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ECC offers two Punjabi urea producers cheaper gas.

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ISLAMABAD: The federal government on Tuesday extended till June 2023 the subsidised supply of necessities in Khyber Pakhtunkhwa with new funding totaling Rs17 billion and extended for two months the delivery of less expensive Liquefied Natural Gas (LNG) to two Punjab-based fertiliser plants.

The decisions were made at a meeting of the Economic Coordination Committee (ECC) of the Cabinet, which was presided over by Finance Minister Ishaq Dar. The meeting also approved additional funding of Rs9.8 billion for the defence ministry and Rs1.26 billion for Pakistan Steel Mills to pay Sui Southern Gas Company’s 14-month gas charges.

The continuance of the Sasta Atta project and the Prime Minister’s Relief Package (PMRP) for Khyber Pakhtunkhwa past August 31, 2022, was covered in a summary provided by the Ministry of Industries and Production. The programmes were launched in January 2020 and June 2022, but only partially received funding.

Following discussion, the ECC approved the continuation of the PMRP and Khyber Pakhtunkhwa Sasta Atta initiatives from September 1 to November 15 using the current model of untargeted subsidy at the current rates and the distribution of additional funds totaling Rs4.908 billion above the regular budgetary allocation through supplementary/technical supplementary grants to cover the sum already spent by the Utility Stores Corporation (USC).

Second, the ECC approved the continuation of PMRP using a hybrid model for a time frame beginning November 16 and ending June 30, 2023 (excluding Ramadan), and it provided an additional Rs10.755 billion through a supplementary grant. Third, the ECC also approved the continuation of the Khyber Pakhtunkhwa Sasta Atta scheme, which will provide subsidised Atta from November 16 through June 30, 2023, following the rationalisation of some stores, with the allocation of Rs1.561 billion through a supplementary grant.

The ECC also approved a report from the Ministry of Energy on the Ministry’s plan to continue providing Fatima Fertilizer and Agritech Ltd with subsidised RLNG from October through December, along with an additional Rs 20 billion in government subsidies to assure domestic urea production.

The meeting was informed that the government has given the two projects a total of Rs71 billion in subsidies to secure LNG at lower prices (of Rs839 per mmBtu).

Additionally, as of September, this included around Rs 33.7 billion in subsidies that had already been provided in the previous fiscal year. Further, the aforementioned subsidy had a Rs15 billion budget for the current fiscal year, which was deemed dangerously insufficient given that the amount of pending claims from June to October had already reached Rs24 billion.

The committee approved Rs. 10 billion for the months of November and December as well as Rs. 9 billion in unpaid subsidies. According to information presented at the conference, local fertiliser costs Rs2,150 per bag while import tenders were offered at Rs5,980 per 50kg bag for 300,000 tonnes. The two facilities’ combined monthly production of around 70,000 tonnes served as the reason for an additional Rs 20 billion in subsidies through the end of December.

For the disbursement of money to SSGC for gas delivery to Pakistan Steel Mills, the Ministry of Industries and Production presented a summary (PSM). The production of PSM had stopped since 2015, and 2 million cubic feet per day (MMCFD) of low flame gas was being provided to PSM primarily to maintain the refractory kilns and the batteries in the coke ovens. The ECC approved the release of Rs298.248 million for the period from March to June 2022, which is equivalent to Rs1.258 billion for 16-month gas bills from the already approved budgeted allocation of Rs10 billion to PSM for FY23.

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