FRIDAY DECEMBER 16: ECC decides to invite fresh sugar bids: production of CNG-fitted vehicles banned

ISLAMABAD: The Economic Co-ordination Committee (ECC) of the Cabinet has decided to impose a ban on the production of CNG-fitted vehicles. It has also decided to invite fresh bids from sugar mills for the purchase of 200,000 tons of sugar because the price quoted by the sugar mills is considered higher than the market price.
Sources told Business Recorder that the ECC meeting presided over by Finance Minister Dr Abdul Hafeez Sheikh on Thursday was proposed by the sub-committee to give a one-time waiver of 3.5 percent in withholding tax to sugar mills with a view to bringing the price of sugar down. The committee also reportedly proposed a 100 percent advance payment to mills for a 50-paisa reduction in per kg sugar price. An official who requested anonymity said that at one stage Finance Minister asked the Chairman PSMA to remain quiet when he tried to intervene in the discussion. The minister also reminded him that he was sitting at one of the highest economic forums of the country.
The sub-committee constituted by the previous ECC meeting proposed to store the purchased sugar with the manufacturers and a 100 percent penalty in case of default in the delivery of commodity to the government. The committee also proposed that 10,000 metric tons of sugar would be purchased from each sugar mill and the benchmark price of re-bidding would be the wholesale price of the sugar in the market of that day.
According to a statement, the ECC reviewed the sugar situation in the country and discussed in detail the proposal to purchase 200,000 tons of sugar from domestic sugar mills. The Finance Minister appreciated the sub-committee's effort for lowering the sugar price from Rs 63 to Rs 53.73 on December 12. Thus, ECC decided that the purchase of sugar would be re-tendered with certain modifications in the tender's terms and conditions.
The committee directed TCP to issue a gallup tender and finalise the process within the coming ten to twelve days. The ECC was of the opinion that the lastly blacklisted sugar mills would also be allowed to bid in this tender provided they had deposited the penalty to the TCP, and this opinion was in good spirit of the government so that a level-playing field could be created.
The ECC discussed the proposal of Ministry of Industries for the import of urea for Rabi Season 2011-12 with the ministry informing the meeting that the import requirements of urea are 700,000 tons to meet the overall demand of 3.4 million tons while 200,000 tons had already been allowed.
The Petroleum Ministry was of the view that import requirements of urea would be increased due to short supply of natural gas in the coming two months. The ECC discussed the proposal at length and decided to meet the remaining shortage of urea for Rabi 2011-12.
The Federal Minister for Finance being the Chairman of the ECC enquired from the members of the committee about the formula on the basis of which the gas was provided to the fertiliser plants, and took exception to reports that certain plants did not lower the prices of their products despite provision of gas to them.
The Minister also expressed concern on the pricing regime and subsidy and decided that a proper distribution mechanism should be identified. In this regard, he formed a committee headed by Minister for Petroleum and Natural Resources comprising secretaries of Water and Power, Production, Finance, Food, Industries and Deputy Chairman Planning Commission to deal with fertilizer companies in relation to fixation of urea price. The Committee will report to ECC in three to four days.
The Committee also deliberated upon the distribution of the available and imported urea, and directed the concerned ministry to ensure the pricing regime for the commodity. In this regard, the line ministry was asked to have a meeting with the dealers of urea in the four provinces to effect a unified price in the market so that farmers should get the subsidised price. It has also been decided that the hoarding of fertilizer by dealers should be discouraged to avoid fluctuations in urea prices.
The ECC also approved the ban on the import of CNG cylinder and conversion kits in the wake of current gas shortage in the country. The installation of new CNG kits in vehicles will also be banned. The existing stock and its owners would be allowed to use their kits and cylinders, and no new licence shall be issued in this regard, the ECC decided. In the same way, CNG fitted public transport vehicles, ie, buses and vans are exempted from this moratorium.
The ECC reviewed its previous proposal of monthly Natural Gas Load Management Program (winter 2011) on SNGPL system, and decided to withdraw the previous approval of supply of 76 mmcfd gas to IPPs because of a severe shortage of gas in coming months and to enhance the gas supply to fertiliser plants.
The ECC also approved the summary "Energy Efficiency Audit of Fertiliser Plants" and "ban on POL products export to Afghanistan and Central Asian Republics," proposed by Ministry of Petroleum and Natural Resources. The committee was informed that the actual conditions were quite different as this import was being practiced only on papers and all these POL products were being sold in Pakistan through export process.
Meanwhile, Chairman Pakistan Sugar Mills Association (PSMA), Javed Kayani, in a statement said that he strongly suggested "in today's ECC meeting that sugar industry can contribute US $300 million by exporting 500,000 tons of sugar to support GoP to meet part of USD 1.2 billion repayment to International Monetary Fund due in February-March 2012 and without the disposal of surplus sugar, industry will not be in a position to make payments to sugarcane growers".