Category: Industry

Sui Northern Gas Pipelines Ltd (SNGPL) lost claims of approximately Rs. 19 billion against National Power Parks Management Company Pvt. Ltd. (NPPMCL) in two arbitrations before the London Court of International Arbitration (LCIA).

According to the details, NPPMCL owns and operates two 1200 MW RLNG based power plants in Punjab, situated in Haveli Bahadur Shah, Jhang, and Balloki, Sheikhupura, and procures RLNG for power generation from SNGPL.

The disputes arose when in May 2018, SNGPL raised take or pay invoices against NPPMCL and subsequently proceeded to recover Rs. 10.37 billion from the gas supply deposit maintained by NPPMCL under its Gas Supply Agreements.

Disputing SNGPL’s claims, NPPMCL contested the assertions of SNGPL on multiple forums and ultimately submitted the disputes for final resolution to the London Court of International Arbitration (LCIA) as per the agreed mechanism under the Gas Supply Agreements.

The sole arbitrator issued its final awards related to these disputes earlier this week, holding that the documents produced by SNGPL in support of its claims “are little more than selfserving evidence.” The sole arbitrator also held that SNGPL wrongly drew down the amount of approximately Rs. 10.37 billion and directed SNGPL to pay the same to NPPMCL with interest from the date of recovery until full payment, which amounts to approximately Rs. 15.3 billion.

In addition, the sole arbitrator also dismissed the counterclaims raised by SNGPL against NPPMCL, including an additional claim of Rs. 4.38 billion, and noted that SNGPL had failed to discharge “its burden of proving their quantum.”

The final hearing for the LCIA Arbitrations initiated by NPPMCL took place from 20 September to 25 September 2021.

The hearing was attended by officials of NPPMCL and SNGPL and expert witnesses, including the renowned power sector expert heading AMA Energy Services, Mr. Abid Latif Lodhi, and gas sector expert, Mr. Mustafa Abdullah. NPPMCL was represented in the LCIA arbitrations by ‘Cornelius, Lane & Mufti, Advocates and Solicitors’ (CLM). The team from CLM comprised of Barrister Munawar-us-Salam, Barrister Waleed Khalid, Barrister Usman Akram Sahi, Barrister Faizan Daud, Amna Salam, and Asad Ullah Khan.

Update:

In a press release, the Sui Northern Gas Pipelines Limited (SNGPL) said that “misleading reports” are circulating regarding two arbitration awards involving SNGPL and NPPMCL.

“It must be noted that arbitration and awards are private and confidential. A selective and misleading disclosure has been made part of the awards. SNGPL will not violate the confidentiality commitment enshrined in the relevant rules, however, it has been constrained to respond given the ongoing speculation,” reads the statement.

It said that under the terms of the license granted to SNGPL by the Oil and Gas Regulatory Authority (OGRA) read with the decision of the Economic Coordination Committee (ECC) of the cabinet dated May 11, 2018, and in line with the tariff regime in vogue, the company after exhausting all the legal remedies available under the law, will take up the matter with the OGRA for determining the impact of the case in revenue requirement of the company.

“Since the Take or Pay revenues billed to NPPMCL were earlier offered to OGRA as an operating revenue, therefore, reversal of the same, if any, may not have any material adverse impact on the profitability of the company”, the statement added.

For the record, the arbitrations arose from a decision of an expert who was a retired Supreme Court Judge who had decided all issues in favor of SNGPL, it said.

Source: Pro Pakistani

The Privatization Commission plans to complete the privatization of at least one dozen state-own entities (SOEs) in the next few years.

Pakistan Steel Mills (PSM) is also among the list of SOEs that the government wants to privatize. The government had projected to generate over Rs. 250 billion in the current fiscal year from privatization proceeds.

According to a report by Business Recorder, the privatization of the Jinnah Convention Center, the House Building Finance Corporation Limited and the First Women Bank Limited is in advanced stages.

The incumbent government had put almost 21 SOEs on the active privatization list but could only manage to privatize a few of them during the last three years. However, the Services International Hotel was auctioned for Rs. 1.951 billion during the current fiscal year.

Now, the Privatization Commission has drawn up a list of 12 more SOEs that it intends to auction by the end of the next fiscal year. The government generated in excess of Rs. 920 million in the last year by selling off 10 properties.

The privatization of the Jinnah Convention Center in Islamabad is expected during the last quarter of the current fiscal year.

The privatization of Pakistan Re-Insurance Co Ltd (PakRe) and Heavy Electrical Complex (HEC) will also be completed by the third quarter of the current fiscal year, whereas the privatization of First Women Bank Limited (FWBL) and House Building Finance Corporation (HBFC) is set to be completed by December next year.

The commission further plans on privatizing Sindh Engineering Limited (SEL) by the end of the next fiscal year. The commission also plans to privatize two liquefied natural gas (LNG) based power plants by the end of the current fiscal year.

Source: Pro Pakistani

The State Bank of Pakistan (SBP) has withdrawn facilities for exporters of Afghanistan and Central Asian Republics (CARs) in response to the growing dollar demand, a situation that has compelled foreigners to conduct business solely through more onerous traditional methods and banking channels.

As a result of this decision, Pakistan’s trade with Afghanistan, and perhaps a few of Central Asian countries, is expected to be severely impacted as inflationary pressures take their toll.

Previously, US dollars could be purchased from Pakistan through Afghan exporters and then presented at Customs counters for import and export clearances. However, after adopting new regulations in light of the ongoing inflationary burden, the Central Bank has revoked all facilities with effect from December 13, 2021.

The SBP gave instructions to the Presidents/Chief Executives of banks and all authorized foreign exchange dealers in relation to exports to Afghanistan and Central Asian Republics (CARs) via land routes, according to a circular released by the SBP on December 7, 2021.

A top Customs officer told a national daily that there are three key developments relating to the latest SBP circular. The first is that the trade of perishable commodities will be Rupee-denominated. Second, travelers now must present convertible currencies and Goods of Declarations (GDs) for import and export, but the currency must include legal declarations. Third, the practice of traders purchasing dollars on behalf of Afghan exporters from the open market has been discontinued in order to relieve pressure on the exchange rate.

Given the looming and unpleasant fiscal repercussions posed by the Bank’s decision, bilateral trade could come down to precarious levels, severely reducing trade volume and conversely piling more pressure on the Pakistani Rupee.

Notably, Pakistan’s exchange rate is currently under substantial pressure due to the growing current account deficit, a lack of dollar inflows, and increased dollar demands. The Pakistani Rupee has been steadily losing ground against the greenback and looks on course to fall below Rs. 180 in the open market.

Source: Pro Pakistani

The government received $15.32 billion in fresh foreign loans from multilateral institutions and commercial banks during the previous fiscal year, up over 47 percent from $10.45 billion the year before.

According to the ‘Annual Report on Foreign Economic Assistance 2020-21’ that has been released by the Ministry of Economic Affairs, the incumbent government took loans worth $15.32 billion from numerous financial institutions while the total foreign loan repayments stood at $35.1 billion in the last three years.

The report detailed that Pakistan lost $8.41 billion in the fiscal year 2018-19, followed by $10.45 billion in 2019-20 (up 24 percent), and $15.32 billion in 2020-21. (up 47 percent). As a result, its external public debt was $85.6 billion by 30 June 2021, up from $77.9 billion on 30 June 2020, a net rise of around $7.7 billion (10 percent). The external public debt was $73.4 billion at the end of June 2019.

International commercial banks provided $4.66 billion (30 percent of the total). Project financing was contracted for $4.19 billion (or 27 percent of the total) while commodity financing was arranged for $952 million (or 6 percent of the total).

During the fiscal year 2020-21, energy and electricity were the top priority sectors for new loan agreements, accounting for 35 percent of the total committed project funding of $4.19 billion.

Rural development and social welfare came in second with a 23 percent share of the overall project funding, followed by governance (18 percent), finance and revenue (seven percent), education (five percent), agriculture (five percent), and transportation and communication (four percent).

Furthermore, the government borrowed $2.5 billion in Eurobonds from international capital markets and $1 billion as a deposit from the Chinese government’s foreign exchange and international trade agency, the State Administration of Foreign Exchange (SAFE). Multilateral development partners have set aside $2 billion (or 13 percent of the total pledges) for program finance to extend and expand the financial system, improve fiscal management, and strengthen the regulatory framework in order to boost Pakistan’s growth and competitiveness.

The World Bank emerged as the top multilateral development partner in terms of new commitments ($4.675 billion), followed by the Islamic Development Bank with $952 million, the Asian Development Bank with $902 million, and the Asian Infrastructure Investment Bank with $326 million.

Moreover, the report detailed that $6.97 billion in financing agreements were negotiated with multilateral development partners, $4.66 billion with foreign commercial banks, and $187 million with bilateral development partners out of a total of $15.32 billion in the new agreements that were inked in the previous fiscal year.

The report adds that a greater commitment was made during the previous fiscal year “to mitigate the pressure on the current account deficit, strengthen foreign exchange reserves, enhance external debt servicing capacity and provide requisite financing to water sector development”.

Source: Pro Pakistani

The federal cabinet will today decide whether to allow some citizens to exchange old notes until December 31, 2026.

Although the old currency notes were declared void almost 5 years ago, the State Bank of Pakistan (SBP) and the Ministry of Finance have both suggested that the deadline be extended.

As per reports, the government has proposed extending the deadline for exchanging outdated notes by another five years. The extension has been approved by the Ministry of Finance, based on a proposal from the SBP board.

Collecting demonetized notes from people unaware of any exchange facility and having them exchanged for new notes at central bank counters has become an informal business. People who have amassed a huge number of these notes in the past will benefit from the proposed five-year extension.

Regardless, the SBP believes that in developed-world central banks, where old legal money can be swapped at any time, one door must remain open for persons who were unable to redeem their holdings on time.

Arguably, according to the SBP Act, the central bank is the sole issuer of banknotes in Pakistan, and the federal government deems legal tender and exchangeable any series of banknotes of any denomination as per the suggestion of the SBP board.

It is noteworthy to point out that having currency notes demonetized six years ago, the central bank has changed its mind about canceling them.

The vintage Rs. 500 banknotes were the last of the central bank’s historic series to have been dropped from circulation as the new currency notes were being pushed for immediate use. Historically, the country’s third-largest currency note was initially positioned for de-circulation on September 30, 2011, and this deadline was later extended to October 1, 2012.

Source: Pro Pakistani

Federal Minister for Information and Broadcasting Fawad Chaudhry on Tuesday warned that “Pakistan will have no gas in years to come”, as the resource was depleting by nine percent every year.

Briefing the media after the cabinet meeting, the Minister said the government will have to restructure its gas system, as due to the depleting gas resources, there will be no gas in the country in the coming years.

He disclosed that the government was providing gas to 28 percent of people, living in the major cities, at subsidized rates, whereas the remaining 78 percent were using liquefied petroleum gas (LPG) and coal.

The minister said the people living in big cities will have to change their habits in terms of the usage of gas. “This trend will not continue for long,” he said.

He said that the government will issue licenses to 10 companies to import gas.

Chaudhry said the cabinet has allowed the replacement of old design currency notes of Rs. 5, 10, 50, and 100 for another year, contrary to six years proposed by the State Bank of Pakistan (SBP).

The federal minister said that inflation has declined in the last three weeks. He mentioned that there has been a visible decrease in the prices of tomatoes and potatoes while the prices of sugar and flour have also remained stable.

He criticized the Sindh government for not controlling the prices of basic commodities, especially in Karachi. He said the prices of flour and sugar were higher in Karachi compared to the rest of the country, adding that the price of flour was Rs. 1,347 per 20 kilograms in Karachi, compared to Rs. 1,100 in other cities.

He added that sugar was being sold for Rs. 97 per kilogram in Karachi compared to Rs. 90 in other cities. He asked the Sindh government to control the prices of milk, flour, and sugar in Sindh, especially in Karachi, as the metropolitan city contributed 40 percent to the sensitive price indicator.

He informed that the Prime Minister has directed Federal Ministers Asad Umar and Zubaida Jalal to visit Gwadar to listen to the issues of the people.

Source: Pro Pakistani