Uncertainty in Pakistan on Possible Removal of Duty for Refineries

Pakistani stocks ended down on Wednesday in thin trade as investors sold refinery shares because of uncertainty about the possible removal of a duty on refineries, dealers said.

There is a possibility the government may decide to remove the deemed duty of 7.5% for refineries which would then hurt earnings.
There was no response from the Petroleum Ministry.

The government lets refineries charge an extra 7.5% duty in order to sell locally-produced diesel at the same price as the sale of imported diesel. This was imposed to protect refineries against volatility in international oil prices.

"The local bourse observed a lackluster day as volume fell to a 10-week low as the prevailing uncertainty about the refinery duty kept local investors on the sidelines," said Samar Iqbal, a dealer at Topline Securities.

The Karachi Stock Exchange's benchmark 100-share index ended 0.25%, or 30.99 points, lower at 12,242.39.

Turnover fell to 78.35 million shares, compared with 132.73 million shares on Tuesday.

Attock Refinery ended at its lower circuit, 5% lower at 121.05 rupees, and Pakistan Refinery Ltd fell 4.6% to end at 99 rupees.

In the currency market, the rupee ended firmer at 85.47/52 to the dollar, compared with Tuesday's close of 85.52/57 amid steady demand for the U.S. currency.

In the money market, overnight rates were flat at between 11.75% and 12.25%, unchanged from the previous days' close amid increased liquidity in the market.

Dealers said rates are likely to stay on the lower side as there were scheduled inflows of 24 billion rupees ($280 million) on Thursday.