ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Friday could not approve two five-year policy packages for supporting small and medium enterprises (SMEs) and automobile sector owing to conflicting opinions of the cabinet members and opposition from major stakeholders — the Federal Board of Revenue (FBR) and the State Bank of Pakistan (SBP).

The notional meeting of the ECC presided over by Minister for Economic Affairs Omar Ayub Khan, however, approved allocation of 10mmcfd (million cubic feet per day) gas in Sindh to Sui Southern Gas Company Limited (SSGCL) and concessionary electricity to the zero-rated industry at Lasbela in Balochistan and Sundar in Punjab.

The ECC also approved supplementary grants of Rs330 million to the Ministry of Defence for VVIP aircraft and Rs85m to the Ministry of Interior for repair of helicopters of Punjab Rangers.

Approves allocation of 10mmcfd gas for SSGCL, concessionary electricity to zero-rated industry

Informed sources said the so-called technical advisory committee (TAC) of the ECC, led by Adviser to the Prime Minister on Finance Shaukat Tarin, which actually takes decisions on summaries of the economic ministries, had discussed the 2021-25 policy for SMEs, but could not finalise its recommendations due to opposition from the FBR and SBP over tax exemptions and matters relating to the Rs30bn SME development fund, respectively.

According to an official statement, the ECC also discussed a summary on the SMEs policy presented by the Ministry of Industries and Production and directed the authorities concerned to review the policy and discuss the observations raised by the relevant stakeholders under the chairmanship of Shaukat Tarin. The proposal will be submitted to the cabinet after developing a consensus with the stakeholders.

Therefore, Mr Tarin called both the FBR and SBP to a meeting on Monday where he could delve deep into their objections, make adjustments where necessary and take a final view of the policy. There were suggestions for expanding the scope of financing support to the SMEs from less than 200,000 at present to 2-3m within the policy period. Total SMEs are estimated to be over 500,000.

The Ministry of Industries and Production had sought reduction in taxes and exemptions from tax audits, besides collateral free loans by banks with credit line of Rs50-60 billion in addition to the SME development fund by the government worth Rs30bn for risk guarantee. The FBR had reservations over taxation proposals and the SBP over risk mitigation and subsidised interest rates.

Regarding the auto industry development and export policy 2021-26, Minister for Interior Shaikh Rashid reportedly wanted that the policy should be for 10 years to provide confidence to the industry for investment, but Minister for Industries Khusro Bakhtiar opposed such a long commitment, saying the policy could be adjusted in line with the changing market conditions and the five-year policy horizon was enough for the auto sector for business decisions.

A decision on the matter was deferred until the next meeting.

The ECC approved a summary presented by the Ministry of Energy (Petroleum Division) for allocation of 10mmcfd gas under commercial production from M/s United Energy Pakistan’s fields to SSGCL. United Energy will provide gas from Mitha and Bitro fields to SSGCL. The price of gas will be as per the applicable petroleum policy to be decided by the regulators concerned.

On a summary presented by the Power Division, the ECC cleared a mechanism for granting concessionary tariff to the eligible consumers of zero-rated industrial estates of Lasbela (LIEDA) and Sundar (SIE) and to prospective industrial estates.

The committee ordered installation of double meters at zero-rated industrial consumers of LIEDA and SIE for verification of reading by K-Electric and Lahore Electric Supply Company. The ECC also directed that subsidy claims be processed on the basis of difference of readings.

Earlier, finance adviser Shaukat Tarin presided over a meeting of the Technical Advisory Committee and reviewed the summaries in details and presented its recommendations to the ECC, the statement said.

Published in Dawn, December 11th, 2021