PETROL, DIESEL RATES LIKELY TO BE CUT BY RS1/LITRE
Consumers of petrol and diesel are likely to get relief as the government is likely to cut petroleum products prices in May after it kept increasing their prices during the last several months following fluctuations in global oil prices, source said to Research Analyst-PAGE. However, the government is expected to increase the prices of light diesel and kerosene. The Oil and Gas Regulatory Authority (Ogra) has sent its recommendations regarding petroleum prices to the Ministry of Petroleum on Friday. According to Ogra’s calculation, the prices of petrol and high speed diesel are likely to be reduced by Rs1 per litre. However, the price of light diesel is expected to increase by Rs10 per litre and kerosene by Rs15 per litre. The new prices will be implemented after getting the nod of Prime Minister Nawaz Sharif with effect from May 1, 2017. During the last three months, the government had rejected Ogra’s recommendations regarding hike in kerosene and LDO prices. Source further said to him, a decrease of Rs1 per litre has been recommended in the price of petrol, and if the government approves the same the increased price of petrol will come down from the current Rs74 to Rs73 per litre. Similarly, after a decrease of Rs1 per litre in HSD, its price will come down to Rs82 per litre from the current Rs83 per litre. The prices of kerosene after an increase of Rs15 will go up to Rs59 per litre from the existing Rs44 per litre and the price of LDO will go up with an increase of Rs10 per litre from the current Rs44 per litre to Rs54 per litre, source added.
PAK DESPERATE TO SEE PAYPAL, OTHER PAYMENT GATEWAYS
As the world moves closer to adopting digital economy, the business community of Pakistan has started feeling the absence of e-commerce payment gateways in Pakistan. The Sialkot Chamber of Commerce and Industry (SCCI) has started demanding government authorities to bring global e-commerce payment gateways in Pakistan, as this mode of business will replace the traditional business methods and transaction in coming years. Government should direct concerned authorities including the State Bank of Pakistan, Ministry of Information Technology and others to strive for bringing e-commerce payment gateways like PayPal, Google pay, Samsung pay, Ali-pay to Pakistan for necessary promotion of exports and business in international arena, said SCCI President Majid Raza Bhutta. For Bhutta, electronic commerce offers unprecedented opportunities to both developing and developed countries; the advancement of technology has aided international business and has impacted the global economy in many ways. Millions of people worldwide use the internet to do everything from research to purchasing products online; the internet is profoundly affecting almost all businesses,” he added. In Pakistan, e-commerce market is on a growth trajectory and such demands have been made repeatedly by business gurus of different sectors.
PKR STABLE AGAINST DOLLAR
The rupee remained stable against the dollar at 104.5/104.7 in the inter-bank market on Friday compared to Thursday’s close of 104.5/104.7, Kamal Hayder, Research Analyst-PAGE said. The currency market has fluctuated regularly in recent months with hefty rises and falls on some occasions. In the long run, however, the rupee has stood firm after experiencing extensive volatility, when it weakened from around Rs98 to a dollar to above Rs103 in the wake of political impasse over alleged election rigging. Recently, the central bank has imposed 100% cash margin on the import of certain consumer items to restrict the demand for US dollars. The rupee has been one of the best performing currencies in Asia for over three years despite the dollar’s sharp appreciation against other currencies. However, the International Monetary Fund has repeatedly said that Pakistan’s rupee is overvalued by 5-20%. Kamal further said that the artificial support for the rupee has adversely affected Pakistan’s exports.
DASU ENERGY PROJECT: ECC APPROVES GOVERNMENT GUARANTEES FOR $140M LOAN
he government on Friday approved sovereign guarantees to help Water and Power Development Authority (Wapda) arrange $350 million in loan from Credit Suisse for meeting external financing needs for the 2,160-megawatt Dasu hydroelectric power project. The Economic Coordination Committee (ECC) of the cabinet, headed by Finance Minister Ishaq Dar, allowed the Ministry of Finance to issue sovereign guarantees to cover a loan of $140 million.
The World Bank, which is the lead financier of the Dasu project, is providing guarantees for the remaining $210 million. The bank will charge 0.75% interest for the guarantees. The ECC also approved the draft of a tripartite power purchase agreement in order to meet the condition for a $400-million loan for balance of payments support. The government is desperately looking for the loan before the end of June. The ECC accepted the proposal of the Ministry of Water and Power for government guarantees for the $140-million loan for the Dasu power project. Total cost of first phase of the project is $4.4 billion. The World Bank has already approved a credit of $588 million and is expected to give another $533 million in the current fiscal year. This leaves a gap of $2.4 billion that will be bridged by borrowing from domestic and international debt markets. The government has arranged $1.44 billion or Rs144 billion from domestic markets and now plans to raise $800 million from foreign debt markets. Wapda will arrange $350 million from international capital markets for 10 years by using both sovereign guarantees and the World Bank’s partial credit guarantees. Wapda also plans to issue $500 million worth of bonds in the international capital market next year to arrange the remaining funds.
NEELUM-JHELUM PROJECT: GOVERNMENT ASKED TO REDUCE MARK-UP ON LOANS IT GIVES
The Water and Power Development Authority (Wapda) has asked Prime Minister Nawaz Sharif to reduce the mark-up on foreign loans that are passed along by the federal government for hydroelectric power projects at a much higher rate than the one charged by creditors. The request comes as the government is extending a foreign loan to Wapda for the 969-megawatt Neelum-Jhelum hydroelectric power project at a very high mark-up of 15% per annum, a senior official of the Ministry of Water and Power said while talking to Research Analyst-PAGE. The high mark-up will eventually burden the consumers with increased electricity tariff. The federal government borrows money from foreign creditors at a lower mark-up, but the Economic Affairs Division transfers these loans to different entities including Wapda at an inflated rate of up to 15%, which is eventually collected from the consumers. Wapda Chairman Muzammil Hussain took up the matter in a high-level meeting, chaired by the prime minister, on April 18. These mark-up rates may be revised keeping in view the rates applicable to provinces, he said. Water and Power Minister Khawaja Muhammad Asif argued that any reduction in the mark-up would have a long-term impact on power tariff for the project. Secretary to the prime minister told the meeting that re-lending of government-negotiated loans always came at higher rates according to the policy in vogue and the revision sought by Wapda would require policy change. The prime minister directed that the matter should be taken up in the presence of Finance Minister Ishaq Dar.
SBP GOVERNOR’S TERM ENDS, BUT HE MAY GET A THREE YEARS EXTENSION
The government is considering offering another three-year term to State Bank of Pakistan (SBP) Governor Ashraf Mahmood Wathra, who, if wins the nod, will face challenges of managing the deteriorating external sector and making the monetary policy an effective tool. The Ministry of Finance has sent a summary for approval of Prime Minister Nawaz Sharif, seeking extension for Wathra, who completed his first term in office on Friday, said a senior official of the ministry. Acting Auditor General of Pakistan Haq Nawaz also retired on Friday after reaching the age of superannuation. The government may appoint Imran Iqbal as new acting auditor general at least till June 18. The SBP law allows the government to appoint the governor for another term if his age is below the maximum limit of 65 years. The decision would be an indication that Finance Minister Ishaq Dar would not change the economic team in the last year of the PML-N government. In case the seat of the governor falls vacant, the government will have to appoint the new head within three months, according to the SBP Act of 1956. If the premier rejects the extension summary, the finance ministry would send another summary, carrying names of probable candidates, said the officials. Wathra’s second term would begin at a time when Pakistan’s economy is facing the challenge of growing current account deficit, dwindling foreign currency reserves that could impact the rupee exchange rate and an uptick in inflation. The second term could also allow Wathra to implement the SBP’s Strategic Vision 2020.
OLX AIMS TO ACTIVATE PAK’S DORMANT ECONOMY
There are several avenues in Pakistan waiting to be tapped. Be it the energy sector, where the government has planned to undertake massive investment with the help of China, or the ecommerce space, where the growth of mobile broadband has spurred the rise of many startups and attracted global players such as Careem and Uber as well. OLX, the online platform that connects buyers and sellers, is also aiming to tap one aspect of the Pakistani economy — the dormant sector that just keeps growing, but doesn’t add much to business activity. There are numerous households in Pakistan that have stockpiled goods that can sell for a lot of money,” Bilal Bajwa, the OLX Country Manager for Pakistan, told to PAGE. We have conducted studies based on the actual numbers. By introducing them to potential buyers, and vice versa, we’re activating a dormant economy, which has been our main aim. From a community perspective, this generates economic activity. Bajwa’s comments mean that the roughly $270-billion economy has much more potential than the actual number suggests.
GOVERNMENT REFUSES TO EXTEND DEADLINE FOR TARBELA EXTENSION PROJECT
The government has turned down a request of the Water and Power Development Authority (Wapda) for extending the time frame for the contractor working on the Tarbela 4th extension project. Already, Wapda has given millions of dollars to the contractor as an incentive to accelerate work on the project. The original deadline for completing the project was February 2018, but it was brought forward to June 2017 under the government’s acceleration program designed to narrow the gap between demand and supply of electricity. In that regard, Wapda and the contractor signed a variation order and the latter got incentive payment of $25 million for stepping up work on the project. However, the contractor later informed Wapda that it would not be able to finish work by June 2017. Consequently, the deadline was extended to December 2017. Sinohydro Group of China is the prime contractor for civil works while a consortium of Voith Hydro of Germany and China has the contract for electrical and mechanical work packages. Recently, Wapda Chairman Muzzamil Hussain again approached the federal government, seeking extension in the time frame to the original deadline of February 2018. Speaking about progress on the Tarbela 4th extension project, the Wapda chief told the Cabinet Committee on Energy, in a meeting held on April 18, that first, second and third power units would start functioning by the end of December 2017, April 15, 2018 and May 10, 2018 respectively. He said 84.10% civil works and 91.36% electrical and mechanical works had been completed by March 31, 2017.