ECC decides to issue letter of comfort to PSO

ZAHEER ABBASI

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet decided to issue a letter of comfort to the Pakistan State Oil (PSO) for securing Rs50 billion loan from a consortium of banks on an urgent basis to fulfil international and domestic payment obligations.

The ECC meeting presided over by Finance Minister Miftah Ismail on Thursday also increased the price of imported urea, as well as, dealer margin.

In a summary on the syndicated running finance facility for the PSO, the Ministry of Energy – Petroleum division – argued that the PSO’s liquidity issues were discussed on 31st July 2022 ECC, wherein, the issue of government guarantee loan to ease out liquidity issues of PSO was also discussed. The ECC was told that a consortium of banks was formed including ABL, NBP, MCB, UBL, and HBL for sanctioning a loan amounting to Rs50 billion to the PSO through a government guarantee. As the issuance of guarantee will take time, the banks have shown their willingness to initiate the process of issuing loan on letter of comfort. The ECC has approved the proposal to issue a letter of comfort in favour of the PSO for raising a loan facility of Rs50 billion on an urgent basis. However, the Finance Division was asked to divert some other allocated guarantees to PSO without exceeding Rs105 billion domestic guarantee limit for the 1st quarter of the current fiscal year.

The ECC also gave approval of the government guarantee for the financing facility of US$ 142 million as loan in accordance with the facility agreement between Roosevelt Hotel Corporation (RHC) and the National Bank of Pakistan (NBP) on a summary moved by the Ministry of Aviation. The Aviation Ministry sought the issuance of a government guarantee in favour of the NBP.

The ECC meeting was further informed that as the hotel business had slowed down in the USA and around the world due to the Covid-19 pandemic; therefore, the RHC was shut down in December 2020 to avoid losses. A committee headed by the deputy chairman Planning Commission was constituted to look into the financial challenges of the RHC.

The ECC, on 2nd September 2020 had approved government support of US$ 142 million on the recommendation of the committee. The Finance Division arranged a financing facility as loan from the NBP. The ECC after discussion approved a government guarantee for the financing facility of US$ 142 million as a loan in accordance with a facility agreement between Roosevelt Hotel Corporation (RHC) and the National Bank of Pakistan (NBP).

The Ministry of Industries and Production tabled a summary for revision of the price of imported urea and stated that the price of imported urea stored in National Fertiliser Marketing Limited (NFML) warehouses is lower than the locally-manufactured urea.

In order to remove disparity in the prices of imported and locally-manufactured urea, the ECC approved the proposal that the Dealer Transfer Price (DTP) of 50kg imported urea may be revised upward at Rs1,805/bag by the NFML (exclusive of dealer margin of Rs145/bag) for the stocks sold between June 23 to July 25, 2022.

The ECC was requested that the DTP of remaining stocks held with the NFML may be further revised upward to Rs2150/ bag (exclusive of dealer margin of Rs50/ bag) with effect from July 26, 2022, onwards. The ECC further directed to fix the urea pricing and dealer margin in future with the prior approval of the ECC.

The meeting was attended by Federal Minister for Commerce Syed Naveed Qamar, Federal Minister for Power Khurram Dastgir Khan, Shahid Khaqan Abbasi MNA/ex-PM, Minister of State for Finance and Revenue Dr Aisha Ghous Pasha, Minister of State for Petroleum Musadik Masood Malik, SAPM on Government Effectiveness Dr Muhammad Jehanzeb Khan, Coordinator to the PM on Economy Bilal Azhar Kayani, Coordinator to the PM on Commerce and Industry Rana Ihsan Afzal, federal secretaries, and senior officers.