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ISLAMABAD: Pakistan-China Relations Steering Committee is to meet on Wednesday(tomorrow) with Minister for Planning, Development and Special Initiatives, Asad Umar in the chair to deliberate on grievances of Chinese companies ranging from non-cooperation from different organizations/ departments and lack of progress on actions assigned to different stakeholders, well informed sources told Business Recorder.

The top most agenda of the meeting will be connectivity of Gwadar with National Grid and supply of additional electricity to Gwadar from Iran; and the second item is relocation/construction of Model Custom Collectorate at Gwadar and exemption from Federal Excise Duty (FED) on imports for investors of Gwadar Free Zone.

Finance Act 2020 granted exemption of FED for Gwadar Free Zone. However, exemption from FED is not covered in the revised rules, which requires a resolution.

Third item is imports for construction of Gwadar Airport held up due to anti- dumping duties. The Chinese contractor for Gwadar Airport has noted that certain steel materials imported for the airport project are held up at the port and Custom authorities have informed that anti-dumping duties have been imposed on their products. As per the Letter of Expression (LoE) and Implementation Agreement (IA), imports for the project are exempt from all taxes and duties as it is a grant project. The matter has already been forwarded to National Tariff Commission (NTC) as well as FBR. Ministry of Commerce, NTC and FBR will brief the Committee on this issue.

Provision of clean drinking water is also on the agenda in Gwadar as thousands are protesting against this issue.

Chinese companies have further maintained that the process of work visa is not smooth and the workers have to apply for a business visa, which later results in penalties and bans. They have requested for easing the process of work visa. Ministry of interior will brief the Committee on the issue of visas.

The sources said different stakeholders will update on decisions at third meeting of the Committee, most of them are related to Power Division, NHA and FBR.

According to sources, CPPA-G and PPIB will brief the Committee about Commercial Operation Date (CoD)/FME of the following projects due to Covid-19 and strikes at project sites: (i) 884 MW Suki Kinari HPP;(ii) 720 MW Karot HPP;(iii) 310 MW TEL, Thar Block- ll;(iv) 330 MW Thal Nova, Thar Block-II; and ( v) 1320 MW Thar Block-l.

National Electric Power Regulatory Authority (Nepra) will brief about review petition for 660KV HVDC Matiari-Lahore Transmission Line as the company wants earlier decision be reviewed for construction stage and return on equity (RoE) adjustment in pre-COD tariff.

Ministry of Interior and Chief Secretaries of KP and SAPM on CPEC Affairs will give a briefing on registration of security trust for 884 MW Suki Kinari pending since April 2021. The sponsor has requested for reversal of Sales Tax increase on construction services (from 2 per cent to 1 %) by GoKP as it was raised from 1 per cent to 2 per cent through GoKP Finance Bill 2019; and requested that the same rate be applicable to them as given to 720 MW Karot HPP by GoPb/ GoAJK – which was reduced from 16 per cent to 1 per cent.

The Government of Punjab (GoPb) will update on 700MW Azad Pattan HPP. The project sponsor requested for reduction of sales tax on construction services (from 16% to 1%) by GoPb (same as given by GoAJK) as the same had been given to 720MW Karot HPP by GoPb/GoAJK. The government of Punjab’s decision is pending.

Power Division will share latest position about reversal of WHT on shareholders’ dividends (25 per cent to 7.5 per cent). Sponsors of power projects installed under Power Policy 2002 agitate the point that the tax on dividends has been increased from 7.5 per cent to 25 per cent. As this is not a pass-through item, their profitability has been adversely affected by 19 percent. They have demanded that the tax rate should be revised back to the original level.

The issues of 1320 MW Sahiwal Coal Power Project including royalty settlement with PQA for coal handing, freight settlement and capacity indexation with PRFTC and approval of coal handing tariff for jetty operator (Fyuan) will also be discussed. Both PPIB and SAPM on CPEC Affairs will share an update on it.

Regarding 600MW Zonergy (Quaid-e-Azam Solar Power Plant), the sponsor has requested to execute the project on cost plus tariff regime as its phase-l (300MW) was executed on cost plus tariff regime. The sponsor also highlighted that ‘cost plus tariff regime’ also permitted in G2G projects under Alternate Renewable Energy Policy-2019, is already in “CPEC energy projects List” which was signed on September 5, 2020 between Power Division and NEA, China. Power Division has been asked to update the Committee on the company’s request.

1124MW Kohala HPP: Nepra and Chief Secretary, AJK will brief on the proposal of cost adjustment under review with Nepra hearing on October 12, 2021 for “water bodies structure and sewage treatment plant in tariff as pass through component was approved by ECC on October 2, 2020;”and “adoption of1 per cent fixed and final WHT on offshore procurement contract” by GoAJK as approved by ECC on May 5, 2021 and which was signed and witnessed by CS GoAJK and PM AJK on June 25, 2020 at PM House Islamabad in Tripartite Agreement (TPA) between the Company, GoP and G/o AJK.

Realignment KKH (Thakot-Raikot Section): During meeting held in MoPD&SI on July 9, 2021, it was decided by the chair that NHA has to move a summary to undertake the project on G to G level. However, no update is available on it.

Zhob-Quetta Road: The case of Zhob-Quetta Road (three sections out of five) is sub-judice/under arbitration in Islamabad High Court (IHC) for more than 6 months. The matter needs to be resolved for timely completion of Western corridor.

Orange Line Metro Train: Defects/deficiencies in civil work component pointed out by E&M contractor need to be rectified by Punjab Mass Transit Authority. Pending payments of Orange Line Metro Train O&M contractor is about Rs 850 million.

Multan-Sukkur Motorway: China State Construction Engineering Corporation has demanded payment of 50 per cent remaining retention money. The matter was also highlighted during 10th JCC meeting. The company has informally proposed amicable settlement of disputes pending in Dispute Adjudicator Board (DAB). Ministry of Communication/ NHA will update the committee.

KKH Phase-II (Havelian-Thakot Sector): According to Ministry of Planning, Development and Special Initiatives payment claims are pending due to disputes between NHA and China Road and Bridge Construction Company (contractor). The matter was also highlighted during 8th JWC on Transport Infrastructure. Chinese Embassy has proposed amicable settlement of matter pending in DAB.

Selection of Developer for Dhabeji SEZ: Request for Proposal (RFP) for selection of developer for Dhabeji SEZ was launched on November 4, 2019 but developer could not be finalized. RFP was re-launched on December 7, 2020; however, selection of developer is still pending.

Hiring of CEO for FIEDMC: Chief Secretary Punjab and Punjab Board of Information Technology will give a briefing about completion of Board and hiring of a fulltime CEO for the FIEDMC. (This point was raised with Govt of Punjab during meeting held under the Chair of CM Punjab on June 22, 2021).

Some of the companies are facing issues at SEZS which were pledged to Foreign Director Investors (FDI) of an estimated $ 905 million and include: Easy Prefabricated Homes (Pvt) Ltd (Prefabricated Houses) paid gas connection fee on Dec 2020, but there has been no further progress till now. The company also paid 700kw electricity connection fee in May 2021, but no further progress till now. Visa issuance also takes more than 5 months.

La He Trading International (Pvt.) Electric Vehicles-(i) -electrical bicycle and tricycle on road policy has not been announced yet. Factory was built in 2019, products have been produced, but they can only stay in warehouses. Visa application is too complicated and takes too long. The enterprise cannot apply for bank facilitation/ financing, without land ownership as they cannot use land as pledge to borrow money. But land purchase is on instalments and a guarantee letter from M3 Industrial Zone is required.

Oiang Sheng Pakistan Ceramic (Pvt) Ltd (Tiles) applied for allotment of land in Allama lqbal Industrial City (land allotted). However, land has not been allotted to Snow White Lavation (Pvt.) Ltd despite the lapse of four months.

Zhenbang Agriculture Pakistan (Pvt) Ltd Pesticide: Gas connection and electricity connection in Allama lqbal SEZ is not being provided. Challenge Fashion (Pvt) Ltd (Textile) approval for 3km access road from Ferozepur Road.

Yisheng Industrial Products Company (Steal Belt): Delay in electricity connection 1250kw by FECSO despite full payment in early 2021.

Deli-JW Glassware Ltd requires stable supply of 10MW electricity, water, and gas.

Ledzone (Private) Limited (LED lights) has asked the government to reduce import duty on raw material to encourage investment on forward processing industry instead of encouraging assembly industry.

Exert Tech Ltd (OPPO Cell Phone) which intends to purchase 30 acres in Special Technology Zone, Islamabad to install manufacturing plant has sought best tax incentive to support the development of high-tech industries.

China-Road & Bridge Construction Company (CRBC) argues that additional incentives including transport subsidy owing to long distance from port, exemption of Custom Duty for raw material or semi-finished goods and Bulk Power on cheap tariff for Rashakai SEZ would make it more attractive for investors.

Century Steel, a Chinese company intends to establish a factory at Rashakai SEZ, and is awaiting NOC from Environment Department of KPK for a long time.

Copyright Business Recorder, 2021

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