Tag: government subsidies

  • Daraz Group plans layoffs amid market challenges

    Daraz Group plans layoffs amid market challenges

    In an internal communication obtained by Reuters on Tuesday, Alibaba-owned e-commerce platform Daraz Group revealed its decision to implement layoffs across the company.

    Acting CEO James Dong stated that the move aims to “adopt a more streamlined and agile structure” to address challenges faced by the company in the market.

    While the memo did not specify the exact number of individuals affected by the layoffs, it acknowledged the necessity of saying farewell to numerous valued members of the Daraz family.

    The company, operating in Pakistan, Bangladesh, Nepal, Sri Lanka, and Myanmar, declined to provide details on the percentage or absolute number of employees impacted.

    Last year, Daraz employed 3,000 individuals globally. However, the company had to reduce its workforce by 11% due to various challenges, including difficult market conditions, the Ukraine crisis, supply chain disruptions, inflation, higher taxes, and reduced government subsidies.

    James Dong emphasised the group’s commitment to addressing the market’s unprecedented challenges and stated, “Despite our efforts to explore different solutions, our cost structure continues to fall short of our financial targets. Facing unprecedented challenges in the market, we must take swift action to ensure our company’s long-term sustainability and continued growth.”

    Dong outlined the group’s strategy moving forward, highlighting a focus on improving the consumer experience.

    This involves diversifying the offerings of value-for-money products, expanding product categories, and enhancing the operational efficiency of sellers on the Daraz platform.

    The company, founded in Pakistan in 2012 as an online fashion retailer, was acquired by Chinese internet giant Alibaba in 2018. James Dong assumed the role of acting CEO in January, succeeding outgoing CEO Bjarke Mikkelsen.

    Mikkelsen had previously noted that Pakistan and Bangladesh are the group’s largest markets.

    Daraz Group, encompassing e-commerce, logistics, payment infrastructure, and financial services, serves more than 30 million shoppers, boasts 200,000 active sellers, and collaborates with over 100,000 brands, according to company statements provided to Reuters.

  • Power sector’s circular debt surpasses Rs2 trillion despite massive tariff increase 

    Power sector’s circular debt surpasses Rs2 trillion despite massive tariff increase 

    Despite raising tariffs significantly, Pakistan’s power sector debt grew to Rs2.31 trillion by June 2023, up from Rs2.25 trillion in the previous fiscal year (FY22). This increase of Rs57 billion (about 3 per cent) over 12 months is quite different from FY22 when the debt actually decreased by Rs27 billion. 

    Here’s a breakdown of the key points: 

    1. In FY22, the debt was Rs2.25 trillion, but by June 2023, it had risen to Rs2.31 trillion. 

    2. In FY22, power producers were owed Rs1,351 billion, generation companies owed Rs101 billion to fuel suppliers, and Rs800 billion was held in Pakistan Holding Limited (PHL).  

    3. In FY22-23, the debt to power producers increased to Rs1,434 billion, while the debt to PHL decreased to Rs765 billion in FY23. 

    4. In FY22, some subsidies were reduced by Rs12 billion, but in FY23, there were no subsidies left. 

    5. The interest charges on delayed payments by independent power producers (IPPs) increased to Rs105 billion in FY22 but dropped to Rs100 billion by the end of FY23. 

    6. The markup paid on IPPs’ claims by PHL increased from Rs29 billion in FY22 to Rs43 billion in FY23. 

    7. The pending generation cost, including tariff adjustments and fuel charges, decreased from Rs414 billion in FY22 to Rs250 billion in FY23. 

    8. K-Electric’s outstanding dues went from Rs107 billion in FY22 to an excess payment of Rs53 billion in FY23. 

    9. However, power distribution companies (Discos) saw their losses due to inefficiency rise from Rs133 billion to Rs160 billion in FY23. 

    Read more: Pakistan to launch digital rupee to reduce printing and distribution costs 

    In simple terms, even though the government raised tariffs to collect more money for the power sector, the debt continued to increase. This debt is owed to various power-related entities, and some subsidies and charges also changed over the years. Additionally, while some costs went down, the losses due to inefficiencies in power distribution increased.