Day: January 6, 2022

The government has finally granted conditional exemptions to all the power distribution, transmission, and generation companies from the approval of their self-financed schemes from the Central Development Working Party (CDWP)/Executive Committee of the National Economic Council (ECNEC), directing the power division to revisit the composition of the Board of Directors of these companies.

An office memorandum on the procedure for the approval of the self-finance development schemes of the autonomous Organization (Commercial/Non-Commercial) available with the scribe has granted permission to Power Distribution Companies(DISCOs), Generation Companies (GENCOs), and the National Transmission and Distribution Company (NTDC) for the approval of self-finance schemes.

The undersigned is directed to convey that the ECNEC considered the summary dated 18 November 2021 submitted by the Ministry of Planning, Development & Special Initiative regarding approval of self-finance schemes and has decided that the “independent boards of concerned DISCOs, GENCOs and NTDC will be fully empowered to approve their self-finance projects on the pattern of Sui Southern Gas Company Limited(SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL), except for projects which required Government of Pakistan budgetary support, donor funding and government of Pakistan’s guarantees,” as per the notification issued by the Public Investment Authorization Section of the Ministry of Planning, Development and Special Initiative.

The notification mentioned that “Power Division will revisit the present composition of Board of Directors of DISCOs, NTDC, and GENCOs to have appropriate public sector institutions representation, including Finance Division and other relevant agencies”.

It has been decided that the “PIP Section of Ministry of Planning, Development, and Special Initiative will work on the mechanism of inclusion of self-financed schemes being undertaken by autonomous State Owned Entities in the future Public Sector Development Programme (PSDP), including power sector entities,” the memorandum added.

Earlier, the Central Development Working Party (CDWP) had approved Position Paper for amendments in the ECNEC Decision 2004 related to the approval of Self-Financed Development Schemes of Distribution Companies/Entities.

In its presentation to the ECNEC, the Planning Commission had recommended the exemption of DISCOs, GENCOs, and the NTDC from the requirement of approving their self-financed schemes from the CDWP/ECNEC on the condition that the independent BODs of the DISCOs may be fully empowered to approve the DISCO’s self-financed projects and they should be held accountable for their decisions.

However, the ECNEC did not approve the Planning Commission’s recommendation of the accountability of the BODs’ members.

The Planning Commission had further recommended that as per the National Electric Policy, 2021, independent BODs of DISCOs may be immediately fully empowered by the Power Division to approve the DOSCOs’ self-financed projects.

Source: Pro Pakistani

Continuing on its relentless anti-smuggling drive, Pakistan Customs (Federal Board of Revenue) has seized contraband items (narcotics) worth Rs. 1.340 billion that were being smuggled to Pakistan through Torkham in two separate incidents.

In the first one, Pakistan Customs confiscated contraband items valuing Rs. 550 million, containing 35 kg of heroin and 17.4 kg of methamphetamine (also known as ‘ice’).

Upon receiving credible information, a Customs Vigilance Team was deployed to detect the suspected vehicle. A suspected vehicle arrived and parked at the Torkham Customs Station. The Vigilance Team waited for handlers to arrive but no one approached the vehicle.

Customs then took control of the vehicle and drove it to Peshawar (39 km from Torkham). When the fuel tank was cut open, it was found that half of the tank had been welded separately to conceal the narcotics.

Similarly, Pakistan Customs seized a huge cache of 113 heroine powder bags weighing 80 kg, worth Rs. 790 million at Torkham. The vehicle carrying the smuggled items had been flagged as ‘suspicious’ by the Appraisement Collectorate staff, and a thorough examination revealed concealed cavities in the vehicle’s fuel tank and frame that were cleverly welded. The cavities were cut opened and a huge stash of narcotics (heroin powder) was recovered.

The drivers of the vehicles have been arrested, FIRs have been lodged in both cases, and further investigations are underway. The Federal Board of Revenue (FBR) is following a policy of zero-tolerance against smuggling and has increased vigilance and surveillance of cargo movement across the border.

The Minister for Finance, Shaukat Tarin, has commended the FBR for its successful anti-smuggling drive across Pakistan. Likewise, the Chairman of the FBR and the Secretary of the Revenue Division, Dr. Muhammad Ashfaq Ahmed, praised Member Customs (Ops) FBR, Syed Muhammad Tariq Huda, for ensuring zero tolerance for all sorts of smuggling.

He has announced cash awards and merit certificates for the Customs Team posted at Torkham for conducting two back-to-back successful operations, and reiterated his unflinching resolve to fight the menace of smuggling across the country to maximize tax compliance.

Source: Pro Pakistani

The federal government’s debt swelled to an all-time high of Rs 40.99 trillion during the first five months of the current fiscal year, mainly due to the depreciation of the local currency and the State Bank of Pakistan’s loan to the government against the allocation of SDRs.

Data released by the State Bank of Pakistan (SBP) showed that the total Central Government Debt touched Rs. 40.973 trillion at end of November 2021 as compared to Rs. 38.699 trillion in June 2021. The federal government’s debt had surged by Rs. 2.27 trillion during the period.

The rupee’s depreciation against the dollar was the main contributor to the escalation of the government’s financial obligation as the rupee fell by Rs. 21 against the dollar, from Rs. 157 to Rs. 176 during the five months. The external debt swelled by Rs. 1.71 trillion from Rs. 12.433 trillion to Rs. 14.146 trillion during the period under review.

The Central Government Domestic debt did not grow with the speed of the external debt as it increased by Rs. 561 billion from Rs. 26.265 trillion to Rs. 26.827 trillion during the first five months of the current fiscal year.

The data shows that the PTI government is depending more on long-term debt instead of short term debt to meet its financial obligations. The long-term loan was appreciated by Rs. 1436 billion from Rs. 19.557 trillion to Rs. 20.993 trillion during the five months.

The government’s permanent debt increased by Rs. 1461 billion from Rs. 15.904 trillion to Rs. 17.365 trillion during the five months of the current fiscal year. Out of the total permanent debt obligations, the debt was increased by Rs. 1055 billion from Rs. 15.457 trillion to Rs. 16.512 trillion against the federal Government Bonds, including Pakistan Investment Bonds, Government of Pakistan Ijara Sukuk three-year bonds, and Bai-muajjal of Sukuk.

The government’s financial obligations decreased by Rs. 67 billion from Rs. 443 billion to Rs. 376 billion against the Prize Bonds during the five months. These obligations were recorded at Rs. 761 billion in November 2020. The State Bank of Pakistan’s loan to the Government of Pakistan against the SDRs allocations was recorded to Rs. 474 billion, which was zero last month.

The unfunded debt, including saving schemes, postal life insurance, and a DP fund, has been narrowed by Rs. 26 billion from Rs. 3.646 trillion to Rs. 3.62 trillion during the current fiscal year. The short-term debt from local resources has depreciated by Rs. 887 billion from Rs. 6.680 trillion to Rs. 5.793 trillion during the five months of the current fiscal year.

The Market Treasury Bills of the total short-term loan decreased from Rs. 6.676 trillion to Rs. 5.79 trillion during the above-mentioned period. The government’s financial obligations also increased by Rs. 12.5 billion to Rs. 40.7 billion from Rs. 28.2 billion against the scheme of the Naya Pakistan Certificate.

Source: Pro Pakistani

The oil refining sector is currently looking for a way out as Independent Power Producers (IPPs) are refusing to lift locally-processed furnace oil as inventory for emergency use.

The Chairman of Cnergyico PK Ltd. (previously Byco Petroleum), Mohammad Wasi Khan, stated in an interview with DAWN that independent power producers (IPPs) are still not lifting locally processed furnace oil that they are required to store on their premises for emergency usage.

All the refineries are currently running at reduced capacity. After adjusting for different factors, their ideal furnace oil throughput is around three million tons per year, which amounts to an average production of 8,000 to 9,000 tons per day.

Khan stated that the current production is expected to be 3,000 to 4,000 tons a day because the refineries’ own depots are nearly full. He remarked, “It’s highly challenging for the local refineries to maintain their operations under these circumstances”.

Local processors had initially raised the issue over a month ago but operational constraints continue to hamper the oil refining activity.

Khan advised the government to set aside at least 1,500 MW of power generation capacity for furnace oil.

Scientifically speaking, generating one MW of power requires around five tonnes of furnace oil, which means that the 8,000 tons of locally produced furnace oil should be enough to generate 1,500 to 1,600 MW per day, he said.

Also, allowing refineries to remain open will result in the local production of gasoline, diesel, and jet fuel for domestic use, reducing reliance on imports.

“Earmarking 1,500 MW (for furnace oil) should be manageable, particularly when it’s resolving a country-wide energy supply chain issue. Refineries running consistently and utilizing their optimum capacities will address at least one of the critical variables in the supply chain parameters,” he suggested.

Previously, because of abnormally high worldwide LNG costs that had rattled global trade to the point of no return, Pakistan’s energy firms had bought surplus furnace oil for IPPs while forecasting an LNG shortfall during the winter. However, this blunder had left the five main refineries, including Cnergyico and National Refinery Limited (NRL), with a massive inventory of supplies that the IPPs had refused to lift, triggering an overstocking disaster in the local market.

IPPs are now lifting 5,000 to 6,000 tons of furnace oil per day from local refineries. According to the spokesperson for the Ministry of Energy, Muzzammil Aslam, the situation will improve once they start lifting to 15,000 tons per day, preferably after 10 January.

Source: Pro Pakistani

Pakistan’s nascent startup ecosystem raised $373 million in investments in 2021, which was a growth of almost five times over $77 million in 2020. A total of 95 percent of this investment came from foreign investors, including very well-known international venture capitalists. Also, with investment news almost every other week, it would not be wrong to call 2021 ‘the Year of Pakistani Startups’.

The growth of the investments in the Pakistani ecosystem has been driven by ‘Wapistanis’ or Pakistani expatriates returning to the country to launch new startups by harnessing local talent at a lower cost than abroad.

Over 50 Pakistani startups have raised investments at a combined valuation of $1.5 billion. On average, 25 percent equity has been taken by investors in Pakistani startups in 2021.

The CEO of Ignite, Asim Shahryar Husain, spoke about the situation and declared, “This is a remarkable achievement for Pakistani startups, and it certainly reflects the confidence of foreign investors in the future growth potential of Pakistani startups. Pakistan’s startup ecosystem is now where near Indonesia was in 2014. So, we can expect some unicorns from Pakistan within the next couple of years, if not by end of 2022″.

He added that Ignite’s National Incubation Center (NIC) network had been nominated as a Champion project in the enabling environment category by the International Telecommunication Union in May 2021.

For the first time in the history of GITEX Future Stars, a Pakistani startup called myTM incubated at NIC, won the Supernova challenge in the creative economy category. Such achievements at highly credible global tech forums reflect the impact NICs are making across Pakistan’s startup ecosystem.

To date, over 860 startups have been incubated in the NICs and have received investment commitments of $57 million. Ignite plans to extend its NIC network horizontally and vertically over the next two years to boost the startup ecosystem. The establishment of new NICs is being planned in Faisalabad, Hyderabad, Multan, Sialkot, and other cities, and specialized incubators are expected in gaming and animation, HealthTech, and electronics.

Ignite also intends to conduct a study of Pakistan’s startup and freelancing ecosystems for further improvements.

The hot sectors for investment in 2021 were Fintech (27.1 percent), E-commerce (26.3 percent), RetailTech (19 percent), Delivery/logistics (9.4 percent), HealthTech (four percent), and Edtech (3.9 percent).

The shift towards series A and B fundings by many startups illustrates the growth and planning of the national and international expansions of their operations.

The average deal size has grown five times from $1.2 million in 2020 to over $6.2 million in 2021. Eight startups raised multiple rounds of funding in 2021. Additionally, startups with foreign-educated founders attracted a majority of the investment (around 87 percent).

More than 34 percent of the startups that had raised funding were either female-founded or cofounded, which indicates the increasing impact female entrepreneurs have on Pakistan’s startup ecosystem.

Leading international venture capitalists from the USA, China, UAE, and Singapore (namely Kleiner Perkins, Y Combinator, 500 Startups, Draper Associates, 20VC, Visa, Stripe, Tiger Global, Prosus, Buckley Ventures, Next Billion Ventures, SparkLabs, Golden Gate Ventures, Hustle Fund, First Round Capital, Global Founders Capital, Raptor Group, MSA Capital, and Shorooq Partners) had invested in Pakistani startups last year.

Leading local investors, including Indus Valley Capital, Fatima Gobi Ventures, 47 Ventures, KASB Securities, BitRate, Invest2Innovate, Zayn Capital, Sarmayacar, HBL Ventures, and Systems Limited participated throughout the year.

A majority of the investments were made by foreign venture capitalists and angels.

With the constant growth of the Pakistani startup ecosystem, it is a good time for local investors to start exploring investment options in Pakistani startups that can generate much higher returns over the long periods as compared to other investment options such as the stock market and real estate.

Source: Pro Pakistani