ISLAMABAD: The Commerce Ministry is reportedly taking other ministries on board to respond to the concerns of European Union companies, including expropriation of Independent Power Producers (IPPs), discriminatory duty on auto industry of Europe to favour Chinese company M/s BYD and reparation of profits and delay in tax refunds, well-informed sources told Business Reorder.
The EU delegation has forwarded issues being faced by the EU companies in Pakistan which will be discussed during 14th session of Pakistan EU Joint Economic Commission scheduled on November 21, 2024 and Sub-Group on Trade meeting on November 20, 2024 in Ministry of Commerce.
The letter written by German Embassy to the Power Minister on the issue of M/s Rousch Power is also part of the agenda.
Deals with IPPs: Govt faces backlash from foreign govts
According to the complaints sent by the European Union to the Commerce Ministry, two Polish companies supplied some material to Pakistani companies, ie, Shakarganj Foods and Harvester Agencies Ltd.
After the consignments were received by the Pakistani industry these companies backed out of their commitment owing to un-conducive business conditions in the country. The Polish Counsellor has requested the government to investigate and compel these big companies to pay the agreed amount.
Some other issues which are on the agenda are as follows: (i) delay in tax refunds; (ii) delay in profit repatriation (although the process of repatriation had started, but it was very slow); (iii) Regulatory Duty (RD) as protectionist measure;(iv) it is not clear whether the RD on molasses was 10 per cent or 15 percent. Commerce Ministry has updated SRO as Brussels was of the opinion that the duty might have been increased to 15 per cent again; (v) in the federal budget 2024-25, concessionary tariffs especially applicable to the EVs of value higher than $ 50,000 were revoked, which puts the EU car manufacturers at a disadvantage, the impression is that this will appease the Chinese EV manufacturer BYD once their sales begin in Pakistan; and (viii) expropriation of IPPs.
The letters of German Embassy to Power Minister, Sardar Awais Leghari who is the Chairman of Energy Task Force, are also on the agenda, according to which, recent developments have caused serious concern amongst the German business community in Pakistan.
M/s Siemens has been a partner in the development of Pakistan’s power sector since the 1990s. Siemens has invested substantial sums to establish Rousch Pakistan Power Limited (RPPL) as an Independent Power Producer (IPP) RI’PL, as an IPP, has an Implementation Agreement (IA) with the Government of Pakistan and a Power Purchase Agreement (PPA) with government owned Central Power Purchasing Agency-Guaranteed (CPPA-G). The term of both Concession Agreements runs till 2031.
The government has also been informed that the current settlement agreement in its present form appears to be unacceptable to foreign investors, as, among other concerns, the currency transfer of the settlement sum and payments of all parts of dividends to the foreign shareholders on an account nominated by them, including an account abroad, in not being guaranteed.
“If, however, the receipts of the settlement sums as well as the currency transfer of the historic and future dividends as well as the partial sums from the settlement agreement were to be guaranteed i.e. by corresponding guarantees by the Ministry of Finance and the Central Bank, Siemens may see fit to agree upon the settlement sum and the termination of the project contracts, despite the settlement lying far below the real value of the plant,” said the German Ambassador in his letter.
Copyright Business Recorder, 2024
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