Pakistan decided on Saturday to directly import two million metric tons of wheat from Russia in cash while scrapping a barter plan, as it also approved additional subsidies of 160 billion rupees to ensure an uninterrupted supply of food, fuel and electricity.
The decisions were taken by the Cabinet’s Economic Coordination Committee which approved an additional Rs 62.3 billion for the payment of fuel subsidies, Rs 50 billion to reduce power outages and over Rs 36 billion for providing targeted subsidies to the poorest families and paying for subsidized essentials. in utility stores.
The ECC also temporarily removed additional customs duties on the import of edible oil to incentivize suppliers to expedite shipments in June. Finance Minister Miftah Ismail chaired the ECC meeting.
“The ECC has authorized the import of two million metric tons of wheat on a government-to-government basis” from Russia, the finance ministry said. The Pakistan Agricultural Storage and Services Company (Passco) will be the receiving agency for wheat imported from Russia under the existing arrangement.
The Ministry of National Food Security had proposed that the Ministry of Foreign Affairs and the Ministry of Commerce jointly explore the possibility of a barter trade with Russia due to Western sanctions.
However, there are no sanctions on importing grain from Russia, but the government is expected to come up with a mechanism to make the payments after Moscow was kicked out of the global payment clearing system – the Society for Worldwide Interbank Financial Telecommunication (Swift).
This month, the federal cabinet had authorized the import of three million metric tons of wheat, including one million metric tons, through international open tenders.
Wheat production fell by one million metric tons to 26.4 million metric tons this year, but consumption is estimated at 30.4 million tons. Pakistan faces a shortage of four million metric tons of wheat as world prices soar due to the Russian-Ukrainian war.
As a result, the first international tender for the import of 500,000 metric tons of wheat was launched on May 16 for shipments in June-July 2022. According to the report of the tender evaluation committee, the tender lowest receivable was from M/s Falconbridge Resources at a rate of $515.49. per metric ton.
According to the Pakistan Bureau of Statistics (PBS), the cost per 40 kg of wheat available in the domestic market is Rs 2,511 or Rs 63 per kg – while the estimated landed cost at the port of imported wheat offered is at Rs 4,618 per 40 kg or Rs 115 per kilo. , which is 2,106.88 rupees per 40 kg more than the wheat available in the domestic market.
The ECC has also approved bridge financing of Rs 7.3 billion for the supply of wheat flour at Rs 40 per kilo in Punjab. The Punjab government cannot approve any grant amount at this time in the absence of a provincial cabinet. The ECC has decided that in case the grant is not approved by the Punjab cabinet, the shortfall will be covered by the federal government, but the Punjab government will ensure that the provincial cabinet approves the package as soon as its meeting will be called.
The ECC has approved the payment of Rs 62.3 billion for the payment of price differential claims to oil marketing companies and refineries for the second half of May 2022 to pay fuel subsidies. This brought total subsidies to 211 billion rupees for three months – far more than the 110 billion rupees originally estimated by the last PTI government for a four-month period.
The amount of subsidies would be reduced next month due to the government’s decision to increase prices by 25% from May 26. offset the impact of rising fuel prices.
The ECC has approved a Rs 50 billion grant to clear electricity sector dues aimed at reducing the period of unannounced power outages. Currently, there is a load shedding of around eight to 10 hours a day due to the government’s inability to operate power plants due to resource constraints.
The ECC also approved a summary submitted by the Pakistan Atomic Energy Commission for granting an extension of the construction period of K-2 from November 20, 2020 to May 21, 2021 and K-3 from September 30, 2021. 2021 to April 18, 2022 to ensure disbursement of the pending loan of $383 million before the expiration of loan availability on June 3, 2022 from Exim Bank, China to the contractor, who has already completed the project.
The Ministry of Industries and Production has submitted a summary on the continuation of the PM – 2020 relief program for the months of May and June 2022 through the Utility Stores Corporation. The ECC, after deliberation, authorized the continuation of the existing subsidy for two weeks on essentials (atta, sugar, rice and pulses) and a subsidy of Rs 100 per kilo on ghee to USC. The Finance Division will also release the outstanding amount of Rs 11 billion under the grant under the ECC-approved PM-2020 relief package for the previous months. It also authorized additional grants for a two-week period.
The ECC authorized the import of 200,000 metric tons of granular urea from China on a government-to-government basis on the basis of deferred payment within 90 days. The country will pay an interest rate of 4.35% on the amount of 120 million dollars, because it has no money for the import.
The ECC did not exempt the tax of 2.5 billion rupees on approximately $600 million executed by the Saudi Fund for Development (SFD). In Pakistan, the SFD supports various projects, particularly in the areas of energy, health, education and infrastructure.
The ECC, taking into account the comments of the Federal Office of Revenue on the subject, suggested that a tax exemption clause for the SFD could be inserted in the draft finance law, given the strong and strategic relations between Pakistan and the Kingdom of Saudi Arabia, encompassing cooperation and investment.
Saudi Arabia made the suspension of loan payments of $845 million conditional on tax exemptions.
The Ministry of Commerce presented a summary of the import duty structure for edible palm oil.
The ECC has authorized the removal of an additional 2% customs duty on the import of palm oil for shipments from all sources except Indonesia from June 10 to June 20, 2022, subject to federal cabinet approval.
The ECC has approved an additional grant of Rs 7.6 billion for the Federal Immunization Directorate (FDI). He gave an additional Rs 2.44 billion to the Ministry of Religious Affairs and Interfaith Harmony for providing one-time support of Rs 150,000 per pilgrim under the government’s Hajj programme.
This will reduce the cost for 32,453 pilgrims to Rs 700,000 for this year’s Hajj.