HUBCO delays dividend as FBR freezes accounts
Company liable to pay Rs3b following dismissal of appeal.
KARACHI:
Hub Power Company (Hubco) has announced to delay dividend payment of Rs3 per share announced earlier as company accounts have been frozen by the Federal Board of Revenue (FBR).
The tax authority has taken this measure after dismissal of the appeals filed by Hubco – the country’s largest independent power producer – in Islamabad High Court against a tax on issuance of shares against the project development cost.
Hubco has already filed appeals before the Supreme Court against the decision and has also requested for abstaining FBR from taking any coercive action until the matter is adjudicated by the court, according to a notice sent to the Karachi Stock Exchange on Tuesday.
The company is liable to pay Rs3 billion in the shape of taxes and penalties for settling this issue as per news reports.
“However, it will be liable to pay Rs1.6 billion, incase the Supreme Court decides against Hubco as per our discussion with the company and mentioned in the company accounts,” said BMA Capital analyst Nurali Barkatali. This translates into a one-time hit of Rs1.38 per share.
This situation raises questions over ability of the power producer to continue its operations and to make payments to its fuel supplier Pakistan State Oil.
“We are of the opinion that plant operations will not suffer as fuel supply to senior plant in south is guaranteed by Government of Pakistan under power policy of 1994,” added Barkatali.
Published in The Express Tribune, April 4th, 2012.
Hub Power Company (Hubco) has announced to delay dividend payment of Rs3 per share announced earlier as company accounts have been frozen by the Federal Board of Revenue (FBR).
The tax authority has taken this measure after dismissal of the appeals filed by Hubco – the country’s largest independent power producer – in Islamabad High Court against a tax on issuance of shares against the project development cost.
Hubco has already filed appeals before the Supreme Court against the decision and has also requested for abstaining FBR from taking any coercive action until the matter is adjudicated by the court, according to a notice sent to the Karachi Stock Exchange on Tuesday.
The company is liable to pay Rs3 billion in the shape of taxes and penalties for settling this issue as per news reports.
“However, it will be liable to pay Rs1.6 billion, incase the Supreme Court decides against Hubco as per our discussion with the company and mentioned in the company accounts,” said BMA Capital analyst Nurali Barkatali. This translates into a one-time hit of Rs1.38 per share.
This situation raises questions over ability of the power producer to continue its operations and to make payments to its fuel supplier Pakistan State Oil.
“We are of the opinion that plant operations will not suffer as fuel supply to senior plant in south is guaranteed by Government of Pakistan under power policy of 1994,” added Barkatali.
Published in The Express Tribune, April 4th, 2012.