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Category: Energy

You can go through stories related to energy. The stories are about changes in petroleum prices and updates on energy sector of Pakistan and world.

  • China Power serves encashment notice as HUBCO standby letter of credit expires

    China Power serves encashment notice as HUBCO standby letter of credit expires

    KARACHI: China Power Hub Generation Company (CPHGC) on Wednesday served an encashment notice to Hub Power Company (HUBCO) under standby letter of credit (SBLC), which expires today i.e. November 23, 2022.

    According to a notice of Pakistan Stock Exchange (PSX), an encashment notice has been served by China Power Hub Generation Company (CPHGC) on November 23, 2022, under the Standby Letter of Credit (SBLC) – which expires today- on the issuing bank.

    READ MORE: Industries threaten mass protest against gas supply shutdown

    To recall, the Hub Power Company (HUBC) had provided SBLC for an aggregate amount of $150 million to guarantee an investment in the form of equity or subordinated debt to satisfy the funding shortfall, if any, in CPHGC;

    a) To achieve completion of the project to the satisfaction of the lenders; and

    b) To repay all principal, interest, fees or any other amounts that may fall due by CPHGC under the finance documents to the finance parties.

    READ MORE: SSGC stops gas supply to industries under load management plan

    Moreover, shares held by Hub Power Holding Limited (HPHL) in CPHGC were pledged in favor of the security trustee in order to secure the company and HPHL’s obligations under the financing documents of CPHGC.

    Analysts at Arif Habib Limited said HUBCO will have to provide a new SBLC within ten (10) days from the date of the encashment notice.

    READ MORE: Pakistan has sufficient stock of fuel to meet domestic demand

    In case of non-issuance of new SBLC, banks will disburse $150 million to CPHGC, as per the agreement. In this case, a liability (we are assuming subordinated debt) of the same amount will be booked on the books of HUBCO against a receivable from CPHGC.

    We believe, CPHGC will repay the SBLC amount to HUBCO after the project completion date (PCD). To recall, CPHGC has not achieved PCD yet.

    READ MORE: ECC approves raising petroleum levy to Rs50 per liter on RON 95

    In order to calculate the financial impact of the mark-up differential between the amount paid by HUBC to the banks and the amount charged from CPHGC along with the share of profit from associate, we have run a sensitivity assuming different spreads on mark-up charged from CPHGC by HUBC, as illustrated in the Exhibit below.

    Our base case scenario assumes zero spread as a company cannot charge a markup lower than its own cost from its associate on a subordinated loan, as per regulations, the analysts said.

  • Petroleum prices in Pakistan for next 10 days; what next?

    Petroleum prices in Pakistan for next 10 days; what next?

    ISLAMABAD: Following are petroleum prices in Pakistan during next 10 days will or November 30, 2022 if those are not changed earlier:

    The price of petrol shall be Rs224.80 per liter; high speed diesel Rs235.30 per liter; kerosene oil Rs191.83; and light diesel oil Rs186.50 per liter.

    The government likely to review petroleum prices on November 30, 2022 for next fortnight starting from December 01, 2022.

    In the latest review on November 15, 2022 the government decided to keep the prices unchanged for the fortnight ending November 30, 2022.

    READ MORE: Petroleum prices in Pakistan for next fortnight effective from November 16, 2022

    It was third straight announcement to keep the prices of petroleum products unchanged. Previously, on September 30, 2022 the government made changes in petroleum prices.

    Experts said that the rise in petroleum prices were imminent in the next review as the government was under immense pressure from the IMF to impose sales tax on petroleum products.

    At present the government adopted a policy to keep zero sales tax on petroleum products instead flat rate of 17 per cent. Furthermore, the government also committed to apply petroleum levy to generate more revenue for curtailing budget deficit.

    READ MORE: Petroleum prices in Pakistan effective from November 01, 2022

    Besides, the exchange rate is again showing a deterioration in rupee value against the dollar. The US dollar continued to make gain for seventh straight session against the Pakistani Rupee (PKR) on November 21, 2022 and reached PKR 223.66 in the interbank foreign exchange market.

    The latest import data showed that the petroleum prices were on the higher sides as the country spent more money for import of lesser quantity of petroleum products.

    READ MORE: Pakistan keeps petroleum prices unchanged from October 16, 2022

    The imports of petroleum products recorded a decline 1.75 per cent to $2.84 billion during July – October of fiscal year 2022/2023 as compared with $2.89 billion in the corresponding period of the last fiscal year.

    However, import of petroleum crude recorded an increase of 6.61 per cent to $1.73 billion during the period under review as compared with $1.62 billion in the corresponding period of the last fiscal year.

    READ MORE: Pakistan sharply reduces petroleum prices from October 01, 2022

    Interestingly, quantities of both the segments fell 34.43 per cent and 23.26 per cent during the first four months of the current fiscal year, showing surge in prices of the international prices.

    Although the present government has kept the prices during last three review under political pressure. But considering the present scenario of fiscal deficit and IMF pressure the government may take tough decision in coming days.

  • Industries threaten mass protest against gas supply shutdown

    Industries threaten mass protest against gas supply shutdown

    KARACHI: Industries have threatened the government of across the board protests against suspension of gas supply, which halted industrial activities and is affecting exports.

    Karachi Chamber of Commerce & Industry (KCCI) and Industrial Town Associations, while expressing deep concerns over suspension of gas supply to the industries in Karachi, stated that all the industries were almost closed and the pressure was zero, resulting in bringing the production activities to a complete standstill which would give a serious blow to the exports by terribly affecting the performance of export-oriented as well as general industries, besides triggering massive unemployment and creating chaos.

    READ MORE: Pakistan organizes first international housing expo next month

    In a joint statement, KCCI along with Site Association (SAI), Korangi Association (KATI), F.B Area Association (FBATI), North Karachi Association (NKATI), Site Superhighway Association (SSAI) and Bin Qasim Association (BQATI) appealed Prime Minister Shehbaz Sharif and Energy Minister Shahid Khaqan Abbasi to take notice of the situation and look into the possibility of supplying RLNG to SSGC for domestic usage as being done in case of SNGPL so that the gas crisis being suffered by the industries in Karachi could be averted.

    They stated that the business & industrial community totally rejects gas supply curtailment announced by the SSGC and the Karachi Chamber along with Industrial Town Associations will shortly announce the future plan of action if relief was not provided immediately which may even lead to triggering across the board protests.

    READ MORE: APTMA urges PM to save textile industry from total closure

    Referring to SSGC’s statement in response to a joint press release issued on November 11, 2022 by KCCI and all seven industrial town associations, they said that a meeting was held between SSGC and federally constituted committee comprising representatives of industries from Karachi who gave numerous suggestions, of which one of the suggestion was to either close down gas supply to industries for two day a week or carry out gas load shedding for eight hours a day so that SSGC could maintain its line pack and the industries receive gas for 16 hours a day at required pressure so that they could keep on operating efficiently.

    However, this unfortunately, was not done and later on, without taking the stakeholders on board, SSGC issued a notification/ letter to industries about suspension of gas supply which contained several ambiguities as in the said letter, SSGC has issued a caution for future as well by saying that every year gas supply will remain suspended. Subsequently, it has also been notified that 50 percent of gas supply to captive power plants will also be curtailed without explaining that what will happen to those industries who do not have KE connection or any other source and the process of gas supply suspension to general industries has also not been properly explained.

    READ MORE: Reducing foreign currency cash carrying limits to half criticized

    SSGC must refrain from giving misleading statements in the media by sharing those decisions which were neither discussed nor agreed upon by the federally constituted committee in any of the meetings held to discuss gas crisis, KCCI and Industrial Town Associations urged, adding that several meetings were held in this regard but without taking us into confidence, SSGC has issued improper notification.

    KCCI and Industrial Town Associations, while once again urging the government to take notice, stated that the overall situation was really alarming in Karachi which would terribly affect industrial performance, exports and have a deep negative impact on the economy due to rampant unemployment as suspension of gas for three consecutive months would obviously cause massive layoffs and massive reduction in exports.

    READ MORE: KATI suggests Pakistan, Sri Lanka trade in local currency

  • Petroleum prices in Pakistan for next fortnight effective from November 16, 2022

    Petroleum prices in Pakistan for next fortnight effective from November 16, 2022

    ISLAMABAD: The government of Pakistan on Tuesday decided to keep the petroleum prices unchanged for next fortnight starting from November 16, 2022.

    It was third straight announcement to keep the prices of petroleum products unchanged. Previously, on September 30, 2022 following changes in petroleum prices were announced:

    The rate of petrol has been reduced by Rs12.63 per liter to Rs224.80 from Rs237.43.

    READ MORE: Petroleum prices in Pakistan effective from November 01, 2022

    The price of high speed diesel has been cut by 12.13 per liter to Rs235.30 from Rs247.43.

    The rate of Kerosene oil has been slashed by Rs10.19 to Rs191.83 from Rs202.02.

    The price of light diesel oil has been reduced by Rs10.78 to Rs186.50 from Rs197.28.

    The government has taken the latest decision amid challenges including long march initiated by leading opposition party and rising benchmark Brent crude rates in international markets.

    The present coalition government led by PML-N is under immense pressure since coming into power in April 2022. This government is mainly criticized for sky rocket prices of all essential items bringing inflation to record levels. The present government had opportunity to attract masses by lowering petroleum prices.

    READ MORE: Pakistan keeps petroleum prices unchanged from October 16, 2022

    On the other hand, Imran Khan, Chairman, Pakistan Tehreek I Insaaf (PTI) launched long march on October 28, 2022 from Lahore demanded the present government to announce general election as the country on the brink of default and masses were witnessing the brunt of high prices.

    The present government has annoyed people through its last decision to keep the prices of petroleum products unchanged. Experts had opinion that the government had room to give benefit by slashing the prices.

    Pakistan is the net importer of petroleum products to meet the domestic demands. Oil import bill of the country went up to $4.86 billion during first quarter (July – September) of the current fiscal year as compared with $4.59 billion in the corresponding quarter of the last year.

    READ MORE: Pakistan sharply reduces petroleum prices from October 01, 2022

    On the other hand the rupee once against started depreciation due to political instability and falling foreign exchange reserves. Although, the SBP recently received $1.17 billion from the International Monetary Fund (IMF) to buffer its foreign exchange reserves and support the local currency. Yet the scheduled repayment gradually dry to foreign exchange reserves position.

    Most recently, the SBP again received $1.5 billion from the Asian Development Bank (ADB) to strengthen the foreign exchange reserves position. However, the repayment pressure and rising political noise the rupee unable to show resistance against the dollar.

    The previous government of PTI had kept both the petroleum levy and sales tax at zero in order to provide relief to the masses. The PTI government also provided a huge subsidy on prices of petroleum products in order to lower the rates and provide relief to the masses.

    READ MORE: Pakistan reviews petroleum prices on Sept 30, 2022 amid crash in global rates

    However, former Prime Minister Imran Khan was removed through a vote of no-confidence motion on April 10, 2022. Since then the new coalition government led by PML-N increased the prices of petroleum products sharply on three different occasions.

    The present government in the budget estimated to collect Rs855 billion as petroleum levy during the fiscal year 2022/2023. As this fiscal year is starting from July 01, 2022, it is likely that the government will opt to impose the levy from this date.

  • Pakistan petroleum prices to go up with sales tax imposition

    Pakistan petroleum prices to go up with sales tax imposition

    The prices of petroleum products in Pakistan will go up with the imposition of sales tax, which presently at zero per cent.

    Analysts AKD Research Tuesday stated that with the IMF consistently conveying concerns over possible shortfall on account of petroleum development levy (PDL), the government is looking towards a contingency plan by taking up additional taxation measures, for one, imposing full 17 per cent general sales tax (GST) on petroleum products.

    READ MORE: SSGC stops gas supply to industries under load management plan

    To note, sales tax collection from the previous fiscal year stood Rs107 billion, against Rs235 billion in the preceding fiscal year, reflecting a decrease of 54 per cent.

    With petroleum products sales remaining robust during fiscal year 2021-2022, the halving of the collection was due to sales tax being effectively zero during the second half of the fiscal year, since mid-January more specifically.

    READ MORE: Pakistan has sufficient stock of fuel to meet domestic demand

    Assuming moderate 8 per cent imposition (Rs16-20 per liter) of sales tax on retail fuel products, the government could fetch additional around Rs30 billion revenue monthly at these rates.

    Furthermore, the government is likely to take a major hit in the non-tax revenue department as well i.e. PDL as retail offtakes have continued to decline during first four months of the current fiscal year, down 22 per cent year on year (YoY).

    READ MORE: ECC approves raising petroleum levy to Rs50 per liter on RON 95

    Total collection during the four months were estimated at Rs115 billion against the budgeted target of Rs250 billion. To note, annual PDL collection target stands at Rs750 billion (Rs62.5 billion per month).

    Assuming unchanged trends in POL offtakes and similar rates, total PDL collections will end the current fiscal year at Rs350 billion, an overall shortfall of Rs400 billion.

    READ MORE: Petroleum sales decrease by 22% in four months of 2022-2023

    The analysts further said that assuming the government pushes through by imposing further levies/taxes, although inflationary, this target may be more achievable now compared to five months ago, as falling global oil/petroleum prices has given the authorities more space to work with without severely hurting end consumers.

  • SSGC stops gas supply to industries under load management plan

    SSGC stops gas supply to industries under load management plan

    KARACHI: Sui Southern Gas Company (SSGC) on Tuesday suspended gas to local industries for three and a half months effective from November 15, 2022.

    The gas utility in an announcement stated that as part of load management plan, gas supplies to all local industrial customers for their use for power generation are being suspended for three and a half months i.e. from November 15, 2022 to February 28, 2023.

    READ MORE: Pakistan has sufficient stock of fuel to meet domestic demand

    Moreover, 50 per cent reduction in supplies of export industrial units for their power generation shall also be carried out for the same period.

    The SSGC said that the decision had been taken in view of the widening demand and supply gas especially with arrival of winter.

    SSGC implements government of Pakistan’s gas load management plan whereby it gives top most priority to the domestic and commercial sector for supplying gas, especially those living in Balochistan where demand for gas increases manifolds due to space and water heating needs.

    READ MORE: ECC approves raising petroleum levy to Rs50 per liter on RON 95

    “This situation is further compounded by the fact that gas reserves are being fast depleted at an annual rate of 10 per cent that further places pressure on the company’s line pack system,” it added.

    The company said that these closure are in line with the contract already signed between SSGC and each individual industrial consumer that clearly states:

    READ MORE: Petroleum sales decrease by 22% in four months of 2022-2023

    “Gas supply will be provided by the company on ‘as and when available basis’ only during the period from March to November each year. The consumer will make dual firing arrangements to avoid loss of production as and when gas is not available during March to November and also during December to February when the company will keep the consumer’s gas supply disconnected at his cost, each year.”

    READ MORE: K-Electric posts huge losses despite 144% jump in tariff adjustment revenue

    The company further said that gas volume curtailed from this management would be diverted to domestic customers for them to cater their enhanced gas loads in context of the winter season.

    “Gas thus saved approximately 160 mmcfd gas thus saved will then be diverted to Balochistan where gas serves as lifeline for the majority of the population.”

  • Pakistan has sufficient stock of fuel to meet domestic demand

    Pakistan has sufficient stock of fuel to meet domestic demand

    ISLAMABAD: Pakistan has sufficient stock of fuel to meet the domestic requirement of the country, an official statement said on Tuesday.

    The statement has clarified the news reports circulated regarding fuel shortage. It said the reports are baseless and contrary to facts.

    On November 7, 2022 the petrol stocks are around 550,000 Metric Tons which is sufficient for 21 days and with regard to diesel the present stocks are 438,000 Metric Tons which is adequate for 15 days, based on Oil Companies Advisory Council’s (OCAC) stock position.

    PSO’s planned import of diesel for the month of November 2022 is around 220,000 metric Tons out of which one cargo is on the way to Karachi and is expected to arrive on November 12,2022 while cargoes of other OMCs are in line to meet the country’s planned demand.

    Keeping in view the above position, the stock in the country is sufficient to take care of current requirements, it added.

  • ECC approves raising petroleum levy to Rs50 per liter on RON 95

    ECC approves raising petroleum levy to Rs50 per liter on RON 95

    ISLAMABAD: The Economic Coordination Committee (ECC) of the cabinet on Friday approved increasing petroleum levy to Rs50 per liter on RON 95.

    Federal Minister for Finance and Revenue Senator Mohammad Ishaq Dar presided over the meeting of the ECC at Finance Division.

    READ MORE: Petroleum sales decrease by 22% in four months of 2022-2023

    Federal Board of Revenue (FBR) presented a summary on increase in rate of Sales Tax on HOBC. It was conveyed that the rates of Sales Tax on POL products were reduced to zero from February 01, 2022, that put pressure on FBR’s efforts to achieve its revenue targets.

    Therefore, the ECC after deliberation allowed to increase petroleum levy from Rs 30 up to Rs. 50/Liter on RON 95 and above with effect from November 16, 2022, which is a luxury good being consumed by wealthy consumers in expensive vehicles.

    READ MORE: K-Electric posts huge losses despite 144% jump in tariff adjustment revenue

    Federal Minister of Planning, Development and Special Initiatives Ahsan Iqbal, Federal Minister for Power Khurram Dastgir Khan, Shahid Khaqan Abbasi MNA/ex-PM, Minister of State for Finance and Revenue Dr. Aisha Ghous Pasha, Minister of State for Petroleum Musadik Masood Malik, SAPM on Finance Tariq Bajwa, SAPM on Revenue Tariq Pasha, Federal Secretaries, Chairman FBR and other senior officers attended the meeting.

    READ MORE: OGDCL announces huge oil discovery at Attock

    Ministry of energy (Petroleum Division) submitted a summary on High Speed Diesel/ Gas oil premium and informed that due to difference of premium on import of HSD for importing OMCs and PSO, there is an unsustainable position for importing OMCs and smooth supply of HSD in the country. In order to ensure sustained supply/import security, the ECC after detailed discussion allowed premium on HSD subject to maximum capping at US$ 15/BBL for importing OMCs other than PSO for the months of November and December, 2022.

    The ECC also approved Technical Supplementary Grants of Rs. 5 billion for conduct of 7th population census.

    READ MORE: Electricity withholding tax not applicable on ATL domestic consumers

  • Petroleum sales decrease by 22% in four months of 2022-2023

    Petroleum sales decrease by 22% in four months of 2022-2023

    KARACHI: Sales of petroleum products have decreased by 22 per cent during first four months (July – October) of fiscal year 2022-2023, according to data released by Oil Companies Advisory Council (OCAC) on Tuesday.

    The date showed the sales of petroleum products fell to 6.15 million tons during first four months of the current fiscal year as compared with 7.85 million tons in the corresponding months of the last year.

    READ MORE: K-Electric posts huge losses despite 144% jump in tariff adjustment revenue

    Petrol sales fell by 18 per cent to 2.54 million tons during July – October 2022 as compared with 3.11 million tons in the same period last year.

    A massive decline of 26 per cent in sales of high speed diesel (HSD) has been seen during the period under review. The sales of HSD plummeted to 2.17 million tons during first four months of the current fiscal year as compared with 2.93 million tons in the same period of the last year. Similarly, furnace oil sales recorded a decline of 26 per cent to 1.19 million tons as compared with 1.60 million tons.

    READ MORE: OGDCL announces huge oil discovery at Attock

    Analysts at Arif Habib Limited said that total petroleum sales settled at 1.66 million tons in October 2022, depicting a decline of 17 per cent Year on Year (YoY) due to higher petroleum prices, lower FO-based power generation, and a plunge in automobile sales.

    Motor spirit (MS) witnessed a fall of 11 per cent YoY, to settle at 0.68 million tons in October 2022. Similarly, High Speed Diesel (HSD) volumes shrunk by 15 per cent YoY, to arrive at 0.71 million in October 2022. Whereas, Furnace Oil (FO) sales volumes plummeted by 37 per cent YoY in October 2022, to clock in at 0.20 million tons.

    Meanwhile, petroleum offtake showcased a MoM growth of 9 per cent during October 2022 amid mobility across the country post floods, commencement of sowing for Rabi season, and a decrease in MS and HSD prices.

    READ MORE: Electricity withholding tax not applicable on ATL domestic consumers

    Volumes of MS and HSD reported a jump of 8 per cent and 37 per cent MoM, respectively. However, FO sales dropped by 33 per cent MoM in October 2022.

    Company-wise analysis depicts that PSO’s offtake displayed a decline of 18 per cent YoY in October 2022 which was majorly contributed by a plunge in sales of MS, HSD and FO by 18 per cent, 11 per cent and 43 per cent YoY, respectively.

    READ MORE: Petroleum prices in Pakistan effective from November 01, 2022

    Similarly, sales of APL and SHEL plummeted by 16 per cent and 21 per cent YoY, respectively due to fall in sales of MS and HSD. Whereas, HASCOL reported a growth of 46 per cent YoY given higher MS and HSD sales.

  • Petroleum prices in Pakistan effective from November 01, 2022

    Petroleum prices in Pakistan effective from November 01, 2022

    ISLAMABAD: The government of Pakistan on Monday decided to keep the petroleum prices unchanged for next fortnight starting from November 01, 2022.

    Finance Minister Ishaq Dar announced the decision to keep the prices unchanged for next 15 days.

    “The government has decided to keep the prices of Petrol, High Speed Diesel, Light Diesel, and Kerosene Oil unchanged for next 15 days”, Ishaq Dar said.

    It was second straight announcement to keep the prices of petroleum products unchanged. Previously, on September 30, 2022 following changes in petroleum prices were announced:

    READ MORE: Pakistan keeps petroleum prices unchanged from October 16, 2022

    The rate of petrol has been reduced by Rs12.63 per liter to Rs224.80 from Rs237.43.

    The price of high speed diesel has been cut by 12.13 per liter to Rs235.30 from Rs247.43.

    The rate of Kerosene oil has been slashed by Rs10.19 to Rs191.83 from Rs202.02.

    The price of light diesel oil has been reduced by Rs10.78 to Rs186.50 from Rs197.28.

    The government has taken the latest decision amid challenges including long march initiated by leading opposition party and rising benchmark Brent crude rates in international markets.

    READ MORE: Pakistan sharply reduces petroleum prices from October 01, 2022

    The present coalition government led by PML-N is under immense pressure since coming into power in April 2022. This government is mainly criticized for sky rocket prices of all essential items bringing inflation to record levels. The present government had opportunity to attract masses by lowering petroleum prices.

    On the other hand, Imran Khan, Chairman, Pakistan Tehreek I Insaaf (PTI) launched long march on October 28, 2022 from Lahore demanded the present government to announce general election as the country on the brink of default and masses were witnessing the brunt of high prices.

    The present government has annoyed people through its last decision to keep the prices of petroleum products unchanged. Experts had opinion that the government had room to give benefit by slashing the prices.

    The experts believed that now the government would have fewer options to cut the prices of petroleum products due to rising global oil prices and depreciation in currency value at home.

    Benchmark US Brent soared to $95.77 per barrel as of October 28, 2022. The commodity witnessed an increase of over $5 during the month of October 2022.

    Pakistan is the net importer of petroleum products to meet the domestic demands. Oil import bill of the country went up to $4.86 billion during first quarter (July – September) of the current fiscal year as compared with $4.59 billion in the corresponding quarter of the last year.

    READ MORE: Pakistan reviews petroleum prices on Sept 30, 2022 amid crash in global rates

    On the other hand the rupee once against started depreciation due to political instability and falling foreign exchange reserves. Although, the SBP recently received $1.17 billion from the International Monetary Fund (IMF) to buffer its foreign exchange reserves and support the local currency. Yet the scheduled repayment gradually dry to foreign exchange reserves position.

    Most recently, the SBP again received $1.5 billion from the Asian Development Bank (ADB) to strengthen the foreign exchange reserves position. However, the repayment pressure and rising political noise the rupee unable to show resistance against the dollar.

    The previous government of PTI had kept both the petroleum levy and sales tax at zero in order to provide relief to the masses. The PTI government also provided a huge subsidy on prices of petroleum products in order to lower the rates and provide relief to the masses.

    READ MORE: New petroleum prices in Pakistan effective from September 21, 2022

    However, former Prime Minister Imran Khan was removed through a vote of no-confidence motion on April 10, 2022. Since then the new coalition government led by PML-N increased the prices of petroleum products sharply on three different occasions.

    The present government in the budget estimated to collect Rs855 billion as petroleum levy during the fiscal year 2022/2023. As this fiscal year is starting from July 01, 2022, it is likely that the government will opt to impose the levy from this date.