Pakistan Economy - News & Updates - Archive

[Neo]

Oil, gas output maintains upward trend​

KARACHI: Oil and gas production maintained upward trend in the last five months (Jul-Nov) of fiscal year 2007-08, posting a growth of 4.5 percent against the corresponding period of last year.

As per recent data released by Pakistan Petroleum Information Services (PPIS) Monday the country’s oil production has enhanced cumulatively to 693 kboepd (thousand barrels of oil equivalent per day) in the five months of the current fiscal. Local gas production in the period stood at 3.9 bcfd (billion cubic feet per day) against 3.7 bcfd produced during the same period last year.

The growth is mainly attributed to 9.9 percent and 3.9 percent increase in oil and gas production, respectively. This healthy growth in gas production came about despite decline in production from mature fields, somewhat offsetting impact of the production growth from new fields. Similarly, oil production stood at 71.7 kbpd (thousand barrels per day) in the period, compared to 65.2 kbpd last year.

This rise in production was mainly due to commencement of production from Mela-1 and increased oil production from Bobi, Tando Alam, Makori, Adhi, and Mela fields. Growth in gas production was mainly led by Qadirpur, Dakhni, and Kandhkot fields.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

VIEW: A new approach to development budgeting —Syed Mohammad Ali​

The growing concern about misappropriation of foreign aid implies the need for reliable systems to be put in place for managing, monitoring and reporting utilisation of direct budget support

Aid for development in countries like ours is coming under greater scrutiny. Given the increasing need for more effective utilisation, let us consider how international financial aid can be provided to support budgets of developing countries and the potential benefits that this approach can have.

Donors have tried to directly support national budgets of poor countries. During the 1970s and 1980s, this contribution largely used to take the form of improving balance of payments, or helping manage external financing constraints. But by the 1990s, the emphasis gradually began shifting from enabling countries to relieve fiscal constraints to trying to directly address poverty reduction goals.

International aid being funnelled directly to the national budgets of developing countries can basically take two forms; it can either provide a general contribution to the overall national budget, or it can contribute to a national budget in specified sectors such as health or education. Providing direct budget support to a recipient government using their own allocation, procurement and accounting systems is meant to increase a sense of ownership of donor funded development efforts.

Directly supporting budgets does provide a more simple method to release foreign aid that reduces transaction costs, avoids the need to fulfil varied reporting and accounting procedures, and improves predictability in the flow of development funds. Yet there are some major concerns associated with this seemingly expeditious form of lending international support for fighting widespread global deprivation.

The growing concern about misappropriation of foreign aid implies the need for reliable systems to be put in place for managing, monitoring and reporting utilisation of direct budget support. Developing countries, therefore, need to demonstrate transparency if more international aid is to be given directly to support their national budgets.

To judge whether a sufficient commitment to reducing poverty exists, proponents of direct budget support have been insisting upon the need for a formal strategic framework like the Poverty Reduction Strategy Paper, which was introduced by the World Bank in borrowing countries to qualify for its loans. Formulation of other plenary frameworks recommended by international financial institutions like the Mid-term Budget Frameworks also facilitates provision of direct budget support.

Even the United Nations system has incorporated the principle of direct budget support in its development assistance framework, and UN agencies are hosting discussions between donors and developing countries to share information to further facilitate the adoption of this new approach. Additionally, there are supplemental initiatives like gender responsive budgeting — aiming to highlight the amount of funds being allocated especially for women by disaggregating budgetary allocations to the social sector — that in turn facilitates provision of direct budget support.

International experience of using direct budget support is now beginning to emerge from countries across Africa, Asia and South America. Even Ireland is using direct budget support to develop its Tigray region. In neighbouring Bangladesh, the World Bank is providing direct budget support for the education sector. The state of Andhra Pradesh in India is also getting direct budget support form the United Kingdom’s Department for International Development. The UK has, in fact, become among the most active of bilateral donors endorsing this approach and DFID has expressly keen to increase the proportion of its development aid channelled directly through government budgets of poor countries.

In the case of Pakistan, DFID is supporting the health sector using the above mentioned sector-specific direct budget support approach. DFID’s support to the National Health Facility has aimed to improve access to good quality health services with an emphasis on the poor. For this purpose, DFID is providing the Pakistan government with resources for seven health and population programmes which include the Population Welfare Programme, the Lady Health Worker Programme, the National Tuberculosis Programme, the Expanded Program of Immunisation, the National Aids Control Programme, the National Malaria Programme and the Nutrition Programme. A consortium of international and local companies with expertise in health and population welfare issues has been formed to assist in providing technical inputs.

The United States has also provided US $200 million as direct budget support for Pakistan’s Federal Public Sector Development Programme for the financial year 2007-08. Then there is the World Bank which is helping provide additional resources to the provincial education budget through its Punjab Education Development Policy Credit. Several research studies had indicated the need for more funding at the provincial and lower levels to help improve the quality and access of public education in Pakistan.

However providing direct budget support for this purpose has proven difficult within the context of devolution, which shifted about planning and finance responsibilities between different tiers of the government. Putting in place a relatively new disbursement modality while devolution of fiscal and political responsibilities was taking place has required exhaustive explanations to the concerned authorities. Building capacity at the lower levels of government to improve financial, monitoring and management systems for ensuring transparency of direct budget support has emerged as another practical challenge.

Donor agencies are providing technical assistance to improve the government’s financial management and reporting systems. In this regard, the need for involvement of other actors like NGOs and the private sector has been recognised to facilitate awareness concerning direct budget support. The Human Rights Commission of Pakistan, for example, conducted a participatory budget analysis for primary education. More of such work needs to be undertaken to ensure that direct budget support is increasing the capacity of the government to address on-ground human needs.

There is considerable potential for collaboration between budget analysts and human rights activists. A well done budget analysis helps determine if the government is actually allocating its resources in line with its stated policy goals, while effective human rights campaigns can compel a shift in existing budgetary priorities to better provide for citizen rights.

It is by simultaneously making the governments of developing countries more capable and responsive to the needs of the poor that this opportunity of utilising less tightly administered development aid can be availed to lessen the prevailing depravation more quickly than meagre budgetary allocations of resource constrained countries had previously allowed.

Daily Times - Leading News Resource of Pakistan

 

[ejaz007]

ADB to provide $1.15 billion new loans to Pakistan
* $900 million will go towards a $5.36 billion investment plan by Pakistan’s National Highway Authority
Staff Report

ISLAMABAD: The Asian Development Bank (ADB) will provide Pakistan up to $1.15 billion in new loans to expand its key north-south highway network and for public sector reforms in Punjab province.
“Both of these programmes will boost the economy, which will generate new jobs and reduces poverty,” said Mr. Sean O’Sullivan, Deputy Director General of ADB’s Central and West Asia Department. ADB statement issued here on Tuesday said up to $900 million has been allocated to rehabilitate and expand key sections of the country’s main highway network, which starts from the port city of Karachi and runs northward. Lack of adequate roads in Pakistan is leading to a transport bottleneck. It is a constraint to improving competitiveness and attracting private sector investment.
“With trade flows concentrated along one major north-south transport corridor, this programme will make road traffic more efficient and reduce transport costs,” said Ms Cleo Kawawaki, a Senior Investment Specialist with ADB.
“Cheaper transport costs will increase private sector productivity, which will help deepen and diversify the industrial base, both of which are necessary to provide jobs for the growing population,” she said.
About $900 million will go toward a $5.36 billion investment plan by Pakistan’s National Highway Authority, which includes upgrading the highway from Karachi to Peshawar, as well as links to the port of Gwadar and the People’s Republic of China. Once the road improvements have been completed, travel time between Karachi and Peshawar, with a distance of 1,700 kilometers, will be cut from 72 hours to only 36.
The upgrade is also crucial for regional trade flows and will allow Pakistan to act as a transit artery for goods moving between Arabian Sea ports in the south and Central Asia and the People’s Republic of China in the north.
Funds from the first tranche, $545 million, will be used for two road projects — a 184 kilometer stretch from Faisalabad to Khanewal, as well as a separate 34-km expressway from Torkham, on the Afghan-Pakistan border, to Peshawar. For the subsequent tranches, depending on the appetite from private sector, structures such as guarantees and equity financing can be used under the programme to foster public-private partnership in the road sector.
In addition to the $900 million, ADB will provide Pakistan with $260.65 million in loans and grants to assist Punjab province to pursue reforms that will improve efficiency in the public sector. Punjab being Pakistan’s most populous province faces a poverty rate at over 20 percent. However, the provincial economy has staged a major turnaround, from a 0.9 percent contraction in 2001 to a 7.1 percent expansion in 2006.
“The province needs continued infusion of public and private investments to keep apace with the growth requirements of the economy, while at the same time to ensure sound maintenance of the investments made,” said Mr. Ramesh Subramaniam, Director of ADB’s Central and West Asia Department.
For this to happen, Punjab needs major improvements on three fronts – enhancing public sector efficiency, increasing access to and improving the quality of public services, particularly in education, health and water and sanitation, and accelerating private sector participation in the provision of services.
Punjab province has been a pioneer in first generational public sector reforms. Moving forward, the programme will support second generational reforms in fiscal management, pension and civil service, and private sector development. It will be designed and implemented through three subprogrammes from 2007 to 2011, each within about 18 months. A $250 million loan will fund the first subprogramme.
Daily Times - Leading News Resource of Pakistan

 

[ejaz007]

Govt plans to offload shares in seven firmsBy Ihtashamul Haque

ISLAMABAD, Dec 11: The caretaker government has agreed to offload Government of Pakistan’s shareholding in seven joint investment companies through Initial Public Offerings (IPOs) with a view to benefit them and at the same time add value to developing portfolio of stock markets.
Informed sources told Dawn that during a meeting with Finance Minister Dr Salman Shah on Monday, senior representatives of Pak-Kuwait Investment Company (PKIC), Pak-Libya Holding Company (PLHC), Saudi-Pak Industrial Agricultural Investment Company (SPIACO), Pak-Oman Investment Company (POIC), Pak-Brunei Investment Company (PBIC), Pak-Iran Investment Company (PIJIC) and Pak-China Investment Company (PCIC) favoured the proposals.
However, they said some of the issues needed to be worked out before formally opting for IPOs.
In this regard, both sides decided that the ministry of finance and the Privatisation Commission should further evaluate the feasibility of offloading some shares of the GOP in joint ventures with these seven companies.
Sources said the issue was earlier discussed between the State Bank of Pakistan and Ministry of Finance and they were informed about the latest business situation in these companies.
They were told that the PKIC, which was incorporated in 1979 was now having its Rs6 billion paid-up capital.
The State Bank of Pakistan is share-holder in the equity of the company on behalf of Government of Pakistan.
With regard to the subject proposal, PKIC favours the proposal as it would not only benefit institutions but would also add value to developing portfolio of the stock markets.
However, it said the following matters have to be initially deliberated between the stakeholders in Pakistan and subsequently with the foreign partners:
Market appetite for shares to be divested through IPO; reaction of the foreign partners for proportionately divesting along with GOP); the changes required in the existing provisions under the joint venture agreement, including concessions granted to JV by GOP.
PLHC: The Pak-Libya Holding Company was incorporated on 14-10-1978. Its paid-up capital presently stands at Rs3.242 billion. With regard to subject proposal it was said that PLHC was established as a “private company” in terms of the Companies Ordinance, 1984, so the right to transfer its shares is restricted and any invitation to the public to subscribe for any share is prohibited. However, according to the joint venture agreement, the induction of third party is possible only with the consent of two partner countries.
SPIACO: Saudi-Pak Industrial Agricultural Investment Company was incorporated on 23-12-1981. Its paid-up capital presently stands at Rs3.0 billion by December 2006. With regard to subject proposal, SPIACO has informed that the proposal is a positive development as it will bring the following advantages:
Instant valuation of the shares, and easing of raising funds from capital market.
The critical factors will be the percentage of shareholding to be off-loaded, pricing of shares, and the timing of flotation. It is presumed that the Saudi government will also have the same option for offloading their part of shareholding to the investors of their choice in the kingdom of Saudi Arabia.
However, the Saudi government would be consulted in the matter at an appropriate time. Its BOD and the shareholders have already approved the conversion of the current private limited status of the company into public limited.
The company is now close to receiving the approval of the governments of the two countries to the change in corporate status of the company.
POIC: PaK-Oman Investment Company company was incorporated on 23-7-2001. Its paid-up capital sands at Rs6 billion at present. GOP is direct share-holder in the equity of the company. The POIC board has in principle decided that the company should be made public listed by having one or two following approaches to offer additional equity to the public up to 20 per cent or to offer existing equity to the public up to 20 per cent.
It was also decided that as and when Pak-Oman would go public through IPOs, listing would be made at the stock exchanges of both the countries.
PBIC: The Pak-Brunei Investment Company was incorporated on 25-11-2006. Its paid-up capital stands at Rs3.05 billion. GOP is direct share-holder in the equity of the company. With regard to subject proposal, PBIC has informed that DFIs are currently over-capitalised relative to business activities; this translates into lower return on equity, which is most likely to attract public investors in case of a public offering.
It wanted that a decision to take JICs public should be made after a thorough evaluation of key objectives / strategic; focus, future business plan and profitability targets, and regulatory framework.
PIJIC: The Pak-Iran Joint Investment Company was incorporated on 15-1-2007. Its paid-up capital stands at Rs4 billion. About the proposal, the PIJIC has informed that they see significant benefits to the GOP vis-a-vis off-loading the shares through IPOs. However, they would like to add that the following issues need to be addressed internally by the GOP itself: A policy of liquidating mature investments (such as those in PaK-Kuwait, Pak-Libya and SAPICO is generally a welcome step as it would have multiple benefits.
It would deepen Pakistan’s capital markets and increase its market capitalisation. It would bring in private sector representations on the boards of these companies and provide them to independently raise capital in future if they so desire rather than be dependent upon the GOP and the JV partner to inject more capital.
It is also said that some of the DFIs being considered have significant strategic investments. As such the share-price at IPO should reflect the true value of these strategic investments as well as the current and future earning potential of these DFIs.PCIC: The Pak-China Investment Company was established in July, 2007. Its paid-up capital stands of Rs4.253 billion. The GOP is direct share-bolder in the equity of the company.
It is believed that all joint investment companies favour the offloading of their share-holding through IPOs in consultation with the respective foreign partner countries.

Govt plans to offload shares in seven firms -DAWN - Business; December 12, 2007

 

[KEWAN]

(WASHINGTON (October 09 2007): An overwhelming majority of Pakistanis are supportive of international trade as they see it good for economic advancement of the country, according to a latest world-wide public opinion survey. The survey by 'Pew Global Attitudes Projects' found that 82 percent Pakistanis favour international trade, 60 percent of the respondents saw people better off in free market economies.)


Dear its all is a game of figures in reallity our local industry will fall to zero and local producer will sufer a lot. As u see in last 2 yrs MNC's are establishing in and our local industry exept major 1's are vanishing.
Rich is becoming rich n poor is becoming more poor due to our poor agreements with MNC's. We does not offer them to transfer technology but calling them n saying come and use our resources.

 

[Neo]

CPI inflation jumps to 8.67pc ​

Soaring prices of food items hit low-income families hard

Wednesday, December 12, 2007

ISLAMABAD: The Consumer Price Index (CPI) inflation in November 2007 went up to 8.67 per cent from 8.07 per cent during the same month last year.

For five months (July to November 2007), the inflation fell to 7.85 per cent over the corresponding period of last year (8.29 per cent), but it was still above the target of 6.5 per cent for fiscal 2007-08, the Federal Bureau of Statistics (FBS) reported on Tuesday.

Though average general inflation is coming down, rising prices of food, fuel and lighting, education, healthcare and house rent are still snatching the purchasing power of the low-income group, which is a challenge for the economic managers.

The crushing blow to millions of low and fixed income families came from rising food prices, which during Nov 2007 went into double digit at 12.45 per cent over the corresponding month of last fiscal.

That hit the low-income families hard by further scuttling their purchasing power. It is interesting to note that high inflation in food has been noticed since the start of the last fiscal 2006-07. In that year, food inflation had been in double-digit, averaging more than 10 per cent.

During July 2006, it stood at 7.44 per cent, August 11.08 per cent, September 11.26 per cent, October 10.54 per cent, November 8.07 per cent, December 12.71 per cent, January 2007, 8.70 per cent, February 9.99 per cent, March 10.74 per cent, April 9.41 per cent, May 11.31 per cent and June 9.68 per cent.

Likewise, at the start of the new financial year 2007-08, it kept the same trajectory and during July 2007 food inflation stood at 8.47 per cent, August 8.62 per cent, September 12.97 per cent, October 14.67 per cent and during the month under review (November 2007) 12.47 per cent.

Despite their adverse impact on the low-income group, no effective steps have been taken by the government to reverse the trend. The authorities seem to be indifferent to the plight of the poor and the lower middle class who find it increasingly difficult to make ends meet with soaring prices of foodstuff and medical expenses.

In CPI basket, during the month under review, the cost of cleaning, laundry and personal appearance increased by 8.77 per cent, apparel, textile and footwear 8.67 per cent, house rent 8.27 per cent, healthcare 7.94 per cent, household, furniture and equipment 5.91 per cent and education 4.27 per cent over the corresponding month of the last fiscal.

More interestingly, the Wholesale Price Index (WPI) during the month also jacked up to 12.64 per cent from 7.46 per cent in same month of the last fiscal, which signifies further increase in general prices in the coming months.

While, main concern is that in the basket of WPI, food prices in November 2007 are costlier by 15.25 per cent, materials 15.09 per cent, fuel lighting and lubricants 14.44 per cent, building materials 9.15 per cent and manufactures up by 5.25 per cent over the corresponding month of the last fiscal.

In the span of one month, cotton seed prices went up by 10.59 per cent, cotton 8.55 per cent and mustard/rapeseed prices up by 4.78 per cent over October 2007.

Raw materials are also costlier by 5.38 per cent and fuel, lighting and lubricants prices also up by 2.98 per cent over October 2007. Detailed analysis of the CPI data revealed that under food and beverages, the items, which became dearer in November 2007, were mustard oil 15.26 per cent, eggs 12.94 per cent, vegetable ghee 7.36 per cent, masoor pulse 6.69 per cent, spices 4.8 per cent, wheat 4.79 per cent, corn flour 4.62 per cent, beverages 3.77 per cent, wheat flour 3.49 per cent and cooking oil prices up by 3.37 per cent in a span of one month over October 2007.

Though the government has tightened its monetary policy in July, the State Bank of Pakistan tightened its stance by raising its policy rate (the 3-day repo rate, which is its rediscount rate) from nine per cent to 9.5 per cent, and adjusted upward both the banks’ cash-reserve requirement ratio and their statutory liquidity requirement ratio, yet the accommodative monetary policy prevailed for the last few years would have a boosting effect on the inflation.

CPI inflation jumps to 8.67pc

 

[Neo]

Trade deficit widens to $7.2bn ​

Wednesday, December 12, 2007

ISLAMABAD: Pakistan’s trade deficit for the first five months of current fiscal widened to record $7.20 billion around 32.4 per cent higher than $5.44 billion recorded in the same period of last fiscal, the Federal Bureau of Statistics (FBS) said on Tuesday.

It is feared that at current pace the trade deficit would be more than $14 billion by end this fiscal that would aggravate current account deficit (CAD) position a situation international donors term as potential threat to economic health.

International donors have time and again shown concern over Pakistan’s soaring trade deficit and cautioned that runaway trade deficit may hurt sustainability of economic growth.

During July-November, 2007-08, Pakistan’s exports totalled $7.38 billion and imports $14.58 billion against $6.89 billion and $12.33 billion, respectively recorded during the same period last year.Imports were 18.27 percent more than the same period last fiscal, while exports rose only by 7.13 percent.

Each month, the import growth exceeds exports steadily widening the trade gap, the provisional FBS data revealed. It is important to note that previously, in its trade policy for the fiscal 2007-08, the government targeted imports at $29.6 billion and exports $19 billion with a trade deficit of $10.6 billion.

The current trend of fast growth of imports and slow pace of exports indicate that country would miss the export target and surpass the import target resulting in huge trade gap. Now in the first five months, the country achieved 38.8 percent of exports and 49.25 percent of imports target. The huge import pressure and low exports growth envisages that by the end this fiscal the trade deficit would exceed the set target of $ 10.6 billion.

In fiscal 2005-06, the government had missed its exports target of $17 billion by a margin of $531 million. During November 2007 local goods worth $1.54 billion were exported, recording an increase of 12.28 percent against exports of $1.37 billion in the same month last year.

Imports were $3.16 billion during November 2007 up 14 percent compared to $2.77 billion in November 2006. However, comparing exports of November 2007 with the previous month, the bulletin reveals increase of 9.56 percent as against exports of the previous month, which stood at $1.41 billion. The imports interestingly declined by 6.59 per cent from $3.38 billion recorded in October 2007.

Trade deficit widens to $7.2bn

 

[Neo]

Telecom sector attracts record FDI ​

Wednesday, December 12, 2007

ISLAMABAD: The telecom sector has received about 1,824 million dollar, which is 35 per cent of the total Foreign Direct Investment (FDI) in the country, an official of the Pakistan Telecommunication Authority (PTA) said here on Tuesday.

Total share of the telecom sector in FDI in 2001-02 was 1.2 per cent, in 2002-03 1.7 per cent, 2003-04 21.8 per cent, 2004-05 32.5 per cent, 2005-06 54.1 per cent and in 2006-07 35.6 per cent.

In the last couple of years, the telecom sector has attracted record inflows of foreign direct investment and in 2005-06, the sector received over $1.8 billion and emerged the only sector of the economy to have such huge investment.

The telecom sector has attracted about 17 per cent more FDI than the financial sector and 25 per cent more than the oil and gas sector in 2006-07.

Telecom sector attracts record FDI

 

[Neo]

Infrastructure improvement ​

ADB loans $1.15bn to Pakistan

Wednesday, December 12, 2007

KARACHI: The Asian Development Bank (ADB) will provide Pakistan up to $1.15 billion in new loans to expand its key north-south highway network and for public sector reforms in Punjab.

Of the total, $900 million will be spent to rehabilitate and expand key sections of the country’s main highway network, which starts at the port city of Karachi and runs northward, the international development lender said in a statement issued here on Tuesday.

“Both of these programmes will boost the economy, which generates new jobs and reduces poverty,” said Sean O’Sullivan, Deputy Director General of ADB’s Central and West Asia Department.

A lack of adequate roads in Pakistan is leading to a transport bottleneck. It is a constraint to improving competitiveness and attracting private sector investment, the ADB said. “With trade flows concentrated along one major north-south transport corridor, this programme will make road traffic more efficient and reduce transport costs,” said ADB Senior Investment Specialist Cleo Kawawaki.

“Cheaper transport costs will increase private sector productivity, which will help deepen and diversify the industrial base, both of which are necessary to provide jobs for the growing population,” she said.

The $900 million will go toward a $5.36 billion investment plan by Pakistan’s National Highway Authority, which includes upgrading the highway from Karachi to Peshawar, as well as links to the port of Gwadar and the People’s Republic of China.

Once the road improvements have been completed, travel times between Karachi and Peshawar, a distance of 1,700 kilometers, will be cut from 72 hours to 36. The upgrade is also crucial for regional trade flows and will allow Pakistan to act as a transit artery for goods moving between Arabian Sea ports in the south and Central Asia and China in the north.

Funds from the first trench, $545 million, will be used for two road projects: a 184 kilometer stretch from Faisalabad to Khanewal, as well as a separate 34 kilometer expressway from Torkham, on the Afghan-Pakistan border, to Peshawar.

For the subsequent tranches, depending on the appetite from private sector, structures such as guarantees and equity financing can be used under the programme to foster public private partnership in the road sector.

In addition to the $900 million, the ADB will provide Pakistan with $260.65 million in loans and grants to assist Punjab in order to pursue reforms that will improve efficiency in the public sector.

Infrastructure improvement

 

[Neo]

IPI gas pipeline project: Pakistan and Iran discuss GSPA ​

ISLAMABAD (December 12 2007): The 11th Pakistan-Iran Joint Working Group (JWG) meeting on Iran-Pakistan-India (IPI) Gas Pipeline project concluded here on Tuesday held an in-depth discussion on the technical, financial, commercial and legal aspects of Gas Sales Purchase Agreement (GSPA), which is at the advance stage of finalisation.

The Iranian delegation was led by Dr H.Ghanimi Fard, Special representative of the Petroleum Ministry of Iran, whereas the Pakistani delegation was led by Farrakh Qayyum, Secretary, Ministry of Petroleum and Natural Resources.

According to a joint press statement issued here, the discussions between the two delegations to include the few remaining issues of the documentation were marked by positive and pragmatic approach and were held in an atmosphere of confidence and mutual understanding to achieve the goal of finalisation of GSPA as early as possible.

The two sides agreed that they had covered a lot of ground on the project agreement at the bilateral level in the last couple of JWG sessions. The Iranian side stated that the window for Indian participation to join the project may not remain open for an indefinite period on the existing terms and conditions of the project.

The two sides noted with satisfaction that each of them had initiated work to a certain level on the project as forty percent of the construction of the pipeline.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Profit outflows soar to $300m in four months ​

Thursday, December 13, 2007

KARACHI: Outflows of profits and dividends during July-October 2007 increased by 21.4 per cent to $300 million against $247.2 million sent abroad during the same period of last fiscal.

The steep rise in outflow of dollars in terms of profits and dividends was witnessed in financial business, which surged by 187.9 per cent to $43.2 million. In the corresponding period of preceding year, the repatriation of profit of the sector was $15 million.

The transportation and automobile (buses, trucks, vans and trail) was another sector where outflows sharply increased by 112.6 per cent to $3 million as compared to $1.4 million last year.

However, the highest outflow in terms of profit and dividend during the first four months was recorded in the power sector, where the outflows amounted to $46.7 million as compared to $26.1 million in the same period of last fiscal.

The communications was another major sector which sent back $34 million abroad against $58.1 million of last year, whereas the petroleum refining was another major sector, which witnessed rise in outflow of dollars. The petroleum refineries sent back $44.1 million, while in corresponding period of previous year the sector’s outflow was $39.7 million.

The food sector recorded outflow of $16.50 million, tobacco & cigarettes $12.6 million, chemicals $12.6 million, oil & gas exploration $31.3 million, pharmaceuticals $2.9 million, fertilizers $1.1 million, transport equipment (automobiles) $6.9 million, trade $6.6 million, tourism $24 million, storage facilities $4.1 million.

Profit outflows soar to $300m in four months

 

[Neo]

500,000 bales of Indian cotton to be imported​

ISLAMABAD, Dec 12: The government on Wednesday allowed import of 500,000 bales of short staple cotton from India through land route (Wagah) to overcome domestic shortage, it is learnt.

Sources said the decision to this effect was taken at a meeting of the Economic Coordination Committee (ECC) of the Cabinet presided over by caretaker Prime Minister Mohammadmian Soomro. Caretaker finance minister Dr Salman Shah did not attend the meeting.

The sources said the ECC directed Deputy Chairman of the Planning Commission Dr Akram Sheikh to ensure that cotton import did not exceed the allowed limit that might cause the domestic cotton prices to crash, to the disadvantage of farmers.

It was for the first time in more than eight years that almost all the leading newspapers were kept out of a briefing on the ECC meeting despite repeated requests.

The briefing by Adviser to the Finance Ministry Dr Ashfaq Hassan was kept restricted to the official media and cameramen of the electronic media. The sources said the ECC also gave a post-facto approval to a Rs18 billion syndicated loan through Habib Bank Limited for payment to Pakistan State Oil (Rs12 billion) and Shell Pakistan (Rs6 billion) at an interest rate of 10 per cent. The government will repay Rs22 billion next year to the banking consortium in one go that would include both the interest as well as the principal amount, the sources said.

The loan has been arranged to improve cash flow problems being faced by the oil companies that has led to the lowest ever oil stocks in Pakistan’s history. The cash flow problems arise due to a freeze on oil pricing.

The meeting, the sources said, was informed that the Sindh government had provided a full-month wheat quota to flour mills, instead of weekly quota, to overcome flour shortage. As a result, the government claimed that wheat price had declined from Rs19 to Rs17 per kg.

The meeting was also informed that with the imposition of regulatory duty on wheat products a few days ago, the exports to Afghanistan had came to a negligible level.

The ECC also endorsed de-linking of prices of liquefied petroleum gas (LPG) with Saudi Aramco Contract price allowed by the caretaker prime minister early this month.

500,000 bales of Indian cotton to be imported -DAWN - Top Stories; December 13, 2007

 

[Neo]

Cabinet approves 969MW Neelum-Jhelum hydropower project​

* Revised cost of the project is Rs 128.4 billion with a foreign exchange component of $785 million (Rs 46.5 billion)

ISLAMABAD: Federal cabinet on Wednesday formally approved the strategically important Neelum-Jhelum Hydropower project at a revised cost of Rs 128.4 billion with a foreign exchange component of Rs 46.5 billion.

The formal approval was made in the federal cabinet meeting chaired by the caretaker Prime Minister Muhammadmian Soomro. The approval cleared the way for the long- awaited construction of the project. Economic Coordination Committee (ECC) of the cabinet had earlier approved the project in April during the current year.

The project envisages the diversion of Neelum waters at Nosairi in Azad Jammu and Kashmir and it will involve tunneling of 47 km for diversion of the water from Nosairi to the power station. The project, awarded to the Chinese company will be completed in eight years. The project will also be executed through a corporate company, which has since been set up and the debt ratio of the project will b e around 50;50 with equity being raised through a nominal surcharge of electricity excluding 3 million lifeline consumers.

Addressing the cabinet on the occasion, caretaker prime minister expressed satisfaction that the project, which had been delayed for many years will not only help secure Pakistan’s rights over the Neelum-Jhelum waters but also go a long way in bridging the energy gap in the country through generation of additional 969 megawatt of hydel electricity which is the cheapest form of generation.

The construction of Neelum Jhelum Hydroelectric Project would enable Pakistan to get water usage rights and any further delay in construction of the said project, technically, Pakistan would be obliged under the treaty to allow India to use these waters for power generation without storage.

Official said that government of Pakistan has already approached Kuwait Fund and French financers M/s BNP Paribas for arrangement of the foreign exchange component of the $785 million (Rs 46.5 billion).

In order to arrange foreign exchange component of $785 million the government made a presentation to Kuwait Fund management delegation on March 21, 2007 and a formal request has been sent to Economic Affairs division for further submission to Kuwait Fund. The government officials have also held discussions for availability of foreign exchange component of the project with French financers M/s BNP Paribas head office which is located at Paris on March 29, 2007, the official explained.

Water and Power Development Authority (WAPDA) has already approved award of the contract to the lowest bidder i.e. CGGC-CMEC a joint venture on March 9, 2007 at the contract price of Rs 90.885 billion including foreign exchange of $785 million. The Project Director office is established and is operational at Muzaffarabad to execute the project in the site,” the official added.

Government had made an allocation of Rs 5 billion in the Public Sector Development Programme (PSDP) and a sizeable amount is expected to be allocated for the project in the PSDP for the next fiscal year, the official added.

The installed capacity of the project is estimated at 969 MW and annual energy generation capability of 5150 kWh, design discharge at 230 and average head at 450 meters. Two tunnels would be built under the project design; the first would be 15 kilometers each 40 square meters and the second would be of 17 kilometers each 80 square meters. According to the official, the project would be connected with National Grid at Rawat with the construction of two separate transmission lines of 500 kV single circuit.

The official informed that the some 2500 kanals of land would be acquired for the project and in the first phase acquisition of 1123 Kanals of private land is underway. WAPDA has already transferred Rs 336 million to the Azad Jammu and Kashmir government as provisional cost of private land being acquired by it.

Daily Times - Leading News Resource of Pakistan

 

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Foreign investors: July-October outflows of profit up 21 percent ​

KARACHI (December 13 2007): Outflows of profit by the foreign investors registered a significant growth of 21 percent to $300 million during first four months of current fiscal year. Huge outflows of profit by the foreigners showed the foreign companies are still earning tremendous profit, analysts said.

The government of Pakistan already has allowed 100 percent repatriation of profit to the foreign investors. Therefore, the foreign investors are fully enjoying the government's policy and sending their profit abroad, they said. Repatriation of profit by the foreign investors witnessed an upsurge of some $52.8 million during the July-October of the current fiscal year.

After this upsurge the overall repatriation has reached $300 million during the first four months of the current fiscal, as it stood at $247.2 million during the same period of the last fiscal, depicting an increase of 21 percent.

Foreign investors have invested millions of dollar during last few years due to rising profit of this sector, as a result the major share of repatriation also witnessed in the financial sector.

Some $43.2 million profit from financial sector was sent back by the investors during first four months of 2007 as compared to $15 million during corresponding period of 2006, depicting an upsurge of 188 percent or $28 million during the July-October.

Earlier, communication sector was the second leading sector, however presently its repatriation has declined by 41 percent to $34 million from $58.1 million. Huge repatriation has also been witnessed in the power sector, while the petroleum refineries are on the second position.

Central Bank's latest statistics shows that foreign investors have sent profit worth $46.7 million from power sector, $44.1 million from petroleum sector, around $31 million from oil and gas exploration companies and $20.6 million from the chemicals sector.

In addition, tobacco and cigarettes sector has sent $12.6 million, $16.5 million from food sector and transport sector has sent some $15 million abroad during the first two months of current fiscal year.

It may be mentioned here that the repatriation by foreign investors is rapidly increasing, as during the last fiscal it showed an increase of $299.8 million or 59 percent to $804.2 million during the last fiscal as compared to $504 million sent during fiscal year 2006.

Business Recorder [Pakistan's First Financial Daily]

 

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Iran, Pakistan decide to go ahead with gas pipeline ​

Wednesday December 12, 2007

Islamabad/New Delhi, Dec 12 (IANS) Pakistan and Iran Wednesday claimed to have 'finally' decided to go ahead with a gas pipeline project without India's participation, and Indian officials termed the move a 'pressure tactic'.

'We have finally decided to go ahead with the project without New Delhi's involvement,' a senior official of Pakistan's petroleum ministry told IANS a day after the 11th Pakistan-Iran Joint Working Group (JWG) meeting on the Iran-Pakistan-India (IPI) gas pipeline project concluded in Islamabad.

Requesting anonymity, he added the group had decided that India might be included in the project at a later stage.

He said the pipeline will have the capacity to carry the gas to the Indian border if New Delhi expressed its willingness to join the project.

However, India refused to attach much importance to the official's remark.

'There is no clarity on the subject,' said a senior petroleum ministry official in New Delhi. 'One of the interpretations that we can give is that these (statements) are just pressure tactics,' he added.

Officials in New Delhi pointed out that there have been similar statements and reports from Islamabad in recent months that India was dropped from the tri-nation project.

At a press meet on Nov 13, Indian Petroleum Secretary M.R. Srinivasan had disputed such reports and noted that there had been only bilateral talks between Iran and Pakistan in Teheran.

'But contrary to media reports... they reread all the provisions of the contract and agreed on most of the contents,' he said. Even reports on a 'deadline' to India to join the project was later denied by Iran.

India has maintained that it is very much interested to participate in the project, but it still has differences with Pakistan on transportation tariff and transit fees.

India has refused to attend the trilateral talks, as it felt that the bilateral issues needed to be resolved first.

'Also, the gas price is on the higher side. We are also not desperate for the gas, as there are new sources for energy since the initiation of talks on the pipeline,' said an official in New Delhi, adding that the project had to be commercially viable to ensure India's participation.

India planned to discuss the IPI pipeline project with Pakistan in the last week of November when Petroleum and Natural Gas Minister Murli Deora was to visit Islamabad to attend the steering committee meeting of the ADB-sponsored Turkmenistan-Afghanistan-Pakistan-India pipeline project.

However, the meeting had been cancelled due to domestic developments in Pakistan. The next meeting on the committee may be held in Islamabad in February 2008.

The IPI project involves building a 2,775-km pipeline to deliver natural gas from Iran's South Pars field to Pakistan and India. Expected to be completed in three to five years, its estimated cost is $7 billion.

Meanwhile, the 11th Pakistan-Iran JWG meeting discussed the Gas Sales Purchase Agreement (GSPA) and Intergovernmental Framework Agreement (IGFA).

H. Ghanimi Fard, Special Representative of Iran's Petroleum Minister, led his country's delegation whereas Farrakh Qayyum, secretary of the ministry of petroleum and natural resources, led the Pakistan delegation.

The Iranian team called on Paksitan's Petroleum and Natural Resources Minister Ahsanullah Khan, who conveyed his government's firm support to the project and urged the two delegations to conclude their discussions on the GSPA and IGFA.

Without mentioning India, the minister said the project will begin as 'soon as possible' and without any further negotiations.

The two sides agreed that they had covered a lot of ground on the project agreement at the bilateral level in the last couple of JWG sessions.

Iran, Pakistan decide to go ahead with gas pipeline - Yahoo! India News