RUPEE STABLE AGAINST DOLLAR: KAMAL
The rupee remained stable against the dollar at 104.4/104.6 in the inter-bank market on Friday as compared to Thursday’s close of 104.4/104.6, 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.
GOVERNMENT DECIDES TO CUT SALARIES OF EMPLOYEES LINKED WITH CPEC
The federal government has decided to cut salaries of contractual employees hired to execute various projects after the finance ministry refused to pay them as per their agreements. The contractual employees of development projects may face up to a 33% cut, depending upon their salary packages. The decision has been taken at a time when the federal government is considering giving a 10% to 15% increase in salaries to its regular employees from next fiscal year 2017-18, starting from July. The decision has been taken after Accountant General of Pakistan Revenue (AGPR) objected over fixing their salaries over and above the Standard Pay Package of 2009 for project staff, according to a notification of the Ministry of Finance that it issued to cut the salaries of China-Pakistan Economic Corridor (CPEC) project employees. These affected contractual employees are getting salaries approved in the PC-I of the projects. But the AGPR does not recognise the PC-I approved salaries. The employees had been offered appointment letters on the basis of salaries mentioned and approved in the PC-Is. However, the finance ministry may face a legal battle as these pay packages have been approved by the Central Development Working Party (CDWP), which is headed by Minister for Planning and by Executive Committee of National Economic Council (Ecnec), headed by the finance minister. The 2009 Standard Pay Package salaries are very low compared with market rates. Even the PC- I approved salaries are significantly lower than market rates. In November 2016, the President of Pakistan approved a 20% ad-hoc increase in 2009 Pay Package. The 2016 revision came after a gap of about three and a half years, which suggested that the Standard Package is not revised on regular basis.
FBR WINS BATTLE AGAINST TAX EVASION, FIRM TO PAY RS96.2 MILLION
Digital Links, a supplier of surveillance equipment, has admitted to evading taxes, and agreed to make payments to avoid criminal proceedings, as investigators plan to further expand scope of the investigation to suppliers and buyers of the entity. Directorate General Intelligence & Investigation-Inland Revenue started the inquiry against the entity about a year ago and finally, Digital Links agreed to pay Rs96.2 million, according to the Directorate of I&I officials. They said that during the course of investigations, one of the partners of the business concern attended the Lahore Directorate and voluntarily agreed to deposit the total sales tax liability to avoid criminal proceedings. In this regard, the entity deposited Rs7.6 million and submitted postdated cheques for the remaining amount. The total recoverable tax amount is Rs96.2 million, said FBR officials. The amount includes a default surcharge of Rs19.6 million besides penalty of Rs38.3 million, which is equal to 100% of the principal tax liability. The authorities are now planning to expand the investigation to Digital Links suppliers and buyers in the hope of recovering taxes from them as well. Meanwhile, while the FBR is rightly penalising companies evading taxes, it is also working on a tax amnesty scheme for those who have created assets abroad by evading taxes. Now the authorities are planning to regularise offshore assets by charging nominal tax and waiving off all other penalties and default surcharges. Khawaja Tanveer Ahmed, the Director General of the I&I wing of the FBR has appreciated the efforts of the Lahore directorate. The directorate has undertaken a drive against tax evasion and unearthed Rs76 billion worth of cases in the last fiscal year. However, it faces challenges in recovering most of the amount due to some legal lacunas. The FBR officials said that the business concerned had concealed its taxable supplies valuing Rs229.5 million and willfully and fraudulently evaded sales tax amounting to Rs38.3 million by committing tax fraud.
DAGHA BLAMES MET OFFICE FOR PROLONGED ENERGY OUTAGES
Former water and power secretary Younus Dagha has held the Meteorological Department responsible for prolonged electricity outages, saying the weather forecasting office made inaccurate estimates for the current summer season, source said to Research Analyst-PAGE. In a high-level meeting held on April 24, the ex-secretary pointed out that electricity demand grew sharply and demand-supply gap widened following an unprecedented heatwave at the end of March and early April 2017. He called the temperature forecast of the Met office highly inaccurate in comparison to actual temperatures, which were up to nine-degree Celsius higher than the monthly average. The prime minister was of the view that changing weather patterns should have been projected while preparing the load-shedding plan for the summer of 2017. He noted that the Ministry of Water and Power had clearly committed that load-shedding in summer would be for three hours in urban areas and for four hours in rural regions. However, the plan was not followed at all. In fact, the duration of load-shedding was 100% more than the approved plan. The premier asked about reasons for the deviation from the earlier commitment. He stressed that the rise in temperatures by two to three-degree Celsius should not have resulted in a big increase in load-shedding. Moreover, lower water availability was never highlighted in earlier presentations made to the Cabinet Committee on Energy. He emphasised that load-shedding for more than 12 hours in April could not be accepted as it caused huge hardships to the people. The government was answerable to the people and excuses could not be made to justify the abrupt increase in power outages, he said. Dagha pointed out that temperature had been expected to remain one to two-degree centigrade above normal in April 2017. However, its sudden increase by seven to nine-degree centigrade was quite extraordinary, source added.
KE TO RECEIVE ADDITIONAL 100MW IN RAMAZAN
The Sindh government is set to add 100 megawatts to ease Karachi’s power deficit at the end of May and provide some relief to city dwellers in the fasting month of Ramazan. We are set to start supplying 100MW to K-Electric from the Nooriabad power station from May 27, Sindh Chief Minister’s Media Consultant A Rasheed Channa told on Friday. Sindh Nooriabad Power Company, a project of the provincial government, has successfully tested power production from one of the two units of 50MW each. Test production and transmission from the second unit is to begin on Saturday or the day after tomorrow, he said. The successful testing of the second unit will pave the way for commercial production and transmission to the K-Electric system. We are making all efforts to add electricity to the K-Electric system by the [fasting] month of Ramazan, which begins either on May 27 or 28, so that citizens could feel relieved, he said. He revealed Sui Southern Gas Company (SSGC) had started supplying gas to the Nooriabad power station in the wake of signing of a sale and purchase agreement between the public utility and the power company. We gave a pay order of Rs1 billion to SSGC following the gas sale and purchase agreement, he said. Earlier, Sindh Chief Minister Murad Ali Shah threatened to cut SSGC’s gas supply across Sindh and Balochistan after the utility kept delaying supplies to the newly constructed Nooriabad power station. Sindh Nooriabad Power Company has established the power plant at a cost of Rs13 billion. Work on the project began in August 2014. For electricity supply, the Sindh Transmission and Dispatch Company has laid a 95km-long transmission line from Nooriabad to Karachi at a cost of Rs2 billion. The company would generate power at a cost of Rs9 per unit and sell it to K-Electric for Rs15.50 per unit. The addition to the system will not overcome the overall power shortfall which stands at 300-400MW these days. However, it will provide some respite to the people from prolonged power outages as demand for electricity has gone up with the arrival of hot weather. Channa said the number of complaints against power outages had increased these days. The chief minister’s office has received 900 complaints over the past two days…the authorities concerned have replied that the increase in outages is the result of ongoing overhaul of K-Electric’s power producing units.
QATAR JOINS RACE TO WIN PAKISTAN’S LNG PIPELINE AGREEMENT
Qatar has joined the race to tap the growing energy market of Pakistan as it expresses interest in the $1.5 billion pipeline project for the supply of imported liquefied natural gas (LNG) to feed gas-starved consumers in Punjab, source said to Research Analyst-PAGE. Qatar has already taken the lead in LNG supplies and signed a multibillion-dollar contract for gas export to Pakistan. It also has the potential to win the Karachi-Lahore gas pipeline contract. The Prime Minister’s Office has offered the signing of a state-to-state deal without bidding. Major oil and gas companies of the US and European Union have a big presence in Qatar and they have even partnered with the Middle Eastern country in LNG supply to Pakistan. ConocoPhillips, headquartered in Houston (Texas) with operations in about 30 countries around the world, has a 30% stake in the oil and gas reserves being explored in the North Field near the Iranian border from where LNG is being supplied to Pakistan. Qatar is likely to enhance the volume of gas exports to Pakistan if it succeeds in getting the pipeline contract,” said a senior government official. The proposal of laying the gas pipeline was taken up during the visit of Qatari Emir Sheikh Tamim bin Hamad bin Khalifa Al-Thani in January this year. In a meeting with Prime Minister Nawaz Sharif, Al-Thani expressed Qatar’s interest in building the Karachi-Lahore pipeline for LNG transportation. The official revealed that the Prime Minister’s Office had been dealing with the pipeline project and the very next day, after the meeting with the emir of Qatar, a letter was sent to Doha, suggesting the signing of a government-to-government deal for the award of project contract without bidding. Apart from this, more pipelines are being built from Karachi to Lahore. State-run gas utility Sui Northern Gas Pipelines Limited (SNGPL) has already completed work on a pipeline augmentation project that will carry 1.2 billion cubic feet of LNG per day. The company has been asked by the Ministry of Petroleum and Natural Resources to lay another pipeline from Karachi to Lahore that will carry a similar volume of LNG. SNGPL board of directors has given the go-ahead for the project. Pakistan has also signed a government-to-government contract with Russia for another gas pipeline called North-South pipeline. Russian company RT Global has been designated to execute the project.