Tribune  Wed, 22 Feb 2012 11:50:58 +0000

ISLAMABAD: Secretary Petroleum and Natural Resources Muhammad Ejaz Chaudhry on Wednesday revealed that petroleum prices will see a major hike in seven days, Express News reported.

Chaudhry was briefing the parliamentary committee on oil prices. The meeting was chaired by Rana Tanveer, who later walked out in protest over the upcoming price hike.

The petroleum secretary had informed the committee that keeping in view global prices, the government will have to raise the rates accordingly.

Tanveer said that the government gave them “lollipops” every time and the prices would still keep going up. He walked out of the meeting in protest.

Finance Minister Hafeez Sheikh then arrived and tried to take the committee into confidence over the decision.

Tribune  Thu, 23 Feb 2012 00:50:46 +0000

Sources told The Express Tribune that the federal government was of the view that the provincial governments should not expect Islamabad to take the brunt of reduced revenues as a result of populist pressure. Islamabad expects to share the pain with the provinces, which are expected to take in as much as 70% of the Rs1,952 billion that the Federal Board of Revenue hopes to collect in taxes this fiscal year.

“If Balochistan, Punjab or any of the other provinces want a cut in oil prices, they should share the burden [of the cut] from these resources that [the federal government] transfers to them,” said one finance ministry official who wished to remain anonymous.

Islamabad believes that cutting taxes on petrol will have an inflationary effect, by virtue of the fact that the increase in the fiscal deficit will force the federal government to borrow more money and even outright print a lot, which in turn will cause the purchasing power of the rupee to decline. The finance ministry seems to be in no mood to let that happen.

“We have reduced the inflation rate from 12% to 10% after a lot of struggle,” said the finance ministry official. “If the federal government reduces oil prices by slashing taxes on petroleum products, it will require more borrowing and printing of more currency notes that will cause more inflation across the country.”

For their part, the politicians seem to have lost interest in what appears to be the mathematical impossibility of trying to reduce oil prices while having no impact on the budget deficit. The special National Assembly committee created last week to address this problem was supposed to meet on Wednesday, but only two of its members – Riaz Hussain Pirzada of the PML-Q and Rana Tanvir Hussain of the PML-N – attended. The chairman of the committee, Water and Power Minister Naveed Qamar, did not bother to show up.

One person who did attend the meeting was the recently demoted Abdul Hafeez Shaikh, who served as finance minister until his election to the Senate was invalidated by a Supreme Court decision earlier this month. Shaikh is effectively continuing in his job, but his formal title is now “adviser to the prime minister on finance and revenue.”

Briefing the committee, Shaikh repeated almost the same figures that the finance ministry had submitted during the committee’s last meeting last week. Shaikh said that prices were linked to the global market and the government did not have the power to influence the global commodity trade.

The only notable new item of substance presented to the committee was during the testimony of the Oil and Gas Regulatory Authority (Ogra), when the regulator specified what it expected would be the increases in domestic oil prices during March.

Ogra officials said that petrol prices would rise by about 3.5%, diesel prices by about 1.7%, and kerosene oil by about 2.9%. Petroleum Secretary Ijaz Chaudhry said that the price rises were made inevitable by the sharp rises in international oil prices. Crude oil prices rose to almost $106 per barrel in trading on the New York Mercantile Exchange on Wednesday, up by almost 9.3% since the beginning of the month.

Abdul Sattar, the head of the sales tax division at the FBR, testified that the government had thus far collected about Rs146 billion in general sales tax on petrol, compared to Rs114 billion during the same period last year. The reason behind the 28% rise in revenues appears to be both a rise in consumption as well as a rise in prices.

The government levies a 16% GST on petrol in addition to a petroleum levy of Rs10 per litre on petrol and Rs6.5 per litre on diesel.

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 22:40:57 +0000

The ‘success’ of the campaign against tax evasion is bound to raise questions; especially since it has been presented as one of the key elements of Islamabad’s strategy to convince international lenders of its sincerity in pursuing fiscal reforms. This seems to be just one more area where the government had set itself an overly-ambitious target.

The Express Tribune tried to dig up the source of these numbers, and get some insight into the future of the campaign, through background interviews conducted with various taxation officials. We were told that they certainly had not been conjured up by the Federal Board of Revenue (FBR) – the authority responsible for tax collection in the country.

According to officials of the Directorate General of Intelligence and Investigation (I&I) of the FBR, the figure, in fact, had been worked out by the National Database and Registration Authority (NADRA). They said that NADRA had claimed evidence of 700,000 people who resided in posh locales within the country, owned multiple bank accounts, but did not pay taxes.

When the officials started monitoring the ‘suspects’, they found that the “figure was a hoax”. Some of the individuals were already paying taxes and the details regarding their bank accounts were vague. When the FBR tried to approach the banks for more information, they got served legal notices instead.

NADRA’s Deputy Chairman Tariq Malik has not yet responded to our repeated attempts at soliciting a comment regarding these revelations.

The investigating officials from the FBR also said that NADRA had shared vague details of 43,000 individuals during the previous year based on certain assumptions which, on further investigation, had turned out to be untrue.

“The data provided leads in only half the cases; and even then it was insufficient to provide ample grounds to trail those people”, said an official who wishes to remain anonymous. He said that the NADRA had again sent vague details of 19,429 individuals in the current financial year, and has not followed up on them at all.

“It [700,000 more taxpayers] was not the FBR’s slogan – the slogan was raised by the chairman of NADRA, and the finance minister hastily announced it in his budget speech”, said Shahid Hussain Asad, Member Inland Revenue FBR, who also holds the charge of director general I&I.

He says that increasing the tax base is tantamount to national duty and the FBR will keep pursuing the campaign. However, he cannot guarantee that the FBR will be able to recover Rs70 billion from these individuals.

While the government struggles to broaden its tax base, the number of returns filed till December 31 2011 slipped to 1.2 million, down 42 per cent from the 1.97 million filed in the same period last year.

The I&I department says that despite the snail-paced progress of the campaign, the authorities have kept up the accountability process. However, officials bemoan the lack of moral ground on which to base it on: when the judiciary, presidency, provincial governors, the National Logistics Cell and the Frontier Works Organisation are exempt from taxation, it is difficult to justify it to the common man, they say.

Under the campaign, the FBR has sent notices to 28,000 individuals, and demanded Rs7.7 billion in outstanding taxes from them.

Dr Akram ul Haq, an expert in tax affairs, has dismissed the campaign as a way of “minting money”, and said that the authorities have to first incentivise people in order to be able to broaden its tax base.

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 22:55:36 +0000

Talking to The Express Tribune on Wednesday, Ecommerce Gateway Media Manager Wasi-ul-Haq said ITIF Asia attracted 35,000 visitors on average in recent years. This year, he said, Ecommerce is expecting a less-than-usual turnout because one of the three major components of the annual ITIF Asia – Auto and Transport Asia – had been cancelled for a number of reasons, including visa issues faced by foreign exhibitors.

“As part of ITIF Asia 2012, we’re holding Alternative Energy & Power Asia along with Oil & Gas Asia. The third component can possibly be held as a stand-alone exhibition in May when many foreign exhibitors are expected to visit Lahore for another event of the same kind,” he said.

Haq said the auto and transport component traditionally attracted the highest number of visitors. “The interest level is always high because it involves the business-to-consumer (B2C) model. That’s not the case in the other two sections, which are solely business-to-business (B2B).”

There are 30 exhibitors and over 50 foreign delegates from 11 countries, including the UK, Italy, Germany, Canada and Turkey, participating in the exhibition.

M Bagheri, who works as manager of marketing and sales at the National Iranian Gas Export Company (NIGEC), a gas marketing company, said the majority of people visiting his stall at the exhibition were more interested in getting a job at the Iranian company. “They’re professionals already working in the energy sector. They’re willing to move to Iran and work for NIGEC.”

The representative of another foreign exhibitor, Marine Motor Services – a German manufacturer of components for large-bore, four-stroke diesel engines – said he had received positive, yet less-than-expected, response at ITIF Asia.

“We’ve a limited target market. Suppose there’re 25 customers out there, only one has visited us so far,” he said. “It’s the first time we’re participating in this exhibition. So that’s part of our effort to build our brand name in the market.”

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 23:09:00 +0000

The auditors, who conducted the audit, have recommended investigating the matter and fixing individual responsibility and said the payment may be recovered from the employees concerned.

According to the auditors, an amount of Rs266 million was released to 3,500 “ineligible workers”, who were not direct employees and hired through contractors, over  three years from 2007-08 to 2009-10. The company paid Rs84 million in 2007-08, Rs84 million in 2008-09 and Rs98 million in 2009-10.

The WPPF is represented by two officials of the company and two members of the CBA.

According to documents, the auditors also noted that a complete list of private workers who received the amount from WPPF had not been produced. “Thus, it could not be ascertained whether the amount was actually received by them or otherwise,” the auditors said.

The auditors observed that private workers engaged through contractors did not come within the definition of “worker” of the company and were not entitled to the benefits of WPPF.

“In this connection, Khalik-ur-Rehman, advocate of the Supreme Court of Pakistan, referred to a judgment passed by the Sindh High Court Karachi in a constitution petition and clarified on January 3, 2012 that distribution of 5 per cent profit under WPPF among third party workers was not admissible and should be stopped forthwith,” the auditors said. Thus, the entire payment of Rs266 million made to third party workers was inadmissible and irregular.

Commenting on the matter, OGDC Managing Director Bisharat Mirza told The Express Tribune that he had not seen the audit report. However, he pointed out that the labour department had said three months ago that the government had filed an appeal in the Supreme Court against the decision of the Sindh High Court and therefore payment to third party workers should continue under WPPF.

The main objective of the Workers Profit Participation Fund, established by OGDC in compliance with the Companies Profits (Workers Participation) Act 1968, is to contribute five per cent of the company’s profit to the fund every year not later than nine months after the close of that year.

As per rules, all workers, who have completed six months of employment with the company during the year of the account, will be eligible to take benefits of the scheme.

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 22:59:25 +0000

“PTCL’s revenue growth during first half of FY2011-12 is a strong indicator of our dynamic corporate direction as well as our customers’ continued satisfaction and trust,” said PTCL CEO & President, Walid Irshaid, following a meeting of the company’s board of directors held to announce the company’s six-month financial results. “Through optimal use of resource, we want to achieve enhanced revenue, greater levels of customer satisfaction, as well as improve our shareholders’ value.”

PTCL’s net revenue stood at Rs28.1 billion, showing a growth of 7% over the previous financial year.

In 2011, PTCL also launched a tablet with built-in EVO Wireless Broadband. Currently available in more than 100 cities of Pakistan, the 7-inch touch screen tablet powered by Google Android Froyo 2.2 offers uninterrupted wireless broadband Internet connectivity on the go.

“We are constantly innovating and improving our customer experience,” said Irshaid, while recounting the successes of PTCL’s most recent business offerings. “We strongly believe that PTCL will remain the market leader and a service provider of choice throughout Pakistan for providing cutting-edge integrated telecom solutions to our customers.”

Despite the economic challenges faced by Pakistan, PTCL remained strong throughout 2011 in emerging segments of Broadband in Wire-line as well as Wireless, and other corporate services. PTCL was declared the leading operator in Pakistan by PTA’s 2011 Quality of Service survey for providing the highest quality Broadband Internet service to consumers.

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 23:15:53 +0000

In absolute terms, credit disbursement to the agricultural sector rose by Rs24.772 billion in July-January 2011-12 from total releases of Rs124.886 billion in the same period of the previous fiscal year.

Muzammil Aslam, economist at JS Global Capital Limited, said the 20 per cent growth in agricultural credit disbursement was because of the low base effect of last year. “Owing to the floods, agricultural credit remained low last year, but it is recovering this year.”

Aslam said the increase in credit releases would have its positive impact on upcoming major crops such as cotton, rice and wheat. “This is happening at a time when Pakistan has already got a few bumper crops in previous months,” he said.

Credit disbursement by five major commercial banks – Allied Bank, Habib Bank, MCB Bank, National Bank and United Bank – stood at Rs82.462 billion in July-January 2011-12 compared with Rs68.481 billion in July-January 2010-11, depicting an increase of Rs13.981 billion or 20.42 per cent.

Zarai Taraqiati Bank Limited, the largest specialised bank, disbursed Rs26.361 billion, down 0.03 per cent compared with Rs26.369 billion in the same period of previous year.

Punjab Provincial Co-operative Bank gave Rs4.980 billion in loans, up 28.49 per cent from Rs3.876 billion disbursed in the same period of previous year.

Fourteen domestic private banks loaned a combined Rs28.996 billion, higher by 10.84 per cent compared with Rs26.160 billion in the previous year.

Five microfinance banks including Khushhali Bank, NRSP Microfinance Bank, The First Microfinance Bank, Pak Oman Microfinance Bank and Tameer Microfinance Bank disbursed a total of Rs6.858 billion.

For the first time, the SBP has set an indicative farm credit target of Rs12.20 billion for microfinance banks for the current fiscal year. Overall, the agricultural credit target has been fixed at Rs285 billion for the year.

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 23:22:10 +0000

The improved profitability more than compensated for rising cost pressures and increased the company’s gross margins, said analysts. Gross margins rose by 3% to stand at 8% during the period under review against 5% in the same period a year ago.

Driven by healthy cash balances and advances, other income improved by 25% to Rs947 million and further supported the bottom-line.

Furthermore, the result was also accompanied by a cash dividend of Rs8 per share.

The country’s second largest automobile maker’s net sales went up by 23% to Rs32.9 billion in the first half of fiscal 2012 against Rs26.8 billion posted in the same period a year ago.

The company hiked prices by 7% during the year but this did not stop volumetric sales from growing 8% to 24,066 units in first half of fiscal 2012.

The major contributor was its Corolla variant with almost 83% of total sales. The company’s smaller variant Coure sales went down by 31% as the company is planning to discontinue the model from June. Moreover, Hilux sales improved by a massive 149% to 2,200 units.

Automobile assemblers importing completely knocked down parts from Japan and Thailand are always exposed to the detrimental impact that can be caused by foreign exchange volatility.

Cost of production rose by 21% on the back of 11% jump in steel prices and devaluation of the rupee against Japanese yen by 11%.

Although Indus Motor has been able to pass the rising cost to consumers, more than foresighted depreciation in the rupee can shrink margins.

Further depreciation in the rupee can force the company to go for another price hike, said Summit Capital analyst Sarfraz Abbasi.

In addition, lower effective tax rate of 32.2% against 37% last year further supported the bottom-line during the period under review.

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 23:22:42 +0000

The Karachi Stock Exchange’s (KSE) benchmark 100-share index gained 0.47 per cent or 59.22 points to end at the 12,603.67 point level.

Except for OGDC, most of the stocks witnessed profit taking after rising by 2% in the past five trading sessions, said Topline Securities Equity Dealer Samar Iqbal. OGDC rose 1.8% to close at Rs166.22 ahead of the company’s half-yearly earnings scheduled to be announced today (Thursday).

Trade volumes fell but still stayed at a healthy level of 272 million shares compared with Tuesday’s 22-month high tally of 322 million shares.

Pakistan State Oil witnessed a rally during the first half of the session on account of implementation of the signed agreement with the banking institutions.

Banks so far have been the leading performers on higher expectation of earnings and pay outs as Askari Bank, National Bank and Habib bank increased by 4.3%, 0.5% and 4.0%, respectively. United Bank rose 4.8% to close near its upper price limit as trading volumes in the stock rose to levels not seen in the last two years as earnings announcement revived investor interest.

Foreign institutional investors were buyers of Rs259 million and sellers of Rs209 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.

Pakistan Telecommunication Company’s stock price fell 3% after the firm declared first half earnings which depicted a decline of 29% to earnings per share of 56.

Bank AlFalah was the volume leader with 26.19 million shares gaining Rs0.43 to finish at Rs13.88. It was followed by Jahangir Siddiqui and Company with 21.69 million shares declining Rs0.49 to close at Rs9.75 and Pace (Pak) with 18.59 million shares firming Rs0.25 to close at Rs2.16.

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 23:31:59 +0000

Speaking at the Lahore Chamber of Commerce and Industry (LCCI) on Wednesday, Saddi said German auto giant MAN is putting up a truck and bus manufacturing plant which would not only create a large number of job opportunities but would also send positive signal to investors in other developed countries.

The diplomat said other German companies were also planning to make investment in alternative energy to help Pakistan overcome the energy crisis.

Saddi spoke about measures being taken by the German government to strengthen bilateral economic relations and said the upcoming visit of agricultural minister was very much part of these efforts.

LCCI President Irfan Qaiser Sheikh said continuous fall in bilateral trade called for appropriate sector-specific, result-oriented measures by both sides as the existing trade volume of $1.9 billion did not correspond with the great potential the two countries had.

Published in The Express Tribune, February 23^rd, 2012.

Tribune  Wed, 22 Feb 2012 23:33:47 +0000

Talking to the media here on Wednesday, All Pakistan Cement Manufacturers Association Chairman Aizaz Mansoor Sheikh said on average cement prices rose by 6.28% while steel rates went up by 15.90% and bricks cost increased by 13.14% from 2000 to the first half of the current fiscal year. Similarly, prices of other commodities including urea and sugar rose by 14.95 and 12.29% respectively in the same period.

According to Sheikh, the input cost has risen tremendously over the years with a heavy increase in diesel and coal prices as well as power tariff. On the contrary, he said, cement prices per bag rose by just 6.28% from Rs328.5 in 2008-09 to Rs350 in 2011-12.

He said energy, which constitutes more than 50% of the production cost, had taken unprecedented jumps in the last two years, but the industry absorbed the cost with efficient plants and reuse of energy mixed with heat recovery and other technology.

He said the industry produced 17.94 million tons of cement in the first seven months (July-January) of current fiscal year 2011-12, up only 3.94% compared to the corresponding period of previous year.

“An increase of 7.21% in domestic demand of cement was offset by a 3.59% decline in exports,” he stressed.

Sheikh claimed that the cement industry operated at less than 70% of the installed capacity in January and most of the manufacturers were not even recovering the input cost.

He said the industry expanded the production capacity on the assumption that the economy would grow at an average of 6% or above, but the economic growth averaged 2.5% in the past four years that weakened the demand for cement in the local market.

Published in The Express Tribune, February 23^rd, 2012.