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Express Tribune
6 days ago
- Automotive
- Express Tribune
Govt denies high interest on EV financing
Listen to article Commercial banks are demanding higher interest rates on financing for electric two and three-wheelers but the government has turned down their request. At present, the interest rate is 11% but they are demanding 5% additional interest to cover insurance and operational expenses. The Steering Committee on the Electric Vehicle Policy has decided to hold a meeting with banks to negotiate the provision of financing at fair rates for electric two and three-wheelers. The government has announced a Rs9 billion subsidy in the federal budget and plans to give a total subsidy of Rs100 billion for two and three-wheelers over five years. Experts say bank financing should ideally not exceed Karachi Inter-bank Offered Rate (Kibor) plus 1% or 2%. Fifth meeting of the Steering Committee on the Electric Vehicle Policy was held on Thursday, headed by Special Assistant to the Prime Minister (SAPM) on Industries and Production Haroon Akhtar Khan. The meeting brought together representatives from key federal ministries, the Federal Board of Revenue (FBR), the State Bank of Pakistan (SBP), the Capital Development Authority (CDA) and coordinators from the Prime Minister's Office to review progress on the New Energy Vehicle (NEV) Policy 2025-2030. It was discussed that two-wheeler prices should not be above Rs200,000 as the government would provide a subsidy of Rs60,000 whereas the remaining amount would be given as bank loan. Meeting participants said that companies engaged in manufacturing electric two and three-wheelers would be bound to use lithium batteries. Moreover, the option to swap batteries in two-wheelers should not be available to mitigate chances of battery theft. China has also banned battery swaps and meeting participants suggested that the same should be done in Pakistan. They noted that a single battery charge should provide a range of 60 kilometres for two wheelers and 180 kilometres for three wheelers. They held detailed discussions on the first phase of the proposed subsidy scheme for electric vehicles. A technical briefing was also given regarding battery performance and specifications, specifically considering Pakistan's unique climatic conditions and their impact on electric vehicle performance. Speaking on the occasion, Haroon Akhtar Khan said that the Ministry of Industries and Production was engaged in consultations with provincial governments regarding the policy and emphasised that this intergovernmental cooperation would continue to ensure effective and consistent implementation across the country. He highlighted that the policy's environmental impact would be assessed using international standards to measure reductions in greenhouse gas emissions and to explore opportunities for carbon credits. He reiterated the government's commitment to promoting eco-friendly technologies under the guidance of the prime minister. According to Haroon Akhtar, the NEV policy is aligned with the vision of steering Pakistan toward a greener, cleaner and more sustainable transportation system. He emphasised that electric vehicles would not only reduce Pakistan's reliance on imported fuel but would also contribute significantly to lowering environmental pollution. The PM aide concluded by stating that the government was fully committed to developing green transport infrastructure and the new policy aimed to achieve integrated progress in technology, economy and environmental sustainability.
Business Recorder
24-05-2025
- Business
- Business Recorder
Power in decline
EDITORIAL: Just as the government prepares to repackage power sector subsidies in a new structure discussed with the World Bank, its own projections for future electricity costs have triggered alarm across the industrial landscape. The textile sector, already battered by erratic supply and steep bills, is warning of a retreat back to captive generation – an outcome that exposes the widening gap between policy claims and operational reality. At the heart of the dispute lies the Power Division's submission to Nepra of power purchase price (PPP) projections for FY2025-26. Despite years of renegotiations with Independent Power Producers (IPPs) and claims of trillions saved, the projected tariffs for next year remain strikingly similar to the old ones. In scenario after scenario presented by the Central Power Purchasing Agency (CPPA-G), the cost of power hovers between Rs24.75 and Rs26.70 per unit. Not only do these projections fail to reflect any tangible benefit from reforms, they also disregard the lived experience of industrial users grappling with frequent supply disruptions and declining competitiveness. From Karachi to Lahore, the industrial sector is demanding clarity: where are the savings, and why are they not translating into reduced tariffs? The fact that power rates may actually rise by Rs5-6 per unit in July, as time-bound fuel and quarterly adjustments expire, only deepens the frustration. Already, grid power has become synonymous with unreliability, causing production losses of up to 10 percent compared to captive generation. If prices rise further, many manufacturers see little choice but to revert to their own plants – despite the inefficiencies – just to keep operations stable. Nepra's hearing last week laid bare the disconnect between official optimism and industrial reality. Industry representatives criticised the flawed assumptions underpinning the CPPA's scenarios: overestimated GDP growth, inflation pegged at 8.65 percent despite a clear downward trend, and Kibor set at 11.9 percent even as interest rates are expected to fall into single digits. They also pointed to the absence of any discernible impact from IPP renegotiations, especially with the expensive Jamshoro coal plant and other legacy capacity charges still weighing heavily on the system. Meanwhile, the new subsidy restructuring proposal is being sold as progressive and targeted—but details reveal more of the same. Instead of genuine cost rationalisation or structural reform, the plan reshuffles consumer categories and discounts under a new label, seeking to placate lenders rather than fix the sector's fundamentals. For large-scale industry, the implications are dire. A distorted pricing structure, unreformed distribution companies (Discos), and unreliable supply chains are combining to undermine export potential at a time when Pakistan can least afford it. The sharpest warning came from the textile sector, which signalled that if quality and pricing are not addressed, it will abandon the grid altogether. Such a shift would not just undo years of policy work but also widen the inefficiency loop: as more high-volume users exit the system, the cost burden will shift further onto a shrinking base, deepening the circular debt crisis and exposing the sector to yet more political patchwork. Nepra's call for more realistic planning and transparency is timely, but insufficient. The Power Division's defence that projections are based on assumptions from IFIs and government agencies only underscores how deeply these exercises have lost touch with economic reality. What industry is demanding is not perfect foresight, but coherence and accountability. That these remain elusive after decades of reform is telling. With consumption already falling and energy affordability now front and centre in export decisions, the warning signs are flashing red. Policymakers may have convinced external lenders of their good intentions, but they are rapidly losing the confidence of the very users who keep the system afloat. Unless corrected, these flawed assumptions and misplaced priorities will not just cripple industry – they will power Pakistan straight into stagnation. Copyright Business Recorder, 2025
Business Recorder
13-05-2025
- Business
- Business Recorder
Sindh govt to provide ‘easy loans' to small, medium businesses
The Sindh government would provide 'easy loans' to small and medium businesses in the province and women to be given priority in providing loans, an official statement said on Tuesday. In this regard, the provincial government has signed memoranda of understanding (MoU) with Bank Islami and Soneri Bank. Speaking on the occasion, Special Assistant to the Chief Minister of Sindh on Investment and Public Private Partnership Syed Qasim Naveed Qamar said the agreements would provide loan facilities to small and medium businesses in Sindh on 'easy terms'. Sindh govt empowers low-income households with solar energy: Murad He added that priority would be given to women in providing loans, while technical assistance would also be provided to the businessmen. 'The agreement will also provide definite help in starting and expanding businesses.' Those engaged in agriculture, livestock, fisheries, poultry, cold storage, mining and other similar businesses in Sindh would be able to take advantage of the facility of the loans with Kibor based finance cost subsidies. He said the Sindh government was providing all possible support to encourage small and medium businesses in the province and in that regard, Kibor subsidy on loans was being provided by the Sindh Enterprise Development Fund (SEDF).
Express Tribune
11-05-2025
- Business
- Express Tribune
PSX sinks 6,939 points amid tensions
Listen to article The Pakistan Stock Exchange (PSX) endured a turbulent week, with the KSE-100 index plunging 6,939 points, or -6.1% week-on-week (WoW), to close near 107,000 amid rising geopolitical tensions between Pakistan and India. Despite a partial rebound on Friday, the broader trend remained bearish. Meanwhile, the State Bank of Pakistan (SBP) slashed the policy rate by 100 basis points (bps) to 11%, prompting a downward shift in Kibor and secondary market yields. On the macroeconomic front, remittances rose 13% year-on-year (YoY) in April to $3.2 billion, while State Bank's reserves climbed $118 million WoW. Additionally, Pakistan launched its Green Sukuk, targeting Rs20-30 billion for eco-friendly initiatives, even as the fiscal deficit widened and trade imbalances persisted. On a day-on-day basis, the PSX witnessed a turbulent start to the week, with the benchmark KSE-100 index closing nearly flat amid rising tensions with India and State Bank's policy uncertainty. The index dipped steeply in early trading, falling 1,036 points. At close, the KSE-100 recorded a decline of just 11.70 points and settled at 114,102. On Tuesday, the bourse closed lower as investor optimism over the State Bank's 100bps rate cut quickly gave way to concerns over escalating Pakistan-India tensions and Moody's warning about economic stability. The index recorded a decline of 534 points. The market continued its downtrend and experienced a turbulent start to Wednesday's session, with the index nosediving over 6,500 points shortly after the open over heightened border tensions. The KSE-100 briefly touched the low of 107,008 before staging a partial rebound, ultimately climbing to the intra-day high of 112,457 and closing the day down by over 3,500 points. On Thursday, stocks underwent yet another day of stampede as the PSX witnessed its largest single-day plunge of 6,482 points on intensifying fears of a war between Pakistan and India. The index settled at 103,527. The market staged a robust recovery on Friday, where the benchmark index surged around 3,650 points, trimming some of Thursday's steep losses. Investor sentiment improved sharply amid optimism over the upcoming IMF's executive board meeting, which was expected to approve the Extended Fund Facility (EFF) tranche and a $1.3 billion Resilience and Sustainability Facility (RSF). The index settled at 107,175. In its review, Arif Habib Limited (AHL) wrote that the KSE-100 index remained mostly in the red during the outgoing week amid mounting geopolitical tensions and concerns over further escalation. On the economic front, the State Bank on Monday reduced its policy rate by 100bps to 11%. Subsequently, Kibor across all tenors decreased 64bps to 91bps. Similarly, the secondary market yields across three, six and 12-month tenors fell 55bps, 51bps and 48bps, respectively. In addition to this, Pakistan launched Green Sukuk, aiming to raise Rs20-30 billion for environmentally sustainable projects, AHL said. Meanwhile, urea and di-ammonium phosphate sales dwindled 25% and 4% YoY, respectively, in April 2025. However, cement dispatches climbed up 13% YoY. AHL pointed out that the finance ministry reported a budget deficit of Rs2,970 billion (2.4% of GDP) for 9MFY25. Furthermore, the State Bank's reserves increased $118 million to $10.3 billion. The market closed the week at 107,175, plunging 6,939 points, or -6.08% WoW. Sector-wise, negative contributions came from banks (1,637 points), exploration and production (905 points), cement (738 points), technology (508 points) and pharmaceuticals (436 points). Meanwhile, the sector that contributed positively was sugar (7 points). Stock-wise, negative contributors were UBL (617 points), Lucky Cement (435 points), Hubco (339 points), OGDC (338 points) and Mari Petroleum (321 points). Among individual stocks, the positive contribution came from Nestle (16 points), JDW Sugar (7 points) and IBFL (3 points). Foreign buying was witnessed during the week, which came in at $1.52 million compared to net selling of $6.79 million last week. Average volumes arrived at 508 million shares (up 20% WoW) while average traded value settled at $98 million (up 0.3%), AHL added. JS Global analyst Muhammad Waqas Ghani said in his report that the week began on a volatile note as markets in Pakistan reacted to heightened geopolitical concerns. By Thursday, the sentiment had weakened sharply following reports of Indian drone strikes on multiple cities, including Karachi and Lahore, after Pakistani forces downed their planes.
Business Recorder
30-04-2025
- Business
- Business Recorder
Pakistan's current account to remain positive for full fiscal year 2024-25, says Aurangzeb
Finance Minister Muhammad Aurangzeb has projected that Pakistan's balance of current account will remain in surplus for the full fiscal year 2024-25, partially contradicting with the central bank estimation that the balance may either be in a deficit of 0.5% in the year. The State Bank of Pakistan (SBP) in its half-yearly report 2024-25 anticipated that the full-year current account would be either in a deficit of 0.5% or in a surplus of 0.5% for FY25. However, speaking at a pre-budget seminar at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) in Karachi on Wednesday, the finance czar said the current account would remain positive for full FY25. He said the country's tax-to-GDP ratio would surge to 10.6% in FY25 and the government was aiming to raise the ratio to 13.5% in the next three years through various tax reforms. 'This will be the last International Monetary Fund (IMF) programme for Pakistan,' the finance minister maintained. Aurangzeb said the government was focused at giving relief in taxes to businesses and salaried class people, where possible, as 'the government is all for supporting economic activities in the next fiscal year 2025-26'. Govt won't support 'plots and files' business, says Aurangzeb He said the government had appointed independent analysts to take their assistance in making a better budget and make that in line with global best practices for FY26. 'Every sector of the economy has to pay due taxes to lower burden of the high taxation on salaried class people and manufacturing industries.' The finance minister, however, highlighted that Pakistan was under IMF programme which might limit relief measures for FY26. 'Despite of this, the government may look what it can do in this regard in the years to come.' Aurangzeb was of the view that there were three major challenges to the businesses and the economy; high taxation, high energy cost and financial cost. He added the finance cost (Kibor) came down to around 12% in line with the State Bank of Pakistan (SBP) cutting its policy rate by 10 percentage points since June 2024 to 12% at present, enabling businesses and the private sector to take credit for new projects and expansion of the ongoing production lines. 'We are in the right direction, but more to do,' the finance minister said, adding the government was working to see where it could give tax relieves to business and individuals.
