ISLAMABAD: A meeting of the Economic Coordination Committee (ECC) of the federal cabinet among other decisions has approved the release of Rs 60 billion in financing for Pakistan State Oil (PSO) to be able to meet its financial obligations.
Of this, Rs 10 billion is a budgered subsidy while Rs 50 billion is a guarantee from the Government of Pakistan against bank financing, meaning the vast majority of this money will be sourced from commercial banks. The ECC meeting also discussed the status of three Pakistani hospitals in Afghanistan, and the issue of sugar exports.
Chaired by Finance Minister Ishaq Dar, the meeting took under consideration a summary tabled by the petroleum division on the liquidity requirements of PSO. Late last year, PSO’s financial results had raised serious alarms about the oil company’s liquidity problem. For the three month period ending in September 2022, the company recorded a net loss of Rs 11.4 billion in its cash and cash equivalents, whereas for the same period last year the company recorded cash inflows of Rs 41 billion. This sums up to a decline of almost 127%.
As the national oil company, PSO is responsible for importing the bulk of Pakistan’s petroleum products, ranging from liquified natural and crude oil to finished products like motor gas (mogas) and high speed diesel (HSD). In its summary, the petroleum division had raised concerns about PSO’s ability to import LNG and petroleum products in the country.
Sources said that the Petroleum division has proposed ECC to release Rs 18 billion available under the head of “subsidy to domestic consumers through SNGPL (RLNG) in one go to SNGPL against its outstanding claims of LNG diversion of Rs 109 billion.
Similarly, it has also asked to provide Rs 100 billion as supplementary grant under the head of “subsidy to domestic consumers through SNGPL (RLNG) for meeting SNGPL accumulated and anticipated LNG diversion cost to domestic consumers.
Sources said that the high ups of petroleum division asked the ECC to approve the above mentioned proposals in order to enable PSO to remain afloat in its payment obligations to LNG suppliers as well as to avoid threat towards breakdown of LNG supply chain.
Three Pakistani hospitals in Afghanistan
Sources said that the Ministry of National Health Services, Regulation and Coordination submitted a summary regarding transfer of amount to Government of Afghanistan for functioning /maintenance/equipments/salaries of three Pakistani hospitals in Afghanistan.
The ECC approved the revised mechanism/modalities for transfer of funds to Afghanistan as proposed by the Afghanistan Inter-Ministerial Coordination Cell (AICC) with direction to attempt to release the amount in Pak rupees.
As per revised mechanism, the total amount already approved by the Cabinet for salaries Rs.1.009 billion would be transferred to Afghanistan in four tranches. The first tranche to be transferred by the Ministry of Finance to the Ministry of NHSR&C account. These funds would be transferred through MoFA and sent to the Pakistan Embassy Kabul.
The remaining three tranches would be transferred through banking channels to the Embassy account opened for the purpose of disbursement of salaries for doctors and other staff working in hospitals in Afghanistan constructed and operated by Pakistan.
Export of 250,000 tons sugar
Meanwhile, the Ministry of National Food Security and Research submitted a summary on export of sugar during the year 2022-23 and presented the recommendations of the 4th meeting of the Sugar Advisory Board (SAB).
The ECC after detailed discussions on the recommendation of SAB, allowed 250,000 tons of sugar for export inclusive of previously permitted 100,000 tons by the ECC on first come first basis.
The ECC further decided that the total quantity of export may be distributed among provinces based on their installed crushing capacity to be determined by PSMA. The ECC further decided that dollar proceeds of exports will be recovered within sixty days of LC opening.
It is worth noting that back in November 2022, a divide had appeared within the federal government over the issue of exporting sugar. Minister for Food Security Tariq Bashir Cheema, who is also the chairman of the Sugar Advisory Board, had threatened to resign from his position if the export of sugar was allowed without proper verification on the floor of the national assembly. However, Finance Minister Ishaq Dar and the sugar industry were keen on exporting what they claimed was surplus sugar.
Big step by ECC to approve 60 billions financing for PSO. great job done.