Closure of PaCCS to cast negative impact: MoF, FBR insist payment to Agility in dollars is not a loss

The Ministry of Finance and the Federal Board of Revenue have worked out that the monthly token payment in dollars to the M/s Agility- Kuwait based logistics provider, is not more as compared to expected revenue loss on sudden closure of the Pakistan Customs Automated Clearance System (PaCCS).
Sources told Business Recorder here on Friday that any move to immediately shut down the PaCCS would have serious implications on revenue as well as business and trade. Thus, the FBR doesn''t not want immediate shutdown of the PaCCS to minimise importers and investors'' problems engaged in regular clearance of imported consignments through the PaCCS. Presently, the government wanted to be engaged in positive negotiations with the M/s Agility and all efforts shall be directed to avoid any shutdown of PaCCS as it will have deep ramifications for trade, trade facilitation, revenue generation and may tarnish the International Image of the government of Pakistan.
In the broader context, the monthly payments are insignificant in comparison to the trade loss due to sudden closure of the PaCCS. At the same time, the revenue loss and loss of international business reputation of GoP in case of closure of PaCCS will be manifold. All efforts are being made to avoid the PaCCS shut down at this stage, sources added.
Sources said that the Ministry of Finance had also remarked that monthly payments of $1.335 million to M/s Agility are not much as compared to the loss GoP might suffer in case of closure of PaCCS. Thus, the immediate closure of the PaCCS would have negative implications on the business community.
Giving details of the payments made to the M/s Agility, sources said that the payment of $1.4 million was made to M/s Agility by GoP in the first week of August 2011. A team of Senior FBR officers headed by Chairman FBR visited Dubai on September 14-15, 2011 and held negotiations with M/s Agility. It was agreed that FBR will continue to meet the demands of M/s Agility for monthly payments which FBR considers to be a token payment adjustable towards final settlement.
It was also agreed by M/s Agility that instead of the demanded amount of $1.335 million per month FBR will pay 0.89 million per month for the period September 15, 2011 to November 15, 2011. So far, the Board had paid around $8.2 million to M/s Agility, which includes the fee for September $1.4 million.
For the period September 15 to 30 the agreed fees as a result of above arrangement comes to around 0.445 million and for the September 1 to 15, 2011 around $0.6665 million totalling to around 1.1115 million. Hence FBR has paid around $0.2885 million in excess for September 2011. This amount of $0.2885 million needs to be deducted from the fee of $0.89 to be paid for October 2011.
Resultantly, in October 2011, payment of $0.6015 million has to be made to the company without prejudice and adjustable in the final settlement. The GoP intends to pay $0.6 million to M/s Agility instead of US $0.6015 (as asked by M/s Agility) so that we can firm up our stance that the amount paid was not monthly fees as asked/ contended by M/s Agility but a token payment and a good will gesture which will be adjustable towards the full and final settlement as payment already made.
In view of the situation and to keep the system alive, another token payment of $0.6 million to M/s Agility may be made in October 2011 provided that the same will be adjustable towards the full and final settlement. According to sources, the earlier payments totalling $8.2 million were made from the Customs Private account titled "Collector of Customs PaCCS Systems, Support and Processing Account" being maintained at NBP Customs House, Karachi and from FBR''s Demand No 37 under the head "Payment to Others for Services Rendered" for the current financial year.
The current balance after the payments in the Customs Private account titled "Collector of Customs PaCCS Systems, Support and Processing Account" is almost nil. Similarly, after making payments of Rs 181.5 million at two previous occasions to M/s Agility from Demand No 37-FBR (HQ), sufficient balance is not available under this demand/head "Payment to Others for Services Rendered" wherefrom obligatory payments have to be made to M/s Pral on quarterly basis for the services rendered by them to the FBR.
An amount of $0.6 million (equivalent Pak currency) needs to be allocated as an additional Budget grant for FBR under Demand No 38-Customs in the head of account "Payment to Others for Services Rendered" and give permission for paying the same in foreign currency ($) to M/s Agility''s account.