Chairman, and competitor, stops Nimir reps from speaking in NA body
Exhibited an obvious case of a conflict of interest between both parties
PHOTO: APP
ISLAMABAD:
National Assembly Standing Committee on Finance Chairman Qaiser Ahmad Sheikh Thursday denied representatives from Nimir Chemicals Pakistan Limited the right to speak, exhibiting an obvious case of a conflict of interest between both parties.
Nimir, which is the sole manufacturer of phthalic anhydride petrochemical, is a direct competitor of Sheikh’s Qaiser LG Petrochemicals, which uses imported phthalic anhydride for the production of di-octyl phthalate in the country.
“I cannot allow any individual industry to plead a case in the standing committee,” said Sheikh during the meeting when a Nimir representative wanted to highlight his company’s plight. It was previously alleged that under pressure from Sheikh, the Federal Board of Revenue (FBR) reduced Nimir’s duty protections in the last budget, which has negatively affected the company’s profits.
The meeting was taking place to discuss budget proposals for the next financial year and Nimir had aimed to make its case to get back lost protection. However, Sheikh halted the company’s representatives from speaking and even ignored requests from committee members to allow them to voice their concerns. The representatives had come from Lahore to attend the meeting.
Ironically, the meeting’s brief had included a representation from Nimir which indicated that the committee allowed them to attend the meeting in the first place.
Nimir Chemicals Chief Finance Officer (CFO) Saqib Raza protested the chairman’s decision of not letting him speak and stated that if the government fails to reverse its decision, then the company will have no option but stop production of the chemical.
Previously, Nimir lodged a complaint with Finance Minister Ishaq Dar in June, protesting against the government’s decision of reducing customs duty from 16% to 11% on import of the chemical.
The government had brought the change in the duty structure at the eleventh hour on June 22 as the duty reduction was not part of the finance bill that Dar unveiled on June 3 in the lower house of parliament.
Meanwhile, Sheikh has been accused of misusing public office to get concession for his business for past one year. While the FBR reduced the duty structure for Nimir Chemicals, it kept the protection intact for Sheikh’s industries. As against only 11% duties on import of the phthalic anhydride, the import duties on di-octyle phthalate are currently 21%. The phthalic anhydride plant costs about Rs4 billion, whereas the installation cost Sheikh’s factories were only Rs80 million.
Negative impact
Nimir Chemicals Pakistan Limited claims that it has sustained Rs178 million in losses from July to December 2016 due to drop in sales of phthalic anhydride chemicals after the government lowered duties. Compared to these losses, the company made a profit of Rs70 million last year, according to the CFO.
The installed capacity of the sole phthalic anhydride plant is 30,000 tons per annum, whereas the overall market demand in Pakistan is 18,000 tons. During the first ten months of current fiscal year, Nimir Chemicals could sell only 14,500 metric tons chemical and it was becoming unviable for it to sustain production.
After the change in duty structure, imports of the phthalic anhydride increased 15.5% during first nine months of the current fiscal year as compared to the last year, according to data submitted by the Nimir Chemicals in National Tariff Commission (NTC).
The company said that the government also sustained Rs45.6 million revenue losses due to lower custom duties.
Additionally, the terms of trade worsened for the industry when Sheikh allegedly used his alleged influence to convince the NTC to lift the anti-dumping duties on import of the chemical.
The previous version of the story erroneously mentioned Nimir Chemicals Pakistan Limited as Nimir Industries. The error is regretted and has been rectified.
Published in The Express Tribune, April 14th, 2017.
National Assembly Standing Committee on Finance Chairman Qaiser Ahmad Sheikh Thursday denied representatives from Nimir Chemicals Pakistan Limited the right to speak, exhibiting an obvious case of a conflict of interest between both parties.
Nimir, which is the sole manufacturer of phthalic anhydride petrochemical, is a direct competitor of Sheikh’s Qaiser LG Petrochemicals, which uses imported phthalic anhydride for the production of di-octyl phthalate in the country.
“I cannot allow any individual industry to plead a case in the standing committee,” said Sheikh during the meeting when a Nimir representative wanted to highlight his company’s plight. It was previously alleged that under pressure from Sheikh, the Federal Board of Revenue (FBR) reduced Nimir’s duty protections in the last budget, which has negatively affected the company’s profits.
The meeting was taking place to discuss budget proposals for the next financial year and Nimir had aimed to make its case to get back lost protection. However, Sheikh halted the company’s representatives from speaking and even ignored requests from committee members to allow them to voice their concerns. The representatives had come from Lahore to attend the meeting.
Ironically, the meeting’s brief had included a representation from Nimir which indicated that the committee allowed them to attend the meeting in the first place.
Nimir Chemicals Chief Finance Officer (CFO) Saqib Raza protested the chairman’s decision of not letting him speak and stated that if the government fails to reverse its decision, then the company will have no option but stop production of the chemical.
Previously, Nimir lodged a complaint with Finance Minister Ishaq Dar in June, protesting against the government’s decision of reducing customs duty from 16% to 11% on import of the chemical.
The government had brought the change in the duty structure at the eleventh hour on June 22 as the duty reduction was not part of the finance bill that Dar unveiled on June 3 in the lower house of parliament.
Meanwhile, Sheikh has been accused of misusing public office to get concession for his business for past one year. While the FBR reduced the duty structure for Nimir Chemicals, it kept the protection intact for Sheikh’s industries. As against only 11% duties on import of the phthalic anhydride, the import duties on di-octyle phthalate are currently 21%. The phthalic anhydride plant costs about Rs4 billion, whereas the installation cost Sheikh’s factories were only Rs80 million.
Negative impact
Nimir Chemicals Pakistan Limited claims that it has sustained Rs178 million in losses from July to December 2016 due to drop in sales of phthalic anhydride chemicals after the government lowered duties. Compared to these losses, the company made a profit of Rs70 million last year, according to the CFO.
The installed capacity of the sole phthalic anhydride plant is 30,000 tons per annum, whereas the overall market demand in Pakistan is 18,000 tons. During the first ten months of current fiscal year, Nimir Chemicals could sell only 14,500 metric tons chemical and it was becoming unviable for it to sustain production.
After the change in duty structure, imports of the phthalic anhydride increased 15.5% during first nine months of the current fiscal year as compared to the last year, according to data submitted by the Nimir Chemicals in National Tariff Commission (NTC).
The company said that the government also sustained Rs45.6 million revenue losses due to lower custom duties.
Additionally, the terms of trade worsened for the industry when Sheikh allegedly used his alleged influence to convince the NTC to lift the anti-dumping duties on import of the chemical.
The previous version of the story erroneously mentioned Nimir Chemicals Pakistan Limited as Nimir Industries. The error is regretted and has been rectified.
Published in The Express Tribune, April 14th, 2017.