ISLAMABAD: With twin objectives of containing large current account deficit and improving finances of the agriculturists ahead of upcoming general election, the government on Friday decided to export two million tonnes of wheat and 300,000 tonnes of sugar by the public sector entities.

The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet which also granted tax and duty exemptions for Sukkur-Multan Motorway, raising of Rs70 billion loan for making hydropower payments to provinces and tax breaks to companies and universities.

The meeting was presided over by Prime Minister Shahid Khaqan Abbasi.

The decision will lead to an increase in domestic prices of the two commodities

It approved a proposal of the Ministry of National Food Security and Research to allow the governments of Punjab and Sindh to export 1.5 million tonnes and 0.5 million tonnes, respectively, of wheat including wheat products before June 30, 2018.

The meeting was informed that the country had bumper wheat crop and also had carry-over stocks which required to be offloaded in the international market to improve financial position of the farming community and help earn substantial foreign exchange, notwithstanding an expected increase in wheat prices for domestic consumers.

The ECC also ordered the procurement of 0.3 million tonnes of sugar from the surplus stock of the mills through tendering process and to export the same.

This was done after continuous resistance by some sugar mills to start crushing or pay approved sugarcane prices to farmers. The government said the decision will enable mills to procure cane from the growers at the prescribed rate and to ensure timely payments to the farmers.

The government has been resisting the demands by the sugar mills to increase freight rebate on sugar export from Rs10.70 per kg to Rs20 per kg. To facilitate its millers, Sindh had also announced additional subsidy of Rs9.30 per kg on sugar export.

The federal government, instead agreed to order the Trading Corporation of Pakistan to procure 0.3 million tonnes quantity from the mills on the intervention of the prime minister.

Earlier, the Council of Common Interests (CCI) had allowed the export of surplus sugar of 1.5 million tonnes during the current fiscal year with a freight subsidy of Rs10.70 per kg and the same decision was endorsed by the ECC in its previous meeting.

The TCP had told the government that it had more than Rs6 billion funds at its disposal on account of commodity operation finance but that would insufficient to facilitate 1.5 million tonnes of sugar export. It had also reported that sugar orders from some foreign governments were also available.

The ECC approved a proposal for grant of exemption from taxes and duties for import of construction materials for infrastructure projects of National Highway Authority under the CPEC project. This exemption would be applicable only to the construction of Sukkur-Multan section of Peshawar to Karachi Motorway project.

The ECC also allowed exemption from provision of section 113 of the Income Tax Ordinance 2001 for public sector universities besides allowing exemption from applicability of section 5A of the Income Tax Ordinance 2001 to companies with special agreement with the Government of Pakistan. Under this decision, the profits of companies working with the government including those under CPEC would be exempt from paying income tax on profits.

The ECC approved exemption from re-lending policy of the Government of Pakistan for funds release to State Bank of Pakistan for implementation of the Financial Inclusion and Infrastructure Project.

The meeting also empowered Wapda to raise Rs70bn funds from banks against the sovereign guarantee of the government for clearance of arrears of Net Hydel Profits of the Khyber Pakhtunkhwa and Punjab as already decided by the CCI. The loans would be ultimately financed through an increase in electricity consumer tariff.

Both provinces have been agitating the non-payments of Net Hydel Profit, repeatedly at the level of CCI despite commitments and written agreements by the federal government.

The meeting was told that the CCI had ordered that the Cabinet Division will place the summary titled “tariff determination and notification for 2015-16” of the power division on the agenda of federal cabinet for approval.

Published in Dawn, December 23rd, 2017