PROVINCES PLAN TO LEVY TAX ON OIL TANKERS
Punjab Revenue Authority (PRA) Chairman Rahil Siddique said on Thursday that all four provincial tax bodies were on board to tax the powerful oil tanker operators and chalk out a strategy in that regard.
“They blackmail the federal government through strikes which brings the entire country to a standstill,” he said while talking to the Lahore Economic Journalists Association.
Such tactics would not work in the future, he emphasised and said a unanimous decision had been made to bring them under the tax net. “If the federal government protects them, then it will have to pay revenue to provincial governments,” he claimed.
Siddique said the PRA was striving to increase awareness of tax issues among the masses along with expanding the tax net. The most significant landmark was the addition of a chapter on taxation issues in the eighth grade textbooks, he highlighted.
“This move will show results in the long run since the next generation will be well aware of the importance of paying taxes for development of the country,” he added.
Siddique said the PRA had started tax clinics for specific businesses where owners and employees were informed about efficient ways of filing tax returns. They were also informed about adoption of technology and development of IT infrastructure to facilitate tax payments and return filing.
FOREIGN EXCHANGE: SBP’S RESERVES DROP BELOW $14BN, STAND AT $13.9BN
The foreign exchange reserves held by the State Bank of Pakistan (SBP) continued their downward spiral for the third consecutive week.
The SBP reserves decreased 1.95% on a weekly basis, according to data released by the central bank on Thursday.
On September 29, the foreign currency reserves held by the central bank were recorded at $13,857 million, down $275.7 million or 1.95% compared to $14,132.7 million in the previous week, according to the central bank.
Total liquid foreign reserves held by the country, including net reserves held by banks other than the SBP, stood at $19,763.2 million. Net reserves held by banks amounted to $5,906.2 million.
The decrease in reserves was attributed to external debt servicing and other official payments.
More than a month ago, foreign currency reserves increased due to official inflows including $622 million from the Asian Development Bank (ADB) and $106 million from the World Bank.
Earlier, the SBP received $350 million under the Coalition Support Fund (CSF) and made payments of $62 million for external debt servicing.
In January, the SBP made a $500-million loan repayment to the State Administration of Foreign Exchange (SAFE), China.
AMID LOW FOREIGN EXCHANGE RESERVES, PUNJAB GETS GO-AHEAD FOR IMPORTED LNG ENERGY PLANT
Despite availability of surplus power from next year, Punjab’s decision to go ahead with two more imported fuel-based power plants of 2,583 megawatts may put additional burden on foreign exchange reserves and on consumers due to guaranteed payments to investors.
The government of Punjab has signed a contract for setting up another Liquefied Natural Gas-fired power plant of 1,263MW, which it said would become operational within 26 months. It will be the fourth LNG-fired power plant being set up in Punjab and the third owned by the provincial government.
The federal government had to give a waiver to Punjab government to set up the imported fuel-based power plant, as the Cabinet Committee on Energy had imposed a ban on setting up new power plants on imported fuels hardly a year ago.
Power Secretary Yousaf Naseem Khokar told that the federal government did not violate the policy of ban on imported fuel-based power plants, as a waiver had been given by the Cabinet Committee on Energy.
It was a conscious decision to impose the ban on imported fuel based power plants due to its growing implications on foreign exchange reserves. According to Power Division’s estimates, the cost of imported fuel is roughly $500 million per annum to run a 1,300MW power plant.
The decision to impose a ban had been taken to restrict the outflow of foreign currency in the shape of a lower import bill as well as to prevent the repatriation of profits and dividends by project sponsors.
BOI LOOKS TO INCREASE PAKISTAN’S FDI TO $250 BN BY 2025
The Board of Investment (BoI) is devising a long-term plan to maximise benefits from the China-Pakistan Economic Corridor (CPEC), and increase Foreign Direct Investment (FDI) for infrastructural developments up to $250 billion and allied industrial activities by 2025, said BoI Director Zulfiqar Ali.
Pakistan has faced low levels of FDI in recent times with the amount close to the $2.4-billion mark in 2016-17. It was only $900 million in 2014-15, surging more than two times to reach $2.3 billion during the next year.
While the road to $250 billion seems a very lengthy one, Ali said CPEC will go a long way in helping Pakistan achieve the figure.
In a briefing to journalists on Wednesday, he said, “The project has huge scope and just the amount of toll tax generated by utilising CPEC routes could generate revenues three times more than the current national budget by 2030.”
The revenues and employment generated by operational Special Economic Zones (SEZs) and other industries will be additional benefits, he added.
“We have already started development of seven SEZs with Chinese cooperation out of which three each are being established in Sindh and Punjab and one in Khyber-Pakhtunkhwa (K-P),” Ali informed.
The BoI director was of the view that CPEC is a second chance for the industrial and economic development of Pakistan after the 1960s industrialisation, which should not be missed.
AUTHORITY’S CONCERNS ABOUT PROFIT MARGIN DEREGULATION ADDRESSED
The Petroleum Division has said that it has addressed concerns of the Oil and Gas Regulatory Authority (Ogra) and Planning Division about planned deregulation of margins on high-speed diesel (HSD) sales for oil marketing companies (OMCs) and dealers.
The Planning Division and Ogra had opposed the deregulation which forced the Economic Coordination Committee (ECC) in its last meeting to put off decision on a summary sent by the Petroleum Division.
It moved the summary again claiming that concerns of the regulator and Planning Division had been addressed.
The Petroleum Division said it had conveyed to Ogra and the Planning Division that OMC margins may be deregulated whereas other cost components included in the ex-depot sale price such as the ex-refinery price, inland freight equalisation margin and taxes would be determined in line with the existing mechanism, a senior Ogra official told.
The Petroleum Division said the proposed deregulation would be done in phases and it would be subject to certain conditions including the increase in commercial storage capacity of the OMCs from existing 20 days to 30 days and putting in place an online inventory system.
OMCs will also be required to add fuel markers to HSD within a specific time frame in order to avoid adulteration and bear its cost out of their margins.
Ogra has been tasked with developing a mechanism to monitor the commercial stock situation, inventory and fuel marker system of the OMCs.
The Planning Division was not in favour of deregulating the HSD margins and recommended that margins on petrol and diesel should be based on the Consumer Price Index. This, it said, would reduce the chances of establishing a monopoly by the OMCs and dealers through fixing high retail prices.
PUNJAB SEEKS TARIFF FOR LNG ENERGY PROJECT
The Punjab government has kick-started the process for construction of the fourth liquefied natural gas (LNG)-fired power project of 1,263 megawatts at an estimated cost of over $800 million.
Despite expectations of surplus electricity next year, the provincial government has asked the power regulator to award sales tariff to the project, which will be built on a fast track so that local financial institutions can be convinced to provide financing.
The provincial government is the sole sponsor of the project being constructed at Jhang by its wholly owned company – Punjab Thermal Power (Private) Limited, according to the National Electric Power Regulatory Authority (Nepra).
The government will inject equity equivalent to 25% of the total cost and the remaining 75% will be met through borrowing from local financial institutions.
It would soon release the first instalment of Rs10 billion for construction of the project. Besides, it would be a major beneficiary as well as it is entitled to a guaranteed return of 16% on equity injection.
The Punjab government took special permission for building the project from the Cabinet Committee on Energy in June 2017 as the central government had banned new projects on imported fuels to save foreign exchange keeping in view availability of surplus power in the near future.
Nepra reported that Punjab Thermal Power (Private) Limited was targeting to arrange full financing for the project by the end of current calendar year. “Financial close is targeted for December 2017.”
The project is to start commercial production in 30 months or by January-February 2020.
Lead arrangers and the petitioner (government of Punjab) are currently negotiating terms and conditions for the financing facility.
NA BODY HITS OUT AT NEPRA FOR MAKING ‘THREATENING CALL’
Chairman of the National Assembly Standing Committee on Energy accused on Thursday the National Electric Power Regulatory Authority (Nepra) head of making a threatening call and pledged that he would move a privilege motion in parliament for disqualification of the regulator.
“Nepra chairman will be the first person to be disqualified from the public office through a privilege motion,” NA Standing Committee Chairman Bilal Virk said, suggesting that authorities should investigate the matter.
The issue came up for discussion during a meeting of the energy committee. It also discussed matters pertaining to The Regulation of Generation, Transmission and Distribution of Electric Power (Amendment) Bill 2017 and the Private Power and Infrastructure Board (PPIB). MNA Shehryar Afridi alleged that Nepra Chairman Tariq Sadozia had also sent threatening messages to him.
Virk vowed that he was going to take the Nepra chairman to task. Today, I intentionally did not call him for the meeting, but will call him to the next huddle,” he added.
Afridi said Sadozai had told provinces that he had raised their concerns about the Nepra bill, but claimed that their MNAs were not supporting him.
Power Division officials informed the committee that reservations of the provinces about the energy bill had been addressed and a new draft had been prepared. Provinces didn’t show any concern about tariff and surcharges. The committee deferred discussion on the bill until its next meeting in view of the clarification sought by its members from Khyber-Pakhtunkhwa on certain clauses.
ORCHARD FARMING: PARC TO PROVIDE 20,000 HYBRID FRUIT PLANTS
The Pakistan Agriculture Research Council (Parc) will provide 20,000 certified hybrid fruit plants to promote orchard farming in different ecologies across the country.
In this regard, Parc has developed plant nurseries in its National Tea and High Value Crop Research Institution (NTHRI), Mansehra. As many as 60 types of fruit plants including apple, peach, apricot, cherry, almond, fig, pomegranate and walnut have been developed for farmers, said NTHRI Director Dr Zahid Hamid.
He said due to rapid urbanisation, fruit orchards were shrinking rapidly, resulting in massive reduction in farm income of the locals.
GOVERNOR, FEDERAL MINISTER DISCUSS INVESTMENT AVENUES
Federal Commerce and Textile Minister Pervaiz Malik met Sindh Governor Muhammad Zubair on Thursday to discuss the law and order situation and investment opportunities in the province.
The governor spoke about various steps taken to rehabilitate the industrial infrastructure in Karachi and other parts of Sindh.
He pointed out that a steady improvement in economic indicators was a sign of growing confidence of the local business community and industrialists in the national economy. “This will attract foreign investors as well,” he added.
The governor highlighted the joint efforts made at the federal and provincial levels in an effort to provide adequate guidance and right information to the stakeholders concerned. He particularly mentioned the end of load-shedding for industrial units which had markedly improved industrial activity in the province.
Malik appreciated the developments in the province, emphasising that concerted efforts were required to arrest the decline in exports of the country’s textile goods.