Pakistan Economy - News & Updates - Archive

[Owais]

Newly-formed coal mining firm may usurp Sindh rights


KARACHI (September 04 2006): The formation of the Coal Mining Company (CMC) under the federal government is considered as another bid to deprive Sindh of its due rights.

Sources in the Sindh government and the Sindh Coal Authority told Business Recorder that on the one hand the federal government is engaged in the privatisation of national entities, on the other, it has created a company to explore and prepare feasibility of coal reserves in Sindh.

The creation of new company also provides the federal government a full authority over coal reserves in Sindh and the province would be sidelined in the process, the sources added.

The summary of the proposed Coal Mining Company has been approved by Prime Minister Shaukat Aziz and sent to the petroleum ministry but has not yet made public, sources said.

For the last 15 years, a powerful lobby in the federal government had thwarted the efforts of the government to develop coal resources. The lobby has still engaged in delaying the project and their vested interests would not bring any results under the new coal company.

They said the federal government would operate the newly-formed company and all revenues would go directly to Islamabad. This would frustrate the people living in the areas where coal reserves were identified, sources said.

The proposed CMC would work under the ministry of petroleum and natural resources and it would be co-ordinating among all the stakeholders on issues related to the coal sector development.

The officials in the ministry have proposed a plan to carry out a new survey study that there was insufficient detailed survey of mineral resources. The plan would open doors of corruption, sources said.

Sources said there was no need to conduct another study because already two world recognised firms (Chinese and Germans) had carried out detailed study.

Sources said that the object of the company to further delay the exploration of coal and create an impression that the provincial government was failed to undertake the projects. The delay would have far-reaching negative impact on the overall economy of the country, they added.

The chief minister and the governor of Sindh have reiterated on several occasions that the coal exploration must benefit the province and royalty should be utilised for the betterment of the people of the province. Sources said the coal authorities have assured the Sindh governor in a meeting held in July 2006 that they were fully capable of developing the coal reserves and exploiting the same for the betterment of people.

Pakistan has fourth largest coal reserves in the world, but the development of the coal sector could not be undertaken properly. Whenever the work carried out seriously by the Sindh government the lobby in the federal government has thwarted the development projects, they said. The government is seeking to overcome energy crisis through available recourses, including coal. It wants to explore the coal deposits but again the main hurdle was the lobby, which is misguiding the government on the issues, they said.

Several countries are producing electricity from coal while having the fourth largest reserves of coal, Pakistan was far behind to capitalise on coal for its power demands.

The United States generates 52 percent electricity from coal, the United Kingdom 58 percent, Australia 77 percent, Germany 52.5 percent even India produces 77 percent power from coal while having enough reserves Pakistan could not even produce one percent from coal, the sources said.

They said that foreign companies are reluctant to invest in the coal exploration or coal base power plant because they were always discouraged by the lobby in the federal government. The stubbornness of Wapda were also a hurdle because of Wapda's reluctance to offer fair tariff has put the plans of the Shenhua Group from China on hold. The group had planned to set up a 600 MW power plant at an estimated cost of $500 million in Thar, sources said.

 

[Owais]

Hydropower generation projects plan in pipeline

SIALKOT (September 03 2006): Punjab government has formulating an action plan for the setting up of five hydropower generation projects in various areas of the Province. Official sources told Business Recorder here on Saturday that under the programme the proposed hydropower generation projects would be carried out in Sialkot, Gujranwala, Sheikhupura, Okara and Pakpattan.

The programme would be undertaken with the financial assistance of Asian development Bank (ADB) for producing 25 megawatt electricity. After a detailed survey as many as 48 sites had been identified at various canals where hydel power projects of 500 megawatts would be established in Punjab. The step taken by the government would not only help provision of low cost electricity to the masses but would leave a positive impact on industrial and agriculture sector in Punjab.

In addition to this the government was also making efforts for generating energy from thermal, solar and other sources and in this regard the government had already taken many steps. The work on hydropower projects would undertake in near future sources added.

 

[Neo]

The killing of Nawab Akbar Khan Bugti, a political figure and the province-wide protest it sparked, would intensify the feelings of alienation among Balochis, making their entry into the national political mainstream far more difficult. At this point of time, its consequences on the development process in the province are also uncertain.

Politics and economics are deeply inter-related. From the point of view of economics, the present rulers have made serious efforts to develop the neglected province and started mega projects including Gwadar port. These mega projects open up Balochistan for both foreign and domestic investors.

But the Balochi reservations about sharing of benefits of these projects have not been removed. Unfortunately, the rulers have not fared well on political front. The political issues linked to these mega projects remain unresolved.

The three main issues agitating the Balochis are;

(1) setting up of military cantonments in Gwadar, Kohlu and the Bugti tribal area;

(2) the lack of employment opportunities for locals in the ongoing mega projects and

(3) the serious reservations about the entire development process.

When the centre decided to set up military cantonments without taking the local leaders into confidence, many Baloch senators accused the government of launching an unannounced military operation. A parliamentary committee was set up to achieve political reconciliation. The committee contacted Nawab Akbar Bugti and discussed the related issues with him but the recommendations made by it in consultations with Akbar Bugti were not implemented.

Military actions in the past have also created political instability, centre-province disharmony, social chaos and intensified feelings of frustration and alienation among the Baluchis and subsequently retarded the process of economic development in the province.

Nawab Akbar Bugti was a veteran Baloch nationalist leader. The nationalists contend that the real beneficiaries of the on-going mega projects would be the non-locals and aliens.

They base their judgment on historical realities, post-independence policies of discrimination and the development strategies of the decision-makers in Islamabad.

The nationalist interpret the ongoing process of development as the politics of development. This politics, they contend, will continue to keep the people of this province deprived, poor, least developed and most backward.

They contend that uplift programmes reflect the federal government’s plan to settle outsiders in Gwadar and other areas, which, they think, would change the demography of the province.

They contend that the federal government earns Rs84 billion annually from Sui gas fields, but gives the Balochistan government only Rs5 billion under the head of development surcharge and excise royalty.

They claim that in the Saindak copper project, Balochistan’s interest was jeopardized as Chinese share in it was 74 per cent, the federal government held 25 per cent and the province got only one per cent.

Neglect: Undeniably, Balochistan has suffered long years of neglect. The province is mired in poverty. In terms of literacy, higher education, technological development, healthcare, infrastructure development and industrialization, the province is far behind rest of the country.

The grievances of Balochistan include the denial of provincial autonomy as guaranteed by the Constitution, a poor share of royalty on gas and other minerals, economic backwardness and inadequate fiscal disbursement on the basis of geographical areas and under-development.

No military solution to the Balochistan problem would be viable. In the past, the military operations have been ineffective, even counter- productive to solve political problems. In fact one military action, after a pause, has led to another.

Deployment of security forces, establishment of cantonments and military operation are not the suitable strategies to create a stable security environment.

There is need to learn from the past experience. A political reconciliation can help sustain the ongoing development process.

No mega-project will bear fruit in the given state of security and law and order situation in the province. The need of the hour is to create real security environment that will serve long-term objectives associated with the economic development.

What is critical for creating a real security environment is the participation of local stake-holders and fair distribution of development gains.

The real parameters of security vis-à-vis development process are yet to be defined. It is about the stake, cooperation, support and engagement of the populace in the development activities taking place in their area. In broader perspective, security concept covers all areas- from economic, social, political and cultural to environmental.

If all these areas are secure and not vulnerable, the development process, which involves changes, certainly brings a positive change not only on ground but also in social attitudes of the people. In a state of real security one feels economically, socially, politically and culturally secure: security in all its aspects.

The federal government should contact the existing tribal and political figures and take them into confidence about development agenda and ensure their consent and approvals.

Effective measures need to be taken which could allay the sense of alienation, bring nationalists into the mainstream politics, create local stake in the province’s development and assuage their grievances.

A sense of ownership should be created among the local people making them directly responsible for the security of vital installations. New doors to cooperation and prosperity should be opened. Physical force will not work.

On the national scene, a key issue is how to remove province-centre disharmony. It requires removing disparities in incomes between various provinces? The situation has also led to provincial disharmony and differences. It has created regional disparity leading to a north-south divide.

The development schemes in Balochistan also suffer from bad planning and slow implementation. The lack of proper planning and faulty procedural codes have also increased the cost of the Kachchi canal project from Rs31.2 billion to over Rs70 billion. The security problem in Balochistan has delayed the completion of the Rs13 billion Gomal Zam Dam by more than two years. However, at a meeting held last month to review progress of ongoing development projects in Balochistan, Prime Minister Shaukat Aziz was told by the provincial chief secretary that Kachhi canal’s phase-I will be competed in 2008.

According to the official estimate, 700,000 acres will be irrigated by the Kachhi canal, which includes 102,000 acres in Dera Bugti. The work on both sides of the canal was continuing to ensure early completion of the project. Prime Minister was informed that Mirani and Sabakzai dams would be completed by the end of this year and June 2007, respectively.

The Balochistan economy is small relative to those of Punjab and Sindh and according to the SPDC report, the growth rates are somewhat misleading on account of low base.

The province appears, at the best, to remain trapped in a low-level equilibrium and at worst regressing further into under-development.

The report raises doubts about the accuracy of 1972 population census of Balochistan where a significant part is nomadic

The regional disparity is actually the outcome of inequitable allocation for development funds among the federating units over a long period of time. According to one estimate, 89 per cent of rural Balochistan and 49 per cent of Sindh’s rural population is in high deprivation areas.

The entire urban population in Balochistan resides in high deprivation districts and the province’s share in low as well as medium deprivation districts is zero. The provincial capital, Quetta does not even qualify for a medium deprivation status.

Over 50 per cent population is subsisting below poverty line in the province. All the districts in the province except Quetta and Ziarat are in the lowest category of high level of deprivation. These districts share 88 percent of the population of Balochistan.

According to the Labour Force Survey (LFS) 2003–2004, urban unemployment is 9.7 per cent in Pakistan, and 12.5 per cent in Balochistan. Between 2001 and 2003, unemployment decreased from 8.3 to 7.7 per cent in Pakistan but went up from 7.8 to 8.2 per cent in the province.

Though Balochistan has been untouched by strong economic growth, its weak economy is likely to be affected by the rising unrest after the killing of Nawab Akbar Bugti in recent Kohlu military action.

The severe droughts in recent years and ongoing military operation has also led to internal migration and increased the vulnerability of the poor. The province has the highest percentage of the highly deprived, both in terms of income and other indicators of poverty.

The officials claim that Rs164 billion have been allocated by the federal government for 140 ongoing development projects in Balochistan.

These projects would create more jobs and provide better facilities of life to the people. They also claim that the 30,000 vacancies created for the people of Balochistan in federal and provincial government departments, 23,000 had been filled and recruitment on the remaining posts is under process.

Officials claim that the government has adopted a holistic approach for development of the province. What is however actually needed is to review the present development policy and allocation priorities, which have worsened the disparities in regional incomes and follow it up with political dialogue for reconciliation with the nationalists.

 

[Neo]

Without careful and intelligent handling, there exists a possibility of current political turmoil to assume the proportions of a crisis, which may induce the economic actors to take a back seat. This could make country a prey to regional and international powers, who are obsessed with promoting their interests at the cost of others.

If the current wave of political unrest subsides quickly, it would not significantly affect the economy, that is on an expansion path at over six per cent average growth rates. However, if the situation is allowed to linger on, that it could spell ‘danger’ for the economy.

The medium and small businessmen will be affected if the situation does not improve immediately. The next three months, including the holy month of Ramadan, is the peak business period in the country. The onus of responsibility to monitor and improve the situation lies with government but the opposition also needs to be cautious when devising its strategies. Exercising the writ of the government is important but ways other than the mode adopted so far are needed. At the same time, the political parties need to weigh their options against gains to the people and not in narrow context of short-term political mileage over opponents.

Hopping from crisis to crisis, national economy has developed very stubborn resilience. It has proved to be strong enough to cope with shutter downs and wheel jams. It does get depressed temporarily but bounces back with vengeance.

These views were expressed by the business leaders in Karachi and representatives of some of the high performing sectors that include capital market, automobiles, and cement sector over the present political scenario. Several attempts to contact official spokesman on the economic affairs in Islamabad and minister of state for finance Omer Ayub Khan proved futile. The Prime Minister and Dr Salman Shah were out of the country.

“The political climate affects the business environment. When political situation heats up investment sentiments cool off. For the last fortnight, we wake up to a bad news every other day. There is need for the government to come out with some positive news to perk up the investors sentiments”, said a key player in the Karachi stock market who owns a chain of businesses and is tipped to be one of the richest men in the country.

“In my view for the next year and a half, the situation is going to be little shaky, till the time elections are held and power is transferred to the elected party. For now, it will take time but the situation will improve. As for the capital market, the current levels are supported by the strong performance of listed companies and not just positive perceptions. It, therefore, can hold ground for quite sometime”, the high profile broker commented.

A senior business tycoon who represents his class at a number of forums acknowledged that military governments are more popular with the business community. Elaborating on reasons he said that during Martial Laws there is stability and continuity in policies.

The power is also centralized so it is easier to negotiate for our demands with the government. Whereas in a democratic set up when it is free for all. Every Tom and Dick and Harry poses to be one in power throwing his weight around, aggravating the problems of the business class. He, however, did oppose the high-headed attitude of a military government that he said alienates the people from the state. Like in the case of Nawab Akber Bugti, this business veteran felt that the government has further complicated the already tangled political situation.

“The outburst of reaction in form of blasts and strikes will drive customers out of local markets. If the situation is allowed to persists for next few months it would translate into huge business losses to local businessmen and retailers who traditionally do roaring business in period preceding Eid”, he said.

“The last three months of the year are also crucial for exporters who have deadlines before the Christmas shopping season picks up in the West. We are hoping that the government will understand the sensitivity of the situation and act accordingly to contain the damage incurred because of the mishandling of the Balochistan situation”, he asserted.

“Business and investment are like migratory birds. It travels to lands that offer favourable environment. Political strife and uncertainty can drive the investors out who are already showing signs of fatigue, waiting for issues related to infrastructure to be resolved”, second generation business leader of Karachi Amin Bandukda said commenting on the impact of political developments on the economy of the country.

A young professional heading research section of a leading brokerage house said that finance professionals were surprised over the extent of support the opposition was able to muster in the national assembly. “It showed that opposition is not as weak as many of us like to believe”. He said that the measures such as the banking and the capital market reforms implemented by the government have increased the depth of the economy making it even more resilient.

He felt that the psychological sentiments do matter in the capital market but the physical performance of listed companies decide the fate of bourses. “In Pakistan most listed companies have given out very good results and these very companies will support the market level and continue to provide stability”, he said. A self-proclaimed socialist turned businessman said that his group was about to finalize a joint venture deal with a major international investment group but at the last minute it backed out. “They decided not to engage their capital in a volatile political situation and left for more stable environment in the region”.

He warned of what he called spacious neighbours waiting to pounce on an opportunity to capitalize on every bad news originating from the country. “Who would like to see the Gwadar Port develop into a regional business hub? Who would like Iran-Pakistan-India pipeline project to materialize that has a potential to alter the dimensions of geo-regional equation? Who favours Pakistan developing its mineral treasures in Balochistan with Chinese assistance? No one”, he said. “Any gain in Pakistan is perceived to be a loss by these powers”, he asserted. “We do not really need enemies. We have proved times and again that we can inflict on ourselves more daunting blows than any external force”, a retired economist in Islamabad said. He ruled out any foreign hand in the making of the current crisis. He, however, did agree that there are many forces who would like to fish in Pakistan’s troubled waters.

Economic mismanagement comes in way of realisation of true economic potential. It is hoped that the military-led government will make a conscious effort to pacify the situation to allow the economic actors to deliver.

 

[Neo]

Does Pakistan need a second Green Revolution? Does it need to radically increase its agricultural output to outpace the population growth of 1.9 per cent officially or far more actually?

There is also the urgent need to raise the nutritional level of the bulk of the people, particularly of the lower income groups with critically low protein consumption. India benefited a great deal by the first Green Revolution in the 1960s Pakistan gained only marginally. The share of agricultural output in domestics economy came down from 25.9 per cent in 1999-2000 to 22.5 per cent last year.

An increase in the total food grain output was from 19.58 million tones in 1999 to 31.268 million tones last year. That means an increase of just over 50 per cent in 15 years during which period the population increased by 3.1 per cent per year.

At the same time, the wheat output increased from 14.565 million tones to 21700 million tones, an increase of just three per cent annually. If the population growth had not outstripped the output of wheat, we would not have wheat or Atta crisis with their high prices from time to time.

In India, Prime Minister Manmohan Singh says his country needs a second Green Revolution as an Australian wheat ship berthed at Chennai, the first ship to arrive in India in six years now. It marked the reverse of the move towards “food independence” that began in the 1970s.

India’s population is rising by 1.5 per cent annually and the output of all the crops is rising by 1.25 per cent. The grain output is rising by 1.5 per cent.

In a country where 77 per cent of the people depend on agriculture, crop failures and rising rural indebtedness have resulted in 15,000 suicides per annum in the last five years.

But the first green revolution did not benefit in full the whole of India, the more enterprising Punjab and Haryana benefited far more.

In a country where the average land holding is 2.5 acres, large provinces like Bihar and the UP did not benefit from the first green revolution substantially.

And now a second revolution is coming to India’s farm land in the shape of farm to supermarket sales, which tries to reduce the abuses of the middlemen and the dominant ‘Mandis’ which instead of helping the farmers to get good prices have become the focus of exploitation by local officials, the middlemen and the money lenders.

A breakthrough is coming in India, initially through foreign investment in the agricultural trade and exports. A British firm “FieldFresh” in which a Rothschild of the famous banking family has a 50 per cent shareholding, has entered into a partnership in India with Barti enterprises, a top telecom outfit.

The joint venture will operate on leased out 4200 acres of land (on 78 farms in the Punjab) for producing beans, snow peas, carrots and a variety of other vegetables to export to Europe and the Middle East.

In the West, Tesco, the famous distribution firm sells many of these products. FieldFresh expects an export of $15 million of vegetables on an initial investment of $50 million this year. The chief of the Barti enterprises says he plans a nation-wide retail chain with Tesco as the partner.

Reliance, one of the two largest business groups in India has far more ambitious plans in this area. Mukesh Ambani, announced in June a multiyear investment of $5.6 billion in the agricultural sector to revolutionise it.

He will not confine himself to the lands in the Punjab. He will use farms in West Bengal, Marashtra and other provinces and set up rural centres for providing the farmers their inputs and handling their output.

Supply chains are planned from the farms to the Reliance retail chain of stores as well to export the products. He promises higher return to the farmers, lower prices for the consumers and far better products.

And he hopes to emerge as India’s top mango exporter as well by selling 3600 tonnes annually. He has already begun growing mangos in the land adjacent to his Jamnagar refinery .

The Walmart of America is planning to open its supermarkets in India. It has already done that in China where it has taken the uncommon step of permitting trade unions.

In Pakistan, Prime Minister Shaukat Aziz has been talking of reducing retail prices by promoting a chain of German-Pakistani cash n carry chains. They will buy the farm products from the farmers at fair prices and sell them to the consumers direct.

But the efforts to set up such stores is far from visible and little is known about what is being done in that area. We are far behind, while the consumer prices, particularly for vegetables shoot up. In fact, any kind of disturbance anywhere, not too far pushes up vegetable and fruit prices sharply.

Walmart, the largest US company, tries to reduce prices to the lowest levels. In Pakistan, traders of all kinds always opt for the maximum price as they seek very high profit.

The prime minister’s solution to the price problem is not so much organising supplies from the farms to the supermarkets but increasing the number of wholesale markets in each city from one to two. But that cannot prevent the monopolists and the cartel makers from jacking up prices.

China has given up seeking food self sufficiency at any cost in favour of a flexible and realistic policy. When it can import food grains cheap from abroad, it does not want to overstrain by striving for food self-sufficiency at any cost.

In India, Dr Manmohan Singh is adopting the same pragmatic policy. If fruits and vegetables grown in India can get good prices abroad, he does not want to grow food grains at any cost, but use a part of the large export earnings to buy food grains from abroad.

Pakistan is importing 70,000 tones of black gram before Ramadan through the private sector and 25,000 tones through TCP while 10,000 tonnes imported earlier are available in the market. That is being done to meet the higher demand for black gram in Ramadan.

Our gram production record is poor. In 1990-1991, the country produced 531,000 tonnes of gram and after 15 years it produced 527000 tonnes last year. Also disappointing is the mustard and rapeseed output- down from 228,000 tonnes to 188,000 tonnes over 15 years.

Agricultural experts have been cautioning the government against neglecting or casually treating agriculture but along with a lot of rhetoric. But the feudal lords who rule the roost in the farm belt are able to get higher support prices for their crops all the time and are happy. And the consumer pays a heavy price for that while the middlemen and the artis fill their pockets.

India made good use of the Pepsi cola company before permitting it to distribute its bottles there. The Pepsi company played a significant role in increasing vegetable production and export.

The new varieties of tomatoes it introduced raised its production in the Punjab from 88000 tonnes to 300000 tonnes and its agricultural export last year earned $400 million, but we offer facilities for unconditional sale of almost any foreign product..

Will a real effort now be made for a farm to consumer supply chain through super markets and the vegetable prices be cut or will the artis mobilise their political support and defeat any move to help the consumers?

In India through the efforts of feel fresh, 30-40 per cent of the waste in the vegetable output was eliminated. So, the prices were reduced and the quality of the supply improved. The same can be done in Pakistan if the government takes an initiative and sustains that.

 

[Neo]

By Dr Ali Muhammad Khushk and M. Ibrahim Lashari
Sugarcane is the second largest non-food crop after cotton and ranks fifth in respect of acreage. Prolonged drought and heat stress decreased its production by 22 per cent in 1999-2000, and further 17 per cent in 2000-01.

Of late, there has been confrontation between growers and millers over price. Growers demand higher price for their raw material and millers complain about increase in production cost and imports.

Late crushing causes dissatisfaction as well as financial loss to both, farmers and millers. Other problems are stagnant cane yield, non-payment of dues to growers by mills, and low import parity prices.

A study it revealed that more than 65 per cent farmers have decreased the total area under cane production due to water shortage, behaviour of the mills’ management, late payments, increased input cost, and diseases and rodent attack.

Constraints faced by the growers are underweighting of cane at purchase centres and mill gates, undue deductions by mills up to 10 per cent, delays in payments, middleman, obtaining an indent, and the payment of premium.

The price structure is such that out of the sale price some 35 per cent of the cost goes to farmer and 24 per cent to the government in taxes etc., 21 per cent to mills with nine and six per cent to wholesalers and retailers respectively. The country exports sugar at low price and imports the same at high rates.

Transporters, particularly trolley-owners also exploit mill owners by demanding additional Rs250–300 per trolley during cane shortage, while a delay in unloading at the gate incurs an additional Rs100 per day for trolley along with the provision of food and tea for trolley drivers etc by the mills.

The government intervenes by issuing export permits to mills, importing sugar on public account and controlling retail distribution below the market price through utility stores.

Production, consumption and demand play an important part as production depends upon support price. The support prices of sugarcane affect the production cost and uncontrolled factors such as weather and technology. The volume of cane crushed is mainly related to production, milling capacity and prices of cane and gur.

Consumption relationship indicates the price elasticity for refined sugar as four and income elasticity as eight in nominal terms. This implies that relatively small change in cane supply causes more proportional increase in sugar price.

Sugar mills, producing in excess to market’s demand are portrayed as going through a difficult period and in need of the state support. Thus many are provided the government’s assistance in a situation that is not the responsibility of the state.

It is a case of state backing a resourceful segment for the exploitation of national resources and rake off operations against the general public. Mills owners are one factor in building the sugar crisis- their reluctance to pay growers the right price promptly.

The purchasing of excess stocks from mills and delayed payments to growers, and delay in crushing are bad aspects for the industry.

Another aspect of delay in crushing causes a negative impact on wheat crop that replaces it in many fields across the country.

These factors create shortage thus increasing the price of the commodity. These factors are manoeuvred towards a specific end by a plan jointly managed by the elements that should have been working to control the price escalation and meet the shortage.

The latest move to resolve the crises is a strange one. Supply to the Utility Stores has been doubled with a view to providing relief to public.

The Utility Stores are selling one kg of sugar for Rs27, while in the market it is available at Rs37-38. A price difference of Rs15 is unheard of and, to the say least, is not natural.

There is an upward trend in sugar price in the international market but the almost double domestic rate is simply not justifiable.

The shortfall of up to one million tons could be eased if the buffer stock available with the Trading Corporation of Pakistan (TCP) is utilised. The stock has cost the TCP Rs18 per kg.

Policymakers have failed to realise the gravity of the situation. Instead of checking the price hike, a free hand has been given to hoarders and profiteers, operators of the utilities stores for forcing consumers to buy other items if they sought sugar at controlled price.

The government has failed in adopting a proper agriculture policy. There is no planning at any level for important crops, including sugarcane, and no monitoring system.

Sugar crisis persisted despite the fact that some two million tons was produced and a huge quantity imported. The country’s requirement is four million tons a year as against the supply of six million tons produced by more than 70 sugar mills.

Although, the government intervention is limited in keeping the prices at a reasonable level but maintaining self-sufficiency in sugar production, static yield and weaknesses in existing regulations are few problems facing the industry.

There is a need to appoint an investigating committee to probe the causes and suggest steps to revitalise the sugar sector. The committee should consist of experts from the agriculture, marketing, pricing, industry, sugar technology and the financial institutions.

There is need for seed treatment in sugarcane cultivation. Agencies such as research and extension department should be directed to enhance the knowledge of growers through demonstration.

Sugar mills should be bound to arrange and distribute seeds of high yielding varieties on easy terms to enhance production and to reduce poverty.

Awareness among farmers on the balanced use of fertilizer be enhanced and the government should take necessary steps to increase its supply at reasonable rates and at proper time.

Demonstration plots should be organised by the Extension Wing of Agriculture Department at least on village level to disseminate information among the farming community in an effective manner.

 

[Neo]

SO far, economic and some socio-economic variables have been identified as factors behind population growth. It has been established that population reduction is positively correlated with inclusive economic growth, poverty eradication, and provision of education, health, and infrastructural facilities.

Non-economic variables or quasi-economic variables, that may appear non-economic but betray economic logic, remain outside the realm of consideration, however significant they may actually be.

Unless these variables too are factored in to seek active and quick public response, population growth rates will not fall fast to the desired levels. These non- or quasi-economic factors revolve around half the population that is female and, therefore, considered secondary in realms of public and private decision-making.

The secondary status of women is age old and has not improved despite the “impressive” GDP growth rates, vast women enrolment in universities, appointments of some women to the highest echelons, and the demonstrated ability of some women to even fly fighter jets in the skies.

The paradox is that these few women are not representative of the multitude who face physical and psychological abuse and lack effective recourse to the legal system where the scale is tipped against them. The fact that the Hudood Ordinance is so difficult to amend in favour of women shows the second-class status that women have in the country.

This second-class status of women speaks volumes about their ability to influence decisions even at home such as the microeconomic decision pertaining to family size. Population growth rate is, therefore, negatively correlated to the status of women. The lower their status, the higher would the population growth rate be.

Bulk of population growth is contributed by the poor low-income, less educated or uneducated households where women of productive age groups are totally subservient to men and elder women alike. So, a GDP growth and educational system that bypass the poor low-income segments will not be able to influence the population growth rates for the better any time soon. Here real population growth rates are meant and not the ones massaged for a favourable evaluation by the powers that be.

Even poverty reduction that raises people only to subsistence and slightly above will not impact population growth significantly for a very long time until people are integrated in the mainstream and are not just literate but are educated enough to become enlightened. That is, the male-female equation within their households stands transformed from one of extreme inequality to one of equity.

So, shall we wait until the asset and income distributive justice comes to prevail in our country as a precursor for male-female intra-household parity before population growth rate is brought down meaningfully? Or, shall we try on war footing to reduce intra-household gender disparities in parallel with macro level efforts towards reduction of income and education disparities?

The policy outlook thus far has been that focus should be on income and education and the rest will take care of itself by default. This too has not been happening. Persecution of women in educated affluent households also makes headlines.

In many cases, women are educated and in one case a woman computer engineer was gagged to death by a family comprising many male lawyers. So, in our country even education and professional training may not change traditional attitudes and behaviour.

And, the tradition is based on perverse economic logic. Girls were regarded as financial liabilities and boys as financial assets in pre-Islamic times. They still are viewed as such. Girls are then psyched into considering their own selves as secondary through their initiation and socialisation process. Women students may excel in education but not many view themselves at par with other members of the society.

Many will tend to take a backseat when it comes time to take crucial decisions related to various facets of personal and professional lives. And, when it will come time to start a family, many will hold their head high at the birth of a male child regarded as superior birth in a patriarchal society that relegates women to secondary status.

The desire for sons filters down to the low-income segments from the educated classes as well and they try to catch up even more on this score. These are significant quasi-economic factors that keep feeding into population growth rate, PTV ads notwithstanding that fall mostly on deaf ears. That is, desire for sons and secondary status of women who cannot influence family size are quasi-economic factors that need a frontal attack to control population growth.

What the policy makers assume will happen by default through GDP growth and education is not happening. So, a grand design is required to bring about gender parity in parallel and to shoot for its quick materialisation irrespective of when parity in incomes/assets and education is achieved.

First, equality before law is of paramount importance. All gender parity arguments will ring hollow for as long as the same is not upheld by the law of the land.

The Hudood Ordinance must be amended as desired by women and enlightened men who know religion just as well. Second, there is a need to drastically change the subservient, pleasing, and fatalistic images of women portrayed by electronic and print media in plays and ads alike.

Third, gender parity should begin to be inculcated from the primary school level in both the genders as girls need to understand, appreciate, and assert their status in society and boys must begin to come to terms with it.

Fourth, as for the bypassed vast population segments, mass campaigns by government and NGOs together can help change attitudes in addition to the electronic media that has a broad outreach too.

Fifth, women will need to stand up and take charge not just collectively but in their individual capacities also. This is a tall order but the first steps must be taken to influence quasi-economic factors of women’s status and supremacy of the son both of which influence population growth unfavourably for the country.

With unbridled population growth, the issue of income inequities and poverty are compounded and so are the issues of illiteracy, malnutrition, infant and maternal mortality, disease, pressure on scare resources, rural-urban migration, poor urban management, pollution, and environmental degradation.

All of these feed back into income disparities and poverty and the vicious circle goes on with half the country’s population of women unable to influence individual and collective socio-economic outcomes for the better. It is this 50 per cent of the country’s human potential that must be unleashed for what is called human development that alone can lead to national economic development. It must be understood that human development is not just the development of men but of both male and female population alike.

 

[Neo]

Pakistan’s oil and gas needs are growing very rapidly. A population growth rate of over two per cent per annum combined with the average annual economic growth rate of over six per cent in recent years has pushed up the annual demand for oil by over one per cent per annum and gas consumption by nearly 11 per cent.

Indigenous production of oil is over 65,000 barrels a day and that of gas is nearly 4000 million cubic feet per day. The balance in the domestic oil reserves is estimated to be around 300 million barrels and that of gas nearly 33 trillion cubic feet. Considering the annual increase in consumption rates of oil and gas under the obtaining economic circumstances and the expected increase in these consumptions in the heightened growth scenario, these reserves are not going to last for much longer.

During the year 2005-06 an investment of nearly $600million is said to have been made in the upstream petroleum sector and as many as 41 wells were drilled in the period. But this is too inadequate considering the looming challenges.

To quote the CEO of Attock Refinery, M. Adil Khattak, total demand for oil which accounts for 31 per cent of the country’s energy needs, will grow to 32.51 million tons by 2015 and 66.84 million tons by 2030 from 16.8 million tons last year.

The shortfall of all oil products by 2015 is projected at 30.33 million tons, up from 13.18 million tons in 2005. And to cover this shortfall with imports would be prohibitively costly as the world oil prices are likely to remain hovering around $70-75 a barrel for the next few years.

The recent terrorist activities in Saudi Arabia which contributes nearly 18 per cent to the total world supplies and which has the largest world reserves (265.3 billion barrels), the unending mayhem in Iraq which has the second largest reserves (115 billion barrels) and the nuclear ambitions of Iran which has the third largest reserves( 96.4 billion barrels) and has 11.2 per cent share in the world supplies have combined to create heightened uncertainty in the oil market at a time when its demand in both China and the US has peaked to new heights in 30 years on the back of the two countries’ phenomenal economic growth.

Meanwhile, major oil reserves are said be becoming harder to find and more expensive to exploit. Many of the oil fields outside Opec have dwindled to very low levels needing costly technology to develop.

Oil industry watchers predict that at least over the next five years the oil price would not go any where near $100 a barrel, but they also project that the price would not go lower than $65 a barrel during this period. The world gas price will be influenced by this oil price band. Advanced economies have so far taken the volatility in world oil prices very well, showing very low rates of inflation as they have been using oil less intensively and more efficiently than in the past. But other economies, especially the developing economies are expected to suffer from recessionary bouts as a result of sustained high world oil prices.

China which has the 8th largest reserve (30.6 billion barrels) of oil in the world and India which is a major oil importing country have both gone out in the world and invested heavily in prospecting industry in many countries to cover their future needs.

Pakistan on its part is said to be seeking investments of up to $16 billion for oil-related infrastructure, including refineries, pipelines and storage facilities. Side by side, Pakistan has also been seeking to import gas through pipeline from Qatar, Turkmenistan and Iran.

But while the investment for oil-related infrastructure has remained abysmally low compared to the needs, the gas import plans have so far remained no more than pipe dreams as the main junctions (Afghanistan and Balochistan) on the routes of Turkmenistan-Afghanistan-Pakistan pipeline and that of Iran-Pakistan-India pipeline continue to remain in the grip of violence and lawlessness.

So, in order to import gas from Iran without major disruptions and also to attract major investment for exploring indigenous oil and gas fields Pakistan needs a peaceful Balochistan, a province which is also endowed with rich deposits of oil, gas, coal, copper, silver, gold and other mineral resources. And now it has a modern state of the art seat port as well.

However, ever since independence to date, the centre has kept this province in a state of total neglect, depriving it of even a modicum of social and physical infrastructure and ruled it from the federal capital rather than letting its people rule themselves from Quetta. The resulting deprivation and destitution has injected among the Baloch people an acute sense of alienation.

Their legitimate demands for provincial autonomy and their struggle to get their constitutional rights over their own assets restored were wrongly labelled as rebellion to crush which military campaigns have been mounted against them as many as three times since 1958.

The third and the latest campaign is still on. This has rendered the province completely lawless and not a very attractive destination for foreign investors with some exceptions proving the rule.

The killing of Nawab Akber Khan Bugti last month is likely to add a further element of violence in the life of the province making it much more difficult to attract foreign investment in the oil and gas sector in the province.

So, if not for anything else, at least for the sake of national economy, the federal government should bring about without any further loss of time a qualitative change in its approach to the law and order problem of the Balochistan province.

To start with, it should immediately suspend the Cantonmentisation of the province. This should be followed up immediately by doing away with the concurrent list in the Constitution. And then the process of implementation of the 33 or so recommendations of the parliamentary committee on Balochistan should be taken in hand earnestly.

These recommendations had envisaged a substantial increasing in the prescribed price of gas at Sui from Rs51 per mmbtu to about Rs95 as against Rs240 for the new gas fields in Sindh and Punjab. This is expected to introduce a modicum of equity among the three provinces.

And perhaps for the same purpose the Dilawar Abbas sub-committee had also recommended that net royalty of each province should be estimated by dividing the total collection of gas development surcharge (GDS) plus the total amount of royalty for all the provincial gas fields by gas production of that particular province. At present Punjab and Sind are enjoying lucrative royalties at the cost of Balochistan.

Indeed, the relative prosperity of urban Sindh and of most of Punjab to a large extent is attributed to cheap gas that has been piped to these regions over the last 50 years from Sui gas fields in Dera Bugti.

So, to enable the country to meet a future of dwindling and costly fossil fuels Pakistan needs a peaceful Balochistan, a Balochistan which is empowered to negotiate with foreign investors directly for the exploitation and development of its proven underground wealth and a Balochistan capable of bringing about social reformation on its own without outside interference.

 

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ISLAMABAD (updated on: September 05, 2006, 18:52 PST): Juan Miranda, the Director General of Central and West Asia Department of the Asian Development Bank, called on Dr Salman Shah, Adviser to Prime Minister on Finance, Revenue, Economic Affairs and Statistics here on Tuesday.

The ADB delegation briefed the adviser about its programme of private-public participation in infrastructure and utility sector development programme.

The ADB informed that it would provide finances of about 700 million dollars for projects of energy, transport and micro-credit sectors.

The director general said that about 400 million dollars would be available for energy and transport and 300 million dollars for micro-credit.

The adviser appreciated the ADB assistance in development of Pakistani economy. He hoped that National Highways Authority would be able to finance its projects itself.

The advisor said that an autonomous company would soon be set up to look after processing and financing of the projects in the field of urban services, energy, highways and other infrastructure with private sector participation.

He assured the delegation that no undue delays would be made in the undertaking of these projects. He thanked the delegation for the co-operation and expressed the hope that co-operation would be beneficial for the country.

The meeting was attended by senior officials of ADB and of the ministry of Finance.

 

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ISLAMABAD (September 05 2006): The International Monetary Fund (IMF) has commended Pakistan's economic growth, sensing "excellent medium-term prospects" with strong increase in the domestic and foreign direct investment (FDI).

However, the IMF has asked Pakistan for 'fiscal consolidation' through higher public savings to control widening current account deficit and address external vulnerabilities.

An IMF mission led by Middle East and Central Asia department division chief Miguel Savastano concluded its discussion with Pakistani authorities on recent economic developments, prospects, and policies under the annual article IV consultation.

The mission noted continuation of macroeconomic stability, market reforms, the privatisation programme, trade liberalisation, and improvement in the country's physical and human infrastructure would encourage further investment and increase productivity.

A two-pronged fiscal consolidation strategy meant for augmenting revenues and rationalising expenditures, recommended by the mission, would help in bringing down the external current account deficit and addressing external vulnerabilities.

It noted in part because of the increased investment activity, and buoyant consumption, domestic demand growth continued to outpace domestic supply growth in 2005-06, notwithstanding, an improvement in comparison with the previous year.

In conjunction with the impact of further rise in the international oil prices that imbalance has led to a widening of the external current account deficit.

At the end of June 2005-06, Pakistan's current account deficit stood over $5 billion, compared with $1.53 billion a year earlier.

Fiscal deficit rose to Rs 325.18 billion (4.2 percent of the GDP) up by 1.5 percentage points during 2005-06 as compared to Rs 201.35 billion (2.7 percent) in FY2004-05. The IMF also discussed with authorities monetary and fiscal policy in the context of desirability to address pre-emptively external vulnerabilities associated with the observed widening of the external current account deficit.

The fiscal policy stance under the 2006-07-budget would support growth and had taken into account the rehabilitation and reconstruction needs after the earthquake.

The mission welcomed the focus of the budget on infrastructure and human development, and the objective to further enhance tax revenue mobilisation, it noted. The mission commended recent State Bank of Pakistan measures to further tighten monetary policy. The targeted slowdown in domestic credit growth should help in further reducing inflationary pressures and growth in imports. Authorities stood ready to further tighten monetary policy to achieve this objective should the need arise.

Continuation of macroeconomic stability, market reforms, the privatisation programme, trade liberalisation and improvement in the country's physical and human infrastructure will provide the right environment to encourage further investment and increase in productivity. It also noted larger inflows on the financing side of the balance of payments, including FDI, had ensured a full financing of the current account deficit in 2005-06 and added to foreign reserves.

The prospects for a similar outcome in 2006-07 and beyond looked good, provided continuation of the recent deceleration in the brisk pace of growth in imports and strong export performance.

 

[Neo]

ISLAMABAD (September 05 2006): The total internal debt obtained from 2003 to 2006 stood at Rs 359.4 billion, minister of state for finance and revenue Omar Ayub Khan said on Monday.

While responding to a question from MNA Begum Ishrat Ashraf during the question hour, the minister in a written reply gave the National Assembly details of the debt: permanent debt, Rs 177 billion; floating debt, Rs 40.4 billion; and unfunded debt, 142 billion.

The total debt year-on-year remained at Rs 24,287 million (2003); Rs 119,825 million (2004); Rs 117,631 million (2005); and Rs 146,218 million (2006), he added. National Assembly speaker Chaudhry Amir Hussain was in the chair. To a supplementary question, the minister informed the house the government under fiscal responsibility law has put a limit of loan up to 60 percent of the GDP. Earlier governments, he said, used to borrow unlimited amounts so much so that they used to borrow more to payback loans.

In reply to a question from Yasmin Rehman, the minister said there are 314 brokers in the stock market and the total listed companies are 654. Regarding investment by brokers, he said, such information is not available as it is not part of stock exchanges regulations or laws being administered by the Securities and Exchange Commission of Pakistan (SECP), but he told the house that at all times net capital balance maintained by the KSE is Rs 2.5 million; LSE, Rs 4 million; and ISE, Rs 2.5 million.

Replying to Qamar-uz-Zaman Qaira's supplementary question regarding brokers not allowed to create mutual funds world-wide, the minister replied that Pakistan's stock market has just completed first generation of reforms and it would improve steadily.

Answering a supplementary question on Rs 1500 billion scam, the minister informed the standing committee of finance and revenue has held three meetings on the stock market crash of 2005 and the report will be presented in October, 2006. Forensic Accountants will unearth the facts. He said there is a need to establish an alternative mechanism of financing, which unfortunately was not there to overcome such a crisis.

On a question raised by Ruqayya Khanum Soomro whether visas granted by India to Pakistanis are for the entire country or for specific cities and exempting the Pakistanis from police report, parliamentary secretary for interior Sanaullah Mustikhel said in a written reply that Indian government has recently proposed changes in the visa agreement of 1974, which inter alia also includes visit of the country instead of specifying cities/places to be visited. In the existing agreement, he said, visa for a maximum of eight places can be granted, which the interior ministry has kept intact instead of the entire country.

Furthermore, he said, as per Indian proposals visitors are required to register themselves at the checkpost of entry and within 24 hours of reaching their destination they are required to report to prescribed authority or the nearest police station and as such they have not proposed exemption from police reporting.

He added these proposals are under consideration and any change/addition/deletion in the existing visa agreement will be made after mutual agreement between the two governments. All matters will be finalised on the principle of reciprocity and in the national interest.

A supplementary question was raised by Mehreen Anwar Raja on the preparation of Computerised National Identity Card (CNIC). She pleaded the identity of females should be attached to their father's name, as there are cases of divorce.

The National Assembly speaker supported her suggestion and asked her to put up this issue to the interior ministry so it could be put to the assembly for necessary action. Earlier, the parliamentary secretary for interior said they do make changes in the CNIC on the request of citizens to which MNA Mehreen responded that it was a very lengthy process.

 

[Neo]

ISLAMABAD, Sept 4: The International Monetary Fund (IMF) has cautioned Pakistan about higher external current account deficit and has asked authorities to enhance public savings for fiscal consolidation and to create right environment to encourage investment and increase productivity.

It noted that fiscal policy had an important role to play in bringing down the external current account deficit and addressing the external vulnerabilities. “It thus recommended a path of further fiscal consolidation through higher public savings," said the IMF at the conclusion of its article IV consultation with Pakistan here on Monday.

"Continuation of macroeconomic stability, market reforms, the privatisation programme, trade liberalisation, and improvement in the country’s physical and human infrastructure will provide the right environment to encourage further investment and increase in productivity, going forward," said the IMF.

The six-member IMF mission, led by Miguel Savastano, Division Chief in the Middle East and Central Asia Department, held discussions with the authorities in the federal government and the State Bank of Pakistan (SBP) over the last fortnight.

The mission concluded that Pakistan’s economy withstood well in 2005-06 the impact of several exogenous shocks, including the tragic earthquake of October 8, 2005, a significant rise in international prices for oil, and less favourable weather conditions which impacted on agriculture output.

At 6.6 per cent economic growth in 2005-06 remained impressive, especially in view of a monetary policy tightening which successfully helped in bringing annual inflation down to 7.6 per cent at end June 2006, compared to close to nine per cent a year earlier.

In the mission’s assessment, the prospects for sustained high economic growth in 2006-07 and over the medium-term remain excellent, with evidence of a strong pick-up in domestic and foreign direct investment, as Pakistan has increasingly been viewed as a promising destination for investment. The mission noted that, in part because of the pick up in investment, but also because of buoyant consumption, domestic demand growth had continued to outpace domestic supply growth in 2005-06, notwithstanding an improvement in comparison with the previous year.

In conjunction with the impact of the further rise in the international price for oil, that imbalance has led to a widening of the external current account deficit.

The mission also noted that larger inflows on the financing side of the balance of payments, including foreign direct investment, had ensured a full financing of the current account deficit in 2005-06, and added to international reserves.

The prospects for a similar outcome in 2006-07 and beyond looked good, provided continuation of the recent deceleration in the brisk pace of imports growth, and strong export performance.

The mission’s discussions with the authorities on monetary and fiscal policy took place in the context of the desirability to address pre-emptively the external vulnerabilities associated with the observed widening of the external current account deficit.

The mission commended the State Bank of Pakistan for the measures recently implemented to further tighten monetary policy. The targeted slowdown in domestic credit growth should help further reducing the inflationary pressures and the growth in imports.

The fiscal policy stance under the 2006-07 budget would support growth, and had to take into account the rehabilitation and reconstruction needs after the earthquake. The mission welcomed the focus of the budget on the infrastructure and human development, and the objective to further enhance tax revenue mobilisation.

 

[Neo]

Dubai: Dow Jones Indexes, a leading global index provider, announced the launch of an Islamic equity index for Pakistan that will be used to launch that country's first Sharia-compliant index fund.

Dow Jones officials told a news conference yesterday the index was launched in partnership with Pakistan's Jahangir Siddiqui group, which owns the country's top asset management company.

The Dow Jones-JS Pakistan Islamic Index, which includes 30 companies with a collective market capitalisation of $22 billion, measures the performance of Sharia-compliant companies listed on the Pakistani stock market.

It is Pakistan's first Islamic equity index and offers an opportunity to Sharia-compliant investors to benefit from the nearly 30 per cent growth Pakistani markets have witnessed in the last two years.

About 56 listed companies in Pakistan, one of the most attractive emerging markets globally, pass the test of Sharia compliance, officials said.

The index will serve as an underlying benchmark for investment products such as mutual funds, exchange-traded funds (ETFs) and other investment products.

JS Abamco Ltd, Pakistan's top asset management company which manages $400 million in funds, said it would launch Pakistan's first Sharia-compliant index fund riding on the index. The open-ended fund will be JS Abamco's tenth and will expect to raise about $100 million, Najam Ali, its chief executive told Gulf News.

"We aim to introduce several Sharia-compliant investment opportunities to Islamic fund managers across the globe," Ali said.

Islamic fund managers globally are estimated to manage $100 billion of assets, which is expected to grow by 15-20 per cent a year for the next 15 to 20 years.

Najam Ali said corporate earnings in Pakistan were likely to rise 25 per cent this year after jumping 30 per cent last year. The market trades at about 9-10 times 2007 earnings.

Pakistan's broader 100-company index jumped 34 per cent in 2005.

Dow Jones Indexes has an Islamic index for Turkey, Malaysia and Pakistan and is poised to launch one for Dubai in partnership with Dubai Financial Market. It also has a 50-company Arabian Titans Index that includes companies from 10 countries.

"The Pakistan Islamic Index will raise the confidence of global investors looking for Sharia-compliant opportunities in the Pakistan stock markets," said A. Rushdi Siddiqui, Global Director, Dow Jones Islamic Market Index Group.

Siddiqui said about 1,900 companies across 40 countries with a market capitalisation of $11 trillion pass the test of Sharia compliance, nearly 99 per cent of which are in non-Islamic countries.

http://www.gulfnews.com/business/Markets/10065098.html
​

 

[Neo]

By Naween A. Mangi Bloomberg News

Published: September 5, 2006




KARACHI Pakistan Petroleum, the nation's largest gas producer, plans to drill overseas in the wake of a rebellion that has curbed exploration in the country's largest province.

The state-controlled company will seek opportunities in Oman, Yemen and Africa, the company's chief executive, Syed Munsif Raza, said in a recent interview. At home, it will step up production outside Baluchistan, where rebels demanding a greater share of the area's mineral wealth have attacked pipelines.

The Pakistani government wants exploration locally and abroad to meet growing demand for gas.

The Karachi-based company will raise exploration spending 60 percent to 6.6 billion rupees, or $109 million, over the next three years, Raza said. One-fifth of its budget will be spent overseas.

Mohammad Fawad Khan, a research analyst at KASB Securities in Karachi, said that a "key challenge for this company is to add reserves to its portfolio," but that "expanding internationally with management that doesn't have experience overseas is a challenge in itself."

The company operates Pakistan's biggest gas field at Sui in Baluchistan, which accounts for 25 percent of the country's gas production, supplying power stations and fertilizer makers.

"In our trade, if we don't continue to replenish our resources, we will be out of business," Raza said. "That's why we really need a big find."
Pakistan Petroleum plans to step up domestic exploration and will expand production to 30 blocks by June, from 27, Raza said, without naming where the new blocks will be located. The company will drill as many as 12 wells a year for the next decade, he said.

Raza plans to expand drilling in offshore areas, most importantly the Indus river delta, Raza said. A total of 12 offshore wells have so far been drilled in Pakistan from Gwadar in Baluchistan and in the Indus River delta. None have had "any real commercial success," he said.

"There has been success in exploration in river deltas of Brazil and Nigeria as well as the Gulf of Mexico," he said. "The Indus River delta is among the largest in the world and there are indicators of potential."
Exploration efforts have been stymied by violence in Baluchistan, of which just 2 percent has been explored. The sparsely populated province makes up 45 percent of Pakistan's land area.

Until May, Pakistan Petroleum teams were conducting geological surveys in five blocks in Baluchistan. Operations have since been halted because of security worries, Raza said.

"This certainly sets back our plans, but things should improve in a few months," Raza said. "There is some resistance to investment in Baluchistan and this is a worry, but in the long run this area will yield good results."

The Baluch tribal chief Nawab Akbar Khan Bugti was killed by Pakistani security forces on Aug. 26. Bugti, 79, led the struggle for political autonomy in Baluchistan and demands for a share of the province's gas and mineral wealth.

The government blamed Bugti for ordering attacks on natural gas pipelines and oil installations. In 2003, the Pakistani Army deployed 3,000 soldiers in the province to protect gas pipelines running for thousands of miles in the region.

"If there's one reason exploration in this country has seen a setback it is the Baluchistan factor," said Najam Ali, chief executive of Abamco Limited in Karachi. "A lot could have happened there, but no one can do anything about it."

The company's stock has gained 16 percent since January, outpacing the benchmark KSE100 index, which has risen 5.6 percent. The government, which owns 78 percent of the company, plans to sell a 51 percent stake this year as part of an asset-sale plan.

Pakistan Petroleum gas production rose 5 percent to 1 billion cubic feet a day in the year ended June 30. The company's output production is expected to increase at least 5 percent annually for the next few years, faster than the 2.6 percent average annual growth of the last five years, Raza said.

Pakistan has "healthy" prospects, with only 1.74 wells having been explored for every 1,000 square kilometers of land compared with a global average of 10 wells, Merrill Lynch said in a July 31 report. The success rate of drilling in Pakistan is higher than average, the report said.
The company's annual sales growth will remain around 30 percent in the next few years, Raza said. Profit growth will slow to about 40 percent as a result of an end to fixed gas prices. In 2002, gas pricing was liberalized by the government. Before that, producers received a fixed return of 30 percent.

The company posted a 55 percent rise in full-year profit on Aug. 17 aided by higher production and prices. Net income rose to 13.4 billion rupees in the 12 months ended June 30. Revenue rose 36 percent to 31.76 billion rupees. Profit has more than tripled in the last four years.
Japan eyes Russian crude

Nippon Oil, Japan's biggest petroleum refiner, would seek increased crude oil supplies from Russia if United Nations sanctions disrupted oil imports from Iran, the company's chairman, Fumiaki Watari, said Tuesday.

"Russia is a big source of crude oil," Watari told reporters in Tokyo. "We also could increase oil purchases from other countries on a spot basis."

Nippon Oil said in March that it planned to trim oil imports from Iran by 15 percent this year because of concern that the crisis over the country's nuclear program was increasing the risk of supply disruption. The Tokyo- based company has no supply agreements with Russian oil ventures in the event shipments from Iran stop.

"Countermeasures such as buying oil from Russia and other producer nations aren't enough to cover any supply losses from Iran," said Hidetoshi Shioda, senior energy analyst at Mizuho Securities in Tokyo.

Nippon Oil last month said it had purchased oil from the Exxon Mobil-led Sakhalin-1 oil and gas project in Russia for the first time to diversify its supply sources. The company bought the oil in a so-called spot basis for immediate delivery.

The refiner imports 80 percent of its oil under contracts of at least one year, said Watari, who is also vice president of Japan's most powerful business lobby, Nippon Keidanren.

Iran, holder of the world's second- largest reserves of oil and gas, has refused to end its uranium-enrichment program, prompting the United States and Europe to seek sanctions by the UN Security Council.

http://www.iht.com/articles/2006/09/05/bloomberg/sxpakoil.php

 

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Tuesday, September 05, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\05\story_5-9-2006_pg7_4

ISLAMABAD: The Central Development Working Party (CDWP) is likely to approve funding for the Water and Power Development Authority (WAPDA) to buy land for major water reservoirs, including Kalabagh Dam, at its next meeting, a senior government official told Daily Times on Monday.

“The acquisition of land for dams is on top of the government’s priority list,” said the official. He said that the CDWP of the Planning and Development (P&D) Division was likely to take up proposals for land for Kalabagh Dam, Bhasha Dam and other water projects. Proposals submitted by WAPDA are likely to be considered at the next CDWP meeting, most probably on September 23.

The official said that the P&D had directed ministries and other autonomous organisations to submit proposals for new development schemes as early as possible. He said that the agenda for the next meeting was being finalised. The official refused to give details of WAPDA’s actual demand for the purchase of land for Bhasha and Kalabagh dams. He said that WAPDA had asked for Rs 67 billion to buy land for Akhori Dam. WAPDA’s demand for the other two water reservoirs is likely to be higher.

Proposals for buying land were previously included in project concept (PC-I) reports and land was acquired after a detailed study of PC-Is, but the policy had been revised, he said, adding that agencies and ministries had now been directed to prepare separate proposals for the acquisition of land.

The government has decided to prioritise the purchase of land for various projects because of the increasing rates. The official said the government was giving final touches to a new formula, under which hydel profit would be given to federating units, to reach a consensus on controversial projects such as Kalabagh Dam. The formula is being devised to address complaints by NWFP and the Northern Areas, and this initiative is seen as a big step towards consensus on the construction of big dams.

Royalty for the proposed Bhasha Dam is to be given to the Northern Areas under this formula. The revised mechanism will help NWFP get a considerable share in royalty for the proposed Kalabagh Dam, but according to the formula, the province will not be given royalty for Bhasha Dam. NWFP could also get a share equal to that of Punjab as royalty for Ghazi Barotha power project.