ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet indulged on Tuesday in a blame game over the government’s failure to import 1.2 million tons of sugar by the June 30 deadline amid indications that consumers would suffer the most in days ahead, particularly in Ramazan, as influential parties played a spoilers’ role in the import process.

The meeting, presided over by Finance Minister Dr Abdul Hafeez Shaikh, also refused to approve the petroleum ministry’s proposals to allow import of liquefied natural gas (LNG) through the 4Gas and the GDF Suez on a long-term basis and start the process for short-term import contracts unless the law ministry issued a letter of comfort that they were in line with a decision of the Supreme Court.

Briefing journalists after the meeting, Finance Secretary Salman Siddique said the ECC did not name anybody for the import fiasco, but indicated that the Trading Corporation (TCP) was responsible for the failure.

His calculations suggested that 440,667 tons of sugar import had either been completed or was expected to be completed by August, leaving a shortfall of about 760,000 tons against the import target.

He said that about 1.2 million tons of sugar was available in the public sector — 148,000 tons with the TCP, 706,000 tons with Punjab, 297,000 tons with Sindh and 49,700 tons with Khyber Pakhtunkhwa. The monthly consumption was 350,000 tons.

“Stocks are sufficient and there is no cause for alarm, but the government has to put in place arrangements” to ensure smooth supplies till December through government-to-government negotiations or private tender.

Sources told Dawn that Law Minister Babar Awan, who had specially been made a member of the ECC by the prime minister, criticised the TCP for failing to import sugar in adequate quantities despite the prime minister’s waiver from the requirement of following the Public Procurement Regulatory Authority (PPRA) rules for speedy sugar import.

As the finance minister wanted to move ahead for the resolution of the sugar crisis, Mr Awan insisted that his demand for resignation of the TCP chairman be put on record because he did not comply with the prime minister’s directive to bypass PPRA rules that had led to the emergence of a serious crisis just weeks before Ramazan.

According to the sources, the TCP chairman said his organisation had tried to persuade bidders to match the lowest bids offered by two companies, but after the lowest bidders backed out the higher bidders refused to accept their bids as benchmark.

The sources said the TCP chairman was being made a scapegoat for the collective government responsibility to ensure the import of sugar in keeping with demand.

These sources said Punjab’s representative blamed the federal government for the fiasco and put on record that the provincial government had written five letters to the centre over the past few months calling for emergency arrangements for sugar imports as prices had started rising.

At the same time, the Punjab government proposed that sugar prices at Utility Stores Corporation outlets should be increased from Rs45 to Rs55 or Rs61 per kg to ensure sufficient stocks and lower pressure at utility stores. The proposal was not accepted by the committee, the sources said.

Mr Siddique said the ECC had decided in January to import 1.2 million tons of sugar through the TCP by June 30. Of this, about 264,000 tons had been imported so far, 68,000 tons would be imported before July 31 and another 108,667 tons shipments were due next month.

He said three bids for 200,000 tons of sugar import had been dropped. This meant that the government had not been able to import about 759,333 tons, leading to an increase in prices.

He said a ministerial committee, led by Industries Minister Mir Hazar Khan Bijarani, would decide within three days to import as much sugar as deemed necessary whether remaining within the PPRA rules or through negotiations.

The committee includes the federal ministers for law, agriculture and petroleum and the minister of state for economic affairs.

Another official said the committee was given two options for timely sugar import. Since the normal PPRA rules required 120 days to complete the import process, the committee would either request the prime minister for another waiver of the rules for government-to-government contracts or allow private importers to procure sugar from abroad with a waiver of 16 per cent general sales tax to keep prices low.

Mr Siddique parried questions about involvement of a relative of Prime Minister Gilani in the cancellation of a couple of import tenders.

Asked about speculations that he too was being accused of facilitating a certain importer, he denied his role and said he wished he could have been that powerful.

POWER PROJECTS

Mr Siddique said that the committee approved a power ministry proposal to allow a special tariff for private power projects that could start partial generation before the scheduled commercial operation date to reduce power shortfall.

He said such projects would be given a tariff of Rs11.256 per unit for open-cycle residual fuel oil and Rs10.476 for combined-cycle RFO-based plants.

Likewise, the gas-based open-cycle plants would be given Rs4.14 and combined-cycle projects Rs3.02. The government is already utilising their capacity to the extent of about 600MW.

DUTY RATIONALISATION

The committee approved a cascading import duty structure for pure terephthalic acid (PTA) products with effect from July 1. Under the decision, import duty on PTA has been reduced from 7.5 per cent to three per cent, while duty on polyester staple fibre (PSF) has been increased from 4.5 per cent to six per cent. The duty on polyester filament yarn (PFY) has been raised from nine per cent to 10 per cent.

The duty on bottle-grade product will remain unchanged at three per cent, while duty on blended yarn has been increased from nine per cent to 10 per cent and on fabric reduced from 15 per cent to 10 per cent.

TRACTOR SUBSIDY

The committee also allowed post facto approval of a subsidy refund to tractor manufacturers.

The official explained that under a 1998 government decision, sales tax exemptions were allowed to the tractor industry to lower prices. The refund mechanism required that the manufacturer paid sales tax to vendors and then got refunds from the Central Board of Revenue.

In 2005, the government allowed the entire tractor manufacturing chain to submit their individual refund claims, but the decision could not be implemented. As a result, the previous practice remained in vogue.

As the government has now rescinded the 2005 decision, about Rs2 billion will be refunded to manufacturers.

Courtesy by dawn.com