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Oct 11, 1999

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

IMF asks Islamabad to increase oil prices

The International Monetary Fund (IMF) has asked Pakistan to increase petroleum prices to match the latest surge in prices in international market and resolve IPPs issue.

The increase in the petroleum prices is one of the major prerequisites for the release of $280 million tranche from the $1.6 billion IMF loan under ESAF/EEF arrangement, said Finance Minister Ishaq Dar at a press briefing at the Central Board of Revenue (CBR).

Mr Dar, however, said the IMF had been clearly told that "we cannot pass the entire burden of the petroleum price increase on the consumers."

In the last two-and-a-half weeks the minister said, the POL prices had witnessed an increase of 30-43 per cent in the international market. He added that the motor spirit prices jumped from $18 a barrel in July to $26 in October, while the furnace oil price soaredly 43 per cent this quarter, he said.

The minister said--adjustment of POL prices would pave the way for the early release of IMF tranche. The condition for rupee devaluation was, however, out of question, Mr Dar said.

The minister pointed out that the IPP issue, specially the Hubco, was also causing problems in the release of the tranche.

Talking about his meetings with the IMF and the World Bank officials with reference to the Hubco issue, Mr Dar claimed that the donors did appreciate that Pakistan government was unflinching on its stance to settle IPP issue.

He said Pakistan had not dropped its basic demand of getting power tariff reduced by the IPPs and that a final round of talks between the GoP and Hubco was still to be held in London.

Cabinet approves package for Northern Areas

The cabinet on Wednesday took a number of major decisions for the distribution of land and eradication of illiteracy from the country. The cabinet meeting adopted measures for the implementation of the Supreme Court's decisions about the Northern Areas.

It approved the Northern Areas Council Framework (Amendment Order), 1999; Northern Areas Rules and Business (Amendment) 1999, and the establishment of Northern Areas Court of Appeals.

However, the details of various decisions taken by the cabinet would be announced at a news conference on Thursday.

Sources said the cabinet had briefly discussed the law and order situation with the prime minister directing the three chief ministers and the PM's adviser on Sindh affairs to take "fresh measures" for curbing sectarian violence across the country.

It was given an in-depth briefing on major initiatives being considered for increasing the literacy rate as well as for giving a boost to the agricultural production.

2pc warehousing surcharge

Central Board of Revenue has re-imposed 2 per cent warehousing surcharge over and above the customs duty on goods other than consumer goods for the second quarter and the rest of the financial year 1999-2000.

In this connection, a Customs General Order No 40, dated October 4, 1999, has been issued by the CBR here on Wednesday which explains that the 2 per cent surcharge removed for the first quarter of the current financial year, has been re-imposed.

Tapal rejects KESC request

A Karachi-based private power project has turned down KESC's request to enhance its original power generation capacity in view of ongoing government-IPPs row, it is learnt on authority.

"The sponsors of 126mw Tapal Energy have turned down our request to enhance the capacity to meet our gruelling power demand," a senior KESC official said on Tuesday.

They were of the view that since the government has failed to restore foreign investors' confidence, it would be difficult to convince the foreign lenders to obtain loans for the required expansion. In the short-term there is no question of expansion, the Tapal Energy conveyed to so far state-run Karachi Electric Supply Corporation.

Oilseed prices fixed for rabi season

Oilseed Development Board (PODB) has fixed the sale price of both local and imported seed at Rs 60 and 160 per kg respectively for the rabi season 1999-2000. The canola seed (local hybrid) will be sold at Rs 210 per kg.

This was decided during a meeting held here the other day to review the oilseed programme under the chairmanship of PODB managing director Ghulam Idris Khan.

Incentive package for free zones

A high-level committee on Monday finalized its deliberations on incentive package for bringing about improvement in free zones of the country.

After threadbare discussion and looking into pros and cons of the impact of free zones on national economy, the committee members drew up recommendations for submission to the ECC.

Secretary, Ministry of Industries and Production, Abu Shamim Ariff chaired the meeting and Secretary, Ministry of Labour and Manpower, Zafarullah Khan, Chairman CBR and Secretary, Revenue Decision, Iqbal Farid participated.

10pc IT waiver on reserves notified

Central Board of Revenue has waived the 10% Income Tax payable on reserves by public limited companies distributing dividends up to 40 per cent, as per Finance Act 1999.

A CBR Circular No 26, dated Sept 30, 1999, says: Through the Finance Act 1999, a new subsection (9A) has been inserted in section 12 of the Income Tax Ordinance 1979, which provides for reserves in excess of 50% of the paid-up capital of a public company at the rate of 10%, if such company derives profit for an income year but does not distribute cash dividend. This provision which is applicable from assessment year 1999-2000 onwards, in relation to assessment year 1999-2000, that the companies whose income year ended on June 30, 1999, may distribute such dividend within eight months reckoned from July 1,1999.

UK firm selected for tax reform

Maxwell Stamp PLC, UK an international consulting firm has been selected for implementing the Central Board of Revenue Tax Administration Reform Project (TARP).

TARP, funded through an interest free IDA credit of $5 million supports the first stage of a programme to reform the federal tax system in Pakistan.