Saudi energy minister to visit Gwadar for oil refinery prospects

Saudi Energy Minister Khalid Al-Falih on Monday questioned what he described as the “hype” of the electric vehicle market at the CERAWeek energy summit. (AFP)
Updated 11 January 2019

Saudi energy minister to visit Gwadar for oil refinery prospects

  • Will be in Islamabad on Saturday to analyze development of the port city, Petroleum Minister says
  • Expected to hold talks with the chief minister and a coterie of other top officials

KARACHI: Saudi Arabia’s Minister of Energy, Industry and Mineral Resources and the Chairman of the Board of Saudi Aramco will be visiting Pakistan’s port city of Gwadar on Saturday, officials said on Friday.
“Saudi energy minister, Khalid A. Al-Falih, is coming tomorrow to witness the development of Gwadar. The area allocated to them for oil refinery, he is coming to see that,” Ghulam Sarwar Khan, Minister for Petroleum and National Resources, said on Friday while addressing the media in the provincial capital, Quetta. 
Khan said that the Memorandum of Understanding (MoU) is expected to be signed next month.
“The federal cabinet has already given its approval for the signing of the MoU. After signing the MoU, the foundation stone for the construction of the refinery would be laid in Gwadar,” he added.
“The Saudi energy minister is visiting Gwadar and will hold meetings with Pakistani ministers and Chief Minister of Balochistan,” Haroon Sharif, Minister of State and Chairman of Pakistan Board of Investment (BoI), told Arab News on Friday.
Saudi Arabia has agreed to construct the multibillion dollar oil refinery in Gwadar, located in the Balochistan province of Pakistan, for which the MoU is expected to be signed next month in the presence of a high-level Saudi delegation.
Pakistani officials said that they have finalized the MoU for the construction of refinery. “Overall directions have been agreed upon and the agreement will be signed at the ‘appropriate time’”, BoI chief told Arab News recently.
However, he dismissed reports that the MoU would be signed during Al-Falih’s visit on Saturday.
Saudi Aramco will construct the petrochemical complex which will house the multibillion oil refinery. “I am expecting around $15 billion investment from Saudi Arabia in the next three years. The inflow of investments for the oil refinery and petrochemical complex in Pakistan is estimated to be between $6 billion to $10 billion,” Sharif said.
Pakistan is hoping to attract more than $40 billion foreign direct investment in the next five years. “We estimate that roughly around $40 billion investment will be made by these three countries (Saudi Arabia, the UAE, and China) during the next three to five years,” Sharif had told Arab News during a recent interview.
Faced with a balance of payments crisis, Prime Minister Imran Khan visited Saudi Arabia twice, followed by a trip to the UAE for financial assistance.
The Kingdom responded with generous bailout package worth $6 billion. Islamabad has so far received $2 billion from Riyadh while another $1 billion is expected this month.
Apart from the balance of payments support, the Kingdom is expected to invest nearly $15 billion in Pakistan’s petrochemical and renewable energy sectors. Saudi Aramco and Acwa Power are the leading Saudi investors in Pakistan. 
Similarly, the UAE has also pledged to extend $3 billion to Pakistan to help avert it’s economic crisis.
Islamabad is expecting a heavy inflow of foreign direct investment from Beijing after the signing of a deal with China which is being described as the second phase of the China Pakistan Economic Corridor (CPEC) project. “We roughly estimated that around $15 billion to $20 billion investments will be made within the next three years during the second phase of CPEC,” Sharif said.

Government presents mini-budget to boost exports, facilitate agricultural financing

Updated 23 January 2019

Government presents mini-budget to boost exports, facilitate agricultural financing

  • Tax on loans for agriculture, SMEs reduced from 39 percent to 20 percent
  • Economists urge the government to ensure strict implementation of all measures

ISLAMABAD: Finance Minister Asad Umar on Wednesday presented the third finance bill for the current fiscal year in the National Assembly of Pakistan, claiming it would boost investment, manufacturing and exports, and facilitate agricultural financing to promote economic activities in the country.

As opposition lawmakers chanted slogans against the government, the minister said he was presenting an “economic reforms package” to address the needs of the people.

“We are committed to helping deprived segment of the society and it is our constitutional responsibility to bridge the gap between the rich and the poor,” he said.

The minister also announced that he would present the “Medium Term Economic Framework” in Parliament next week to boost investment, manufacturing and agricultural produce in the country.

Umar said his government had identified four variables to fix Pakistan’s ailing economy. These included: balancing government’s revenues and expenses; increasing exports that recently plummeted from 14 percent of the GDP to 7 percent; encouraging foreign direct investment; and boosting national savings from 10.4 percent which, he added, were the lowest in the world.

To achieve all these targets, he announced to slash tax on small and medium enterprises and agricultural loans from 39 percent to 20 percent, abolish withholding tax on banking transactions for tax filers, and remove import duty on newsprint.

He said that duty on diesel engines for agricultural purposes was also decreased to five percent. Other than that, abolition of Gas Infrastructure Development Cess on fertilizers would help reduce prices of urea for 200 rupees per bag.

After approval of the Finance Supplementary (second amendment) Bill 2019, non-tax filers will be able to purchase cars up to 1300cc, though the tax will be increased for them.

Tax would also be increased on imported vehicles above 1800cc, he said, adding that tax for low priced imported mobile phones would be decreased but remain the same for expensive imported phones.

To promote low-income housing, the minister announced a revolving fund of five billion rupees for interest free loans, while tax on wedding halls up to 500 square feet would be decreased from 20,000 rupees to 5,000 rupees.

The government has also announced a five-year tax exemption on manufacturing of all products related to renewable energy, including solar panels and wind turbines.

The finance minister announced to abolish super tax for non-banking companies and on bids for sports franchises until profitability, while withholding tax on trading in the stock exchange, he said, had also been abolished.

To encourage exports, the minister said that a scheme of promissory notes was being introduced for businessmen and exporters that would help them get concessionary loans from commercial banks.

Criticizing the opposition earlier, the minister accused them of leaving the country indebted with 2,500 billion rupees to 3,000 billion rupees in loans that were not shown in the books.

However, members of the opposition parties were not impressed by the new finance bill.

“There is nothing in this budget that will generate economic activity in the country,” Pakistan Muslim League-Nawaz leader, Mohammad Zubair, told Arab News. “The government has announced tax reductions in different fields, but it is yet to be seen how this will affect revenue collection.”

Pakistan Peoples Party’s former finance minister, Saleem Mandviwala, said the budget was just a “plethora of numbers” and there was nothing in it for the common man.

“The government just wanted to show its performance by bringing the mini-budget. But it has badly failed to address the genuine issues of people,” he said while talking to Arab News.

Senior economist, Dr. Athar Ahmad, termed the budget “a step in the right direction,” saying that all these measures were needed to fix the economy.

However, he pointed out that the finance minister had failed to introduce any incentives for booming IT industry and measures to increase tax revenue. “The actual test of the government now is to ensure strict implementation of all the announced measures to achieve the targets,” said Dr. Ahmad.