ECC approves Rs8.6bn bailout package for PSM

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet approved financial assistance of Rs. 8.6 billion for Pakistan Steels Mills (PSM) here on Tuesday.

In a meeting of ECC of the cabinet held under the chairmanship of Minister for Finance and Economic Affairs, Dr. Abdul Hafeez Shaikh, the ECC discussed summary regarding financial assistance for PSM moved by Ministry of Production.

The ECC was informed that PSM has been facing loss since 2008 and currently working at a very low capacity of 15 percent.

While keeping in view difficulties faced by PSM and the previous Cabinet Committee on Restructuring (CCOR) decision, the ECC approved financial package of Rs.8.6 billion for PSM including mark up for FY 2013.

The ECC also approved disbursement schedule for PSM formulated by CCOR.

While keeping in view the current gas shortage in the country, ECC approved the summary "allocation of gas from new sources Makori field, Tal Block" moved by Ministry of Petroleum and Natural Resources by which 75 MMCFD gas will be included in the system.

In the same way the ECC approved gas allocation from OGDCL's NIM West Field to SSGCL by which 02 MMCFD gas will be included in the system.

The ECC also reviewed key economic indicators. The Consumer Price Index (CPI) stood at 11% in 2011-12 while it was 13.7% in 2010-11.

The Wholesale Price Index (WPI) remained at 10.4% in 2011-12 while it was 21.3% in 2010-11. Sensitive Price Index (SPI) remained at 7.15% in 2011-12 while it was 16.6% in 2010-11.

Large Scale Manufacturing trend has been improved to 1.3% in May 2012. Exports reached at US$ 24.66 billion and imports were US$ 40.04 billion in 2011-12. Current Account Deficit remained at $ 586 million in June 2012. Foreign Exchange Reserves remained at $ 14.77 billion on July 20, 2012, informed in ECC.

ECC also discussed the summary "delay in submission of case for disposal of surplus stocks of wheat held by PASSCO" observing that case was not processed at appropriate time resulting in substantial loss to public exchequer.

Secretary Cabinet informed the ECC that major reasons are due to devolution of Ministry of Food and Agriculture, procedural delays due to lack of requisite data and record during interim arrangements and transfer of PASSCO along with subject from Ministry of Commerce to newly created Ministry of National Food Security and Research.

The ECC constituted a committee comprising Ministers for Law, Information and Broadcasting and Adviser to PM on Agriculture and Water Resources to work further on the matter and to formulate a mechanism in order to avoid any future loss to national exchequer.

The ECC also discussed summary of storage charges of wheat moved by Ministry of Commerce. Secretary Commerce argued that TCP billed the provincial governments of Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit/Baltistan, Government of AJK, Utility Stores Corporation (USC), Pak-Army and Pak-Navy for recovery of storage charges amounting to a total of Rs.3,886.605 million.

Secretary Commerce informed the ECC that TCP has vigorously been pursuing all agencies for storage payment but have not been paid since 2009. Secretary requested ECC that Finance Division may be asked to recover the storage charges at source from the Provincial Governments.

After due deliberations, ECC decided to hold a separate meeting between TCP officials and representatives from all provinces and armed forces to discuss the issue in detail and to submit their recommendations to Cabinet Division subsequently.

ECC also discussed summary moved by Federal Board of Revenue (FBR) on waiver of sales tax at import stage to Swede Bus Pakistan (Pvt) Ltd., mentioning company's request for exemption from sales tax at import stage to discharge its liabilities to the financial institution which are mainly government owned.

Without the settlement of this dispute the company will neither be able to sell the buses nor discharge its liabilities and the buses will turn into scrap, informed in ECC.

After much deliberations, the ECC constituted a committee comprising Secretary Industries and Chairman FBR to further investigate into the matter.

The ECC was also informed that 721 decisions have been taken in total 78 ECC meetings since 2008 in which 655 decision implemented. So the percentage of implementation of decision is 91 percent.