Pakistan Economy - News & Updates - Archive

[Neo]

POL consumption rises by 8.4pc in 10 months ​

Tuesday, June 03, 2008

KARACHI: The consumption of petroleum products (POL) has recorded an increase of 8.4 per cent to 15.31 million tonnes during July 2007 to April 2008 compared with 14.12 million tonnes in the corresponding period of last year mainly due to increasing demand for power, industrial consumption and the transport sector.

According to a report, the major rise was seen in the consumption of high speed diesel and gasoline, which grew by 14.5 per cent and 30.2 per cent, respectively. The company-wise break-up shows that the total POL sales of the Pakistan State Oil (PSO) stood at 10.47 million tonnes during the period under review as compared with 9.17 million tonnes in the corresponding period of last year, depicting an increase of 14.2 per cent. Increase was witnessed in all three major product categories, ie, HSD (20.3pc), furnace oil (10.1pc) and motor gasoline (38.5pc).

Similarly, Shell Pakistan Limited also showed a growth of 9.2 per cent in its POL sales volume, which stood at 2.07 million tones during the said period. Overall market share of the company was 13.5 per cent during the period under review as against 13.4 per cent in 10 months of 2007. Attock Petroleum Limited (APL) also depicted a nominal growth of 1.9 per cent in its total POL sales, which stood at 0.93 million tones in 10 months of 2008 as compared with 0.91 million tonnes in the same period of last year.

The total market share of APL fell to 6.1 per cent during the said period as compared with 6.5 percent in the corresponding period of last year due to a fall in sales of furnace oil, showing a decline of 8.9 per cent to 0.43 million tonnes from 0.47 million tonnes last year.

http://www.thenews.com.pk/daily_detail.asp?id=116255

 

[Neo]

Pakistan-Italy sign soft loan for development of SME​

* Interest-free loan payable in 39 years​

ISLAMABAD: A financial agreement to the tune of euro 7.75 million soft loan was signed between SME Bank and Artigiancassa Bank Monday.

Small and Medium Enterprises (SME) Bank, as borrower on behalf of government of Pakistan and Italian Bank as lender on behalf of government of Italy inked the agreement.

The agreement provides for implementation of a credit facility offered by government of Italy for provision of soft loan of euro for small and medium enterprises (SMEs) development in Pakistan.

The loan carries zero percent interest rate, payable in 39 years. SME Bank would lend this loan to SMEs at a maximum markup of 4 percent on loan in euro and 8 percent on loan in Pak rupee.

The credit facility shall be available only to private enterprises or enterprises with a public participation upto 20 percent. Research Centers and Universities may also have access to the soft loan in order to set up pilot projects or demonstration centers in the field of technology innovation and environment protection. Each individual project, even if split into more than one contract, shall not exceed the amount of euro 550,000 and shall not be lower than euro 30,000.

The credit line is proposed to disburse through a SMEDA-UNIDO IPU (Small and Medium Enterprise Development Authority, United Nations Industrial Development Organization Investment Promotion Unit. This IPU would be set up within SMEDA premises, through an Italian grant of euro 1,418,200 (already released in favour of UNIDO). Financial and technical feasibility of each project loan is to be undertaken by the IPU and loans shall be managed through the network of SME Bank.

Syed Naveed Qamar, Federal Minister for Finance, Privatisation and Investment and Guiseppe Vegas, Italian Minister of State for Economic and Finance witnessed the signing ceremony.

R A Chughtai, chairman SME Bank and Stefano Gatti, head of Revolving Fund Management Unit, Artigiancassa Banking Group of Italy signed the accord.

Earlier Guiseppe Vegas called on Syed Naveed Qamar and they discussed general guidelines of the financial agreement between the two governments. They also discussed for fostering collaboration in other sectors. Both the sides exchanged views on establishing a Technical Support Unit in Economic Affairs Division of Ministry of Finance that would underpin all similar Italian-Funded Projects in Pakistan in various development sectors.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Pakistan keen to strengthen economic ties with Italy: PM ​

Tuesday, June 03, 2008

ISLAMABAD: Prime Minister Syed Yousuf Raza Gilani on Monday said Pakistan and Italy enjoy close friendly relations on diplomatic, political, economic and security fronts, and hoped the ties would strengthen in the future.

Talking to an Italian delegation headed by Giuseppe Vegas, Minister of State for Economic and Finance, the PM said that Pakistan accords priority to its close relationship with Italy.

The PM discussed the issue of better market access for Pakistani products to Italy and asked the Italian Minister to support Pakistan in the European Union. He said his government was focusing on improving the agriculture sector to overcome the food shortage, and sought Italy’s cooperation to develop a mechanised agriculture in the country.

On strengthening people-to-people contact, the PM stressed for exchange of parliamentary delegations besides promoting cultural cooperation. He said Pakistan was facing energy shortage and asked Italy to invest in the power sector to supplement the government’s efforts in overcoming the power shortage. He lauded the role of the Italian government for providing valuable assistance to rehabilitate the quake-affected areas.

Giuseppe Vega expressed confidence that bilateral relations between the two countries would strengthen as both the countries had a common vision on important international issues. He said Italy considers that Pakistan was playing an important role in regional stability. He also extended an invitation to the PM to visit Italy at his convenience. Ambassador of Italy, Vincenzo Prati, and Minister for Finance Syed Naveed Qamar, were also present during the meeting.

Pakistan keen to strengthen economic ties with Italy: PM

 

[Neo]

NEC lowers proposed GDP growth target​

* Approves Rs 541 billion Public Sector Development Programme for 2008-09
* Rejects federal demand to reduce budget of PSDP​

By Ijaz Kakakhel and Sajid Chaudhry

ISLAMABAD: Following intervention by the Finance Department and the State Bank of Pakistan, the National Economic Council (NEC) on Monday revised the Planning Commission’s proposed Gross Domestic Product (GDP) growth target from 6.5 percent to 5.5 percent for the fiscal year 2008-09.

The Planning Commission has also been directed to revise projections of the Macro-Economic Framework for the forthcoming fiscal year.

Major contributions of services, agriculture and manufacturing in GDP in the next fiscal year would also be re-determined in line with the revised GDP growth.

PSDP: The council also approved the costliest ever Rs 541 billion Public Sector Development Programme (PSDP) for 2008-09, with an 11.54 percent increase compared to last year’s Rs 485 billion programme.

Prime Minister Syed Yousuf Raza Gilani chaired the meeting. Provincial governors, chief ministers, federal and provincial ministers, federal and provincial secretaries and the State Bank governor also attended.

The council, due to opposition from all four provinces, turned down the demand of the federal ministers for Foreign Affairs and Finance to reduce the scope of the Public PDSP for 2008-09.

According to official sources, the NEC set aside the request of Foreign Affairs Minister Shah Mehmood Qureshi and Finance Minister Syed Naveed Qamar and approved allocation of Rs 541 billion, including Rs 170 billion for the provinces, as proposed by the Planning Commission for the fiscal year 2008-09.

However, Finance and Planning ministers representing their respective provinces strongly opposed any cut to the proposed PSDP. The provincial ministers claimed that an increase in the PSDP was essential for the revival of economic growth in the next fiscal year.

The approved PSDP allocates Rs 371 billion to the federal development programme and Rs 170 billion to the Annual Development Programme (ADP) for the provinces.

About 20 percent of the federal programme funds – Rs 75 billion – have been allocated to infrastructure development. Of the sum, Rs 10 billion have been allocated to hydel projects, Rs 9.8 billion to the National Programme to improve water courses, Rs 14 billion to canals and Rs 2.2 billion to canal lining.

The NEC had approved a block allocation of Rs 27 billion for the Earthquake Reconstruction and Rehabilitation Authority (ERRA).

Planning Commission Deputy Chairman Salman Farooqi told reporters that the revised GDP growth target was realistic and achievable and could increase depending upon the economic situation.

He said that PSDP had never been implemented in line with budgetary allocations in the past, including the outgoing fiscal year.

The NEC also authorised the Planning Commission to substitute development projects according to the demands of the province, sources said.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

Pakistanis fail to exploit available resources ​

Country among top producers of ghee, rice, wheat, sugarcane, milk, onions,chickpeas, cotton, date palm, mango and oranges

Tuesday, June 03, 2008
By Mansoor Ahmad

LAHORE: Economists point out that Pakistanis somehow fail to exploit available resources in the country.

They said Pakistan is the largest producer of ghee in the world. The country stands second in chickpeas production, fourth in production of cotton, apricot and sugarcane, fifth in milk and onions, sixth in date palm, seventh in mango, eighth in tangerines, mandarin orange and rice, ninth in wheat and tenth in oranges.

Yet they said the country at one time or the other faces shortages, as the bureaucracy has no hold over hoarders, black marketers or smugglers.

They said the dairy potential of the country remains unexploited as the planners promote higher growth by increasing the milch animals instead of making efforts to increase the productivity of livestock at par with developed countries. They said the mindset of the government to increase agriculture output by four per cent every year would provide no relief to the consumers.

This productivity they added is naturally achieved every year subject to favourable weather. The government makes no contingency plans to take measures that could minimize the any adverse impact of the weather. Moreover they added the added in view of huge unexploited agricultural potential the productivity should be increased by 20 per cent annually for next five years in order to take advantage of high global commodity rates.

They said the performance in the industrial production is equally pathetic. They said Pakistan is the fourth largest producer and third largest consumer of cotton in the world. They said Pakistani textile industry consumes 16 million bales of cotton every year, out of which 85 per cent is exported. Thus only 4 million cotton bales are consumed for local needs while 12 million are used for exports.

Without taking into account the size of India itself, the volume of its economy, its polity and the age of Indian industry, the said economists went on to compare Pakistan with India.

They said India consumes 22 million cotton bales every year out of which only 50 per cent is exported and 50 per cent consumed locally. This implies that Indians consume 11 million cotton bales for exports and 11 million for local use.

The Indians earn over $18 billion from textile exports against $10 billion textile exports from Pakistan. If Pakistan textile industry matches the value addition attained by India our textile exports should have been over $20 billion. The textile industry alone is not responsible for this stalemate the protection provided to PTA plant also retarded blending textile products with manmade fibres.

They said the growth in automobile sector has also been lopsided. The car production in Pakistan, they added increased six times from 33,000 in 1999 to 200,000 units now.

The deletion of auto-components they added has remained almost stagnant. The foreign exchange saving they said is only 30 per cent even in vehicles where the localization of parts has reached 70 per cent.

They said 30 per cent imported parts of the vehicle add 70 per cent cost to the car. They said for low deletion models the imported component is 80-85 per cent. This they added explains one of the reasons for high import bill.

The previous government proudly claims that the import of raw material, parts and machinery has increased substantially during past eight years. These raw materials, parts and machinery added very little to exports but ballooned local consumption beyond reasonable limits. It looks strange that the government is providing undue protection to such industries at the expense of the consumers. They should be asked to either export certain percentage of production and part away from protection.

Despite high sugarcane production Pakistani consumers pay higher than the global sugar rates. The payments to the farmers are withheld due to lack of government writ. The cement industry has always operated on low capacity utilization to maintain high cement rates. Currently this sector is manipulating local cement rates on the strength of high export rates they are fetching from India and Middle East.

Pakistanis fail to exploit available resources

 

[Neo]

Italy loans 7.8m euros for SME development ​

Tuesday, June 03, 2008
By Mehtab Haider

ISLAMABAD: Italy has signed an agreement for providing a credit line of 7.75 million euros for the development of small and medium enterprise (SME) in Pakistan.

A financial agreement between SME Bank (as borrower on behalf of the Government of Pakistan) and Artigiancassa Bank (as lender on behalf of the Government of Italy) was signed here on Monday.

The agreement provides for implementation of a credit facility offered by Italy for the provision of a soft loan worth 7.75 million euros for small and medium enterprise (SME) development in Pakistan.

The loan carries zero per cent interest rate, payable in 39 years. SME Bank would lend this loan to SMEs at a maximum markup of 4 per cent on loan in euro and 8 per cent on loan in Pak rupees.

The credit facility shall be available only to private enterprises or enterprises with a public participation of up to 20 per cent. Research centres and Universities may also have access to the Soft Loan in order to set up pilot projects or demonstration centres in the field of technology innovation and environment protection. Each individual project, even if split into more than one contract, shall not exceed the amount of Euro 550,000 and shall not be lower than Euro 30,000.

The credit line is proposed to be disbursed through a SMEDA-UNIDO IPU (Small and Medium Enterprise Development AuthorityñUnited Nations Industrial Development Organisation Investment Promotion Unit). This IPU would be set up within SMEDA premises, through an Italian grant of Euro 1,418,200 (already released in favour of UNIDO). Financial and technical feasibility of each project loan is to be undertaken by the IPU and loans shall be managed through the network of SME Bank.

The signing ceremony was witnessed by Syed Naveed Qamar, Pakistan’s Finance Minister, and Italian Minister of State for Economic and Finance, Guiseppe Vegas. R A Chughtai, Chairman SME Bank signed the agreement on behalf of the Government of Pakistan and Stefano Gatti, Head of Revolving Fund Management Unit, Artigiancassa Banking Group of Italy signed on behalf of the Italian Government.

Earlier, Italian Minister of State for Economic and Finance, Guiseppe Vegas called on Finance Minister, Syed Naveed Qamar in Finance Division Islamabad. Both the Ministers discussed general guidelines of the financial agreement between the Governments of Italy and Pakistan that would help promote small and medium enterprises development in Pakistan, besides fostering collaboration in other sectors.

Both the sides exchanged views on establishing a Technical Support Unit in Economic Affairs Division of the Ministry of Finance that would underpin all similar Italian-Funded Projects in Pakistan in various development sectors.

Subsequent monitoring and evaluation of all such projects would pave the way for maximum benefits to the people of Pakistan, simultaneously enriching Italian entrepreneurs with experience in projects handling world over.

In the end, Guiseppe Vegas ivited Pakistan’s Finance Minister to visit Italy at his convenience in times to come. Such a visit would certainly strengthen bilateral relations between the people and governments of both the countries, Syed Naveed Qamar concluded.

Italy loans 7.8m euros for SME development

 

[Neo]

Chinese firm interested in bus making​

ISLAMABAD, June 2: A three-member Chinese delegation from King Long Automotive Industry (KLAI) visited investment Division and Board of Investment (ID&BoI) here on Monday to explore ways for Completely Knock-Down (CKD) bus manufacturing in the country.

The delegation comprised Richard Zhang, Assistant to President and Overseas Business General Manager, Andrew Chen, Project Manager and Xu Chang Hua, Manager, said a BoI press statement.

King Long Automotive of China is involved in the production of buses of international standards and has recently entered the European market and has further strengthened its global presence, the press statement added.

The delegation members held detailed meeting with the BoI officials. The meeting was chaired by BoI Director General Riaz-ul-Haq, who gave a presentation and discussed economic profile of Pakistan, various reforms and their implications on investment, liberal investment policy, while foreign direct investment trends from China were highlighted in particular.

The delegation was informed that currently over 60 Chinese companies were successfully operating in key economic sectors of Pakistan, the major ones being, China Mobile in Telecommunications, Pak-China Investment Company in Financial Services, Huawei Technologies Company Limited in Information Technology, China National Machinery Import & Export Corporation in mining and explorations and China State Construction Engineering Company in construction of 7-star hotel in Pakistan.

During the discussion delegation was also informed about the China-specific economic zones and the incentives it offers to the investors, including a 5-year tax holiday and 100 per cent depreciation allowance.—APP

Chinese firm interested in bus making -DAWN - Business; June 03, 2008

 

[Neo]

Economic fundamentals still strong, says Musharraf ​

ISLAMABAD (June 03 2008): President Pervez Musharraf on Monday said the country's economic fundamentals were strong and hoped the government would address the current downtrend. The President was addressing the participants at the National Defence University following the presentation of a National Strategy Paper on Governance of Specially Administered Areas (Fata and NAs), and their impact on national security.

The event was attended by NWFP Governor Owais Ghani, Chairman Joint Chiefs of Staff Committee General Tariq Majeed, Chief of the Army Staff General Ashfaq Parvez Kayani and Air Chief Marshal Tanveer Mahmood.

To a question about the prevailing economic situation, President Musharraf said it was certainly recoverable. "I hope the government moves forward politically for the salvation and putting back on track the derailed situation. It is doable and achievable," the President added. The President said the issues of economy and terrorism must not be politicised as these might harm the national interests.

About the country's economic fundamentals, the President said: "Alhamdolillah, these are right and have been endorsed by international institutions." "We have to solve the problem and Pakistan has to move forward. We must make sure that this nation rises," the President said.

He pointed at the recent slump of stock exchange where billions were lost and the exchange rate after staying stagnant for the past eight years to around Rs 60, touched Rs 70 per dollar. The country loses Rs 28 billion with the increase of single rupee, he added.

He expressed the confidence that "if correct and bold measures are taken then all issues that confront us, are solvable - whether political or in economic field and all the issues of energy, water and food." The President said the three-pronged strategy of addressing military, political and socio-economic aspects was the way forward for addressing the situation in Pakistan's tribal areas.

"Military is certainly and is never the solution, as it only creates an environment, the solution is always through political measures," the President added. He said apart from the peace deal done two years back, the current deals had been done from a position of strength, particularly in Swat and South Waziristan.

He said an important aspect would be to ensure that there was no linkage with al Qaeda or foreign elements and there must not be cross border activity. The President said it was important that the vast majority of the moderate people are weaned away from the extremists. He said there should be no politics involved while dealing with terrorism and the region be brought to mainstream by providing socio-economic development to the area.

Similarly, he said, there was a need to integrate the Northern Areas both within and with the rest of the country, through roads and communications. The President said the recent measures taken to bring more development and improvement to the area will have a deep impact and the people will have a greater sense of contentment.

To a question, the President said Pakistan's relations with the United States were extremely important. He said ties between the two countries need to be broadbased and not focused merely on extremism and terrorism. The relations, he said, need to encompass social, economic and other ties.

The President said he would not agree that the problems facing Afghanistan could be resolved with the pulling back of coalition forces from Afghanistan. "I don't think so," the President said, adding it could destabilise Afghanistan and also Pakistan.

He said Afghanistan is a tribal society and can end up fighting each other as it did with the withdrawal of the Soviet forces. He said it was important that other issues like Iraq and Palestine are resolved as they do have an impact on the situation in Afghanistan and need to be addressed. The President when asked about the need for long term water management said it was vital to have large water reservoirs to ensure water and energy security for the country.

He said politicising developmental issues of the country could impact economic growth. The President stressed pursuing all projects to generate electricity and preserve water to meet the growing irrigation needs. To a question he said Pakistan was pursuing a long-term strategy to address poverty, unemployment, extremism through rationalisation of education system across the country.

About the food crisis, the President favoured giving higher prices to farmers, to match the international prices to curb smuggling. He said it will also bring prosperity to the rural areas, however, he said that the poor segments of the society need to be protected.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Trade deficit may cross $20 billion this year ​

KARACHI (June 03 2008): The country's trade deficit is likely to cross $20 billion mark, for the first time in Pakistan's history, this fiscal year, mainly due to sharp rise in imports low exports. Although the State Bank took some bold steps to bring down the increasing imports, analysts believe that these steps had been announced very late, when the imports and trade deficit had already breached all barriers.

The State Bank of Pakistan imposed 35 percent margin on all import Letters of Credit (L/Cs), except oil and some food items from May 23, aimed to bring down imports and the rising trade deficit. Earlier, there was no percent margin on LC opening, and importers were importing goods over and above the requirement, putting extra burden on the national exchequer.

Analysts said that during the remaining two months of current fiscal uear no positive impact of this step may be witnessed, as importers had already has placed huge import orders. However, they believed that in FY09 imports would definitely decline due to the 35 percent margin.

The previous government has set the import target of $32.3 billion. However, the soaring oil prices in the world market and unexpected imports of wheat and other commodities for local consumption badly hurt the target. Imports during ten months have already reached near the target, as the July-April imports stood at $32.06 billion, 28 percent higher than last year's imports of $24.9 billion.

Economists have predicted that this year trade deficit would cross $20 billion, or about 49 percent, with about $37.5-38.5 billion imports and $18-18.5 billion exports. The targeted trade deficit for the current year was $13.1 billion, with $19.2 billion exports and $32.3 billion exports. The country's trade deficit has already reached at all-time high level of 16.08 billion dollars in the first 10 months of current fiscal year as imports stood at 32 billion dollars and exports at 15.25 billion dollars.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

$100 million ethanol plant in the doldrums ​

KARACHI (June 03 2008): A private firm's $100 million plan of setting up maize-based ethanol generation plant near Port Qasim Karachi has been not been implemented so far. Sources in Sindh government told Business Recorder on Monday that poor law and order and political instability in the country had put the project in doldrums, as the foreign investor company is reluctant to invest here in such circumstances.

Without naming the investor firm, sources said that the company had shown interest in developing energy by alternative resources about a year back. On its request, the government had asked the Alternative Energy Development Board (AEDB) to see the possibility of setting up the plant near Port Qasim.

The firm was also in close contact with the Board of Investment (BoI) and Planning Commission (PC) to remove financial and legal hitches in implementing the proposed project. The AEDB had started work on the feasibility of the project in collaboration with the Swiss firm, but later the work had been ceased due to unknown reasons, sources said.

They said that the project had been stopped, as the firm was reluctant to invest in view of the political uncertainty and deteriorating law and order. The firm also intended to invest, on a large scale, in several projects of oil and gas sector. They were also put on hold by the firm's stance to remain apart from investing in Pakistan, sources added.

Sources were of the view that the present law and order situation and political instability of the country is putting barriers in the way of foreign investments. It may be pointed out that Sindh Alternative Energy department had also proclaimed to set up a $110 million ethanol plant, but the project was still on paper, owing to indifference of the concerned officials.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

1,000 megawatts more power to national grid from June 10: action plan approved ​

ISLAMABAD (June 03 2008): A plan for generating around 1000 MW additional electricity from the existing private and public sector plants has been approved here on Monday. The additional electricity will be available to the national grid from June 10.

A high-level inter-ministerial meeting, presided over by Federal Minister for Water and Power Raja Pervez Ashraf, approved the plan that will reduce the quantum of load management by about two hours daily. Speaking on the occasion, the minister said that co-ordinated efforts of all concerned were required to cope with the prevailing power crisis and to generate additional electricity.

The meeting discussed ways and means to maximise power generation in the country, particularly in the summer, and approved a three-month action plan. Secretary and Advisor on Water and Power, additional secretaries, finance and petroleum, Managing Director of Pakistan Electric Power Company (Pepco), managing directors of Private Power Infrastructure Board (PPIB), Sui Gas Northern Gas Pipeline Limited (SNGPL) and Sui Southern Gas Company (SSGC), chief executives officers (CEOs) of all generation companies (Gencos) and senior officials of the ministry attended the meeting.

The minister directed the Pepco MD to take immediate measures to meet the target to generate additional power of 1000 MW from the Gencos, and the IPPs from the current month.

He also asked the Gencos to keep their plants in order on maximum capacity and no shut down on minor faults would be allowed. He was of the view that today the country was facing shortage of about 4000 MW electricity, which had affected the economy and all segments of society.

It was decided in the meeting that all the concerned ministries would extend cooperation with each other to generate maximum electricity from the Gencos and IPPs to reduce the gap between demand and supply. The representative of Finance assured the meeting to provide enough financial resources to the Pepco within a week time to reduce its financial burden and payments to fuel supply companies.

The Petroleum Ministry would supply the maximum gas to all Gencos and ensured timely supply of furnace oil to the public and private power projects to enable them to generate additional power of 1000 MW during the summer season.

The Pepco MD assured the meeting of generating 1000 MW from the existing plants of the Gencos and IPPs from June 10, after receiving funds and required gas supply to the power plants.

Earlier, the representatives of Finance and Petroleum and Gencos CEOs gave a detailed briefing to the Minister on the financial matter related to cash resources and immediate release of sufficient funds, supply of fuel and gas, and generation capability during peak and off-peak hours, respectively.

Business Recorder [Pakistan's First Financial Daily]

 

[Neo]

Planet Energy, Goldwind Technology sign MoU ​

KARACHI (June 03 2008): Planet Energy (Pvt) Ltd Pakistan signed a memorandum of understanding with China's largest and one of the world's top ten wind turbine manufacture's for purchase of turbines for its planned 50MW wind farm with the option to increasing it to 150MW. The MoU was signed in Urumqui, China.

On this occasion Planet Energy was represented by its Chairman Tariq Sayeed whereas Goldwind Science and Technology was represented by its Vice President Wang Xiangming. With this agreement Planet Energy becomes one of the few companies in Pakistan to be able to secure wind turbines at a time when demand of quality turbines is sky rocketing and waiting periods are estimated at 4-5 years.

Tariq Sayeed has assured that further turbines will be made available to other companies interested in developing Pakistan's wind energy market, so that the current energy crises can be curtailed through cleaner technologies thus reducing country's dependence on imported fuel which is a major contributor to its import bill.

Business Recorder [Pakistan's First Financial Daily]

 

[ejaz007]

Iran to mediate to end IPI gas pipeline transit fee deadlock
* 4-member committee formed by Iranian president to resolve matter within 45 days
* Pakistan rejects Indian demand of fixed rates
By Zafar Bhutta

ISLAMABAD: Iran is to mediate between Pakistan and India to end the deadlock on the issue of transit fees over the billion dollar Iran-Pakistan-India (IPI) gas pipeline deal, sources in the Petroleum Ministry told Daily Times on Tuesday.

The sources said that Iranian President Mahmoud Ahmadinejad has constituted a 4-member committee comprising of respective ministries’ officials to hold talks with Pakistan and India on the transit fee issue, and that the Iranian president has given a 45-day time frame to the committee to settle the issue of gas transit fee between Pakistan and India, and submit a report to him.

They said that Pakistan and Iran were set to sign a gas sales purchase agreement (GSPA) on the IPI gas pipeline deal by May 31, 2008, but Pakistan and Iran would now sign GSPA after the 45-day deadline.

He said that Pakistan and India could also sign the gas transit fee agreement when GSPA would be signed between Iran and Pakistan.

Then Pakistani Petroleum Minister Khawaja Muhammad Asif and Indian Petroleum Minister Murli Durao had announced on April 26 in a joint press conference that the gas transit fee on IPI gas pipeline project would be addressed within next 10 days but no progress on the fee issue has been made as yet.

The sources claimed that India had offered a gas transit fee of 15 cents per million British thermal units (MMBTU) whereas Pakistan had demanded 60 cents per MMBTU as per international standards during bilateral dialogue between Pakistan and India on April 25 over the issue.

They said that India had agreed during the discussion to pay 30 cents per MMBTU as a transit fee.

They said that the Indian delegation had assured the Pakistani authorities to seek approval from its competent authority and convey the decision to Pakistan in a week’s time, but Pakistan has not received a response from the India so far. The committee formed by the Iranian president will resolve the issue now, sources added.

Fix transit fee: The sources said that India also wants Pakistan to charge a fixed transit fee for the project for lifetime. However, Pakistan has turned down the demand, and is of the view that determination of the transit fee mechanism should be based on gas sales price revision, as international standards require.

They also noted that transportation charges would be determined after the finalisation of the feasibility report on the gas pipeline in Pakistan and a company would be set up to implement the project, as well as arrange the security according to the mutually agreed framework. Pakistan and Iran have finalised the draft of GSPA, which contains the revision of gas price, and therefore Pakistan believes that gas transit fee should be based on gas price revision, sources added.

Daily Times - Leading News Resource of Pakistan

 

[Neo]

USC may suffer Rs2bn loss in rice deal with REAP ​

Prices soften ahead of fresh crop; Utility Stores’ authorities reject Super Basmati supply on quality issue​

Wednesday, June 04, 2008

KARACHI: The Utility Stores Corporation (USC) is likely to suffer a loss of Rs2 billion in the rice supply deal signed recently with the Rice Exporters Association of Pakistan (REAP).

According to the agreement REAP was to provide 200,000 tonnes of rice to USC at fixed rates till October 2008.

The local and global rice prices have dropped by almost 10 per cent ahead of the arrival of fresh crop of coarse quality rice in August, fine quality rice in September and news of bumper crops in Vietnam and Thailand along with allaying of rice crisis fears in India as it has indicated lifting of ban on rice exports.

The current scenario leaves the USC and the REAP seeking loopholes in the contract to prevent losses and secure better profits respectively, sources said.

It was learnt that USC was only taking basmati broken from the REAP and had refused to receive Super Basmati shipments. An industry source revealed that the samples of Super Basmati were rejected, as they did not match the agreed sample.

Masood Alam Niazi Regional Manager South Zone USCP said that REAP so far has only supplied broken rice to south zone and that too not according to the agreed quantity.

“As far as Super Basmati is concerned they have not yet supplied any consignment because we have rejected what REAP was passing on as Super Basmati rice,” Niazi said.

REAP seems inclined upon supplying sub-standard rice which does not meet the quality which was agreed upon when the deal was inked, he said.

Another issue is that rice prices have dropped almost 10 per cent bellow the rate at which USCP agreed to buy rice from REAP. The price differential is likely to cause USCP a loss of Rs2 billion.

It was learnt from the market that prices have dropped at least Rs10,000 per tonne for Super Sella Basmati, Super Basmati white, PAK-386, Irri-9 and Irri-6.

Irri-6 rates have fell from Rs47,000 per tonne to Rs35,000 per tonne, PAK-386 down from Rs85,000 per tonne to Rs65,000 per tonne, Super Basmati superior grade of average grain length (AGL) 7.25mm to 7.5mm which had touched peak of Rs105,000 per tonne to Rs90,000 per tonne while its short grain of AGL 6mm to 7mm was being traded at Rs63,000 per tonne.

According to details, USCP had purchased 80,000 metric tons of Super Basmati Crop 2007-08 of AGL 6mm to 7mm at Rs73 per kg, 20,000 metric tonnes of Super Sella (Par-boiled) Basmati Crop 2007-08 of AGL 6mm to 7mm at Rs80 per kg and 100,000 metric tonnes of Basmati Broken rice of Crop 2007-08 at Rs43 per kg as per samples provided by REAP.

According to the deal, USCP was to receive initial consignment of 13,800 metric tonnes in May 2008.

Another leading exporter revealed on the condition of the anonymity that if Federal Government lifts stocks of 300,000 metric tonnes of rice kept at rice exporters warehouses as ‘strategic reserves’, it will cost additional loss of Rs3 billion if today’s market prices are calculated.

It is important to mention that the deal is the biggest deal of rice purchase amounting to Rs50.44 billion that the USCP has made so far with local vendors of rice at fixed rates valid till October 31, 2008.

USCP authorities inked the contract despite knowing the fact that new crop of IRRI 6 would be available in August and P-386 and Irri-9 in September, which always lower market prices.

The rice exporter said, “contracted specification and mutually agreed prices depict ‘error of omission and commission’ as minimum length grain of Super Basmati rice is 7.25mm to 7.5mm while agreement between these two parties shows average grain length (AGL) of 6mm to 7mm for Super Basmati white and Super Sella (Par-boiled) Basmati rice. But it is clear from agreed grain length that short grain of inferior grade would be supplied to USCP under label of Super Basmati rice,” he said.

A mixing formula was verbally advised by the negotiating team of this deal that rice to be supplied, consists of 38 percent purity of short grain of Sindh Super Basmati blended with balanced varieties of Irri-9, Pak-386 and DR or KS282, he added.

The rice exporter revealed that the prices were artificially jacked up around the time agreement was being negotiated with the USCP.

Within a period of three weeks Super Basmati rates had jumped by Rs40,000 per tonne to justify that the deal fair and beneficial in the national interest.

However, the rice supply vows were short lived. The farsighted entrepreneurs knew that Thailand and Vietnam were expecting bumper crops, a news available to all rice stakeholders. Once they made USCP authorities realize that a colossal rice shortage crisis was at hand the USCP agreed to buy the staple grain at higher rates. USCP was soon to realise that the rates would fizzle out once new crops land in the local and global markets.

Rice exports told that further price decline is expected as Thailand and Vietnam new bumper crop has arrived. India is also considering allowing rice exports of varieties during this month which were banned earlier.

USC may suffer Rs2bn loss in rice deal with REAP

 

[Neo]

Japan to increase ODA to Pakistan ​

Wednesday, June 04, 2008

ISLAMABAD: The Japanese government on Tuesday assured to increase the volume of its Official Development Assistance (ODA) to Pakistan, with particular emphasis on infrastructure development, including focusing on highways, communication and alike.

It is worth mentioning that in April 2005, after a seven-year suspension, the then Japanese Prime Minister Junichiro Koizumi’s visit to Pakistan announced resumption of yen loan it suspended after Islamabad May 28, 1998 nuclear explosions.

Current level of Japanese assistance to Pakistan is around $500 million per annum and now Tokyo has green signaled to positively review the size of Japanese economic assistance to Islamabad.

Japanese Ambassador to Pakistan, Seiji Kojima called on Syed Naveed Qamar Federal Minister for Finance, Privatisation & Investment here on Tuesday. It was bilaterally discussed that both the countries need to address the current upward spiral in international market oil prices that is impacting the developing countries growth.

Seiji Kojima informed that the Japanese government was currently in the process of discussion with Pakistan’s Economic Affairs Division on forthcoming programme-based financial support to Pakistan, through bilateral consultations, which was based on the principle of need analysis leading to subsequent financial assistance.

Naveed Qamar apprised the Japanese Ambassador about the government’s concept clearance on Pre-Budget preparations, along with other development related economic initiatives. Both the sides discussed the institutional economic framework of their respective countries.

Qamar said that Pakistan was currently passing through the most challenging time since the democratic government took over and special measures are underway to reform the national economy. Pakistan would continue to be a priority in the Japanese govt’s global economic preferences, he added.

It is worth mentioning that two months back, Japan and Pakistan held in-depth deliberations to increase bilateral cooperation, especially Japanese financial assistance to Pakistan. They discussed ways and means for encouraging Japanese investment in the country.

Japan to increase ODA to Pakistan