ISLAMABAD, July 30: The government on Tuesday allowed sugar export to Iran against electricity import.It also allowed continued higher margins to Oil Marketing Companies (OMCs) and petroleum dealers and put an immediate ban on import of gold and export of live animals.
The decisions were taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet, presided over by Finance Minister Ishaq Dar that also decided to strictly go by the procurement rules in import of Liquefied Natural Gas (LNG) to ensure transparency instead of seeking exemptions.
The meeting was also informed that the Prime Minister had approved a summary under which the ECC decisions would be considered final and would not require mandatory approval of the federal cabinet as in the past.
The ECC decisions would be dispatched to the cabinet division for information and not approval.
The government imposed a ban on import of gold for 30 days to improve various import schemes following reports that duty-free gold import facilities were being massively abused by unscrupulous elements for export to India at the cost of national interest.
Duty-free import of gold is allowed with the condition that it be converted into jewellery for export.It was evident from the fact that in recent months import of gold into Pakistan under various schemes had seen “an enormous and abnormal surge.”
During the period January to June, 2013, gold worth Rs92.970bn was imported compared to Rs19.132bn for the same period last year.
This trend had become even more alarming since in the first 26 days of the current month (July) alone, import of gold amounted to Rs52.549bn.
The ECC was also told that the Indian government had during the past few months been consistently engaged in discouraging import of gold.
In this context, India increased import duty on gold from 2pc to 6pc in January 2013 and to 8pc in April-May 2013. Reports also indicated that seizures by Indian authorities of smuggled gold increased by as much as 365pc in April-June 2013 as compared to the similar period of 2012.
This difference in import duties seems to have provided the incentive for increased duty free imports in Pakistan and smuggling to India.
Therefore, the ECC decided to take immediate steps to prevent further damage to the national economy by imposing a 30-day ban on duty-free gold imports to re-examine the schemes and quickly restore them in improved form so that genuine exporters of jewellery were facilitated.
The Ministry of Commerce would take administrative measures to implement this decision in letter and spirit.
The ECC also decided to put a ban on export of live animals with effect from Oct 1, 2013 (just before Eidul Azha) to encourage export of processed meat and provide by-products, such as hides, bones, blood and tallow to many downstream industries.
While allowing continuation of slightly higher margins to OMC and dealers on sale of petroleum products, the meeting directed the ministry of petroleum to carry out a study with the assistance of Oil and Gas Regulatory Authority (Ogra) to establish a basis for revision of margins within 45 days and submit it for its consideration.
The ECC also approved export of 30,000 tons of wheat to Iran as part of a barter trade agreement with Iran against electricity imports.
The meeting was informed by secretary Aviation Division that PIA had paid Rs6.1bn to vendors out of Rs6.89bn released by the Ministry of Finance, and an amount of Rs.789m has been paid to Exim Bank as part of repayment of loans.
The PIA and FBR have also reconciled their accounts and Rs250m had been paid to FBR.
The ECC directed the Ministry of Aviation to present a viable plan to overcome annual loss of Rs3.3bn being incurred by PIA, including breakdown of the present losses as well as the way forward.
The ECC also approved renewal of GOP guarantee for running finance facility of Rs2bn for Pakistan Steel up to Jan 4 next.
The ECC directed that no exemption would be allowed to procurement rules on import of LNG or award of contract for construction of terminals for storage and regasification to ensure transparency.
The meeting was informed that the Ministry of Planning and Development had submitted a report on reasons and causes in the cost escalation in different components of the Nandipur Combined Cycle Project which was now estimated at Rs58.4bn.
This tentative cost may undergo change subject to actual costs increased on Insurance Duty Construction Rates, Dollar fluctuation, taxes, cost of inclusion of gas component and damage to equipment, if any.
The meeting was informed that expenditures will be made on actuals after validation, and special monitoring arrangements will be made by the power ministry which was asked to share the report with Transparency International.