoarding and profiteering – with the proviso that the financial implication of Rs 1.314 billion on account of price differential and incidental charges of Rs 6573.98 per tons to be picked up by the Finance Division would be settled in the third or fourth quarter by the Finance Division by finding suitable sources of funding.