ISLAMABAD - The Economic Coordination Committee (ECC) of the Cabinet on Tuesday approved bailout package worth Rs 8.6 billion for Pakistan Steel Mills (PSM) to steer the national entity out of financial losses faced by it since 2008.

The ECC which met with Finance Minister Dr Abdul Hafeez Shaikh in chair, approved financial package of Rs 8.6 billion for PSM including mark up for FY 2013. The Cabinet Committee on Restructuring (CCOR) has already approved the said bailout package.

The ministry of production had moved a summary to the ECC regarding financial assistance for PSM. The national entity has been facing losses since 2008 and currently working at a very low capacity of 15 per cent due to the financial constraints. Therefore, the ECC has approved the bailout package worth Rs 8.6 billion for PSM to steer it out of the losses. ECC also approved disbursement schedule for PSM formulated by the CCOR.

Keeping in view the current gas shortage in the country, ECC approved the summary for allocation of gas from new sources of Makori field, Tal Block moved by Ministry of Petroleum and Natural Resources by which 75 MMCFD gas will be included in the system. In the same way the ECC approved gas allocation from OGDCL’s NIM West Field to M/S SSGCL by which 02 MMCFD gas will be included in the system.

ECC also discussed the summary regarding delay in submission of case for disposal of surplus stocks of wheat held by Passco observing that the case was not processed at appropriate time resulting in substantial loss to public exchequer. Secretary Cabinet informed ECC that major reasons are included devolution of Ministry of Food and Agriculture, procedural delays due to lack of requisite data and record during interim arrangements and transfer of Passco along with subject from Ministry of Commerce to newly-created Ministry of National Food Security and Research.

ECC constituted a committee comprising Ministers for Law, Information and Broadcasting and Adviser to PM on Agriculture and Water Resources to work on the matter and to formulate a mechanism to avoid any future loss to the national exchequer. ECC also discussed summary of storage charges of wheat moved by Ministry of Commerce. The Commerce Secretary argued that Trading Corporation of Pakistan (TCP) had billed the provincial governments of Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Gilgit/Baltistan, Government of AJK, USC, Pak-Army and Pak-Navy for recovery of storage charges amounting to Rs 3,886.605 million. Secretary Commerce informed ECC that TCP had vigorously been pursuing all agencies for storage payment but have not been paid since 2009. He requested the ECC that Finance Division might be asked to recover the storage charges at source from the provincial governments. After due deliberations, ECC decided to hold a separate meeting between TCP officials and representatives from all provinces and armed forces to discuss the issue in detail and to submit their recommendations to Cabinet Division subsequently.

The ECC also discussed summary moved by FBR on waiver of sales tax at import stage to Swede Bus Pakistan (Pvt) Ltd., mentioning company’s request to discharge its liabilities to the financial institutions, which are mainly government owned. Without the settlement of this dispute the company will neither be able to sell the buses nor discharge its liabilities and the buses will turn into scrap, the ECC was informed. After much deliberation, the ECC constituted a committee comprising secretary industries and chairman FBR to further investigate the matter.

The ECC also reviewed key economic indicators. CPI stood at 11% in 2011-12 while it was 13.7% in 2010-11. WPI remained at 10.4% in 2011-12 while it was 21.3% in 2010-11. SPI remained at 7.15% in 2011-12 while it was 16.6% in 2010-11. Large scale manufacturing trend has been improved to 1.3% in May 2012. Exports reached US$ 24.66 billion and imports were touching US$ 40.04 billion mark in 2011-12. Current account deficit remained at $ 586 million in June 2012. Foreign exchange reserves remained at $ 14.77 billion on July 20, 2012, the ECC was informed.