ISLAMABAD - In a bid to cope with the aggravating power crisis in the country, the Economic Coordination Committee (ECC) of the Cabinet on Tuesday provided significant incentives and concessions to the Karachi Electric Supply Company and other Independent Power Producers. The ECC that met under the chairmanship of Syed Naveed Qamar, Federal Minister for Privatization at the Prime Ministers Secretariat, approved deferment of 6 per cent withholding tax on advance payment to all Rental Power Projects. The ECC deferred the withholding tax till monthly rental payment starts after commissioning of the project. The decision was taken in favour of the RPPs so that proportional withholding tax would be deducted from monthly payments, over the term of the Rental Service Contract, an official handout stated. Meanwhile, sources told The Nation that the ECC had turned down the summary proposal initiated by Utilities Stores Corporation to increase the price of sugar. Besides, the sources added, the meeting observed that private sector should also sell sugar at Rs 38 per kilogram. On the other hand, industry sources said that they had already informed the government that sale of sugar at Rs 38 per kg was not possible as the sugar millers were now selling this item of daily use at Rs 43 per kg ex-factory. As per Ministry of Commerce proposal the ECC rescinded the decision for inspection of rice by the committee constituted by Ministry of Food and Agriculture. The ECC approval to rescind its earlier decision allowed the Trading Corporation of Pakistan (TCP) to get the balance of contracted quantities inspected from international surveyors on its panel. Regarding acquisition of bank loan facility for conversion of Shahbaz (Jacobabad) Forward Operating Base (FOB) into the Main Operating Base (MOB), the ECC granted ex post facto approval of GoP Guarantee and Term Finance Agreement for Rs 1 billion loan obtained from ABL. The meeting also approved GoP guarantee for additional loan of Rs 6 billion and Term Finance Agreement as already agreed by the Finance Division. The ECC approved that the government guarantee amounting to Rs 3,000 million regarding KESCs financial improvement plan would be extended for a period of one year up to October 3, 2009, at the markup rate of 6 months KIBOR + 100 bps instead of 6 months KIBOR + 2 per cent per annum. The cabinet committee allowed amendments in the Guidelines for Determination of Tariff for IPPs. The Amendments provided for projects under the 1995 Policy (i.e. New Bong and Rajdhani Hydropower Projects), the period for IRR calculation be allowed from 2004 when the PPAs were initiated between the companies and the NTDC. For all other hydropower projects, a 30 months period prior to construction start, may be allowed for IRR calculation subject to provision of related audited accounts. ECC agreed with the interpretation of its earlier decision on fixation of consumer sale prices of CNG by Oil and Gas Regulatory Authority (OGRA) that all cost parameters including rate of return, as already agreed between GOP and All CNG Associations, will be taken as benchmarks for fixation of the CNG consumer prices. Cost of gas/electricity (compression cost) be adjusted at actual and the scalable cost components be indexed with CPI. The ECC was informed that the stock of wheat as on July 15, 2009 amounted to 9.810 million tons as against 3.764 million tons in the same period last year, thereby showing a higher stock of about 6.046 million tons compared with last year. It was also noticed that the trade deficit improved by 18.52 per cent to $17.04 billion in July-June 2009 from $ 20.91 billion in the same period last year. Similarly, overseas Pakistani workers remittances amounted to $7,811.4 million in July-June 2008-09 as against $ 6451.2 million, showing an increase of 21.1 per cent over the same period last year. Foreign exchange reserves stood at US $ 11.7 billion as on July 24, 2009 - up from $.6.4 billion in November 2008. This reflects impact of disbursement of $3.1 billion from IMF in November and fresh disbursement of second tranche of $ 849.9 billion plus $ 500 million disbursement of Poverty Reduction concession loan from the World Bank. The ECC was also informed that the overall CPI-based inflation registered an increase of 0.99 per cent in June 2009 over May 2009. While discussing the recommendation formulated by the Ministerial Committee on the issue of rising milk prices without benefit to small farmers, the ECC directed the authorities concerned to submit a detailed report within six weeks.