- Gives approval for an increase in petroleum dealers margin by Rs7 per litre both on petrol and diesel from Rs4.90 per litre and Rs4.13 per litre
ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has decided to allow the import of 200,000 metric tonnes of wheat and lifted the ban on the import of all the items except completely built units (CBUs) of auto, mobile, and home appliances.
The meeting presided over by Finance Minister Miftah Ismail also gave approval for an increase in petroleum dealers margin by Rs7 per litre both on petrol and diesel from Rs4.90 per litre and Rs4.13 per litre, respectively.
Sources said that the ECC was informed that the Pakistan Petroleum Dealers Association (PPDA) has approached the government for immediate revision of their margins due to inflation, increase in the staff salaries and utility bills, etc, requesting that the margins may be revised to Rs6.90/ litre including 15 per cent profit (effectively Rs7.94/litre). Subsequently, the PPDA called for a nationwide strike starting from 18th July 2022 through media with the demand to raise their margins to six per cent of the current selling price (effectively Rs13.81/ litre for MS and Rs14.16/ litre for HSD).
The Minister of State for Petroleum, Musadik Malik, and Shahid Khaqan Abbasi, former minister for petroleum, on the directions of the prime minister immediately initiated dialogue with the PPDA and a number of rounds of negotiations were held in Karachi on 16th and 17th July 2022.
The chairman OGRA and the Secretary Petroleum also remained present during negotiations. During negotiations, the PPDA adjusted their demand and asked that the margins may be increased to Rs9.23 and Rs9.46/ litre on MS and HSD, respectively with immediate effect.
The negotiation team acknowledged that it is not possible for a dealer, with a daily sales volume of less than 200,000 litres to run the business profitably on existing margins, and such daily losses become an incentive for fraudulent practices. Finally, after intense negotiations, the PPDA agreed to margins of Rs7/ litre for both MS and HSD and on the basis of the agreement and the commitment that the revised margins will be made effective from August 2022 and the PPDA called off their strike call for 18 July 2022.
This agreed margin remains below the commitment made to the dealers in November 2021 (4.4 per cent of sales price).
The Ministry of National Food Security and Research put up a summary seeking urgent advice relating to the award of 4th international wheat tender 2022 opened on 25th July2022. The meeting was informed that the Trading Corporation of Pakistan (TCP) issued the 4th tender on 19-05-2022 for securing a quantity of 200,000 metric tons of imported wheat on CFR basis.
The ECC after a detailed discussion approved the lowest bid offered by M/s Falconbridge FZ [email protected] US$ 407.49/MT CFR bulk on sight LC basis with direction to TCP to negotiate with the Russian authorities to procure wheat on a lower rate subject to confirmation of the ECC.
On a proposal of the Ministry of Water Resources for a compensation package for the Chinese causalities at Dasu Hydro Power project, the ECC has approved the disbursement of $11.6 million as compensation/ goodwill amount directly to the company M/s China Gezhouba Group International Engineering Co. Ltd (CGGC) through Ministry of Foreign Affairs. The ECC decided that the amount of compensation/ goodwill package will remain the same as per the ECC’s earlier decision dated January 21,2022 (i.e. US$ 11.6 million).
On a summary moved by the Ministry of Industries and Production, the ECC approved the proposal of shifting both Fatima Fertilizer (Sheikhupura Plant) and Agritech plants to indigenous gas.
The ministry stated that both the SNGPL-based plants are operated by provisioning of RLNG on cost sharing basis and the gas rate for the operation of these plants is worked out on the basis of variable contribution margin (VCM). Due to price increase in fuel prices and other factors, both plants have approached the Ministry for revision of VCM and capping of GST at the price paid by the plants. In compliance of with the earlier decision of the ECC and the Federal Cabinet, the ECC after discussion approved the proposal of shifting both the plants to indigenous gas.
The ECC further directed the ministries of Petroleum, Finance, Food Security and Industries & production to work out the gas price/ VCM for the fertilizers. The ECC also decided that sales tax may be charged on the actual price of the gas being paid by the company.
The Ministry of Commerce also submitted a summary that in order to curtail the rising current account deficit (CAD), ban on the import of about 33 classes/ categories of goods was imposed with the approval of the Cabinet to curtail the current account deficit. As a result of the decision, the overall imports of the banned items have shrunk by over 69 per cent, i.e., from $ 399.4 million to $ 123.9 million. A review meeting was also held to review the ban after two months owing to serious concerns raised by major trading partners on the imposition of ban and considering the fact that the ban has impacted supply chains and domestic retail industry.
As imports have reduced substantially due to consistent efforts of the government, the ECC decided to lift the ban on imported goods except for Auto CBU, Mobile CBU and Home Appliances CBU.
Further, all held-up consignments (except items which still remain in banned category), which arrived at the ports after 1st July 2022 may be cleared subject to payment of 25 per cent surcharge.
Copyright Business Recorder, 2022