Pakistan Economy - News & Updates - Archive

[Neo]

Tourism — an unexploited sector

By M. Nazir Ali

Despite its many visible and invisible benefits and its multiplier effects on the economy, the tremendous potential of tourism remains untapped.

In many countries, tourism is a major foreign exchange earner, lures foreign investment and contributes to employment-generation and poverty-alleviation. In Pakistan, the policy framework has failed to bring about any visible improvement in this sector.

Besides a full-fledged federal ministry of tourism, tourism development corporations work at the federal and provincial levels. The department of tourist services (DTS) looks after the standard and categorising of tourist service.

The Hotel and Restaurant Act 1976, Travel Agency Act 1976 and National Tourism Policy of 2001 (which accorded tourism the status of an industry) are in vogue.

The tourism policy targeted an annual growth of five per cent in tourist arrivals. The foreign exchange earning was expected to move to the level of $800 million by 2005 as compared to $200 million in 2001.

However, no target was accomplished. Pakistan ranks very low in terms of world tourism income. In the global tourism income of $ 514 billion, Pakistan shares only $135 million- a mere 0.03 of global income.

Likewise, out of the total tourists’ arrival in the world estimated at 694 million per year, Pakistan receives 0.5 million tourists annually, which is indeed very low. India’s earns from tourism over $2 billion annually.

The Tourism Master Plan of 2000 says that, “Tourism in Pakistan is still in early stages of development’. The foreign tourists represent only 13 per cent of all visitors, while domestic tourists are only 5-7 per cent of all domestic travellers.

With the oldest civilization (Mohenjodaro, Harrape and Gandhara being their cradle), snow-bound mighty mountains in the north, shining beaches, and golden deserts in the South, combined with a large number of religious, cultural and historical places, the country has tremendous attraction for tourists. It has also potential for tourism sports like mountaineering and trekking.

There is a wide variety of natural, historical and religious sights for tourists, especially for Buddhists, Hindus and Sikhs.

But Pakistan has not been able to make headway in religious and cultural tourism whereas a study shows that, “out of 230 million tourist trips undertaken to India, the largest proportion is made up of religious pilgrimages’.

Though having immense potential as envisaged in the tourism policy 2001, Pakistan could not emerge to be a viable and buoyant sector of the economy.

In fact, unlike any other industry, tourism cannot be developed or promoted in isolation. Its development is conditioned by a host of geo-political and socio-economic considerations.

The 9/11 had a very damaging impact on tourism and aviation industry all over the world. Having been declared as the hub of terrorism by the foreign media, Pakistan has been the worst sufferer.

The travelling advisories given by western countries to their citizens as well as refusal by some of the leading international air lines to touch Pakistani air ports further aggravated the situation. Afghan and Iraq wars combined with continued Middle East crisis had their own share in restricting travelling to this part of the world.

Tourists expect peaceful environment and security of life in the visiting country. Pakistan’s tarnished image largely keep away tourists. Undeveloped tourists sites, inadequate infrastructure, law and order problem, lack of A-one entertainment facilities, social and religious restrictions, and lack of proper publicity, are some of the major constraints.

Some of these factors also restricted the development of the domestic and religious tourism.

The medium-term development framework—2005-10, estimates Investment of Rs1.28 billion through public-sector development programme (PSDP), specially for the development of infrastructure.

In the past also, both public and private sectors were involved in the promotion of tourism. Now, the concept of public-private sector has been introduced, perhaps to ensure more co-operation and co-ordination between the two.

All the strategies adopted so far have failed to fully exploit the economic potential of tourism which is quite broad-based. Studies, made on the subject both at national and international level identified four core issues, which are pre-requisite for the sustainable development of tourism.

These are development of a policy; structure of the management machinery; the legal and regulatory process and the source of sustainable tourism funding.

The government needs to evolve a new composite and integrated policy encompassing the related issues and measures.

Some mechanism be developed for the promotion of foreign trade and attraction of foreign investment through interaction with foreign visitors as well as publicity and projection of our products.

Hotels and tourist spots must be show-windows of our products, specially those of handicrafts. All the staff, involved in tourism promotion activity must be educated and trained.

Tourism presently is supply-led rather than a market-driven industry. It is not important what we offer. What is important is what the market wants.

Therefore, all services/facilities, institutional frame-work, rules and regulations etc. be upgraded and restructured in conformity with the market requirements.

To sum up, the sustainable development of this sector, which is indeed long over-due, will accrue many-sided benefits both to the country as well as its people.

The efforts both at the government as well as private sector level be geared up to their optimum level to off set the deficiency of the past and to quicken process of its development, through appropriate policy framework.

 

[Neo]

Managing the worsening power crisis

By General (rtd) Zahid Ali Akbar Khan

Pakistan recently experienced the fourth major power breakdown to hit the national grid since 1999 and the longest in its history. It cost the nation over Rs200 million.

This is mainly as a result of shortage of power and poor transmission and distribution infrastructure. When demand outstrips the capacity, causing a ripple effect and resulting in the collapse of the entire system.

We will continue to live with this phenomenon unless we take drastic action, on war footings, to improve the power sector of the country; without it the tall claim of eight per cent increase in GNP in future will only be a dream.

Our power generation capacity was considerably enhanced in the nineties, but since 2000 no major project has been constructed.

From 1987 to 1992, in Wapda, we doubled the power generation capacity. Major transmission lines from Tarbela to Jamsharo via Faisalabad and Multan were added to reduce the line losses which were brought down from 28 per cent to 19 per cent. It has now jumped to 30 per cent.

During People Party’s tenure in power considerable power generation capacity was added in private sector. There was a lot of criticism at that time on the power tariff of 6.5 cents given to these developers, but at that time this was the only solution to meet the rising demands.

Since then no significant addition has been done to our power generation capacity resulting in the present crisis.

Instead of taking long time measures to over come energy crisis we are grappling at quick fixes which will only bring further deterioration in this sector. It is incomprehensible why KESC was hurriedly privatised without the government having negotiated capacity building programme on improvement of distribution system with the buyer.

The price the people and Karachi based industry and commercial sector are paying as a consequence of frequent power failure is all too evident. These and other failures of political and economic aspects of the government are least likely to restore the investor’s confidence in the country.

It is disturbing that instead of undertaking mega projects in public sector, government has opted for a further pulling out of the power sector. The revised power policy is aimed at inviting independent power producers to fill the gap between supply and demand.

If pursued in disregard of the consequences, it will only make the power crisis go further up in the years ahead. Such policies are the result of the highest tariff in the region today. This is having a catastrophic effect on our exports.

We are trying to deceive the nation by performing opening ceremonies of projects like Bhasha Dam, which should have least priority. During late 1980s we tried to complete the feasibility of this project with foreign assistance but the investors refused to finance the feasibility because according to them the area was disputed. One wonders how we can finance this mega project now.

Without detailed feasibility it is surprising how we have laid the foundation stone of Bhasha Dam. A similar façade was enacted in the past when a developer from Honk Kong was hailed in the press for the development of billion dollars thermal coal project which did not see the light of the day.

The preliminary study of Bhasha Dam has indicated that this is a questionable project and difficult to construct even for a developed country mainly because of the technical problems.

If constructed it will be the highest concrete Dam in seismic prone region. It will be prohibitively expensive to construct because of the difficult design and mountainous terrain.

The transmission line will have to be constructed over the most rugged and unstable mountain region of the world. Even a small slide will cause havoc to the transmission line which may take months to restore. Bhasha is therefore a non-starter to meet our immediate energy needs.

During the last fiscal year, Pakistan spent $6 billion on energy imports when oil was at $40 a barrel. If oil prices reverts back to between $60 to $70 per barrel and with about 10 per cent annual increase in the energy consumption, we would need over $9 billion this year for energy import, about $3 billion go out for debt servicing resulting in the expenditure of 2/3 of our meagre export earnings of $17 billion.

A recent report of UNDP indicates that we have no elasticity to raise our exports earnings. Even our principal industrial sector of textiles has been loosing market share in textile and clothing in competition with the regional countries including Bangladesh which does not even grow cotton.

Last year’s trade deficit of $12 billion, the highest in the country’s history has already been overtaken in the last three quarters. So, where is the hard currency going to come to pay for our essential needs, such as medicine, machinery, defence and reserves to keep the rupee from sliding.

Our country’s use of privatisation proceeds and home remittances to finance the current consumption is self defeating. The feel good factor thus created would start to evaporate as the few remaining state owned enterprises are sold out.

This should give sleepless nights to our policy makers. As if that was not worrying enough, we still want to add to our external venerability by opting for second hand expensive and inefficient imported thermal power plants on rental bases at a tariff of three cents per KWH excluding fuel cost and buying F-16 air crafts for billions of dollars. One wonders why we need these expensive toys when we have nuclear deterrent.

I recall when we achieved our nuclear capability in 1983, we used to argue with General Zia, to go nuclear instead of keeping the bomb in the basement, reduce the army to half (because nobody would dare to violate the borders of any nuclear state) and use the money thus saved, for the development of the country: but he also did not want to displease the Americans.

Our total installed capacity of power is 19500 M W. Considering the spinning reserves and the line losses, the firm capacity is reduced to about 10000MW resulting in massive load shedding of two to three thousand MW.

With eight to 10 per cent annual increase in power demand Pakistan will require about 25 thousand MW of firm capacity by 2015. It is, therefore, imperative that we increase our installed capacity with all available resources at the earliest, otherwise our exports will completely collapse and the country will plunge into darkness for 30 per cent of the time.

At present we are generating 50 per cent of our power by natural gas, 30 per cent hydro, 16 per cent oil, 3.3 per cent nuclear and only 0.2 per cent coal. The country has the capacity of 40000 hydro electric power and abundant coal reserves which are both cheap sources of energy compared with nuclear and gas. Our endeavour should be to base our power plants on indigenous sources.

Hydro power: We are generating only 6000 MW of hydro power against the potential of forty thousand MW. This is the cheapest source of renewable energy and is also environment-friendly.

As explained earlier Bhasha Dam is a non-starter because it is very expensive and difficult to construct, more over it does not fit in the time horizon. Small hydro projects will not make significant difference, moreover these are expensive to construct because of economy of scale.

The only major project which can be completed in the next eight to 10 years is Kalabagh Dam which beside generating 4000 MW of cheap power will have considerable water storage for irrigation purposes, essential to meet the food demands of our growing population.

Kalabagh Dam has no adverse effects on any province. This project has been unnecessary politicised by the vested interests.

When Mr Jam Sadiq was the chief minister Sindh, Mr Jatoi who is the minister of water and power at present, was a minister in Sindh cabinet will recall that the Sindh government almost agreed for the construction of this project at that time. The only opposition was from the Frontier Province.

Here too all the technical experts of the province agreed with WAPDA that Kalabagh had no adverse effects on Frontier Province . Only one political Party was against it. I recall the comments made to me after a detailed presentation regarding Kalabagh by a senior member of that party.” General”, she said ,”what you are saying makes a lot of sense but agreeing to start this project will be our political death”.

With a little bit of more persuasion, all concerns can be brought to a consensus to start this project which is vital for the survival of Pakistan.

Coal-fired units: Pakistan is sitting on 185 billion tons of coal estimated to be second largest reserve in the world. While 1.5 millions MW of coal-based power plants are in the various stages of development around the world we do not even have a single MW plant based on coal. Compare to this 77 per cent of power generation is based on coal in India, 58 per cent in UK and 52 per cent in USA.

Investment in an indigenous integrated coal mining and power generation is a long-term commitment by investor. It is different from investment in the franchise of a fast food chain or from importing ready made power plants. Hence partnership of public and private sector is essential for the successes of such projects.

For the first time, a 150 MW coal-fired plant was installed with the Chinese help at Lakhra in early 90s. It was also planned to develop the coal mines in the area to meet the requirements of this plant.

Against a market value of about $130 million we contracted this plant from China at a cost of $70 million. We asked the Chinese why they are giving us this plant at such a low price, their answer was that though it was a proven technology and such plants are operating all over China, they intended to export similar plants to the entire world . They wanted a corroboratory reference that such a plant is successfully operating outside China.

Lakhra coal plant successfully operated for over two years. Later it was shut down due to poor maintenance. Our future coal fired plants should be based on Lakhra Coal which is of better quality than Thar coal, which has excessive water contents.

Modern technology of pulverized coal, synthetic gas or gaseous fabrication of coal considerably reduce emissions of gases in the atmosphere and make them environment friendly. We should immediately explore the possibility of constructing coal fired plants.

Gas turbines: Power generation based on gas turbines is the quickest means of generating power. These turbines are available off the shelf and have an efficiency of 55 against 36 per cent of oil fired power plants. To overcome the immediate shortage of our power requirements we should set up power plants based on gas. It is imperative that we should endeavour to immediately conclude the agreement for the construction of gas pipe line from Iran for such projects.

Nuclear projects: We have made some headway with the help of China in the nuclear field. Uranium exploration in Pakistan started in the late seventies when we started the Kahuta nuclear project. Geological and exploratory projects carried out since then have resulted in delineation of favourable areas of uranium deposits in Pakistan.

It indicates the resource potential in excess of 30 thousand metric tons of uranium 308. The requirement of yellow cakes for the project needs can be catered to a significant extent from indigenous resources.

Currently there are international embargoes on the transfer of nuclear power technology to Pakistan. People Republic of China is the only supplier of the nuclear power plants to us.

In view of the latest agreements of India and USA in the nuclear field we must also try to get the embargo removed so that we can contract more efficient nuclear power plants from developed countries.

Cost of construction of nuclear power plant is comparable with thermal and hydro plants, but in the long run it is most expensive because its decommissioning cost is more than the commissioning cost. However it is environment friendly and essential to meet our Power requirements.

Infrastructure development: In the last ten years, our line loses in WAPDA system have gone up from 19 per cent to over 30 per cent where as in KESC loses are estimated to be 40 pert cent. It is therefore paramount that more transmission lines should be constructed and distribution system over hauled This can not be done in private sector, it has to be undertaken by public sector.

To overcome the present energy crises it is repeated again that all the national resources should be galvanised, on war footing, to add about ten thousand MW to the existing power generation in the next ten years.

Economical power plants can not be completed over night. Hydro plants require eight to ten years from feasibility to completion, coal based plants four to six years, nuclear three to five years.

Only oil and gas based plants require two to three years but the power generated is very expensive, therefore not feasible in view of prevailing highest tariff in Pakistan compared with the countries in the region which is already making our exports uncompetitive.

What our country needs is a serious straightening of economic and development priorities along with a pinch of selfless patriotism. A tall order indeed.

— The writer is a former chairman, Wapda

http://www.dawn.com/2006/10/30/ebr15.htm

 

[Owais]

PSO first-quarter net profit drops on inventory losses


KARACHI (updated on: October 31, 2006, 16:36 PST): The Pakistan State Oil (PSO) posted a bigger-than-expected drop in first-quarter net profit on Tuesday, down 78 percent, that analysts blamed on high inventory losses.

July-September net profit slumped to 566.5 million rupees ($9.34 million) from 2.5 billion rupees a year earlier, the oil marketing company said in a statement.

Quarterly sales rose around 30 percent to 100.9 billion rupees.

"The decline in earnings was on the back of a sharp drop in international refined product prices in the Arab-Gulf region, resulting in inventory losses," said Naveed Vakil, analyst at AKD Securities.

Analysts said ex-refinery prices during the period dropped by an average 8 percent.

"Another factor contributing to the year-on-year drop in earnings was the 19-21 percent reduction in absolute margins at oil marketing companies in April," said Shahab Farooq, head of research at Al-Habib Capital Markets.

The PSO has a 65 percent share of Pakistan's petroleum market, where its main rivals are Shell Pakistan and Caltex Pakistan.

The government plans to sell a 51 percent stake in the PSO. The PSO shares closed down 4.15 percent on Tuesday, underperforming a broader market that fell 1.74 percent.

The PSO stock has lost 28 percent so far this year, while the benchmark KSE 100-share index has gained 18.5 percent.

 

[Owais]

First quarter FDI soars by 203.8 percent

ISLAMABAD (October 31 2006): Foreign Direct Investment (FDI) in the country during first three months of 2006-07 soared by 203.8 percent year-on-year to $1.029 billion, while portfolio investment dipped by 16.77 percent to $120.6 million, the State Bank of Pakistan (SBP) reported on Monday.

During July-September 2006-07, FDI year-on-year increased to $1.029 billion from $338.7 million of 2005-06, while portfolio investment declined to $120.6 million from $144.9 million, according to statistics released by the central bank.

Therefore, on balance, total foreign private investment in the three months (July-September 2006) increased by 137.67 percent to $1.149 billion from $483.7 million in the corresponding period of last year.

A significant feature of the data was that though FDI inflow followed steep rise right from the beginning of the new fiscal year and increased enormously, portfolio investment showed a declining trend.

According to break-up of investment by region, developed countries made total investment of $796 million (FDI $709 million and portfolio investment $87 million), and the developing economies invested $268.5 million (FDI $235.3 million and portfolio investment $33.3 million).

Among developed countries, Western Europe made total investment (FDI and portfolio) of $499.5 million and European Union of $483.9 million, against $152.9 million and $116.1 million respectively in corresponding period of last fiscal year. Besides, under unspecified head (investment by IFIs) was $85 million. This included FDI of $84.7 million, and $0.3 million in portfolio.

Among developing economies, Caribbean Islands invested $3.6 million as FDI and withdrew $0.6 million portfolio investment. Africa, including Libya, Egypt, Mauritius, South Africa and other African countries, invested $19.6 million.

Asian countries (western Asia, South, East and Southeast Asia) made total investment of $245.6 million ($211.6 million FDI and $33.9 million portfolio investment). The United Kingdom (UK) was the biggest investor in Pakistan by investing $433.6 million ($365.8 million FDI and $67.9 million portfolio investment).

United States was next with total investment of $262.2 million (FDI $227.6 million and portfolio investment $34.7 million). United Arab Emirates (UAE) was third with total investment of $187.6 million. It injected $192.2 million FDI and withdrew $4.5 million portfolio investment.

Singapore made sizeable investment of $49.7 million, against only $2.8 million in corresponding period of last fiscal year. It made $46.6 million portfolio investment and $3.1 million FDI, against only $0.1 million and $2.7 million, respectively, in corresponding period of last fiscal year.

 

[Owais]

Pakistan, Malaysia agree to sign FTA


KUALA LUMPUR (updated on: October 31, 2006, 16:35 PST): Pakistan and Malaysia have agreed to sign the Free Trade Agreement which will be executed in the start of next year following the three day visit of Malaysian Prime Minister Datuk Seri Abdullah Ahmad Badawi to Pakistan from November 4.

Both the countries have held Joint Ministerial Committee meetings and had already singed Early Harvest Programme paving the way to finalise the FTA between the two countries, said Pakistan's Acting High Commissioner to Malaysia, Jamshid Iftikhar in an exclusive interview with APP's correspondent Fayyaz Chaudhry in Kuala Lumpur on Monday.

He said that following the official visit of Prime Minister of Malaysia Abdullah Ahmed Badawi from November 4 to 6 to Pakistan, there will be another meeting of Joint Ministerial Committee in Islamabad in December this year and the FTA will be executed early next year.

Giving details about the visit of the Malaysian Prime Minister to Pakistan, the Acting High Commissioner said Prime Minister Abdullah Ahmed Badawi will arrive Islamabad on November 4 on his second official and bilateral visit to Pakistan as earlier he visited in February 2005.

The visit of Malaysian PM, which is on the invitation of Prime Minister Shaukat Aziz will further promote bilateral, economic and trade relations between the two countries, said Pakistan's High Commission to Malaysia.

Pakistan's Prime Minister Shaukat Aziz has visited Malaysia twice in 2005.

Highlighting the areas of co-operation between the two countries during this visit, the High Commissioner said, besides discussing to promote trade and economic relations, both the leaders will also discuss to enhance co-operation in other fields including tourism, improving infrastructure in Pakistan and getting benefit from the development in the Information Technology.

Malaysian Prime Minister Abdullah Ahmad Badawi during his visit to Pakistan will also attend the World Islamic Economic Forum being held in Islamabad from November 5 to 7 and he will be the key note speaker on the first day of the meeting of the high level forum.

Under the FTA, Malaysia has agreed to provide market access to Pakistan's traditional items of export including mangoes, textile, leather, surgical instruments and other agriculture and manufactured goods, said the statement and it has been proposed in the FTA that oranges, potatoes and lemon can be exported to Malaysia at zero duty from Jan. 1, 2006.

The FTA also include a chapter on promotion and protection of investment, and it is also expected to provide impetus for attracting the foreign direct investment from Malaysia to Pakistan.

Prime Minister Shaukat Aziz will also brief Prime Minister Badawi about economic reforms in Pakistan to get Malaysian businessmen to invest in Pakistan. A lot of private companies from Malaysia are already investing in Pakistan in various sector.

During the visit of Prime Minister Badawi to Pakistan, both sides will explore many areas of co-operation between the two countries.

 

[Owais]

Russian firm to invest in Pakistan's power sector
ISLAMABAD (updated on: October 31, 2006, 16:54 PST):

The RAO UES, a Russian construction company has expressed keen interest to invest in Pakistan's power sector including the project of 5000 MW Bunji hydro power project.

The Russian company's interest came to surface when Minister for Water and Power Liaquat Ali Jatoi held talks with the management of the RAO UES while paying a short visit to Moscow on his way back to Pakistan from Tajikistan, says a fax message received here from Moscow on Tuesday.

The investment would also focus on power sector on the prospective project related to import of electricity to Pakistan from Tajikistan and other Central Asian states.

The minister briefed the company's delegation of the upcoming plans of Pakistan in power sector and apprised them of the Government of Pakistan's liberal and generous policies to encourage private sector in generation and transmission of electricity.

The company will soon send a high level team of experts to Pakistan to explore the opportunities in this regard.

The Ambassador of Pakistan in Moscow Mustafa Kamal Kazi was also present on the occasion.

 

[Owais]

Hubco 06/07 Q1 profit jumps 13.2 percent


KARACHI (updated on: October 31, 2006, 16:42 PST): Pakistan's leading private power producer, Hub Power Co. (Hubco), on Tuesday reported a better-than-expected 13.2 percent jump in quarterly net profit, an increase analysts said was due to higher plant utilisation.

Hubco's earnings growth has been constrained by a tariff structure that falls as the company reduces its debts, but future ventures could provide additional upside for dividend payouts, analysts say.

The firm has expressed interest in acquiring a 51 percent stake in state-run Sui Southern Gas Co. Ltd. (SSGC), which the government plans to privatise this fiscal year. It also plans to bid for three combined cycle power generation projects.

In its first quarter ended Sept. 30, Hubco earned a net profit of 722 million rupees ($11.9 million), up from 638 million rupees earned a year earlier, it said in a statement.

The result was above analysts' expectations of 650-700 million rupees. Earnings per share during the quarter rose to 0.62 rupees from 0.55 rupees. Dividends are announced with half and full year results.

Analysts said Hubco's load factor improved in the quarter. Sales almost tripled to 11.72 billion rupees from 4.07 billion rupees a year-ago. However with prices fixed and input costs offsetting the revenue increase, analysts said earnings growth was limited.

"The profit has most likely stemmed from higher utilisation, leading to improved levels of thermal efficiency," said Naveed Vakil, analyst at AKD Securities.

Hubco's profits fell sharply last year as its tariffs were cut following repayment of its senior debt. The company's tariffs are front-loaded -- set high initially but designed to reduce over time.

The tariff is based on "Cost plus ROE (Return on Equity)" structure, with costs defined in cash flows terms and including debt repayments, analysts said. Hubco fully repaid its senior debt in July 2005, resulting in lowering of its annual debt repayment to 980 million rupees from 3.9 billion rupees.

The firm runs a 1,292-megawatt thermal coal power plant near Karachi. Its biggest shareholder is Britain's International Power Plc., with a stake of 16.6 percent. Hubco shares were down 1 percent at 25.45 rupees as Tuesday's market close approached, in a broader market that was down 1.5 percent.

Hubco shares have risen around 6 percent in 2006 so far, while the benchmark KSE 100-share index has risen almost 20 percent.

 

[Owais]

Charles meets Musharraf and Shaukat: youth business project inaugurated

ISLAMABAD (October 31 2006): Britain's Prince Charles spent a business day here on Monday, beginning his weeklong visit to the country with a call on President Musharraf, followed by a meeting with Prime Minister Shaukat Aziz and inauguration of a youth business programme.

However, his expected intercession with Pakistani authorities to secure the life of the death row inmate, British citizen Mirza Tahir Hussain, did not take place, according to a report quoting Information Minister Durrani. "This issue was not discussed. Neither did they want to talk about it nor did we talk about it," he said.

But, an unidentified Pakistani diplomat was cited having said that after their meeting, as Musharraf led his guest to the car, the Prince raised the issue, to which the President responded that effort would be made to handle it in a way that would satisfy both sides.

Prince Charles, accompanied by his consort, Duchess of Cornwall Camilla Parker, arrived here on Sunday night on his maiden visit to Pakistan, during which he will also go to Lahore, Peshawar and visit the earthquake hit areas. His itinerary includes a visit to a Madressah, near Peshawar.

Since the visit is taking place under strict security arrangements, the general public would get a very limited view of the royal couple. That would be indeed causing severe disappointment here, particularly to women who would like to see Camilla, who has taken the place of Princess Diana.

Prince Charles and the Duchess called on Prime Minister Shaukat Aziz at the Prime Minister House, where the latter informed the guests that Pakistan has all the essentials of democracy, including a functioning parliament, an active opposition and free media. The two also met on one-to-one basis for some time.

Another highlight of the royal visit was inauguration of 'Youth Business International Mentor's Programme' which was also addressed by the Prime Minister.

Addressing the function, Shaukat said that Pakistan and the United Kingdom share a friendship, which is rooted in history. "We are dedicated to the promotion of dialogue and understanding between Islam and the West, a goal, which I know, is close to your heart. Indeed, we in Pakistan greatly appreciate the consistent efforts that you have made in this regard."

He said: "We also welcome the valuable assistance that your country is providing towards Pakistan's economic and social development. In this context, we greatly appreciate your personal interest and contribution to the enhancement of the youth in Pakistan, which is symbolised by today's event.

"I am confident that your visit to Pakistan and, in particular your presence here today, will greatly contribute towards further strengthening of the friendship between our countries and peoples", the Prime Minister said.

He said his government attaches highest priority to the development of the youth, as it is underscored by the fact that a separate full-fledged Ministry of Youth Affairs was created. "We have involved the youth in decision-making by reducing the voting age from 21 to 18 years", he added.

The Prime Minister also apprised the visiting dignitaries of the several programmes for youth capability enhancement, including the Youth Internship Programme, Youth Awareness Programme, and Credit Facility for Youth, Youth Volunteer Corps, Youth Development Centres and the International Youth Exchange Programme.

 

[Owais]

IPIC to set up $2 billion oil refinery at Khalifa point: ECC to consider proposal today

ISLAMABAD (October 31 2006): The International Petroleum Investment Company (IPIC) of Abu Dhabi has agreed to establish oil refinery at Khalifa point, Hub, with the refining capacity of 200,000 to 300,000 barrels crude oil per day.

Official sources told Business Recorder the company has submitted its $2 billion investment plan to the government, which would be considered by the economic co-ordination committee (ECC) of the cabinet in its meeting on Tuesday.

The government had decided to offer 2,000 acres of land in Hub, primarily acquired for the Pak-Iran refinery, to prospective investors to establish oil refinery through international competitive bidding (ICB).

In 2002, Tehran had unilaterally refused to help establish $1.3 billion refinery in Balochistan's coastal areas, saying the project has no rate of return. The petroleum ministry had indicated that the land acquired by the State Petroleum and Petrochemical Corporation (PERAC) for setting up of Pak-Iran refinery is available at Khalifa point.

Sources also quoted the ministry as pointing out that the estimated cost of a mega project with 200,000 to 300,000 barrels per day (bpd) refining capacity is about $2 billion. Pakistan and Iran had signed an agreement on May 16, 1991 to initiate the project with a capacity to refine 120,000 barrels crude oil per day, but later Iran backtracked on the proposal and any of the arguments from Pakistani side did not convince it.

The petroleum ministry had suggested to seek proposals from the short-listed prospective investors (single entity or joint venture) to set up a new, state-of-the-art deep conversion refinery of this capacity at Khalifa point on Build-Own-Operate (BOO) basis under the incentives regime applicable to projects established in the Export Processing Zones (EPZs), sources added.

They said investment proposals had been evaluated on the basis of technical and financial soundness of development and operation of the proposed refinery.

The country's current demand of petroleum products is about 16 million metric tons per annum, 82 percent of which is met through imports (crude and finished products) and the rest through indigenous resources.

Pakistan's total refining capacity, at present, is about 12.8 million tons per annum against total demand of 16 million. Energy demand and supply projections indicate, by 2011-12 the total deficit of petroleum products in the country would be over nine million and 11 million, respectively.

 

[Owais]

OGDC earns Rs 12.328 billion net profit in first quarter

ISLAMABAD (October 31 2006): The Oil and Gas Development Company (OGDC) has earned after-tax profit of Rs 12.328 billion during the first quarter of 2006-07, against Rs 9.021 billion in the corresponding period last year.

The OGDC board of directors, which met here on Sunday to consider the quarterly accounts of the company for the period ended September 30, 2006 under the chairmanship of Arshad Nasar, declared first interim dividend of Rs1.75 per share for the year 2006-07 as compared to Rs1.25 per share for first quarter of last year, according to a press release.

Despite heavy rains in September, sales revenue of the company increased by 26 percent; profit before tax by 28 percent; and profit after tax by 37 percent, as compared to the corresponding period of last year.

The company's net profit margin increased to 49 percent and return on assets was 41 percent. Higher profitability of the year resulted in earnings per share of Rs 2.87 as compared to Rs 2.10 in the corresponding period of last year.

During the period 1,316 L kms. of 2D seismic survey was carried out. Drilling operations continued at 15 exploratory and two development wells. Two more wells at Chak 14-1 (exploratory) and Rajian 4-A (development) were spudded during the quarter.

Its average daily production, including the share from the joint ventures, averaged 39,682 barrels per day of crude oil, 826mmcf per day of gas and 823 M. tons per day of LPG compared to 37,418 barrels of crude oil, 333mmcf of gas and 309 M. tons of LPG during the corresponding period of the previous year.

The company recently had two discoveries - Mela Exploratory Well No 1 and Pasakhi North East Well No 1 - in September and October this year.-PR

 

[Owais]

NBP net income grows to Rs 14 billion

KARACHI (October 31 2006): The National Bank of Pakistan (NBP), in the first nine months of 2006 earning announced here, on Monday, declared that the net income of the bank grew by 61 percent to Rs 14 billion, translating earning per share of Rs19.76.

Net interest income of the bank grew by a hefty 45 percent to Rs 21.720 billion. Non-interest income of the bank improved by 28 percent to Rs 9 billion.

Muhammad Imran, an analyst at JS Research, said among non-interest income dividend from NIT units contributed significantly. The NBP has a practice to book NIT dividends in the third quarter of the calendar year.

This time NIT dividends contributed Rs2.85 per share in the bottom-line of the bank. The bank did not announce any payout with the results.

 

[Owais]

ABL registers Rs six billion operating profit in nine months

KARACHI (October 31 2006): The Allied Bank Limited (ABL) has posted an operating profit of Rs 6 billion, reflecting a growth of 59 percent during the first nine months period ended September 30, 2006 as compared to the corresponding period last year.

The board of directors of ABL approved the accounts for nine months in a meeting held on October 30, 2006 at Lahore. The profit after-tax was Rs 3.4 billion, registering a growth of 65 percent during the period under review from Rs 2.1 billion during the same period last year. Consequently, the earning per share jumped to Rs 7.53 from Rs 4.57.

The deposits of the bank grew by 23 percent to Rs 198 billion, while loan book increased to Rs 144 billion by posting a growth of 20 percent over December 2005. The NPLs decreased by 4 percent and the net NPLs to net loans ratio dropped to 2.3 percent from 3.6 percent.

The income to cost ratio improved to 2.6:1 from 2.2:1 in the corresponding period. The capital and reserves of the bank increased by 24 percent to Rs 16.7 billion.-PR

 

[Owais]

MCB profit up by 61 percent

KARACHI (October 31 2006): Profitability of the MCB Bank has grown by 61 percent to Rs 8.642 billion, translating earning per share of Rs16.89 during the first nine months of the current year ended September 30, 2006, as compared to Rs 5.382 billion, EPS Rs10.52, during the corresponding period last year.

Analyst said major contribution in the earnings growth was made by net interest income, which grew on the basis of higher spread of the bank. The net interest margin (NIM) of the bank increased by 100bps to 8 percent. Interestingly, advances of the bank depicted a declining trend quarter-on-quarter basis.

Net interest income (NII) of the bank increased by 51 percent to Rs 15.5 billion. Interest expense to interest income ratio of the bank increased to 16.4 percent from 15.9 percent in the corresponding period of last year. Non-interest income of the bank improved by 5 percent.

The bank also announced third interim cash dividend of Rs2 per share, ie, 20 percent with the results. This is in addition to interim dividend already paid at Rs4 per share, ie, 40 percent

 

[Neo]

Defence exports cross $200m mark: DEPO

By Iftikhar A. Khan

ISLAMABAD, Oct 30: Defence exports of Pakistan have crossed the $200 million mark as the country’s robust defence manufacturing industry continues to expand. This was disclosed by Major General Syed Absar Hussain, Director General, Defence Export Promotion Organisation (DEPO),while talking to Dawn here on Monday after briefing defence attaches of different countries on the International Defence Exhibition and Seminar (IDEAS) 2006. The event is scheduled to be held in Karachi from November 21 to 24.

General Absar said a new Armoured Personnel Carrier (APC) named ‘Saad’ will be unveiled for the first time at IDEAS 2006. Pakistan launched APC Saad equipped with Battle Field Management Systems, including computerised command, control, communication, intelligence and information systems in July 2003.

Gen Absar did not give details whether the Saad to be displayed at IDEAS 2006 was an upgraded version.

He said improved versions of the Al-Khalid battle tank and Super Mushak single piston engine aircraft will also be put on display besides various other upgrades.

The Al-Khalid tank has a night-fighting capability as well as the ability to automatically track targets. Super Mushak can be used as a trainee aircraft as well as for other aerial and defence operations.

Earlier, in his presentation, he said there will be a presentation on JF-17 Thunder aircraft jointly developed by Pakistan and China.

He said an international seminar on “expanding global security environment” will be held on Nov 20. The seminar will be presided over by either the defence minister or the foreign minister and addressed by various foreign delegates.

He said the formal inaugural ceremony of the exhibition will also take place the same evening. The exhibition will be open for the general public from November 21.

He said a Joint Forces Display in the sea at Manora island will mark the culmination of one of the world’s largest defence exhibitions. He said all the three services will demonstrate their prowess.

He said the Special Services Group (SSG) of the Pakistan Army will demonstrate a mock anti-terrorist operation.

He said the theme of the exhibition will be “Arms for Peace”, adding that the purpose was not just to sell weapons but also to show the soft image of Pakistan to the world.

He said 165 leading manufacturers from 23 countries, including 91 foreign and 74 domestic companies, had participated in IDEAS 2004.

He said this time 107 delegates from 95 countries have been invited, adding that 75 delegates from 70 countries have so far confirmed their participation.

 

[Neo]

Banned seeds to yield 1m cotton bales this season

By Sabihuddin Ghausi

KARACHI, Oct 30: More than one million bales of cotton this season is being obtained from the sowing of genetically modified seeds either smuggled from India or trans-shipped from Australia as a mis-declared item via Dubai, Singapore or Hong Kong.

Officially, the sowing of genetically modified seed in Pakistan is banned for which the government issues warning to the growers through electronic and print media well in advance at the time of plantation. But the use of these seeds, identified officially as bio-technological seeds (BT Seeds), is gradually becoming popular among the farmers because of its pest resistant quality and better yield in last few years.

Farmers in Sindh call BT seeds “Bhittai seed” and according to Syed Qamaruzzaman Shah, president Sindh Chamber of Agriculture (SCA), the seeds have been sown on about 0.1 million to 150,000 acres in the province.

President of Karachi Cotton Association (KCA) estimates cotton production from BT seeds this season anywhere “from 10 to 20 per cent of the total cotton production”.

With an indicated cotton output of 12 million bales plus this season, the BT seeds contribution comes to one million bales plus, the highest so far in the country in the face of federal agricultural ministry’s repeated warnings against the use of these seeds.

“The seed mafia and the pesticide mafia are against the official adoption of BT seeds in Pakistan,” a senior official in the federal textile ministry informed Dawn on Monday who disclosed that the textile ministry has “again urged the agriculture ministry to adopt the BT seed.”

Pakistan is a net importer of pesticides and one big importer hails from a powerful political business family of central Punjab that has interest in sugar, textiles, dairy farming and other areas.

The genetically modified seeds were first introduced in Pakistan about five years ago by an American multinational—Monsanto--that has registered its patent internationally. The company wants observation of international patent rules for marketing its seeds in Pakistan.

“Any agreement with Monsanto would have bound Pakistan with unbearable conditions,” is one argument offered by the bureaucrats in federal food and agricultural ministry. For example, there is a condition to import fresh seeds every year from the company rather than allowing the farmers to use seeds from the crop as is being done now.

“Why should not farmers use BT seeds if these are beneficial to them,” argued Qamaruzzaman Shah who said that this variety of seed had improved yields per acre and has been found pest resistant and moisture resistant.

He explained that some parts of lower Sindh were rendered unsuitable for cotton plantation after farmers switched over to bananas and sugarcane because of excessive use of water increased humidity in the environment. “Cotton needs dry weather and heat,” he said.

The BT seeds gave good results in an environment where humidity was relatively high and is, therefore, being used excessively. “Bags full of BT seeds are offered as gift by zamindars to each others,” the SCA chief replied when asked as what is the source of these seeds.

Zahid Bashir, however, wants all necessary safeguards for the use of BT seeds. He advocates a formal agreement with Monsanto or with any company that has produced these seeds. “Before sowing these seeds, these should be properly modified to suit our soil and our environment,” he stressed. The company should provide necessary training to technicians and farmers and also offer after-sales service as it is in case of every big deal.

Cotton traders and farmers blame bureaucrats’ fixations and frozen minds for delaying the official adoption of genetically modified seeds.

These seeds have been adopted in India where cotton output this season is being estimated at around 28 million bales--more than double that of Pakistan--where the Federal Committee on Agriculture has recently cut down crop estimate to 12.4 million bales from 13.8 million bales. China too has adopted these seeds and is now reaping benefits.With an expected 12.4 million bales production, the textile industry is all set to import about 2.5 million bales to 3 million bales in the coming months as there is a demand of about 15 million bales by the local industry after investment of about $5 billion in last five years. The government is exploring the possibility of cotton import from India via Wagah overland to cut down on freight and ensure swift delivery.