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PM, COAS CONFIDENT ABOUT TRANSFORMATIVE $30-50B INVESTMENT IN AGRI SECTOR tuesday, 11 July, 2023 i 22 Zil hajj, 1444
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Shehbaz says many Gulf countries ready to invest, says country cannot take further loans
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Rs 40.00 | Vol XIV No 11 I 40 Pages I Islamabad Edition
Gen Asim Munir says army fully support all initiatives under SIFC, including Green Pakistan Initiative
Green Pakistan Initiative to usher in agri revolution, create four mln jobs: PM ISLAMABAD
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RIME Minister Shehbaz Sharif said on Monday the government expects investment worth billions of dollars in the next four to five years in agriculture sector with Chief of Army Staff (COAS) Gen Asim Munir assured the military would fully cooperate for Pakistan’s economic progress. “As an institution, we assure of our diligent cooperation for Pakistan’s economic progress,” Chief of Army Staff (COAS) Gen Asim Munir said while speaking at the National Seminar on Food Security and Agriculture in Islamabad along with Prime Minister Shehbaz Sharif. COAS General Syed Asim Munir attended the seminar as the guest of honour. Besides Prime Minister Shehbaz Sharif and COAS gen Syed Asim
Munir, The seminar was attended by federal ministers, chief ministers of Punjab and Sindh, agriculture experts, farmers, foreign dignitaries and potential investors and experts from the United Kingdom, Italy, Spain, China, Bahrain, Qatar, Saudi Arabia, Turkiye and other countries, the Prime Minister’s Office (PMO) said
in a separate statement. The premier highlighted the importance of agriculture for the economy of Pakistan and the landmark steps being undertaken by the government to exploit its full potential in agriculture and other domains under the ambit of the recently launched Special Investment Facilitation
Council (SIFC). PM Shehbaz said that Green Pakistan Initiative would be the second green revolution, paving the way for prosperity and progress in the country. Prime Minister Shehbaz Sharif Monday said that the Green Pakistan Initiative would eventually bring about the second agriculture revolution, in addition to the creation of four million jobs in the country. Addressing a seminar on agriculture and food security, he said agriculture was the backbone of the country and the farmers worked hard to provide food to millions of people and they would be remembered in the history as builders of Pakistan. He said the farmers had the due right to avail incentives for the agriculture sector and it was the responsibility of the government to provide them all possible assistance for overall development and progress.
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After $82m controversy in Uch, OGDCL issues LoI to second bidder
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Joint venture between Presson Descon and SNGPL, which was earlier awarded the project, failed in March ISLAMABAD
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The Oil and Gas Development Company Limited (OGDCL) has issued a letter of intent (LoI) to Hong Kong HuiHua Global Tech. Ltd. and local company AJ Corporation for the $82 million Uch Front End Compression Facility Project. The development comes months after the joint venture of Presson Descon Int (Pvt.) Ltd. (PDIL) and Sui Northern Gas Pipelines Ltd. (SNGPL), which was initially awarded the tender for the Uch project, fell apart. The issuance of the LoI to the second bidder — a joint venture between Hong Kong HuiHua Global Tech. Ltd. and AJ Corporation — is significant as the Uch project is scheduled to be completed in the second half of next year and any delays will result in penalties for OGDCL besides hitting its reputation.
This is perhaps why the LoI comes with specific conditions requiring the second bidder to urgently confirm their acceptance of the terms and conditions outlined. The Uch gas field compression project, which aims to enhance production capacity in the Uch gas field to meet Pakistan’s growing energy needs, has a scheduled completion date of July-September 2024 and operates under a gas sales agreement with a French company that owns the Uch power plant. The OGDCL will be liable to pay a daily penalty of $660,000 to the French company in the event of project delays. The bidding process for the project has been mired in controversy. Initially, two bidders participated in the bidding process – PDIL in a joint venture with SNGPL, and Hong Kong HuiHua Global Tech. Ltd. in a joint venture with AJ Corporation. Following the tender, reports also emerged that former officials of the
OGDCL lobbied not on behalf of either one of the consortiums, but on behalf of the manufacturing company that provides the equipment to these two consortiums. To do this, the bid was manipulated and specific stipulations were added so that only the bidder using equipment from a specific company would remain in the running. Later on, the OGDCL’s audit department recommended cancelling the tender, raising concerns about tailored criteria that limited competition. Both bidders were found to be sourcing equipment from a single manufacturer, despite other vendors being available in the market. Despite these concerns, OGDCL decided to proceed with the bidding process. The winner, PDIL and SNGPL’s joint venture, was requested to submit a performance bank guarantee of Rs 267 million, which amounts to 10 percent of the total project cost of $82.3 million.
PM reaffirms Pakistan’s commitment to UN SDGs with enhanced cooperation ISLAMABAD
Prime Minister Muhammad Shehbaz Sharif on Monday said that Pakistan was keen to expand its cooperation with partner countries to meet the UN Sustainable Development Goals (SDGs)-2030. The prime minister virtually participated in the First High-Level Forum on Global Development Initiative (GDI). Held under the theme of Global Development Initiative: “Echo the Development Agenda and Call for Global Action”, the forum was organized by the China International Development Cooperation Agency (CIDCA), the PM Office Media Wing said in a press release. PM Shehbaz, in his remarks, stressed the salience of international development cooperation to present a unified global response for socio-economic development, mitigation of climate change threats, and galvanizing new drivers of growth for humanity’s enduring progress and prosperity. He also appreciated China for launching the Global Development Initiative for achieving shared goals of inclusive and sustainable global development. Extending Pakistan’s firm support to the GDI, the prime minister said that Pakistan would continue its multifaceted cooperation with China for swift implementation of the GDI projects in Pakistan. The event was attended by Wang Yi, member of the Politburo of the Communist Party of China and Director of the General Office of CPC Foreign Affairs Commission, State Councilor and Foreign Minister Qin Gang and Chairman CIDCA, Luo Zhaohui.
Unfortunately, the joint venture failed to deposit the required performance bank guarantee, leading OGDCL to encash its Rs 267 million bid bond due to non-compliance. The LoI issued to Hong Kong HuiHua Global Tech. Ltd. and AJ Corporation’s joint venture explicitly states that the document should not be considered an award of the contract or service order. The bidder is informed that no vested legal or contractual rights will be accrued until a valid contract is executed between the parties. The terms and conditions of the tender documents will form the basis for the contract, which will be executed only after obtaining all necessary management and governmental approvals. As part of the LoI, the bidder is also required to submit a 10 percent performance bond or bank guarantee within 15 days, following the provided format in the tender document. The bid’s validity is expected to remain firm throughout the delivery period specified in the tender documents.
Fresh recruitment process to begin as Nepra chief refused job extension ISLAMABAD
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The federal government decided ‘in principle’ not to extend job tenure of National Electric Power Regulatory Authority (NEPRA) Chairman Tauseef H Farooqi and the cabinet has given the green light for initiation of the recruitment process to fill the top position. Sources reveal that the Cabinet Division sought the federal cabinet’s approval for the appointment of the NEPRA Chairman, and the cabinet gave its consent through the circulation of a summary. It is largely believed that the government’s dissatisfaction with Farooqi’s handling of NEPRA’s decisions concerning K-Electric and other power plants/companies played a significant role in the decision. Consequently, the government is expected to appoint a trustworthy bureaucrat who can align with its preferred direction for NEPRA’s decisions, said sources.
According to Section 3(2) of the Regulation of Generation, Transmission, and Distribution of Electric Power Act (NEPEA Act) of 1997, the NEPRA Authority consists of a Chairman and four specialized members who are appointed by the federal government. Tauseef H Farooqi was appointed as NEPRA Chairman via a notification from the Establishment Division (notification No. 1/27/2019-E-6) on July 31, 2019. His current four-year term is set to expire on August 4, 2023. The decision not to offer an extension to Farooqi’s job tenure marks a significant change in NEPRA’s leadership. The government’s intention to recruit a new Chairman demonstrates its desire to appoint an individual who is perceived to be more aligned with its goals and priorities for the power sector. The selection process for the new Chairman will be initiated promptly to ensure effective functioning of NEPRA and the regulation of the power sector in Pakistan. Section 3(3) of the NEPRA (Amendment) Act, 2021,
Fitch Ratings upgrades Pakistan’s rating to ‘CCC’
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Fitch Ratings has raised Pakistan’s LongTerm Foreign-Currency Issuer Default Rating (IDR) from ‘CCC-‘ to ‘CCC’. This upgrade is attributed to Pakistan’s improved external liquidity and funding conditions following its Staff-Level Agreement (SLA) with the International Monetary Fund (IMF) on a nine-month Stand-by Arrangement (SBA) in June. The SLA is expected to receive ap-
proval from the IMF board in July, which will unlock other sources of funding and anchor policies around the parliamentary elections scheduled for October. However, Fitch Ratings acknowledges that there are still risks related to program implementation and external funding due to the country’s volatile political climate and significant external financing requirements. Pakistan has recently taken measures to address issues such as revenue collection shortfalls, energy subsidies, and policies inconsistent with a market-determined
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states that the Chairman should be a person known for integrity and eminence, with a minimum of twelve years of experience in a relevant field, such as law, business, engineering, finance, chartered accountancy, or economics, preferably in the electric power services business. Additionally, Section 3(5) of the Act stipulates that the Chairman’s term is four years and they are not eligible for re-appointment for a similar term. However, the Chairman cannot be appointed if they have reached the age of sixty. As per the proviso of Section 3(5) of the NEPRA (Amendment) Act, 2021, the process of appointing the Chairman under Section 3(2) should be finalized ninety days before the incumbent Chairman’s retirement. Sources state that the Prime Minister’s approval has been obtained to initiate the process through floating advertisements. As the Minister In Charge of the Cabinet Division, the Prime Minister has reviewed and approved the submission of the summary to the federal cabinet, sources added.
Pakistan takes measures to address revenue shortfalls and energy subsidies, ratings agency reports
exchange rate. These measures were necessary to overcome obstacles that delayed the previous three reviews of Pakistan’s IMF program, which expired in June. The government has also made amendments to its proposed budget for the fiscal year ending in June 2024, introducing new revenue measures and spending cuts. While Fitch Ratings recognizes the progress made by the Pakistani government, they caution that implementation risks remain. Pakistan has a history of deviating from its commitments to the IMF.
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Furthermore, uncertainties surrounding the October elections and the government’s commitment to the program after the elections could pose challenges. Upon approval of the SBA by the IMF board, Pakistan will receive an immediate disbursement of $1.2 billion, with additional amounts scheduled for later disbursements. Saudi Arabia and the United Arab Emirates have also committed $3 billion in deposits, and Pakistan expects to receive $3-5 billion in other new multilateral funding after finalizing the IMF agreement. The SBA will also facilitate the disbursement of aid pledges made at the January 2023 flood relief conference, including project loans. Pakistan’s current account deficit (CAD) has shown improvement due to import restrictions, tighter fiscal and economic policies, measures to limit energy consumption, and lower commodity prices.
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NEPRA notifies Rs1.24 per unit hike in power tariff
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INCREASE COMES UNDER THIRD QUARTERLY ADJUSTMENT FOR DISCOS ISLAMABAD
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The National Electric Power Regulatory Authority (NEPRA) has issued a notification announcing an increase in electricity rates by Rs 1.24 per unit, leading to a burden of Rs 46.76 billion on power consumers of all power distribution companies (DISCOs) for the third quarter of the fiscal year 2022-23. However, this adjustment will not be applicable to consumers of K-Electric. The notification states that the increase in electricity prices, implemented through the quarterly adjustment, will be reflected in the bills of July, August, and September. It is important to note that the increase will not affect K-Electric consumers. Sources within the power sector have estimated that this price hike will result in an additional burden of Rs 46.76 billion on consumers. In the previous second-quarter adjustment of the fiscal year 2022-23, consumers were charged an average of Rs 0.47 per unit. The third-quarter adjustment will introduce an additional charge of Rs 0.77 per unit compared to the second quarter. This adjustment applies to all DISCOs customers, excluding lifeline customers, but does not include consumers of K-Electric. The increase in electricity rates is attributed to various factors, including rising fuel prices, higher generation costs, impact of losses, capacity charges, inflationary pressures etc. NEPRA, as the regulatory authority, reviews these factors and determines the adjustments needed to maintain the financial stability of the power sector. The decision to raise electricity tariffs has been met with concerns from consumers who are already grappling with the impact of rising living costs. The burden of increased electricity rates will be felt by residential, commercial, and industrial consumers across the country. The additional cost will have implications for households’ budgets, businesses’ operational costs, and the overall competitiveness of industries. While the power sector faces financial challenges, it is crucial for NEPRA and relevant stakeholders to strike a balance between ensuring the financial viability of power companies and protecting the interests of consumers. Transparency in the tariff-setting process and effective mechanisms to address inefficiencies and losses within the power sector are essential to establish a sustainable and affordable electricity supply. Consumers are urged to conserve energy and adopt energy-efficient practices to minimize the impact of rising electricity tariffs on their monthly bills. Additionally, it is essential for DISCOs and other power sector entities to enhance their efforts in improving service delivery, reducing distribution losses, and implementing measures to promote renewable energy sources. These steps can contribute to creating a more resilient and cost-effective power sector in Pakistan.
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