• ECC directs Punjab millers to sell 20,000 tonnes of sugar at Rs95 a kg
• Okays Rs15bn guarantee for PIA, Rs675m grants for ministries

ISLAMABAD: Under criticism over a proposed fuel subsidy scheme ahead of elections, the government on Thursday approved a subsidised electric bike and rickshaw scheme through Prime Minister’s Youth Programme at an initial estimated cost of about Rs7.5 billion.

The decision was taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet that also approved about Rs15bn loan guarantee to Pakistan International Airlines (PIA) and the sale of over 20,000 tonnes of sugar at a controlled rate of Rs95 per kg in Punjab as retail prices jumped following export permission.

The meeting presided over by Finance Minister Ishaq Dar also allowed the declaration of Customs Station Angoor Adda as an authorised export land route to Afghanistan and through Afghanistan to central Asian republics.

On a summary moved by the Ministry of Industries and Production, the ECC approved a financing facility through PM’s Youth Business & Agriculture Loan Scheme (PMYB&ALs) to kickstart demand for e-bikes and e-rickshaws.

The scheme provides an incentive structure for potential users to make electric bikes affordable.

However, the ECC did not agree with three options that envisaged the government taking half of the cost of the e-bikes and rickshaws through commercial bank financing at about 21pc interest rate as the Ministry of Finance opposed it for fiscal constraints.

It approved a scheme through which a clean loan of up to Rs0.5 million will be given under Tier-I (T1) of PMYB&ALS at zero markup rate for repayment in three years. This facility will be available for up to 15,000 e-bikes/ricksaws in the current fiscal year and will be scaled up to 60,000 in 2023-24 and 100,000 in 2024-25.

Therefore, the subsidy amount for the scheme would be about Rs1.5bn during the current year, followed by Rs6bn next year and Rs10bn in 2024-25.

The average cost of the e-bike with a Lithium battery and special standards assumed by the ministry of industries and engineering development board is Rs190,000 which is considered high for electric vehicle penetration.

While the nitty-gritty of the scheme still needs to be finalised, PM’s Youth Programme, the State Bank of Pakistan, the Bank of Punjab and the National Rural Support Programme would be key stakeholders in the initiative.

The government has already allowed the import EVs specific parts at 1pc customs duty and 1pc sales tax under the Auto Industry Development & Export Policy 2021-26 and has set EVs penetration target of 50pc by 2026.

More than 26.3 million motorbikes are plying on roads and annual market size is more than 2 million produced locally and estimated to be consuming about $3bn worth of fuel per annum. On the other hand, the government has issued 22 manufacturing licences to manufacturers of E-bikes and total production during 2021-22 stood at 7377 e-bikes.

Export trade route

The ECC also approved a summary of the Ministry of Commerce for the declaration of Customs Station Angoor Adda as an authorised export land route to Afghanistan and through Afghanistan to Central Asian Republics. Export of goods from Pakistan to Afghanistan is already taking place through Angoor Ada since 2020 but is not included in the authorized land routes At present authorized land routes for Afghanistan and onward to CARs include Torkham, Chaman, Ghulam Khan, Qamaruddin Karez and Kharlachi.

The meeting also approved a request of the Ministry of Aviation to increase in GoP guarantee related to USD-denominated loans of PIACL to the tune of Rs15.61bn by enhancing the existing guarantee limit of Rs247.630bn to Rs263.237bn mainly because of the exchange rate loss.

Distributing sugar

The ECC was told that sugar prices in the retail market had gone beyond Rs130 per kg after the government allowed the export of 250,000 tonnes with the commitment from the sugar industry that prices would not increase beyond Rs95 per kg. Ministry of National Food Security and Research said the Pakistan Sugar Mills Association (PSMA) was reminded of its commitment to a domestic price cap.

The PSMA Punjab Zone thus agreed to reduce the retail price to Rs95 per kg and provide 20,000 tonnes for distribution at designated sales points to be established by the Punjab government.

The ECC endorsed the PSMA decision for providing 20,000 tonnes of sugar at Rs95 a kg during Ramazan till Eidul Fitr to the general public through the government of Punjab.

The ECC further directed to make arrangements with other provincial PSMAs on a similar pattern for the provision of sugar in other provinces.

The ECC also approved about Rs675.5m worth of four supplementary grants for different ministries.

Published in Dawn, April 14th, 2023