ISLAMABAD, Oct 23: The Economic Coordination Committee (ECC) of the cabinet reduced on Tuesday tariff for motorcycle manufacturing industry and approved a Rs16 billion package for Pakistan International Airlines and another of Rs7.1 billion for Wah Industries.

Presided over by Finance Minister Abdul Hafeez Shaikh, the EEC meeting approved allocation of 202 million cubic feet per day (MMCFD) of gas to four fertiliser plants through a dedicated 1,000km pipeline.

The committee discussed a commerce ministry’s summary on protection of motorcycle industry, seeking reduction in tariff and policy guidelines for new entrants in the industry.

The ECC, which had earlier agreed in principle to gradually reduce customs duties, approved reduction in general tariff on different categories of components used by motorcycle industry.

Under the decision, the existing 20 per cent tariff on sub-assemblies was reduced to 15 per cent, the 65 per cent tariff on completely built units (CBU) components for assembly of motorcycles was cut down to 57 per cent and the rate of 15 per cent on completely knocked down (CKD) units not locally manufactured was reduced to 10 per cent. The 47.5 per cent tariff on locally manufactured CKD units was brought down to 38.75 per cent.

Reviewing liquidity problems of the PIA, the meeting extended repayment period for loan (Sukuk Certificates) for two years and allowed issuance of guarantee for a fresh loan of Rs.9.36 billion to the PIA to be arranged by the National Bank of Pakistan.

The meeting approved up-gradation of capacity of Wah Brass Mills (Pvt) -- a project of Wah Industries -- from 7000 tons to 24000 tons and approved a loan of $16 million at the rate of annual average cost of borrowing of the government for financial year 2012-13 to be repayable in seven years and issuance of a letter of comfort/sovereign guarantee for loan facility to Pakistan Ordnance Factory, Wah, amounting to $59.4 million.

GAS ALLOCATION: The committee approved 202MMCFD of additional gas allocation from new fields and capacity additions from some of the existing fields to fertiliser plants through a 1000km dedicated pipeline.

The decision was based on estimates that gas supply to four fertiliser plants had been closed for some time, affecting production of 2.7 million tons of fertiliser and leading to over Rs160 billion subsidy for fertiliser import and non-payment of Rs150 billion by fertiliser companies to banks.

For short term, the gas curtailment to industrial sector had been increased to two days to provide 55MMCFD to Pak-Arab and Dawood Hercules, 25 MMCFD from Makori field to Agritech and 82MMCFD from Mari gas field to Engro Fertiliser.

In longer term, 130MMCFD of gas would be provided to fertiliser sector from Kunar-Pasakhi, 22MMCFD from Mari field, 10 MMCFD from Rati Maru and 25MMCFD from Makori East. This gas would be provided to fertiliser plants through pipeline worth $400 million to be installed with gas infrastructure development cess. The maintenance cost would be paid by gas consumers.