Category Archives: BUSINESS

BUSINESS, LATEST

Petrol, diesel prices likely to rise by over Rs5 per litre

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ISLAMABAD: The prices of key petroleum products are estimated to jump by up to Rs6.30 per litre on Jan 15 for the next fortnight, mainly because of higher international oil prices.

Informed sources said the prices of petrol (motor gasoline) and high-speed diesel (HSD) had been worked out to go up by about Rs5.30 and Rs5.80 per litre, respectively, based on the existing tax rates, import parity price and exchange rate.

Likewise, the prices of kerosene and light diesel oil (LDO) are also estimated to go up by Rs5.80 and Rs6.30 per litre, respectively.

An official said the government could slightly reduce sales tax on petroleum products if it decides to minimise inflationary pressures on the public, but it would largely depend on its engagements with the International Monetary Fund (IMF) for the revival of a $6bn programme.

Increase mainly driven by higher international rates

In recent months, the government has been increasing petroleum levy and general sales tax (GST) on an alternate fortnight basis as part of its negotiations with the IMF. The levy would keep going up by Rs4 on the first of every month until it reached a maximum of Rs30 per litre and GST adjustments would take place on the 15th of every month depending on the price cushion.

At present, the government has been charging a tax of about Rs35 per litre on petrol and about Rs30.50 per litre on HSD.

The taxes on a litre of petrol include Rs17.13 petroleum levy, Rs7.31 (5.45pc) GST and Rs10 customs duty. The per-litre HSD price includes Rs17.62 petroleum levy, Rs3.53 (2.5pc) GST and Rs9.26 customs duty.

The ex-depot price — the final cost after applying the sales tax — of petrol currently stands at Rs144.82 per litre and HSD at Rs141.62.null

Petrol is mostly used in private transport, small vehicles, rickshaws and two-wheelers and has a direct bearing on the budget of middle- and lower-middle classes while HSD’s price is considered highly inflationary as it is mostly used in heavy transport vehicles, trains and agricultural engines like trucks, buses, tractors, tube-wells and threshers.

The ex-depot price of LDO at present is Rs111.06 per litre and that of kerosene is Rs113.53 per litre.

LDO is consumed by flour mills and a couple of power plants while kerosene is mostly used by unscrupulous elements for mixing it with petrol and for lighting in some remote areas of the country.

Until last year, the government used to charge up to Rs30 per litre petroleum levy on HSD and petrol and Rs6-8 per litre on kerosene and light diesel.

Petrol and HSD are two major products that generate most of revenue for the government because of their massive and yet growing consumption in the country.

The sale of petrol is touching 750,000 tonnes per month on average against monthly consumption of around 800,000 tonnes of HSD. The monthly sale of kerosene and LDO generally stands at fewer than 11,000 and 2000 tonnes.

Under the new mechanism, the government now sets oil prices every fortnight to pass on the impact of international prices published in the Standard & Poor’s energy publication Platts Oilgram instead of the previous mechanism of monthly calculations based on Pakistan State Oil’s import cost.

BUSINESS, ISLAMABAD, LATEST

Govt raises petrol, high speed diesel prices by Rs 4

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The government increased the prices of petrol and high speed diesel (HSD) by Rs4 per litre, according to a statement issued by the Finance Division late on Friday.

The statement said the new prices will be effective from January 1 (Saturday).

“In the fortnightly review of petroleum products prices, Prime Minister [Imran Khan] has rejected the proposal of Ogra (Oil and Gas Regulatory Authority) for an increase in prices of petroleum products and advised to increase only Rs4 per litre to meet the petroleum levy target agreed with the IMF (International Monetary Fund),” the statement read.

The Rs4 increase in the price of petrol is part of a commitment made by the government under an agreement with the IMF for a net fiscal adjustment of almost Rs550 billion during the remaining part of the current fiscal year.

Making an announcement in this regard, Finance Minister Shaukat Tarin had said during a press conference in November that a Rs4 per litre monthly hike in petroleum levy on major petroleum products would be made as part of an austerity plan for the revival of $6 billion IMF package.

The Rs4 increase announced on New Year’s Eve is the first instance of the monthly raise announced by Tarin.

Following this development, the price of petrol has been increased from Rs140.82 to Rs144.82, that of HSD from Rs137.62 to Rs141.62, of kerosene from Rs109.53 to Rs113.53 and that of light diesel oil from Rs107.06 to Rs111.06, according to the Finance Division’s statement.

The statement said sales tax on petrol and diesel had been adjusted downwards as compared to December 16, 2021, to keep the prices lower.

On December 15, 2021, the government had slashed the prices of petrol and high speed diesel by Rs5 per litre in an effort to provide relief to the people.

BUSINESS, ISLAMABAD, LATEST

Pakistan expects $3 billion reserves deposit from Saudi in days

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Reza Baqir, Governor of the State Bank of Pakistan (SBP), gestures during a news conference at the head office in Karachi, Pakistan January 22, 2021. REUTERS/Akhtar Soomro

ISLAMABAD, Nov 30 (Reuters) – Saudi Arabia will deposit $3 billion in Pakistan’s foreign reserves in a week or so for one year at 4% interest under a support package signed on Monday, Pakistan’s finance ministry spokesman said on Tuesday.

The South Asian nation has faced growing economic challenges with sliding foreign reserves, a widening current account deficit, a depreciating currency and high inflation.

Pakistan’s total liquid foreign reserves stand at $22.77 billion, according to the central bank.

The Saudi support package that included a $1.2 billion oil loan facility was agreed during Prime Minister Imran Khan’s visit to Riyadh last month.

Asked when the Saudi deposit would land in Pakistan’s foreign reserves, Finance Ministry spokesman Muzammil Aslam told Reuters: “Hopefully this week or early next week.”

He said it was a “one year demand deposit” with 4% interest.

Chief Executive Officer Sultan Bin Abdul Rahman Al-Marshad of the Saudi Fund for Development (SFD) and Pakistan’s State Bank Governor Reza Baqir signed the agreement in Karachi on Monday, the central bank said in statement.

“Under this deposit agreement, SFD shall place a deposit of USD 3 billion with SBP. The deposit amount under the agreement shall become part of SBP’s Foreign Exchange Reserves,” it said.

The Saudi facility has come a week after the International Monetary Fund (IMF) agreed with Pakistan on measures needed to revive a stalled $6 billion funding programme. 

The completion of the review, pending since earlier this year, would make available 750 million in IMF special drawing rights, or around $1 billion, bringing total disbursements so far to about $3 billion, the statement said.

The central bank has raised its benchmark interest rate by 150 basis points to 8.75% to counter inflationary pressures and preserve stability with growth.

Headline inflation had reached 9.2% in October, up from 8.4% two months earlier, and the Pakistani rupee that closed at 175.72 at inter-bank against a dollar has depreciated over 11% since the start of this year.

BUSINESS, LATEST

Dhabeji Industrial Zone project hits impediments.

• Award of contract challenged in Sindh High Court
• Provincial govt says the project does not have SEZ status

ISLAMABAD: The recently awarded contract for the Dhabeji Industrial Zone (DIZ) project that falls under the China-Pakistan Economic Corridor (CPEC) is in the doldrums after being challenged before a court of law.

The Sindh High Court will take up on Monday (today) a petition submitted to it challenging that the rules of Special Economic Zones (SEZ) had not been followed in the award of the contract.

The provincial government claims that since DIZ has not been given the status of SEZ so far, the rules of special economic zones do not apply to it. The CPEC Authority also had submitted an official statement to the high court, expressing satisfaction over the bidding process and claiming that no irregularity had been committed in the award of the contract.

According to a document of the Sindh Economic Zones Management Company (SEZMC), however, the DIZ will be declared a special economic zone (SEZ).

The multibillion DIZ, which will be developed under Public-Private Partnership by the successful bidder Zahir Khan & Brothers (ZKB) and the Sindh government, is part of CPEC and may be given the status of a special economic zone later.

The project, spread over 1,500 acres, is being executed jointly by the Centre, Sindh government, and CPEC Authority with an aim to make it a hub of major economic activities in the province.

The Sindh government received bids for the project in February this year. However, after a two-month evaluation, one of the bids was declared ‘technically unfit’. The provincial government then went for re-bidding in which ZKB emerged successfully. Subsequently, the government issued a Letter of Award (LoA) to the winning firm.

However, the award of the contract was challenged before the court that would take up the matter on Nov 29 (today).

Earlier at a meeting held on Nov 23, Prime Minister Imran Khan expressed the hope that all economic zones, including Dhabeji Industrial Zone, would be completed at the earliest and economic activity started there.

He, however, lashed out at the Sindh government for the slow pace of development work in the province.

When contacted, the Sindh government’s spokesman Saeed Ghani said he was not fully aware of the project’s details, but believed that there was nothing wrong with the award of the contract.

Meanwhile, a senior SEZMC official said the provincial government had ensured transparency and fair play in the award as the successful bidder had quoted Rs16.25 billion while the second-lowest bid was Rs13.75bn.

He said the total income to be generated from the project was Rs32bn and the successful bidder would have to pay Rs16bn to the provincial government in five to seven years. The remaining amount would be paid to the provincial government by selling plots in the economic zone, he added.

The official believed that like 17 other industrial zones in the country, the DIZ had so far not attained the status of SEZ but the provincial government would apply for it later.

“Allama Iqbal Economic Zone in Lahore was established in 2006 but got the SEZ status in 2016,” he said, explaining that economic zones did not get the SEZ status right away.

The official said unfortunately the court had been misled by the petitioner, who was claiming that rules of SEZs had not been followed while awarding the contract for DIZ.

Meanwhile, it has been learned that due to litigation, the DIZ project is being delayed as the successful bidder has still not signed the agreement with the Sindh government even a month after the issuance of the LoA.

Under the contract, the successful firm will undertake designing, financing, construction, operation, and maintenance of DIZ on a build, own, operate and transfer basis.

The DIZ is located on the N-5 National Highway, close to Bin Qasim and Karachi ports as well as about 700km from Gwadar Port, which connects the Central Asia Republics, Middle East, Europe, and Africa. According to the layout plan, the DIZ will have 130 heavy, 145 medium, and 211 light industries, 82 warehouses, commercial areas, office areas, grid stations, roads, lanes, mosques, recreation areas, captive power generation facilities, and PTCL/SSGC/K-Electric intake points.

BUSINESS, LATEST

Three days after rains, Karachi business struggles to recover

KARACHI: Traders in the old city areas — dealing with the bulk of country’s wholesale trade — on Monday continued to struggle with stagnant rainwater and assessing inventory losses while industrialists in different areas gave a mixed picture of production activities and export activities on the first day of the week.

Korangi Association of Trade and Industry President Sheikh Umer Rehan said some 30 per cent of the 4,500 units in the area faced severe hardship as rain water inundated the factories and go downs, causing huge inventory losses of finished goods and raw materials.

He said that most of the staff was unable to arrive at factories due to flooded roads which brought down production by almost 30-40pc.

A sizable number of labor in the area usually arrives from the EBM causeway and Korangi Crossing, which were opened on Monday evening after continuous rains last week. Hopefully, labor turnover would improve from Tuesday onwards, he added.

Traders and industrialists to release loss estimates in next few days

“Industrial units are draining out accumulated rain water with their own efforts,” he said adding that the “affected units would share details on inventory losses in a day or two.”

F.B. Area Association of Trade and Industry (FBATI) President Abdullah Abid said only 15-18pc of the small and medium sized units out of the total 2,200 in the area were facing issues because of rain water.

He said the situation in FBATI was better because the association had already procured six water draining pumps to clear rain water from the area.

Site Association of Industries President Suleman Chawla said production activities in the area remained normal but added that laborers were facing problems in reaching factories their units owing to the bad road conditions in Site area.

Meanwhile, Bin Qasim Association of Trade and Industry Secretary General Abdul Rahman Ismail said production remained normal in 350-400 large to medium-sized units despite power breakdown issues at some units. He said that so far, he had not received any complaints regarding stagnating rain water from industrialists in the area.

North Karachi Association of Trade and Industry President Naseem Akhtar claimed “all the units resumed full production activities on Monday.”

“Luckily, rain and sewerage water did not enter any factory despite incessant rains,” he claimed adding that export shipments from the area also resumed on Monday.

All City Tajir Itehad General Secretary Ahmed Shamsi said traders in the old city areas like medicine market, Densohall, electric market, Khori Garden, Marriot road, cloth market, plastic market etc were working to clear rain and sewerage water from their shops and godowns on their own.

“Traders are analysing inventory losses at shops and go downs and may come out with a report in a day or two,” he added.

Moreover, Karachi Wholesale Grocers Association Chairman Anis Majeed said around 350 of the 700 shops in Dandia Bazar — hub of essential food items — were still inundated with 1-1.5 feet of rain and sewerage water on Monday. The water had damaged various commodities, he added.

All Pakistan Restaurant Association Convener Athar Chawla requested Sindh government, Defence Housing Authority, Cantonment Board Clifton and concerned departments to clear out rainwater to save the restaurant industry from further devastation.

Federation of Pakistan Chambers of Commerce and Industry President Mian Anjum Nisar said heavy rains have inundated the entire city and severely damaged the roads and exposed the already-weak infrastructure. The city, that contributes more than 60pc of the revenue to the national kitty has been left at the mercy of nature and relief measures are highly inadequate, he complained.