He said this while chairing a high-level meeting at the Petroleum Division with the CEOs/Managing Directors of the country’s oil refineries to review and accelerate the operationalisation of Brownfield Upgradation Refinery Policy, read an official statement.

Malik underscored the strategic importance of the refining sector and emphasised that local refineries were critical national assets for ensuring an uninterrupted fuel supply and strengthening Pakistan’s energy security.

He said that the ongoing regional situation arising from the US-Iran conflict had further highlighted the urgency of reducing reliance on external supply chains and ensuring maximum domestic refining flexibility/capability.

READ MORE: CEOs of refineries appreciate resolution of sales tax issue

He stressed that the timely upgradation of existing refineries is essential to enhance production capacity, improve efficiency, and ensure the supply of cleaner Euro V fuels in line with international standards.

“Refinery upgradation will enable Pakistan’s refineries to produce Euro-V compliant fuels, contributing significantly towards improved environmental outcomes, better engine performance, and reduced emissions,” he stated.

The minister noted that despite the introduction of both refining policies in 2023, implementation progress had remained stagnant.

He stressed that addressing the existing bottlenecks is essential to advancing refinery modernisation and attracting sustained long-term investment in the sector.

Meanwhile, the meeting reviewed refining policies and the Upgradation Agreement template in detail to ensure their effective and timely operationalisation.

The CEOs/Managing Directors highlighted key challenges and proposed practical measures for resolution. They stated they had full confidence in the Petroleum Division’s efforts.

The exemption of sales tax on petroleum products was identified as the key issue affecting the viability of upgradation projects.

The minister directed that a comprehensive proposal addressing these challenges be finalised and submitted to the relevant forum before the finalisation of the upcoming budget, so that the refining policies may be implemented without delay.

During the meeting, the delegation briefed the minister on the growing scale of illicit cigarette trade in Pakistan, noting that a significant portion of the market remains undocumented, resulting in an estimated annual revenue loss of around Rs350 billion, i.e. USD1.25 billion.

It was highlighted that nearly 45 to 47 billion cigarettes are being sold without payment of taxes, creating an uneven playing field for the formal sector.

The discussion focused on structural issues in the tobacco supply chain, particularly the procurement of tobacco leaf, under-reporting of production, and weak traceability mechanisms. The delegation pointed out that although registered companies operate under strict regulatory frameworks, undocumented production and misuse of contracts enable informal players to access raw materials and expand illicit manufacturing.

According to the statement, participants emphasised that the issue extends beyond taxation, with concerns relating to undocumented income, money laundering, and broader economic distortions.

The minister was informed that a limited number of actors benefit disproportionately from the undocumented segment, while formal businesses continue to face compliance and cost pressures.

The delegation stressed that while laws, tax stamp systems, and regulations are already in place, their implementation remains inconsistent. It was noted that enforcement requires coordinated action by multiple institutions, including federal and provincial authorities.

The role of the Pakistan Tobacco Board (PTB) was also discussed. Participants highlighted that while the Board has regulatory functions such as crop estimation and price setting, its enforcement capacity is limited. The need for restructuring and strengthening the board to play a more proactive role in documentation and monitoring was emphasised.

The meeting also reviewed policy challenges arising from Pakistan’s commitments under the International Monetary Fund programme, particularly regarding the gradual removal of import restrictions and equal treatment of commercial and industrial importers. While these reforms aim to liberalise trade, stakeholders noted that they may complicate efforts to control the supply of key inputs used in cigarette manufacturing.

Jam Kamal acknowledged the complexity of the issue, describing it as a “multi-layered challenge” requiring a comprehensive approach from farm-level production to retail enforcement. He emphasised that the core problem lies in weak enforcement rather than the absence of policy.

The minister underscored the importance of aligning federal and provincial efforts, noting that effective regulation of tobacco cultivation and local markets requires active provincial involvement alongside federal agencies such as the FBR and FIA.

He reiterated the government’s commitment to supporting the formal sector, promoting exports, and ensuring a fair and transparent business environment. He further directed that stakeholder proposals be consolidated into actionable recommendations, with a focus on strengthening enforcement mechanisms, improving traceability, and gradually reducing the size of the informal economy.

“The plant was initially expected to start production by March 2026, but it has already started production in November,” Zayan Babar, an Investment Analyst at Arif Habib Limited (AHL) told Business Recorder on Tuesday.

The development came into light during a corporate briefing session of Nishat Power Limited (NPL) held today, which was attended by Babar.

During the briefing session, NPL management shared it will invest up to Rs2 billion in NexGen Auto (Private) Limited in the long term.

Nishat Power to invest Rs2.5bn in EV venture NexGen Auto

Through this investment, NPL will acquire a 33% stake in the company via the subscription of 200 million shares.

“Management expects this move to enhance the company’s long-term value and profitability by entering the growing automotive sector,” said Babar.

An electrified Pakistan: test driving Nishat Group’s Omoda & Jaecoo EVs

The analyst shared that NexGen Auto facility, located adjacent to Hyundai’s assembly line, will assemble both the Jaecoo plug-in hybrid and the Omoda E5 fully electric EV.

Approximately 2,000 vehicles have already been booked, with around 20% advance payments received, while several models are currently in the paint shop. “Deliveries for CKD units are expected to commence by mid-December,” Babar added.

The plant has an annual production capacity of 32,000 units, or 2,667 vehicles per month on a double-shift schedule, while a single shift operates at half capacity.

Meanwhile, the management of Nishat Chunian Power Limited (NCPL), in a separate corporate briefing session, also confirmed a long-term investment of up to Rs2 billion in NexGen Auto.

NCPL’s management shared that the NexGen Auto assembly plant would integrate its operations with Hyundai’s assembly line, with the first car launch imminent and strong market interest already expected.

“While profitability may be impacted by government concessions, the company expects strong returns for shareholders. The first dividend from the next-gen auto business is expected in FY28,” disclosed NCPL’s management.

The DFAK had filed the appeal against penalties imposed last year in December by the Competition Commission of Pakistan (CCP) on the representatives of three dairy associations in Karachi for collusive practices aimed at influencing the price of fresh milk—violating Section 4(1) and 4(2)(a) of the Competition Act, 2010.

During the proceedings, the tribunal was informed that the appeal was not maintainable, since no adverse order had been passed against the appellant, according to a statement released on Friday.

The counsel for the CCP clarified that DFAK was registered as a society under the Societies Registration Act, 1860, and the penalty in question had been imposed on the association’s representative, not the association itself.

CAT accepted the CCP’s legal position and directed the appellant’s counsel to withdraw the appeal. With the appellant’s consent, the tribunal subsequently dismissed the appeal as withdrawn.

PDA seeks reduction in hefty GST on dairy products

The penalties included Rs1 million imposed on Shakir Umer Gujjar of M/s Dairy and Cattle Farmers Association (DCFA); Rs500,000 each imposed on Haji Akhtar Gujjar of M/s Dairy Farmer Association Karachi (DFAK) and Haji Sikandar Nagori of M/s Karachi Dairy Farmers Association (KDFA).

As per the statement, the CCP initiated an inquiry following media reports of a sharp rise in milk prices across Karachi.

Investigations confirmed that the three associations, operating at various stages of the fresh milk supply chain, were actively involved in anti-competitive practices that led to a significant price hike affecting consumers in Karachi and surrounding areas.

“The due diligence and price discovery for a share price agreement is yet to happen,” Shahid Ali Habib, CEO of Arif Habib Ltd, the manager to the offer, told Reuters.

Acquisition of 75.01pc Lotte capital: ICI board allows management to submit binding bid

Lotte Chemical Corp, the Korean parent company, had put up the Pakistani unit for sale, citing a mismatch with its long-term vision.

But two previous deals for the company, which currently has a market capitalization of 32.1 billion rupees (about $115 million), have fallen through.

Stocks surge amid bullish sentiments

First, Pakistan-based petrochemical firm Novatex pulled its offer to buy the 75% stake in 2023 and last year a unit of conglomerate Lucky Core Industries ended its deal to buy the stake for about 192.4 billion won ($132.85 million).

In a virtual address at the INSURE IMPACT CONFERENCE PAKISTAN 2025 – Fostering Collaboration, Engagement & Innovation, Aurangzeb shared that the government, led by Prime Minister Shehbaz Sharif had “a very constructive and positive meeting” with the IMF’s Managing Director (MD), Kristalina Georgieva.

“We got some very positive feedback in terms of the macroeconomic stability achieved over the last 12 months,” he said.

The finance minister said the IMF chief praised the prime minister’s leadership and the country’s commitment towards the reform-based programme.

On Tuesday, PM Shehbaz met Georgieva on the sidelines of the World Government Summit (WGS) 2025, ahead of the first review of a $7-billion IMF bailout set for early in March.

The meeting focused on Pakistan’s ongoing IMF program and the macroeconomic stability achieved through the government’s comprehensive reform agenda, read a statement released by the Prime Minister’s Office (PMO).

“The discussions highlighted Pakistan’s commitment to implementing structural reforms and maintaining fiscal discipline, which has been instrumental in restoring economic stability and will be critical in driving sustainable growth, going forward.”

Separately, a three-member IMF mission is in Pakistan for an assessment under the Extended Fund EFF programme.

Meanwhile, Aurangzeb said that apart from achieving macroeconomic stability, the government has been swift in implementing structural reforms in taxation, energy, SOE and public finance.

Coming to Pakistan’s insurance sector, the finance minister noted that the sector “is starting from a good place”. However, to achieve the vision of an Insured Pakistan, the sector has to be better, faster and cheaper.

“Certain level of innovation is there, but we are certainly not where we should be and need to be,” he said.

Aurangzeb reiterated that the government’s role is to provide a policy framework and ensure policy continuity.

Pakistan – home to more than 240 million people – ranks among the countries most vulnerable to the effects of climate change, which scientists say is making extreme weather events more common and more severe.

The Pakistan Meteorological Department (PMD) says the farming heartland of eastern Punjab province saw 42 percent less rainfall than normal between the start of September and mid-January.

“The lack of rains has had a major financial impact on farmers, whether they have a big holding or a small one,” Fruit and Vegetable Exporters Association Punjab chairman Malik Asghar told AFP.

“Potato is a staple in my area. The average is very low this year. Usually we could easily get 100 to 120 sacks per acre. This winter we have only gotten about 60 sacks per acre.”

Worsening drought situation: Met Office raises the red flag

The agriculture sector contributes nearly a quarter of Pakistan’s GDP and employs 37 percent of the national labour force, according to the UN’s Food and Agriculture Organization.

But Asghar said many small farmers “were already giving up” and looking for employment elsewhere.

“This spell of dry weather will have a very adverse reaction on them,” he said.

Sindh, Pakistan’s most urbanised province located in the south, witnessed rainfall 52 percent below normal levels according to the PMD, while Balochistan in the west saw a 45 percent drop.

“Mild drought” prevailed in most of Punjab, all of Sindh and around half of Balochistan in January according to the PMD, which predicts rapidly onsetting “flash droughts” in the warmer months to come.

Wheat farmer Ishfaq Ahmad Jatt said his harvest in the Multan area of central Punjab has been “badly affected” by the dearth of rain.

“Even five years ago we used to get winter rains for a week at a time. They were light rains but they were enough for us,” the 45-year-old said.

“If it doesn’t rain soon, you can expect production to drop by as much as 50 percent.”

Pakistan generally relies on water from the Indus river which bisects the country from north to south, where it empties into the Arabian Sea.

But analysts say a fast-growing population, climate change and poor resource management with an over-reliance on a single water source are all spurring scarcity.

The drought comes less than three years since record monsoon rains caused devastating floods that left nearly a thirds of the country under water – including the major agricultural areas of Sindh and Punjab.

The country also suffers from choking smog in the winter season, caused by poor quality vehicle fuel and farmers burning off crop remnants, with cold weather trapping pollution close to the ground.

Rain typically offers temporary reprieve by dampening down airborne particles, but the dry weather has seen Punjab province blanketed by smog with hazardous health effects.

The Pakistan unit of British consumer healthcare firm Haleon plans to expand its pain management offerings next year by adding the Panadol range for menstrual pain and migraines, CEO Farhan Muhammad Haroon told Reuters in an interview.

“Pakistan has a Rs24-billion ($86.30 million) Vitamin Mineral Supplement market. This does not include the grey market. We already make up Rs7.5 billion ($26.97 million) of the market through our (vitamin) products CAC-1000 Plus and Qalsium-D,” said Haroon.

“With the launch of Centrum, we plan to capture 7 to 8% of remaining market immediately, which is a sizeable portion of the category.”

Pakistan’s Citi Pharma, Martin Dow partner with Chinese firm for biotech manufacturing

Haroon said the company plans to sell Centrum in smaller bottles so customers do not have to worry about high upfront costs, as purchasing power has diminished in the country after inflation hit a multidecade high of around 40% last year. In November, Pakistan’s consumer price index inflation slowed to 4.9%.

Haroon said in the first stage of the Centrum launch, expected in the first quarter of 2025, the product will be imported, and in the second stage it will be made locally with market specific variants to suit needs of Pakistanis and other export markets.

“We already export our calcium and vitamin D supplement CAC-1000 Plus and topical pain relief product Voltral Emulgel to Vietnam and Philippines, we will be ready to export to 19 countries in the next 1-1.5 years,” he said.

Haleon Pakistan sees at least 10% of its sales coming from exports in the next two years, up from 5%-6% during its peak in 2022, Haroon said, adding that it had invested $10 million last year to enhance local production capabilities.

New European Union regulations make retailers selling in the bloc, like Inditex, H&M and Nike, legally liable for conditions at their suppliers, putting pressure on them to help fund improvements to cool factories they source from.

In Dhaka, Hanoi, Ho Chi Minh City, Phnom Penh and Karachi, the number of days with “wet-bulb” temperatures - a measurement that accounts for air temperature as well as humidity – above 30.5 degrees Celsius jumped by 42% in 2020-2024 compared to 2005-2009, researchers at Cornell University’s Global Labor Institute found.

Textile, leather industry spells out factors hurting exports

Above that threshold, the International Labor Organisation recommends as much rest as work in any given hour to maintain safe core body temperature levels.

The report identified only three retailers - Nike, Levi’s, and VF Corp - which specifically include protocols to protect workers from heat exhaustion in their supplier codes of conduct.

Companies warned

“We’ve been talking to brands for ages now about this issue, and they’re only now starting to turn their attention to it,” Jason Judd, executive director at Cornell University’s Global Labor Institute, told Reuters.

“If a brand or retailer knows that temperatures in a production area are excessively high or doing damage to worker health, then they’re obligated under this new set of rules to do something about it,” he added.

Textile exporters urged to discover opportunities in emerging markets

The EU Corporate Sustainability Due Diligence Directive came into force in July and will start applying to large companies from mid-2027.

Fixes to cool factories could include better ventilation and water evaporative cooling systems, instead of energy-intensive and expensive air conditioning that would increase manufacturers’ carbon emissions.

Some factory owners would likely be willing to make such investments themselves, given how heat stress significantly impacts productivity, Judd said, but the EU rules highlight brands’ responsibility to address the issue too.

The report also urged retailers and brands to invest in higher wages and health protections so that workers can manage the risk of missing work days due to heatwaves.

Bangladesh garment workers clash with police, two wounded

Extreme heat and flooding could erase $65 billion in apparel export earnings from Bangladesh, Cambodia, Pakistan and Vietnam by 2030, research from asset manager Schroders and the Global Labor Institute found last year.

Pakistan has a record of curbing online access in response to political turmoil, banning social media sites, or simply temporarily shutting down the internet altogether.

The United States condemned internet shutdowns in Pakistan following parliamentary elections in February in which Khan’s party won the most seats despite a crackdown on its activities.

Businesses that rely on the internet have complained Pakistan could lose hundreds of millions of dollars of revenue as a result of the government’s imposition of a national firewall to monitor and regulate content and social media platforms and prolonged internet disconnections.

The government denies any attempt at censorship.

“We’re seeing a loss of civilian control over basic IT and digital infrastructure, only made worse by a lack of transparency,” said Usama Khilji, a prominent digital rights activist. “It’s almost like a creeping coup.”

Internet shutdown: IT sector suffers $1m per hour loss: P@SHA

In Layyah, a small town in south-eastern Pakistan, getting steady internet connection requires Sehrish Bano to hop from room to room balancing her laptop and toggling between the three different connections.

More often than not, she said, none of them work.

The 25-year-old said the poor, unreliable internet connections hampered her ability to earn a living as a freelance video editor and complete her online graphic design course.

“I’m not able to take online classes because Zoom keeps freezing and I can’t understand what my teacher is saying,” she said. Compared to three months ago, “even simple things like sending an audio message via WhatsApp or downloading a picture or a PDF takes five times as long.”

Internet speeds have dropped by more than 30% in the last three months, Shahzad Arshad, chairman of the Wireless and Internet Providers Association of Pakistan, an advisory body of internet service providers, told the Thomson Reuters Foundation.

Arshad attributed the decline to the government’s deployment of “a web management system or firewall”.

Farieha Aziz, co-founder of Bolo Bhi, a digital-rights and civil-liberties group, said there had been no acknowledgement of an official firewall and accused authorities of not coming clean on the issue.

“It seems sustained opacity is the official government policy,” Aziz said.

Rights group Amnesty International has also called on Pakistan to be transparent about internet disruptions.

JI chief assails govt for slowing down internet services

“The opacity of the Pakistani authorities regarding the use of monitoring and surveillance technologies that block content, slow down and control internet speeds is an alarming concern,” Jurre Van Bergen, Amnesty technologist said in August.

“Time and again, the use of such technologies, including national firewalls, has proven to be incompatible with human rights,” Van Bergen said.

Digital chasm

Aziz said it was clear the government’s aim was to clamp down on free speech and dissent.

“Never before,” she said, has the government “been able to disrupt a whole function of an app; usually the entire website or application stops working. But here we are seeing that only media files are being disrupted.”

Aziz said the issue was compounded by the government’s attempts to restrict the use of Virtual Private Networks (VPNs), which encrypt data and mask IP addresses, allowing users to browse the internet more securely.

The Pakistani government has said it would no longer pursue a ban on VPNs and denies any responsibility for slowing down of bandwidths nationwide.

Users still facing problems due to internet slowdown

The United Nations says Pakistan’s digital divide is vast — more than half the country does not have access to the internet because of inadequate digital infrastructure and affordability challenges.

That divide could become a chasm, experts said.

“WhatsApp, sharing voice notes, links for education and work purposes, has become a way of life,” said Aziz. Government measures that slowed internet speeds, or cut connections altogether, she said, were “creating digital haves and have-nots”.

The problem has become so bad that some whose livelihoods depend on internet access are considering leaving the country.

Ehtesham Khan, a freelance photo editor and graphic designer, said he was contemplating moving to Dubai because frequent internet disruptions had led to him losing clients.

And it is not just individuals who are thinking of leaving.

“Companies are already relocating to other places, Dubai, Singapore, where internet access isn’t a problem,” Khilji said. “Our foreign income and internet exports have reduced, and our IT industry’s potential is reducing by the day because of these issues.”

The session, led by Semih Kumluk, Ph.D., Head of AI and Digital at PwC Academy in the Middle East and one of LinkedIn’s Top Voices on Artificial Intelligence (AI), explored how AI can revolutionize the pharmaceutical industry in Pakistan.

The workshop drew participation from key pharma industry officials.

In a conversation with Business Recorder on the sidelines of the event, Kumluk emphasized that AI’s integration offers immediate productivity gains across various sectors, including pharmaceuticals.

“When you use AI to complete a task, studies suggest that you can achieve up to 40% time savings,” he said. “In the pharmaceutical industry, AI allows for more informed decisions by combining available data and running algorithms that generate useful insights for healthcare professionals.”

Kumluk identified data sharing as a major obstacle to fully realizing AI’s potential in Pakistan’s pharmaceutical sector. “Data sharing is not very high at the moment. A dedicated data collection program embedded with AI algorithms could promote greater data exchange and lead to valuable insights.”

He further elaborated on AI’s role in predictive maintenance for pharmaceutical manufacturers, ensuring smoother operations by reducing machine downtimes.

Additionally, AI-driven logistics optimization can streamline supply chains, offering quick and effective solutions to challenges faced by the industry. “From a manufacturing perspective, overall equipment effectiveness can be significantly increased with AI,” Kumluk said.

Kumluk suggested a few immediate steps for Pakistan’s pharmaceutical industry to benefit from AI.

“AI can be applied to sales forecasting and manufacturing operations right away,” he noted. He also advocated for a nationwide data collection program to harness AI’s power, saying, “Data from public health records can provide immense value for future decision-making.”

Speaking at the event, former PPMA Chairman and Managing Director of PharmEvo, M. Haroon Qassim, stressed the importance of staying ahead of technological trends.

“At PPMA, we aim to introduce our professionals to the latest technologies, including AI, to enhance production, marketing, and exports,” Qassim remarked. He further explained that AI is particularly effective in improving efficiencies across the value chain, making Pakistan’s pharmaceutical products more competitive in the global market.

“Cost-effectiveness is a major factor when competing internationally. AI not only improves efficiency but also ensures better quality products at affordable prices for the masses.”

Qassim also urged the government to support the industry by allowing the pharmaceutical sector to retain a larger share of export revenues. “We’ve seen how the IT industry’s export growth was facilitated by allowing them to retain a bigger percentage of their revenues. We want similar support for the pharma sector to help it expand internationally.

“If we focus properly, we can increase pharmaceutical exports from the current $300 million to between $2 billion and $3 billion within the next five years,” Qassim stated.

He emphasized the need for government support to help the industry achieve this target. “We want the government to prioritize the pharmaceutical sector in its trade relations with other countries to facilitate this growth.”

Qassim also pointed out a key challenge faced by the sector: “Currently, we are only allowed to retain 15% of our export revenues by the State Bank. Similar to the IT sector, where we’ve seen significant export growth, we are requesting the government to allow the pharmaceutical industry to retain 35% of its revenues. This will enable us to expand further into international markets and compete more effectively.”

Former PPMA Chairman Dr. Qaiser Waheed highlighted the necessity of adopting digital technologies to remain competitive.

“If any industry or organization doesn’t adapt to the digital transition, it will be left behind,” said Waheed. He emphasized that the pharmaceutical industry, in particular, must embrace AI, robotics, and digital transformation to stay competitive globally.

“The world is moving towards AI, nanotechnology, and other advancements that are improving drug quality and delivery,” Waheed explained. “By adopting these technologies, we will be able to significantly enhance the quality of drugs and healthcare services.”

Syed Jamshed Ahmed, Deputy CEO of PharmEvo, shed light on how AI can address pressing challenges in Pakistan’s healthcare system. “AI can play a transformative role in solving issues such as access to immediate care in rural areas,” Ahmed said.

“For instance, if someone in a remote district like Dadu suffers a heart attack, AI can help medical consultants provide immediate care remotely, potentially saving lives.”

Ahmed also pointed out the shortage of specialized medical professionals in Pakistan, with only 200-250 neurologists serving a population of 250 million. “AI could be used to support these professionals by aiding in diagnostics and consultations. This would allow them to serve a much larger population, making healthcare more accessible to all.”

He added that while the industry is still catching up to global technological trends, workshops like these are helping bridge the gap.

In a LinkedIn post following the workshop, Semih Kumluk provided a broader perspective on AI’s transformative role in the pharmaceutical industry. He outlined several key areas where AI is making a lasting impact, including drug discovery, personalized medicine, and supply chain management.

“AI is now accelerating drug discovery by identifying potential drug candidates much faster than traditional methods,” Kumluk noted. “Additionally, personalized medicine—where treatment plans are tailored to an individual’s genetic profile—will become more common as AI can analyze patient data to predict responses to medications.”

He also highlighted how AI is improving clinical trial processes by helping with patient recruitment and data analysis, thus reducing costs and improving the accuracy of trial results. AI is also enhancing supply chain operations by optimizing resource management, ensuring timely drug delivery, and minimizing waste.

While Kumluk is optimistic about the future of AI in pharma, he also cautioned against potential ethical challenges. “AI raises important questions around data privacy and algorithmic bias. Ensuring AI is used ethically is crucial for maintaining patient trust and advancing the industry responsibly.”

Copyright Business Recorder, 2024

The exemption could also increase the operating costs of the oil industry by Rs25 billion, the source added.

“Foreign investors in the sector may soon approach Prime Minister Shehbaz Sharif on the issue,” they said.

In the Finance Act, Motor Spirit (Petrol), High Speed Diesel, Kerosene and Light Diesel Oil (LDO) have been changed from taxable supplies to exempt from levy of Sales Tax.

Pakistan refiners warn $6bn upgrades at risk due to fuel price deregulation plan

Resultantly, up to 80-85% of the input tax will be disallowed resulting in a substantial increase in the operating cost as well as project cost, according to a letter sent to the Petroleum Division by refineries earlier this month.

“This has a material impact to the extent that it may make existing refining operations unsustainable as well as the projects/investments, expected under the policy unviable as it significantly affects Project IRRs,” the letter read.

“It is generally accepted practice that governments allow subsidies/grants to local industries to finance their projects and such subsidies are exempt from tax. The same was the case in Pakistan under Clause (102A) of Income tax ordinance, 2001.

However, with the introduction of the revised law, the said exemption has now been withdrawn which will have impact on the Refinery upgrade project as the incentives will not be treated as tax-exempt government grants,“ it added.

Since this issue – sales tax exemption instead of zero-rated sector that allows claims by refineries – has become a part of the Finance Act, it can only be amended through parliament.

The source explained that the oil industry operates in a regulated environment, and prices are determined by the Oil and Gas Regulatory Authority (OGRA) based on a government-approved formula, leaving no room for recovery of additional costs.

Cnergyico says upgrading its both refineries

Sales tax exemption may also discourage foreign investment in the oil industry, essential for refinery upgradation, setting up new refineries, and developing infrastructure for oil marketing companies, the source said.

Oil marketing companies are also struggling and the source siad that if this issue is not resolved, their service level will drop.

“They won’t be able to expand as they have planned.”

It may be noted that the government introduced the Refining Policy for Upgradation of Existing/Brownfield Refineries 2023 to attract investment of over $5 billion in the refining industry.

Industry stakeholders have urged the federal government to restore the status of petroleum products as taxable supplies and to ensure the continued development of the oil industry and uninterrupted supplies of petroleum products.

The latest levy will be applicable to all the consumer categories of the ex-Wapda distribution companies (XWDiscos) except Electric Vehicle Charging Stations (EVCS) and lifeline consumers. The K.Electric (KE) consumers will also remain exempted from the said price hike.

NEPRA directed the XWDiscos to show the hike in FCA separately in the consumers’ bills of May 2024 on the basis of units billed to the consumers in March 2024.

“While effecting the fuel adjustment charges, the concerned XWDISCOs shall keep in view and strictly comply with the orders of the courts notwithstanding this order,” the authority emphasised.

It’s worth mentioning that power distribution companies (Discos) have also sought positive adjustment of up to Rs1.60 per unit to recover an additional amount of Rs52 billion from the consumers of KE and Discos for the third quarter (January to March 2024) of FY 2023-24 under Quarterly Tariff Adjustment (QTA) mechanism.

Nepra advises govt to review power tariff structure

NEPRA is scheduled to conduct a public hearing on May 17, 2024 on the petition of Discos filed by the Central Power Purchasing Agency Guaranteed (CPPA-G). Of the total requested adjustment of Rs51.883 billion, Rs31.348 billion is on account of the capacity charges to be paid to power generation plants.

Last month, Business Recorder reported that the CPPA-G had planned to extract about Rs23 billion from Discos consumers in April 2024 under monthly FCA mechanism.

MARI shared the development in its notice to the Pakistan Stock Exchange on Friday.

“The Directorate General Mines & Minerals Balochistan has granted an Exploration License (EL-186) and allotted an area of 501 sq. km to Mari Petroleum Company Limited for mineral exploration near Dalbandin, District Chagai, Balochistan,” read the notice.

MARI said that the grant is in line with its strategy to “diversify into near core areas and its commitment to contributing to the growth of the mineral mining sector of Pakistan”.

The mining sector has recently been in the limelight as authorities seek to attract foreign investments in the largely unexplored sector.

Earlier this month, Islamabad conducted the first Pakistan Mineral Summit to attract international investors interested in the country’s mining sector. This was attended by Barrick Gold Corporation CEO and President Mark Bristow, Saudi Mining Minister Engineer Khalid bin Saleh Al Madifar and other investors.

Chief of Army Staff General Syed Asim Munir had said at the time that the summit had laid down new rules for ease of doing business for domestic and foreign investors in the country.

“We will ensure an investor-friendly system that avoids unnecessary delays and provides easy terms and conditions for business. There are vast mining opportunities in our country which will be realized through joint efforts.”

IATA, in a press release on Sunday, said Pakistan has blocked $188.2 million of airline funds for repatriation. The association represents some 300 airlines comprising 83% of global air traffic.

As per IATA, Pakistan is among the top five nations in the world that have blocked airline funds. The body said that the top five account for 68% of overall blocked funds.

Other countries on the list are Nigeria, Bangladesh, Algeria, and Lebanon which have blocked $812 million, $214.1 million, $196.3 million, and $141.2 million respectively.

“Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets,” “ said Willie Walsh, IATA’s Director General.

“Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation,” he added.

IATA urged governments to abide by international agreements and treaty obligations to enable airlines to repatriate funds arising from the sale of tickets, cargo space, and other activities.

Earlier in March, the IATA had warned that Pakistan had become “very challenging” to serve as carriers were struggling to repatriate dollars, while $290 million remained stuck in the crisis-hit country since January.

Last year in December, IATA had said that Pakistan had blocked $225 million of airline funds for repatriation. Even back then, the country was among the top markets where airline funds had been blocked from repatriation.

While the amount of funds has varied over time, difficulty in repatriating profits stems from a severe dollar crisis in Pakistan that is scrambling to arrange foreign currency inflow.

It is engaged in talks with the International Monetary Fund (IMF) for revival of its bailout programme, stuck at the ninth review since November last year.

Its foreign exchange reserves with the central bank sit at nearly $4.09 billion as of May 26, the latest data available, and not enough to cover a month of imports.