ISLAMABAD: The Economic Coordination Committee (ECC) has given formal approval of the Guaranteed Minimum Price (GMP) of wheat from Rs. 510/- to Rs.625/- per 40 kg as announced by the Prime Minister on March 29, 2008 on the floor of the National Assembly. The first Economic Coordination Committee (ECC) meeting of the democratic government was held at the Prime Minister’s Secretariat Tuesday under the chairmanship of Prime Minister Yousaf Raza Gilani.. It was also decided that the provinces should re-adjust with immediate effect the release price of wheat in accordance with the recently announced GMP.
The Prime Minister directed that all-out efforts be made by the Provincial Government/PASSCO to ensure maximum procurement of wheat at the announced GMP. Decision regarding import of wheat will be made in the light of post harvest estimates. The ECC decided that programmes would be formulated to provide relief to the poor and vulnerable groups of society. The proposals in this regard would be presented to the Cabinet for decision. Anti-smuggling measures will be beefed up on both the western and the eastern borders. The ECC further decided that 100% grinding of the wheat released to the flour mills by the Provincial Governments should also be ensured. Ban on export of wheat/wheat products will remain in force. Registration of all wheat stockists in the private sector and complete monitoring of wheat movement out of provinces will also be undertaken to ensure the availability of wheat in different regions of the country.
In view of the prevailing power deficit and need for immediate power generation capacity, ECC decided that all IPPs nearing financial close by 30th April 2008 be allowed to import Cooling Towers, Heat Recovery Steam Generators and Feed Water Pumps after paying 5% custom duty as a one time relaxation. In this regard, the ECC also approved amendment in the Income Tax Ordinance 2001 which read as follow:
“Provided further that exemption under this clause shall also be available to the expansion projects of existing Independent Power Projects already in operation.”
It may be mentioned that Private power projects under the 1994 Power Policy and the 2002 Power Policy are exempted from income tax subject to fulfillment of certain conditions. KAPCO’s existing power generation facility, being a privatized unit of Public sector was allowed income tax exemption only up to 28th June 2006. However expansion of KAPCO power plant has been approved by PPIB Board under the 2002 Power Policy which allows income tax exemption for the term of the project. Therefore, in order to provide income tax exemption to the KAPCO expansion project in line with the 2002 Power Policy, an amendment is required in clause-132 of part-I of Second Schedule to the Income Tax Ordinance 2001. Further expansion of few other existing IPPs has been approved by the Board of PPIB, including Hub Power, Japan Power, Kohineer Energy and Tapal Energy. These expansion are again being implemented under the 2002 Power Policy, hence the aforementioned amendment in the income tax ordinance 2001 is also needed for these expansion projects. It is important to highlight that no new exemption is being recommended. KAPCO’s existing plant/facility shall remain taxable under the income tax ordinance 2001 while income tax exemption is already available to IPPs under 2002 Power Policy.
ECC also accorded approval for issuing of GoP guarantee for Rs. 1 billion for short-term borrowing by PIAC to meet its immediate cash shortfall. The terms and conditions for the loans will be negotiated by PIAC with the lending banks and the same has to be approved by Ministry of Finance.
It was also decided that PIA will come back to ECC with restructured operational and financial plan to overcome its financial difficulties. While reviewing the prices of essential commodities including the food products, the ECC expressed concern over the rising trends in the prices of essential food items and directed the ministries concerned to come up with concrete proposals to curtail the rising trend in prices so as to provide relief to the people.
The Governor State Bank of Pakistan briefed the ECC on the current fiscal and monitory situation of the country and apprised of the possible economic repercussions during the current financial year. She also proposed a number of economic measures to stabilize the economy. She stressed upon the need of reducing government borrowing as well as curtailing subsidies on various products to check the fiscal deficit. Earlier, the ECC commenced its proceedings with recitation from the Holy Quran by the Senior Minister, Ch. Nisar Ali Khan.-SANA