ECC approves policy guidelines for CNG prices

ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet, which met on Tuesday with the Federal Minister for Finance and Economic Affairs Dr. Abdul Hafeez Shaikh in the chair, approved the recommendations of its sub-committee headed by the Minister of Law and Justice regarding formulation of policy guidelines for fixation of CNG price.

The ECC also directed Oil and Gas Regulatory Authority (Ogra) to ensure transparency and public welfare in the pricing mechanism.

Meanwhile, talking to reporters after the meeting, Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain said the Ogra had the authority to fix CNG prices.

He also said CNG stations’ owners could not be given old profit margin and it could not be fixed according to their wishes.

He said Ogra presented three aspects including value addition or compression, operating cost and margin cost in the meeting.

CNG representatives agreed to two parameters including value addition and margin cost but they disagreed on operation cost.

However, All Pakistan CNG Association (APCNGA) has rejected the new CNG pricing formula, terming it illogical, illegal and against the interests of CNG sector.

“As a first step, we will challenge the controversial decision in the petroleum ministry and Ogra, while later we will announce schedule for protests to get out demands met,” said Ghiyas Abdullah Paracha, chairman of Supreme Council APCNGA.

He said that the latest CNG pricing decision is one-sided and irrational in which demand for uniform gas prices and taxation as well as right to just profit margin were not accommodated. Moreover, Ghiyas Paracha said, globally accepted accounting principles were violated; CNG filling stations owners were not allowed to fulfill gas cost while the profit of the CNG filling stations were linked to petrol pumps, which is unjust.

A cut in taxation would have helped the CNG sector and the people which was unfortunately ignored while the hike in power tariff was not accommodated, said Paracha.

He said that the sub-committee of the ECC formed to hammer out the outstanding CNG issue had taken decision before the meeting, while the stakeholders were called to let them know about the decision, which was against the claims of the committee.

Paracha said that no CNG operator could continue business honestly while observing the terms and conditions of Ogra, which will pave way for protest.

The government seems uninterested in resolving the crisis but is bent on compounding it due to some reasons, he said.

It may be mentioned that the sub-committee has formulated an interim report on one component of the policy guidelines and report on other components will be submitted before the ECC in the next meeting.

The ECC approved LPG (Production and Distribution) policy guidelines, 2012 submitted by the petroleum ministry. The approval of the summary is in continuation to the decision by the ECC in its meeting held on 23rd October, 2012, whereby the law ministry was asked to furnish its detailed comments over the draft. The law ministry approved the draft which was subsequently placed before the ECC for approval.

The Economic Coordination Committee also accorded waiver of on-lending charges to Karachi Urban Transport Corporation (KUTC) for the Project “Revival of Karachi Circular Railways as Modern Commuter System”.

The Ministry of Railways moved a summary seeking the approval of the Economic Coordination Committee for waiver of on-lending charges to KUTC for the Project.

Japan International Cooperation Agency (JICA) has already agreed to provide 93.5 percent ($2.4 billion) of the estimated cost through soft loan at a markup of 0.2 percent payable in 40 years including 10 years grace period.

The remaining 6.5 percent ($169.6 million) will be borne by the railway ministry (60 percent equity), Government of Sindh (25 percent equity) and the City District Government Karachi (15 percent equity); the stakeholders of KUTC as per their share.

The track of the KCR will be 86 km long and 27 stations will be built around the city. This important project will be a milestone in improving the quality of life of the citizens.

The Economic Coordination Committee also approved a summary by railway ministry whereby the ministry approval for changes in the composition of Business Express. The ministry submitted a summary for ECC approval back in July 2012.

The Economic Coordination Committee constituted a committee comprising the Minister for Information & Broadcasting, Chairman Board of Investment and Deputy Chairman Planning Commission to examine the issue of changes in the composition of Business Express.

The committee in the meeting came up the some recommendations that include i) minimum occupancy to be achieved at 65 percent; ii) Sharing ratio of gross revenue can be set at 80:20 between Pakistan Railways and joint venture partners up to occupancy of 75 percent, iii) For occupancy achieved above 75 percent, the sharing ratio between Pakistan Railways and joint venture partners can be set at 75:25.

Further, the ECC accorded its approval to the summary of the Ministry of National Food Security and Research for sale of 12,000 MT of wheat to World Food Programme from the PASSCO’s stocks at a price of $300 per MT.

The wheat procured by WFP will be provided to the internally displaced people of Khyber Pakhtunkhwa. Moreover, the conomic Coordination Committee also agreed to the proposal of selling another 40,000 MT of wheat to WFP for consumption in Afghanistan.

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