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ADMIN ON TOES, EVACUATION AT BRISK PACE AS BIPARJOY DRAWS NEARER
Profit
Wednesday, 14 June, 2023 I 24 Zilqad, 1444
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DG RANGERS, SINDH CM REVIEW EVACUATION, PREVENTIVE MEASURES IN COASTAL AREA
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KARACHI/ISLAMABAD
PAKISTAN NAVY EVACUATES 700 PEOPLE FROM VILLAGES OF SHAH BANDAR IN SUJJAWAL
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DASTGIR CLAIMS CYCLONE POSES NO MAJOR RISK TO POWER INFRASTRUCTURE
SALEEM JADOON
HE Pakistan Meteorological Department reported on Tuesday that the Extremely Severe Cyclonic Storm (ESCS) “BIPARJOY” over northeast Arabian Sea moved further north-northwestward and slightly weakened into Very Severe Cyclonic Storm. It lies near Latitude 21.2°N & Longitude 66.6°E at a distance of about 410km south of Karachi. According to a PMD report, the system is likely to keep tracking further in north direction during next 12 Hour. The tropical cyclone is likely to recurve on June 14 and Cyclone is likely to move north-east while it is likely to collide between Kati Bandar (south-east Sindh) and Indian Gujarat on 15th June (evening). The maximum sustained surface winds are 140-150 km/hour, gusts 170 km/hour around the system center and sea conditions being phenomenal around the system center with maximum wave height 30 feet. The favorable environmental conditions (sea surface temperature of 29-31°C, low vertical wind shear & upper-level divergence) are in support to sustain its strength through the forecast period. Under the existing upper-level steering winds, the VSCS “BIPARJOY” is most likely to track further northward until 14 June morning, then recurve northeastward and cross between Keti Bandar (Southeast Sindh) and Indian Gujarat coast on 15 June afternoon/evening as a Very Severe Cyclonic Storm (VSCS) with packing winds of 100-120Km/hour. PMD’s cyclone warning center, Karachi
is continuously monitoring the system and will issue update accordingly. POSSIBLE IMPACTS: With its prob-
able approach to the southeast Sindh coast, widespread wind-dust/thunderstorm rain with some very heavy/ex-
tremely heavy falls accompanied with squally winds of 80-100Km/hour gusting 120km/hour likely in Thatta, Sujawal, Badin, Tharparker, Mirpurkhas & Umerkot districts during 13-17 June. Dust/thunderstorm-rain with few heavy falls & accompanied with squally winds of 60-80 Km/hour likely in Karachi, Hyderabad, Tando Muhammad Khan, Tando Allayar, Shaheed Benazirabad & Sanghar districts from 14 -16 June. Squally (high intensity) winds may cause damage to loose & vulnerable structures (Katcha houses) including solar panels etc. Storm surge of 3-3.5 meters (8-12 feet) expected at the land falling point (Keti Bandar and around) which can inundate the low-lying settlements. Fishermen have been advised not to venture in open sea till the system is over by 17 June, as the Arabian Sea conditions may get very rough/high accompanied with high tides along coast.
PM alerts federal, Sindh depts to esnure people’s protection
ISLAMABAD: Prime Minister Shehbaz Sharif on Tuesday directed the Sindh provincial government, National Disaster Management Authority (NDMA) and other relevant organisations to utilise all-out resources to ensure people’s protection keeping in view the Biparjoy cyclone. The prime minister, who chaired a meeting to review the preparedness ahead of the possible impact of the Biparjoy cyclone, asked the Sindh government, NDMA and other organizations to ensure the establishment of mobile hospitals in coastal areas and provide adequate emergency medical assistance there. He said in view of the storm, special arrangements of clean drinking water and food should be made at the camps of displaced persons. The prime minister instructed Power Minister Engineer Khurram Dastgir Khan to ensure his presence in the districts
Ayesha Pasha hints at electricity, gas tariff hike
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Rs 15.00 | Vol XIII No 345 I 8 Pages I Islamabad Edition
SAYS PAKISTAN HAS PLAN B IF IMF DEAL NOT FINALISED
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of southern Sindh until the effects of the cyclone were over, to monitor the 24-hour power transmission system in the coastal areas. Prime Minister Shehbaz said after the cyclone, the possible damage to the power transmission system should be repaired immediately. He also set up a committee to deal with the emergency situation arising in view of the Biparjoy cyclone. To be headed by Climate Change Minister Sherry Rehman, the committee would comprise Power Minister Engineer Khurram Dastgir Khan, Food Security Minister Tariq Bashir Cheema, NDMA Chairman Lt-Gen Inam Haider Malik, and representatives of Sindh and Balochistan governments, Meteorological Department and National Institute of Health (NIH). STAFF REPORT
NEPRA hikes power price by Rs1.61 per unit under FCA for April
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POWER CONSUMERS OF ALL DISCOS EXCEPT KE WOULD FACE ADDITIONAL BURDEN DUE TO INCREASE ISLAMABAD
AHMAD AHMADANI
ISLAMABAD
SHAHZAD PARACHA
State Minister for Finance and Revenue Ayesha Ghous Pasha has hinted to increase tariffs of electricity and gas if the IMF agreement is not reached. Talking to the media after the meeting of the Senate standing committee on Finance and Revenue, she said that the government will increase electricity and gas prices in case no IMF agreement is reached. She said that Economists always work on other options as we have Plan B if the IMF deal doesn’t happen. The circular debt of the gas and power sector will be reduced for structural reforms adding that she said that negotiations with the IMF are going on and we have shared budgetary numbers with them. The State Minister said that the IMF has been asked to complete the ninth review as time is very short and it is a problem for us however she said that MD IMF had also assured us that the ninth review would be completed soon. Pasha said that we have to give tax exemptions to advance the economy as these will increase production and create jobs. Replying to a question on pensions, she said that pension reforms are inevitable and billions of rupees go towards pension. A plan of action has to be decided to solve the pension problem, the Minister of State for Finance added. Replying to the question, she said that there is no intention to freeze foreign currency accounts in the country.
National Electric Power Regulatory Authority (NEPRA) has notified power tariff hike of Rs. 1.61 per unit on account of fuel charges adjustment (FCA) for the month of April 2023. According to NEPRA’s notification, this hike in power tariff under the head FCA of April will not be applicable to Electric Vehicle Charging Stations (EVCS) and lifeline consumers while power distribution companies (DISCOs) will reflect the increase in power price separately in consumers’ bills in June 2023. More, the DISCOs should show the approved FCA of April separately in the consumers’ bills on the basis of units billed to the consumers in the month of April 2023 and power distribution companies (DISCOs) will reflect the fuel charges adjustment in respect of April 2023 in the billing month of June 2023. While effecting the Fuel Adjustment Charges, the concerned DISCOs shall keep in view and strictly comply with the orders of the courts notwithstanding this order, said NEPRA notification.
The Central Power Purchasing Agency (CPPA), acting on behalf of DISCOs, applied to NEPRA for the approval of a Rs 2.0100 per kilowatt hour (kWh) increase in power tariff. According to CPPA’s application, a total of 10,010.30 giga watt hour (GWh) of energy was generated in April at a cost of Rs 10.2384/kWh. Out of this, 9,734.91 GWh was delivered to DISCOs at a cost of Rs 10.3975/kWh. The CPPA report provided detailed information on the energy production from various sources during April, including
hydel, coal, RFO, gas, RLNG, nuclear, import from Iran, mixed sources, wind, bagasse, and solar. On May 31, 2023, National Electric Power Regulatory (NEPRA) conducted hearings to review the proposed tariff adjustments for DISCOs. Earlier, the Central Power Purchasing Agency (CPPA) had requested NEPRA for a higher rate of Rs. 2.01per unit. Power consumers of all DISCOs except K-Electric would face additional burden as NEPRA has granted approval for power price hike.
Govt seeks Parliament’s nod to increase PDL beyond Rs50 per litre g
SENATE BODY APPROVES INCREASE IN MONETARY LIMIT OF FOREIGN REMITTANCE TO $100,000 ISLAMABAD
SHAHZAD PARACHA
The Ministry of Finance on Tuesday proposed an amendment in the Petroleum Products (Petroleum Levy) Ordinance, 1961, to transfer the power of fixing the petroleum levy, from the parliament to the Cabinet. The Finance Division informed the Senate Standing committee on Finance and Revenue chaired by Senator Saleem Mandviwala that the proposal is to enhance the ceiling from Rs 50 per liter to Rs 60 per liter under the Petroleum Products (Petroleum Levy) Ordinance, 1961. After excluding Fifth Schedule, the federal government can increase levy beyond Rs 50 per litre. The levy is the prerogative of the National Assembly and amendment would allow the federal government to raise PL on POL products, officials added. The Minister of State for Finance said that the ministry does not intend to raise the levy to 60 rupees but seeks the necessary space and flexibility to effectively manage the petroleum levy. The chairman committee deferred the matter with regard to giving powers to the cabinet of imposition of Rs 10 per litre PDL on petroleum products. Senator Saadia Abbasi said that the heading of section 111 of the Income Tax Ordinance 2001 also needs to be changed. Section 111 (unexplained income and assets) should be renamed. The word “unexplained” gives a message that Pakistan is a country of money launderers. FBR Member Policy Inland Revenue stated that the people went into litigation even after change of one word in the law and it should remain intact. FBR Member stated that the proposed threshold is similar to the amendment made vide Income Tax Amendment Ordinance 2018, whereby this threshold was reduced to Rs 10 million at the time. Considering the Pak-US dollar back then, the threshold of Rs 10 million amounted to around $100,000. The same threshold of $100,000 has been proposed through this Bill 2023. SECP Commissioner Abdul Rehman Warraich informed the committee that FBR cannot ask for the source of investment or income under section 111 of the Income Tax Ordinance, 2001. FBR cannot probe tax evasion on the basis of the source of remittance under section 111 of the Ordinance 2001. Adding to that, he said that basically, section 111 taxed unexplained income except foreign remittances coming into Pakistan. He stated that under the Finance Bill 2023, the government has enhanced the monetary limit of foreign remittance remitted from outside Pakistan from five million rupees to the rupee equivalent of $100,000. For this purpose section 111(4) is important which places a bar on asking nature and source of unexplained income/assets. However, there are more chances of money laundering after an increase of this limit, which cannot be probed by the tax officials of the FBR. Listening to all stakeholders, the Senate Standing Committee on Finance approved the proposal with regards to enhancing the monetary limit of foreign remittance remitted from outside Pakistan from five million rupees to rupee equivalent of $100,000. The committee approved an increase in withholding tax rate from one percent to 5 percent on payment to non-resident through debit/credit or prepaid cards (2 percent to 10 percent for non-active taxpayers). This proposal would increase the withholding tax (WHT) on international credit card transactions to 2 percent for individuals on Active Taxpayer List (ATL) and 10 percent for non-ATL citizens. Member IR Policy FBR stated that the proposal is to discourage foreign exchange outflow on non-essential purchases online and payments made for Netflix or Google accounts. When the Chairman committee asked the State Bank of Pakistan (SBP), the concerned official informed that around one billion dollars have been sent abroad through the payments made through 49 million credit and debit cards per year. The committee recommended reduction in the rates of the Super Tax from 10 to 7 percent and from 8 to 6 percent. Committee members further approved a clause in Finance Bill 2023 that allowed the federal government to collect Rs. 200,000 adjustable advance tax, from the employers of foreign workers as domestic helpers in Pakistan.
Why did FINCA and Apna MFB decide to shun merger plan? g
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DUE DILIGENCE REVEALED MERGER MIGHT NOT BE BENEFICIAL FOR ORGANISATIONS, ITS CUSTOMERS KARACHI
MARIAM UMAR FAROOQ
Early on Saturday, FINCA Microfinance Bank (MFB) and Apna Microfinance Bank (MFB) disclosed that the proposed merger between the two microfinance banks has been shelved. FINCA is now exploring other options and amongst these options are a number of well-known international financial institutions. Profit reached out to both Apna MFB and FINCA MFB to find out why the two dropped the idea of a merger. We received no response from Apna MFB. However, Samra Noori, Senior Vice President, Head of Marketing, Research & Communications from FINCA Microfinance Bank Limited told Profit that the due diligence was a long and extensive one. “This was some six-month-long ex-
clusive due diligence which means that we would take a decision after evaluating all aspects. After due diligence was completed, both organisations mutually decided to suspend negotiations and continue to pursue other options with the help of State Bank aggressively for capital raising for both institutions. To be transparent, it (the proposed merger) required us to take more risk without sufficient probability of success given the country’s current economic environment. So we had to take a decision that was in the interest of the organisation and the customers. Hence it was shelved. During the due diligence process, we realised that this merger would not benefit us. We obviously have to think about the customer. FINCA Microfinance Bank has been the first one to ensure customer protection. We have won an award previously as well.
So for us, the customer comes first. (This merger) would not have translated into benefits for customers So we did not want to go ahead with it (merger) for the same reason. It (due diligence) was a very very thorough exercise. A lot of thought, effort, work and capital has gone into evaluating this merger. So having said that we do have a few options. We are in talks with other entities, which I would not be able to disclose at this point but rest assured, things are coming up.” Why were the two microfinance banks interested in merger? Noori told Profit “The reasons for considering the merger were a bigger network, more outreach, and more avenues for the customer. Apna Microfinance Bank did not have a digital financial services wing so they could have added that to their portfolio because we are full-fledged digital financial
services (DFS) on the side with the bank. We are dispersing loans through our DFS. We have a mobile wallet called FINCApay. So it could have resulted in greater things but not at the expense of sustainability, profitability and success”. Apart from that the two microfinance banks had been suffering from capital adequacy issues: FINCA Microfinance Bank’s financial troubles In the annual reports of 2021 of FINCA, the auditors raised a red flag by highlighting a “Material Uncertainty relating to Going Concern.” This alarming phrase indicates that the bank is facing a serious problem: it doesn’t have sufficient assets to cover its liabilities. This concern arose after FINCA MFB incurred a whopping net loss of Rs.1.5 Arab in 2021. The losses arose due to the adverse
effects of COVID-19. COVID-19 wreaked havoc, hitting the borrowers hard and making it difficult for them to repay their loans which resulted in a substantial increase in write-offs, and provision against non-performing advances (loans). Their interest income took a hit. The Capital Adequacy Ratio (CAR) dropped. While the bank managed to meet the CAR regulatory requirements by the end of 2021, there was a looming threat that the threshold might be breached in the next twelve months based on projected results. The latest period for which FINCA MFB’s financial statements are available is for the first quarter of 2022. The bank hasn’t released the subsequent period’s financial statements, which indicates the bank’s capital inadequacy issue.
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