Govt set to lift luxury goods import ban

• Restrictions on mobile phones and importing automobiles will remain in place
• Loan to provide subsidized gas and electricity to export sectors

ISLAMABAD: The government is set to start removing restrictions on imports of ‘non-essential and luxury items’ imposed on February 19 and to provide energy at subsidized rates – electricity at nine cents per unit and gas at $9 per unit – throughout the current fiscal year to make the country’s exports competitive.

Sources said Dawn that a special virtual meeting of the Economic Coordination Committee (CEC) had been scheduled for Sunday to approve the subsidized energy tariffs, but was then postponed at the last moment for a day to merge with another huddle on Monday with important points on the table .

The sources said the government expected around $3 billion in inflows from ‘certain friends’ in the current week and wanted to give ‘confidence and well-being to the market’ by supporting five sectors export-oriented and simultaneously clearing import debts and gradually easing restrictions on most imports (except mobile phones and automobiles) imposed on about 85 items for a temporary period.

In consultation with the Ministries of Energy and Finance and the export sectors, the Ministry of Commerce requested the supply of electricity at an all-inclusive final tariff of nine cents per unit (kilowatt-hour or kWh) to five export-oriented sectors – jute, leather, carpets, surgical and sporting goods – from July 1, 2022 to June 30, 2023.

Second, imported, regasified liquefied natural gas (LNG) would be supplied to these sectors at an all-inclusive rate of $9 per unit (million British thermal units, or mmBtu) instead of the current $6.5. The rate will be applicable throughout Pakistan without any disparity.

As such, the RLNG would be supplied to consumers of Karachi-based Sui Southern Gas Company Limited (SSGCL) on the same preferential tariff as that to consumers of Lahore-based Sui Northern Gas Pipelines Limited (SNGPL) of five export sectors .

Currently, there is a restriction on new industrial connections due to a shortage of natural gas. The government has already allocated 60 billion rupees for these subsidized tariffs – 20 billion rupees for electricity and 40 billion rupees for RLNG – in the federal budget for 2022-23 to provide energy at preferential tariffs. to these sectors.

The Ministry of Finance would financially commit that additional funds, if required by the electricity and oil divisions due to rising international prices, would be provided to continue supplying power to the electricity sector. export at unchanged rates.

He nevertheless stressed that additional subsidies were not allowed under the IMF program and that energy divisions should seek timely adjustments in tariffs to stay within allocations.

At a higher level, it was decided that the electricity and petroleum divisions would be required to alert the Ministry of Finance in advance and submit a formal summary for additional ECC subsidy in a timely manner.

The case of fixed energy prices is presented to the ECC as an approval formality following a decision taken in principle by Prime Minister Shehbaz Sharif during a meeting attended by the ministers of finance, commerce , electricity, oil and representatives of the textile industry.

There was political acknowledgment that regionally competitive rates had provided a launch pad for exports, which jumped 26% year-on-year to $32 billion in the previous fiscal year. Therefore, fixed rates for the current year and regionally competitive rates throughout the Textile and Apparel Policy 2020-25 would be ensured to maintain export momentum.

While considering the issues of regionally competitive tariffs and the availability of electricity, gas and RLNG, the meeting decided that in view of costly energy imports, proposals from the textile sector and space available budget, “electricity at nine cents per kWh and RLNG at $9 per mmBtu all-inclusive will be supplied to export-oriented sectors”.

It was, however, reported that only 50 million cubic feet of gas per day would be supplied to captive power plants in export-oriented sectors on the SNGPL network until supply issues stemming from difficult international markets be settled.

The textile industry agreed that its Punjab captive power plants using local gas mainly for power generation would be transferred to the national grid.

However, it would be important for gas and electricity companies to ensure uninterrupted supply and reliability of the electricity grid and to solve the problems of new connections, load improvements and transmission and distribution first.

The import ban on mobile phones and automobiles, however, would remain in place for the time being due to their significant impact on currencies. Most other items have lower foreign exchange costs and greater added value and employment impact, the sources said.

These sources, however, explained that expensive phones and automobiles already being imported at the time of the ban had already been relieved last week by allowing them to clear the port at a surcharge of 5pc after arriving within two weeks. since May 19 and at 15 pcs surcharge for items arriving two weeks after the ban and before June 30.

The relevant Regulatory Orders (SROs) were issued on July 22 to exempt the import of timber/timber from the ban and clear shipments arriving at ports, mainly including automotive items with a surcharge of 5pc and 15pc.

The sources said the ECC would also take for formal approval and implementation a federal cabinet decision made in February to amend the Import and Export Control Act of 1950 to replace the words “federal government” with the “responsible minister” to allow once. authorization to import, export or re-export on a case-by-case basis.

The government had imposed a comprehensive import ban of 30 categories covering about 85 customs items, including automobiles, mobile phones, household appliances, fruits and dried fruits (except Afghanistan), tableware, weapons and private ammunition, shoes, chandeliers and lighting (except energy savers), headphones and speakers.

Other headings include sauces, door and window frames, travel bags and suitcases, sanitary ware, fish and frozen fish, carpets (except Afghanistan), canned fruit, paper silk, furniture, shampoos, confectionery, luxury mattresses and sleeping bags, jams and jellies, cornflakes, toiletries, heaters, fans, sunglasses, cooking utensils, carbonated water, frozen meat , fruit juices, pasta, ice cream, cigarettes, shaving products, luxury leather clothing, musical instruments, salon items such as hair dryers, etc., and chocolates.

Posted in Dawn, July 25, 2022

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