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IMF Delays Consideration of Pakistan’s $7 Billion Bailout Package

Khashif Sarfraz
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IMF Delays Consideration of Pakistan’s $7 Billion Bailout Package

Introduction

The International Monetary Fund (IMF) has postponed the approval of Pakistan’s $7 billion bailout package, as it is not part of the IMF Executive Board’s agenda for the upcoming week. This delay adds to the uncertainty surrounding Pakistan’s efforts to stabilize its economy, which continues to struggle with significant financial challenges.

IMF Executive Board Meeting Schedule

The IMF’s Executive Board has released its schedule for the week of September 4, 2024, which notably does not include Pakistan’s request for the crucial $7 billion bailout package. This package was expected to play a pivotal role in addressing Pakistan’s ongoing economic difficulties, including its balance of payments crisis and dwindling foreign exchange reserves.

Finance Ministry’s Optimism

Despite the omission of Pakistan’s bailout request from the IMF’s immediate agenda, the country’s finance ministry remains optimistic. Sources within the ministry believe that the IMF Executive Board will still take up the matter and approve the bailout during the month of September.

The finance ministry is actively engaging with key international partners, including China, Saudi Arabia, and the United Arab Emirates (UAE), to secure financial support. Pakistan is seeking the rollover of $12 billion in loans from these countries to alleviate its financial burden. Additionally, Pakistan has requested a $1.2 billion loan from Saudi Arabia to bridge a $2 billion financing gap.

Pakistan’s Financial Struggles

Pakistan’s economic situation has been precarious, with challenges such as high inflation, a weakening currency, and a substantial fiscal deficit. The country has been relying heavily on international financial assistance to maintain its economic stability.

The delay in the IMF’s approval of the bailout package could further exacerbate these issues, putting additional pressure on the government to find alternative sources of funding. The government’s ongoing negotiations with China, Saudi Arabia, and the UAE are crucial for securing the financial support needed to navigate this challenging period.

Conclusion

The IMF’s decision to delay consideration of Pakistan’s $7 billion bailout package has added another layer of uncertainty to the country’s economic outlook. While the finance ministry remains hopeful that the bailout will be approved later in September, Pakistan’s financial future hinges on its ability to secure support from international partners. As the situation unfolds, the government will need to carefully manage its finances and continue seeking external assistance to stabilize the economy.

Nepra Approves Rs1.90 per Unit Increase in Electricity Tariff for Q4 FY2023-24

Khashif Sarfraz
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Nepra Approves Rs1.90 per Unit Increase in Electricity Tariff for Q4 FY2023-24

Introduction

The National Electric Power Regulatory Authority (Nepra) has approved a significant increase in electricity tariffs, raising rates by up to Rs1.90 per unit under the quarterly adjustment for the fourth quarter of the financial year 2023-24. This decision is set to impose a financial burden of approximately Rs46 billion on consumers across the country, including those served by state-owned power distribution companies (DISCOs) and the private utility K-Electric.

Details of the Tariff Increase

The approved tariff hike is primarily attributed to lower electricity demand, reduced utilization of Maximum Demand Indicators (MDI), and aggregate technical and commercial (AT&C) losses that have resulted in load-shedding. The additional cost will be recovered from consumers of various DISCOs and K-Electric, with the total amount to be collected reaching Rs46.805 billion.

This amount is broken down as follows:

  • Capacity Charges: Rs22.867 billion
  • Variable Operation and Maintenance (O&M) Costs: Rs3.566 billion
  • Use-of-System Charges and Market Operator Fee: Rs7.513 billion
  • Transmission and Distribution (T&D) Losses: Rs11.067 billion
  • Net Metering Costs: Rs1.792 billion

Despite the significant increase, Nepra Chairman Waseem Mukhtar assured the public that consumers would receive a net relief of Rs1.80 per unit in their September 2024 bills. This relief is expected due to a Rs0.31-per-unit reduction in fuel charges adjustment for July 2024 and a Rs0.90-per-unit decrease in the quarterly tariff adjustment for the third quarter.

Impact on K-Electric and Government Subsidy

The impact of the tariff adjustment for K-Electric consumers will be borne by the government through a subsidy. This move aligns with the federal government’s policy of applying uniform quarterly adjustments across all consumer bases, including those served by K-Electric.

Challenges Faced by DISCOs and Criticism

During the public hearing, Nepra members expressed concerns about the performance of DISCOs, particularly regarding their handling of AT&C losses-driven load-shedding and capacity payments to independent power producers (IPPs) for unused booked capacity. Member Rafique Ahmad Shaikh specifically criticized DISCOs, such as Peshawar Electric Supply Company (Pesco), for denying consumers access to net metering facilities.

Furthermore, Fesco reported an 8% reduction in sales due to a growing shift towards solar energy. Nepra member Mathar Niaz Rana suggested imposing penalties on DISCOs that underutilize their allocated capacity, emphasizing the need for accountability.

Future Outlook and Promised Relief

Nepra Chairman Waseem Mukhtar highlighted that future tariff adjustments would likely be minor, provided current economic conditions remain stable. He assured that if Pakistan’s economic situation continues to improve, further relief could be granted to consumers in the form of reduced fuel charges adjustments.

However, the chairman also called on DISCOs to improve their management and ensure that consumers are not deprived of facilities like net metering, which could help alleviate some of the financial burdens faced by the public.

Conclusion

The recent approval of a Rs1.90 per unit increase in electricity tariffs by Nepra is set to impact millions of consumers across Pakistan. While the move is aimed at addressing lower demand and AT&C losses, it raises concerns about the financial strain on households. However, with promises of future relief and a focus on improving DISCO performance, there is hope that the burden on consumers will be alleviated in the coming months.

Saudi Arabia’s Strategic Investment in Reko Diq

Khashif Sarfraz
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0
Saudi Arabia’s Strategic Investment in Reko Diq

Introduction

In a significant development, Saudi Arabia has made a strategic offer to acquire a 15% stake in Pakistan’s Reko Diq mining project, coupled with a substantial grant to build infrastructure around the mining area. This marks the first major investment under the Special Investment Facilitation Council (SIFC) framework and could pave the way for strengthened economic ties between the two countries.

Details of the Saudi Offer

Saudi Arabia’s Public Investment Fund (PIF), through its subsidiary Manara Minerals, has expressed interest in purchasing a 15% stake in the Reko Diq mining project. The offer includes not only cash for the acquisition of shares but also a grant to develop critical infrastructure around the mining area, particularly the Mashkhel-Panjoor road, to ensure smooth operations and movement.

The federal government of Pakistan currently holds a 25% stake in the Reko Diq project, and it plans to sell 15% of this share to Saudi Arabia. In response to the Saudi offer, the Pakistani government has decided to form a negotiation committee to review the terms of the deal and recommend a final price to the federal cabinet for approval.

Significance of the Deal

If the deal materializes, it will mark a new chapter in Pakistan-Saudi Arabia economic relations. The investment is expected to create employment opportunities in the region and contribute to the overall economic development of the country. Pakistan is also in the process of securing a rollover of a $5 billion Saudi cash deposit and has requested a $1.2 billion new oil financing facility, further highlighting the deepening economic ties between the two nations.

Infrastructure Development and Economic Impact

In addition to the acquisition of shares, Saudi Arabia’s offer includes a grant for constructing road infrastructure around the Reko Diq mining area. The Ministry of Economic Affairs is currently working with the Saudi Fund for Development (SFD) to finalize the road scheme, with plans to complete a feasibility study once the talks progress.

The Reko Diq project, which is highly capital-intensive, holds immense potential for economic growth. The project is currently owned 50% by Barrick Gold, 25% by three federal government entities, and 25% by the government of Balochistan. Barrick Gold is updating the project’s feasibility studies, with completion expected by December 2024 and the first production anticipated by 2028.

Once operational, the project is expected to attract joint investments from Saudi Arabia, the government of Balochistan, and the federal government, potentially leading to a $5 billion investment by June 2025 in the mining and agriculture sectors.

Challenges and Future Prospects

While the Saudi offer presents a significant opportunity for Pakistan, several challenges need to be addressed. Pakistan has already taken steps to reassure Saudi investors about the repatriation of profits, given the country’s external sector liquidity constraints. Prime Minister Shehbaz Sharif has instructed the State Bank of Pakistan (SBP) to prioritize Saudi companies in profit repatriation, a move aimed at bolstering investor confidence.

The US Export-Import (Exim) Bank has also shown interest in financing the Reko Diq project, offering a loan of $1.5 billion to $2 billion. However, the loan is contingent on the bank receiving preferential creditor status, which is currently under consideration.

As negotiations continue, the three federal government-owned companies that hold shares in Reko Diq on behalf of the government will begin the process of divesting their shareholding proportionately, following board approvals.

Conclusion

The Saudi offer to invest in the Reko Diq mining project represents a significant step forward in Pakistan-Saudi economic relations. With the potential for substantial infrastructure development and job creation, this deal could have far-reaching implications for Pakistan’s economy. As the negotiation committee reviews the offer, the outcome will likely shape the future of not only the Reko Diq project but also the broader economic partnership between Pakistan and Saudi Arabia.

FBR Appeals to Traders for Dialogue Ahead of Planned Strike Against Tajir Dost Scheme

Aarooj Manzoor
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FBR Appeals to Traders for Dialogue Ahead of Planned Strike Against Tajir Dost Scheme

FBR Appeals to Traders for Dialogue Ahead of Planned Strike Against Tajir Dost Scheme

In a bid to avoid an escalating conflict with the trading community, the Federal Board of Revenue (FBR) has reached out to traders, urging them to present their demands before resorting to a nationwide shutter-down strike. The strike, planned for August 28, 2024, is in response to the controversial Tajir Dost Scheme, a tax policy initiative that has been met with significant resistance from traders across Pakistan.

Background: The Tajir Dost Scheme and Its Impact

The Tajir Dost Scheme, introduced by the FBR, was intended as a “trader-friendly” initiative aimed at simplifying tax collection from small shops and retail outlets. However, what was designed to ease the burden on traders has instead sparked widespread discontent. The scheme includes provisions for a fixed monthly tax on shops and retail outlets, which many traders argue is impractical and unsustainable, especially in the current economic climate.

Traders’ Concerns: A Call for Change

Traders have voiced strong objections to the Tajir Dost Scheme, particularly regarding the fixed monthly tax. The Central Organisation of Traders and the All Pakistan Anjuman-e-Tajiran, two of the most influential trader associations, have been vocal in their criticism. Leaders such as Kashif Chaudhry and Ajmal Baloch have called for the immediate withdrawal of the scheme, labeling it as detrimental to the survival of small businesses. They also demand the removal of withholding taxes on essential items like pulses and flour, which they argue are disproportionately affecting lower-income consumers and small retailers.

FBR’s Response: A Plea for Dialogue

Recognizing the potential disruption that a nationwide strike could cause, the FBR has extended an olive branch to the trading community. Chief Coordinator of the Tajir Dost Scheme, Naeem Mir, announced that FBR Member Inland Revenue Operations had contacted the traders’ representatives, offering a meeting on August 27 to discuss and resolve their grievances. The FBR has assured the traders that it is open to making necessary amendments to the scheme and addressing their concerns, including issues related to tax payments and the fixed monthly tax.

The Planned Strike: A Show of Strength?

Despite the FBR’s plea for dialogue, the traders’ associations remain firm in their stance, with the nationwide shutter-down strike still scheduled for August 28. This strike is seen as a last resort by the trading community, a way to pressure the government into reconsidering the tax policies that they feel are unfairly targeting small businesses. The strike, if it proceeds, could see thousands of shops and retail outlets across Pakistan closing their doors in protest, sending a strong message to the authorities.

Potential Outcomes of the Meeting

The meeting between the FBR and traders on August 27 will be crucial in determining the future of the Tajir Dost Scheme and the broader relationship between the government and the trading community. If the FBR can successfully address the traders’ concerns and make meaningful concessions, it could avert the strike and restore some level of trust. However, if the meeting fails to produce satisfactory results, the strike could go ahead, potentially leading to a prolonged standoff between the two parties.

The Broader Context: Tax Reforms in Pakistan

The controversy surrounding the Tajir Dost Scheme is part of a larger debate over tax reform in Pakistan. The government has been under pressure to increase tax revenues to fund public services and reduce the budget deficit. However, efforts to broaden the tax base have often been met with resistance, particularly from small businesses and traders who argue that they are already overburdened by existing taxes.

The Role of Trader Associations

Trader associations like the Central Organisation of Traders and the All Pakistan Anjuman-e-Tajiran play a critical role in representing the interests of the trading community. Their influence is significant, not only in negotiating with the government but also in mobilizing support for collective actions like strikes. The outcome of the current dispute will likely have lasting implications for these associations and their ability to advocate for their members.

Public Opinion: Divided Views

Public opinion on the Tajir Dost Scheme and the planned strike is divided. Some view the traders’ demands as legitimate, arguing that the government should do more to support small businesses. Others, however, believe that the trading community should contribute its fair share of taxes, particularly in a country where tax evasion is rampant, and the informal economy is large. The challenge for the FBR will be to find a balance between enforcing tax laws and maintaining a conducive environment for business.

Looking Ahead: What Traders Can Expect

As the August 27 meeting approaches, traders across Pakistan are closely watching developments. The outcome will likely shape the future of tax policy in the country and could set a precedent for how similar disputes are handled in the future. Traders hope that the government will listen to their concerns and make the necessary changes to avoid further conflict.

Government to Reevaluate Solar Energy Limits for Export-Focused Industries

Aarooj Manzoor
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0
Government to Reevaluate Solar Energy Limits for Export-Focused Industries

Government Reconsiders Cap on Solar Energy Production for Export-Oriented Industries

The Pakistani government, through its Minister for Commerce, Jam Kamal Khan, has announced a significant move that could reshape the landscape for export-oriented industries, particularly in the sports goods sector. During a virtual meeting with the Sectoral Council for Sports Goods, the minister assured industry representatives of the government’s unwavering commitment to reducing the tax burden on exporters and enhancing their competitiveness. One of the key points discussed was the reconsideration of the current policy that imposes a cap of 100KW on solar energy production for these industries.

The Importance of Solar Energy for Export-Oriented Industries

Solar energy has increasingly become a vital component for industries looking to reduce operational costs and transition towards more sustainable practices. For export-oriented industries, which are often subject to intense global competition, the ability to produce cost-effective energy on-site is a game-changer. It not only reduces dependence on traditional, often expensive, energy sources but also aligns with global trends toward greener manufacturing processes.

Current Cap on Solar Energy Production: A Bottleneck?

The existing policy caps solar energy production at 100KW for export-oriented industries. While this may seem sufficient on paper, industry insiders argue that it significantly limits their ability to optimize energy costs. Many larger facilities, particularly those in the sports goods sector, require far more energy to operate efficiently. By limiting their solar energy production, these businesses are forced to rely on the national grid or other energy sources, which can be both unreliable and costly.

Minister’s Assurance: A Step Towards Greater Competitiveness

Minister Jam Kamal Khan’s assurance that the government will reconsider this cap is a promising development for the industry. By potentially lifting or increasing the cap, the government would enable businesses to produce more of their energy needs through solar power, reducing their operational costs and enhancing their competitiveness on the global stage.

Impact on the Sports Goods Sector

The sports goods sector, a significant contributor to Pakistan’s exports, stands to benefit immensely from this policy change. This sector is particularly energy-intensive, given the need for continuous manufacturing processes. Allowing these businesses to generate more solar energy could lead to lower production costs, enabling them to price their products more competitively in the international market.

The Broader Context: Renewable Energy in Pakistan

This move also fits within a broader context of Pakistan’s energy policy, which is increasingly focused on renewable sources. With frequent power outages and rising electricity costs, renewable energy offers a viable solution to some of the country’s most pressing energy challenges. Encouraging export-oriented industries to embrace solar power aligns with national goals of reducing carbon emissions and promoting sustainable development.

Tax Reforms: A Focus on Exporters

In addition to the reconsideration of the solar energy cap, the minister also addressed another critical issue: the tax burden on exporters. The current Fixed Tax Regime has been instrumental in providing a stable and predictable tax environment for exporters, shielding them from the complexities and potential harassment associated with the Normal Tax Regime, which involves multiple tax departments.

The Need for a Stable Tax Environment

Exporters at the meeting emphasized the importance of retaining the Fixed Tax Regime, which has proven to be a lifeline for many businesses. The complexity of the Normal Tax Regime, with its multiple departments and potential for inconsistent enforcement, can be a significant distraction for businesses focused on maintaining their competitive edge. A stable, predictable tax environment is essential for long-term planning and investment, particularly in industries as globally competitive as sports goods.

The Role of the National Export Development Board

The minister pledged to present the industry’s proposals, including the call to maintain the Fixed Tax Regime, to the National Export Development Board. This board plays a crucial role in shaping export policies and ensuring that they align with the needs of the industries they are designed to support. By advocating for these changes at the highest levels, the minister is demonstrating the government’s commitment to creating a more favorable business environment for exporters.

A Win-Win for the Government and Exporters

If the government follows through on these commitments, it could lead to a win-win situation for both the government and exporters. By lifting or increasing the cap on solar energy production, the government can promote the adoption of renewable energy, reduce the strain on the national grid, and help businesses lower their operational costs. Simultaneously, by maintaining a favorable tax regime, the government can ensure that exporters remain competitive in the global market, driving economic growth and job creation.

Looking Ahead: What Can Exporters Expect?

Exporters in Pakistan, particularly those in the sports goods sector, have reason to be optimistic about these developments. While the final decisions have yet to be made, the government’s willingness to reconsider existing policies and engage directly with industry representatives is a positive sign. Businesses can look forward to potentially lower energy costs, a more stable tax environment, and enhanced competitiveness in the global market.

Addressing Pakistan’s Economic Woes: A Call for Realistic and Sustainable Reforms

Khashif Sarfraz
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Addressing Pakistan’s Economic Woes: A Call for Realistic and Sustainable Reforms

Introduction

Pakistan finds itself in a state of economic inertia, where the usual state of affairs continues without any substantial efforts to initiate meaningful reforms. The conversations surrounding the annual budget and the IMF package may have faded from the public discourse, but the economic challenges remain as daunting as ever. Without concrete actions, the nation risks remaining a victim of the status quo, with little hope for recovery or progress.

The Grim Reality of Pakistan’s Economic Landscape

Pakistan’s economy is riddled with challenges that demand immediate and multifaceted responses. The social and political unrest in the country has deep roots in economic deprivation and marginalization. The frustration and discontent observed across various sectors of society are closely tied to the economic slowdown, the closure of industries, a shrinking job market, and the rising cost of doing business. These factors, coupled with a continuous disconnection from global markets, paint a bleak picture of the country’s economic health.

While grandiose promises of tripling exports, establishing new industrial zones, and attracting billions in investments are often made, the authenticity and practicality of these claims are questionable. The lack of follow-up and accountability further exacerbates the situation, leaving the public disillusioned and the economy stagnant.

A Need for Realistic and Feasible Economic Strategies

The pressing question remains: Is there anything being done to address the economic challenges facing Pakistan? Beyond negotiations with the IMF and the issuance of bonds, there seems to be little focus on actionable strategies that could lead to real economic recovery. The continuous increase in utility prices, coupled with subsidies for favored sectors and neglect of massive loan write-offs, only adds to the financial strain.

What is urgently needed are ideas, schemes, and plans that prioritize production, productivity, and employment in key sectors like agriculture, manufacturing, and services. A market intervention strategy that enhances the availability of land, labor, capital, and entrepreneurship is essential. Additionally, incentives for adopting new technologies and mechanisms for monitoring and evaluating progress must be implemented to ensure accountability.

Glimmers of Hope Amidst Challenges

Despite the challenges, Pakistan’s economy does present opportunities for growth. The country boasts a strategic location, a large and youthful population, and ongoing economic reforms that offer long-term business prospects across various sectors.

The agriculture sector, which saw a robust growth of over 6% in FY2024, continues to be a cornerstone of the economy, contributing around 24% to the GDP. Key crops like cotton, rice, and wheat have shown significant increases in production, offering potential for agribusiness and food processing ventures.

The industrial sector, accounting for approximately 20.42% of the GDP, is diverse, with textiles, garments, and sports goods being notable export items. Similarly, the services sector, particularly in IT, telecommunications, financial services, and retail, has emerged as a major contributor to the GDP. With over half of the GDP contribution coming from services, this sector offers vast potential for foreign investment, especially in fintech, e-commerce, and digital services.

Addressing Structural Challenges

To fully capitalize on these opportunities, Pakistan must address several structural issues, including regulatory barriers, corruption, inadequate infrastructure, and political instability. Entrepreneurs often face difficulties such as limited access to credit, a shortage of skilled labor, and security concerns, all of which hinder business growth and investment.

For a sustained medium-term recovery, Pakistan needs a prudent macroeconomic policy mix that includes reforms to improve expenditure quality, broaden the tax base, address regulatory constraints, and reduce the state’s presence in the economy. Additionally, addressing challenges in the energy sector and increasing public investments in human development are crucial for creating a conducive environment for sustainable growth.

Conclusion: A Call for Mindset and Accountability Reforms

Pakistan’s path to economic recovery requires more than just financial reforms—it demands a shift in mindset and a commitment to accountability. Without these fundamental changes, the country risks remaining trapped in a cycle of inaction and apathy, with little hope for progress.

The road to recovery is challenging, but with a focused approach that includes realistic, transparent, and traceable economic strategies, Pakistan can lay the groundwork for a resilient and inclusive economic future. The time for action is now, and it is imperative that both decision-makers and the public rise above indifference to steer the nation towards sustainable growth.

China Exports First Shipment of White Broiler Eggs to Pakistan, Strengthening Agricultural Trade Ties

Khashif Sarfraz
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0
China Exports First Shipment of White Broiler Eggs to Pakistan, Strengthening Agricultural Trade Ties

Introduction

In a groundbreaking development for agricultural trade relations between China and Pakistan, the first-ever shipment of Chinese homegrown white broiler eggs has been successfully exported to Pakistan. This inaugural shipment, which included 172,800 “Guangming No 2” White Feathered Broiler eggs, marks a significant milestone in the collaboration between the two countries’ poultry industries.

Significance of the Shipment

This export is particularly noteworthy as it represents the first time China has exported its breed of poultry to Pakistan. The eggs were domestically bred by Foshan Gaoming District Xinguang Agriculture and Animal Husbandry Co. Ltd., in partnership with the Beijing Institute of Animal Science of the Chinese Academy of Agricultural Sciences.

Liu Dawei, Deputy General Manager of Xinguang and the leader of the White Feather Broiler project, expressed his enthusiasm about this achievement. “This export of white-feathered broiler breeding eggs to Pakistan means a lot to us. More Chinese breeding eggs will go abroad, not only to Pakistan but also to the globe,” he stated.

About “Guangming No 2” White Feathered Broilers

The “Guangming No 2” White Feathered Broiler is an exceptional breed, known for its rapid growth and high survival rate. At just 42 days of age, these broilers weigh over 3kg and have a feed-to-weight ratio of 1.32-1.5:1, making them highly efficient for commercial production.

The shipment of 172,800 hatching eggs to Pakistan is expected to yield more than 50,000 sets of parent broilers after a 21-day incubation period. These parent broilers could produce over 7 million commercial broilers, which translates to more than 21,000 tonnes of chicken meat, providing a significant boost to Pakistan’s poultry industry.

Impact on the Poultry Industry

Historically, the global white-feathered broiler breeding industry has been dominated by developed countries in Europe and the United States, with China once fully dependent on foreign breeders. However, China’s successful cultivation of domestic varieties, including “Guangming No 2,” by the end of 2021, has reduced this reliance, enabling the country to enter new markets, such as Pakistan.

Pakistan currently faces a similar challenge, relying heavily on imported grandparent stock to supply its poultry industry. The introduction of Chinese-bred white broiler eggs could help Pakistan reduce its dependency on foreign breeders, fostering greater self-sufficiency in the poultry sector.

Conclusion

This inaugural export of Chinese white broiler eggs to Pakistan represents a significant step forward in the agricultural trade relationship between the two nations. With the potential to revolutionize Pakistan’s poultry industry, this development underscores the growing cooperation between China and Pakistan in the agricultural sector, paving the way for further collaboration in the future.

HUBC Reports Strong FY24 Results with Impressive Dividend Announcement

Khashif Sarfraz
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HUBC Reports Strong FY24 Results with Impressive Dividend Announcement

The Hub Power Company Limited (HUBC) has reported robust financial results for the fiscal year 2024 (FY24), with consolidated earnings reaching PKR 70,018 million (Earnings Per Share: PKR 54.0), marking a 22% year-on-year (YoY) increase compared to PKR 57,554 million (EPS: PKR 44.4) in FY23. Despite a 14% YoY decline in profitability during the fourth quarter of FY24 (4QFY24), where earnings fell to PKR 20,472 million (EPS: PKR 15.8), the company surprised investors with a cash dividend of PKR 8.50/share, bringing the total dividend for FY24 to PKR 20.0/share.

Result Highlights

  1. Revenue Growth: Net sales for FY24 rose by 14% YoY to PKR 130,526 million, driven by increased dispatches from Thar Energy Limited (TEL), which saw a 57% YoY surge, and the devaluation of the Pakistani Rupee (PKR) against the US Dollar. The topline for 4QFY24 also showed an 8% YoY increase, reaching PKR 35,091 million.
  2. Improved Margins: HUBC’s gross margins for FY24 improved by 600 basis points YoY, standing at 52%. The gross margins remained stable at 53% during 4QFY24 compared to the same period last year.
  3. Profit from Associates and Joint Ventures: The company’s share of profit from associates and joint ventures grew significantly by 44% YoY to PKR 49,361 million in FY24, largely due to the profitability of ThalNova Power Thar Limited (TNPTL), which achieved Commercial Operation Date (CoD) on February 17, 2023, and the devaluation of the PKR. However, in 4QFY24, this profit slightly declined by 1% YoY to PKR 14,657 million.
  4. Finance Costs: Finance costs increased by 38% YoY to PKR 26,744 million during FY24, attributed to higher interest rates and the addition of TEL’s finance costs. However, there was an 18% YoY decline in finance costs during 4QFY24 due to the reduction in long-term loans.

Additional Information

HUBC has entered into a joint venture with Ark Metals (Private) Limited, a mining company, through its wholly owned subsidiary, Hub Power Holdings Limited (HPHL). This venture aims to explore and develop mineral mines in Pakistan. The completion of the agreement is subject to obtaining the necessary regulatory approvals and consents.

Traders Unite Against High Electricity Costs and Government Policies

Aarooj Manzoor
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0

Traders Across Pakistan Prepare for Nationwide Strike on August 28

On August 28, traders across Pakistan will unite in a nationwide strike to protest the unbearable electricity costs and the continuation of Independent Power Producer (IPP) agreements. The Central Traders Association (CTA) and the Sindh Traders Alliance (STA) are leading this movement, emphasizing the dire need to safeguard the economy and prevent the closure of industries due to these skyrocketing expenses.

High Electricity Costs and IPP Agreements

The core issue driving this strike is the exorbitant electricity bills that businesses and individuals are being forced to pay. The IPP agreements, which have led to a staggering Rs2,800 billion in payments and the imposition of 13 different taxes on electricity, are at the heart of the traders’ grievances. No business, big or small, can sustain such overwhelming costs. This strike is not just a protest but a fight for survival.

CTA President’s Perspective

CTA President Kashif Chaudhry has been vocal about the necessity of this strike. He emphasized that the movement is not merely about leadership but about the very survival of businesses across the country. “The strike on August 28 will be observed in Karachi, Sindh, and across the country. We are not only protesting against the exorbitant electricity bills but also against the IPPs’ fraudulent agreements,” Chaudhry stated during a press conference at the Karachi Press Club.

The Impact of Unfair Taxation

Opposition to the Rs60,000 Monthly Shop Tax

One of the most contentious issues is the imposition of a Rs60,000 monthly tax on shops. Traders see this as a form of oppression, turning shopkeepers into tax collectors for the Federal Board of Revenue (FBR). Kashif Chaudhry expressed his strong opposition to this tax, vowing to resist any attempts by the FBR to inspect markets. “We reject advance tax notices and will resist any FBR team attempting to inspect the markets. If they come, we will encircle them,” he warned.

Call for Reversal of Anti-Trader Policies

Chaudhry also highlighted the need for a reversal of anti-trader policies, specifically those linked to the International Monetary Fund (IMF) deal. He stressed that negotiations must be held directly with the prime minister, as lower-level officials lack the authority to amend these policies

Support from Prominent Trader Leaders

Atiq Mir, a prominent leader within the trader community, condemned the current government for its perceived negligence towards the welfare of the people. He criticized the imposition of taxes on essential food items and the increase in electricity tariffs, which have led to widespread financial strain, and in extreme cases, suicides due to overwhelming bills. “Instead of easing the burden, they have exacerbated the crisis. The ruling class has not curtailed its luxuries but instead increased our hardships,” Mir stated.

Solidarity from Balochistan

The strike is not limited to Sindh alone. Representatives from Balochistan have also pledged their support, signaling the emergence of a broad-based protest movement that could have significant implications for the country’s economic landscape.

Federal Government to Close Utility Stores Corporation Amid Efforts to Exit Non-Essential Businesses

Khashif Sarfraz
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Federal Government to Close Utility Stores Corporation Amid Efforts to Exit Non-Essential Businesses

The federal government has decided to shut down the Utility Stores Corporation (USC) as part of its efforts to withdraw from non-essential business operations. This decision was disclosed by the Secretary of Industries & Production during a meeting of the Senate Standing Committee on Industries and Production on Friday.

The announcement came in response to an inquiry from Senator Saifullah Niazi regarding the future of the Utility Stores. The Secretary confirmed that the government is actively working to reassign USC employees to other institutions as part of the closure process.

The Secretary further explained that one of the reasons behind the decision is that government subsidies provided to the Utility Stores distort market competition. By shutting down the USC, the government aims to reduce these distortions and create a more level playing field for businesses in the market.

This move is part of a broader strategy by the government to focus on essential services and allow the private sector to take a leading role in non-essential areas of the economy. The closure of the USC represents a significant shift in the government’s approach to managing its business operations and could have far-reaching implications for market dynamics in Pakistan.

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