Connect with us

Business

Largest coal miner to boost output

Published

on



NUSA DUA, INDONESIA:

Pakistan’s largest coal miner Sindh Engro Coal Mining Co (SECMC) expects to boost its output by 51.3% in 2024, its Chief Executive said, as the South Asian economy seeks to reduce imports, cut fuel costs and shore up its finances.

Faced with a crippling foreign exchange crisis, the government is trying to preserve its depleted foreign exchange reserves and cushion itself against geopolitical shocks.

Advertisement

SECMC aims to help by boosting coal production to 11.5 million tonnes in 2024, from an expected 7.6 million tonnes this year, said CEO Amir Iqbal on Friday.

The company will seek to push power plants currently operating fully on imported coal to use 20-25% domestically mined coal, Iqbal said.

“We have done some initial work (on imported coal-based power plants). It is very much possible,” he said.

SECMC has funds to finance the expansion of mining for 2024, but faces challenges in boosting output after that as Chinese lenders have stopped funding coal projects, Iqbal said.

“That is one challenge for which we are seeking support from the government of Pakistan. They need to come up with some financial instrument so that we can continue expanding,” he said.

Advertisement

The country of more than 230 million people depends chiefly on natural gas to produce electricity, but has been looking to boost coal-fired output to save costs.

“The other very big area is the cement industry, which is 100% imported-coal based. If we start to penetrate into that area, we can start to replace imported coal,” Iqbal said.

However, the Thar Coal project, despite its immense potential, is currently at a crossroads, grappling with a critical financial challenge. The mining company overseeing the Thar Coal Block-II project has faced a precarious situation since the second quarter of 2022 due to incomplete payments. While certain payment portions were disbursed in 2023, these disbursements ceased in the past three months, exacerbating the issue.

“At the forefront of the Thar Coal Block-II project’s challenges lies the urgency to settle dues amounting to over $43 million at this stage. Allegedly, a critical $10 million is required every month to honour Operations and Maintenance (O&M) contractors to ensure uninterrupted mine operations, prompting an urgent need for government attention,” revealed an official in discussion with The Express Tribune.

“If the critical $10 million per month payments are not cleared, the mine operations are likely to be halted, which, in turn, will impact the power generation of Thar-based Independent Power Producers (IPPs), who currently stand as the country’s most economical energy producers,” cautioned Yousuf M Farooq, Director of Research at Chase Securities.

Advertisement

Thar Coal Block-II currently contributes a substantial 1,320 MW of electricity to the overall 2,640 MW generated by Thar Blocks I & II combined. The repercussions of inaction extend beyond the immediate halt of mining operations.

The Thar Coal mine stands as a critical asset in Pakistan’s energy landscape, a testament to its potential to reshape the nation’s power dynamics. The incoming government should take decisive action on this critical matter to ensure its continued viability.

“Immediate action is imperative to ensure the uninterrupted operation of the mine by addressing foreign payment issues. These payments are crucial for maintaining smooth operations and preserving the integrity of the mine’s expansion plans,” stressed the official. “Neglecting this necessity not only threatens to halt a promising indigenous energy source but also endangers Pakistan’s pursuit of energy security and economic growth. This pivotal moment demands decisive action to safeguard the future of Thar Coal and, consequently, Pakistan’s energy landscape,” he added.

REUTERS WITH ADDITIONAL INPUT FROM OUR CORRESPONDENT

 

Advertisement

Published in The Express Tribune, October 1st, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.



Advertisement
Continue Reading
Advertisement
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Business

IHC halts Rs35b tax on banks

Published

on

By



ISLAMABAD:

The Islamabad High Court (IHC) on Wednesday suspended the government’s decision to impose a windfall income tax on commercial banks for the recovery of Rs35 billion, after lawyers questioned the powers of the interim setup and the constitutionality of the move.

The court’s decision came a day before the last date for the payment of an estimated Rs35 billion tax by those commercial banks that had manipulated the value of foreign currency to make extra profits.

Advertisement

Read: 40% tax on banks’ windfall profits

The Federal Board of Revenue (FBR) was betting on the Rs35 billion in revenues to achieve its monthly target of nearly Rs711 billion. It is now left with the goal of collecting over Rs100 billion more today (Thursday) to meet the monthly target, although it may achieve the five-month tax collection target of Rs3.45 trillion.

design: Ibrahim Yahya

design: Ibrahim Yahyadesign: Ibrahim Yahya

design: Ibrahim Yahya

“The submissions (by petitioners) demonstrate not only a prima facie case but also that the ingredients of balance of convenience and irreparable loss operate in favour of the petitioner. Resultantly, the operation of the impugned statutory regulatory order shall remain suspended till the next date of hearing,” reads the short order of the court.

Eight days ago, the FBR, through SRO 1588, had imposed a 40% windfall income tax on income from foreign exchange of banking companies for the preceding two years ended on December 31, 2021, and 2022.

Advertisement

Advocate Supreme Court, Salman Akram Raja, pleaded before the court on behalf of his banking clients.

While the government had anticipated banks to challenge the levy, the financial institutions were finding it difficult to hire lawyers to plead their case.

The government had issued the SRO under section 99D, which the Parliament had inserted into the law in June this year. While the FBR imposed taxes on the banks to get an additional Rs35 billion out of an estimated Rs90 billion windfall income, it conveniently ignored a windfall profit of approximately Rs1.5 trillion made by exporters. The Ministry of Finance has estimated that the exporters made a windfall gain of Rs1.5 trillion due to steep currency devaluation these past few years.

The banks’ lawyers argued that section 99D (through which the federal government could determine a tax rate between 0% and 40%) was tantamount to excessive delegation of power by Parliament and in breach of Article 77 of the Constitution.

The legal team also questioned the power of the caretaker government in imposing the tax, arguing that the function of the caretaker government was only to “attend to day-to-day affairs and (it) cannot extend its authority to a fresh taxation measure.”

Advertisement

The legal team also argued that the SRO was also defective in that the determination of the preconditions under section 99D, namely, the economic factors that led to the windfall income as well as the quantum of the windfall income, are conspicuous by their absence in the impugned SRO.

The team further argued that by reading the SRO, there was only an underlying (but invalidated) assumption that external economic factors have actually operated and led to a windfall income but without these being spelt out in the notification, which would be expected given the letter and spirit of section 99D.

The petitioners also claimed that the charge of additional tax conflicted with entry number 47 in the Legislative List for imposing an additional tax which was not warranted.

The law requires that the notification of the windfall tax has to be placed before the National Assembly within three months –a clause that the banks have now invoked as there is no assembly in Pakistan and the next elections are scheduled for February 8th.

The lawyer argued before the court that the government assumes that the next assembly will validate its action but it is quite possible that the National Assembly does not agree to bless the notification.

Advertisement

If the next assembly rejects the additional tax, banks would be at a disadvantageous position, according to the petitioners.

The court did not accept the arguments of the FBR legal counsel who submitted that the legislation has to remain operative until it is declared ultra vires. The court accepted the banks’ argument that the interim relief is sought in respect of the SRO, which is an executive act and not legislation and, therefore, prima facie not covered by the judgments on the point referred to by the counsel for the FBR.

Published in The Express Tribune, November 30th, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

 

Advertisement



Continue Reading

Business

Growers sound alarm on fertiliser crisis

Published

on

By



KARACHI:

Growers in Sindh have appealed to the federal and provincial governments, as well as Chief of Army Staff (COAS) General Asim Munir, to take notice and prompt action to curb hoarding, smuggling, counterfeiting, and the black market of Urea and diammonium phosphate (DAP) fertilisers in Sindh immediately; otherwise, food insecurity could ensue.

“After demanding action from the federal and provincial governments on multiple occasions, I had to write a letter [available with The Express Tribune] to the COAS to address the ineptitude of all three fertiliser companies: Fauji Fertiliser Company Limited, Engro Fertilisers Limited, and Fatima Fertiliser Company Limited. Additionally, three Sindh government departments, including Sindh Agriculture Extension, Anti-Corruption Establishment (ACE), and Revenue, are being implicated in hoarding, smuggling, counterfeiting, and the black market of fertilisers due to nepotism, favouritism, and corruption. This is agonising farmers and driving up input costs of agricultural produce,” said Ali Palh, Advocate and President of the Small Growers’ Organisation Sindh Agriculture Research Council (SARC), speaking to The Express Tribune.

Advertisement

He highlighted that the government’s substantial subsidies to fertiliser companies have been in vain, as poor growers are not benefiting from them, leading to an acute shortage of fertilisers in the market. “We have laws, including the Sindh Fertiliser (Control) Act 1994 and Sindh Fertiliser (Control) Rules 1999; however, they are not being implemented to benefit peasants at all,” he emphasised.

Read: Fertiliser sector seeks delay in axle load regime

Frustrated with the caretaker government, Jawaid Junejo, Chairman of the Farmer Organisations Council Sindh, expressed concern that large farmers are being compelled to purchase fertiliser sacks at almost double rates, while small growers are unable to obtain them, even at higher rates in the market. “We are running a social media trend; those who provide fertilisers at government rates to farmers will garner votes from the people in the upcoming general elections. This is the wheat sowing season, and we are being deprived of fertilisers,” he lamented.

Sindh Chamber of Agriculture (SCA), Senior Vice President, Nabi Bux Sathio highlighted that instead of a controlled Urea price at Rs3,680 per 50kg bag, it is being sold for Rs5,000-5,500 per 50kg in the market. He pointed out that a 50kg sack of DAP, which was sold at Rs9,000 until October 30, is now being sold at Rs15,000 per 50kg bag due to wheat sowing and other Rabi season crops.

“A total of 6.5 million tonnes of Urea are being produced in the country, meeting a local demand of 6.2 million tonnes. We should have a surplus, but no action is being taken. Growers need Urea and DAP fertilisers for better yield, rapid growth of standing crops. I urged the Sindh Chief Minister during a meeting today (Wednesday) in Hyderabad to make the fertiliser portal, set up by the federal government under the Ministry of Industries and Production, public. This way, every farmer can obtain updated information about actual bags of fertilisers sent to authorised dealers in every district. I also proposed forming an agriculture advisory committee to monitor agriculture issues and fix problems through monthly meetings,” he concluded.

Advertisement

Published in The Express Tribune, November 30th, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

 



Advertisement
Continue Reading

Business

Saudi Arabia wins bid for 2030 world fair

Published

on

By



PARIS:

The Saudi Arabian capital of Riyadh won the right to host the Expo 2030 world fair, vote results showed on Tuesday, in another diplomatic victory for a Gulf country after last year’s soccer World Cup in Qatar.

South Korea’s port city of Busan and Rome in Italy were also in the running to host the five-yearly event that attracts millions of visitors and billions of dollars in investment.

Advertisement

Riyadh won 119 votes, Busan 29 and Rome 17, results from 182 members of the Paris-based Bureau International des Expositions (BIE) showed. Saudi Arabia needed two-thirds of the votes to win from the first round.

The Italian contestants were scathing in their disappointment.

“This huge result for Saudi was unexpected in those proportions,” Giampiero Massolo, head of the Italian Expo bid, told reporters. “It is no longer about the merits, but about transactions. Yesterday it was a soccer championship, tomorrow it will be the Olympics,” he added.

Read: Saudi Arabia to host extraordinary joint Islamic-Arab summit today

However, South Korean President Yoon Suk Yeol congratulated Saudi Arabia for winning the bid, calling the Gulf state “a key partner,” and adding that his nation would share the resources and experience gained to help Riyadh hold a successful event.

Advertisement

Riyadh had enlisted soccer star Cristiano Ronaldo, who plays for the Al-Nassr Saudi club, to convince members in a video projected before the vote. Riyadh aims to host the event between October 2030 and March 2031.

The win is the icing on the cake for de-facto ruler Crown Prince Mohammed bin Salman’s ambitious Vision 2030 programme, which aims to wean the country off its oil dependency.

Published in The Express Tribune, November 30th, 2023.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.

 

Advertisement



Continue Reading

Trending