ISLAMABAD  - The Economic Coordination Committee on Tuesday decided to impose a ban on live animal exports and a temporary ban of 30 days on duty-free import of gold.

The country’s highest economic forum, which met with Finance Minister Ishaq Dar in the chair, decided to impose a ban on live animal exports with effect from October 1 in order to encourage export of processed meat and provide by-products such as, hides, bones, blood and tallow, to many downstream industries in the country.

The Cabinet’s committee also gave an approval to export of 30,000 tonnes of wheat to Iran as part of the barter trade agreement. Iran would export electricity in exchange. During Tuesday’s meeting, the Ministry of Planning and Development in compliance with directions of the committee, submitted a report about the reasons and causes in cost escalation in different components of the Nandipur Combined Cycle project which was now estimated to cost around Rs58.4billion against the actual cost of Rs23billion.

This tentative cost may undergo a change subject to the actual cost increase on insurance duty construction rates, dollar fluctuation, taxes, cost of inclusion of gas component and damages to equipment, if any. Expenditures will be made on the actual cost, after validation and special monitoring arrangements by the Ministry of Water and Power.

The ECC hinted the ministry might share the report with Transparency International. It also noted that the matter was subjudice in the Supreme Court and a comprehensive report had also been submitted to the prime minister.

The economic committee decided that the operation of SRO 266(1)/2001 of May 7, 2001, might be suspended with effect from July 31 for a period of 30 days. It, therefore, imposed a temporary ban of a month on duty-free import of gold under these special schemes.

According to SRO 266(I)/2001, dated May 7, 2001, the government has taken initiatives to diversify exports to promote the export of value-added gold jewelry. For this purpose, currently there are special schemes in operation to facilitate jewelry exporters whereby they are able to import gold without payment any duty on the condition that this gold is re-exported after converting it into value-added jewelry.

Recently however, there have been serious apprehensions that these schemes for duty-free import of gold are being abused by some unscrupulous elements and the national interest is being damaged. That is to say that instead of the duty-free gold being used for the purpose it was intended, it is being smuggled to India.

In this respect, it is noteworthy that in recent months the import of gold into Pakistan, under these schemes has seen an enormous surge which is highly abnormal.

During the period of January to June, 2013, gold worth Rs92.97billion was imported compared to Rs19.132 billion for the same period in 2012. This trend has become even more alarming since in the first 26 days of July, the import of gold under these schemes was to the tune of Rs52.549 billion.

In view of these developments, the government has taken cognizance of the apparent abuse of these schemes and decided to take some immediate steps to prevent further damage to the national economy.

The ECC decided to impose a short-term ban of 30 days on the duty-free import of gold, but this ban is purely temporary and is intended to allow the government sufficient time to re-examine the operation of these schemes with a view to speedily removing any loopholes and deficiencies. The objective of the government is to quickly restore these scheme in an improved form, so that genuine exporters of gold jewelry are facilitated in the best possible way to contribute to the national objective of increasing exports.

The ECC directed the Ministry of Petroleum and Natural Resources to carry out a study to establish a basis for revision of margins of oil marketing companies and dealer within 45 days, and submit the same for consideration. The Oil and Gas Regulatory Authority (OGRA) was asked to assist the ministry with the matter.

The committee was informed by the Aviation Division secretary that Rs6.1billion had been paid to vendors out of Rs6.89billion released by the Ministry of Finance and an amount of Rs789million had been paid to Exim Bank as part of repayment of loans.

The secretary also informed the committee that the accounts between PIA and FBR had been reconciled on account of federal excise duty collected by PIA. “Also that a separate account was now being maintained since July 1, 2013 for collection of federal excise duty and that an amount of Rs250million had been deposited with the FBR so far.”

The ECC directed the Ministry of Aviation to present a viable plan to overcome the annual loss of Rs3.3billion being incurred by PIA. This plan should include breakdown of the present losses as well as the way forward.

The ECC also approved the renewal of GOP guarantee for running finance facility for Rs2billion for Pakistan Steel Mills up to January 4, 2014.

The Industries secretary informed the ECC that sales of utility stores touched Rs13billion during the first ten days of Ramazan and was likely to cross Rs25billion. It was also informed that the Ministry of Industries was contemplating to computerize its 5800 utility stores and warehouses throughout the country The economic committee reiterated that no exception would be allowed to PPRA rules on import of liquefied natural gas or award of contract for construction of terminals for storage and re-gasification, to ensure transparency.

The petroleum and natural resources minister was directed to brief the media and dispel any misperception in this regard by sharing the entire process of purchase of LNG. Due process and transparency would not be compromised in any way, resolved the ECC.