BUSINESS
RECORDER
Thursday 4th February, 2016
Facilitating global passengers:
PIA in talks with Saudi, other airlines
MUHAMMAD ALI
Following
a
complete
suspension of PIA flight
operations, the national flag
carrier
has
started
negotiations
with
Saudi
Airlines, Etihad Airways and
Turkish Airlines to facilitate its
international
passengers.
According to details, the flight
operations
of
PIA
on
Wednesday
remained
standstill at all major airports
due to PIA employees' protest
against
privatisation. The
protest demonstrations, which
continues since January 26,
2016, have intensified and
spread across the country
after the killing of two PIA
staffers
on
Tuesday.
The charged PIA employees
are staging sit-ins protest at
PIA offices countrywide that
led to a complete suspension
of flight operations at all major
cities - Karachi, Lahore,
Quetta, Peshawar, Multan and
Islamabad. Sources in PIA
confirmed that over 20 PIA
flights had been cancelled on
February 3, 2016 due to
ongoing protest by PIA
employees against planned
privatisation. Keeping the
present situation in view, the
PIA spokesman claimed that
airline as its back-up plan was
in final stages of negotiations
with Etihad Airways and
Turkish Airlines to facilitate
passengers going to and
coming from Europe, America
and Canada. While, the airline
has arranged four Boeing 747
jumbo planes to bring back
2000 stranded Umra pilgrims
from Jeddah. In this regard,
an agreement has been
finalised with Saudi Airlines.
These four jumbos will fly on
February 5, 2016 and bring
passengers to Karachi and
Islamabad, he maintained.
Gilani said, and asked the
government to launch an
inquiry
into
Tuesday's
incident.
The spokesman further stated
that on their way back to
Saudi Arabia, these planes
would carry the same number
of Zaireen back to Jeddah for
Umrah. These passengers,
having confirmed PIA tickets,
are being provided hotel
accommodation by PIA at
Jeddah as well as at various
cities in Pakistan, he added.
Since January 26, the strike
has cost the airline about 1
billion Pakistani rupees ($9.6
million) in losses, he added. In
a television interview on
Tuesday
night,
company
chairman Nasser Jaffer said
he planned to resign. "From
this day on, my conscience
does not allow me to stay as
chairman of this organisation,"
the emotional Jaffer said on a
television. "Two people lost
their lives. I don't think
anything worse than this could
have
happened."
Agencies add: Most flights by
Pakistan's
ailing
national
airline were grounded on
Wednesday,
a
company
spokesman said, as striking
employees
disrupted
operations to protest against a
government privatisation plan.
The strike is the latest in a
months-long series of protests
against the plan to sell off part
of
Pakistan
International
Airlines
(PIA),
among
companies the government
has pledged to privatise under
an International Monetary
Fund (IMF) deal. "Most of the
PIA flights are not being
allowed to take off from any of
the airports, domestic or
international," said airline
spokesman Danyal Gilani,
although
some
returning
international flights were being
allowed
to
land.
A
spokesman
for
the
protesters did not immediately
answer telephone calls from
Reuters to seek comment.
PIA's management expressed
"deep grief and sorrow" over
the deaths of its employees,
At
Karachi's
international
airport, demonstrators waved
placards and chanted slogans
against Prime Minister Nawaz
Sharif, calling on the leader to
reverse a bill that converted
the carrier into a public limited
company. The carrier could
lose around $4 million in
revenue per day, Gilani
added.
Protest leader Sohail Baloch
told AFP: "We will continue
our peaceful protests until our
demand
is
met."
The
employees also said they
would donate a day's salary to
the families of the two
employees who were killed. In
December,
Islamabad
announced it would complete
the partial sale of the carrier
by July, following years of
crushing
losses
and
mismanagement that have
battered
the
airline's
reputation.
BUSINESS
RECORDER
Thursday 4th February, 2016
Air travel fares soar by 300 percent
NUZHAT NAZAR & WASIM IQBAL
Competition Commission of
Pakistan (CCP) is examining
possible abuse of dominance
position/collusive
behaviour
under Competition Act as
domestic private airlines have
increased fares from 100 to
300 percent as Pakistan
International Airline's (PIA)
strike entered its second day.
Shaheen
Airlines
has
increased its fare (IslamabadKarachi) from Rs 7000 to Rs
28000 with a return ticket now
costing Rs 56000. Air Blue
Airline has increased its
airfare one way for the same
sector from Rs 8000 to Rs
16000 with a return ticket
costing
Rs
32000.
Civil Aviation Authority (CAA)
has allowed Airblue to operate
additional late night flights.
The airline is charging Rs
9000 which is relevantly a low
price. There are two late
flights - one at 9:00 AM and
the other at 11:00 PM,
confirmed
travel
agent
Bilawal, adding that these
charges would be applicable
till
PIA
flights
become
operational. Civil Aviation
Authority (CAA) official said
that CAA has taken notice of
the sudden increase in
airfares of private airlines
although the responsibility for
taking appropriate action lies
with the CCP which has yet to
take any action. The official
further said that the oversight
of airfare does not come
under
Aviation
Policy.
When contacted a CCP official
said that the Commission is
analysing the issue in light of
the
provisions
of
the
Competition Act. However, so
far no official inquiry has been
initiated against the private
airlines. PIA spokesperson
while explaining the situation
said that no single flight has
taken off due to prevailing
strike of PIA employees
throughout Pakistan. He said
other domestic airlines are
accommodating
those
passengers with confirmed
booking.
Last year the CCP passed a
special order under Section
36 of the Competition Act,
2010 to the Chief Executive
Officers of private airlines
operating in Pakistan asking
them to submit information
regarding the unreasonable
increase in the air fares and to
appear before the inquiry
committee. The inquiry did not
produce any evidence against
the
airlines.
BUSINESS
RECORDER
Thursday 4th February, 2016
Import of 6 LNG cargoes legalised by ECC
MUSHTAQ GHUMMAN
Economic
Co-ordination
Committee (ECC) of Cabinet has
legalised import of six cargoes of
Liquefied Natural Gas (LNG)
arranged by Pakistan State Oil
(PSO)
from
Qatargas
on
government-to-government
on
FoB bases, on board FSRU in
spite of OGRA disagreement on
price of four cargoes, official
sources told Business Recorder.
Ministry of Petroleum & Natural
Resources has revealed that while
considering its summary of
January 12, 2016, a committee
was constituted to examine legal
and commercial aspects of four
proposals which are as follows:
(i) MSPA on FOB/ DES with
Qatargas Operating Company
may be approved; (ii) section
3.2(a) of the LNG Policy 2011
provided that procurement of LNG
by the LNG buyer(s) will be
undertaken
through
direct
negotiations with one or more LNG
suppliers for a reasonable time to
be determined by OGRA. In view
of this section of LNG policy,
OGRA be directed to approve the
terms of the SPA; (iii) the port
charges in excess of $320,000
(being the maximum payable by
QG2 under the SPA) will be
invoiced in the DES price and will
form
part
of
price
of
RLNG/swapped
gas
as
determined by OGRA and notified
by PSO; and (iv) since SSGC has
already entered into LNG Services
Agreement for receiving, storage
and re-gasification of LNG with
EETPL, therefore PSO will not be
required to enter into such
arrangement/agreement.
The
committee was asked to submit a
report
within
ten
days.
Accordingly, the committee held its
meeting on January 20, 2016 and
recommended that Ministry of
Petroleum & Natural Resources
may place a separate summary
before the ECC for obtaining ex
post
facto
approval
for
procurement of LNG cargoes by
PSO from Qatargas signifying its
relevance with the Master Sale
Purchase Agreement (MSPA).
According to the Petroleum
Ministry under the LNG Service
Agreement (LSA), SSGC was
obliged to pay capacity charges
from the commissioning date of
the terminal, therefore, it was
considered expedient to start
import of LNG to synchronise with
commissioning of terminal for
optimal utilisation of re-gasification
facilities. So far, PSO has
imported 18 cargoes, out of which
first six cargoes were procured
from QG2 under the G to G
agreement.
It
was
further
explained that on June 6, 2015 the
ECC had decided that PSO, being
a commercial entity, has the
autonomy to import LNG either on
FOB or C&F basis and take
appropriate decisions for import of
the LNG at its own level. The
ECC, however, directed that the
PSO must keep commercial
prudence and provision of the
relevant rules and regulations in
view while making such decisions.
The Ministry further stated that on
March 14, 2015, the ECC had
allowed
PSO
to
bring
a
commissioning cargo on board the
FSRU on FOB basis. For this
purpose PSO entered into FOB
MSPA with Qatargas and signed
confirmation notice for one cargo
on March 19, 2015 for Pak Arab
Fertilizer on board the FSRU on
FOB basis which arrived at Port
Qasim on March 26, 2015.
Moreover, in the first week of April,
2015, the Qatargas revealed that
Port Qasim was not yet ready to
receive Q-Flex whereas the
commissioning
cargo
was
expected to be fully re-gasified by
mid-April, 2015 and the terminal
was entitled to receive a daily
capacity charge. Various alternate
options both in terms of tenders
and Government to Government
arrangements were examined by
the consultants. As potential
options were severely limited
given the time constraints, five
more LNG cargoes were procured
from Qatargas on FOB basis using
FSRU as LNG carrier under the
confirmation notices signed on
April 15, 2015 (for 4 cargoes) and
July 2, 2015 (for 1 additional
cargo). Out of these, one cargo
received on May 11, 2015 was
supplied to Pak Arab Fertilizers
whereas other four cargoes were
sold to SNGPL as per the
arrangements
between
PSO,
SSGC and SNGPL. The average
slope on delivery ex-ship basis
was worked out at 13.36% of
Brent for five cargoes while the
slope for the remaining 12 cargoes
procured
through
tendering
process worked out at 14.5008%
(on average) of Brent. For
commissioning cargo, the price
included freight, boil of gas,
loading port charges and gassing
of FSRU. It was further explained
that the Qatargas had offered
(14.30% of Brent) under long term
sale purchase agreement on
January 30, 2015 and on June 4,
2015 (13.90% of Brent) during
which
FOB
cargoes
were
contracted. It was further stated
that the MSPA was an umbrella
document which set out general
terms and conditions without
creating any binding sale and
purchase obligations on the
parties. The cargoes sourced from
Qatargas were delivered on March
26, 2015, April 24, 2015, May11,
2015, May 28, 2015, June 15,
2015 and July 9, 2015. Out of
these six cargoes, two cargoes
were delivered to a private
customer. The PSO took up the
matter with OGRA for price
determination of four cargoes but
the
latter
did
not
agree.
The MoI&P requested the ECC for
grant of ex-post-facto approval in
respect of six cargoes arranged by
PSO
from
Qatargas
under
Government
to
Government
arrangement on FOB basis, on
board FSRU. After a detailed
discussion, the ECC accorded expost facto approval of six cargoes.
BUSINESS
RECORDER
Thursday 4th February, 2016
SBP introducing fixed
rental rate Ijara Sukuk
RIZWAN BHATTI
The State Bank of Pakistan
(SBP) has announced that it is
introducing three-year Fixed
Rental Rate Government of
Pakistan (GOP) Ijara Sukuk
(FRR-GIS).
Presently,
Variable Rental Rate GOP
Ijara Sukuk (VRR-GIS) is
being auctioned and its rental
rate is being fixed every three
months on the basis of Market
Treasury Bills' cut-off yield.
However, on the request of
Islamic Banking Industry, SBP
has decided to launch Fixed
Rental Rate GOP Ijara Sukuk
for
market
development.
Sources said that for the first
time in the banking history,
rental rate for long-term
Islamic instrument will be fixed
for a period of three years on
the
basis
of
Pakistan
Investment Bonds' margin.
The rental rate decided in the
auction will be applicable to
the entire tenor of FRR-GIS
and will be paid to FRR-GIS
holders on semi-annual basis,
they said. "The federal
government is likely to auction
FRR-GIS
against
Jinnah
International Airport, Karachi
as
underlying
asset
amounting to Rs 100 billion
soon and Islamic banks will
get a better rent on FRR-GIS,"
they
maintained.
According to
issued
on
SBP circular
Wednesday,
pursuant to the Government
of Pakistan Ijara Sukuk Rules
2008, it has been decided to
introduce Fixed Rental Rate
GOP Ijara Sukuk, which will
be in addition to the Variable
Rental Rate GOP Ijara Sukuk
already introduced in 2008.
As per instructions and
guidelines, the FRR-GIS will
be issued at face value with a
maturity period of three years
from the date of issue and the
FRR-GIS will be scrip-less
and held in the special Sukuk
account
(SGLA).
These
Sukuks can be traded in the
secondary markets and are
transferable through SGLA.
The FRR-GIS will be sold via
competitive auctions held by
the State Bank of Pakistan
and all Islamic banks and
commercial banks with Islamic
banking branches designated
as primary dealers for the
purpose of participating in the
auction of FRR-GIS to be
announced by the State Bank.
However, Islamic banking
branches will not be allowed
to separately place bids in the
auction.
Primary dealers will be
required to bid rental rate (%
p.a.) and amount (face value)
as per the format provided.
Minimum bid size will be Rs
100,000 and in multiples
thereof. Primary dealers will
be free to place multiple bids.
Rental rate (% p.a.) has to be
specified up to a maximum of
two decimals points. Bids can
be rejected without assigning
any reason thereof. The
auction process will be
uniform based, where cut-off
rental rate will be awarded to
all successful bidders. The
rental rate decided in the
auction will be applicable to
the entire tenor of FRR-GIS
and will be paid to FRR-GIS
holders on semi-annual basis.
According to SBP, in order to
ensure that there is no over
concentration, holding limits
prescribed earlier will also
apply to FRR-GIS. The legal
structure of the FRR-GIS will
be
Jinnah
International
Airport, Karachi as underlying
asset. Successful bidders
would be required to duly
execute, within one day of the
announcement of the auction
result,
a
certificate
subscription
undertaking
through
their
authorised
signatories at the premises of
the State Bank of Pakistan,
Karachi. The settlement date
will be the date of issue of the
FRR-GIS.
The
SBP
mentioned that all other rules
and regulations applicable to
variable rental rate GOP Ijara
Sukuk will also be applicable
to fixed rental rate GOP Ijara
Sukuk.
BUSINESS
RECORDER
Thursday 4th February, 2016
Short deduction of Rs 3.562 billion in 'salaries':
Massive leakage in banks'
WHT regime unearthed
SOHAIL SARFRAZ
Regional Tax Office (RTO)
Rawalpindi has unearthed a
massive leakage in banks'
withholding tax regime by
conducting forensic analysis
with short deduction of Rs
3.562 billion under the head of
'salaries' during July 2014 to
May 2015 period. The FBR
has received a comprehensive
report of the RTO Rawalpindi
Wednesday. The said RTO
has carried out the detailed
analysis
of
the
banks'
withholding tax regime and
also
made
viable
recommendations/corrective
measures for consideration of
the
Board.
According
to
the
recommendations/corrective
measures of the RTO, the
state of affairs calls immediate
corrective measures. It is
recommended that the credit
for deduction/collection u/s
149 for bank employees' may
be decentralised. Based on
individual NTNs (or place of
posting where no NTNs are
ascertainable)
payments/collections reported
by the banks through their
withholding statements may
be
transferred
to
the
concerned
RTOs.
DPCs
concerned
can
act
as
"Clearing Houses" in this
regard. Secondly, IT access to
withholding statements, filed
by all banks, corporate giants
with multi-city branches may
be allowed to all RTOs, so as
to enable them in monitoring
of
proper
&
timely
deduction/collection of taxes
under various withholding
provisions. This way each field
formation can be obligated to
safeguard
withholding
operations within its specific
jurisdiction. This step would
also
help
in
timely
enforcement of filing of returns
by the bank employees.
Thirdly, as action u/s 161/205
cannot be diluted to the level
of each and every field
formation, therefore in order to
avoid this possible hardship to
defaulting
Banks
and
corporate
giants,
it
is
recommended
that
all
leakages detected & reported
by RTOs may be routed to DG
(WHT)/Chief (WHT) FBR. The
said office(s) after ensuring
timely
remedial/recovery
measures can apportion the
credit of collection between
detecting
RTO
and
enforcement formation on the
basis of qualitative input made
by the respective formations.
Fourthly, similar audits may be
conducted
by
respective
RTOs/LTUs in the cases of all
corporate giants with multiple
intra-city
and
multi-city
branches.
An
immediate
action by the Board (Para-4
above) would plug the existing
loopholes in tax withholding
regime, entail a multilayered
monitoring
mechanism,
incentivise good performance,
discourage complacency and
ultimately and give a boost to
national revenues. As all the
remedial
measures,
as
suggested above are home
based, do not involve any
financial cost and are hassle
free, as far as WHT Agents
are
concerned,
therefore
warrant
immediate
enforcement, the report said.
The RTO Rawalpindi further
highlighted
that
while
conducting its routine field
operations, unit officer MACIV, Withholding Zone RTO
RWP has observed that tax
withholding
regime
of
Pakistan's banking sector is
badly infested with leakages
and needs a serious review.
Findings of the forensic
analysis
of
only
one
withholding area, ie, salaries,
conducted thus far, are an eye
opener.
Short
deduction
during July 2014 to May 2015
alone stands at Rs 3.562
billion.
The further break-up of
aforesaid short deduction
revealed that the short
deduction worked out for the
months of July, August and
September, 2014, indicating
revenue loss of Rs 140.513
(millions) has already been
communicated
to
the
LTUs/RTOs
holding
jurisdiction over the cases.
The
remaining
Short
deduction worked out for the
months of October, 2014 to
May 2015 of Rs 3,421.487
(millions) is being forwarded to
the Board(soft copy) for
information
and
further
directions to the concerned
LTUs/RTOs
for
retrieval.
The methodology for detection
revealed that the figure of
aforesaid short deduction has
been simply worked out by
downloading
withholding
statements filed by the target
taxpayers.
Adopting
the
taxable
amount
as
per
declared version, based on
respective
withholding
statements and applying rate
of tax as per applicable rate of
the
tax
year.
The basic working has been
BUSINESS
RECORDER
Thursday 4th February, 2016
made by the concerned unit in
charge
and
random
rechecking
has
been
conducted
by
concerned
ADCIR and CIR (WHT). The
RTO Rawalpindi has also tried
to find out the breeding factors
contributing
towards
this
adverse phenomenon in the
bank's withholding regime,
which is one of the most
documented
&
organised
sectors of our economy.
Following major areas have
been identified in this regard.
In the cases of salaried
individuals,
apart
from
deduction u/s 149, a lot more
withholding provisions are
applicable.
Under
the
prevailing law settlement of all
adjustable tax withholding is
allowed only at the time of
filing of returns. While making
payments/releasing salaries
WHT Agent has nowhere
been allowed to account for all
such claims filed by the
employees. WHT Agent is
neither legally empowered nor
qualified to adjudicate the
admissibility of each such
claim filed by the employees,
prior to the filing of their tax
returns.
Banks
have
apparently assumed the role
of tax authorities by allowing
pre-filing adjustments. As this
practice suits all and sundry,
(especially
the
top
management
with
hefty
salaries)
therefore
its
widespread
popularity
is
evident from massive dip in
withholding u/s 149. This
phenomenon
has
now
engulfed almost all major
WHT
Agents,
it
said.
Among the WHAs u/s 149 the
bank management is perhaps
the only withholding agent
which is empowered for
deduction/collection of tax in
their own case ie two-in-one
position. In all other cases
invariably the WHAs and
Withholdees are distinct and
separate entities, therefore
the version of deduction
/collection at source remains
mostly objective & fair. In the
banking sector this unique
position of WHAs is a potential
threat and risk to the interest
of
revenue.
Credit for collection u/s 149,
made by the banks and other
corporate giants is centralised
with selected LTUs/RTOs,
holding
assessment
jurisdictions
over
said
institutions. This decision has
created multiple revenue risks
like; Banks, operating at
hundreds of stations with
thousands of branches all
over Pakistan are transmitting
huge amounts under different
heads to 3/4 LTUs/RTOs. Any
ground check/verification by
Lahore/Karachi/Islamabad
based LTUs is physically out
of question. Knowing this
limitation, banks, especially
the private/privatised banks
have space for manoeuvring.
While deduction/collection is
centralised, Tax returns of
banks and their employees
are filed at different, multiple
and
mutually
de-linked
jurisdictions. Over & above Iris
does not allow accessing any
withholding statement beyond
respective jurisdiction. The
instant exercise is confined to
the previous financial year
only
because
now
Iris
prohibits
any
such
pro
revenue venture. All this is a
perfect recipe for revenue
disaster.
While
3/4
LTUs/RTOs,
receiving almost a wind fall,
have gone complacent, all
other 17/18 field formations
are rather obligated to issue
refunds
wherever
so
warranted, thus there is no
incentive
for
vigilant
monitoring. Apathy is all
pervasive. Over the years
major banks have a big say in
achievement
of
revenue
targets, as a result withholding
audit of banks has almost
withered away, the report of
RTO
Rawalpindi
added.
BUSINESS
RECORDER
Thursday 4th February, 2016
IMF team recommends giving
Pakistan $500 million tranche
MONITORING DESK
The
Pakistan-International
Monetary Fund (IMF) talks for
10th mandatory review under
the $6.64 billion Extended
Fund Facility (EFF) in Dubai
remained successful and the
IMF
team
recommended
releasing the 11th tranche of
US $500 million to Pakistan.
According to a TV channel,
the IMF team made this
recommendation to its Board.
The Fund's mission chief to
Pakistan Herald Finger led the
Fund's team in the talks while
Pakistan's side was led by
Finance Minister Ishaq Dar.
BUSINESS
RECORDER
Thursday 4th February, 2016
Finger won't visit country
ZAHEER ABBASI
The Inter-national Monetary
Fund (IMF) mission chief to
Pakistan Harald Finger is
reportedly not going to visit
Pakistan and hold a joint
press conference with Finance
Minister Ishaq Dar at the
conclusion of the tenth
mandatory review under the
$6.64 billion Extended Fund
Facility (EFF), unlike after
previous reviews, due to
security
concerns.
Sources in the Finance
Ministry
told
Business
Recorder on condition of
anonymity that the decision
not to hold a joint press
conference in Islamabad was
taken due to ongoing protests
by PIA staff, supported by all
opposition parties, against the
proposed privatisation widely
believed to be the outcome of
IMF
conditionalities.
Finger in his conference call
from Washington DC on 12
January 2016 with the local
media stated that "privatising
these public entities through
strategic sales is a quite
complicated
process,
a
complex process, and so it
also needs to be done right.
Rushing it through in a way
that would then endanger the
success of it would not really
help anybody. And so we will
need to continue discussing
these things.....In PIA, I think
it's important now that we
come to some view on how to
get
consensus
in
the
Parliamentary process now on
next
steps
."
Sources further told Business
Recorder that the ongoing
protests and suspension of
PIA flights has compelled the
Finance Minister to extend his
stay in Dubai. They maintain
that the finance minister was
to return to Pakistan on
Thursday after the conclusion
of policy level discussion but
would
now
Saturday.
return
on
Dar's critics point out that PIA
flights may be suspended but
Gulf airlines are continuing to
operate and the decision of
the Finance Minister to defer
his return may be because the
IMF
review
remains
inconclusive; or that he wants
to spend sometime with his
family resident in Dubai.
Finance
Ministry
sources
when asked claimed that
there was no issue in either
the technical or policy level
discussions but did not deny
that the amnesty scheme,
slow pace of tax and power
sector reforms as well as the
passage of anti money
laundering law without the
amendments agreed with the
Fund may have slowed the
progress of the ongoing
review.
BUSINESS
RECORDER
Thursday 4th February, 2016
THE RUPEE: all-round gains
RECORDER REPORT
All-round gains were seen on
the
money
market
on
Wednesday as the rupee
moved up against the dollar in
the process of trading, the
dealer said. The rupee posted
fresh gains of 11-paisa versus
the dollar due to easy supply
of US currency for buying and
selling at Rs 104.79 and Rs
104.82 respectively, they said.
INTERBANK
MARKET
RATES: OPEN MARKET
RATES: The rupee was
higher by 10-paisa against the
dollar for buying and selling at
Rs 106.40 and Rs 106.60
respectively. At the same
time, the rupee picked up 50paisa in terms of euro for
buying and selling at Rs
116.00
and
117.00
respectively. In the third Asian
trade,
emerging
Asian
currencies
slumped
on
Wednesday as oil prices
extended losses and sparked
a rush out of risk assets,
sending the South Korean
won to a 5-1/2-year low.
Indonesia's rupiah lost one
percent as foreign banks sold,
while some of the country's
bonds also fell. The Malaysian
ringgit slid as offshore funds
unloaded the unit on concerns
about sliding oil and gas
prices affecting government
revenue. The dollar was
trading against the Indian
rupee at Rs 68.23, the US
currency was at 4.2380 in
relation to the Malaysian
ringgit and the greenback was
at 6.5799 in terms of the
Chinese yuan.
Open Bid
Open Offer
Rs. 106.40
Rs. 106.60
Interbank Closing Rates:
Interbank Closing Rates For
Dollar on Wednesday.
Bid Rate
Offer Rate
Rs. 104.79
Rs. 104.82
RUPEE IN LAHORE: The
rupee did improve against the
American
dollar
on
Wednesday as the latter
slightly fell in its demand and
supply.
This slight fall did help the
rupee in the open market
though.
The dollar did slip to Rs
106.55 and Rs 106.80 on
buying and selling against Rs
106.60 and Rs 106.85 of
Tuesday.
The rupee did fail to get out of
pressure against the British
pound that was traded at Rs
153.50 and Rs 154.20 on
buying
and
selling
as
compared with the previous
closing of Rs 153.00 and Rs
154.00.
RUPEE IN ISLAMABAD AND
RAWALPINDI: The dollar
further
gained
strength
against the Pak rupee at the
open currency markets of
Islamabad and Rawalpindi
here
on
Wednesday.
The dollar opened at Rs 106
(buying) and Rs 106.20
(selling) against same last
rate. It did not observe further
change in the second session
and closed at Rs 106 (buying)
and Rs 106.20 (selling).
Pound Sterling opened at Rs
158 (buying) and Rs 158.50
(selling)
against
same
overnight value. It did not
observe further change in the
evening session and closed at
Rs 158 (buying) and Rs
158.50
(selling).
BUSINESS
RECORDER
Thursday 4th February, 2016
2,320 megawatts energy projects in Southern Punjab:
Two accords signed with Chinese,
Danish companies
RECORDER REPORT
Two separate agreements were
signed
between
Punjab
Government and Chinese and
Danish companies for setting up
2320 megawatt energy projects in
South Punjab Chief Minister
Shahbaz Sharif was the chief
guest. Under the agreement
signed
between
Punjab
government and Danish wind
power generation international
company VESTAS will set up four
wind power plants of 250
megawatt each at Rajanpur in
South Punjab whereas under the
second agreement, renowned
Chinese
Company
Hauneng
Shandong will set up two coal
power plants of 660 megawatt
each
at
Rahimyar
Khan.
The Chief Minister gave Letter of
Intent to Vice President of
VESTAS. Gerard Carew with
regard to the agreement of one
thousand megawatt energy project
between Punjab government and
Danish company VESTAS, under
which four wind power projects of
250 megawatt each will be set up
in South Punjab on which an
investment of 2 billion dollars will
be made. Talking to the media
men Shahbaz Sharif said that last
year it was announced that there
are
vast
opportunities
of
generating energy in south Punjab
and sites had been identified
where
plants
of
generating
electricity through wind could be
set up, former Danish Ambassador
in
Pakistan
Jesper
Moller
Sorensen
had
extended
cooperation for identifying wind
corridor.
He said the wind corridor was
identified with the cooperation of
world
renowned
company
VESTAS for which we are thankful
to Danish company for providing
free assistance in this regard. As a
result of these efforts, a big
achievement has been made with
regard to one thousand megawatt
wind power project between
Danish Company VESTAS and
Punjab
government.
Political Director of Ministry of
Foreign Affairs of Denmark Jesper
Moler Sorensen who served as
ambassador in Pakistan from 2013
to 2015 addressing the function
said Pakistan is coming as a
surprising market for Danish
companies in energy sector and is
marching forward in the field of
renewable energy where Danish
companies are very strong.
He said that technical abilities of
VESTAS were introduced to
Punjab government one and a half
years ago and Denmark is ready
to
provide
more
technical
assistance to Punjab government
in renewable energy sector. He
said Danish government has
planned
to
transfer
Danish
expertise in wind policy, technical
field and financing sector to
concerned Pakistani stakeholders.
2018 is the target of starting
commercial operation from first
250
megawatt
project.
Vice President of VESTAS Jerad
Cereu addressing the ceremony
said that VESTAS provides wind
energy to 74 countries and it has
provided jobs to 19500 people.
VESTAS has set up 52 percent
more megawatts than others in the
industry and the projects of 71
gegawatts have been set up all
over the world. VESTAS is
committed to play important role in
the increasing market of Pakistan,
he
added.
Provincial Ministers Sher Ali Khan,
Ayesha Ghous Pasha, Chairman
Planning and Development and
other officials were also present on
this
occasion.
Earlier,
an
agreement of 1320 megawatt coal
power plant was signed between
Punjab government and Chinese
company Hauneng Shandong, an
investment of two billion dollars
will be made on this project. Under
this agreement, Chinese company
will set up two coal power plants of
660 megawatt each in Rahimyar
Khan. Secretary Energy Asad ur
Rehman Gilani signed on behalf of
Punjab government and President
of Chinese company Wang Wen
Zong on behalf of his company.
Speaking
on
the
occasion
Shahbaz Sharif said that the
agreement of 1320 megawatt
between Punjab government and
Chinese company is a good omen.
The Punjab government will
provide all possible facilities for
implementing this project. He said
that Sahiwal coal power project is
being forwarded expeditiously and
50 percent construction work has
been
completed.
The Chief Minister said that a new
history of speed, transparency and
high standard is being written in
Sahiwal coal power project. He
said that Chinese companies have
made investment of 1.8 billion
dollars in the project. this project of
China Pakistan Economic Corridor
will be helpful in removing
darkness from Pakistan. Shahbaz
Sharif
said
that
Punjab
government
and
federal
departments are working with
devotion and dedication on energy
projects. Railways, Port Qasim
Authority and NTDC have assured
to complete their respective work
within stipulated period. The Chief
Minister said that work is
continuing on 1320 megawatt coal
power plant in Sahiwal. He said
that the work was started on this
project six and a half months ago
and 50.8 percent construction
work has been completed so far.
BUSINESS
RECORDER
Thursday 4th February, 2016
Trade ministers of D-8 to meet in
Islamabad on February 17
MUSHTAQ GHUMMAN
Pakistan will host the Trade
Ministers' Council Meeting of
D-8 in Islamabad on 17th
February 2016. The meeting
will deliberate upon the status
of
Preferential
Trade
Agreement (PTA) among the
contracting parties which is at
an
advanced
stage
of
preparation. The members
would discuss the tariff
reduction lists provided so far
by members states. As of
now, Indonesia, Malaysia,
Nigeria, Pakistan and Turkey
have submitted their lists.
The Developing 8 (D-8) is a
group of Muslim countries
comprising
Bangladesh,
Egypt,
Indonesia,
Iran,
Malaysia, Nigeria, Turkey and
Pakistan. The establishment
of D-8 was announced
officially by the Summit of
Heads of State/Government in
Istanbul, on June 15, 1997.
Federal
Minister
for
Commerce, Engr Khurram
Dastgir Khan, who will chair
the Trade Ministers' Council
Meeting, held a meeting with
the ambassadors of D-8
countries and apprised them
of the preparations Pakistan
has made for the Trade
Ministers' Council Meeting.
Talking to the ambassadors,
the minister said that Pakistan
intends to hold meaningful
negotiations on trade matters
and conclude negotiations on
fast-track basis to reap the
maximum benefits out of the
Agreement. He said that the
economic cooperation and
trade facilitation among the
member countries will change
the lives of the teeming
millions which inhabit the
member states and are poor.
The meeting will also discuss
the
dispute
settlement
mechanism and continue its
discussion on consolidated
draft
Dispute
Settlement
document which set the rules
to resolve the disagreements
between the parties. The
Trade Ministers' Council will
discuss the provisions for
Rules of Origin and the
Bangladeshi proposal to have
30% Local Value Addition
Criteria for LDCs as agreed in
Trade Preferential System
(TPS) amongst the OIC
Member
States.
Pakistan's total exports to D-8
countries in 2014-15 were
$1.602 billion while the
imports were $3.67 billion.
Exports to Iran stood at $30
million, Turkey 309.2 million,
Bangladesh $697.6 million,
Indonesia
$143.2
million,
Malaysia $205.1 million, Egypt
$150.9 million and Nigeria
$66.7
million.
According to the PTA, tariff
above 25 per cent will be
reduced to 25 per cent, above
15 per cent and below 25 per
cent will be lowered to 15 per
cent and above 10 per cent
and below 15 per cent will be
reduced to 10 per cent. In
order to enhance co-operation
in the area of trade among the
member countries, a High
Level Trade Official (HLTO)
consisting of the technical
experts of the member
countries, was constituted to
discuss and finalise the PTA.
The agreement envisages
tariff reduction on 8 percent of
tariff lines having MFN tariff of
above 10 percent in four equal
instalments
for
all
D-8
members except Bangladesh.
Being an LDC, Bangladesh
had been allowed eight years
for reduction of tariff. The tariff
reduction modality under the
agreement will be as follows:
(i) Tariff above 25 percent
shall be reduced to 25
percent; (ii) tariff above 15
percent and below 25 percent
shall be reduced to 15 percent
and; (iii) tariff above 10
percent and below 15 percent
shall be reduced to 10
percent.
For the products to be eligible
for preferential treatment, the
agreed Rules of Origin require
at least 40 percent value
addition which implies a
manufacturer can import up to
60 percent of its inputs for
manufactured
goods.
Agriculture produce and live
animals have to be wholly
produced and obtained in the
territories of the parties to be
eligible for tariff concessions.
Pakistan will be the chair of
this Trade Ministers' Council
for
the
first
time.
BUSINESS
RECORDER
Thursday 4th February, 2016
'PML-N government yet to undertake
promised economic reforms'
RECORDER REPORT
Policy Research Institute of
Market /Economy (PRIME)
said on Wednesday that even
after three years in power, the
present government is yet to
undertake promised economic
reforms. Speaking at a launch
of Pakistan Muslim League
(N) side tracking long term
reform, Ali Salman, Executive
Director PRIME, said that
ruling party had won the
general elections 2013 on the
promise to bring about
economic
reforms.
He said that people voted for
the PML-N to carry out direly
needed
reforms
in
the
economy
which
would
demand certain unpopular
decisions. However, it has so
far shied away from taking
these decisions, which has
resulted in flight of capital from
the country and a dangerous
reliance on external financing,
in
form
of
debt
and
investment. Nothing could be
more counter-reform than the
aura of political consensus on
reforms.
He added that the report
tracks the implementation of
the economic agenda as per
PML-N's own manifesto with
the help of a 'scorecard' which
allocates scores on a range of
0 to 10 to 92 targets reflecting
the economic promises made
by the present ruling party in
three
areas:
According to the 6th Tracking
Report "Sidetracking Longterm Reforms", which reviews
the
federal
government's
performance from July to
December 2015, the average
score in economic revival
stood at 4.2 as compared to
3.8 in the 5th, 4.6 in the 4th,
4.33 in the 3rd, 4.47 in the
2nd and 3.17 in the 1st
tracking report. In the Energy
Security,
the
PML-N
government earned a score of
5.01 which is 13.8% higher
than 5th report, 11% higher
than score in the 4th report,
27% higher than the score in
the 3rd and 15% better than in
the 2nd and 20% higher than
the 1st report. Lastly, in social
protection its average score is
7.13 which was the same in
the 5th report, as compared to
6.5 in the 4th, 6.25 in the 3rd,
6.5 in the 2nd and 6th in the
1st
report.
BUSINESS
RECORDER
Thursday 4th February, 2016
Fiscal Year 2016-17:
Various chambers agree to present
joint budget proposals to FBR
RECORDER REPORT
Various
chambers
of
commerce and industry have
decided to present joint
budget proposals to the
Federal Board of Revenue for
the financial year 2016-17.
The decision came at a
meeting called by the Lahore
Chamber of Commerce and
Industry to ensure more
business
community
participation in trade-andindustry-related policymaking
on the budget proposals
2016-17, here on Wednesday.
LCCI
President
Sheikh
Muhammad Arshad chaired
the meeting. Senior Vice
President Almas Hyder, Vice
President
Nasir
Saeed,
Executive Kamal Mahmood
Amjad Mian, representatives
of Dera Ghazi Khan, Okara,
Vehari, Sargodha, Rawalpindi,
Quetta and Gujrat and other
chambers of commerce and
industry attended the meeting.
All chambers of commerce
and industry, through a joint
communique,
pledged
to
make joint efforts to eliminate
harmful taxation, harmonise in
the federal and provincial tax
regime, withdrawal of import
duty
on
raw
materials,
removal
of
prevailing
anomalies in the statute,
simplification
of
tax
adjudication process, timely
completion of CPEC project
and ensuring availability of
uninterrupted and cheaper
energy.
The participants said the
government should invest as
much as possible in the
energy sector, lower the ratio
of indirect taxes, bring down
taxes
and
duties
on
smuggling-prone items and
ensure timely completion of
the
China-Pak
Economic
Corridor to achieve the key
economic
targets.
The
participants said considering
the growing energy demand, a
major portion of the federal
budget 2016-17 should be
allocated for generation of
cheap electricity through hydel
means.
Maximum
funds
should also be allocated for
construction of large dams,
tapping of natural resources to
keep the industrial wheel
moving.
BUSINESS
RECORDER
Thursday 4th February, 2016
All industrial areas:
SSGC MD assures provision
of equal gas pressure
RECORDER REPORT
Managing
Director,
Sui
Southern
Gas
Company
(SSGC),
Khalid
Rahman
visited SITE Association of
Industry for a wide-ranging
discussion with the members
and office bearers of the
association. Khalid Rahman
agreed with the contention
that industry should be given
priority amongst all consumers
as it provides employment to
the
general
masses.
He said SSGC relationship
with SITE Association had
always been very good,
adding they were trying to
deliver best services to all
industries specially the SITE
industries.
He assured to provide equally
gas pressure to all industrial
areas of Karachi and try to
satisfy all the consumers of
SSGC, saying gas pressure
had been improving because
of LNG in the system.
He said it was the Ogra who
made revisions in the prices
and
advised
the
SITE
Association to take up the
matter with Ogra as he himself
was against the frequent
increase
in
gas
prices.
Replying to another question,
he
said
gas
was
an
indigenous
product
of
Pakistan but its prices were
linked with international prices
to attract foreign companies to
invest in oil and gas
exploration and get proper
return on their investment. On
the question of low gas
pressure
and
delay
in
rectification
thereof
he
sympathised
with
the
industrialists
and
said
sometimes it happened that
due to low-pressure of gas in
pipelines from the sources at
Sui. However it is SSGC's
prime objective that the gas
pressure remains constant
and
their
consumers
especially industries do not
suffer
unnecessarily.
He said dedicated pipeline for
SITE Phase-I would be
completed in March 2016 and
second phase would be
completed
in
September,
2016. He also constituted a
two-member committee for
liaison with industrialists of
SITE namely Saeed Ahmed
Larik, Sr General Manager
(Distribution), Dr Ejaz Ahmed,
Sr General Manager (C/S)
who will visit SITE Association
and meet members of the
association last Friday of
every
month.
Junaid
Esmail
Makda,
President, SITE Association of
Industry underscored the point
that SSGC was the vital part
of a bridge between the
policymakers and customers.
Makda also demanded equal
treatment to SITE Industrial
Area in regard to the provision
of gas. According to him, in
other industrial areas of
Karachi, gas with full pressure
is being supplied while in SITE
industrial area gas with low
pressure
is
provided.
He demanded that dedicated
pipelines of gas supply for
industries
should
be
separated
from
other
consumers - commercial,
CNG stations and domestic.
He also requested to exempt
SITE industries from the
Sunday Gas Holiday to meet
vital export commitments in
time.-PR
BUSINESS
RECORDER
Thursday 4th February, 2016
'Power sector companies, not Wapda,
being privatised'
RECORDER REPORT
The spokesman for the
Pakistan Water and Power
Development
Authority
(Wapda), responding to a
news titled "Privatisation of
Wapda will not be allowed"
has clarified that it is not
Wapda but the power sector
companies that are being
privatised. The spokesman
made it clear that subsequent
to power sector reforms and
unbundling of Wapda's Power
Wing in 2007, all the power
sector companies such as
Gencos, NTDC and Discos
have been operating as
independent
corporate
entities. Since then, Wapda
has no administrative control
over
them.
He maintained that it is
factually
incorrect
and
misleading
to
term
privatisation of the power
sector companies as the
privatisation
of
Wapda,
because the power sector
companies are functioning
independent of Wapda. The
spokesperson has further said
that Wapda's mandate is only
limited to construction of new
dams
and
hydropower
projects and operation and
maintenance of the hydel
power
stations.
BUSINESS
RECORDER
Thursday 4th February, 2016
Punjab Assembly adopts PRA
(Amendment) Bill 2016
JALIL HASSAN AKHTAR
Punjab Assembly in its 19th
session here on Wednesday
passed 'The Punjab Revenue
Authority (Amendment) Bill2016'. In the session 'The
Punjab Animals Slaughter
Control (Amendment) Bill
2016'was also tabled. In its
legislative
activities,
the
assembly also passed the
Infrastructure
Development
Authority of the Punjab Bill-l
2015, the Punjab Food
Authority (Amendment) Bill2015 and the Punjab Pure
Food (Amendment) Bill-2015.
During the session, opposition
legislators
vociferously
protested in the assembly
against PIA Karachi incident
in which two PIA employees
were killed. Opposition led by
MPA Mahmud Ur Rashid of
the PTI demanded punitive
action
against
persons
involved in the incident. The
opposition legislators termed
the attitude of the government
authoritative
and
antidemocratic.
They walked out from the
assembly
and
protested
outside of the assembly
building. In the assembly
session, provincial minister for
agriculture replying to a query
said that there were 27
research
organisations
working under the authority of
the research wing of the
department.
The
minister
further replying to questions
stated that there was 1.2
million livestock in 6.6 million
acre area of Cholistan.
He further said they were
shifting food grain market,
vegetable market and fruit
market from District Sahiwal to
Chak 9-L and Chak 92-9
Pakpattan Road. He stated
that there were three market
committees in District Sahiwal.
The Provincial Minister for
Agriculture apprised that they
had sent 30 scientists abroad
for training. He told that 2-3
technologies had also been
introduced here from abroad.
The minister to a query said
two new varieties of wheat
had been introduced during
last two years. He stated
Cotton Research Institute
,Faisalabad was also working
on
preparation
of
new
varieties of cotton and in the
last three year period 10
varieties of cotton had been
launched. The minister stated
that Punjab Seed Corporation
had authority to approve
newly introduced seed to the
farmers. The House was
adjourned later by the chair
for
today
(Thursday).
BUSINESS
RECORDER
Thursday 4th February, 2016
Limitations on exercise of powers
under section 38 The Sales Tax Act, 1990
ZAFAR AZEEM
Section 38 of the Sales Tax
Act, 1990 did authorise an
officer of Sales Tax to have an
access to the premises,
stocks, accounts and records
in respect of an inquiry or
investigation relating to a tax
fraud, and in consequence the
authorised
officer
is
empowered
to
conduct
investigation. However, in
order
to
invoke
these
provisions, the officer must be
authorised by a competent
authority, furthermore, there
must be some ongoing
investigation relating to a tax
fraud.1
The authorised officer enjoys
full powers and authority to
inspect
the
offending
promises and the prescribed
records to ensure that the tax
payer is abiding by the law in
respect
of
proper
maintenance of prescribed
records, and to satisfy himself
that the prescribed records as
required under the law is fully
in order, and such officer has
to act fairly, justly and
reasonably while exercising
the said powers and such
officer has to disclose that he
has been dully authorised to
act
by
the
competent
authority.
Where any action is taken
without authorisation, such
action would be illegal, null
and
void,
since
the
requirements of the provisions
of section 38 are not complied
with. It may be noted that
section 38 by itself does not
authorise an officer to carry
out searches and seizures
since
there
are
other
provisions in the law; for
example powers conferred
under section 40 and 40-A of
the Sales Tax Act, 1990, the
provision of said sections do
provide authority to search
and seize. The powers under
section 38 as such are only
restricted
to
check
the
maintenance of prescribed
records related with the
offences related to book
keeping
requirements.2
Furthermore,
another
important requirement is the
basis and belief upon which
an office is invoking the
powers under section 38 must
record before embarking upon
an inquiry. The provisions of
section 38 of the Sales Tax
Act, 1990 have been enacted
with a view to protecting the
interest of the citizens and
therefore a tax official who
claims to be authorised by the
competent authority is bound
to show the authorisation to
the person who is asked to
make the compliance of the
requirements of the sales tax
law.
It is noteworthy that where the
tax authorities carry out
searches
without
any
authorisation, a contravention
case made by such officer
would be null and void having
no
legal
effect.
The
authorisation of the competent
authority
is
mandatory.
It
would,
therefore,
be
necessary
for
the
departmental officers that
before embarking upon to
exercise powers under section
38 of the Sales Tax Act, 1990,
such functionaries must have
reasons to believe that such a
visit or inspection of records:
I. Is duly warranted by law;
II. There exists a sound belief
on record that exercise the
powers
conferred
under
section 38 of the Sales Tax
Act, 1990, it is also mandatory
that the reasons for such
belief must be recorded;
III. A situation exists where a
registered person has filed
documents in the normal
course and these documents
reveal non compliance of
sales
tax
law;
IV. Such visit must be
confirmed in advance to the
taxpayer
indicating
the
requirements and the purpose
of
visit;
V. Custody of documents can
only be taken of such records
which have been presented to
the visiting officer by an
authorised person of the tax
payer;
VI. A proper receipt for taking
the documents in custody
must be given to the taxpayer;
VII. Any record or document
taken into custody under
compulsion cannot be used
for any purpose against the
tax
payer.
Thus where a departmental
officer act in violation of the
said provisions of law, his act
would amount to an act falling
short of the requirement to act
fairly, justly and reasonably
and would therefore make the
undertaken proceedings in
violation of law as being illegal
and
void.
It must therefore be noted that
where a visit is conducted by
an unauthorised person and
there was no reasonable
cause to conduct such visit,
the action of the departmental
authorities would be void and
BUSINESS
RECORDER
Thursday 4th February, 2016
illegal as the contemplated
actions are not in compliance
with the requirements of the
sales
tax
law.
(The writer is an advocate
and is currently working as
an associate with AzimudDin-Law
Associates
Karachi)
1. The law requires that such
demand of documents for
inspection can also be made
from a person who is liable for
registration and demand of
documents relate to for an
inquiry or investigation relating
to a tax fraud committed by
him.
2. A probable cause for
search can arise during the
visit made in exercise of
powers under section 38, if it
does, provisions of section 40
and 40-A must be complied
with.
BUSINESS
RECORDER
Thursday 4th February, 2016
PRGMEA to hold 15th Textile Asia in March
RECORDER REPORT
Pakistan
Readymade
Garments Manufacturers &
Exporters
Association
(PRGMEA) has announced to
hold 15th Textile Asia 2016
(International
Textile
&
Garment Machinery Trade
Fair) from March 9 to 11, 2016
in
Karachi.
Chairman
PRGMEA Shaikh Mohammad
Shafiq termed this event as
the Pakistan's biggest B2B
textile, garment, embroidery,
digital printing machineries
and chemical and allied
services.
The trade fair will provide an
effective platform for joint
ventures/ collaborations to the
textile SMEs and to its
international participants to
meet respective Pakistani
business personals to make
future business deals in
Pakistan. 15th Textile Asia
2016 will focus on the
immense
buying/selling
potential of textile & garment
industry
and
poised
to
introduce overseas suppliers
of
textile
and
garment
materials, accessories and
parts and machinery to the
textile industry of Pakistan.
This will complement their
efforts for high quality, value
added products and assist
them to further develop their
business
in
the
export
markets. Over 500 foreign
delegates mainly from Austria,
China,
Czech
Republic,
France, Germany, India, Italy,
Korea, Taiwan, Turkey, UK,
USA etc will attend the event.
The expected visitor turnout is
over
65,000.
BUSINESS
RECORDER
Thursday 4th February, 2016
Moderate business seen on cotton market
RECORDER REPORT
A moderate business activity
was witnessed on the cotton
market on Wednesday in the
process of trading, dealers
said. The official spot rate was
unchanged at Rs 5,400,
dealers said. In Sindh, prices
of seed cotton were at Rs
2000 and Rs 3000, in the
Punjab, rates were at Rs 2300
and Rs 3100, they said.
In the ready business some
7000 to 8000 bales of cotton
changed hands between Rs
5250 and Rs 5650, they said.
Market sources said that there
was lack of buying interest
seen by mills and spinners,
they said. Cotton analyst,
Naseem Usman said that
selling activity is not picking
up despite shortage of quality
cotton.
It is very surprising to note
that after the short arrivals of
seed cotton in PCGA report
not much improvement was
seen in the mills buying.
According to PCGA fortnightly
report cotton arrivals are at
9.6 million bales till 1st
February 2016. The following
deals reported: 800 bales of
cotton from Shahdadpur at Rs
4800, 400 bales from Sui Gas
at Rs 5300, 200 bales from
Rohri at Rs 5300, 400 bales
from Lodhran at Rs 5250, 200
bales from Dharanwala at Rs
5375, 300 bales from Fort
Abbas at Rs 5450, 400 bales
from Rahim Yar Khan at Rs
5600,
400
bales
from
Khanewal at Rs 5600, 600
bales from Kabbirwala at Rs
5650 and 600 bales from
Mianwali at Rs 5650, they
said.
THE FOLLOWING ARE THE KCA OFFICIAL SPOT RATES FOR 2015-16 FOR LOCAL
DEALINGS IN PAK RUPEES FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
Spot Rate
Difference
Rate
Ex-Gin
Upcountry
Spot Rate
Ex-Karachi
Ex-Karachi in
For
Price
Expenses
Ex-Karachi
As on 02.02.2016
Rupees
37.324 Kgs
5,535
5,535
5,400
135
Nil
Equivalent
40 Kgs
5,932
5,932
5,787
145
Nil
BUSINESS
RECORDER
Thursday 4th February, 2016
Cotton futures hit 1-1/2 weeks high
on India production concerns
RECORDER REPORT
Cotton futures rose for the
second consecutive session
on Tuesday amid concerns
about crop damage and
acreage reduction in South
Asia, as the market continued
to grapple with low supplies of
high-quality cotton after a
stormy US harvest season.
"We still have strong demand
for high-grade cotton," said
Keith Brown, a Moultrie,
Georgia-based cotton broker.
Production in India, the
world's
largest
cotton
producer, is likely to fall 3.6
percent to 35.2 million bales in
the 2015/16 crop year, a
senior government official said
on Tuesday. March cotton on
ICE Futures US settled up
0.51 cent, or 0.83 percent, at
62.30 cents per lb, after rising
as high as 62.50 cents, the
highest since January 22.
Total futures market volume
rose by 4,597 to 43,505 lots.
Data showed total open
interest fell 2,851 to 195,506
contracts in the previous
session. Certificated cotton
stocks deliverable as of
February 1 totalled 27,784
480-lb bales, unchanged from
27,784
in
the
previous
session. The dollar index was
down 0.17 percent. The
Thomson
Reuters
CoreCommodity CRB Index,
which tracks 19 commodities,
was down 2.02 percent.
New York cotton
RECORDER REPORT
The fluctuations observed during the day:
Current Session
Prior Day
Open
High
Low
Last
Time
Set
Chg
Vol
Set
Mar’16
62.14
62.59
61.90
61.99
14:00
Feb 03
-
-0.31
25284
62.30
May’16
62:65
62.85
62.29
62.40
14:00
Feb 03
-
-0.25
13691
62:65
Jul’16
62.77
63.00
62.53
62.65
14:00
Feb 03
-
-0.23
5801
62.88
Thursday 4th February, 2016
Cotton production shrinks by one-third
PARVAIZ ISHFAQ RANA
KARACHI:
Pakistan’s
cotton
production has plunged 33 per
cent to 9.612 million bales this
season, the Pakistan Cotton
Ginners Association (PCGA) said
on Wednesday.
The industry believes that such a
huge shortfall would not only hurt
the economy, but also have farreaching social implications.
Cotton experts estimate that the
shortfall would inflict a loss of
around $6 billion to the country’s
GDP.
Output in Punjab is lower by 44pc
as the province has produced
5.857m
bales
this
season
compared to 10.5m bales a year
earlier, according to a fortnightly
report of the PCGA for Jan 15 to
Feb 1 period.
Sindh
was
also
adversely
affected by heavy rains and
floods, but losses are much lower
due to early sowing. The province
has produced around 3.755m
bales as against 3.935m bales a
year ago, a drop of 4.6pc.
“As long as the government
leaves growers at the mercy of
merchants,
such
incidents
continue to repeate,” cotton
analyst Naseem Usman said.
“Only ensuring quality seed,
pesticides
and
fertiliser
to
growers can help produce a good
harvest.”
During Jan 15 to Feb 1, phutti
arrivals remained extremely slow
at 136,982 bales as against
184,230 bales a year earlier.
Exporters have so far purchased
around 358,48 bales this season
compared to 446,346 bales last
year. Spinners have offloaded
lesser quantity at 8.032m bales
as against 12.563m bales.
Ginners are currently holding
1.221m bales compared to 1.33m
bales last year.
Only 167 ginneries are operating
in Sindh and Punjab combined
against
267
last
year.
Thursday 4th February, 2016
Cement, fertiliser and power sectors still consuming
major share of gas
KHALEEQ KIANI
ISLAMABAD: Around 275 million
cubic feet per day (mmcfd) of
natural gas is still being provided
to cement, fertiliser and power
plants
although
domestic
consumers continue to suffer,
particularly in Punjab and some
parts of Khyber-Pakhtunkhwa.
A senior official of the petroleum
ministry told Dawn that natural
gas currently being supplied to
some of the non-domestic sectors
was without formal contracts. At
least 275mmcfd gas being
supplied to customers other than
residential consumers accounted
for 600mmcfd of total gas
availability in the Punjab.
The supplies of liquefied natural
gas (LNG) have also been
curtailed in recent days because
of liquidity crunch even though
the regasification and storage
terminal was installed in March
last year with prime objective of
minimising gas shortfall in winter
— starting November 2015.
He said the terminal had the
capacity to process 400mmcfd
under the government contract
but LNG imports had been
reduced despite lowest prices in
the spot market.
The government should not only
increase LNG imports to take
advantage of its low prices, but
also negotiate with Qatargas to
put an upper cap on its import
price because of a long-term
agreement.
Giving an example, the official
said Rousch Power Plant was
currently being supplied about
86mmcfd of gas despite the fact
that the plant did not have any
gas supply contract at the
moment.
Likewise,
Fauji
Kabirwala Plant was also getting
25mmcfd and public sector
Guddu plant was being provided
23mmcfd.
Another 81mmcfd of natural gas
was also being provided to
Jamshoro Power plant, followed
by 29mmcfd to Kotri Power Plant.
Fauji Jordan Fertiliser plant was
also being provided 19mmcfd.
The
official said
Pak-Arab
Fertiliser was also being provided
about 43mmcfd of natural gas
until last week but was later
disconnected
when
it
was
highlighted in the media.
About 11mmcfd gas in Sui
Northern Gas Pipelines Limited
(SNGPL) was also going to the
cement sector which is at the
lowest level of the priority list.
This include 5.5mmcfd to Lucky
Cement, 2.5mmcfd to two plants
of DG Khan in Kalar Kahar and
Multan, one mmcfd to Kohat
Cement and two mmcfd to
Gharibwal Cement.
Under the load management
policy, domestic consumers are
on the top priority, followed by
power, fertiliser, industry, CNG
and then cement. Because of
historic fall in international oil
prices, the cost of regasified LNG
(RLNG) after all the taxes and
charges has fallen below $5.5 per
mmbtu which is well below the
price of some of the domestic gas
fields.
RLNG
price
has
become
affordable to domestic sector at
this rate if made part of the
weighted average cost of gas at
least for three months.
On the other hand, the SNGPL
has appealed to all consumers to
minimise use of gas appliances to
ensure provision of gas for
cooking purposes only for fellow
consumers and avoid using gas
compressors and heaters which
could be life threatening.
The company said the demand
supply position on its system had
deteriorated over the last few
years due to the impact of new
domestic connections involving
additional 80-100mmcfd annually
during winter months against
160mmcfd reduction in supplies
every year.
“Thus each year, SNGPL faces
an
additional
shortfall
of
250mmcfd,” the SNGPL said.
It said the shortfall was bridged
though
load
management
(curtailment) in different sectors
to cater for high priority domestic
and commercial sectors in
accordance with Natural Gas
Allocation
and
Management
Policy, 2005 and its subsequent
amendments.
“Due to the decision of Peshawar
High Court against a writ petition
invoking Article-158 of the
constitution,
there
is
no
curtailment
in
Khyber
Pakhtunkhwa,”
a
company
spokesperson explained.
During the current winter season,
SNGPL was left with no option
but to curtail total system quality
gas supplies to all sectors in
Punjab other than domestic and
commercial
consumers,
the
spokespersons claimed.
Even with the said suspension,
the gas available for Punjab is not
Thursday 4th February, 2016
sufficient to meet the demand of
domestic and commercial sectors
in extreme winters (around 1,000
mmcfd).
Commenting on gas supply to
non-entitled sectors, the SNGPL
said some sectors continue to get
gas even during winter months
like power and fertiliser which are
supplied raw, permeate or low
BTU gas, which is not fit for
supply to other sectors through
SNGPL’s pipeline network. These
dedicated supplies typically range
from 180 to 240mmcfd. Further,
SNGPL is bound to supply
15mmcfd system quality gas to
Engro Fertilisers, under firm
commitment.
Additionally, cement sector is
being supplied around 12mmcfd,
out of which, around 7-8mmcfd is
supplied to the plants located in
the
provinces
of
Khyber
Pakhtunkhwa.
Remaining
45mmcfd is mainly supplied to
residential colonies of cement
plants in Punjab since the same
fall under domestic consumers.
RLNG supplies and are being
supplied RLNG on as available
basis.
Some consumers have opted for
supplies of Re-gasified LNG
(RLNG). Rousch, Fauji Kabirwal,
Kot Addu, Saif, Sapphire, Orient
and Halmore from the power
sector, Pak-Arab from fertiliser
sectors and a large number of
consumers from industrial and
CNG sectors have opted for
He said total gas available for
supply in the Punjab was around
600mmcfd and diversion of gas
from non-entitled sectors as per
government’s
approved
and
published
load
management
policy could make a lot of
difference in easing sufferings of
the
people.
This shift has contributed to
reduction in the overall demand
supply gap of natural gas.
Domestic sector is not being
supplied RLNG due to its heavy
cost component.
Thursday 4th February, 2016
LPG prices cut by Rs15 per kg
FROM THE NEWSPAPER
ISLAMABAD: The marketing
companies reduced prices of
Liquefied Petroleum Gas (LPG)
by Rs15 per kg on Wednesday
following a declining trend in
world markets.
Prices of domestic cylinder were
decreased
by
Rs175
and
commercial cylinder by Rs700.
LPG Distributors Association
Chairman
Mohammad
Irfan
Khokhar said that the local
market witnessed a dip in LPG
prices after a reduction of $70 per
tonne to $300 per tonne in the
international market.
He said the new prices would be
effective from Feb 3 throughout
the country.
Giving details, he said the prices
had been reduced to Rs85 per kg
and domestic cylinder will be
available at Rs970 in Lahore,
Kasur,
Gujranwala,
Gujrat,
Faisalabad, Jhelum, Sahiwal,
Sialkot and Peshawar.
Prices of domestic cylinder in
Rahim Yar Khan, Sadiqabad,
Hyderabad, Attock, Mirpur and
AJK have been slashed to
Rs1,150, and its one kilogram
price would be Rs100.
In
Rawalpindi,
Islamabad,
Abbotabad, Muzaffarabad, Fata,
Kotli, Mirpur Khas, Umarkot and
Nawabashah, the one kilogram
LPG would be sold at Rs110 and
the domestic cylinder will be
available at Rs1300.
The price of domestic cylinder in
Gilgit-Baltistan,
Murree
and
Balakot would be Rs1,510 and its
one kilogram price would be
Rs130.
He said the price of domestic
cylinder in Karachi has been
reduced to Rs910, and its per kg
rate would be Rs80.
He said the representatives of the
association recently held a
meeting
with
Minister
for
Petroleum
and
Natural
Resources
Shahid
Khaqan
Abbasi
to
discuss
issues
pertaining to ensuring stability in
prices.
Base price rejected
Our Staff Reporter adds from
Karachi:
LPG
Distributor
Association
of
Pakistan
(LPGDAP) Vice Chairman Ali
Haider has rejected the base
price announced by public sector
producers and private refineries.
He said it was for the first time in
the history of the country that the
landed price of imported LPG is
around 50,500 tonnes, including
the profit margin of importer due
to decline in international Saudi
Aramco Contract Price by $72
per tonne. The current C&F price
is $360 per tonne.
He said that the OGDCL had
announced average price of
Rs43,000 per tonne followed by
Rs44,000 per tonne by Byco and
this price, including sales tax,
amounts to Rs51,597 per tonne
ex-refinery.
OGDCL and Byco reduced LPG
price by Rs5,000 per tonne on
Wednesday.
After
adding
the
primary
transportation and operating cost
of LPG marketing company and
its distribution margin, another
Rs10,000 per tonne are added.
Distributor and retailer margin is
not included in this price which
means the ex-refinery price of
local producer is expensive than
the landed imported LPG price,
he claimed, adding “this is
against the spirit of deregulation
policy of LPG.”
He said the local product is being
forced to sell at more than
international prices and none of
these private and public LPG
producers import a single tonne
of LPG.
They
are
also
charging
premiums, signature bonus and
profit margin to LPG marketing
companies. “If we add this
component of cost, the price of
LPG would increase at least by
Rs13,000-15,000 per tonne than
the imported LPG. “
He urged the government to bring
the local LPG prices at least to
the level of Saudi Armaco
Contract Price of the current
month.
Thursday 4th February, 2016
Slow trading on cotton market
THE NEWSPAPER'S STAFF REPORTER
KARACHI: Trading was slow on
production figures close to 9.6
the cotton market on Wednesday
million bales, a shortfall of almost
in the wake of depressed phutti
5m bales over the previous year.
(seed cotton) arrival figures.
The industry does not seem to be
Much of the buying remained
in panic or hurry to replenish their
around low quality lint because of
stocks despite the fact that the
short supply of quality cotton.
quantity of unsold cotton stocks
Floor brokers said that steady
with ginners is also very low, at
flow of buying orders for low
around 1.2 million bales.
quality cotton kept prices steady
but
big
spinners
were
conspicuous by their absence.
Barring small lot deals originating
The
market
should
have
from some spinners, the activity
rebounded
under
normal
was slow and devoid of
circumstances but since the
enthusiasm, brokers said, adding
textile industry is facing financial
that
the
government’s
crisis there was no immediate
“indifference” to the cotton
reaction.
economy was surprising.
According to reports, the ginners’
The world cotton markets moved
body has placed fresh cotton
higher with New York cotton
closing further high for all the
future contracts. The Karachi
Cotton
Association
(KCA),
however, kept its spot rates
unchanged.
Major deals on ready counter
were:
800
bales
from
Shahdadpur (Rs4,800), 400 bales
from Sui (Rs5,300), 200 bales
from Rohri (Rs5,300), 400 bales
from Lodhran (Rs5,250), 200
bales
from
Dharanwala
(Rs5,375), 300 bales from Fort
Abbas (Rs5,450), 400 bales from
Rahimyar Khan (Rs5,600), 400
bales from Kabirwala (Rs5,650),
and 600 bales from Mianwali
(Rs5,650).
THE FOLLOWING ARE THE KCA OFFICIAL SPOT RATES FOR 2015-16 FOR LOCAL
DEALINGS IN PAK RUPEES FOR BASE GRADE 3 STAPLE LENGTH 1-1/32"
MICRONAIRE VALUE BETWEEN 3.8 TO 4.9 NCL
Rate
Ex-Gin
Upcountry
Spot Rate
For
Price
Expenses
Ex-Karachi
37.324 Kgs
Equivalent
5,400
135
5,535
40 Kgs
5,787
145
5,932
Thursday 4th February, 2016
Thursday 4th February, 2016
Spinning industry still faces problems despite power
tariff cut
By Mansoor Ahmad
LAHORE: The spinning industry
still face problems despite power
tariff reduction of Rs3 per unit
that is insufficient to bring back its
competitiveness, but its quality
yarn is bringing back global
buyers being disappointed by
inconsistent and low quality
Indian yarn.
Last 18 months have been a
nightmare
for
the
energy
intensive spinning and weaving
sectors due to high power tariff
and general energy shortages.
During the same period, the
Indian government tried to boost
its yarn and fabric exports by
providing subsidies on the export
of these two items. Later, it
announced further subsidy on a
few focused market that included
Pakistan. Chinese shifted their
orders from Pakistan to the Indian
spinners. Some large fabric
manufacturers also preferred
cheaper Indian yarn over the
expensive domestic product.
The Pakistani weavers soon
realised that the quality of Indian
yarn was inferior and inconsistent
that impacted their quality badly.
The fabric exports also declined
along with the Pakistani yarn, as
the global buyers were not
satisfied with the fabric made
from Indian yarn.
The Chinese also noticed this
flaw and for a considerable time
they persisted with Indian yarn on
promise of the Indian exporters
that product quality will be
improved.
The Chinese have started
reverting back to Pakistan for
their cotton yarn needs. The
numbers
of
queries
are
increasing consistently. Some
Chinese buyers have even
started visiting Pakistan to
procure yarn.
The reason for high tariff was
dependence on high cost furnace
oil for power generation.
Pakistani yarn manufacturers are
however not prepared to export
yarn at current global yarn rates
as it is not commercially viable to
match Indian rates that are
subsidized by their government.
Other
regional
economies
generated minimal power from
furnace oil. Oil prices remained
very high for most of the decade
baring last 15 months. Another
factor that this industry tolerated
for long was that despite exports
being zero rated there were some
duty paid inputs bought from the
market during manufacturing
process
which
were
not
entertained for refunds.
Yarn exports from Pakistan are
slowing picking up as some
Chinese importers have agreed
to buy at higher rates. Still around
110 spinning units are closed
creating supply concerns. The
spinners are determined that they
will not export their goods at loss.
The current prices offered by the
Chinese buyers though a little
higher are not attractive enough
to warrant reopening of the
closed units.
Industrial activities slow down in
China a month before Chinese
New Year which is the reason
that the prices offered by few
Chinese
imports
were
not
attractive.
The textile industry is expecting a
surge in Chinese demand as New
Year’s vacations are over. They
also expect to sell their products
at a better price the New Year
orders from China are not
accompanied with fair price the
industry experts expect more
mills to close down.
Pakistani
weavers
in
the
meantime
have
stopped
importing Indian yarn and are
buying it locally at a higher price.
Pakistan’s spinning industry has
for the last one decade been
operating at much higher power
tariff than regional economies
and still remained competitive.
Yet another drawback it faced
was the its genuine refunds
acknowledged by the government
were withheld for long periods
and continued accumulation of
refunds has reached hundreds of
million rupees.
Fourth drawback was the regional
disparity created after 2010 in
supply of gas to the industries for
power generation. Spinning units
that are predominantly in Punjab
were
denied
this
cheap
generation fuel which the state
supply power was acutely short.
Except for gas the spinners rarely
raised other issues mentioned
above in their interaction with the
government. The planners took it
for granted that the industry is
viable with most of these
drawbacks.
They have responded partially on
power tariff when 1/3rd of the
industry was closed. The reason
for the survival of industry despite
denial of zero rating, late refunds
and high tariff was that until 2006
it was the most efficient producer
of yarn around the world because
it
possessed
the
better
Thursday 4th February, 2016
technology than India, China or
Bangladesh.
Unfortunately the industry halted
its upgrade and its technology is
now older than all the three
regional countries.
The new spinning equipment is
more energy efficient and its
production speed is also higher
which
has
enabled
other
economies to either match or
lower
the
spinning
costs
compared with Pakistan.
Pakistan still possesses the
advantage of world’s best dye
able cotton that is suited for
products like denim which is
bringing back buyers again.
However this will not last long if
the
technology
and
other
drawbacks are not addressed.
Thursday 4th February, 2016
Cotton output slides 33.4pc to 9.6 million bales
By Erum Zaidi
KARACHI:
Pakistan’s
cotton
output dropped 33.41 percent to
9.612 million bales during this
season to February 1 as heavy
rains and pest attacks wreaked
havoc with the crop.
Pakistan
Cotton
Ginners
Association (PCGA) data showed
that the country produced 14.435
million bales in the corresponding
period last year.
The PCGA reported that 5.857
million bales have been produced
in the Punjab up to February 1,
lower than 10.500 million bales
harvested a year earlier. Sindh
produced 3.755 million bales as
against 3.935 million bales.
The pace of cotton arrival into
ginning
factories
has
also
remained slow.
Analysts said the output of cotton,
a mainstay of the country’s textile
sector, has been declining for the
past few years due to extreme
weather conditions, inappropriate
government policies, shrinking
domestic demand and the
fluctuation in international cotton
prices.
surely result much better yield
and production in FY16.”
Heavy rains in July 2015
inundated a large area of Kharif
crops of rice and cotton.
Cotton accounts for 28.0 percent
share in major crops. Cotton
crop for the current fiscal year is
estimated at 10.9 million bales,
falling well below the target of
15.4 million bales.
Low cotton prices, in the previous
season, also discouraged farmers
to sow the commodity.
“Some of the farmers used their
lands for other crops, like maize,
fodder,
vegetable
due
to
softening domestic cotton prices,”
a cotton expert said.
“The government needs to slap
ban on new sugar mills in cotton
growing belt.”
The expert said the government
should provide the growers
rebate on utility bills. The
government should also provide
subsidy on seeds and other agri
inputs with lowering the rate of
sale tax on fertiliser.
“The government should provide
free cotton seeds to growers and
purchase cotton from growers at
the international price. This will
The agriculture sector is passing
through a vulnerable time.
Damages to major Kharif crops
are less likely to be compensated
by Rabi crops. Moreover, farm
income has taken a hit due to
persistent low prices of agri
products, and the losses inflicted
by bad weather.
In international markets, a
slowdown in demand from China
is likely to keep cotton prices low
despite a fall in global cotton
production.
Analysts said cotton production is
on the decline in the region. It fell
27 percent over the last 25 year.
Thursday 4th February, 2016
Govt starts feasibility study to improve power
transmission system
By Javed Mirza
KARACHI: The government has
begun a feasibility study to
upgrade the power transmission
networks across the country in a
bid to reduce technical line
losses, an official said.
The official said the government
is advancing with its plan to
enhance
the
transmission
capacity
of
the
National
Transmission
and
Despatch
Company (NTDC) and feasibility
study of the Rs133 million project
has been launched.
“The project will help NTDC in
examining
future
system
scenarios
with
various
combinations
of
upcoming
generation
and
network
expansions,” an official at the
Planning Commission said. It will
enhance the capacity of NTDC's
500 KV transmission system.
The project is part of federal
government’s efforts to resolve
the energy crisis in the country.
Pakistan's
energy
crisis
deepened over the years and
there is a widening gap in energy
demand and supply.
The objective of the study is to
benefit the NTDC by exploring
the
impacts
of
introducing
advanced technology, such as
flexible AC transmission system,
including
series/shunt
compensation and power system
stabilisers.
The objective of introducing these
technologies is to enhance the
transfer capability of NTDC's
network and bring it in line with
the transmission requirement for
anticipated
generation
expansions.
The official said the power
generation capacity is increasing
day by day and up-gradation in
transmission and transformation
capacity of NTDC is urgently
required as a coping strategy.
The official said the feasibility
study is in line with the power
sector’s strategy to provide
reliable and uninterrupted power
to the consumers.
The Planning Commission of
Pakistan has approved the
project at the cost of Rs133
million with foreign exchange
component of Rs106.83 million.
The project would be financed
through NTDC's own resources. It
is scheduled to be completed in
six months. The project will cover
entire system of NTDC except KElectric.
The NTDC has developed the
project to introduce series of
compensation on existing 500KV
transmission lines and to avoid
parallel lines by few years.
Thursday 4th February, 2016
Tax ombudsman forms committee to resolve stuck
refunds’ issue
By Shahnawaz Akhter
KARACHI:
Federal
Tax
Ombudsman (FTO) Abdul Rauf
Chaudhry has constituted a
committee to resolve the issue of
businesses’ stuck refunds with
the Federal Board of Revenue
(FBR).
“The committee will give its
recommendations in 30 days for
resolving the issues,” Chaudhry
told The News on Wednesday
during a visit to the Federation of
Pakistan Chambers of Commerce
and Industry (FPCCI).
The
committee
comprises
officials of FTO office and
members of business community.
The FTO said the issue will be
resolved by early March. He said
the ombudsman office is trying to
eliminate the queue of refunds.
The FTO also said the FBR has
issued refund payment orders in
various cases. The amount
should
be
transferred
to
claimants within seven days.
Business leader SM Muneer said
the FBR held up around Rs300
billion of sales tax and income tax
refunds.
Meanwhile, Federal Ombudsman
Salman Faruqi, at a meeting with
members of FPCCI, outlined the
working of ombudsman office and
achievements it made during the
past two years.
Faruqi said the position of the
Federal Ombudsman will not be
vacant for a single day according
to an amendment into a law. He
further said the powers of federal
and other ombudsmen are
equivalent to Chief Justice and
judges of Supreme Court of
Pakistan.
He said the ombudsman office
has decided 260,000 cases.
Under the law, a case has to be
decided in 60 days but the cases
took only 45 days to resolve
during the past.
He said out of total cases only
7,000 representations were made
before the President.
He further said 92 percent of
representations were decided in
the favour of the ombudsman.
He
said
the
paperless
environment was introduced in
order to speed up the justice
system delivered through the
ombudsman office. So far,
around
90
percent
computerisation
has
been
complete, he added.
Faruqi said the ombudsman
services may be extended to 158
districts and 450 union councils to
increase its outreach.
A proposal has been sent to the
government, he added.
FTO Chaudhry said, talking to the
participants, said around 90
percent cases had been decided
in favour of taxpayers.
He said in the past there were
issues in implementation but now
focus is on this to give relief to
taxpayers.
The FTO said around 70 percent
complaints are pertaining to sales
tax refunds.
President FPCCI Abdul Rauf
Alam stressed the need to further
strengthen relations between
business community and Federal
Ombudsman Office to resolve the
issues.
Thursday 4th February, 2016
POL products’ sales surge 8pc
KARACHI: In line with the recent
growth trend, petroleum products
sales clocked in at 1.75 million
tons, up eight percent M-o-M in
January.
"The
growth
is
primarily
attributable to the increased
demand for the furnace oil. The
industry-wide sales of FO in
January jacked up to 0.76 million
tons, while sales volumes of highspeed diesel (HSD) and Motor
Spirit (MS) clocked in at 0.59
million tons and 0.46 million tons,
respectively," Shahbaz Ashraf at
Arif Habib Limited said. Total MS
sales surged one percent to 0.46
million tons, primarily fueled by
lower retail prices, less availability
of CNG and healthy growth in the
auto sector. The sales volume
can witness a decent growth on
the back of recent reduction in
retail prices, he said.
Total HSD sales volume surged
five percent to 0.59 million tons.
In the near future, infrastructure
developments in the country
tagged with higher sales of buses
and trucks and a further drop in
retail price should provide added
support to the growth in HSD
sales.
FO sales volumes for January
grew by 30 percent to 0.76 million
tons aided by the diminished
availability of water for power
generation at this time of the
year; supporting the surge in the
demand for FO. Lower FO prices
will continue to attract demand
from
power
sector.
Thursday 4th February, 2016
SBP raises Rs320 billion through T-bills auction
KARACHI: The State Bank of
Pakistan
(SBP)
has
sold
Rs319.93 billion worth of treasury
bills in an auction held on
Wednesday against the target of
Rs350 billion set for the auction.
The central bank received bids of
around Rs569.6 billion on face
value of Rs591.21 billion. The
SBP accepted bids of three-, sixand 12-month maturities at the
face value of Rs329.95 billion.
The cutoff yield in the latest
auction increased in all the three
maturities. The cutoff yield for
three-month Market Treasury
Bills (MTBs) increased to 6.2591
percent from 6.1697 percent; sixmonth increased to 6.2665
percent from 6.1812 percent and
for 12-month the yield increased
to 6.2758 percent from 6.2306
percent.
The
highest
amount
of
Rs169.366 billion has been
accepted against the three-month
maturity at the face value of
Rs171.8
billion.
The
SBP
accepted bids in other two
maturities
included
Rs56.73
billion for six-month and Rs93.84
billion for 125-month T-bills.
The federal government borrows
from commercial banks for its
budgetary needs. The borrowing
pattern is now focused on
commercial
banks
after
restrictions on the government to
borrow from the central bank.
In the latest auction calendar, the
government has planned to
borrow through the sale of
treasury papers during the next
three months, of which 86
percent amount would be taken
for retirement of matured amount
and the remaining for the
budgetary and project financing.
The
targeted
amount
of
government papers, which would
be sold through auction during
February to April, 2016. The sum
of Rs1,775 to be raised through
sale of Market Treasury Bills
(MTBs), Pakistan Investment
Bonds (PIBs) and Government of
Pakistan Ijara Sukuk, the central
bank said. The maturing amount
during the period is around
Rs1534 billion. The additional
requirement for project finance is
targeted at Rs240 billion. The
bulk amount of Rs1425 billion to
be raised through auction of
treasury bills. The entire amount
is projected to be used for
repayment of matured amount of
Rs1428 billion during the period.
Thursday 4th February, 2016
Chambers to present joint budget proposals
LAHORE: Business forums on
Wednesday decided to present
joint budget proposals for the
fiscal year 2016/17 to the FBR.
All Chambers of Commerce and
Industry pledged to make efforts
for elimination of harmful taxation,
harmonisation in federal and
provincial tax regime, withdrawal
of import duty on raw materials,
removal of prevailing anomalies
in the statute, simplification of tax
adjudication
process,
and
ensuring
availability
of
uninterrupted
and
cheaper
energy.
The chambers’ representatives,
at a meeting at the Lahore
Chamber of Commerce and
Industry, said government should
invest as much as possible in the
energy sector, lower the ratio of
indirect taxes, bring down taxes
and duties on smuggling-prone
items
and
ensure
timely
completion of CPEC to achieve
the
key economic
targets.
Thursday 4th February, 2016
State Bank introduces fixed rental rate for Ijara Sukuk
KARACHI: The
Pakistan (SBP)
fixed
rental
government of
Sukuk.
State Bank of
has introduced
rate
for
the
Pakistan Ijara
The SBP, in a circular issued on
Wednesday, said the instruments
will be in addition to the various
rental rate already introduced in
2008.
“The fixed rental rate will be
issued at face value with a
maturity period of three years
from the date of issue,” it said.
“The new regime will be scripless and held in the subsidiary
general ledger accounts (SGLA).
These Sukuk can be traded in the
secondary markets and are
transferrable through SGLA.”
branches are designated as
primary dealers for the purpose of
participating in the auction to be
announced by the SBP.
The SPB said the Ijara Sukuk will
be sold via competitive auctions
held by the central bank. All
Islamic banks and conventional
banks with Islamic banking
Primary dealers will be required
to bid rental rate at percent per
annum and amount and minimum
bid size will be Rs100,000 and in
multiples,
the
SBP
said.
“Islamic banking branches will not
be allowed to separately place
bids in the auction,” it said.
Thursday 4th February, 2016
15th Textile Asia next month
KARACHI: Pakistan Readymade
Garments Manufacturers and
Exporters Association (Prgmea)
on Wednesday announced to
hold 15th Textile Asia 2016
International Textile and Garment
Machinery
Trade
Fair
incorporating clothing, fFabric
and Textile Asia in Karachi.
Shaikh
Mohammad
Shafiq,
chairman of Prgmea, announced
the schedule for the fair, which
would
be
organised
in
collaboration with the Ecommerce
Gateway (Pvt) Ltd.
The three-day trade fair will be
held from March 9-11, 2016 and
has been termed as the country’s
biggest B2B fair on textile,
garment,
embroidery,
digital
printing machinery and chemical
and allied services.
The trade fair will provide an
effective podium for joint ventures
/ collaborations to the textile
SMEs and provide a platform to
its international participants to
meet
respective
Pakistani
business personals to make
future business leads in Pakistan,
a statement said.
The exhibition will focus on
buying and selling potential of
textile and garment industry and
poised to introduce overseas
suppliers of textile and garment
materials, accessories and parts
and machinery to the textile
industry of Pakistan.
“This will complement their efforts
for high quality, value added
products and assist them to
further develop their business in
the
export
markets,”
the
statement said.
The trade fair will have more than
550
international
brands
displaying their products in over
700 booths and over 500 foreign
delegates mainly from Austria,
China, Czech Republic, France,
Germany, India, Italy, Korea,
Taiwan, Turkey, UK, US etc likely
to
attend
the
event.
Thursday 4th February, 2016
Cotton spot rate remains flat
Karachi
Cotton prices continued to
witness a firm trend in dull trading
session on Wednesday, dealers
said.
Trade volumes remained thin at
the ready counter of cotton
market and much of the activity
revolved around buying of high
grade lint variety.
The Karachi Cotton Association
(KCA) kept the official spot rate
unchanged at Rs5,400 per
maund. Traders purchased 2,000
bales at Rs4,800 to Rs5,650 per
maund as against 7,600 bales
changed hand at Rs Rs4,425 to
Rs5,650 a day before.
Dealers said cotton prices
maintained the previous position
as the ginners have held stock of
unsold bales.
“The prices look to remain
unchanged unless the unsold
stocks get offloaded,” said a
broker at KCA.
Domestic demand for the cotton
also subdued and many spinning
mills are meeting their needs
through
imports
of
this
commodity.
Thursday 4th February, 2016
Bank holiday
KARACHI: The State Bank of
Pakistan (SBP) will remain closed
on February 5, 2016 on the
occasion of Kashmir Day as
declared by the government of
Pakistan, a statement said on
Wednesday.
Thursday 4th February, 2016
Chambers decide to present joint budget proposals to
FBR
Our Staff Reporter
Lahore
Various Chambers of Commerce
& Industry Wednesday decided to
present joint budget proposals to
the Federal Board of Revenue for
the Financial Year 2016-17.
The decision was made at a
meeting on Budget Proposals
2016-17 called by the Lahore
Chamber
of
Commerce
&
Industry on Wednesday. The
LCCI
President
Sheikh
Muhammad Arshad presided
over the meeting and attended by
the Senior Vice President Almas
Hyder, Vice President Nasir
Saeed,
Executive
Kamal
Mahmood
Amjad
Mian,
representatives of DG Khan,
Okara,
Vehari,
Sargodha,
Rawalpindi, Quetta, Gujrat and
other Chambers of Commerce &
Industry spoke on the occasion.
Objective of the meeting was to
ensure maximum role of business
community in trade & industry
related
policy
making.
All Chambers of Commerce &
Industry,
through
a
joint
communiqué, pledged to make
joint efforts for elimination of
harmful taxation, harmonization in
Federal and Provincial tax
regime, withdrawal of import duty
on raw materials, removal of
prevailing anomalies in the
statute, simplification of tax
adjudication
process,
timely
completion of CPEC project and
ensuring
availability
of
uninterrupted
and
cheaper
energy.
The
participants
said
that
government should invest as
much as possible in the energy
sector, lower the ratio of indirect
taxes, bring down taxes & duties
on smuggling-prone items and
ensure timely completion of
China-Pak Economic Corridor
(CPEC) to achieve the key
economic
targets.
The participants said that keeping
in view the growing energy
demand, a major portion of the
upcoming Federal Budget for the
year 2016-17 should be allocated
for generation of cheap electricity
through hydel means. Maximum
funds should also be allocated for
construction of large dams,
tapping of natural resources to
keep
the
industrial
wheel
moving.
Reliance on expensive thermal
units is not only one of the
biggest reasons of energy crisis
in recent past but has also been
jacking up the cost of production.
Country is direly needed energy
mix in favor of hydel power and
local
fuels.
They lauded the efforts of the
government and security forces
for establishment of peace in the
country saying that in past, law
and order situation had hurt
Pakistan’s potential as a highlyattractive investment destination.
Though situation is far better than
the past but still a lot work has to
do.
They said that menace of
smuggling which is causing loss
of billions of dollars to the
national economy. Smuggling has
become a big threat for economic
growth and any sector has hardly
left untouched by this menace.
Smuggled goods through the
borders of Afghanistan, Iran
China, India and the Afghan
Transit Trade form a chunk of the
informal economy volume of
which ranges between 50 to 60
percent of the formal economy.
It is costing the national
exchequer in billions. Markets
across the country are flooded
with smuggled goods and local
industries are struggling for
survival as smuggled goods are
not
only
easily
available
everywhere
but
are
also
attracting the buyers who prefer
foreign
merchandise.
Thursday 4th February, 2016
Connections to residents around gaswells
Federal govt wants provinces to pay Rs3.89b
Fawad Yousafzai
Islamabad
The federal government wants
the provinces to pay Rs 3.89
billion for the provision of gas
connections to the locals -residents located within five
kilometer radius of gas wells.
A summary has been moved, by
the ministry of Petroleum and
Natural Resources, to the Council
of Common Interest (CCI) for
approval, an official source told
The Nation here yesterday.
The ministry of Petroleum and
Natural Resources has pleaded
that the gas utilities companies
can pay up to certain amount for
the provision of gas to the
residents lives in five kilometer
radius of gas wells and the
provinces
should
pay
the
remaining balance, the official
said.
Under the rule the gas utilities
companies are responsible to
provide free connection to the
people residing within five
kilometer areas of the gas well.
The provinces were pressing both
the gas utilities companies of Sui
Northern Gas Pipelines Limited
(SNGPL) and Sui Southern Gas
Company (SSGS) to provide gas
connections to the consumers’
lives in 5 kilometer radius of the
gas wells which has prompted the
ministry to move a summary to
the CCI asking to transfer the
major burden to the provinces,
the official said. Sui Southern
Gas Company is providing gas to
the Sindh and Baluchistan while
Sui Northern Gas Pipeline
Limited supplying gas to Punjab,
Khyber
Pakhtunkhwa
and
Federal capital. At present 67
percent of gas is produced in
Sindh, 19 percent in Baluchistan,
9 percent in KPK and 5 percent in
Punjab.
According the summary, the
ministry of petroleum is of the
view that the companies are
paying Rs 54000 for the gas
connections in, the five kilometer
radius of gas wells, in Punjab and
Sindh respectively, for Khyber
Pakhtunkhwa they are paying Rs
108000 per meter connection
while in Baluchistan the cost of
per connection is Rs 207000, the
official
said.
Now the federal government has
asked three provinces that the
cost of gas connections in their
selected areas are over and
above the allocated amount of
the companies, therefore they
should bear the extra burden, the
official said. Baluchistan was
exempted because it falls within
the limit of allocated amount, the
official
said.
The provinces have been asked
to furnish about Rs 3.89 billion
while the remaining will be
provided by the companies, the
official said.The total cost is about
Rs 5.89 billion for providing
connections to the selected
destination of the provinces and
the companies will pay its share
of Rs 2 billion, the official said.
Sindh has selected a total of 437
localities for the gas connections
and the ministry of petroleum
wants them to pay Rs 2.848
billion, the amount over and
above the allocated amount per
connection in the province, the
official
said.
Similarly Punjab has selected
about 77 localities and will be
paying one billion rupees from the
provincial kitty, the number of
selected localities by KP is five
and they have to deposit Rs 15
million for the gas connections,
the official said. Baluhistan has
asked for the inclusion of one
new locality in five kilometer
radius of the gas well but it is
within the limit of the allocated
amount and therefore they are
they are not making any
contribution, the official said. End
Thursday 4th February, 2016
Speakers call for single digit General Sales Tax
Our Staff Reporter
ISLAMABAD
Speakers at a seminar on
Wednesday called for single digit
General Sales Tax to enhance
the
country's
tax
base.
Islamabad
Chamber
of
Commerce and Industry in
collaboration with the Association
of
Chartered
Certified
Accountants (ACCA) organized
seminar on sales tax on services
and
inter-provincial
harmonization. A large number of
business community and tax
professional attended the event.
The event highlighted that after
the passage of 18th amendment
to
the
constitution,
three
provinces except for Baluchistan,
have established their own tax
authorities for collection of sales
tax on services, however, the
issues like overlapping between
federal & provincial tax authorities
and double taxation were creating
problems for taxpayers. They
were of the opinion that federal
government should have drafted
a
framework
within
which
provinces could tax services.
They said without cross provincial
consensus and inter-provincial
harmonization on tax collection of
sales tax on services, there would
be issues of double taxation and
excessive administration burden
both on the businesses and tax
authorities.
The experts observed that very
high tax rates in Pakistan were
promoting culture of tax evasion
and government should focus on
low tax rates for enhancing tax
base and improving tax revenue
of the country. The businessmen
said that tax regime in Pakistan
was very complicated with
multiple tax rates as taxpayers
were paying almost 10 different
taxes in addition to many indirect
taxes. They said businessmen
wanted to pay tax, but high taxes
and difficult tax system were the
main hurdle in better tax
compliance.
They
said
government should simplify tax
system and introduce single digit
sales tax rate in order to attract
more taxpayers into the tax net.
Atif Ikram Sheikh President
Islamabad
Chamber
of
Commerce & Industry in his
welcome address said that
positive changes were happening
gradually in the tax system and
stressed that government should
make tax policies in consultation
with trade bodies by addressing
their key concerns on tax matters.
Chas Roy-Chowdhury ACCA’s
Head of Global Taxation, Arif
Masud Mirza Regional Head of
Policy MENASA ACCA Hammad
Siddiqui Acting Country Director
Centre for International Private
Enterprise (CIPE), Muhammad
Yasir Technical Advisor Tax
Compliance FBR and others also
addressed the event and called
for simplified tax system. It was
stressed that SMEs should also
focus on improving their financial
management skills to deal with
tax matters more effectively. It
was
urged
that
educating
taxpayers including SMEs on tax
compliance was key to promote
tax culture and improve tax
revenue. Experts stressed that
trade bodies across the country
should play their role for
improving tax compliance and
minimizing informal economy.
Thursday 4th February, 2016
RTOs hold meeting with retailers
LAHORE: Regional Tax Office
(RTO)
Lahore-1
and
RTO
Lahore-II held meetings with the
All Pakistan Anjuman-e-Tajran
represented by its President
Muhammad Ashraf Bhatti. RTO-I
meeting was presided over by its
Chief
Commissioner
Ms.
Tasneem Rehman where focal
person of the region Mahmood
Jaffery threw light on salient
features of the scheme which has
been introduced for those traders
who are not filing their returns at
all or those who had filed return
at least once in last ten years.
Speaking on this occasion Chief
Commissioner Ms. Tasneem
Rehman said that this scheme
had been introduced for the
traders who would show working
capital of up to Rs 50 million. She
said
to
create
awareness
amongst the traders about this
scheme and to facilitate them the
RTO had set up 14 Kiosks at
different places in its jurisdiction
which
include
Lahore,
Sheikhupura and Nankana Sahib.
Traders present on this occasion
drew the attention of the FBR
officials
that
scheme
only
facilitate retailers and have
nothing to offer for wholesalers
who are working on a very
minimum margins but ready to
contribute to national exchequer.
FBR officials assured them that
their point will be raised with the
high
ups.–Staff
Reporter