ISLAMABAD - Instead of following the Oil and Gas Regulatory Authority’s (OGRA) recommendation to increase the gas prices for the industrial sector by around 36 percent, the Economic Coordination Committee (ECC) of Cabinet on Friday approved a reduction of around 33 percent in the gas tariff for the sector.
The ECC chaired by Finance Minister Ishaq Dar approved reduction of gas price for Industrial sector from Rs600 to Rs400 per MMBTU. In accordance with Fertiliser Policy 2001, the industrial sector gas sale price will also be applicable to the fertiliser sector only for fuel stock. According to the summary, in the current situation of reduced oil prices, there is a strong justification for providing some relief to the industrial sector which is becoming noncompetitive in international market resulting in loss of export earnings.
Accordingly, the ministry proposed that the prices of gas sale price for industrial sector and captive power may be decreased from Rs600 per MMBTU to Rs400 per MMBTU. Currently, industries are paying Rs600 per MMBTU as a gas price and Rs102 as GST, which takes the price to Rs720 per MMBTU. Now after the ECC decision, the industries will pay Rs600 per MMBTU which includes Rs400 per MMBTU gas price and Rs200 GST.
It is pertinent to mention here that in October, OGRA has recommended about 36 percent increase for the industrial consumers and later the government has asked the authority to not increase the prices. Industries and power generation entities in SNGPL domain area are using around Rs160 billion of gas and OGRA has recommended different increase. For example for general industries and cement industries an increase of 36 percent is recommended by OGRA. The cement current rate is Rs750 per MBTU and OGRA recommended to increase it to Rs1020.80. WAPDA and IPPs are using gas worth Rs6942.68 million, fertiliser Rs 1300 million, cement Rs71.47 million, general industries Rs7709 million, captive power Rs2590.84 million, CNG Rs4784.20 million, commercial Rs3962.54 million, special commercial is also using Rs30 million gas, bulk domestic consuming of over 30O CM are consuming Rs1945.94 million gas.
Meanwhile, the Federation of Chambers of Commerce and Industry (FPCCI) expressed his gratitude to Prime Minister Nawaz Sharif and thanked the finance minister for reducing Rs200 per MMBTU in the gas price for industrial sector.
“This will provide relief to the Industrial sector which is becoming non-competitive in the international market,” FPCCI President Rauf Alam said while talking to Finance Minister Ishaq Dar. The finance minister said that the government is committed to address the problems of the Industry as much as possible. He said all efforts are directed to create a congenial working environment for business so that our products could become competitive in the international market. Now it is obligation of the businesses to increase exports and earn the much needed foreign exchange for the country, he urged.
The ECC also considered and approved the Summary presented by the Earthquake Reconstruction and Rehabilitation Authority (ERRA) regarding exemption of taxes on procurement of furniture and supplies of 15 District Health Units (DHU) and at three colleges located in the 2005 earthquake affected areas in the AJ&K and Khyber Pakhtunkhwa. Saudi Fund for Development has provided funds through a grant and mandated UNICEF for procurement of furniture and supplies for the reconstruction of these educational institutions. The exemption has to be obtained from the ECC as the powers to grant exemption through SRO’s have been taken away from FBR.
The ECC also accorded approval to the proposal of the Ministry of National Food Security and Research regarding extension in export period of thirty days from the date of approval (June 15, 2016) on the same terms and conditions already approved by the ECC in its meeting on 18 March, 2016. The chairman said that the extension is limited for the balance quantity already approved for export for Sindh and Punjab. The ministry apprised the ECC that the Food Departments of the governments of Sindh and Punjab and All Pakistan Flour Mills Associations and exporters have pleaded for extension as the specified quantity of wheat/wheat flour could not be exported within the specified period due to Eid holidays and transportation problems etc.
It was decided that the extension on payment of export rebate would only be available to those exports which have been shipped/transported (GD) on or till September 30, 2015 deadline. The ECC upheld the earlier decision that export of wheat and wheat flour made during the period from October 1, 2015 to January 12, 2016 shall not be entitled for any such support.
ECC also gave approval to the settlement reached between the Ministry of Water and Power and the Sindh government to resolve the issue of outstanding bills of the Sindh government’s departments and HESCO/SEPCO for the period of July 2010 to July 2016. The Sindh government will clear the outstanding amount of Rs27.398 billion in six equal monthly installments starting from September 2016. In the same decision, the chairman also directed Ministry of Water and Power for installing AMR meters (smart meters) in the area within four months, with 50 percent of the cost of the installation of meters to be borne by the Sindh government so that the issue may be settled on permanent basis.