Pakistan Daily Economy Update - 28 July

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1. Jul . 28, 2016 KCCI - eBulletin CPEC’s $ 35Bn energy projects A staggering $ 11.3Bn out of the total allocation of $ 35Bn for the energy projects under the CPEC is kept aside for Sindh. Minister for planning, development and reforms has said that the country will become self-sufficient in electricity by 2018 with the addition of 10,000MW and another 15,000MW by 2023-25. He said the country will be producing electricity from its own coal by 2019, which has the potential of generating 5,000MW power for the next 400 years. It will initially produce 2,000MW of power. Port Qasim, Sahiwal and Hubco will be producing 1,320MW each by 2017. Whereas, Jamshoro will produce 1,320MW on coal in a project funded by the Asian Development Bank, while 3,600MW will be produced on liquefied natural gas by 2017and the nuclear power plants will produce 2,200MW in next 5 to 6 years. The News. Economic Indicators Date / Period Unit Value Change Daily USD-Interbank List of Indicators 27-Jul PKR 104.85 0.01% USD-Open MKT 27-Jul PKR 104.85 0.00% KSE-100 index FIPI 27-Jul 27-Jul Pts. $ Mn 39,435 2.37 0.73% NM** 27-Jul $/bbl 41.89 -1.78% 27-Jul $/oz 1,342.6 1.10% 27-Jul PKR 44,424 0.44% 27-Jul $/oz 20.42 3.54% 27-Jul PKR 6,950 1.56% 27-Jul % Crude (JU'16) Energy portfolio: Sindh has largest share of $ 11.3Bn, claims Ahsan Planning, Development and Reforms Minister Ahsan Iqbal has said that Sindh province has the biggest share of $ 11.3Bn in the energy Gold (MY'16) portfolio of China-Pakistan Economic Corridor (CPEC). The minister put the total energy portfolio under the multibillion-dollar CPEC venture Gold (10g) Local at $ 35Bn. The first phase of $ 46Bn China-backed "game changer", is based on infrastructure development and would complete by 2018. Silver (MY'16) BR. Cotton(KHI)-40 kg Kibor-6M Companies declaring gross loss shall now be obliged to pay minimum tax 0.01% WoW FBR has announced that the companies declaring gross loss shall now be obliged to pay minimum tax irrespective of whether they declare gross profit or loss under section 113 of the Income Tax Ordinance 2001. In this regard, FBR's circular revealed that the scope of minimum Forex Reserves 8-Jul $ Bn 23.06 -0.10% tax (turnover tax) under section 113 has been expanded through Finance Act, 2016. Previously, individuals and AOPs having turnover below YoY the threshold of PKR 50Mn were not obliged to pay minimum tax u/s 113. Now, minimum tax shall be levied on individuals and AOPs having Jul-Jun 16 Remittances $ Bn 19.90 7.84% turnover of Rs 10 million and more in tax year 2017 and onwards. BR. Jul-Jun 16 Exports* $ Bn 20.80 -12.11% SBP to announce MPS on Jul. 30, 2016 Jul-Jun 16 Imports* $ Bn 44.76 -2.33% SBP will announce Monetary Policy decision on Jul. 30, 2016 for next two months where another cut of 25 basis points (bps) is expected on Trade Balance* Jul-Jun 16 $ Bn -23.96 -8.13% lower inflation outlook and positive economic indicators. In the last policy announced on May 21, 2016, SBP cut the interest rate by 25 bps Jul-May 16 Current Account $ Mn -2,486 -1.18% to 5.75% on improved macroeconomic conditions and low inflation numbers. BR. % 2.86 Avg. CPI-FY16* Jul-Jun 16 May-16 Discount Rate % 5.75 SBP plans flexible inflation framework The State Bank of Pakistan (SBP) on Jul, 27. 2016 said it plans to introduce a flexible inflation targeting framework for its monetary policy Sources: KCCI Research, PMEX, NCCPL, KSE, SBP, PBS* regime with a view to enhance its effectiveness. Senior officials of the SBP gave a detailed presentation on adoption of flexible inflation ** Not Meaningful WoW= week on week; YoY=Year on Year targeting regime; challenges and potential strategies to boost country’s exports and initiatives taken for strengthening of the agriculture Major Currencies sector. Dawn. 175 Builders or land developers: incomes to be subject to final taxation on specified rates 165 FBR has notified that after amendments introduced through the Finance Act, 2016, the income of a builder or a land developer shall now be 155 subject to final taxation on the basis of specified rates based on cities and areas of properties in respect of projects approved after Jul. 1, GBP, 27-Jul-16, 145 2016. According to income tax circular 7 of 2016, the income of a builder or a land developer was assessed on the net income basis where 137.8 135 declared receipts were reduced by the claimed expenses. BR. EUR, 27-Jul-16, 115.8 125 Over $ 400Mn investment: MPCL to set up 400 megawatts gas-fired power plant 115 Mari Petroleum Company Limited (MPCL) is going to establish a 400MWs power plant at Dharki/Sadiqabad. To be completed at a 105 "standard" cost of $ 400Mn, the gas-based power generation project would be set up under Energy Policy 2015. The official document of USD, 27-Jul-16, 95 the policy entitled the low BTU (British Thermal Unit) gas producing firms to the right of first refusal to become an Independent Power 104.9 Producer (IPP). BR. 85 75 Solar projects: Ministry challenges Nepra over high tariff Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Water and Power Ministry has challenged Nepra for extending higher tariff for solar projects which has adversely affected the basket price. USD GBP EUR Source: KCCI Research ; Oanda.com The Ministry has written a letter to Nepra on fixation of high tariff on solar projects and recommended that tariff for solar power should be slashed as per international trends. Nepra recently held a public hearing to fix new tariff for solar power after consideration of arguments of Quote of the Day all the stakeholders. BR. Govt. plans to privatize LNG-based power plants The govt. has decided to privatize LNG based power plants of 3,600MW that are being set up in Punjab to cope with the persistent electricity shortfall in the country. In a meeting of ECC held on Jun 28th, 2016 the Ministry of Water and Power has said 3 power plants with a cumulative capacity of approximately 3,600MW were being developed in the public sector at Bhikki, Balloki and Haveli Bahadur Shah in Punjab. Tribune. Italy to double investment in Pakistan this year Italian Ambassador to Pakistan Stefano Pontecorvo has stated that the European country sees doubling investment in Pakistan within a year as more Italian firms are looking for partnership with Pakistani businessmen. A mission consisting of 80 to 120 Italian businessmen will visit Pakistan in the current year to look into opportunities for partnership with Pakistani counterparts in different sectors, said Pontecorvo during the signing ceremony of Pak-Italy friendship contract between Agha Steel Industries and Italian Danieli. Under the project, Aga Steel Industries will utilize the largest steel manufacturing furnace in Pakistan to make quality grade reinforcing bars (rebars) for the upcoming growth in steel demand due to CPEC related projects. Tribune. Oil industry seeks end to ‘double taxation’ The country’s oil industry has asked the government to withdraw “double taxation” at provincial and federal levels through general sales tax on services and goods or allow a proportionate increase in the prices of petroleum products. The industry feels aggrieved by withdrawal of two separate statutory regulatory orders (SROs) by the Ministry of Finance — of Feb 6, 2008 and March 26, 2014 — to disallow provincial sales taxes as input tax adjustment at federal level. This came at a time when the oil industry was already in courts against annual fees and taxes imposed by the Oil and Gas Regulatory Authority (Ogra) on oil marketing companies (OMCs) and refineries. Dawn. OGDCL unsettled by circular debt crisis The late payment surcharge (LPS) of the Oil and Gas Development Company (OGDCL) against oil refineries and gas distributors has reached PKR 57Bn while OGDCL’s recoveries only increased marginally due to unsettled issues related to circular debt. A sub-committee of the Public Accounts Committee (PAC) on Jul, 27. 2016 was informed that the amount received by OGDCL showed some improvement but they are still far away from any settlement until the government resolves circular debt issues. Dawn. SECP officers asked to be extra vigilant in implementing bill SECP Chairman has advised all the SECP officers to take necessary measures to ensure that those at the helm of affairs are fully familiar with the changes made in the said act to enable the commission function more effectively. The briefing was arranged in view of the fact that the bill will come into force soon. He emphasized that the amendments would facilitate superintendence and control over capital and financial services markets, corporate sector and insurance industry. The News. 5.98% "Yesterday is not ours to recover, but tomorrow is ours to win or lose." Lyndon B. Johnson Chart of the Day Pakistan's Top Importing Partners (FY16) China U. A. E Singapore Saudi Arabia India U. S. A. Japan Indonesia Kuwait Hong Kong Germany Malaysia Switzerland Thailand South Korea 2,060 1,809 1,480 1,398 1,220 1,173 1,018 938 825 736 719 623 0 1000 2000 3,008 3000 4000 8,127 6,021 5000 6000 7000 8000 9000 Source: KCCI Research, SBP Value in $ Mn Disclaimer This report has been prepared by KCCI Research & Development Cell. The information contained herein have been compiled or arrived at based upon information obtained from Corporate result: Fauji Fertilizer’s profit down 30% Fauji Fertilizer Company (FFC) has announced a net profit of PKR 2.8Bn (EPS: PKR 2.2) in 2QFY16, down 33% compared with PKR 4.2Bn (EPS: sources believed to be reliable and in good faith. Such information has not been independently verified. PKR 3.3) in 2QFY15. The company also declared an interim cash dividend of PKR 1.55 per share, taking total dividend in 1H2016 to PKR 3.4 per share. Tribune. icon represents the sole viewpoint of the KCCI R&D Cell, and is stated to enrich the readers' understanding of the news item. The R&D Dept. bears no responsibility for its correctness or accuracy. Contact: res@kcci.com.pk