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  • CCP discovers monopoly behind massive increase in poultry prices

    CCP discovers monopoly behind massive increase in poultry prices

    ISLAMABAD: The Competition Commission of Pakistan (CCP) has discovered that monopoly of feed mills resulted massive increase in poultry rates at retail state.

    A statement on Friday said that the nineteen poultry feed companies have been involved in price coordination and their alleged anti-competitive conduct has caused poultry feed price rise.

    Poultry feed comprises approximately 75-80  percent of the cost of broiler meat and eggs. Therefore, the hike in feed prices has affected the prices of chicken and eggs, which are the most commonly consumed high protein foods. The CCP’s enquiry revealed that from December 2018 to December 2020, the feed mills colluded to raise the poultry feed prices by Rs. 825 per 50kg bag, thus making the feed 32 percent costlier for the poultry farmers.

    Moreover, data from the Pakistan Bureau of Statistics (PBS) for September 2020 shows that chicken prices rose by 18.31 percent and eggs by 5.2 percent. The rise in these prices coincided with an increase in feed prices by almost Rs. 100 per bag.

    In October 2020, after another price increase by poultry feed mills (by Rs.125 on layer and 175 on broiler feed), the chicken prices rose by 26.62 percent and eggs by 23.81 percent as compared to the previous month. In November 2020, poultry feed prices rose again by Rs. 150 per bag, and in this month, the prices of chicken and eggs rose by 20.76 percent and 5.23 percent. In December 2020, another price increase in poultry feed by Rs.250 per bag caused prices of chicken and eggs to rise by 3.21 percent and 14.08 percent, respectively.

    The CCP took a suo motu notice of the concerns and complaints received, through the PM Citizens Portal and the CCP’s own online complaint management system, alleging that some of the leading mills in the country collusively raised poultry feed prices. The complainants also included poultry farmers whose business were hit by the costlier feed prices.

    In February 2021, the CCP raided two major poultry feed producers and impounded crucial evidence pointing towards price change coordination among the feed companies. The impounded record revealed that officials of 19 feed mills were using an active WhatsApp group where one feed producer would announce its intended price increase and the rest expressing and sharing their willingness to follow suit. Price discussions included the effective date and amount of the rise. These discussions and decisions were implemented on the ground, as evidenced by the official price lists of these companies.

    In a conversation thread from 07 December 2020, feed mills, while discussing price increases on the group, an official of a feed mill states: “Everyone would increase, for sure, but what’s about the exact effective date, please”. In response official of another feed mill says: “Dear all owners want immediately but seems from tomorrow”. Another feed mill representative replies: “surely w.e.f 07-12-2020”. Price lists show that on 7/8 December 2020, mills increased prices by Rs. 250 per 50 kg bag.

    The enquiry also found that mills carried out price changes between December 2018 and December 2020 in a coordinated manner in short intervals at least 11 times. In addition, the data revealed that not only were price revisions made on the exact dates, but the amounts of price change were also similar.

    To illustrate this pattern, on 10 October 2020, the feed mills participating in the WhatsApp group increased prices by Rs. 125 per 50 kg bag for layer and Rs. 175 per 50 kg bag for broiler feeds, on 14th/16 November 2020, by Rs. 150 per 50 kg bag on all feed rations and on 7th/8 December 2020, these mills increased prices by Rs. 250 per 50 kg bag on all rations.

    An analysis of poultry input costs shows that maize, which is the primary component of feed, constitutes 55-60 percent in terms of physical usage in feed, approximately 40 percent of the cost. Maize witnessed a bumper crop in 2020 and was abundantly available.

    Moreover, in FY-2019-20, maize prices fell by 7 percent compared to the previous year and in the first quarter of FY21, were 22  percent lower than 2019-20. On the other hand, soybean meal, another critical raw material, saw higher prices. However, a rise in input prices it has been witnessed cannot be used as a justification to increase feed prices uniformly as each mill has a different cost structure and business model.

    Poultry feed mills are each other’s competitors, and any discussion and coordination on prices is prohibited under Section 4 of the Competition Act, 2010. Accordingly, following the findings of the enquiry report, Show Cause Notices will be issued to poultry feed companies involved in the prima facie violation of Section 4 of the Act.

  • Pakistan’s foreign exchange reserves fall by $777 million

    Pakistan’s foreign exchange reserves fall by $777 million

    KARACHI: Pakistan’s foreign exchange reserves have fell by $777 million during a week owing to repayment of government’s external debt, State Bank of Pakistan (SBP) said on Thursday.

    The country’s foreign exchange reserves fell to $22.746 billion by week ended April 30, 2021 as compared with $23.52 billion a week ago ended April 23, 2021.

    The official reserves of the central bank fell by $830 million to $15.598 billion by week ended April 30, 2021 as compared with $16.428 billion a week ago. The SBP said that during the week government’ commercial loan of $ 1.0billion was paid, whose impact on SBP’s reserves was partially offset by official inflows.

    The foreign exchange reserves held by commercial banks however increased by $53 million to $7.145 billion as compared with $7.092 million a week ago.

  • Pakistan’s fiscal deficit narrows in nine months

    Pakistan’s fiscal deficit narrows in nine months

    ISLAMABAD: Pakistan’s fiscal deficit has narrowed to 3.6 percent of the GDP during first nine months (July – March) of the current fiscal year as compared with the deficit of 3.8 percent in the corresponding months of the last fiscal year, according to data released by the finance ministry on Thursday.

    According to commentary of Arif Habib Limited, Pakistan’s fiscal balance in the current fiscal year to date has strengthened over prior year, with the deficit arriving at Rs1.65 trillion in nine months of fiscal year 2020/2021 (3.6 percent of GDP) compared to Rs1.69 trillion in the corresponding months of the last fiscal year (3.8 percent of GDP), down by 2 percent YoY.

    Moreover, the primary surplus during the period at Rs452 billion (1.0 percent of GDP in nine months of fiscal year 2020/2021) fares better compared to a primary surplus of Rs194 billion witnessed last year (0.4 percent of GDP).

    Primarily, total revenue growth at 6 percent in nine months of fiscal year 2020/2021 to Rs5.0 trillion (nine months of the last fiscal year: Rs4.7 trillion) aided the fiscal balance, translating into 11.0 percent of GDP vs. 10.7 percent last year. The total tax revenue collection has gone up by 5 percent YoY to Rs3.8 trillion. Indirect taxes (+13 percent YoY to Rs2.15 trillion), sales tax (+14 percent YoY to Rs1.42 trillion), and direct taxes (+9 percent YoY to Rs1.25 trillion amid higher number of tax payers), contributed to the overall collection.

    In addition, the government collected Rs1.17 trillion in non-tax revenues, displaying a jump of 13 percent YoY. This was particularly owed to imposition of Petroleum Levy, which is now classified under non-tax revenue (+86 percent YoY | Rs369 billion). On the flipside, the surplus profit of State Bank of Pakistan and Pakistan Telecommunication Authority declined during nine months of fiscal year 2020/2021 to Rs498 billion (-22 percent YoY) and Rs20 billion (-82 percent YoY), respectively.

    In addition, total expenditures went up by 4 percent YoY to Rs6.6 trillion (14.6 percent of GDP vs. 14.5 percent of GDP in 9MFY20). Further breakup revealed that current expenditure underwent an uptick of 8 percent YoY of which markup payments rose by 12 percent YoY. On the contrary, the defence expenses went down by 2 percent YoY to Rs784 billion. Moreover, development expenditure and net lending undertaken by the government declined by 7.5 percent YoY to Rs723 billion.

    Total PSDP expenditure in nine months of fiscal year 2020/2021 arrived at Rs654 billion (-9 percent YoY) with provincial expenditure at Rs390 billion, outdoing federal disbursement of Rs264 billion.

    Decline of 26 percent YoY in deficit during 3QFY21

    The analysts highlighted that cumulatively all four provincial governments recorded an overall balance of Rs413 billion during nine months of fiscal year 2020/2021, compared to Rs344 billion recorded in the corresponding period last year, marking a 20 percent increase. However, Sindh and KPK recorded a decline of 10 percent YoY and 70 percent YoY, respectively.

    Pertinently, budget deficit during 3QFY21 settled at Rs514 billion (1.1 percent of GDP), depicting a decline of 26 percent YoY vis-à-vis Rs691 billion during 3QFY20.

    Total revenues of the government in 3QFY21 arrived at Rs1.64 trillion (3.6 percent of GDP), up by 13 percent YoY from Rs1.46 trillion during 3QFY20.

    FBR taxes increased by 25 percent YoY to Rs1.18 trillion due to 15 percent YoY rise in direct taxes to Rs416 billion in 3QFY21 whereas collection from sales tax and indirect taxes went up by 30 percent and 39 percent YoY to Rs498 billion and Rs769 billion, respectively.

    Total expenditure in 3QFY21 clocked in at Rs2,156 billion (4.7 percent of GDP), up 0.3 percent YoY over the same period of last year (Rs2,149 billion; 4.9 percent of GDP) with a 9 percent rise in defense expenditure to Rs297 billion and 9 percent uptick in current expenditure to Rs2.1 trillion.

  • Payment to 12 IPPs withheld for NAB cases

    Payment to 12 IPPs withheld for NAB cases

    ISLAMABAD: Economic Coordination Committee of the Cabinet (ECC) has approved payment of first installment to 35 Independent Power Producers (IPPs) out of total 47 whereas payment to the remaining 12 IPPs (under Power Policy 2002) may be withheld owing to the NAB investigation.

    Federal Minister for Finance and Revenue Shaukat Tarin chaired the meeting on Wednesday. Power Division presented a summary before the ECC regarding release of first installment of payment to IPPs.

    Secretary Power Division briefed the Committee about the recommendations of the sub-committee constituted during ECC last week.

    “The ECC approved payment of first installment to 35 IPPs out of total 47 whereas payment to the remaining 12 IPPs (under Power Policy 2002) may be withheld owing to the NAB investigation,” according to as statement.

    Federal Minister for Privatization Muhammad Mian Soomro, Federal Minister for Interior Shaikh Rashid Ahmad, Federal Minister for Economic Affairs Division Omar Ayub Khan, Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Energy Muhammad Hammad Azhar, Federal Minister for Industries and Production Makhdum Khusro Bakhtyar, Federal for National Food Security & Research Syed Fakhar Imam, Federal Minister for Maritime Affairs Ali Haider Zaidi, Adviser to the PM on Commerce Abdul Razak Dawood, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, SAPM on Finance and Revenue Dr. Waqar Masood, SAPM on Power & Petroleum Tabish Gauhar, Federal Secretaries, Chairman BOI and other senior officers participated in the meeting.

    Governor State Bank of Pakistan Reza Baqir also joined through a video link.

    Secretary Power gave a detailed briefing to the Committee regarding a draft summary for approval of arrangement for providing additional power from NTDC to K-Electric since April 2020.

    The Secretary Power also raised the issue of non-payment for the additional power supply by K-Electric to Power Division.

    After Detailed discussion, the ECC constituted a Sub-Committee comprising Federal Minister for Planning, Federal Minister for Energy, Federal Minister for Maritime Affairs and SAPM on Power to be headed by the Finance Minister to negotiate with the Karachi Electric for settlement of payment dispute amicably.

    Power Division placed a summary before the ECC regarding tax on payments to the offshore supply contractors of Independent Power Producer(s) located in AJ&K.

    The ECC considered and approved the summary to facilitate swift processing of such projects due to its strategic importance.

    The ECC considered and approved a summary tabled by the Ministry of Industries and Production regarding exemption from duties and taxes for import of oxygen gas, oxygen gas cylinder and cryogenic tanks by oxygen concentrators / Generators / manufacturing Plants under respective Harmonized System (HS) codes for a period of 180 days to cope with the increased requirement of oxygen during the third wave of COVID-19 in the country.

    Ministry of Commerce presented a summary regarding implementation of United Nations Security Council Resolutions (UNSCRS) through export Policy Order, 2020 and Import policy Order, 2020.

    The ECC considered and approved the summary.

    Lastly, Power Division presented a summary before the Committee regarding retargeting of power sector subsidies for electricity consumers during phase-I in consultation with Ehsaas and Finance Division. The ECC approved the summary, in principle, with a direction to work out modalities for future course of action.

  • ECC approves Rs10 billion as reimbursement of transfer charges to banks

    ECC approves Rs10 billion as reimbursement of transfer charges to banks

    ISLAMABAD: Economic Coordination Committee of the Cabinet (ECC) on Wednesday approved Rs10 billion for re-reimbursement of telegraphic transfer charges to the banks on home remittances.

    Federal Minister for Finance and Revenue Shaukat Tarin chaired the meeting.

    The Technical Supplementary Grants were approved by ECC in its meeting held on Wednesday:

    • Rs.10 billion for the Finance Division for re-imbursement of telegraphic transfer charges to the banks on home remittances to encourage overseas Pakistanis to remit money through formal banking channels.

    • Allocation of funds for the National Disaster Management Authority (NDMA) for procurement of oxygen gas and delivery mechanism for import of 6,000 MT of oxygen amounting to Rs. 1800 million to meet the emergency requirement for supply of oxygen to hospitals for treatment of COVID-19 patients.

    • Rs. 115 million for the Ministry of Defence for the up-gradation of health care facilities at Cantonment General Hospital, Rawalpindi.

    • Rs. 800 million to the Ministry of Defence Production for the payment of outstanding loan to the National Bank of Pakistan (Bahrain).

    • Rs. 8 million for the Ministry of Information and Broadcasting to clear the pending liabilities of “Implementation Tribunal for Newspaper Employees (ITNE)”.

    • Rs. 571.216 million for the Ministry of Law and Justice for the construction of Islamabad High Court Building.

    • Rs. 350 million for the Ministry of Law and Justice for a new building of the Supreme Court Branch Registry Karachi.

    • Rs. 198.017 million for running Isolation Hospital and Infections Treatment Center, Islamabad for treatment of COVID-19 patients.

    • Rs. 27.5 billion for National Disaster Management Fund to complete NDMA’s component under Karachi Transformation Plan.

    • Rs. 48.337 million for the Ministry of Parliamentary Affairs for meeting its various operational expenses.

    • Rs. 17.739 million for the Geological Survey of Pakistan (GSP) to repair important laboratory equipment.

    • Rs. 1563.046 million for the Ministry of Federal Education and Technical Training for establishment & operation of Basic Education Community Schools.

    • Rs. 1210.18 million for the National Commission for Human Development (NCHD) for meeting various operating expenses.

    • Rs 100 million for the Cabinet Secretariat, given as contribution from the Government of Punjab for Pakistan Tourism Development Endowment Fund.

    Federal Minister for Privatization Muhammad Mian Soomro, Federal Minister for Interior Shaikh Rashid Ahmad, Federal Minister for Economic Affairs Division Omar Ayub Khan, Federal Minister for Planning, Development and Special Initiatives Asad Umar, Federal Minister for Energy Muhammad Hammad Azhar, Federal Minister for Industries and Production Makhdum Khusro Bakhtyar, Federal for National Food Security & Research Syed Fakhar Imam, Federal Minister for Maritime Affairs Ali Haider Zaidi, Adviser to the PM on Commerce Abdul Razak Dawood, Adviser to the PM on Institutional Reforms and Austerity Dr. Ishrat Hussain, SAPM on Finance and Revenue Dr. Waqar Masood, SAPM on Power & Petroleum Tabish Gauhar, Federal Secretaries, Chairman BOI and other senior officers participated in the meeting.

    Governor State Bank of Pakistan Reza Baqir also joined through a video link.

  • Hammad Azhar continues to head AML/CFT coordination group

    Hammad Azhar continues to head AML/CFT coordination group

    ISLAMABAD: Hammad Azhar, Federal Minister for Energy, will continue to act as chairman of the National Coordination Group of Anti-Money Laundering (AML) / Combating of Financing of Terrorism, (CFT), a statement said on Wednesday.

    Owing to the recent change of portfolios in the Prime Minister’s Cabinet, the Cabinet Division, Islamabad has notified that Muhammad Hammad Azhar, former Federal Minister for Industries and Production and now Federal Minister for Energy will continue to act as the Chairman of the National Coordination Group of Anti-Money Laundering (AML) / Combating of Financing of Terrorism, (CFT).

     Under the Chairmanship of Federal Minister Hammad Azhar, Pakistan has been making all out endeavors in achieving full compliance with Financial Action Task Force (FATF) Plan of Action and the standards and safeguards set by FATF and Asian Pacific Group (APG).

    Over the years, Pakistan has demonstrated significant progress, more work is required to mainstream FATF/APG safeguards across various sectors of the economy and national and sub national systems.

  • Trade deficit widens by 21.6pc in 10 months

    Trade deficit widens by 21.6pc in 10 months

    ISLAMABAD: Pakistan’s trade deficit has expanded significantly, rising by 21.6 percent during the first ten months (July–April) of fiscal year 2020–2021, according to official data released by the Pakistan Bureau of Statistics (PBS) on Wednesday. The increase in the trade deficit is attributed largely to a sharp surge in the country’s import bill, which has outpaced the growth in exports.

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  • April inflation records double digit increase

    April inflation records double digit increase

    Pakistan’s headline inflation, based on the Consumer Price Index (CPI), witnessed a notable increase of 11.10 percent on a year-on-year (YoY) basis in April 2021, according to data released by the Pakistan Bureau of Statistics (PBS).

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  • Consumer confidence declines in first quarter of 2021

    Consumer confidence declines in first quarter of 2021

    KARACHI: The consumer confidence index has declined by over 10 percent in the first quarter of 2021 owing to concerns over the current economic situation owing to imposition of restrictions to prevent spread of coronavirus.

    Dun & Bradstreet Pakistan and Gallup Pakistan issued their report on ‘Pakistan Consumer Confidence Index (CCI)’ for Q1 2021 on Thursday.

    The CCI report has been developed by assessing Consumers’ Confidence about the economy as well as their personal financial situation. The Index covers four key parameters i.e., Household Financial Situation, Country’s Economic Condition, Unemployment, and Household Savings.

    The Index is a reflection of ‘Current Situation’ (economic changes felt in the last six months), as well as ‘Future Expectations’ (changes expected for next 6 months) of consumers across the country.

    The CCI ranges from 0 to 200, with 100 as the neutral value. A score of less than 100 indicates pessimism. The CCI was 80.8 points in Q1 2021, compared to 90.3 points in Q4 2020, translating into 10.5 percent q-o-q decrease. This deterioration in sentiment is driven by restrictions imposed on business operations by the government to counter the third wave of the pandemic.

    Consumers reported a greater decline in Future Expectations (down 12.0 percent) due to prevailing uncertainty, compared to the Current Situation, which also declined by 8.3 percent this quarter.

    Nauman Lakhani, Country Lead of Dun & Bradstreet in Pakistan stated, “The fifth issue of Pakistan Consumer Confidence marks the beginning of the calendar year 2021.

    A decline of over 10 percent q-o-q in the Consumer Confidence reflects increasing concerns amongst respondents. Consumers reported a greater decline in Future Expectations compared to Current Situation which demonstrates that consumers are more apprehensive about Future.”

    Bilal Ijaz Gilani, Executive Director Gallup Pakistan, added, “In the first quarter of 2021, CCI shows a consumer who is both increasingly concerned about the present economic situation and also apprehensive about the future. Unemployment concerns have been rising to mid-2020 level as the government imposes lockdown in major cities, curtail business hours, and shut schools in wake of the third wave of the COVID-19 pandemic.

    Inflation at high 7-8 percent continues to eat purchasing power of the common consumer. With the new Finance Minister, we at Gallup hope that growth enhancing policies will be introduced to bring short term relief to consumers.”

    During the current quarter, all CCI parameters witnessed an overall decline. Consumer sentiments witnessed the largest deterioration in regards to Economic Condition of the Country which declined by 16.0 percent on account of resumption of smart lockdown.

    During Q1 2021, Household Financial Situation was the only CCI parameter that managed to stay above 100 points despite decreasing for the first time since Q1 2020.

    Furthermore, Unemployment continues to drag consumers’ enthusiasm and remained the most pessimistic parameter. Unemployment Situation deteriorated by 15.7 percent q-o-q, more than half (53 percent) of respondents believe that Unemployment will increase in the next six months compared to 42 percent in Q4 2020 and 39 percent in Q3 2020.

    During Q1 2021 survey, 92 percent consumers believed that daily essentials have continued to become expensive / very expensive in the last 6 months compared to 93 percent in Q4 2020.