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Business Recorder
24-06-2025
- Business
- Business Recorder
Middle East crisis: solar imports in Pakistan could become costlier on increased freight
The cost of solar panel imports was feared to increase in Pakistan if Iran-Israel conflict continued for a longer period, importers told Business Recorder on Tuesday. Israel's aggression in Gaza has continued for the last 18 months, but the Middle East crisis intensified after Israel began attacking Iran on June 13, saying its 'longtime enemy' was on the verge of developing nuclear weapons. Iran, which says its nuclear programme is only for peaceful purposes, retaliated with missile and drone strikes on Israel. After two weeks' clashes, US President Donald Trump said a ceasefire between Iran and Israel was in force on Tuesday, urging both sides to 'not violate it' on the 12th day of the war between the two arch-foes. However, Gaza crisis still persists along with chances of renewal of Iran-Israel conflict. 'Shipping costs are around $2,500 per container in Pakistan, and if the Middle East conflict intensifies, this cost could reach up to $3,000 per container,' said Diwan International Pvt Ltd Director Muhammad Faaz Diwan told Business Recorder. According to Diwan, the pre-container shipping cost (freight cost) rose more than 100% in the last two months, from $1,200 to now $2,500. Explaining the reasons behind the cost increase, he noted that the US had imposed duties on China, but the duties were suspended for 90 days. 'As a result, China received a surge of orders from the US, which led to increased freight costs.' Diwan said the freight costs would increase further if Iran-Israeli clashes continued for a longer period. He also mentioned that importers were paying an additional 3% advance tax on imports. 'If a 10% tax is imposed on solar panels, the total tax burden on importers would reach 13%, leading to higher solar panel prices.' It may be noted that the government, in its budget proposals for FY2025-26, suggested 18% tax on imported solar panels, and later reduced it to 10%. Diwan noted that the cost per watt of solar panel was approximately Rs28, and if the 13% tax was imposed, the cost would rise to Rs32 per watt for importers. He remarked that Pakistani citizens were facing dual challenges: high electricity rates and load shedding, which is why many opt for solar panels, according to Diwan. However, he emphasised that even with the tax, solar panels would remain within the consumer's budget if they calculated the long-term savings. Meanwhile, regarding Finance Minister Muhammad Aurangzeb's statement accusing traders of hoarding and creating artificial shortages, Diwan rejected the claim, saying if traders were hoarding, solar panel prices would have skyrocketed — which has not happened. On the question of local solar panel manufacturing, Diwan stated that approximately 98% of the solar panels used in Pakistan were imported. 'The remaining 2% are locally made but substandard, mainly used in rural areas or for small-scale needs. These panels have low durability.' He stressed that until a top-tier 1 manufacturing facility was established in Pakistan, no kind of duty should be imposed on solar panels. 'Once a tier-1 factory is operational in Pakistan, the government can then impose GST [goods and services tax] and import duties to encourage local competition,' Diwan said. 'Imposing taxes on panels without local manufacturing is equivalent to blocking the entry of high-quality products into Pakistan.' 'Massive demand, lack of clarity on taxation' Inverex CEO Muhammad Zakir Ali told Business Recorder Pakistan imported 17 gigawatts worth of solar panels in 2024, while in 2025, imports have already reached 8 gigawatts so far, according to Ali. He explained that demand for solar panels in Pakistan was very high due to rising electricity rates and frequent load shedding, pushing people to shift towards alternative energy sources. Speaking about alternative energy, Ali stressed the need for clarity in taxation policies, as the government's announcement of 18% tax, followed by a reduction to 10%, created confusion among people. He also stated that setting up a solar panel industry in Pakistan had become inevitable. 'Currently, 95% of the solar panels used in the country are imported, and the remaining 5% are not up to international standards.' Ali emphasised that establishing such an industry would create employment opportunities and enable Pakistan to meet its growing demand locally. 'Need for immediate local manufacturing and financing' Fusion Tech chairman Salim Memon stressed that local manufacturing must begin at the earliest to meet the country's rising demand for solar panels. He also urged the government to introduce bank financing schemes for solar panels to make green energy accessible to the common man. He highlighted the need for complete local manufacturing—from solar panels to inverters, and criticised the current practice saying what was referred to as 'manufacturing' in Pakistan was 'merely assembling'. Memon stressed that the time had come for Pakistan to initiate a true solar panel manufacturing industry.
Hans India
07-06-2025
- Business
- Hans India
Centre's wheat procurement at MSP rises to 3-yr high
New Delhi: The government has procured 29.92 million tonnes (MT) of wheat during the 2025–26 Rabi marketing season (April–June) which represents a 13 per cent increase over the corresponding figure for the same period of the previous year and is the highest in the last three years, according to a senior official. This procurement is from a total 40.42 MT that arrived in the markets of the main wheat producing states across the country. The remaining portion has been bought by millers and traders at a price that cannot be less than the Minimum Support Price (MSP) paid by the government. A small quantity of wheat is still reported to be reaching the mandis in Uttar Pradesh and Rajasthan. The procurement is considered sufficient for distribution through the Public Distribution System and market intervention schemes to keep prices under control. At present, the Food Corporation of India (FCI) has wheat stock of 36.65 MT which exceeds the buffer requirement of 27.58 MT for July 1, the official said. The top four states contributing to wheat procurement include Punjab (11.93 MT), Madhya Pradesh (7.77 MT), Haryana (7.14 MT) and Rajasthan (2.02 MT). The agriculture ministry has estimated wheat production at a record 117.5 MT during the 2024-25 crop year (July-June), an increase of 3.7 per cent over the previous year. The average mandi prices on Thursday across key producing states were: Punjab (Rs2,475/quintal), Madhya Pradesh (Rs2,521/quintal), Rajasthan (Rs2,465/quintal) and Haryana (Rs2,425/quintal). The modal retail price of wheat was Rs28/kg.
Express Tribune
02-06-2025
- Business
- Express Tribune
MYT impact estimated at over Rs300b
The Power Division has urged Nepra to align KE's tariff structure with national standards to ensure fairness, transparency and affordability. photo: file The Power Division has challenged the regulator's decision on granting a multiyear tariff (MYT) to K-Electric (KE), alleging that it will allow the company to collect over Rs300 billion from consumers. "The total financial impact is in excess of Rs300 billion of the interventions identified for review by the government of Pakistan in the KE MYT," the division said in a review petition submitted to the National Electric Power Regulatory Authority (Nepra). It has asked Nepra to revisit its recent approval of electricity rates for KE, Karachi's main power supplier. KE's new tariffs come into effect from financial year 2024-25 and will run through FY30. The government believes that Nepra has allowed several cost items and profit margins to KE that are higher or more favourable than for any other utility in Pakistan, resulting in unnecessarily high bills for consumers and extra pressure on public finances. The Power Division has raised serious concerns over the preferential treatment granted to KE. Nepra set KE's fuel cost benchmark at Rs15.99 per kilowatt-hour (kWh), significantly higher than the rates paid by other utilities purchasing power from the national grid. This discrepancy adds Rs28 billion in FY24 and Rs13 billion in FY25 to the federal budget, shielding KE customers from these costs. KE also received a "recovery loss allowance," despite its actual recoveries exceeding the threshold set by Nepra. No other utility enjoys this privilege, which has generated Rs36 billion in FY24 and Rs35 billion in FY25 for KE, amounting to over Rs200 billion in seven years. Furthermore, Nepra allowed KE a 24% markup on working capital – higher than any other utility – boosting revenue by Rs2.4 billion in FY24 and Rs15 billion over seven years. Additionally, a higher distribution loss target of 13.90% (vs KE's own 13.46%) was set, passing Rs3.1 billion in FY24 and Rs21 billion over the seven-year period on to consumers. A unique 2% "law and order" margin was granted to KE, despite an improved security situation. This adds Rs14 billion in FY24 and Rs99 billion over seven years. KE was also allowed to retain "other income" from fines and investments, which should have offset customer costs. Transmission losses were overestimated at 1.30% (vs actual around 0.75%), and KE keeps 75% of savings, creating inefficiency and costing Rs4 billion in FY24 and Rs28 billion over the seven-year period. Excessive returns were also permitted. KE enjoys a 12% return on equity (RoE) in US dollar (around 24.46% in Pakistani rupee) on generation, compared to National Transmission and Despatch Company's (NTDC) 15% in rupees, and 14% RoE in US dollar (around 29.68% in PKR) on distribution, far exceeding the 14.47% RoE in rupees for others like the Faisalabad Electric Supply Company (Fesco). Idle KE power plants still receive capacity payments, costing Rs12.7 billion in FY25 and Rs82.5 billion overall. Generous inflation indexation and a 17% RoE for these plants further strain finances. The Power Division urged Nepra to align KE's tariff structure with national standards to ensure fairness, transparency and affordability, stressing the need to eliminate unjustified allowances and ensure equal treatment for all utilities. KE eyes DISCO acquisitions K-Electric held a corporate analyst briefing on Monday to provide insights into its recently approved tariffs and operational updates. The company expressed openness to acquiring other DISCOs (distribution companies), should the privatisation process move forward, according to Arif Habib Limited. Its management highlighted that KE's total generation capacity currently stands at 2,397 megawatts (MW) from internal sources, while it procures over 1,600 MW externally. With the anticipated completion of NTDC interconnection projects, an additional 400 MW is expected to be integrated into its grid. The utility's robust transmission network now comprises 7,095 MVAs capacity, 74 grid stations and 1,394 km of lines, while its distribution infrastructure includes 8,964 MVAs capacity, 2,112 feeders and over 31,000 pole-mounted transformers (PMTs). Since its privatisation in 2005, KE has added 1,957 MW to its generation capacity, improved efficiency from 30% to nearly 46%, doubled transmission capacity and cut transmission and distribution (T&D) losses from 34.2% to 16%. The utility estimates a cumulative saving of Rs900 billion for the government and consumers, alongside annual fiscal savings of Rs164 billion due to lower aggregate technical and commercial (AT&C) losses. Nepra has approved a multi-year tariff (MYT) structure of Rs39.98/kWh for KE, lower than the utility's request for Rs44/kWh. Return on equity (RoE) has been set at 14% for generation/distribution and 12% for transmission, with a 70:30 D/E ratio. The cost of local and foreign debt has been capped at Karachi Interbank Offered Rate (Kibor) + 2% and Secured Overnight Financing Rate (SOFR) + 4.5%, respectively.
Express Tribune
01-06-2025
- Business
- Express Tribune
Food price disparities persist across metropolis
A steep and widespread increase in the prices of perishable food items has been observed across the provincial capital this week, highlighting the ineffectiveness of official measures aimed at curbing artificial inflation and profiteering. Despite repeated claims by the Punjab government, enforcement of the official price list remained virtually ineffective in markets. Retailers openly flouted the government-fixed prices despite then recent establishment of a price monitoring department led by a secretary. Live chicken prices were officially reduced by Rs28 per kilogram this week, bringing the rate to Rs369383 per kg. However, it was generally unavailable, while chicken meat sold for Rs580690 per kg and boneless chicken for Rs900 to Rs1,050. Among vegetables, the official price of A-grade soft skin potatoes increased by Rs10 to Rs5560 per kg, but they were sold at Rs120140 per kg. B-grade potatoes, fixed at Rs4550, and C-grade at Rs3540, were sold as mixed lots for Rs80100 per kg. Sugar-free potato prices also rose, with A-grade set at Rs4550 but sold for as high as Rs100 per kg. A-grade onions, fixed at Rs3540, were sold for Rs80 per kg. Similar disparities were observed in B- and C-grade onions. Tomatoes followed the same trend, with A-grade fixed at Rs3540 but retailing between Rs80 and Rs120 per kg. Garlic and ginger prices showed notable increases. Locally produced garlic, officially priced at Rs176185 per kg, was sold for Rs200250, while Chinese garlic, fixed at Rs252265, was sold for Rs400. Ginger prices dropped on paper, with the Thai variety set at Rs582610 and Chinese at Rs535580 per kg, yet both were sold for Rs8001,000 per kg. Spinach, fixed at Rs3540, was sold for up to Rs100 per kg. Other items showing significant disparities included cabbage (Rs4750, sold at Rs120150) and Chinese carrots (Rs5255, sold at Rs200250). Among fruits, apple prices surged by Rs30, with official rates ranging from Rs250 to Rs420 per kg, but market prices reached Rs800 per kg. Bananas were also sold well above official prices. Papaya, melon, watermelon, cantaloupe, peach, and phalsa all recorded price gains, with official rates far lower than selling prices.
Express Tribune
22-05-2025
- Business
- Express Tribune
Power generation hits 4-year high in April
Listen to article Pakistan's power generation in April 2025 surged to 10,513 gigawatt-hours (GWh), reflecting a robust 22% year-on-year (YoY) and 25% month-on-month (MoM) increase — the highest monthly generation recorded in the past 48 months, according to data published by the National Electric Power Regulatory Authority (NEPRA). "Power generation in April'25 surged by 22% YoY, highest in 48 months, to 10,513 GWh," wrote Arif Habib Limited (AHL). Despite this sharp rise, generation remained broadly aligned with the regulatory reference level, helping produce a positive Fuel Cost Adjustment (FCA) for the month, the first since June 2024. "Shift to expensive fuel mix resulted in the first positive FCA after June 2024," said Research Head of Optimus Capital, Maaz Azam. The uptick in generation is largely attributed to soaring electricity demand, spurred by rising temperatures and reduced reliance by industries on captive power generation. Analysts believe the shift was also influenced by lower grid tariffs, which made national grid electricity more attractive compared to captive sources. "The rise in generation is attributed to increased demand, driven by a reduction in tariffs," said Research Head of AHL, Sana Tawfiq. Cumulative power generation during the first 10 months of the fiscal year 2025 (10MFY25) reached 100,661 GWh, showing a marginal decline of 0.4% YoY from the same period last year. In terms of source-wise contribution, hydropower (hydel) led the mix with 2,306 GWh (22% share), up 11% YoY, followed by re-gasified liquefied natural gas (RLNG) at 2,157 GWh (21%) and nuclear at 1,882 GWh (18%). A notable highlight was the 59% YoY growth in local coal-based generation, which rose to 1,540 GWh, supported by increased utilisation and favourable fuel costs. Conversely, generation from imported coal and natural gas declined by 32% and 26% YoY, respectively, reflecting deliberate cost-cutting and fuel optimisation strategies. Wind and solar energy maintained a combined share of 9.2%, consistent with seasonal patterns, while residual fuel oil (RFO) re-entered the generation mix with 83 GWh at a steep cost of Rs28.77/kWh. From a policy perspective, a significant development in March 2025 was the imposition of a Rs791/mmbtu levy on gas-based captive power plants (CPPs), raising their effective gas tariff to Rs4,291/mmbtu. According to estimates by AKD Securities, this translates into a staggering generation cost of around Rs42/kWh for off-grid captive units operating at 35% thermal efficiency. This steep cost differential prompted many industrial users to switch to relatively cheaper grid electricity, which averaged around Rs28/kWh (excluding taxes and duties). While the fuel cost of power generation rose by 8% YoY to Rs9.92/kWh in April 2025, driven by a heavier reliance on expensive fuels like RLNG and RFO, the average cost of generation actually fell on a MoM and YoY basis. It dropped to Rs8.95/kWh, down 5% YoY and 8% MoM, compared to Rs9.75/kWh in April 2024reflecting improved fuel mix efficiency and lower reliance on imported fuels. According to Optimus Capital Management, the total generation of 10,513 GWh in April was slightly below the reference level of 10,550 GWh, a shortfall of just 0.4%. However, changes in the fuel mix were stark. Hydel power dropped by 28.6% versus its reference (3,228 GWh), while coal-fired generation soared by 48.6%, with imported coal usage jumping 115.1% and local coal rising 22.5%. Meanwhile, RLNG generation grew by 42.1%, and nuclear generation fell by 22.3%. The cost impact of this fuel mix shift was significant. RLNG's contribution to fuel cost jumped to Rs4.98/kWh, up from a reference of Rs3.31/kWh. Local and imported coal together contributed Rs3.30/kWh, while nuclear (Rs0.38/kWh) and hydel (zero marginal cost) remained low-cost contributors. The net result was a positive FCA of Rs1.27/kWh, calculated against a reference fuel cost of Rs7.68/kWh. This marked change in fuel mix, particularly the increased reliance on RLNG and coal, alongside stable generation levels, led to the country's first positive FCA adjustment in 10 months, a noteworthy development for both consumers and the broader energy sector.
