Government to limit its role in lng industry: Babar
Liquefied natural gas (LNG) has been a source of lucrative business ever since the Pakistan Muslim League-Nawaz (PML-N) government initiated deals in the sector.
However, now the Pakistan Tehreek-e-Insaf (PTI) administration has backed out from the plan of extending its footprint in the LNG industry while further opening the field for the private sector.
At present, all LNG supplies are in control of government entities, with Pakistan State Oil (PSO) importing 500 million cubic feet of LNG per day (mmcfd) from Qatar and 100 mmcfd through Gunvor.
Apart from that, Pakistan LNG Limited (PLL) is importing 200 mmcfd of LNG through Gunvor and Eni. Pakistan has two LNG terminals with handling capacity of over 1.3 billion cubic feet per day (bcfd).
The previous PML-N government had inked a 15-year LNG deal with Qatar, which was criticised by the ruling party. But the PTI government had also planned to strike another LNG deal for the import of an additional 200 mmcfd from Qatar, which sparked controversy and caused concern in the private sector.
Speaking at an LNG conference on Friday, Special Assistant to Prime Minister on Petroleum Nadeem Babar announced that the government would not continue its footprint in the LNG industry.
He said the government had decided that it would not continue to further its work in the LNG industry and with that mind “we went ahead with the plan of opening access to pipelines and terminals and there is no bar on setting up LNG terminals by the private sector.”
The government would support private-sector players if they had buyers, suppliers and the financial muscle, he said and told the participants, “We create the environment… you do the business and compete with the public-sector entities.”
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FBR sustains Pkr 385 bn tax shortfall in Jul-Jan fy20
The Federal Board of Revenue (FBR) has sustained a whopping Rs385-billion tax shortfall in first seven months of the current fiscal year and the number of tax return filers has also declined by 16 percent amid prevailing uncertainty due to the uncertain future of FBR chairman.
With the widening tax shortfall, the federal government has also fast-tracked its preparations for a mini-budget and on Friday reviewed again the proposals to increase or slap 17 percent sales tax on dozens of items including agricultural inputs, industrial goods, agricultural machinery and consumable items.
One of the mini-budget proposals is to charge sales tax on around 50 items on their retail market prices against the current factory prices.
Since the number of tax return filers remains below 2.35 million, the government on Friday gave another extension in the last date to February 28 in the hope of matching last tax year’s (2018) number of 2.8 million return filers.
Till January 31, about 2.336 million people had filed tax returns, down by 454,000 or 16.2 percent compared to the 2018 tax year.
From July through January of the current fiscal year, the FBR provisionally collected Rs2.405 trillion in taxes, according to the officials. The original target was Rs2.791 trillion and the FBR fell short of the goal by a record Rs385 billion.
The Rs2.791-trillion target for seven months was against the annual target of Rs5.5 trillion, which the IMF has lately agreed to revise down to Rs5.238 trillion. However, the federal cabinet has not yet revised the budget estimates for fiscal year 2019-20.
The Ministry of Finance is expected to present a mid-year budget review summary to the federal cabinet in February.
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Key alter to anti-money laundering bill struck down
A Senate panel on Friday rejected the government’s proposal to allow investigation officers to arrest anyone on money laundering charges without court permission – going back on the decision it had made three weeks ago.
Headed by PPP’s Senator Farooq H Naek, the Senate Standing Committee on Finance approved the majority of the amendments to the Anti-Money Laundering Bill to comply with the Financial Action Task Force’s (FATF) conditions.
However, it did not approve the amendment to declare money laundering a cognisable offence.
On January 7, the committee had approved the amendment with a thin majority of 5-4 to allow officers to arrest anyone on the suspicion of money laundering without a court warrant.
Senators belonging to the PTI, the MQM-P and the Balochistan Awami Party (BAP) had voted in favour of the amendment three weeks ago but on Friday, all members of the committee, including Leader of the House in Senate Shibli Faraz, expressed their concerns over handing over these powers to investigation officers.
However, at the time of voting, Senator Faraz, Senator Mohsin Aziz of the PTI and Senator Anwar Kakar of the BAP voted in favour of making money laundering a cognisable offence.
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Relaxation comes to an end in CNIC condition
The mandatory condition of presenting CNIC copies for transactions of over Rs50,000 will come into force on Saturday as the relaxation deadline set by the Federal Board of Revenue (FBR) comes to an end.
All Pakistan Anjuman-e-Tajran President Ajmal Baloch told that the mandatory condition was not a hurdle to the owners of small businesses and as such the association had no reservations about withdrawal of the relaxation and fully supported it.
He said the association’s agreement with the FBR had also come into force after which all problems faced by the owners of small businesses had been resolved. He added that notifications for the formation of committees comprising representatives of the business community had also been released after which the FBR and traders would join hands for the registration of businesses to ensure that they became part of the tax net. Baloch revealed that the agreement with the FBR was being implemented from January 2020 and a law to that effect had also been chalked out.
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Petrol price maintained at Pkr 116.60/ litre
The government on Friday decided to maintain oil prices for the month of February 2020.
The Oil and Gas Regulatory Authority (Ogra) had recommended the government to increase price of high speed diesel (HSD) by 1.9 percent for February following fluctuations in global oil prices. The regulator had proposed an increase of Rs2.47 per litre or 1.9 percent in the prices of high speed diesel, which is mainly used in transport and agriculture sectors.
The price of high speed diesel has been maintained at existing level of Rs127.26 per litre.
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The price of petrol has also been maintained at Rs116.60 per litre. Petrol is an alternate of compressed natural gas (CNG) for vehicles in Punjab province where indigenous gas is not available and CNG retail outlets were using imported gas.
Following decision of government, LDO will be sold at a price of Rs84.51 per litre.
The regulator had proposed to reduce price of kerosene oil by Rs0.66 per litre or 0.7 percent. Its price has been maintained at current level of Rs99.45 per litre. Kerosene is used for cooking purpose, especially in remote areas where LPG or pipeline gas is not available.
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Ogra slashes lpg price by Pkr 10/ kg
The Oil and Gas Regulatory Authority (Ogra) has announced a reduction of Rs10 per kg in the price of domestic cylinder (11.8 kg) of locally produced liquefied petroleum gas (LPG) and a reduction of Rs454 in the price of commercial cylinder (45.4 kg) for February 2020.
According to a notification issued by Ogra, the LPG price has been slashed to Rs1,680.21 per domestic cylinder from Rs1,791.48 in January, a significant reduction of Rs111 for February.
Similarly, the commercial cylinder will be available at Rs6,437 instead of Rs6,891 in January. The regulator notified Rs142 as the per-kg LPG price.
The LPG producer price (propane 40 percent and butane 60 percent) has been calculated at Rs82,033.29 per ton for February compared with Rs90,092.65 per ton in January 2020. This price includes excise duty of Rs85 per ton but does not include the petroleum levy. Ogra worked out the producer price for 11.8kg cylinder at Rs967.99.
Marketing and distribution margins have been set at Rs35,000 per ton or Rs413 per cylinder. Apart from these, petroleum levy of Rs4,669 per ton will also be charged, which will translate into Rs55.09 per cylinder.
Prior to the imposition of general sales tax (GST), the consumer price will be Rs121,702.29 per ton compared with Rs129,761.65 per ton in January. The price of 11.8kg cylinder will now stand at Rs1,436.08.
Additionally, 17 percent GST will be charged, which will translate into Rs20,689.39 per ton or Rs244.13 per cylinder. Final consumer price will be Rs142,391.65 per ton or Rs1,680.21 per cylinder.
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Exporters of knitwear dismayed by delay in tax refunds
The value-added knitwear industry has expressed its disappointment over the performance of the Federal Board of Revenue’s (FBR) newly launched Fully Automated Sales Tax e-Refund (FASTER) system, seeking a new and foolproof system for full and speedy release of refunds.
Pakistan Hosiery Manufacturers and Exporters Association (PHMA) Vice-Chairman Shafiq Butt, in a statement, criticised the revenue board for not releasing billions of rupees in refunds for the exporters despite promises.
“FBR’s commitment to release exporters’ refunds within 72 hours has not been fulfilled completely,” he remarked.
He requested Prime Minister Imran Khan to give directives to the tax agency to remove bottlenecks to the new refund payment system as the exporters were facing a severe liquidity crunch due to the delay in sales tax refunds.
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Fertiliser-makers reduce urea rates
Following the abolition of gas infrastructure development cess (GIDC), fertiliser manufacturers have reduced urea prices in order to pass the benefit on to farmers – the major fertiliser buyers.
Fauji Fertiliser Company (FFC) and Fauji Fertiliser Bin Qasim Limited (FFBL) reduced urea prices by Rs300 to Rs1,700 per 50kg bag. Similarly, Engro Fertilisers pushed down its urea price by Rs150 to Rs1,850 per bag.
“All the companies reduced their prices according to the cess imposed on them,” said Saqib Hussain, research analyst at Sherman Securities.
According to the Fertiliser Policy 2001, Engro Fertilisers and Fatima Fertiliser were granted a GIDC concession for installing new urea manufacturing plants. The aim of the policy was to increase the number of companies in the market which would give a wider choice to the farmers.
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Energy sector: Pakistan’s average surplus capacity to cross 4,000mw
The annual average capacity surplus of Pakistan’s power sector is likely to increase 15 percent against projected demand because of over-commitment of power generation projects.
The surplus will translate into annual average of more than 4,000 megawatts, according to a report launched by the Energy Institute of Lahore University of Management Sciences (LUMS).
The report, titled “Pakistan’s Electricity Outlook 2020-25”, critically reviews the challenges faced by the country’s power sector and also assesses the implications of continuing business as usual. It explores the scope and feasibility of an alternative set of options in order to correct the current course.
The report stated that a decade of crippling spells of load-shedding pushed for a quick-build and arguably excessive capacity additions in the recent past. The power sector now faces a new, and no-less serious, challenge – a period of expensive capacity surplus.
Decision-makers in the country are in a fix about how to alleviate the financial consequences of the past decisions and transform this critical sector into a vibrant contributor in order to realise the nation’s dream of progress and prosperity.
Independent, objective and dispassionate analysis of different courses of action and potential choices is considered an indispensable prerequisite for taking informed policy decisions for any country.
Pakistan’s Electricity Outlook 2020-25 has been prepared precisely to serve this longstanding need. It is a pioneering effort and will be the institute’s flagship publication in the future, said National Transmission and Despatch Company’s former managing director Fiaz Ahmad Chaudhry.