ISLAMABAD: government decided to introduce additional taxes on the melody of 30 billion rupees as he struggles to arrange emergency funding of 100 billion rupees for avoid international default on payments for oil and gas and compliance with the agreement at the staff level with The International Monetary Fund (IMF) was unaffected.
decision was taken into special meeting of Economic Coordinating Committee (ECC) of cabinet presided over Minister of Finance Miftah Ismail on Sunday.
The meeting was informed that the budget commitment with IMF for Rs 153 billion primary budget there can be no excess met without additional taxation.
ESS also decided to study the issue of reducing price adjustments on weekly or 10-day basis from existing bi-weekly prices to minimize price uncertainty.
Decision is made for smooth continuity of oil and gas national supply chain
The ECC “led the Finance Department and the Federal Council of Proposal Income for generation of 30 billion rupees through taxes within a week,” said announcement after meeting.
it also additional budget grant of 30 billion rupees for immediate payment of staterun Pakistan State Oil (PSO) facing international payment obligations of about 270 billion rupees until 28 August.
“For the smooth continuity of oil and gas national supply chain and avoid PSO by default on international payments, EC made a decision clear unpaid payments accumulated during the period of permeable government”, announcement said. it also ordered the Energy Department to make immediate payments of in current outstanding amount of 20 billion rupees within 24 hours and another Rs 12.8 billion by August 4 (Thursday).
Sources in The oil division said PSO’s receivables reached Rs 608 billion. on July 28, including Rs 340 billion from Sui Northern Gas Pipelines Limited (SNGPL) alone. The main factor contributing to this was the supply of LNG, which added a cash flaw of Rs 213 billion from July 1, 2021. SNGPL, on part of it, was limited by delayed payments by the Central Power Procurement Agency (CPPA), whose receivables jumped to Rs 113 billion from Rs 43 billion as of January 1, 2022. CPPA had another Rs 182 billion direct payables to PSO. on Account of fuel reserves, including RUB 16 billion accumulated since July 1, 2022
Oil secretary referred to the fact that the PSO was raising SOS calls avoid international default as delay in the payments of the persons concerned have exhausted their liquidity. As a result, the company was unable to contribute 81 billion rubles. government local currency account (NIDA) for onward transfer to Kuwait Petroleum Cooperative (KPC), which is a contractual obligation.
Moreover, the PSO was unable to deposit Rs 16 billion into the bank. government against integrated term financial certificate mechanism (ITFC), which was deferred until avoid PSO international contractual obligations.
At the meeting it was said that decline of sales of high speed diesel (HSD) and gasoline by 28% and 32% respectively, which had an impact of 69 billion rupees on collections, while the devaluation of about 17.8% of rupee against dollar in July led to in increased cost of purchase of these products for 63 billion rupees. JI was reported to have had a foreign exchange loss of about 85 billion rupees over years and 55 billion rupees of it was still outstanding.
It was said at the meeting that despite these challenges PSO had met his contractual international payments in July 2022, but “it won’t happen possible in August”, which will result in destruction of supply chain.
PSO must do international payment of 267 billion rupees in in first two weeks of August 2022. Fees during first two weeks of August was expected at Rs 157 billion, bringing net deficit of 100 billion rupees.
While the oil division made field for total payments of 133 billion rupees, the Ministry of Finance explained that “there was no budget allocation”. in current fiscal year” for this account; Consequently financial support should be organized through an additional grant. Even then, given fiscal constraints and understanding with IMF, the additional grant provided in this way will result in outflow in excess of agreed figures with IMF.
Consequently, against a demand for An additional grant of 54 billion rupees has been approved, 30 billion rupees, which will be recorded as expenses, and then appropriate taxes should be created to compensate. for loss of income to “achieve the primary balance agreed with IMF”.
In addition government will separately manage the National Bank of Pakistan (NBP) and other banks to expand credit limits for PSO and SNGPL on on an emergency basis to pay off the remaining funding of 45 billion rupees.
ESS also instructed the Oil Department work out in consultation with OGRA other options of parameter up prices for petroleum products during the week. ECC led the oil division for subordination of offer within a week to adjust prices of Kerosene oil and light diesel after consultation with relevant stakeholders.
Published in Dawn, August 1, 2022