Clearing hurdles: Govt to renew focus on barter trade with IranClearing hurdles:

Finance Minister Ishaq Dar chairs a meeting on trade with Iran on Saturday. PHOTO: PID

ISLAMABAD: 

The government decided on Saturday to revive the process of barter trade with Iran, which got stuck last year, in an effort to clear outstanding payments for electricity purchases from Tehran.

The decision came ahead of a meeting of the Joint Economic Council (JEC), which is scheduled to meet this quarter. It will discuss all outstanding bilateral trade issues including Iran-Pakistan gas pipeline, payments for electricity bills and cooperation in the banking sector.

To review the progress, an inter-ministerial meeting was held in Islamabad on facilitating trade between the two countries, keeping in view the United Nations’ sanctions.

Finance Minister Ishaq Dar underlined the need for removing impediments in the way of bilateral trade before holding the JEC meeting, according to a handout issued by the Ministry of Finance. The two sides will discuss all outstanding issues.

Dar said there was a need to build confidence in a bid to overcome the hurdles standing in the way of barter trade and commodity exchanges, which would enable the two countries to benefit from their proximity.

Participants at the meeting agreed to constitute a committee which would submit its report to the inter-ministerial committee after reviewing progress on outstanding issues.

They said negotiations between western nations and Iran for reaching a settlement were also at an advanced stage and Pakistan should be prepared and adopt a common approach to enhance bilateral trade.

The finance minister recalled that during Prime Minister Nawaz Sharif’s visit to Iran, both sides had reaffirmed their commitment that while remaining within the ambit of UN sanctions, mutual trade and cooperation would be stepped up with barter trade and a commodities exchange mechanism.

A new set of US sanctions came into force in February last year designed to restrict buyers of Iranian oil from making payments in local currencies rather than dollar or euro. In addition to this, Iran can use funds kept in Escrow accounts only for buying locally sourced goods and services.

Pakistan is also experiencing problems in making payments for electricity import. Iran supplied electricity valuing at $53 million until July last year but payments were outstanding as international sanctions barred financial transactions with Tehran.

Pakistan’s efforts to export wheat to Iran, aimed at paying outstanding bills for electricity import, were also frustrated after the state-owned Trading Company of Iran cancelled an export contract under a barter trade agreement. Tehran revoked the contract because of slow progress on the barter arrangement.

Pakistan had agreed to sell wheat at $300 per ton to cover the cost of electricity being supplied to the National Transmission and Dispatch Company (NTDC) by Iran’s Tavanir.

Officials said NTDC had already paid the rupee equivalent of $9 million to the Pakistan Agriculture Storage and Services Corporation as the cost of 30,000 tons of wheat, out of $53.21 million owed to Tavanir.

The finance minister directed the finance secretary to hold a meeting of all stakeholders and suggest practical measures to move forward on barter trade and opening of border crossings between the two countries, according to the handout.

It was decided that the Ministry of Commerce and Trading Corporation of Pakistan would review exportable surplus of various commodities in consultation with the Iranian side and present a report in a follow-up meeting to be held in the third week of this month.