ISLAMABAD: After the failure of Makhdoom Logistics Services to provide 300,000 tonnes of urea fertilizer at the price of $520 per tonne, the Economic Coordination Committee (ECC) of the Cabinet on Friday approved the import of 125,000 MT urea on G2G basis from China and import of 35,000 MT urea on G2G basis through M/s Socar from Azerbaijan.
The ECC approved the import from Azerbaijan against the initial demand of 70,000 MT at a landing price of $710 per MT.
Top official sources confirmed to The News after the ECC meeting that in the wake of no response from M/s Makhdoom Logistics Services, the Government of Pakistan negotiated with M/s SINOCHEM and M/s CNOOC from a ranging price of $570/MT (FoB basis).
During the course of negotiations spanning five days in November 2022, the prices were brought down to the rate of $480/MT (FoB basis) (price reduction of $90/MT). After long negotiations, both the Chinese firms have committed to supply a quantity of 125,000 MT at $480/MT (FoB basis) at 90-day deferred payment basis inclusive of markup.
Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar presided over the meeting of the Economic Coordination Committee (ECC) on Friday. The official statement said the Ministry of Industries and Production submitted a summary on the procurement of 200 KMT urea and shared that the ministry had negotiated various options, including import from Chinese firms who have committed to supply the negotiated quantity of urea fertiliser at the lowest rate.
The ECC, after discussion, allowed the TCP to proceed ahead for import of 125,000 MT on G2G basis from China for meeting the demand of urea fertilizer and import of 35,000 MT on G2G basis through M/s Socar from Azerbaijan. The ECC further directed the TCP to explore feasible options for import of remaining quantity of urea fertiliser to meet the strategic reserves of 200,000 MT.
The sources said that the ECC had approved for allowing premium on High Speed Diesel (HSD) imports subject to maximum capping at $15/BBL for importing Oil Marketing Companies (OMCs) during the months of November and December 2022.
On the other hand, oil industry expressed serious concerns on procurement of HSD, as the product molecule is either not available in the Gulf market due to increased demand of the product in the Western and European markets or higher premiums are being charged in view of country specific risk factors in relation to supplies to Pakistan.
Consequently, the matter was again placed before the ECC for allowing premium on HSD import without capping at any upper limit. The ECC considered the matter in its meeting held on 14th November 2022 and allowed premium on HSD import for the month of November 2022 only subject to maximum capping at $16.75/BBL. The ECC decisions in writing/ratification by the federal cabinet for the aforesaid summaries are still awaited.
Meanwhile, PSO’s spot tender opened on 16th November 2022 for HSD delivery during 26 Nov-05 Dec, 2022 has turned out to be non-responsive, as no valid bid was received. This points towards the apprehension that currently product is short in the international/Gulf market and procurement thereof will most likely be at higher premiums/prices. Any further delay in decision making on premium issue will make procurement more difficult discouraging the OMCs to import. Accordingly, there are strong chances of HSD shortages in the country.
The Petroleum Division/OGRA has, therefore, concluded that PSO’s weighted average premium (KPC & Spot) may be applied for HSD price computation as per the federal government applicable policy guidelines.
In case of higher HSD premium paid by importing OMCs other than PSO, the differential of premium may be conveyed by Ogra with relevant documents for consideration and approval of the ECC of the Cabinet before its adjustment through IFEM (Inland Freight Equalization Margin).
The official statement stated that the ECC considered a summary submitted by the Ministry of Energy, Petroleum Division, on High Speed Diesel (HSD)/Gas Oil premium. Considering the increasing demand for HSD in the country, the ECC recommended that PSO’s weighted average premium (KPC & Spot) may be applied for HSD price computation as per the federal govt applicable policy guidance and in case of higher HSD premium paid by importing OMCs other than PSO, the differential of premium will be computed in the price.
The ECC also approved technical supplementary grant of Rs115 million in favour of Ministry of Housing and Works. The Ministry of Planning approved the additional allocation for Rehabilitation/Improvement of Main GT Road from Gujrat-Lalamusa (Ghakri Stop) to Gujrat Dinga Road (Chakorhi Bhallowal Stop) Via Paswal Kotla, Sarang and Paswal to Thama Phatak Lalamusa Tehsil Kharian District Gujrat-III being executed by the Ministry of Housing & Works during the current financial year through technical supplementary grant.
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