ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Monday formally approved a Rs100 billion electricity subsidy package for five export sectors and deferred a decision to fix the minimum support price (MSP) of wheat for 2022-23 season.

The meeting, presided over by Finance Minister Ishaq Dar, also approved more than Rs410 million for effective security arrangements ahead of PTI’s upcoming march to the federal capital and relaxed conditions for the import of wheat through Gwadar port despite about Rs9,000 to 10,500 per tonne higher freight cost.

The ECC approved the continuation of regionally competitive electricity tariff (RCET) at Rs19.99 per kWh, all-inclusive, to five export-oriented sectors — textile (including jute), leather, carpet, surgical and sports goods — across Pakistan from Oct 1 to June 30, 2023, said a statement issued by the Ministry of Finance.

Last week, Mr Dar had announced the continuation of cheaper electricity for five export sectors after textile exporters announced the closure of units for non-implementation of the cabinet’s August decision for the supply of electricity to export industries at nine cents per unit in FY23.

No decision on fixing new wheat support price

The finance minister and exporters agreed to change the rate in local currency to Rs19.99 per unit instead of nine cents at the exchange rate of that date.

Prime Minister Shehbaz Sharif and former finance minister Miftah Ismail had committed the RCET at nine cents and then implemented it for a couple of months but because of some follow-up fiscal challenges this was notified to have come to an end on Oct 1.

The Ministry of Commerce said the RCET had helped Pakistan’s industry to achieve historic high exports of about $32bn during 2021-22 despite the fallout of Covid-19 pandemic and severe economic challenges.

Meanwhile, the meeting deferred a summary from the Ministry of National Food Security and Research (MNFSR) that sought to fix the minimum support price (MSP) of wheat at Rs3,000 or Rs3,200 per 40kg for 2022-23.

It said that if the MPS was fixed at Rs3,000, the farmers would get a profit margin of 20pc and 28pc if fixed at Rs3,200.

The ministry pointed out that Sindh had announced the MSP of Rs4,000 while all others recommendations ranged between Rs2,600 to 3,000 based on the cost of production estimated at Rs2,500.

It argued that Sindh’s MSP would trigger multi-dimensional issues including food inflation, hoarding, smuggling and market distortion. At Rs4,000 per tonne, the consumer price index was estimated to surge by 2.86pc compared to 1.27pc and 1.6pc in the case of Rs3,000 and Rs3,200, respectively.

The MNFSR presented another summary to consider proposals to use Gwadar port and revision of procedure for the pre-shipment inspection agency for the import of wheat under a Prime Minister Office directive to improve Gwadar port’s financials.

The authorities had earlier tendered three to four shipments of 40,000 tonnes each of wheat through Gwadar port but bids received were on the higher side.

The ECC was informed that the reason for higher bids was increased risks due to a change in the inspection regime and port. These changes pertained to the change of port from Karachi to Gwadar and shipment inspections both at the port of loading and discharge port. The MNFSR proposed that both conditions should be deferred for the time being and pre-shipment at the load port should be enough.

Subsequently, the ECC approved the proposal that both amendments to the Trading Corporation of Pakistan (TCP) tender inspection may be dropped for the time being.

Published in Dawn, October 11th, 2022