ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Thursday decided to import 220,000 tonnes of urea from Azerbaijan on a government-to-government (G2G) basis, allowed Rs754 billion cash credit limits (CCL) to Punjab and Sindh for procurement of essential commodities and approved a further increase in gas price from January.

The ECC meeting, presided over by caretaker Finance Minister Dr Shamshad Akhtar, rejected an increase in prices of 262 medicines sought on a hardship basis and refused waiver of interest on $25 million loan to the National Database and Registration Authority (Nadra) for issuance of digital identification cards.

The meeting allowed higher than normal wellhead gas price for Jhal Magsi field in Balochistan to make it commercially viable for the OGDCL-led joint venture.

On the request of the industries and production ministry, the ECC allowed the Trading Corporation of Pakistan to immediately finalise arrangements with Azerbaijan’s SOCAR Trading for import of 220,000 tonnes of urea. The state-owned company had offered $388.5 per tonne on cost & freight (CFR) on a G2G basis at 30-day credit.

Approves fresh hike in gas tariff from January next; rejects increase in prices of 262 medicines

On request of the petroleum division, the ECC approved continuous supply of gas to two Punjab-based fertiliser plants — Fatima Fertiliser and Agritech — till March next year at an Ogra-notified rate of Rs1239 per mmBtu, even if they were to be supplied imported re-gasified liquefied natural gas (RLNG) that entailed an additional cost of over Rs15bn.

The ECC was informed that if RLNG was supplied at about $15.9 per mmBtu, the fertiliser price from these two plants would increase by Rs3,000 per bag from its existing price of about Rs3,400. The price differential between natural gas (at Rs1,239/mmBtu) and RLNG close to $16 (at almost Rs4,400/mmBtu) went Rs3,200/mmBtu. In that case, the fertiliser rate of the two plants would be Rs6,400 per bag compared to Rs3,400 from other fertiliser plants.

Because of the price differential, the two plants had threatened to close their plants early this month but were asked by the government to continue production “in the national interest” and assured them of resolving the issue.

The petroleum division reported that the government had been allocating subsidy in budget ranging from Rs8bn in FY21 to Rs30bn in FY22 and Rs26bn in FY23, but no allocation had been made in budget FY2024.

To run the two plants until March 2024 at Rs1239/mmBtu involved over Rs15bn impact (over three months). Half of this would be borne by Punjab and Khyber Pakhtunkhwa at a ratio of 81pc and 19pc on the basis of supply of urea from these plants for three months to the two provinces.

The ECC approved the recovery of the remaining 50pc differential through gas price revision in January 2024 with the clearance of the Oil and Gas Regulatory Authority (Ogra).

Credit limits

The ECC approved a request of the national food security ministry to allow Rs754bn CCL to Punjab (Rs540bn) and Sindh (Rs214bn) for July-September 2023 for procurement of essential items such as wheat, sugar, rice and cotton.

The two provinces were also directed to settle the unsecured exposure of their commodity debt, including Rs143bn against Punjab and Rs108.35bn against Sindh.

The finance ministry was asked to monitor the CCL requirement of Punjab and Sindh to ensure that the provinces make settlement of their unsecured exposure.

The ECC approved application of Marginal Pricing Policy for Jhal Magsi south gas field to ensure development and production on a fast track basis.

The meeting rejected a summary seeking an increase in the minimum retail price of 262 medicines under “hardship category”. The meeting was told that the existing prices had made these medicines unviable and hence were being sold in the black market at exorbitant rates and the patients and doctors were facing problems.

Published in Dawn, November 24th, 2023