Profit

Communication Ministr y asked to clear Rs8 7b owed to DISCOs

Rising panic over blocked imports in crisis-hit Pakistan

g finance Bill proviDes for 1pc increa se in Gst, aDDitional taxes UnDer imf’s nintH review

islamabad p r o f i t r e p o r t

PresiDent Dr ar f alvi on tuesday adv sed finance min ster ishaq Dar to take the parliament nto confidence and call immed ate session to discuss the issue of raising additional revenue through taxes

Dar apprised president a vi about the progress in talks with the internationa monetar y fund (imf) and that all modal ties have been agreed upon such as raising rs 170 billion taxes in the next four months the president appreciated the efforts of the government in negotiat ng an agreement with the imf and assured that the state of pak stan would stand by the commitments made by the government w th the imf the minister said the government wanted to ra se additional revenue through taxes by promulgat ng an ordinance the press reease issued about the pres dent House said that, “the pres dent advised that t would be more appropriate to take par iament into conf dence on this mportant subect and that a session be cal ed mmediate y so that the bi l s enacted w thout delay ” Cabinet aPPRoves FinanCe suPPlementaRy bill 2023 a s moRe taxes on luxuRy items with 1% inCRea se in Gst: the federal cabinet on tuesday ap- proved the finance supplementar y Bi l 2023 prov d ng for a 1% increase in general sales tax and add tional taxes on luxur y items as part of the reforms related to the international monetar y fund ’s ninth rev ew the supp ementar y bill was passed in a cab net meeting chaired by prime minister shehbaz sharif who gave the directives not to tax any dai y use items wh ch could affect the poor or middle class

During the briefing given to the prime m n ster it was told that under the reforms the luxur y items would be taxed the prime m nister sa d the government was making maximum efforts to put the minimum possible burden on the poor people, however, he called for tak ng necessar y measures to tax luxur y goods the supplementar y finance b ll would now be tabled before the parliament on wednesday as the president has already summoned the sessions of the nationa assembly and senate the prime min ster said that an austerity policy would be adopted at the government level which would soon be formally announced as the economic diff culties cou d only be overcome while limiting ourselves within our resources

He said all of the cab net members and the government officers would be bound to ad- here to the austerity package as it was imperat ve to steer the countr y out of economic challenges He said the 220 million of pakistan were bearing the brunt of the incompetence and neg igence of the previous government we assumed the power in d fficult circumstances and sacr ficed our polit cs for sake of the state the previous government betrayed the peop e through its tal claims of simpl city and austerity he remarked the federal cab net approved the renaming of the turkiye earthquake victims fund as turkiye and syria earthquake victims fund as the pr me m nister urged the peop e to donate wholehearted y to th s fund the prime minister expressed condolences over the destruction caused by the unprecedented earthquake in turkiye and syr a He also apprised the cabinet members of his telephon c nteraction w th turkish president recep tayyip erdogan in which he assured pak stan s a l-out support to the quake-hit people He said the relief goods including blankets warm c othes and others had been d spatched to turkiye and syria as more goods were also being sent there the pak stan air force, rescue workers nGos and phlanthrop sts were also taking part in the re ief activities, he added the cabinet members also offered fateha for the late

Coffee trumps economic crisis as Tim Hortons opens in Pakistan g earlier, Dr alvi aDviseD Dar to take parliament into confiDence over taxes raise mother of advisor to prime minister ahad cheema the federal cabinet endorsed the econom c coordi- nat on committee s decisions it had taken in its respective meetings held on februar y 10 and 13 2023 it also endorsed the decis ons of the cabinet comm ttee on legis ative cases taken n its meeting held on februar y 9 2023 islamabad

A h m A d A h m A dA n vehic e owners shou d gear up to be h t with another jolt as the government is likely to ack up petrol prices by up to 12 8% per itre for the second half of februar y 2023 according to sources, the ex-depot per litre price of petrol is calculated to go up by rs 32 07 (or 12 8%), High speed Diesel (HsD) price is to witness a rise of rs 32 84/ itre (or 12 5%), whi e kerosene oil price is estimated to be hiked by rs 28 05/litre (or 14 8%) and light d esel oi (lDo) price may w tness a hike of rs 9 90/litre (or 5 3%) during the second half of februar y this year likely new prices are based on current government taxes and estimated pso ncidentals said sources the est mated UsD/rs adustment appl es rs 15/ itre for both products (petrol & HsD) while it is assumed that petroeum levy (pl) on the HsD wi l rise to rs 50 per l tre they added at present, petrol is availab e at rs 249 80/ itre HsD at rs

295/l tre, kerosene oi at rs

189 83/litre and lDo at rs

187/litre However sources further said that if the h ke is approved then the new price of petrol wil stand at rs 281 87/l tre HsD at rs

295 64/litre, kerosene oil at rs

217 88/litre and lDo at rs

196 90/l tre during the last fifteen days of februar y 2023

HsD is wide y used in transport and agricu ture sectors therefore any increase in its price wil be a blow to consumers n the form of rising inflation similar y petrol s used by motorbikes and cars and is an alternative to compressed natural Gas (cnG) and gas s already not available for cnG stations to feed transport due to the issue of availabi ty n the w nter months furthermore, kerosene oil s used in remote areas where lpG is not available for cooking purposes; the pakistan army is a key user of it n northern parts of pakistan it is also learnt from sources that the ex-refiner y price for the second half of februar y 2023, of petroleum products s calcuated to go up by 21 4% the ex-ref ner y price of petrol is calculated to go up by 21 4% from rs 177 40/litre to rs 215/litre, HsD price from rs 221 36/l tre to rs 240/litre (8 8pc), kerosene oi from rs 182 13/l tre to rs 210 18/litre (15 4%) and ex-refiner y price of lDo is also estimated to go up from rs 153 99/litre to rs 163 89/litre (6 4%) it is important to remember that the common man is already burdened and this h ke in the prices of petroleum products wil add much more to their miser y

PA K I S TA N plans to quadruple its domestic coal-fired capacity to reduce power generation costs and will not build new gas-fired plants in the coming years, its energy minister told Reuters on Monday as it seeks to ease a crippling foreign-exchange crisis

A shortage of natural gas, which accounts for over a third of the country’s power output, plunged large areas into hours of darkness last year A surge in global prices of liquefied natural gas (LNG) after Russia s invasion of Ukraine and an onerous economic crisis had made LNG unaffordable for Pakistan

LNG is no longer part of the long-term plan,” Pakistan Energy Minister Khurram Dastgir Khan told Reuters, adding that the country plans to increase domestic coal-fired power capacity to 10 gigawatts (GW) in the medium-term, from 2 31 GW currently Pakistan s plan to switch to coal to provide its citizens reliable electricity underscores challenges in drafting effective decarbonization strategies, at a time when some developing countries are struggling to keep lights on

Despite power demand increasing in 2022, Pakistan’s annual LNG imports fell to the lowest levels in five years as European buyers elbowed out price-sensitive consumers “We have some of the world’s most efficient regasified LNG-based power plants But we don’t have the gas to run them,” Dastgir said in an interview

The South Asian nation, which is battling a wrenching economic crisis and is in dire need of funds, is seeking to reduce the value of its fuel imports and protect itself from geopolitical shocks, he said Pakistan s foreign exchange reserves held by the central bank have fallen to $2 9 billion, barely enough to cover three weeks of imports It s this question of not just being able to generate energy cheaply, but also with domestic sources, that is very important Dastgir said

The Shanghai Electric Thar plant, a 1 32 GW capacity plant that runs on domestic coal and is funded under the China-Pakistan Economic Corridor (CPEC), started producing power last week The CPEC is a part of Beijing s global Belt and Road

Car prices continue to soar as Toyota, Cher y hike prices simultaneously

pr ofIt report Da n i ya l a h m a D Toyota and Chery have introduced price hikes for their entire lineups

The most likely explanation for the price increases are the increases in the cost of production due to the Rupee’s depreciation, the global commodity supercycle, and the general rise in the domestic cost of production

These new prices are likely, and hopefully, also reflective of the companies factoring in further dips by the Rupee, and potential increases in taxes levied on vehicles The latter is potentially a consequence of the rumours across industries of new rounds of taxation across industries due to negotiations with the IMF P l ay i n g D e v i l’ s a D v o c at e : to y o ta

This price increase amounts to Toyota’s third price increase within the span of a month Toyota’s rationale is clear

It has made operating losses for two consecutive quarters It recorded an operating loss of Rs 3 3 billion in Q1FY23 and Rs 1 483 billion in Q2FY23 taking its HFY23 operating loss to Rs 4 78 billion Its HFY23 loss is a 150% Year-onYear contraction for a staggering reduction of Rs 15 billion

Furthermore, Toyota has been unable to meet demand due to inventory shortfalls This has led to it announcing non-production days from February 1 to February 14 and its intent to shift to a single shift work day from February 15 until stated otherwise Toyota seems to be so crippled by these shortfalls that it reintroduced its refund policy, from July, last month

Thus, Toyota’s decision comes down to a confluence of two things: It can only produce a limited number of vehicles and it needs to increase the profit margins for its vehicles The price increases, therefore, are a means for Toyota to achieve this There is no doubt that Toyota’s sales volume has fallen as a result of these Its 7MFY23 sales volume stands at 21 877 units This is a 51% contraction from the 44,869 units it sold over the same period last year However there seems to be a method to the madness Toyota gross profit, and gross profit margin both improved Quarter-on-Quarter from Q1FY23 to Q2FY23 This was despite Toyota selling fewer vehicles within that time span This is likely in part due to the change in the composition of vehicles Toyota sold over the period Q1FY23 saw the Toyota Yaris and Corolla constitute 72% of total sales with the remainder being attributed to the Toyota Fortuner and its IMV line of vehicles Q2FY23 in contrast saw the Yaris and Corolla’s share dip to 60% with the shares of the Fortuner and the IMV line of vehicles rising to 40%

Based on past precedent, the higher prices are likely to dissuade customers from the more affordable options across Toyota’s portfolio, whilst encouraging sales across Toyota’s more expensive lineup Such a dynamic would therefore lead to Toyota only producing those cars which it has higher profit margins for This is the most likely explanation for why Toyota has also reduced its shift; it is expecting demand to fall and therefore aims to reduce its fixed costs whilst bolstering its margins

P l ay i n g D e v i l’ s a D v o c at e Pa rt D e u x: c h e ry Chery cannot be faulted for its price increase The company has withheld its prices from September till now, and its decision is a likely consequence of the aforementioned macroeconomic reasons plaguing the entire industry Ghandhara Nissan introduced the Chery Tiggo 8 Pro and 4 Pro almost a year ago however the reception has not been lacklustre to say the least G h a n d h a r a N i s s a n s t a r t e d Q 1 F Y 2 3 w i t h a R s 7 8 m i l l i o n l o s s N o w t h e c o m p a n y d i d n o t p r o v i d e d i s a g g r e g a t e d s e g m e n t w i s e d a t a t o e x t r a p o l a t e w h i c h o f i t s a u t o m o t i v e b r a n d s w a s f a i l i n g H o w e v e r, t h e f a c t t h a t i t m a d e a l o s s o v e r a l l , i s i n d i c a t i v e o f C h e r y a l s o s t r u g g l i n g This is despite the fact that Chery International outlined its eagerness and plans to expand across the Pakistani market in 2023, earlier this year Chery’s Tiggo Pro 4 might serendipitously be a beneficiary of Toyota’s price increase as Chery’s SUV enjoys an even more considerable price advantage compared to Toyota’s sedans The Tiggo Pro 8, however, now operates in a very competitive price market with the majority of the newer entrants who entered the market having their premium offerings either within that price range or on the boundaries of it

Toyota records lowest half-yearly earnings since 2019

Toyota Indus Motors has released its quarterly financials for Q2FY23 on the Pakistan Stock Exchange The financials reveal period last year Toyota however still recorded a gross loss of Rs 490 million This is an 80% QoQ reduction on the Rs 2 3 billion gross loss it incurred in the previous quarter The change in Toyota’s sales composition is also the likely reason for its gross profit margin (GPM) improving from -6 33% last quarter to -0 99% this quarter Its current GPM still stands significantly lower than the 7 56% it recorded last year over the same period Toyota’s operating expenses have increased by 4 86% QoQ to Rs 954 million This is also a 2 27% YoY increase Similar to last quarter, Toyota was able to record sizable income from its other earnings to bolster its overall earnings and thereby prevent a cumulative loss Toyota’s quarterly financials do not reveal the make-up of its other income However, its other income elucidates upon how these are the gains that Toyota makes from engaging in investment activities

Toyota’s other income, similar to last quarter, exceeds its operating income which, again, indicates that Toyota made more money from being a bank or investment institution than a car company Its other income stands at Rs 3 45 billion, and is Rs 4 89 billion in excess of its operating loss of Rs 1 4 billion Toyota’s other income has experienced a 33 09%

Initiative

In addition to the coal-fired plants, Pakistan also plans to boost its solar, hydro and nuclear power fleet Dastgir said without elaborating

If the proposed plants are constructed, it could also widen the gap between Pakistan s power demand and installed power generation capacity, potentially forcing the country to idle plants

The maximum power demand met by Pakistan during the year ended June 2022 was 28 25 GW, more than 35% lower than power generation capacity of 43 77 GW

It was not immediately clear how Pakistan will finance the proposed coal fleet, but Dastgir said setting up new plants will depend on “investor interest,” which he expects to increase when newly commissioned coal-fired plants are proved viable F i n a n c i a l i n s t i t u t i o n s i n C h i n a a n d J a p a n , w h i c h a r e a m o n g t h e b i g g e s t f i n a n c i e r s o f c o a l u n i t s i n d e v e l o p i n g c o u n t r i e s , h a v e b e e n b a c k i n g o u t o f funding fossil-fuel projects in recent years amid pressure from activists and Western governments

Imran ‘super corrupt’, filed false cases against rivals via ‘pressure tactics’: Marriyum

ISLAMABAD

S ta f f R e p o R t

Minister for Information and Broadcasting

Marriyum

Aurangzeb said on Tuesday that if General (Retd) Bajwa was a super king”, Imran Khan was a super corrupt person who filed false cases through threats and pressure tactics against the then-opposition leaders in front of “selected judges” Addressing a press conference here she said, Not a single evidence has been presented against Prime Minister Shehbaz Sharif in any court inside and outside the country to prove the allegation of corruption The then opposition leadership appeared in every court and never made any excuse like Imran Khan, wearing a plaster on the leg ” She said that the leadership of the Pakistan Muslim League (Nawaz) including Nawaz Sharif and Shehbaz Sharif become victorious and Imran Khan got “exposed every day” She said the political victimization of Nawaz Sharif and Shehbaz Sharif by Imran Khan damaged the county The minister said that “Imran Khan had destroyed the economy, and foreign policy and deprived the youth of employment and pushed the country into a storm of inflation She asked the Supreme Court of Pakistan to “summon Imran Khan in the fake narrative of cypher and foreign conspiracy against his government as this was a national and public interest issue at present She said that during Imran Khan’s rule baseless cases were filed against Shehbaz Sharif The minister said that Shahzad Akbar the head of the Asset Recovery Unit and his team were hired for filing of false cases against Shehbaz Sharif and Imran’s other political opponents over the same

QoQ decrease, but it is still 38 07% higher on a YoY basis Toyota ended the Q2FY23 with a net income of Rs 1 3 billion This amounts to a 2 59% QoQ increase but a 72% YoY decrease Looking at the quarter ahead it is likely that Toyota will do similarly, if not worse By similarly, we mean that it will record a sluggish QoQ increase if it does at all Toyota has not only undergone three upward price revisions across January and February, but it has also observed non-production days from February 1 to February 14 Toyota has announced that it will operate a single shift going forward from February 15 due to its inability to maintain its inventory levels which in turn are a consequence of the country’s forex, and the subsequent import situation Toyota has also reinstated its refund policy earlier this month The refund did not lead to a significant dip in sales according to Asghar Ali Jamali, CEO Toyota Indus Motors however it remains to be seen whether a similar outcome will happen this time Toyota s biggest challenge beyond its supply-chain quagmire, will be the waves of inflation that will erode customers purchasing power in the months to come January has already recorded the highest inflation in the past five decades, with most expecting February and March to exceed this

PPP decides against contesting NA by-elections

ISLAMABAD

S ta f f R e p o R t

Accepting the proposal tabled by Pakistan Democratic Movement (PDM), the Pakistan People’s Party (PPP) on Tuesday decided against contesting the upcoming by-elections to 33 seats of the National Assembly (NA)

According to details, the decision to boycott the upcoming by-elections was taken during PPP’s parliamentary board meeting held with PPP Chairman Bilawal Bhutto Zardari in the chair

The PPP’s parliamentary board meeting was attended by Yousuf Raza Gilani, Raja Pervez Ashraf, Nair Bukhari, Farhatullah Babar, Makhdoom Ahmed Mehmood, Faryal Talpur and candidates of the by-elections The participants of the meeting were divided over the Pakistan Democratic Movement s (PDM) proposal, sources claimed During the meeting, the party’s senior leaders opined against contesting the elections However sources claimed, the meeting decided in principle to boycott the by-polls and let the Pakistan Tehreek-e-Insaf (PTI) fight against no one The candidates – who were nominated to contest the polls – were taken into confidence It is pertinent to mention here that by-polls on 33 NA seats would be held on March 16