Pakistan Economy - News & Updates - Archive

[Owais]

PPL profit jumps 55.4 percent, Rs5.5 cash dividend announced

KARACHI (updated on: August 17, 2006, 13:27 PST): Pakistan Petroleum Ltd. (PPL) on Thursday reported a 55.4 percent jump in full-year net profit, thanks to rising oil and gas prices and higher production. PPL, which operates country's largest gas field at Sui in Balochistan, earned a net profit of 13.401 billion rupees ($222.2 million) in the year to June 30, it said in a statement to the Karachi Stock Exchange.

That compared with a net profit of 8.623 billion rupees for the 2004/05 financial year.

The result was in line with a range of between 13.2 billion and 14.2 billion rupees forecast by analysts.

At 0710 GMT, PPL shares were trading 3.05 rupees down at 253.25 rupees while the broader market was down 0.02 percent.

"Once again the hefty growth in PPL's bottomline has arrived from the phased increase in wellhead prices of major fields, that is Sui and Kandhkot," said Faraz Farooq, analyst at brokers Jahangir Siddiqui Capital Markets.

The average wellhead price of those two fields, which contribute 81 percent of PPL's gas production, went up by 37 percent during the year, he said.

In addition, the wellhead price of Qadirpur field, where PPL has a 7 percent share, was raised by 37 percent, while those for Sawan and Miano gas fields were increased by 14-16 percent, said Farooq. PPL reported earnings per share of 19.54 rupees for 2005/06, compared with 12.57 rupees a year earlier.

Gas prices in Pakistan are revised every January and July. Under a government pricing formula, PPL tariffs are expected to be increased by an average of 25 to 26 percent annually until 2007.

PPL has a 26 percent share in the country's total gas production.

Analysts said that rising oil prices also had a positive impact on PPL's profits. But it was very small compared with the impact of gas price rises, as only 2 percent of PPL's revenue was contributed by oil.

PPL did not release production figures with the financial results, but analysts said the company's oil and gas production were expected to have grown by 11 and 5 percent, respectively, in 2005/06.

They said the company also benefited from a sharp rise in interest income, given the 300-400 basis points increase in deposit rates during the year.

PPL, which is high on the government's privatisation agenda, also announced a final cash dividend of 5.5 rupees per share. The firm had already paid an interim dividend of 3.5 rupees during the year.

The firm was partly privatised in July 2004, when the government sold 102.8 million shares to the public at 55 rupees each.

The state still holds a 78.4 percent stake in the firm, while 6 percent is held by the World Bank's private sector arm, the International Finance Corp. The public holds 15 percent.

The government has yet to announce a bidding date for the sale of a 51 percent stake in PPL, but has pre-qualified four companies to enter the race.

PPL's stock carries a weighting of 6.53 percent on the KSE's benchmark 100-share index.

 

[Owais]

Clean cotton plan unveiled


ISLAMABAD (August 17 2006): On the eve of cotton picking season, the Ministry of Textile Industry (Mintex) has announced the Clean Cotton Programme 2006-07 under which 100,000 bales of clean and standardised cotton would be produced (70,000 in Punjab and 30,000 in Sindh)

Sources told Business Recorder here on Wednesday that 20 modern ginning factories (Punjab 14 and Sindh 6) have been selected on the basis of the criteria set by Mintex and the two provincial agriculture departments in consultation with the Pakistan Cotton Ginners Association (PCGA), the All Pakistan Textile Mills-owners Association (Aptma) and the Trading Corporation of Pakistan (TCP) in the main cotton growing districts of Multan, Vehari, Khanewal, Muzaffargarh, DG Khan, Bahawalnagar, Rajanpur in Punjab and Khairpur, Naushehro Feroze and Mirpur Khas in Sindh.

According to the plan, growers/suppliers will be required to bring clean seed-cotton (phutti) to the selected factories and upon examination and clearance by the team headed by the Pakistan Cotton Standardisation Institution (PCSI) classer and comprising representatives of the TCP, provincial agriculture departments, and the ginner, that the seed-cotton is of minimum Grade-II and reasonably clear of non-lint contamination, the growers/suppliers of such cotton will be paid Rs 50 per maund by the TCP through crossed cheques as clean cotton premium.

Sources said that Rs 70 million is required to be paid as premium for the purchase of 100,000 bales (14 million maunds) of clean cotton, of which Rs 35 million will be contributed by the federal government and Rs 35 million by the two concerned provincial governments according to the share of their production. The Aptma members, who purchase these clean cotton bales, will pay Rs 30 per maund as premium to the ginner over and above the market rate.

They described quality of the clean cotton as of minimum Grade-II, micronaire 3.8 to 4.9 NCL, staple length 11/16 (min) moisture 8.5 percent (max), trash 5.6 percent (max) and non-lint contamination not more than 2.5 gms/bale.

Sources clarified that if the ginners did not sell such bales either to the spinners or in the open market, then the TCP will buy the clean cotton bales according to its laid down procedure at Rs 2,520 per maund for Grade-II and at Rs 2,591 per maund for Grade-I (including ginners premium at Rs 30 per maund and grade premium of Rs 90 and Rs 161/md for Grade-II and I, respectively)

They said the programme for production of clean and standardised cotton has been framed after taking all the stakeholders ie provincial governments, TCP, PCSI, PCGA, APTMA and growers on board.

The prime minister has also approved continuation of this programme up to 2008-09 with 300,000 clean cotton bales to be produced in 2007-08 season and 600,000 bales in 2008-09. Commissioner Crops, Ministry of Food and Agriculture, Dr Masood Amjad Rana told that despite some pest attacks, cotton crop is so far good and production target of 13 million bales plus would be achieved.

 

[Owais]

UIN mandatory for overseas investors and brokers

KARACHI (August 17 2006): The Securities Exchange Commission of Pakistan (SECP) has made it mandatory for the overseas investors/brokers to place Unique Identification Number (UIN) following the buying and selling of shares.

According to a notice issued to all members by the Karachi Stock Exchange related to Unique Identification Number-foreign institutional investors. It says that the SECP held a meeting at the SECP Registration Office here on August 8, 2006, with the key personnel of some of the financial institutions dealing with stock market's foreign clients to discuss and clarify the issue and concern of foreign institutional investors with regards to the UIN.

In light of these discussions, the following decision was taken which is circulated for the information of members: "In case, an international broker dealer is placing trade order with the local broker the UIN would be of the international broker."

However, the SECP shall reserve the right to seek information relating to any investor/ultimate beneficial owner at any point in time if need be and the international broker dealer shall be bound to provide the said information.

Furthermore, the international broker dealer or the global custodian shall be requested to provide information relating to the investor/ultimate beneficial owner to SECP on its demand.

 

[Owais]

Two defence pacts signed with China

RAWALPINDI (August 17 2006): Pakistan and China signed two agreements on defence co-operation and military assistance at the end of the 4th round of Defence and Security Talks held at Joint Staff Headquarters, Rawalpindi on Tuesday, an ISPR statement said on Wednesday.

The talks were led by General Ehsan Ul Haq, Chairman Joint Chiefs of Staff Committee from the Pakistani side while Lieutenant General Zhang Qin Sheng, Assistant to Chief of General Staff, People's Liberation Army (PLA) led the talks from the Chinese side.The two sides expressed satisfaction over the progress made so far and shared a commonality of perception on all important regional and international issues.

Following the parleys, Major General Tariq Salim Malik, Additional Secretary, Ministry of Defence Production and Major General Jia Xiaoning, Deputy Director General of Foreign Affairs Office, Ministry of National Defence, China signed the agreements on behalf of their respective governments.

The agreements would come into force from the date of the signing to include co-operation in the field of defence and security and military assistance to the armed forces of Pakistan.

The Pak-China Defence and Security Talks is the highest common forum between the two armed forces and are held alternatively in China and Pakistan in order to identify further areas of co-operation and mutual assistance.

The first round was held in March 2002 in Pakistan, when Chairman Joint Chiefs Staff Committee led the talks from the Pakistan side while the Deputy Chief General Staff of the People's Liberation Army led the Chinese side.

The next round of talks will be held in 2007 in China. Earlier, Lieutenant General Zhang Qin Sheng, the Assistant to Chief of General Staff of People's Liberation Army China also called on General Ehsan Ul Haq, Chairman Joint Chiefs of Staff Committee.

 

[Owais]

Import of 340 items from India to be allowed at suitable time


ISLAMABAD (August 17 2006): Pakistan is anxiously waiting for a suitable time to allow import of 340 items from India, official sources told Business Recorder here on Wednesday. The sources said commerce ministry has finalised the list and the summary is ready for the Economic Co-ordination Committee (ECC) of the cabinet, and is expected to be considered in the next meeting.

"Pakistan is ready to expand positive list with India but we are waiting a suitable time to give a go ahead signal," the sources added. The sources said India had raised the issue at different forums that Pakistan was not implementing the South Asian Free Trade Area (Safta) agreement in letter and spirit and even demands expulsion of Islamabad from the organisation for non-compliance.

They added that the other members of Safta have also approached Pakistan asking for level playing field for all member countries.

However, Pakistan is of the view that since Pakistan did not accord Most Favoured Nation (MFN) status to India, it would continue trade as per bilateral arrangements.

The sources said Pakistan had agreed at the Joint Study Group (JSG) meeting a few months ago to consider increase in importable items from India after consultations with stakeholders and fulfilment of legal requirements.

The commerce ministry had received a list of 286 items from India (271 through diplomatic channels and 15 at the JSG) whereas local business community had demanded permission to import 900 items.

After detailed comparison of both the lists and keeping in view the interests of the local industry, the ministry has identified 340 items, which it plans to include in the positive list.

The sources said preference has been given to those items on which duty is about five percent and are not being manufactured locally. They said that with the inclusion of 340 more items, the positive list would cross 1000 items, as the decision to import cement from India could be withdrawn at any time.

Presently, the trade volume between both the countries stands at less than $1 billion and it is very much in favour of New Delhi. During 2004-05 it was $746.396 million against $476 million in 2003-4.

The share of Pakistan's total exports to India was 0.8 percent whereas share of imports from India was 2.5 percent during 2003-04.

The sources said Pakistan's share of exports to India increased to 2.8 percent during July-May 2004-05, while share of imports from India jumped to 8.6 percent when compared to the same period of the corresponding year.

 

[Owais]

Lakhra power plant not yet leased out despite President's orders

ISLAMABAD (August 17 2006): The Water and Power Development Authority (Wapda) has defied President General Pervez Musharraf's orders by not finalising terms and conditions to lease out Lakhra Power Plant in Sindh to Associated Group, a Lahore-based private sector company.

Sources said the President endorsed leasing out of Wapda's Lakhra plant to Associated Group during a meeting held on March 22. The authority chairman was also among the participants.

The minutes of the meeting, made available to Business Recorder, showed that Musharraf gave a clear direction to Wapda for preparing terms and conditions for leasing out the plant to the private company within a week. The sole objective of the move was to get injected more money into it and raise its production up to 150 megawatts.

Despite lapse of almost five months, the orders were yet to be implemented. The delay in implementation of the decision in this case shows how seriously the government departments take the orders of high-ups.

Timely transfer of Lakhara Power Plant could result in providing some additional electricity to Wapda, which is at the moment facing acute shortage. The sources said Wapda authorities instead of implementing the President's directive were finding excuses to delay the transfer.

The proposal to lease out the plant to Associated Group has already been approved by the federal cabinet. As per original plan, the Group will get Lakhra Power Plant from Wapda on lease and invest $120 million in it in two phases to increase the production to 150-MW.

In the first phase, the company will invest $20 million on the basic infrastructure and capacity enhancement and this would be followed by another $100 million in one year to take its production to 150-MW.

Lakhra is a coal-fired power plant owned by Wapda and its existing production capacity is only 20-MW. After having failed to run the plant to an optimal production level, Wapda is now going for even a much bigger coal-fired power plant for Sindh. It recently floated international tender for setting up 1000-MW coal fired power plant close at Qasim Port.

 

[Owais]

$377.01 million remittances received in July

KARACHI (August 17 2006): Pakistan has received $377.01 million as workers' remittances during July 2006, the first month of the current fiscal year as against $313.14 million during July 2005, registering an increase of $63.87 million or 20.40 percent.

The amount of $377.01 million includes $0.68 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The figures issued by the State Bank of Pakistan (SBP), show that the inflow of remittances into Pakistan from almost all countries of the world increased last month as compared to July 2005.

According to the break-up, Pakistan received workers' remittances during July 2006 from the USA ($90.73 million), Saudi Arabia ($80.92 million), UAE ($59.62 million), GCC countries, including Bahrain, Kuwait, Qatar and Oman ($57.48 million), UK ($31.70 million) and EU countries ($10.53 million) as compared to the corresponding receipts from the respective countries during July 2005 ie $9 1.30 million, $56.63 million, $43.31 million, $40.56 million, $33.72 million, and $7.26 million.

Remittances received from Canada, Switzerland, Australia, Norway, Japan and other countries during July 2006 amounted to $45.35 million as compared to $37.23 million during July 2005.

 

[Owais]

Palm products import drains out extra $1 billion in fiscal year 2006

KARACHI (August 17 2006): Palm products and oil seed imports have drained out in excess of $1 billion from the country during the last fiscal year (2005-06), trade sources told Business Recorder on Wednesday.

Sources said that commercial importers had imported around 1 million tonnes of oil seeds and 1.5 million tonnes of palm products during the last fiscal year, of which approximately, 1.2 million tonnes of RBD palm olien and 0.3 million tonnes of crude palm oil was brought in, respectively.

Senior traders said that the prices of palm products in the international market remained stagnant during the first 10 months (July05-April06) of the last financial year, however, it started climbing up during May and June 2006.

"The average price of RBD palm olien remained unchanged at $415 per ton to $425 per ton CNF Karachi during July05-April06, however, it witnessed a rise during May and June (2006) where it jumped by $25 per ton to $440-$450 per ton," said a leading importer.

He said that a number of countries have started setting up plants for the production of bio-diesel with palm fruits, including Singapore, Malaysia, China and some European countries, and this situation has helped the prices of palm products increase substantially.

Traders have pointed out that the government's attitude towards cultivation of sunflower seed in the country is non-serious as the country could save its precious foreign exchange and shed dependency on imported palm oil, if proper cultivation is done in the country.

"A study reveals that soil and weather conditions of Pakistan is favourable for sunflower seed cultivation," said a trader, adding that cultivation of sunflower seed is not on government's priority list.

"The country's annual seed production is still 150,000 tonnes from which nearly 75,000 tonnes of mustard oil is extracted after grinding," he added.

On the contrary, the country during the last fiscal year, imported around 0.8 million tonnes to 1 million tons, of which canola oil is extracted while the remaining stuff or seed waste is used for making poultry feed.

Gurus of this trade said that duty structure on imports of crude palm oil and palm olien has no difference and the importers have to pay Rs 9,000 per ton on account of import duty whether the imported commodity is crude palm oil or RBD palm olien.

The country's import of palm products depends on Malaysia and Indonesia, of which Malaysia enjoys the biggest chunk from where refined and crude products are being imported.

"The Malaysian government has slapped certain taxes on the export of crude palm oil and encourages the concept of value-addition," said a Karachi-based importer, adding: "That is why we (importers) prefer to import refined products from Malaysia. He also said that Indonesian suppliers mainly export crude palm oil because they are not bound to pay any tax.

 

[Owais]

ABL profit jumps to Rs 4 billion

LAHORE (August 17 2006): The Board of Directors of the Allied Bank Limited (ABL) approved the accounts for half year ended June 30, 2006 in their meeting held on August 16, 2006 at Lahore. The operating profit jumped to Rs 4.06 billion, reflecting a growth of 90 percent as compared to the corresponding period of the last year.

The Bank has posted Profit After Tax of Rs 2.26 billion 117 percent from the corresponding period. The earning per share improved to Rs 5.04 from Rs 2.32 in the corresponding period. The equity increased by 16 percent to Rs 15.5 billion.

The deposits of the bank grew by 23 percent to Rs 198 billion, while loan book increased to Rs 143 billion by posting a growth of 19 percent during the half year, while the NPL portfolio decreased by two percent and the net NPLs to net loans ratio dropped from 3.6 percent to 2.5 percent.-PR

 

[Neo]

ISLAMABAD (updated on: August 17, 2006, 20:16 PST): Dubai Port World (DPW) will make an investment of 211 million dollars for establishment of 2nd Container Terminal at Port Qasim in Karachi and an agreement to this effect was signed here on Thursday.

The company has already invested 100 million dollars for construction of the Ist terminal and is likely to make further investment of 70 million dollars in dredging.

Together this would be the largest ever direct foreign investment in the port sector of the country.

Speaking on the occasion, Prime Minister Shaukat Aziz said that this is beginning of a new era in the infrastructure construction and development in Pakistan.

He said Pakistan is a growing economy and with growth we need to develop our infrastructure to meet the increasing demands for road, air and sea transportation.

The prime minister said as the trade is rising, Pakistan needs to have a logistic and supply chain of world class. In this connection, the country is looking at ports of Karachi and Port Qasim to expand and build new berths so that we can take larger and larger vessels, he added.

The prime minister said with Gwadar Port becoming operational by the end of the year, Pakistan will have three functional ports to allow for trade and transit and sea traffic from all over the world.

He said it is significant that the DPW would build the terminal and operate it. He said the principle of Build, Operate and Transfer is being used successfully in many countries and now private sector is managing ports rather than the port authority.

The prime minister expressed the confidence that the investment of 375 million dollars would help accelerate our logistic chain, reduce transit time, reduce delays in shipment and meet the growing demands of imports and exports.

The prime minister also referred to the strong and robust relations between Pakistan and UAE and said Pakistan is having more trade and investment from GCC countries especially Dubai.

He said as a result of the visit to Pakistan by the Prime Minister of UAE, many major companies from Dubai are now investing in different sectors of Pakistan.

The prime minister said the reason why companies are coming to Pakistan is that it is a growing economy, market of 160 million people, has an ideal location and its human capital is second to none. He said the Government is business friendly and takes quick and transparent decisions.

The prime minister said Dubai World's is the first of many investments from Dubai and the same company and assured them of the level playing field.

He expressed the confidence that the company would build and operate the terminal at globally competitive level.

The Chief Executive Officer of the DPW, Muhammad Sherrif said the policies of the Government of Pakistan encouraged them to make the substantial investment in the country.

He said the speed with which the negotiations for construction of the terminal were completed proved that the Government means business.

He said the company is looking forward to many other projects as well. In this connection, he said DPW would invest in Gwadar Port and industrial zones in Karachi and Gwadar.

Completion of the project in about three years would result in doubling of container handling capacity at Port Qasim. It will also generate a revenue of about sixty billions rupees to the Port Qasim Authority in thirty years.

 

[Neo]

ISLAMABAD (August 17 2006): Raziq Bugti spokesman government of Balochistan on Wednesday said that developmental process was smoothly going on in Balochistan and soon the area would be developed like other provinces. Talking to a private TV channel, he said every process takes time and tribal system could not be eliminated until there was social, political and economic development.

He said, in the past no one gave attention to Balochistan and there were no developmental projects, educational institutes and even no renowned universities.

The government realised it for the first time that to develop a backward area it was necessary there should be developmental projects, he added. Raziq Bugti said, mega projects were started there and although they would be fully developed within five years.

 

[Neo]

ISLAMABAD (August 17 2006): Federal Minister for Water and Power, Liaqat Ali Jatoi told The National Assembly on Wednesday that there are 1,00,775 villages out of 1,27,568, which have been electrified by June 2006.

He was replying to a question from MNA, Fauzia Wahab over the province-wise percentage of village electrification including Fata during the question hour session.

The minister said that 19 percent of the population residing in the rural areas of the country is deprived of electricity. Giving details of the provinces, he said that Balochistan is the most deprived where only 40 percent of the villages have been electrified, whereas NWFP including Fata enjoys the maximum with 91 percent, while in Punjab and Sindh 82 and 84 percent villages have been electrified respectively.

 

[Neo]

ISLAMABAD (updated on: August 17, 2006, 22:35 PST): Advisor to Prime Minister on Financial Affairs, Dr. Salman Shah on Thursday said that Pakistan's economy was among the fast emerging markets in the world at present and the prospects were bright for the future.

Speaking in a PTV programme he said, after passing through ups and downs during the past six decades, the economic policies gained stability and the process was moving in the right direction.

He said till the decade of 60s, there was a favourable growth rate in country's economy but due to nationalisation policy during the 70s, the chain was broken and the growth rate declined to its lowest in the subsequent years.

Consequently, the succeeding governments had to opt for privatisation of public sector organisations but the pace was miserably slow, he said.

He said the credit goes to the present government not only for expediting the privatisation process but for making necessary legislation to ensure the transparency of transactions.

Salman said that during the last 5-6 years local and foreign investment substantially increased and the fundamentals of the economy considerably improved.

He said the investors form Middle East, East Asia, Europe and America were investing in Pakistan, adding during the last fiscal year an investment worth $3.5 billion was made in the country.

Only six years before the size of overall investment in the country used to be around $300 million , he said.

He said Pakistan was presently pursuing very bold and rational economic policies which if sustained would bring revolutionary changes in economy.

He said in past, huge amounts were spent to cover the losses of public sector organisations thus curtailing the size of development budget.

For example he said, the subsidy amount to the Karachi Electric Supply Corporation (KESC) used to be more than the size of entire development budget of the Sindh province.

Pakistan Steel Mill was set up in 80s but up to 2003-04 it was running in losses, he added.

He said the government in realisation of the ground realities has decided to facilitate the private sector to do business rather than doing itself.

This will help improve the efficiency of the services providing organisations and rid the national exchequer of undue fiscal burden, he said.

To a question he said, all out efforts were being made to control the inflation and bring the poverty level further low, adding, however the overnight results were not possible.

 

[Neo]

Thursday, August 17, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\17\story_17-8-2006_pg5_11

LAHORE: A total of 82,059 metric tonnes of mangoes were exported by the country in the outgoing fiscal year earning foreign exchange of US$ 24 million dollars and capturing over 10.1 percent of the share of the world mango market, according to a meeting of the Agricultural Marketing on Wednesday.

Provincial Minister for Agricultural Marketing Rana Qasim Noon said there was vast potential for the export of mangoes and he added that special efforts were being made to increase the exports of mangoes by seeking new markets in the USA, Netherlands and the UAE.

Various measures to increase the export of mangoes were discussed such as efforts to initiate one window operation for mango exports at the country’s major airports. The meeting also spoke of the need for more cargo space to help increase the quantity of mangoes exported to European countries.

Training facilities are also being extended to stakeholders in the areas of proper packing, grading and transportation of fruits, the meeting added. The meeting was told that working groups were being formed which will represent farmers, traders, processors, exporters, cold storage owners and government representatives to help boost exports of mangoes.

 

[Neo]

Thursday, August 17, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\08\17\story_17-8-2006_pg7_8

ISLAMABAD: The government has sought a $1.2 billion dollar loan from international financial institutions to start work on 19 power generation schemes of the Water and Power Development Authority (WAPDA), on the president and the prime minister’s directive.

A senior government official told Daily Times that the Economic Affairs Division, WAPDA, Planning and Development Division, and the Finance Ministry made plans in this regard at a meeting.

According to the government’s estimate, Pakistan requires a $6 billion investment for power generation over the next three to four years. “This is our requirement, but we are seeking financial assistance for 19 projects,” the official said.

He said the Planning Commission had asked the Water and Power Ministry and WAPDA to finalise the PC-Is of the 19 schemes, before the next meeting of the Central Development Working Party (CDWP) of the P&D Division. The next meeting of the CDWP is likely to be held later this month or early next month, he added.

The optimal utilisation of hydroelectric power has been prioritised in the power development programme, and the government has already approved hydroelectric projects in accordance with Vision 2025. WAPDA is scheduled to commission a number of other schemes in the current financial year.

The optimal utilisation of hydroelectric power has been prioritised in the power development programme, and the government has already approved projects in accordance with Vision 2025.

The official said that the 19 new schemes fell in the category of small or medium-sized projects, and they would have a capacity to generate up to 600 MW. He said that the ADB had indicated that it would consider Pakistan’s proposal, but the bank’s initial response had been that it would give only $880 million. The ADB could give financial assistance under its soft-term loan programme, he said, adding that the government and the ADB were scheduled to hold talks shortly.

The Planning Commission was willing to consider the projects on priority basis, the official said, adding that the power projects could be considered separately by planning bodies to allow their execution as soon as possible.