ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet decided on Tuesday to procure 10,000 tons of sugar from a mills in Sindh and to absorb the transportation cost of delivering 30,000 tons sugar to Tajikistan.

The meeting, presided over by Finance Minister Dr Abdul Hafeez Shaikh, did not take up a new incentive package for Japanese Yamaha company and deferred it after discussing a decision on allowing import of parts used in CNG kits manufactured in Pakistan for export purposes.

The ECC had decided about two weeks ago to sell 30,000 tons of sugar to Tajikistan at $20 per ton discount on international rate of $248 per ton on a government to government basis.

Over the intervening period, international sugar prices dropped to $228 per ton that was earlier agreed between the countries.

In view of decline in the international market, Tajikistan requested the government to bear the cost of transporting sugar from different mills to Nowshera for its onward transportation through road link to the central Asian state.

The ministry of commerce requested the ECC that in view of friendly relations with Tajikistan, the government should bear the cost of transportation between mills and Nowshera.

The ECC agreed to the proposal in the context of bilateral relations and approved export of sugar to Tajikistan on the same rate as decided earlier with transportation cost to be borne by the government of Pakistan.

The ECC also approved procurement of 10,000 tons of additional sugar over and above the approved quantity of 200,000 tons by the Trading Corporation of Pakistan (TCP) to compensate eight sugar mills affected due to decrease of their normal quota to meet a decision of the Sindh High Court.

The Sindh High Court had instructed the TCP to allocate 10,000 metric ton quota for procurement from M/s Adam Sugar Mills after hearing a case filed by the mill to ensure compliance of the court orders, The TCP issued acceptance letter to M/s Adam Sugar Mills Ltd for procurement of 10,000 MT sugar out of the quota deducted from the remaining 8 sugar mills on pro-rata basis. The decision will compensate the affected sugar mills.

The meeting discussed a proposal for a procedural change in deregulation of ex-factory price of high-speed diesel to provide a level-playing field to smaller oil-marketing companies who purchased HSD from domestic refineries.

The Secretary of Petroleum informed the committee that currently 93 per cent of HSD was being imported by Pakistan State Oil while 7 per cent was being produced in local oil refineries. PSO import price and local refinery HSD price as per existing pricing formula did not match and fluctuated in different directions.

The secretary pleaded that this difference in pricing created a disparity for small OMCs, which were entirely dependant on local refinery supply, because they could not import HSD due to their capacity and infrastructure constraints.

In most of cases, the local ex-factory prices remained on the higher side, putting smaller OMCs at a disadvantage and consequently forcing them to market HSD at the cost of their margin.

The ECC approved the domestic ex-refinery price of HSD on the premise that this would contribute about Rs1 billion additional revenue to the government.

The committee considered a summary from the Ministry of Commerce seeking to lift ban on import of CNG cylinders and conversion kits for which Letters of Credit or bank agreements as per State Bank regulations had already been concluded before Dec 31, 2011 and sought to allow import of parts and components of CNG kits for export oriented industries for which investments had already been made.

Dr Hafeez Shaikh directed the Commerce Ministry and the State Bank of Pakistan to provide further data on the revenue being earned by export of local manufactured CNG kits to ensure that parts and components of CNG kits were not used for local marketing despite a ban on fresh conversion of vehicles on CNG in view of gas shortage.

The ECC also directed the central bank to provide verified data to suggest how many import orders had been secured through Letters of Credit before Dec 31, 2011, so that only genuine importers affected by the ban on import of CNG cylinders and kits could be facilitated.