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Sep 27, 1999

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade
  6. Gulf

Hubco row with Wapda over tariff deepens

The tariff row between Wapda and the Hub Power Company has blown into a crisis as the Hubco has invoked the government's sovereign guarantee.

The Hubco board of directors which met in London on Thursday, overwhelmingly voted to call the sovereign guarantee of the Pakistan government.

The power company accused Wapda of refusing to honour obligations contained within the Power Purchase Agreement (PPA).

Reports reaching here from London said that the Pakistan government was formally notified of the Board's decision immediately after the meeting.

This would mean that the GoP will now have to buy over $400 million equity from Hubco's sponsors at the premium decided by the international auditors.

International law experts said that Pakistan faced the threat of being declared debt defaulter if it failed to honour the contractual obligatious being invoked by the Hubco under the sovereign guarantee clause of the PPA.

30% subsidy on raw cotton export proposed

Pakistan Cotton Ginners' Association (PCGA) has asked the government to allow 30 per cent subsidy on raw cotton export to overcome the present price crises.

Official sources said that in a letter to the federal government, the chairman of the PCGA Sheikh Mohammad Saeed Ahmed has claimed that " only way to overcome this present crisis of unsold cotton is to allow subsidy so that cotton export may become viable and existing crisis could be eliminated".

Ban imposed

The Central Board of Revenue has imposed a ban on import of timber, dry fruits and LPG from Afghanistan, Iran and Central Asian States through Balochistan bordering routes.

Through a notification No C. 2(2) Law and Procedure (L&P/89, dated Sept 22, 1999, the CBR is pleased to direct that the following further amendment shall be made in its notification No SRO 102 (I)/ 83 of February 1983:

WT on foreign engg contracts, rice export levied

Central Board of Revenue (CBR) has announced to levy 1% withholding tax on engineering contracts by Pakistanis abroad, and 0.5% on export of rice, canned/bottled food, and precious/ semi-precious stones.

The Income Tax Ordinance '79, Second Schedule, has been amended through an Income Tax notification No SRO 1052 ()/99, dated Sept 17, '99, which says:

In the aforesaid schedule, in Part II, after clause (2), the following new clauses shall be inserted:

'Rate of tax in respect of commission of export indenting agents etc: (2A) the tax chargeable in respect of commission received by an export indenting agent or an export buying house shall be an amount equal to the tax payable by the exporter on export of goods to which such commission relates.

Tin-plate maker seek protection

The National Tariff Commission has decided to give a hearing to tinplate raw materials' importers against levy of duty on their imports to the duty-free area.

An NTC press release issued here on September 18, 1999, says that M/s Siddiqsons Tin Plate Ltd. Karachi have approached NTC for tariff protection for the industry manufacturing tin plate (PCT heading No 7201.1200) and tin free plate (PCT:heading No 7210.5010) .

Tin plate is importable at the rate of 35% customs duty and tin free plate is importable at the rate of 15% customs duty. The inputs of this industry i.e. cold rolled coils and plates (PCT heading No 7209.9000) is importable at the rate of 35% customs duty.

Govt allows export of 2.5m cotton bales

The government has decided to allow export 2.5 million bales of cotton.

Official sources said here that the Cotton Committee headed by Minister for Food and Agriculture Mian Abdus Sattar Khan Lalika met here on Wednesday immediately after the cabinet meeting and decided to arrange export 2.5 million cotton bales.

The meeting summoned Managing Director PASSCO, Lt. Gen. Saleem, General Manager PASSCO Brig. Pervaiz and General Manager Audit, Brig Akram and directed them to immediately leave for Karachi and formulate an emergency plan fox the export of 2.5 million of cotton bales.

The members of the Cotton Committee will reach Karachi on Saturday to make sure that the prospect of exporting cotton was explored as quickly as possible.

The Committee had also summoned secretary commerce and Chairman Trading Corporation of Pakistan (TCP) and the concerned people of Export Promotion Bureau (EPB) to help expedite the programme.

The Committee members included Mian Aqil ur Rehman MNA, Syed Javed Ali Shah MNA, Abbas Qurashi MNA, Chaudhry Asad ur Rehman MNA and Jamil Bukhari MNA.

The officials of the PASSCO were given a go-ahead signal to buy lint cotton to what was said "export 2.5 million cotton bales within days not weeks". The PASSCO will use its credit line of Rs 25 billion to buy the cotton.

Sources said that the government had to levy 15 per cent excise duty on to import of cotton after All Pakistan Textiles Mills Association (APTMA) backed out of its commitment on September 7 to lift half a million cotton bales, lying with the ginneries.

Mian Abdul Sattar Lalika told APP on Thursday that arrangements are being made to export surplus 2.5 million cotton bales. This is over and above the 8.5 million bales required for the local consumption.