ECC approves guarantee for Rs 9.36b fresh PIA loan
24 October, 2012
ISLAMABAD: The Economic Coordination Committee (ECC) of Cabinet has approved to issue guarantee for fresh loan of Rs 9.36 billion to Pakistan International Airlines Corporation and also extended repayment period for loan (Sukuk Certificates) of PIAC for 2 years.
The ECC, which met under the chairmanship of Finance Minister Dr Abdul Hafeez Shaikh, on Tuesday approved to issue guarantee for fresh loan of Rs 9.36 billion to PIAC after considering the severe liquidity crisis faced by the national entity. However, ECC directed PIAC officials to present their detailed business plan in the next meeting. After reviewing the liquidity conditions of Pakistan International Airlines Corporation (PIAC), the ECC has also extended repayment period for loan (Sukuk Certificates) of PIAC for 2 years.
Sources informed that ECC did not take the summary of Ministry of Petroleum and Natural Resources for changing mechanism of oil prices from weekly to fortnightly or monthly. The ECC is likely to take this issue in next meeting. Sources said that Ministry of Petroleum and Natural Resources has prepared a report suggesting that weekly mechanism is in public favour.
The ECC has also approved the reduction in general tariff on different categories of components used in motorcycle industry. It was decided that the rate of approved tariff would be average of the existing rates and commerce ministry's currently proposed rates for each category. However, the new tariff will be reviewed after one year.
The ECC discussed in detail on the allocation of gas to fertilizer plants from dedicated sources. It was informed to ECC that total 202 MMCFD would be made available through newly discovered fields and the fields having additional gas.
It was proposed to allocate this additional gas to four fertilizer plants. It was also informed that 1000 km long pipeline would be required to be established in order to utilise this additional gas from the fields. After considering the different aspects of the proposal, ECC gave in principle approval for establishment of 1000km long pipeline. ECC also set up a committee comprising Ministers for Information and Broadcasting, Petroleum and Natural Resources, Law and Justice, Deputy Chairman Planning Commission and Secretary Water and Power to work on determination of legal modalities, mechanism for pricing, review of agreement and estimation of cost and time. The said committee will present its report in the next ECC.
ECC also discussed summary on import policy of used cars submitted by Ministry of Industries. Secretary Industries argued that huge import of used cars are severely damaging the domestic car industry and proposed to increase age of used cars from three years to five years. After due deliberations, ECC constituted a committee comprising representatives from Ministry of Industries, Commerce, FBR and Production to work out further and give a detailed presentation in the next ECC.
The ECC also approved up-gradation of capacity of Wah Brass Mills (Pvt) - Project of Wah Industries from 7000 MT to 24000 MT. In order to achieve this enhanced capacity, ECC approved (a) a loan of $16 million at the rate of annual average cost of borrowing of the Government for FY/2012-13 to be repayable over a period of 7 years and (b) issuance of letter of comfort/sovereign guarantee against loan facility to POFs Wah amounting to $59.4 million, as demanded by Ministry of Defense Production.
ECC also discussed summary on “Policy Guidelines for Energy Efficiency Audit of Captive Power Plants and Natural Gas Boilers, proposing reduction in efficiency benchmark for gas engines/gas turbines, combined cycle and boilers. As the comments from Ministry of Water and Power and Ministry of Textile Industry were not presented in the summary, it was decided to reconsider the summary in next ECC meeting after receiving the formal comments from both the Ministries.
On the summary of “LPG Production and Distribution Policy 2012” Minister for Law and Justice remarked that comments by his ministry are not present in the summary. After discussing the different dimensions especially arguments given by Minister for Law and Justice, ECC decided to reconsider the summary in the next meeting after having formal comments by the Law and Justice Division.