Hub Dam depleting its capacity

on 02/05/2017

Water and Power Development Authority (WAPDA) has decided to strengthen Hub Dam, a major source of water for Sindh’s capital of Karachi and Balochistan. The authority is evaluating technical possibilities to save the slippages of precious water to meet the needs of Karachi and Lasbela, said a communicator from the authority. Chairman Lt. Gen. (R) Muzammil Hussain visited Hub Dam location and had a detailed round of the spillway and embankments of the project. WAPDA chairman said that Hub Dam, completed on Hub River in 1981, had significantly been contributing to fulfilling domestic and industrial water requirements of Karachi and part of Balochistan including Hub. . During his visit, the issue relating to receivables in the head of operation and maintenance (O&M) of Hub Dam was also discussed. Sindh gets 63.3 percent and Balochistan 36.7 percent from Hub Dam. At the time of its completion in 1981, the live water storage capacity of the reservoir was 0.76 m acre feet which have been reduced to 0.65 m acre feet due to natural phenomenon of sedimentation.

AMRELI STEELS Approves Expansion ‘The first million-tonne quality rebars manufacturer’

on 02/05/2017

Sure about its phase – I expansion almost online this year, Amreli Steels Limited has approved next phase of expansion which, as the company claims would become the first million-tonne quality rebars manufacturer of the country. The Board of Directors approved phase – II of the expansion plan of the company that was announced at the Pakistan Stock Exchange (PSX). For technical feasibility, the board has also invited bids from technical consultants of international repute. The final selection will be made in May 2017. The approval of expansion is subject to the approval of technical feasibility and successful financial close of the proposed transaction. Also, the Board approved an increase in steel melting capacity at Dhabeji under which billets making would be raised from 400,000 to 600,000 tonnes per annum. Moreover, the approval as regards an increase in rolling mill capacity at Dhabeji would take rebar making from 300,000 to 425,000 tonnes per annum. The Board also approved increase in rolling mill capacity at SITE, Karachi for making rebars from 180,000 to 325,000 tonnes per annum. The targets would be achieved in FY 18-19. After expansion, the company will boast a total rebar capacity of 750,000 tons per annum. Shayan Akberali, the Managing Director at Amreli Steels Limited, said that the expansion will further enhance the footprint of Amreli Steels Limited across the country by supplying quality Rebars for infrastructure development and fulfilling needs of retail customers across Pakistan. The company has decided to embark on phase – II of capacity expansion in view of rising construction activity in the country, believed to sustain high growth over the next decade.

Exemptions to Chinese won’t affect Local Industry Contractors

on 02/05/2017

The Federal government has claimed the tax exemptions given to Chinese companies in the China-Pakistan Economic Corridor (CPEC) would neither harm economy nor would it affect local industry. It asserted that a necessary cushion has been provided to local industry as the concessions and exemptions to Chinese are subject to the condition that the imported goods were not manufactured locally. However, the power plants above 25 MW have not been kept under such condition. Pakistani industrialists, trade and business community have been perturbed over exemptions given to Chinese investors and have expressed their concerns that it would harm local industry. However, the government claims otherwise and, this time Ishaq Dar, the Fedral Minister for Finance came out in the National Assembly with a written reply that the income tax exemption for the income of companies, contractors, sub-contractors etc engaged in CPEC projects was not likely to impact the interests of local contractors and sub-contractors, etc. Experts say the exemptions to Chinese companies would inflict a loss of Rs.150 billion in revenue. Mr. Dar however claims there will be no adverse impact on local industries and domestic investors. He did not share with the house the financial loss borne out by the concessions. He explained the series of tax exemptions or discounts offered to Chinese investors, which have been notified through statutory regulatory orders (SRO). According to him, exemptions from levy of customs duty at import stage have been specifically designed, notified and made available to Chinese contractors for a few projects of roads, mass transit and Gwadar port. They include exemption of customs duties on the import of plant machinery and equipment, if not manufactured locally, by the China State Construction Engineering Corporation Limited and the China Communication Construction Company for the construction of Sukkur-Multan section of Karachi-Peshawar Motorway and Karakoram Highway Phase-II (Thakot-Havelian section), respectively. Also included in this category are the customs duty exemptions on the import of equipment and material for Lahore`s Orange Line Metro Train Project. The original exemptions were notified on Jan 25 and further eased through another notification on March 6. Similarly, customs duty exemptions were also allowed on imports to the concession holder and its operating companies for the construction, operations and development of Gwadar port and all port-related businesses established in Gwadar Free Zone. In addition, concessions and exemptions from levy of customs duty on import of goods were already available to some early projects of Thar coal field sector, which have now been extended to CPEC projects. Some of them include the exemption of customs duties on import of coal mining machinery, equipment and spare parts not manufactured locally, for Thar coal field. For the power sector, a concessionary duty rate of zero per cent, 3pc and 5pc on the import of machinery, equipment and spare parts, not manufactured locally, is available for generation projects using oil, gas, coal, wind and tidal energy. On top of that, income derived from port operations by the China Overseas Ports Holding Company Limited, the China Overseas Ports Holding Company Pakistan (Private) Limited, the Gwadar International Terminal Limited, the Gwadar Marine Services Limited and the Gwadar Free Zone Company Limited has been granted exemption from income tax for 23 years, with effect from Feb 6, 2007. Besides, income generated by contractors and subcontractors of those five companies from port operations has been granted income tax exemption for 23 years from July 1, 2016. Similarly, income and interest earned by a foreign lender or a local bank with more than 75pc government or State Bank of Pakistan shareholding by virtue of a financing agreement with the China Overseas Ports Holding Company Limited, are exempt from income tax for 23 years with effect from July 1, 2016. Dividends received by the China Overseas Ports Holding Company from the China Overseas Ports Holding Company Pakistan (Private) Limited, the Gwadar International Terminal Limited, the Gwadar Marine Services Limi‘Exemptions to Chinese won’t affect local industry, contractors’

The federal government has claimed the tax exemptions given to Chinese companies in the China-Pakistan Economic Corridor (CPEC) would neither harm economy nor would it affect local industry. It asserted that a necessary cushion has been provided to local industry as the concessions and exemptions to Chinese are subject to the condition that the imported goods were not manufactured locally. However, the power plants above 25 MW have not been kept under such condition. Pakistani industrialists, trade and business community have been perturbed over exemptions given to Chinese investors and have expressed their concerns that it would harm local industry. However, the government claims otherwise and, this time Ishaq Dar, the Fedral Minister for Finance came out in the National Assembly with a written reply that the income tax exemption for the income of companies, contractors, sub-contractors etc engaged in CPEC projects was not likely to impact the interests of local contractors and sub-contractors, etc. Experts say the exemptions to Chinese companies would inflict a loss of Rs.150 billion in revenue. Mr. Dar however claims there will be no adverse impact on local industries and domestic investors. He did not share with the house the financial loss borne out by the concessions. He explained the series of tax exemptions or discounts offered to Chinese investors, which have been notified through statutory regulatory orders (SRO). According to him, exemptions from levy of customs duty at import stage have been specifically designed, notified and made available to Chinese contractors for a few projects of roads, mass transit and Gwadar port. They include exemption of customs duties on the import of plant machinery and equipment, if not manufactured locally, by the China State Construction Engineering Corporation Limited and the China Communication Construction Company for the construction of Sukkur-Multan section of Karachi-Peshawar Motorway and Karakoram Highway Phase-II (Thakot-Havelian section), respectively. Also included in this category are the customs duty exemptions on the import of equipment and material for Lahore`s Orange Line Metro Train Project. The original exemptions were notified on Jan 25 and further eased through another notification on March 6. Similarly, customs duty exemptions were also allowed on imports to the concession holder and its operating companies for the construction, operations and development of Gwadar port and all port-related businesses established in Gwadar Free Zone. In addition, concessions and exemptions from levy of customs duty on import of goods were already available to some early projects of Thar coal field sector, which have now been extended to CPEC projects. Some of them include the exemption of customs duties on import of coal mining machinery, equipment and spare parts not manufactured locally, for Thar coal field. For the power sector, a concessionary duty rate of zero per cent, 3pc and 5pc on the import of machinery, equipment and spare parts, not manufactured locally, is available for generation projects using oil, gas, coal, wind and tidal energy. On top of that, income derived from port operations by the China Overseas Ports Holding Company Limited, the China Overseas Ports Holding Company Pakistan (Private) Limited, the Gwadar International Terminal Limited, the Gwadar Marine Services Limited and the Gwadar Free Zone Company Limited has been granted exemption from income tax for 23 years, with effect from Feb 6, 2007. Besides, income generated by contractors and subcontractors of those five companies from port operations has been granted income tax exemption for 23 years from July 1, 2016. Similarly, income and interest earned by a foreign lender or a local bank with more than 75pc government or State Bank of Pakistan shareholding by virtue of a financing agreement with the China Overseas Ports Holding Company Limited, are exempt from income tax for 23 years with effect from July 1, 2016. Dividends received by the China Overseas Ports Holding Company from the China Overseas Ports Holding Company Pakistan (Private) Limited, the Gwadar International Terminal Limited, the Gwadar Marine Services Limited and the Gwadar Free Zone Company Limited have also been granted income tax exemption for 23 years from July 1, 2016. If this was not enough, exemptions from sales tax and federal excise duty have been provided on materials and equipment for construction and operation of Gwadar port and Gwadar Free Zone through the Finance Act, 2016 to the China Overseas Ports Holding Company Pakistan (Private) Limited and its operating companies, their contractors and subcontractors. This exemption is equally available for imported and locally-manufactured materials and equipment. Plant machinery and equipment, including dumpers and special purpose motor vehicles, imported for the construction of the Karachi-Peshawar Motorway Project and the KKH Phase-II are also exempt from income tax and sales tax. Likewise, exemption from sales tax and federal excise duty has also been granted to machinery, apparatus, materials etc imported by the China Railway Corporation for the Orange Line project. Rail-based mass transit projects in the four provincial metropolises have also been exempted from the provisions of Section 148 of the Income Tax Ordinance, 2001, which deals with advance income tax at the import stage. This is in addition to exemption from income tax to interest and income derived by the Industrial and Commercial Bank of China (ICBC) and the Silk Road Fund in Pakistan from loans relating to the energy projects mentioned in CPEC Energy Projects Cooperation Agreement signed in Beijing in Nov 2014.
ted and the Gwadar Free Zone Company Limited have also been granted income tax exemption for 23 years from July 1, 2016. If this was not enough, exemptions from sales tax and federal excise duty have been provided on materials and equipment for construction and operation of Gwadar port and Gwadar Free Zone through the Finance Act, 2016 to the China Overseas Ports Holding Company Pakistan (Private) Limited and its operating companies, their contractors and subcontractors. This exemption is equally available for imported and locally-manufactured materials and equipment. Plant machinery and equipment, including dumpers and special purpose motor vehicles, imported for the construction of the Karachi-Peshawar Motorway Project and the KKH Phase-II are also exempt from income tax and sales tax. Likewise, exemption from sales tax and federal excise duty has also been granted to machinery, apparatus, materials etc imported by the China Railway Corporation for the Orange Line project. Rail-based mass transit projects in the four provincial metropolises have also been exempted from the provisions of Section 148 of the Income Tax Ordinance, 2001, which deals with advance income tax at the import stage. This is in addition to exemption from income tax to interest and income derived by the Industrial and Commercial Bank of China (ICBC) and the Silk Road Fund in Pakistan from loans relating to the energy projects mentioned in CPEC Energy Projects Cooperation Agreement signed in Beijing in Nov 2014.

Dam compensation funds

on 04/04/2017

Transfer sparks controversy

GILGIT: A controversy is brewing up over funding of compensation to those affected by construction of Diamer- Bhasha dam. With over Rs50 billion disbursed so far, district administration is being accused of depositing the funds in private banks, instead of official Nation al Bank (NBP), with the intention of maximising interest. The allegation has been rejected by concerned officials. It was claimed that despite Ministry of Water and Power deirectives against the practice, district administration has deposited compensation funds in private banks, delaying its disbursement to pocket interest on billions of rupees. According to the Ministry, compensation is being paid to affectees from a loan and it must be kept in a profitable account at NBP to facilitate the government to pay the mark-up to institutions it  borrowed money from. Administration has been keeping funds in private banks despite the fact that people frequently hold demonstrations in Diamer in protest against non-payment of compensation for their land being affected by the project. Sarzameen Khan, a National Assembly member from Kohistan, described it as `fraudulent and unlawful tactics` of Diamer administration and said the matter would be taken up in assembly’s next session. He said, different tribes in Diamer were fighting each other because of issues related to the land being affected and they were being deprived of their rights by the administration. `There are reports that Deputy Commissioner’s office is always crowded by employees of private banks,` he said. He suggested forming a parliamentary committee to investigate the matter besides auditing project’s accounts. It`s unfortunate that vested interests are playing with the $14bn project, he added. When contacted, a spokesman for Gilgit Baltistan government said that the compensation amount, running into billions, had been shifted to private banks on public demand. He said private banks had provided jobs to over 200 local youths, adding that the district administration had used the interest on development projects. The spokesman said that over Rs50bn had been paid to affected people. Despite that Rs7-8bn are lying in private banks which would be used to pay compensation after land disputes among tribes were settled. He said keeping a huge amount in NBP was not as profitable as in private banks and added that interest on the amount was solely used for public interest projects.

CPEC should be open to Pakistani firms like to Chinese: Dr. Ishrat Hussain

on 04/04/2017
Calls for ensuring level playing field for Pakistani, foreign companies

Renowned economist and former Governor State Bank of Pakistan has said CPEC should be open to Pakistani firms on the same terms as to the Chinese adding Commercial banks should finance Pakistani companies, either stand alone or in joint ventures with the Chinese companies in collaboration with the infrastructure development fund.
Mr. Hussain believes: one of CPEC’s benefits would be the training and development of skilled manpower. Plans have to be made to assess long-term manpower requirements, both for construction as well as the operational phases of CPEC projects.
 “Various categories and levels of training programmes have to thus be designed and then assigned to credible, pre qualified providers. Particular attention should be given to train youth from backward areas, starting with Gwadar all the way to the Karakoram Highway.
A number of private and non-profit organisations are actively engaged in quality vocational and technical training, mainly in Karachi and Punjab. These organisations should be invited to set up similar facilities in other parts of the country where CPEC projects are being executed, he writes in an article.
In addition to this formal training, internships and attachments with Chinese companies working on the projects should be made an integral part of the curriculum. If there is one lasting legacy for which CPEC should be remembered, it is investment in producing skilled and trained technical manpower with different levels of expertise.
Dr. Hussein enshrined six areas of policy where the government has to get serious. They include energy, industry, trade, foreign exchange regime, financial policy and skill development.
He says The Special Economic Zones (SEZs), industrial parks, etc to be set up along CPEC should be open to Pakistani firms on the same terms as to the Chinese. Land should be allotted on long-term lease rather than outright purchase and the leases auctioned only to genuine, pre ualified bidders to eliminate land grabbers and speculators. In Balochistan, some portion should be reserved for local investors wherever feasible. The lease should incorporate a provision that the allotment would be cancelled if the project is not operational within three years. All infrastructure works — power, gas, water, roads, effluent plants, amenities — should be in place before the possession is passed on.
Pre-feasibility studies should be carried out by SEZ authorities through expert consultancy firms or universities, to provide baseline data and information about the kind of projects that can be established in different zones.
He says exports must grow at least 15 per cent annually to meet these new obligations, and remittances have to increase at their historical level. The exchange rate has to be managed deftly to stimulate new export products, new firms and penetration into new markets, while ensuring that prices of imports of capital goods, machinery and equipment are not hiked up, which would make new investments unattractive. Pakistani and other foreign companies winning competitive bidding should have a level playing field.
Also, free trade Agreements have to be renegotiated to preserve the comparative advantage of Pakistani exports and tariff quotas introduced to safeguard against material injury to Pakistani manufacturers. Import tariff rates must be gradually reduced to enable Pakistani companies to participate in the global supply chain.
In Balochistan, southern KP and Gilgit-Baltistan, urban and rural infrastructure projects that link the main highways and motorways under CPEC with the communities should be given priority by their respective set-ups in allocation of development budgets.
In addition to this formal training, internships and attachments with Chinese companies working on the projects should be made an integral part of the curriculum. If there is one lasting legacy for which CPEC should be remembered, it is investment in producing skilled and trained technical manpower with different levels of expertise. – MD