ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Wednesday could not take a decision on a proposed 25 per cent increase in minimum support price (MSP) for the upcoming wheat crop as it was divided over the quantum of increase, a cabinet member told Dawn.

The ECC meeting, which was presided over by Adviser to the Prime Minister on Finance and Revenue Dr Hafeez Shaikh, took up a summary of the Ministry of National Food Security and Research (MNFSR) for increasing support price from the previous Rs1,400 to Rs1,745 per 40 kg for the upcoming wheat crop.

Some members were of the opinion that increasing support price by the proposed quantum would have a significant inflationary impact at a time when the government’s focus was on fighting inflation amid rising political pressure and the opposition might exploit the situation, the cabinet member confided to Dawn. He said another opinion was that ‘belated’ decision on MSP coupled with the little increase of Rs50 per 40kg last year besides the locust attack was one of the reasons behind lower than targeted wheat production, leading to shortages and smuggling of stocks to neighboring countries.

India has recently set wheat support price at about Rs1,950 per quintal that worked out to be around Rs1,750 per 40-kg in Pakistan. Similar prices in the neighbouring countries provided a stability factor in the market, he added.

Approves Rs72.6bn technical supplementary grant to Power Holding Ltd

The flour prices had increased by almost 55 to 60pc over the past year despite the fact that the government had been allowing tax- and duty-free wheat imports both through public and private sectors.

However, the PM’s adviser on finance was dissatisfied with the required data and related projections that could help form opinion. The committee then decided to defer the matter for a special meeting to be convened on Monday for a dedicated discussion.

Power loans, media dues

On the summary moved by the Ministry of Information and Broadcasting for allocation of additional funds for the payment of media campaigns launched on August 5 (Kashmir Siege Day), the ECC decided that Ministry of Information and Broadcasting may meet the immediate fund requirement through re-appropriation from its own budget allocated for the financial year 2021 and any shortfall due to re-appropriation of the funds would be met through technical supplementary grant towards the end of the current financial year.

The information ministry had sought additional funds of Rs13.4 million to cover the cost of the media campaign on August 5.

The ECC also approved in principle a technical supplementary grant of Rs72.635 billion to Power Holding Private Limited (PHPL) for onward disbursements to respective banks or through financial instruments as and when due during the current financial year. This is part of an earlier decision of the ECC under commitment with the International Monetary Fund (IMF) to shift the power sector debt stock of Rs804 billion to public debt.

The government had given an undertaking to the IMF that it would absorb the PHPL debt into its budget, fully recognizing the liabilities in PHPL as debt of the government of Pakistan and taking over the servicing of the loans contained in PHPL.

As per debt repayment schedule agreed between PHPL and lending institutions, an amount of Rs72.635bn was required to be paid partially during the FY 2019-20 and remaining is payable in 2020-21 as principal repayments to lenders.

The meeting also decided that the Rs82bn loan taken from Oil and Gas Development Company Ltd (OGDCL) and included in the total of Rs804bn PHPL debt would be considered separately through non-cash or cash settlements. Therefore, it constituted a committee, headed by Adviser to the PM on Institutional Reforms and Austerity Dr Ishrat Hussain and comprising SAPM on Revenue Dr Waqar Masood Khan, representatives of finance and power divisions, to prepare a proposal for the settlement of power sector dues and other related issues in a holistic manner and come back to the ECC with a formal summary.

The ECC allocated Rs10bn from Stimulus Package for the payment of first installment of interest/profit for the period of May 21 to November 20 in respect of Pakistan Energy Sukuk-II amounting Rs200bn.

The coordination committee also approved the allocation of funds for implementation of the Interest-Free Loans (IFL) programme by the Pakistan Poverty Alleviation Fund (PPAF). The Benazir Income Support Programme (BISP) has already surrendered funds amounting to Rs4.98bn in favour of the PPAF during the financial year 2020-21, which would be used for the IFL programme.

The ECC also took up a request of the Ministry of Energy for settlement of Rs7.6bn loan and its associated costs from the National Bank of Pakistan (NBP) pertaining to advance payment (mobilisation advance) for Turkish company, Karkey Karandeniz Elektrik Uretim. The ECC decided that finance division should engage with the NBP for the settlement of the loan. It was decided that a well-rounded proposal with all stakeholders on board would be presented before the ECC for the final approval.

Published in Dawn, October 15th, 2020