ECC approves used tractors import

ISLAMABAD: Instead of supporting the local tractor manufacturers who have already suspended their operations or are on the verge of it because of lacklustre sales, the government has decided to allow the import of up to five-year-old tractors.

The decision was taken in the meeting of the Economic Coordination Committee (ECC) of the Cabinet held under the chairmanship of Federal Minister for Finance and Revenue Ishaq Dar on Tuesday.

The Ministry of Commerce tabled a summary on the import of agricultural tractors under the Kissan Package 2022 and proposed amendments to the Import Policy Order 2022 to reduce the tractor’s costs.

The ECC after deliberation approved the proposals of the Commerce Ministry and allowed the amendment to the relevant clause of the IPO 2022 for the import of up to five-year-old tractors.

Regarding duty reduction for the import of secondhand tractors, the ECC allowed depreciation in value at 2 per cent/month up to a maximum of 60 per cent as already provided under CGO No 14 of 2005.

Surprisingly, the government took this decision at a time when leading tractor manufacturer Millat Tractors Limited (MTL) decided to suspend operations from January 6, 2023.

MTL announced that due to the reduced demand for the tractors and cash flow constraints, the company would remain closed from January 6 till further notice.

MTL is the second tractor manufacturer that has reported a decline in sales that came in at 1,103 units in November 2022, down 27 per cent month-on-month, according to Topline Securities.

Earlier, Al-Ghazi Tractors posted a 65 per cent month-on-month decline in its sales that stood at 137 units.

During the meeting, the Finance Division presented a summary on the proposals of the State Bank of Pakistan (SBP) regarding equity investment of $4.9 million by the Fauji Foundation for the acquisition of shares of Daharki Power Holding Limited and submitted that the government allowed Fauji Foundation to make equity investment abroad of $12 million in Daharki Power Holdings Limited in 2008.

The Fauji Foundation, Asian Development Bank and Daharki Power Holdings Limited, BVI entered into an agreement in 2008, which provided the ADB the right to exercise the option in respect of 2,750,000 shares subscribed by it.

The ECC considered the SBP proposals and allowed equity investment of $4.9 million by the Fauji Foundation for the acquisition of 2,750,000 shares (18.64 per cent stake) of Daharki Power Holdings Limited and granted waiver and exemption to the Fauji Foundation from the policy enumerated in the Foreign Exchange Manual being incorporated as a trust under Charitable Endowment Act 1980.

The Ministry of Energy (Petroleum Division) presented a summary for assignment of working interest in the exploration licences and Blocks.

The ECC approved assignment of 34 per cent working interest of Pakistan Oilfields Limited (POL) and 6 per cent of Attock Oil Company Limited (AOC) to Polskie Gornictwo Naftowe I Gazowinictwo S A (Polish oil and gas company) (POGC) in Kirthar South Block (Sindh).

The Ministry of Energy also submitted a summary regarding amendments to the Standardized Security Package Documents (SPDs) for the large solar PV projects, based on the market response on the earlier modifications by the competent forum and to ensure the viability of the project.

The ECC gave the approval to the proposals that indexation of tariff in the SPDs be on an annual basis and the payment mechanism for the settlement of invoices as per the framework guidelines.

The ministry submitted another summary regarding the enhancement of oil and gas production from Tal Block (KP), proposing the sale of gas from Mamikhel South discovery to third party in accordance with the Petroleum Concessions Agreement (PCA).

It was also submitted that the state-owned entities (SOEs) have around 70 per cent working interest in TAL exploration licence. This arrangement will benefitted the government of Pakistan in the form of increased dividends and taxes and would be an opportunity to enhance the private sector participation.

The ECC considered and approved the proposal.

The meeting also considered and approved a summary submitted by the Ministry of Commerce on the policy regarding B2B barter trade mechanism, especially where there is absence of banking channels and generally to facilitate trade with other countries.

It also approved supplementary grants and technical supplementary grants, which included Rs300 million in favour of the Ministry of Energy for expenditures on development projects under the Public Sector Development Programme (PSDP) being executed by the Peshawar Electric Supply Company (PESCO) during the current financial year (2022/23); Rs12.462 million in favour of the Ministry of Housing and Works for the urgent repair and maintenance expenditures during the current fiscal year 2022/23; and Rs1 billion for the rehabilitation and construction of roads in the Site Industrial Estate Karachi.

Federal Minister for Commerce Syed Naveed Qamar, Federal Minister for Power Khurram Dastgir Khan, Federal Minister for Planning and Special Initiatives Ahsan Iqbal, Federal Minister for Industries and Production Syed Murtaza Mahmud, Minister of State for Finance and Revenue Dr Aysha Ghous Pasha, Shahid Khaqan Abbasi MNA and former prime minister, Special Assistant to Prime Minister (SAPM) on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, SAPM on government effectiveness Dr Muhammad Jehanzeb Khan, coordinator to PM on commerce and industry Rana Ihsan Afzal, federal secretaries and other senior officers attended the meeting.