Month: November 2021

Pakistani businesses are suffering heavily from the existing framework of the power sector, according to the report: “State-Owned Electricity Distribution Companies — A 5-year Performance Review” published by Prime Institute.

As per the report, even surplus generation capacity is unable to end Pakistan’s loadshedding because of the state-owned distribution companies’ (DISCOs) inability to meet the regulatory targets for transmission and distribution loss. It also criticizes the authorities’ failure to implement regulations on-bill recovery, investment, and public safety.

The report mentions that the carelessness in the power sector resulted in the overall loss to the national exchequer that is recorded at Rs. 1.355 trillion. From the total losses, Rs. 647 billion was caused by the financial loss of the DISCOs and Rs. 708.4 billion was attributed to the subsidy paid out of the federal budget to DISCOs between 2016 and 2020.

One of the reasons for these unnecessary losses is reportedly the lack of investment by some DISCOs while others had invested more than the permitted limit. Another reason is the DISCOs ‘incompetence in fulfilling the regulatory targets.

Fines were imposed on these DISCOs, but many continue to breach the set regulations, and these inefficiencies have led to the government paying Rs. 708.4 billion to bail out different distribution companies.

The report also highlights that a total of 7.5 million applications have been filed for new connections over the past five years but 16 percent of them are yet to be approved.

Source: Pro Pakistani

Advisor to the Prime Minister on Finance, Shaukat Tarin, informed that the matters with IMF have been settled and a formal agreement would be reached within a couple of days to revive the 6 billion USD Extended Fund Facility (EFF).

He was talking to the media after the launch event of the Pakistan Single Window (PSW) on Monday.

Shaukat Tarin said that an accord would be signed this week as the differences have been settled. The Adviser on Finance further said, “We have tried to explain our position to the IMF, that we do not have a two-third majority in the parliament to bring any constitutional amendment.”

He was referring to the laws pertaining to the State Bank of Pakistan (SBP). The Advisor on Finance, commenting on the latest cyberattack on the National Bank of Pakistan (NBP), said that more cyberattacks may occur on our financial system after attacks on FBR and the National Bank of Pakistan. “The enemy is sitting on our borders and such attacks may occur, but we have deployed safety measures to avert any such in future,” said Shaukat Tarin.

He said that the issues of finances have been managed and there is no chance of delay in salaries of the government employees, as the situation is under control now. Responding to a question on inflation, Shaukat Tarin said that the government is giving targeted subsidies to control inflation. He said that higher commodity prices are a global phenomenon, and he cannot control global commodity prices.

Earlier, while addressing the launching ceremony of the Pakistan Single Window facility, Shaukat Tarin said that it is an important step towards reforming our trade and it will not only boost trade but also streamline all inbound and outbound trade at a single platform. “The government has come up with the slogan of change, reform, and accountability as we have taken important steps for institutional reforms,” said the advisor.

Congratulating Pakistan Customs on the launch of Single Window, Shaukat Tarin said that in the last two years, the supply chain had been affected due to the COVID-19 pandemic, but Pakistan’s economy is now in a recovery phase. He further said that the businessmen and industries will get facilitated with the PSW project, and it will help increase Pakistan’s export. Shaukat Tarin opined that the regional trade and geo-economic ties would improve and provide a comparative advantage to our business community to enter new markets and enhance exports. He said the government is actively pursuing the agenda of making Pakistan a hub of regional trade and transit.

In this regard, he said a major milestone had been achieved by operationalizing the TIR agreement and dispatch of transit consignments to Uzbekistan and Turkey.

The Advisor on Finance said the PSW would boost our capacity to promote regional trade and help counter financial crimes, including money laundering.

David Young, Deputy Mission Director USAID, and Syed Aftab Haider, Chief Executive Office PSW, also addressed the event.

The Pakistan Single Window enables parties involved in trade and transport to register standard information and documents with a single-entry point and thereby, fulfill all import, export, and transit-related regulatory requirements. Previously, traders were required to secure approval from a variety of government offices, duplicating efforts and paperwork, which led to increased costs and delays. Today’s announcement rolled out the Subscription and Customs Registration system, along with the Commercial Bank integration module, which are the first steps in helping to reduce these costs and delays, and which will benefit consumers and businesses alike.

Source: Pro Pakistani

Waqar Siddiqui has been appointed as the Chief Executive and Managing Director of Shell Pakistan Limited, with effect from 1 November 2021.

He joined Shell Pakistan Limited (SPL) in 2001, and has since held several roles locally and internationally at senior leadership positions. He has successfully guided Shell companies through organizational change, strategy development, mergers/acquisitions, and achieving consistent performance delivery in his 24 years of oil downstream experience.

Siddiqui holds a BS degree in Chemical Engineering and an MBA in Marketing besides academic and professional accreditations from the Harvard Business School and the University of British Columbia.

His last role before returning to Pakistan was the Managing Director of Shell Downstream Retail in PT Shell Indonesia, and he has been a Director on the SPL Board since 2019.

Siddiqui fills in the new role at a time when SPL has recorded a hefty profit of Rs. 2.44 billion in the first nine months of 2021 after reporting a loss of Rs. 6.06 billion in the same period last year.

The company reported net revenue of Rs. 169.22 billion, up by 47 percent as compared to Rs. 115.16 billion in the same period last year. The mobility business successfully launched Shell Recharge during this period, which is an electric vehicle charging station in Karachi in collaboration with K-Electric, while aiming to lead the energy transition and provide the best-in-class customer value proposition in Pakistan.

Source: Pro Pakistani

The currency in circulation (CIC) has increased to over Rs. 7 trillion in Pakistan, representing the growth in the size of the economy and the traditional use of cash among the citizens as money.

According to the State Bank of Pakistan (SBP), the currency in circulation has increased to Rs. 7.4 trillion by the end of the financial year 2020-21 as compared to the previous level of the last financial year in which it stood at Rs. 6.7 trillion, showing a double-digit growth of 10.4 percent year-on-year.

The currency in circulation is the overall currency consisting of various denominations of banknotes being used as money in an economy for the exchange of goods and services and informal savings, excluding the financial sector.

The size of Pakistan’s economy has increased significantly, which showed the double-digit growth in currency in circulation, said Tahir Akbar, Head of Research at Arif Habib Limited. It is pertinent to mention here that Pakistan’s GDP grew by 3.94 percent, which was well above the target set for the financial year 2020-21 of 2.1 percent, and COVID-19 induced contraction of 0.47 percent in FY20.

Accordingly, the banking regulator issued currency notes in order to meet the requirements of the local economy. The banknote printing charges of SBP increased to Rs. 15.762 billion in FY21 from Rs. 13.325 billion in FY20, thereby registering an increase of 18 percent mainly due to larger volumes of printing and an increase in printing rates.

The CIC of the country stands from 28 to 30 percent viz-a-viz the volume of broad money size, he further said. This is the average percentage of CIC when Pakistan is compared with similar economies. On the other hand, the CIC percentage is less than 20 percent of the broad money in most of the developed countries, where the digitization of the economy is much higher than in Pakistan.

Besides, the currency in circulation stands at Rs. 7.4 trillion, the value of money deposits maintained by the banking system of the country stood at Rs. 19.2 trillion, which is in addition to the value of assets and investments made by the country.

Financial Inclusion and Digitization of Banking System

The higher currency in circulation also means that the size of Pakistan’s undocumented economy is huge. Besides, the cash available in the economy also causes a factor of money-led inflation.

Since the last decades, the banking regulator along with the private sector has been working aggressively towards the financial inclusion of the economy through introducing various new avenues such as branchless banking, mobile and internet banking, payment cards, payment gateway operators, POS operators, digital wallets, QR payments, etc.

The use of digital means for the transaction of money has increased tremendously, but there is a big room for improvement, which needs customers’ confidence over these tools on the one hand, whereas the literacy of electronic banking is also needed on the other hand.

In FY20, the volume of paper-based transactions within the banking sector stood at Rs. 151 billion as compared to transaction volume through electronic or digital banking standing at Rs.86 billion. The electronic banking transactions registered year-on-year growth of 31.1 percent, which implies an increase in the adoption of digital means for payments.

This growth was spurred by major uptake in mobile banking (133.6 percent increase in transactions volume) and internet banking (65.1 percent increase in transactions volume), whereas transactions against paper-based instruments showed a decline of 6.8 percent by volume and a rise of 15.6 percent by value.

These trends point toward healthy growth in fostering a more digitally integrated economy in years to come.

Source: Pro Pakistani