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SPI Inflation Rises 0.05% Weekly As LPG, Diesel And Petrol Prices Increase
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SPI Inflation Rises 0.05% Weekly As LPG, Diesel And Petrol Prices Increase

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Pakistan’s short-term inflation, measured by the Sensitive Price Indicator (SPI), increased by 0.05% during the week ended August 27, 2026, according to data released by the Pakistan Bureau of Statistics (PBS). The latest SPI inflation data showed mixed price movements for essential commodities. Prices of LPG, diesel, electricity, petrol and several food items increased during the week, while significant declines were recorded in tomatoes, chicken, onions and bananas. On a year-on-year basis, the SPI increased by 9.04%, indicating continued pressure on household budgets despite weekly price movements remaining relatively limited. LPG, Diesel And Petrol Prices Rise The largest weekly increase was recorded in the price of LPG, which rose by 3.46%. Diesel prices increased by 2.44%, while electricity charges for the first quarter rose by 2.06%. Petrol prices increased by 1.71% during the week. Other commodities that became more expensive included pulse gram, wheat flour, eggs, mustard oil, pulse masoor, prepared tea, pulse mash and beef. Pulse gram recorded a weekly increase of 0.88%, while wheat flour rose by 0.39%. Egg prices increased by 0.34%, and mustard oil and pulse masoor prices went up by 0.30% each. Tomato Prices Fall 18.65% Several food items recorded notable price declines during the week. Tomato prices registered the biggest decrease, falling by 18.65%. Chicken prices dropped by 4.41%, followed by onions at 2.87% and bananas at 2.80%. Garlic prices declined by 1.02%, while IRRI-6/9 rice fell by 0.42%. Basmati broken rice prices decreased by 0.41%, while potatoes became 0.39% cheaper. Out of the 51 items monitored by the PBS, prices of 20 items increased, 11 decreased and 20 remained unchanged during the week. Annual Inflation Shows Sharp Price Increases The annual SPI data showed considerably larger price increases in several essential commodities. Onions recorded the highest year-on-year increase at 125.86%, followed by LPG at 55.66% and wheat flour at 45.28%. Tomato prices were 36.69% higher than a year earlier, while diesel increased by 36.33%. Petrol prices rose by 29.84% year-on-year, while electricity charges for the first quarter increased by 25.24%. Other significant annual increases were recorded in chilli powder, mutton, bananas, beef and plain bread. However, several commodities became cheaper compared with the same period last year. Potato prices declined by 31.33%, chicken by 23.87%, sugar by 19.33% and eggs by 17.97%. Fertiliser And Cement Prices The average price of Sona Urea remained unchanged at Rs4,684 per 50kg bag during the week. However, its price was 6.81% higher compared with the same period last year. Meanwhile, the average price of cement stood at Rs1,549 per 50kg bag, showing a weekly decline of 0.59%. Despite the recent decrease, cement remained 9.88% more expensive than a year earlier. The SPI tracks prices of 51 essential commodities across 50 markets in 17 cities. The weekly indicator provides policymakers with a near-real-time assessment of price movements and short-term inflationary pressures across the country.

SECP Digital Onboarding Framework To Speed Up Stock Market Investment
Pakistan

SECP Digital Onboarding Framework To Speed Up Stock Market Investment

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The Securities and Exchange Commission of Pakistan (SECP) has introduced a digital onboarding framework aimed at making stock market investment easier, faster and more accessible for investors across Pakistan. Under the new SECP digital onboarding framework, facilitation accounts will be opened within one day, while investor account applications will be decided within two days. The initiative is designed to simplify the account-opening process and encourage more people, particularly young investors, to participate in the capital market. Investors will also receive a tracking ID that will allow them to monitor the progress of their applications. The new system is expected to improve transparency and reduce delays that can discourage potential investors from entering the stock market. SECP Introduces 24/7 Digital Onboarding The framework will allow investors to complete onboarding and application processing digitally on a 24/7 basis. This means prospective investors will have greater flexibility when applying for accounts without being restricted by traditional office hours. The SECP has also introduced measures aimed at making the process more transparent. Brokers will be required to provide written reasons if they reject an application for opening an investor account. The requirement is expected to give applicants greater clarity about why their applications were declined and what issues may need to be addressed. Another important feature is the removal of unnecessary repeated verification. Investors who have already completed the required verification process will not have to undergo verification again. Govt Targets 2.5m Stock Market Investors The SECP aims to significantly expand participation in Pakistan’s capital market, with a target of increasing the number of investors to 2.5 million. Greater participation by young people remains one of the regulator’s key priorities. The digital onboarding system is expected to help attract a new generation of investors by reducing paperwork, improving accessibility and speeding up account opening. Technology is increasingly being used to simplify financial services, and the SECP believes similar digital solutions can help broaden participation in the stock market. The regulator’s latest initiative could also help improve the overall investor experience by allowing applicants to track their applications and receive clearer information throughout the onboarding process. SECP Chairman Highlights Technology’s Role SECP Chairman Dr. Kabir Ahmed Sidhu said technology was being used to make stock market investment easier for the public. He said Pakistan’s capital market offered significant opportunities for growth and investment, highlighting the importance of making participation more accessible. The new framework represents another step toward digitalising Pakistan’s capital market and reducing barriers for new investors. By combining faster account opening, round-the-clock digital processing, application tracking and simplified verification, the SECP expects the framework to make stock market participation more convenient. The regulator’s focus on young investors could also help broaden the investor base over the longer term and increase public participation in Pakistan’s capital markets.

PIMS Fire: Govt Announces Rs5m Compensation For Each Affected Family
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PIMS Fire: Govt Announces Rs5m Compensation For Each Affected Family

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The government has announced Rs5 million compensation for each family affected by the PIMS fire that claimed the lives of 14 infants at the Pakistan Institute of Medical Sciences (PIMS) in Islamabad. Parliamentary Affairs Minister Tariq Fazal Chaudhry said the financial assistance was approved by Prime Minister Shehbaz Sharif to provide some relief to the bereaved families. Speaking to the media during a visit to PIMS, Chaudhry expressed deep sorrow over the deaths and said the 14 infants had become victims of what he described as “criminal negligence”. The minister said the government could not undo the loss suffered by the families. He acknowledged that no financial assistance could bring the deceased children back or reduce the grief of their parents. However, he said the compensation was intended to provide some immediate financial support to the affected families during an extremely difficult period. PIMS Fire Inquiry Committee To Submit Report Chaudhry said Prime Minister Shehbaz Sharif had formed an inquiry committee to investigate the incident and determine how the fire started and whether negligence contributed to the deaths. According to the minister, the committee was expected to submit its report on Thursday. The findings are likely to establish responsibility and identify officials or other on-duty personnel whose actions or omissions may have contributed to the tragedy. Chaudhry assured the affected families that those found responsible for negligence would face strict action. “All on-duty individuals found guilty of negligence will be given exemplary punishment,” he said. The minister’s remarks came as concerns grew over safety arrangements and emergency procedures at the major public-sector hospital following the deaths of the infants. Rs5m To Be Deposited In Mothers’ Accounts The parliamentary affairs minister said he had visited PIMS on behalf of the prime minister to support the affected families and oversee the distribution of the announced compensation. He said he was at the hospital to hand over a cheque to one of the affected families. The government plans to deposit the Rs5 million compensation into the bank accounts of the mothers of the deceased children. The move is aimed at ensuring that the financial assistance reaches the families directly. Chaudhry reiterated that the government understood the enormous pain caused by the deaths and said financial assistance should not be viewed as compensation for the loss itself. Govt Promises Accountability The announcement of compensation comes alongside the government’s commitment to determine responsibility for the PIMS fire. The inquiry committee’s report will be closely watched by the families and the public, particularly regarding any safety lapses or negligence identified during the investigation. The minister stressed that those responsible would not be allowed to escape accountability if the inquiry established their negligence. The tragedy has also raised questions about hospital safety protocols, emergency response systems and the protection of vulnerable patients, particularly newborns and infants. The government is now expected to review the inquiry findings and take action based on the committee’s recommendations.

Unilever Foods Sales Surge 29%, But Shareholders Receive a Smaller Dividend
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Unilever Foods Sales Surge 29%, But Shareholders Receive a Smaller Dividend

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Unilever Pakistan Foods Limited (PSX: UPFL) delivered strong growth in the first half of 2026, with sales rising nearly 29% and profit increasing by around 40%. However, shareholders received a smaller cash payout, making the dividend decision a key part of the latest results. For the six months ended June 30, 2026, profit after tax rose to Rs4.34 billion, compared with the previous year, while the board recommended a second interim dividend of Rs350 per share, down from Rs444 a year earlier. Sales and Margins Improve UPFL’s half-year sales increased 28.9% to Rs25.26 billion, compared with Rs19.59 billion last year. Second-quarter sales also grew 32.3% to Rs12.06 billion. The company attributed the growth to stronger volumes across Knorr Noodles, Rafhan and Unilever Food Solutions. Gross profit increased to Rs10.83 billion from Rs7.53 billion, while the gross margin improved to around 42.9%, up 442 basis points. Rising Expenses Limit Profitability Despite stronger sales and margins, operating expenses increased sharply. Distribution, administrative and other expenses rose nearly 50% to Rs4.35 billion from Rs2.91 billion. Other income also declined 41% to Rs365 million. Operating profit nevertheless increased 30% to Rs6.84 billion, showing that the core business continued to perform well despite higher costs. Profit Rises While Dividend Falls Half-year EPS increased to Rs680.90 from Rs484.86, while second-quarter EPS rose to Rs349.89 from Rs222.25. However, dividend growth moved in the opposite direction. The company had already reduced its first interim dividend to Rs331 per share from Rs525 a year earlier. With the latest Rs350 payout, total H1 cash dividends reached Rs681 per share, compared with Rs969 in the previous year. The entitlement date for the second interim dividend is September 7, with share transfer books scheduled to close from September 8 to 10. Cash Flow Shows Improvement UPFL’s cash position improved considerably during the period. Net cash generated from operations reached Rs5.45 billion, compared with an outflow of Rs633 million in the same period last year. The company spent Rs601 million on plant and equipment, while cash and cash equivalents increased to Rs3.57 billion from Rs812 million at the start of the year. The stronger cash generation provides some support for the company’s financial position, even as management takes a more cautious approach to shareholder distributions. Outlook Remains Cautious The company continues to operate in an environment shaped by high living costs, inflation, commodity prices and geopolitical uncertainty. Rising administrative and distribution expenses show that stronger sales do not necessarily translate into proportional increases in shareholder returns. There is also uncertainty surrounding Unilever Plc’s planned combination of its global foods business with McCormick, which remains relevant for local investors. UPFL’s first-half results therefore present a mixed picture: strong brands, higher sales, wider margins and improved cash generation, but rising costs and a reduced dividend. The key question for investors will be whether the company can sustain its growth while protecting margins and maintaining attractive shareholder returns.

Systems Limited Targets AI Led Growth With Acquisitions and Global Expansion
Business

Systems Limited Targets AI Led Growth With Acquisitions and Global Expansion

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Systems Limited is positioning artificial intelligence, acquisitions and international expansion at the center of its next growth phase as enterprise technology spending increasingly shifts toward AI driven transformation. The Pakistan listed technology company says a healthy backlog, stronger enterprise demand and recent acquisitions are creating a foundation for continued expansion. However, the bigger question for investors is whether Systems Limited can convert its aggressive international expansion and AI ambitions into sustainable margins and stronger shareholder returns. Systems Limited Sees AI Becoming a Major Growth Engine Systems Limited says AI is no longer simply an emerging technology opportunity. Its customers are increasingly looking to use AI to improve productivity, automate operations and create new revenue streams. The company has been embedding AI into its own internal processes as well as client solutions. It is also expanding the use of AI tools across its workforce to improve productivity and delivery efficiency. Management believes these productivity gains could result in larger technology deals. With more than 300 customers globally, Systems Limited sees considerable room to expand existing relationships through cross selling and upselling. The company’s focus on agentic AI is particularly significant. Businesses are increasingly exploring autonomous systems capable of performing tasks with limited human intervention. This could create new demand for consulting, software development, cloud infrastructure and digital transformation services. Yet there is a potential risk. AI can increase productivity, but it can also reduce the amount of traditional technology work required for certain projects. Systems Limited will therefore need to prove that higher productivity translates into larger and more profitable contracts rather than simply reducing billable manpower requirements. Confiz Acquisition Opens North American Opportunity The acquisition of Confiz has strengthened Systems Limited’s access to North American enterprise customers. Management says Confiz and BAT Shared Services Center both delivered healthy revenue growth during the second quarter. Systems Limited now expects cross selling and upselling across the acquired customer bases to create additional value. The Confiz transaction could become particularly important because it gives Systems Limited greater exposure to large enterprise clients in the United States and Canada. Management expects integration synergies to begin emerging during the second half of 2026. If successful, the acquisition could reduce the company’s geographical concentration and strengthen its international revenue base. However, acquisitions also bring integration risks. Revenue growth alone does not guarantee that a deal will create value. Systems Limited will need to demonstrate that expected synergies translate into improved margins and cash generation. Europe and APAC Become New Expansion Fronts Systems Limited is also expanding its footprint in the United Kingdom and Europe. The company has established a UK entity and appointed regional leadership, with plans to use Britain as a platform for further expansion into continental Europe. Meanwhile, investments in Vietnam, Malaysia and Indonesia are beginning to generate results in the Asia Pacific region. Stronger channel partnerships and a growing backlog are supporting expansion, while the company is evaluating additional delivery capacity in Malaysia. The company has also expanded its delivery network through an operational center in Egypt and a development center in Malaysia, while planning another center in Jordan. This strategy could improve access to international talent and provide greater operational resilience. But it also means Systems Limited is increasing its cost base across multiple markets at a time when global technology spending remains highly competitive. Pakistan Business Turns Profitable One of the more important developments is taking place in Systems Limited’s domestic business. Management says the Pakistan operation has moved from negative profitability to positive profitability. The company expects further improvement as its backlog and pipeline strengthen. Systems Limited also wants domestic margins to move closer to those achieved in its international operations. This turnaround could provide an important earnings boost. At the same time, the company faces the challenge of managing wage inflation, operating costs and currency movements while competing in a market where pricing pressure can remain intense. Systems Limited Delivers Strong First Half Growth The company’s financial performance provides momentum for its expansion strategy. For the six months ended June 30, 2026, consolidated revenue increased 35.3 percent year on year to Rs49.72 billion. Consolidated profit after tax rose 17.4 percent to Rs6.05 billion. The numbers show strong revenue growth, but the slower pace of profit growth deserves attention. Revenue expanded by more than one third, while profit increased by less than one fifth. That gap suggests investors should look beyond headline revenue growth and closely monitor margins, integration costs, foreign exchange effects and the profitability of newly acquired businesses. Systems Limited said its results reflected strong organic and inorganic growth, improved efficiency and optimization despite wage and fuel cost inflation and the impact of rupee appreciation on its predominantly foreign currency revenue base. More Acquisitions Could Reshape Systems Limited Systems Limited continues to evaluate merger and acquisition opportunities, particularly in Western markets. The strategy is designed to strengthen its presence in the United States and Europe, diversify its customer portfolio and reduce geographical concentration risks. If executed successfully, another acquisition could accelerate Systems Limited’s transformation from a Pakistan based IT exporter into a broader global technology services company. But investors should remain cautious about an acquisition led growth strategy. The ultimate test will not be how many companies Systems Limited acquires, but whether those businesses generate sustainable revenue, stronger margins and cash flow after integration. Systems Limited Faces a Bigger Test Ahead Systems Limited enters the second half of 2026 with strong revenue momentum, a sizeable backlog, expanding international operations and growing AI demand. The opportunity is substantial. Enterprise customers are increasing technology spending, AI is creating new service categories and Systems Limited’s international footprint is becoming increasingly diversified. But expectations are also rising. The company must now demonstrate that acquisitions can produce genuine synergies, international expansion can generate attractive returns and AI driven productivity can translate into profitable growth. For investors, the next phase of Systems Limited’s story may therefore be less about whether the company can grow and more about how profitably and efficiently it can

Export Facilitation Scheme Faces Misuse Concerns as PCDMA Seeks Tighter Controls
Business

Export Facilitation Scheme Faces Misuse Concerns as PCDMA Seeks Tighter Controls

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The Pakistan Chemicals & Dyes Merchants Association (PCDMA) has called for stronger controls on the Export Facilitation Scheme (EFS), arguing that growing imports under the scheme are creating tax disparities and need closer monitoring. The issue was raised during PCDMA’s annual dinner, where Senate Standing Committee on Finance & Revenue Chairman Senator Saleem Mandviwalla assured the chemicals and dyes trade that its taxation, EFS, import and e-invoicing concerns would be taken up at the parliamentary level. PCDMA Calls for Action on EFS PCDMA Chairman Salim Valimuhammad said imports under the EFS had increased by more than 70 percent without a similar rise in exports. He proposed several measures to prevent potential misuse, including linking EFS imports with actual export proceeds or letters of credit. The association also suggested imposing a 40 percent limit and conducting annual audits based on an industry’s three-year consumption and export records. According to PCDMA, stronger monitoring is necessary to ensure that the scheme continues supporting genuine export-oriented activity rather than creating an uneven tax environment. Tax Disparity Remains a Major Concern The association also called for the removal of the 3 percent additional sales tax and demanded equal treatment for commercial importers and industrial businesses. PCDMA argues that the chemicals and dyes sector plays an important role in supplying textile, leather, pharmaceutical and other export-focused industries. Any tax or import policy affecting the sector can therefore have wider implications for manufacturing and exports. Parliament to Review Business Concerns Senator Saleem Mandviwalla said the Senate finance committee would invite the Federal Board of Revenue, Ministry of Finance and other relevant departments to examine the concerns raised by the business community. He also urged trade associations and chambers to maintain regular engagement with policymakers instead of waiting until the federal budget period to raise their issues. According to Mandviwalla, policymakers must balance business demands with the government’s revenue requirements and commitments under the IMF programme. E-Invoicing Issues Also on the Agenda Alongside EFS and taxation, the chemicals and dyes trade raised concerns over the implementation of e-invoicing. The association called for consultations between the business community, FBR, Finance Ministry and Senate to address practical difficulties and improve the system. The upcoming discussions could determine whether changes are made to EFS monitoring, tax treatment and e-invoicing requirements. For the chemicals and dyes sector, the priority is to ensure that tax and import policies support legitimate businesses without creating unfair advantages or additional costs.

Pakistan Targets $6 Billion Refinery Investment Under Brownfield Upgrade Policy
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Pakistan Targets $6 Billion Refinery Investment Under Brownfield Upgrade Policy

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Pakistan is moving closer to attracting around $6 billion in investment in its oil refining sector as the country’s five major refineries prepare to sign brownfield upgradation agreements early next month. The agreements are expected to mark the beginning of a major modernisation programme aimed at improving domestic fuel production, reducing imports and strengthening Pakistan’s energy security. Refineries Ready to Sign Upgrade Agreements Petroleum Minister Ali Pervaiz Malik recently met the management of PARCO, Pakistan Refinery Limited (PRL), National Refinery Limited (NRL), Cnergyico and Attock Refinery Limited (ARL) in Karachi. The refinery managements reportedly confirmed that preparations are complete and that they are ready to sign agreements under the Brownfield Refinery Upgradation Policy. The Petroleum Division said the agreements would provide the first major step toward implementing the policy and upgrading existing refining facilities. Focus on Euro-V Fuel Production A key objective of the programme is to enable local refineries to produce Euro-V compliant petrol and diesel. Increasing domestic production of higher-quality fuels could help Pakistan reduce its dependence on imported petroleum products. It may also strengthen supply chains and reduce exposure to international fuel price and supply disruptions. The government has also emphasised maintaining uninterrupted fuel supplies, particularly after the challenges created by disruptions around the Strait of Hormuz. Modernising Pakistan’s Refining Sector The brownfield policy follows amendments to the 2023 refining policy approved by the Cabinet Committee on Energy in July. The government considers the modernisation of existing refineries an important national priority. Planned upgrades are expected to increase petrol and diesel production, reduce furnace oil output and bring refinery operations closer to international environmental standards. For the industry, modernisation is increasingly important as global fuel specifications become more demanding and Pakistan seeks to improve the efficiency of its domestic energy infrastructure. Oil City Proposal Adds to Energy Strategy Alongside refinery upgrades, officials have also discussed developing an Oil City in Hub as a potential strategic storage and energy terminal. The proposed facility could strengthen Pakistan’s petroleum storage capacity and improve the country’s ability to manage fuel supplies during periods of international market disruption. Together, refinery modernisation and improved storage infrastructure could form a broader strategy to make Pakistan’s petroleum supply chain more resilient. $6 Billion Investment Could Reshape the Sector The proposed agreements represent a significant investment opportunity for Pakistan’s refining industry. If implemented effectively, the programme could increase local fuel production, reduce the import bill and improve energy security. However, the scale of the investment will ultimately depend on timely implementation, financing arrangements and the ability of refineries to complete upgrades within agreed timelines. The government has pledged continued cooperation with refinery operators to prevent delays and move the programme forward. For Pakistan, the brownfield initiative offers an opportunity to modernise an ageing refining base while reducing dependence on imported fuels. The real test will be whether the planned investment translates into higher production, cleaner fuels and measurable savings for the economy.

Service Industries Reports Strong H1 Profit but Skips Dividend as Q2 Earnings Decline
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Service Industries Reports Strong H1 Profit but Skips Dividend as Q2 Earnings Decline

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Service Industries Limited (PSX: SRVI) delivered a stronger first-half performance in 2026, but its second-quarter earnings declined and the company recommended no cash dividend, bonus shares or rights issue. For the six months ended June 30, 2026, consolidated revenue increased 21% to Rs84.75 billion, while profit after tax rose 24% to Rs9.69 billion. However, second-quarter profit fell to Rs4.64 billion from Rs6.16 billion a year earlier. Stronger Revenue and Gross Profit The group’s operating performance improved significantly during the first half. Gross profit increased 41% to Rs22.41 billion from Rs15.84 billion, lifting the gross margin to around 26.4% from 22.5%. Operating profit also climbed to Rs13.44 billion from Rs8.63 billion. Meanwhile, finance costs declined to Rs2.27 billion from Rs3.08 billion as mark-up expenses eased. Profit before tax more than doubled to Rs11.16 billion compared with Rs5.52 billion in the same period last year, showing a substantial improvement in underlying operations. Tax Impact Weighs on Net Profit The biggest difference in the earnings comparison came from taxation. During the first half of 2025, Service Industries recorded a tax credit of Rs2.33 billion. This year, the company booked a tax expense of Rs1.47 billion. As a result, the improvement in profit after tax was much smaller than the increase in pre-tax earnings. Q2 Profit Falls Despite Higher Sales The second quarter presented a different picture from the overall half-year results. Quarterly sales increased to Rs42.52 billion from Rs37.77 billion, while gross profit rose to Rs10.98 billion from Rs8.41 billion. Profit before tax also improved to Rs5.21 billion from Rs3.10 billion. However, profit after tax declined to Rs4.64 billion from Rs6.16 billion. The previous year’s second quarter benefited from a Rs3.06 billion tax credit, while the latest quarter recorded a tax charge of Rs564 million. Quarterly EPS consequently declined to Rs5.90 from a restated Rs7.04. Working Capital Requirements Remain High Service Industries reduced its short-term borrowings to Rs42.30 billion from Rs54.18 billion at the end of December, providing some balance-sheet relief. However, working-capital requirements increased. Inventory rose to Rs32.26 billion from Rs26.47 billion, while trade debts increased to Rs20.95 billion from Rs16.97 billion. Loans and advances also climbed to Rs3.74 billion from Rs1.10 billion. Fixed assets increased to Rs56.32 billion from Rs49.22 billion, while long-term financing rose to Rs14.85 billion from Rs12.35 billion. Cash and bank balances stood at Rs9.31 billion, compared with Rs8.48 billion at year-end, while short-term investments declined to Rs15.57 billion from Rs21.42 billion. No Dividend Recommended Despite the stronger first-half profit, the board recommended no cash dividend, bonus shares or rights issue for the period. Profit attributable to equity holders of the holding company reached Rs5.79 billion, translating into EPS of Rs12.32, compared with restated EPS of Rs9.70 in the previous period. The decision marks a notable change from calendar 2025, when the company paid Rs17.50 per share as part of what it described as a consistent payout history. Service Industries Earnings Outlook Service Industries’ latest results present a mixed picture for investors. The first-half numbers show stronger sales, wider gross margins, lower finance costs and a significant increase in pre-tax profit. However, the second-quarter decline and absence of a dividend highlight the impact of tax changes and continued working-capital requirements. The key factors to watch going forward will be profit margins, inventory levels, receivables, borrowing costs and cash generation. The company’s ability to convert stronger operating performance into sustainable net earnings and shareholder returns will remain central to its outlook.

SSGC UFG Reform Takes Center Stage as Government Demands Structural Change
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SSGC UFG Reform Takes Center Stage as Government Demands Structural Change

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The government has ordered the Board of Sui Southern Gas Company Limited to prepare a comprehensive reform strategy focused on controlling unaccounted-for-gas, commonly known as UFG, as Islamabad pushes to turn the financially troubled gas utility into a more sustainable organization. Federal Minister for Petroleum Ali Pervaiz Malik issued the directive during a meeting with the SSGC Board, Managing Director and senior management in Karachi on August 27. The meeting reviewed the company’s performance, operational challenges and future reform priorities. The government’s emphasis on SSGC UFG reform highlights one of the biggest structural problems facing Pakistan’s gas distribution system. While management reported that UFG has fallen by approximately 57 percent in volumetric terms, the government’s latest demand indicates that significant efficiency and financial challenges remain. 57 Percent UFG Reduction Is Significant, But Is It Enough? SSGC management told the meeting that UFG had been reduced by around 57 percent in volume. The improvement is substantial and could strengthen the company’s finances if the reduction is sustained. However, the headline figure should not become an excuse to declare victory. UFG represents gas that enters the distribution system but is not properly accounted for through legitimate consumption. It can arise from technical losses, inefficient infrastructure, inaccurate measurement and gas theft. Every unit lost ultimately puts additional pressure on the gas sector’s finances and can contribute to higher costs for consumers or the government. This is why the government’s SSGC UFG reform agenda needs to move beyond percentage-based improvements. The real test will be whether SSGC can permanently reduce losses, recover unpaid revenues, modernize infrastructure and make those gains visible in its financial statements. Government Pushes SSGC Toward a Self Sustaining Business Model The Petroleum Minister directed the Board to develop a strategy covering operational efficiency, human resource capabilities, loss reduction, gas theft control, revenue recovery and better resource utilization. The objective is ambitious: SSGC must become financially self-sustaining while continuing to provide essential public services. The government also said gas supply has improved. There is currently no gas load shedding for K-Electric, industrial consumers and fertilizer plants, while domestic consumers are receiving gas three times a day. Gas prices have also remained unchanged over the past year, while the growth of gas circular debt has reportedly been nearly arrested. Yet these developments expose a difficult policy question. Can the government keep gas prices politically manageable while simultaneously making state owned gas companies financially viable? Without deeper structural reforms, controlling circular debt and losses could prove temporary. Single Gas Price Proposal Could Reshape Pakistan’s Energy Market Another major proposal discussed at the meeting was replacing the existing gas subsidy system based on pricing slabs with a single fair gas price. The government argues that a unified pricing structure could encourage economic activity and reduce consumer migration toward alternative fuels, while vulnerable consumers would receive targeted support through social protection programmes. This approach deserves scrutiny. A single gas price may simplify the market and reduce distortions, but it could also increase household energy costs if targeted protection is poorly implemented. The success of such a reform will depend on whether subsidies actually reach low income consumers rather than simply shifting the financial burden from one part of the gas sector to another. Balochistan Gas Supply Remains a Critical Test The government has also instructed SSGC to prioritize gas supply issues in Balochistan while addressing infrastructure constraints, technical problems and gas theft. The province presents a particularly difficult challenge because energy availability is closely connected with broader economic and political grievances. The Board welcomed the formation of a Political Committee under the Deputy Prime Minister to examine Balochistan’s longstanding challenges. However, political committees alone cannot resolve infrastructure and service delivery problems. SSGC will need sustained investment, stronger enforcement and transparent performance targets if gas availability in the province is to improve meaningfully. World Bank Reform Programme Adds Pressure on SSGC The government says it is working with the World Bank on broader gas sector reforms aimed at addressing structural weaknesses and improving financial sustainability. The involvement of an international development institution could provide technical support and reform discipline. But Pakistan’s history with state owned enterprises suggests that reform plans frequently fail when political intervention, weak accountability and poor implementation undermine them. The latest SSGC UFG reform strategy therefore needs measurable targets rather than another policy document. The Board should be judged on whether UFG falls further, revenue recovery improves, theft declines, infrastructure becomes more efficient and the company reduces its dependence on government support. For consumers, the real question is even simpler: will these reforms deliver more reliable gas without creating another financial burden?

Sazgar Engineering Profit Jumps 44% To Rs23.6 Billion Despite Margin Pressure
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Sazgar Engineering Profit Jumps 44% To Rs23.6 Billion Despite Margin Pressure

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Sazgar Engineering Works Limited (PSX: SAZEW) reported a 44% increase in net profit to Rs23.60 billion for the year ended June 30, 2026. The strong earnings growth was supported by a major increase in sales, but the results also showed growing pressure on margins, rising inventory and weaker operating cash flow. The company reported earnings per share of Rs390.51, compared with Rs270.26 a year earlier. Sales Surge As Costs Rise Faster Net sales jumped 76% to Rs191.72 billion from Rs108.69 billion. However, the cost of sales increased even faster, rising 89% to Rs145.24 billion. As a result, gross profit grew 47% to Rs46.48 billion. Gross margin declined to approximately 24.2% from 29.1%, showing that higher sales volumes did not translate into the same level of margin expansion. Four-wheelers remained a key growth driver, helping push the company’s top line sharply higher. Profit Growth Outpaces Cash Generation Operating profit increased to Rs36.45 billion, compared with Rs25.61 billion last year. However, distribution and marketing expenses rose 78% to Rs6.19 billion, while administrative costs also increased significantly. Finance costs nearly doubled to Rs454 million. Other income provided some support, increasing to Rs2.65 billion, while taxation amounted to Rs15.04 billion. Despite the higher reported profit, cash generated from operations declined to Rs9.60 billion from Rs14.11 billion. Inventory Becomes A Major Concern One of the biggest changes in the financial statements was the sharp rise in inventory. Stock-in-trade increased to Rs42.07 billion from Rs14.23 billion, nearly tripling during the year. The rise suggests that a significant portion of the company’s earnings is tied up in inventory rather than being converted into cash. Cash and bank balances consequently declined to Rs13.98 billion from Rs16.60 billion. Heavy Investment Drives Balance-Sheet Growth Sazgar also significantly expanded its production capacity. Property, plant and equipment increased to Rs23.02 billion from Rs7.94 billion, while capital expenditure reached Rs15.64 billion. Diminishing musharakah financing rose sharply to Rs5.19 billion from just Rs50 million, while trade and other payables increased to Rs30.72 billion. Total assets more than doubled to Rs81.65 billion, while equity reached Rs43.02 billion. The expansion is therefore being supported by retained earnings, supplier financing and additional Islamic financing alongside the company’s investment programme. Final Dividend Takes Total FY26 Payout To Rs70 Sazgar declared a final cash dividend of Rs20 per share, taking the total FY26 payout to Rs70 per share after interim dividends. The total payout is higher than the Rs52 per share distributed last year, but represents only around 18% of FY26 earnings. The relatively low payout suggests that management is retaining a significant portion of earnings to support capacity expansion and working-capital requirements. Strong Growth Comes With New Risks Sazgar’s FY26 results present a mixed picture. The 76% increase in sales and 44% rise in profit demonstrate strong business growth, while the dividend has also increased. However, the decline in gross margin, sharp inventory build-up, lower operating cash flow and increased financing indicate that expansion is becoming more capital-intensive. For investors, the key issue going forward will be whether Sazgar can convert its growing sales and production capacity into stronger margins and sustainable cash generation.

The Boardroom PK delivers trusted business news, analysis, and insights from Pakistan and beyond, keeping readers informed, inspired, and ahead in the evolving world of business and leadership.

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