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FBR collects Rs846b revenue in 1H2011-12 LAHORE IMRAN ADNAN
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eDeRAl Board of Revenue (FBR) has collected revenue of Rs846 billion during the first six months of the current fiscal 2011-12 (July-December). FBR also witnessed an increase of over 34 per cent or Rs216 billion during the same period of previous year. Figures show that lahore large Taxpayers Unit (lTU) has witnessed an increase of Rs17 billion or 25 per cent in the first six months of the fiscal 2011-12. lahore lTU has collected revenue of Rs53.5 billion during the first half of the current fiscal, whereas, Rs36.5 billion revenue was collected during the corresponding period of last year. Breakup shows that on account of income Tax, lahore lTU has collected Rs12.3 billion in the first half of the current fiscal, while revenue of Rs8.6 billion was collected during the corresponding period of previous year. in General Sales Tax (GST), revenue receipts of lahore lTU has witnessed Rs33.7 billion during the period under review, which showed Rs13.1 billion increase from last fiscal figures. Similarly, on account of Federal excise Duty (FeD), revenue collection has stood at Rs7.5 billion, which showed an increase of Rs0.2 billion from fiscal 2010-11. FBR’s lahore lTU Director General Mustafa Ashraf indicated that despite economic depression and energy crisis, revenue collections had witnessed substantial increase, which showed tax machinery’s efforts to increase tax revenues. he said FBR had initiated an aggressive revenue generation and collection campaign from the start of the current fiscal, considering the overall depressed economic situation in the country. he pointed out lahore lTU had also recovered some Rs1 billion arrears, stuck up in appeals and other cases. in addition, lahore lTU had created a demand for Rs2.5 billion additional revenue collections, during the period under review, he maintained. Ashraf underscored that increase in revenue collection was result of better monitoring and extra efforts of the tax machinery. lahore lTU had ensured timely tax collection from withholdings agents and followed FBR’s Broadening Tax Base (BTB) programme through which a good number of new taxpayers were added to the tax base.
Friday, 13 January, 2012
WAPDA lashes out at govt’s rudderless power sector reforms g
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HESCO, PESCO, QESCO and MEPCO not recovering Rs90 billion per annum Wapda demands reassigning role for integrated power planning, development and transmission GENCOs burning more fuel worth Rs11b per annum ISLAMABAD AMER SIAL
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hile strongly criticising the power sector reforms that are under implementation, Water and Power Development Authority (WAPDA) has demanded improvement in governance in distribution companies (DiSCOs). WAPDA has also called for enhancing accountability in lieu of increasing the already towering power tariff as the revenue gap could be filled through improving their efficiencies, says the entity’s presentation on the energy issues for the National Assembly Special Committee on energy crisis.
PRESENTING TNT The presentation could not be made on Wednesday, as the members were not interested in listening to usual presentations. The presentation contains fireworks that could have ignited the committee into grilling the Ministry of Water and Power (MOWP) on its poor planning and implementation on the power sector reforms which is holding the economy hostage.
ROLE REASSIGNMENT
mal power plants in the public sector as it neither has the mandate nor the planning and implementing departments to undertake these activities.
RESTRUCTURING AND DECLINE Government had started the restructuring of WAPDA, in early 1990s, with the vision that the break-up of its various departments and decentralisation will make management more effective however it has not materialised. WAPDA’s Power Wing was replaced by PePCO, whose top management exercised the same centralized control over DiSCOs. Criticising the boards of directors of DiSCOs, it says they have failed to contribute significantly to the improvement and functioning of these companies. The quality and effectiveness of some of its key departments have deteriorated alarmingly. The Power Planning department, under NTDC, is a particularly example of decline in standards. CPPA has not become fully functional despite the lapse of a significant period since its inception. The operational and financial sustainability of PePCO appears to be seriously threatened unless immediate remedial measures are taken.
LACK OF VISION
Demanding reassignment of the role of integrated power planning, development and transmission to WAPDA as it has mandate under the WAPDA Act, to prepare centralised plans for development of power in hydel, thermal and renewable energy resources including those dealing with transmission lines. PePCO should not be saddled with the responsibility of establishing new ther-
On the circular debt, it says even though it has been cleared many times during last four years, it reemerges as PePCO’s monthly revenues fall, short of its expenditures by Rs20 billion per month. This is unsustainable and the existing revenue gap is solely because of the mismanagement and flawed implementation of the reform program. Criticising the government on its lack of
vision, it says by picking up bank loans for revenue gap of Rs300 billion, the government paid tariff differential subsidies of Rs470 billion since 2007 to PePCO. Despite passing on fuel price impact by making almost 100 per cent tariff increase, the gap between revenue and the cost is still not narrowed.
GROSS MISMANAGEMENT illustrating the gross mismanagement in generation companies (GeNCOs), it says, due to poor maintenance, they were producing almost six billion less units per annum than their optimum level. GeNCOs are burning more fuel worth Rs11 billion per annum more than normal efficiency level. NTDC is losing power worth Rs6 billion per annum in transmissions because of losses more than the normal standards. heSCO, PeSCO, QeSCO and MePCO compositely are losing power worth Rs90 billion per annum in the distribution system. These DiSCOs are also not recovering revenue of almost Rs 90 billion in a year. These are the real reasons of existing circular debt which has paralysed the national economy and has made the life difficult of a common man.
RECOMMENDATIONS it recommends, the MOWP must recognise that PePCO is a transitory entity meant to prepare DiSCOs and GeNCOs for privatisation. They should facilitate PePCO for its strategic objectives only. Day to day management of company’s business affairs should not be a ministerial concern. For improving DiSCOs performance, it asks for taking provincial government boards so that they are administratively involved in controlling line losses and to improve revenue recovery from consumers. To ensure better collection and delivery of services, the selected inefficient feeders of DiSCOs should be leased out. Differential tariff must be implemented without taking into account the administrative losses and poor revenue recovery. The basic issue of most of the DiSCOs is poor governance and limited accountability. There should be no political and administrative interference in DiSCOs. GeNCOs must be leased out. PePCO has deviated from its given role, therefore must be rolled back to avoid further deterioration of performance of exWAPDA entities. The available energy must be consumed prudently and its industrial consumption should be preferred.
The weakening currency dilemma SITUATIONER SAkINA HuSAIN he rupee has been on steady decline since the past two months, with the exception of the past two days. Most are quite aware of the worsening balance of trade position with exports for 1h-FY12 arriving at $11.24 billion and imports standing at $22.71 billion. Remittances, which were the nation’s pride for keeping the economy out of red, have this time failed to buttress the struggling current account despite registering an unprecedented level over $6 billion during the last six months. in the face inelastic imports, exports have seemed to be the only maneuverable saving grace. however, the general
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opinion regarding power shortages causing supply deficits, especially with reference to the textile sector, is also a favourite example and ostensibly a significant impediment. it takes the sector only one year of glory for the SBP and other policy makers to start reveling in the idea of its permanence and glorify the fact that the fiscal imbalance did not affect the external account in the days of cotton gains and surpluses. Reflecting on other interesting correlative developments in the last two months, KiBOR in excess of 12 per cent, ie higher than the discount rate signals impending liquidity constraints in the banking system. The last two T-Bill auctions have also been witness to the low participation levels, extremely unlike the preceding fiscal year, and bid patterns
that showed quotation of high rates that led to complete rejection of the earlier bid in Dec-11. Theoretically this would also imply that banks are either short of funds or unwilling to lend to anyone given that the private sector credit has not ventured further than the Rs3.1-3.2 trillion from the end of FY11, and short-term government bonds seem to hold no spark lately. This implies that the shortage of funds is reflecting itself on the currency as higher interbank exchange rates are being quoted, resulting in the ongoing depreciative phase for the rupee. Delving into the investigation of the first hypothesis, it seems that banks are most definitely not short of funds. A latest report on liquidity held in excess of the CRR shows, that in the later week of
Dec-11 when KiBOR hit the12 per cent high, banks on average held around Rs10 billion/day (Rs70 billion/wk) in excess of the CRR. Similarly, an OMO conducted over the last two days extracted liquidity worth Rs41 billion. Why would SBP further squeeze liquidity if the market was already short? On the other hand, the ‘unwillingness’ hypothesis may very well hold some truth. During the first half of FY12, the SBP has lent an incremental Rs151 billion (versus Rs80 billion during 1h-FY11) and scheduled banks have lent Rs668 billion (versus Rs206 billion) to the government for budgetary borrowing. This coupled with a decline in Net Foreign Assets of Rs130 billion during the 1hFY12 (Rs127 billion increase during 1hFY11) is pre-
sumably rendering a double whammy on the exchange rate. Simple arithmetic would reveal that banks have an incremental hold up of around Rs662 billion, explaining their reservations about money lending and raising the price of the rupee. On the darker predictive side, the rupee can be expected to go even further down as the date of iMF payment approaches. And touching base with the well known exports and power deficit connection, the slow growth in external receipts can be expected to continue as no resolution of the power and gas supply issue seems to be approaching. Since this is the land of the impure, the rent seeker and the opportunist, i would suggest lets all speculate and thrive! Cheers!!