Pakistan Economy - News & Updates - Archive

[Neo]

50 percent market capitalisation wiped out ​

KARACHI (August 29 2008): The Karachi share market has lost half of its value during recent downfall in just four months as local bourse's capitalisation is down to $37.6 billion from a recent peak of $75.3 billion. In last four months, the benchmark KSE Index is down 42 percent (51 percent in dollar terms) from its peak of 15676.34 points on April 18, 2008.

"One thing that is badly missing in the country is investors' confidence and financial markets in Pakistan have been under pressure for last few months", said Muhammad Sohail, senior analyst at JS Global Capital.

Global financial crunch, rising commodity prices and local political situation has affected the macro-economic picture and that is reflected in the stock, money and currency markets, he added. Besides the equity market, the benchmark six-month T-Bill yield is up 240 bps while the rupee is down 16 percent in last 4 months.

He said that a similar trend was seen in 1998 after the nuclear testing. Market worth plummeted from $10 billion to $5 billion, a decline of 50 percent, between March and July 1998. Thus the recent decline is largest and equal to that of 1998, in terms of capitalisation, ever since the KSE-100 Index was launched in November 1991. It was at that time (early 1990s) when Pakistan market came under the limelight thanks to the financial sector liberalisation of the early 1990s.

In 1998, after the nuclear testing, the Index fell by 53 percent (55 percent in dollar terms) in a brief span of 4 months. The famous March 2005 crisis brought the Index down by 34 percent (34 percent in dollar terms) when leveraged bubble busted. A year later, in April 2006, index plunged 29 percent (29 percent in dollar terms) amid global market sell-off.

After this biggest fall, the KSE board of directors freezed share prices on the Cash and Derivatives market. That is share prices cannot go below August 27, 2008 closing while 5 percent upper and lower limit will work as normal. The Nigeria Stock Exchange did similar sort of freezing two months back.

He said that though the earnings growth projection has been adjusted downward, Pakistan is trading at forward looking PE of 6.9x. "We expect FY09 earnings to grow at 9 percent mainly due to 30 percent growth in heavy weight E&P firms", he said. In the post-nuclear scenario, market PE was 6x. This mean that Pakistan right now, on valuation multiples, is coming closer to what it was 10 years back.

Despite the fact that economic conditions are not as bad as it was 10 years ago after the economic sanctions. Moreover, compared to last 15-year average PE of 9.7x, valuations today are at 29 percent discount. "Thus, signalling that due to external and internal factors, confidence of investors is really missing", he added.

 

[Neo]

Riyadh agrees to give oil facility on deferred payments ​

ISLAMABAD (August 29 2008): The official delegation is back on Thursday from Saudi Arabia after getting a categorical assurance that Riyadh will provide support to Pakistan partially in the form of oil facility against deferred payments and some cash for plugging the current account deficit.

Sources said Saudi authorities agreed during the talks with Pak official delegation, led by Petroleum and Foreign Minister Shah Mahmood Qureshi, that Riyadh will provide Pakistan support partially as oil facility against deferred payments and some in cash form for three years.

The official delegation had flown to Saudi Arabia on August 26 for negotiating a deal with Saudi authorities for the oil facility. It comprised National Reconstruction Bureau (NRB) Chairman Dr Asim, Finance Secretary Furrukh Qayyum, Petroleum Acting Secretary G.A. Sabri, and Additional Finance Secretary Asif Bajwa.

Pakistan had demanded of Saudi Arabia the supply of 110.000 barrel of crude oil per day for three years. Its total volume in monetary terms was estimated between $5 to $6 billion. Pakistan is likely to get oil from Saudi Arabia against deferred payments from next week. However, the two sides are yet to finalise modalities for an amount that Pakistan will get as cash from Saudi Arabia for offsetting economic woes.

In the recent past, Saudi Arabia had provided Pakistan $300 million for budgetary support. This was followed by an announcement by Chinese government for providing Pakistan a $500 million loan at soft-terms and conditions during former president Pervez Musharraf's visit to China a couple of months back.

The country is facing severe financial crisis and after poor performance of the key sectors of economy, the government is looking towards friendly countries for financial support. Much depends on the support of Saudi government. The oil supply against deferred payments could serve Pakistan's purpose of easing pressure on its economy. The officials of the delegation termed their visit to Saudi Arabia and meetings with Saudi authorities extremely positive which would bring good news for Pakistan shortly. They are hopeful of getting oil from Saudi Arabia under the agreed arrangement from next week that will help Pakistan stop quick erosion of its forex reserves.

Pakistan's forex reserves are depleting quickly. And oil import bill is one of the major factors, which are bringing forex reserves down to an alarming level.

 

[Neo]

Infrastructure and energy sectors: consensus reached with US Chamber over boosting investment ​

ISLAMABAD (August 29 2008): US Chamber of Commerce and the Ministry of Finance have developed consensus on increased Pak-US commercial interaction for public and private sector development to progressively increase investment in infrastructure and energy sectors in Pakistan.

US Chamber of Commerce delegation led by Lieutenant General Daniel W Christman (Retd), Senior Vice President for International Affairs accompanied by Jay Collins, Chairman, US-Pakistan Business Council met Finance Minister Syed Naveed Qamar, here on Thursday.

The US delegation is in Pakistan to explore avenues for closer co-operation in commercial and trade sectors between the two countries. The US Chamber of Commerce represents US foreign business leaders whose efforts focus on development of leadership-to-leadership relationship on international issues affecting the business community.

The Finance Minister briefed the US delegation about latest economic and business development initiatives of government of Pakistan that not only focus strengthening of internal economy but also take stock of GoP's business and commercial relationship with regional states and the developed world.

US delegates discussed the possibility of adding to the frequency of business-commercial partnership between the two countries in the context of financial investors' perspective that would take the two allies further on way to expanded relationship.

The Finance Minister reciprocated the US delegation's viewpoint, adding that political scenario following post-September 2008 presidential elections in Pakistan would complete the democratic process and the country would attain substantial political stability that forms essential part of economic stability and progress. The GoP currently is geared to come out with a multi-pronged positive economic trends and policy framework - notwithstanding the ongoing global energy crisis - that would place the country at par with other stable developing countries' economies. Macroeconomic stability is primary agenda of the present government, the Finance Minister added.

The Finance Minister further informed the US delegates that during recent months GoP has taken certain hard fiscal decisions that potentially would impact attaining stable economic indicators down the road. Pakistan looks forward to working with the US in all economical fields in times to come, he stressed.

The delegation presented their country's financial community perspective on market economy, individual investors initiative for across the country investment which certainly take into account GoP's privatisation programme and other external investment portfolios being opened to the world.

The Finance Minister explained to the delegation Pakistan's financial instruments being put in place in all fiscal and economic sectors that take stock of all micro and macro issues prioritised on GoP agenda, which contains all market-based monetary incentives. He added that agriculture in Pakistan is an engine of economic growth and the government is fully committed to boosting it for achieving better crop yield, and Pakistan welcomes foreign investment in portfolio-based projects in all sectors of economy focusing energy, agriculture and infrastructural development.

 

[Neo]

Indigenous oil, gas production: drilling at Sadiq-two in Shikarpur begins ​

ISLAMABAD (August 29 2008): In order to supplement the government efforts to increase indigenous production of oil and gas Petroleum Exploration (Pvt) Limited (PEL) has started drilling of Sadiq-2, a new development well, in Shikarpur District. The well Sadiq-2 was spud-in on August 26, 2008 and is expected to be completed by end of September 2008.

The Chinese drilling Rig SPA-3 is being used for drilling of this well. Petroleum Exploration (Pvt) Limited is the Operator of Block 2768-3 with Pakistan petroleum Limited (PPL) Government Holdings (Pvt) Ltd (GHPL) and Pyramid Energy International Inc (PEII) as Joint Venture Partners. This is the second well spud-in by petroleum Exploration (Pvt) Ltd within the span of a fortnight.

Earlier, on 16 August Petroleum Exploration (Pvt) Ltd carried our spudding-in-of the Kandra Well Deep-4 in District Khairpur, Sindh. For this purpose, a brand new Drilling Rig form Weatherford International Inc (WII) was mobilised from Houston, USA. Petroleum Exploration (Pvt) Ltd is the operator in this Mining Lease, with Frontier Holdings Limited (FHL) and government Holdings (Pvt) ltd (GHPL) as Joint Venture Partners. After drilling of Kandra, the Weatherford rig will continue drilling exploratory wells in other blocks operated by PEL.

It may also be recalled that PEL is a joint venture partner of Mari Gas Company Limited, (MGCL) which drilled the Koonj Well located in Shikarpur in Sukkur Block and where gas was discovered. Arrangements are in hand to bring Koonj Well in Production and it is expected that about 10 mmscfd of gas will be supplied to SNGPL from this field.

PEL is currently producing around 40 mmscfd per day. It is striving hard to achieve the objective of enhancing the indigenous production of oil and gas of Pakistan. PEL has already hired 2 drilling rig one form Weatherford International Inc (WII) and other from SPA China. PEL is in the process of hiring one more rig at an early date.

 

[Neo]

ADB to provide $25 million for Sindh urban areas ​

FAISALABAD (August 29 2008): Asian Development Bank (ADB) will provide 25 million dollars for "Multitranche Financing Facility-Sindh Cities (Improvement Investment Programme)", which will be increased in per capita monthly income level by 2018 in interior Sindh.

FIRST TRANCHE FOCUS ON URBAN AREAS IN SIX TMAS: Sukkur, New Sukkur, Rohri, Larkana, Khairpur, and Shikarpur for reducing percentage of children under five years of age suffering from diarrhoea, which will be reduced from 19 percent in urban areas of Sindh (excluding Karachi and Hyderabad) in 2004-05 to 10 percent by 2018.

According to ADB's update project report, this project will be the first tranche of a programme to support infrastructure investments and institutional strengthening in three priority sectors over a 10 year period in selected clusters of secondary cities of Sindh. The programme will support establishment of effective system for urban service provision. A Multitranche Financing Facility (MFF) modality is proposed.

The programme will support urban planning institutional reforms, public-private partnerships and capacity development. Physical investment will include water supply, sewerage, drainage and wastewater treatment (wastewater), and solid waste management.

The programme will support a comprehensive programme of reform for improved urban service planning and management, including increased private sector participation, complemented by priority investments in water supply, wastewater and solid waste management improvements. The investment programme comprises four parts.

Part 'A' supports the establishment of professionalised urban service providers, urban planning capacity, and technical backstopping for programme implementation. Parts 'B' and 'C' will finance targeted infrastructure improvements in water supply and wastewater and in solid waste management, respectively. Part 'D' provides revenue shortfall support for the newly established urban services corporation.

According to ADB report, the impact of the investment programme will be the improved health, quality of life and economic competitiveness of participating secondary towns in Sindh. Outcomes of the investment programme will be enhanced quality, coverage, and reliability of water supply, wastewater and solid waste management services in participating cities.

Under this project, population of participating towns served by household water connections will be increased on average from approximately 37 percent in 2008 to 52 percent in 2013.

Average hours per day of water supply will also be increased from about three hours in 2008 to more than six hours in 2013 and over 20 hours for 18,000 households in DNI zones. Drainage and knock on water quality benefits for 100,000 households by 2013. Household access to solid waste management (SWM) services to be increased on an average to 80 percent byy 2013 in participating towns Over 27,500 households in Khairpur with improved sewage flow and wastewater stabilisation; 6,000 households in Rohri with improved water supply at intake.

 

[General Fujita]

Pakistan gets encouraging response at Shanghai exhibition

Friday, 29 August 2008 03:08 Pakistan Daily
Pakistan exhibitors who are participating in the annual exhibition of textile products in Shanghai started Tuesday, said they were getting good response from intending buyers.

As many as 15 key entrepreneurs doing business in textile and related fields from Pakistan are taking part in the exhibition to showcase their products, the marketing manager of one of the exhibitors said from Shanghai.

Pavilion from Pakistan return this year after its success in 2007, said organizer of the 3-day Intertextile Shanghai Home Textiles Exhibition-2008.

We held a number of good business meetings with customers here during the last two days, said Abdul Ghaffar Gai Gai, Marketing Manager of Aziz Sons.

This is an important opportunity for Pakistani exporters to display their quality products for obtaining new orders from customers attending the exhibition from across the world?, he said.

The Consulate General of Pakistan has obtained a pavilion at a conspicuous place for the country?s exporters to display their goods in a better way.

Spreading over 100,000 sqm of trade space, the fair is expected to surpass the previous visitor levels as more than 900 exhibitors are attending the exhibition.

The show is one of the largest home textile trade events in Asia, with nine halls. The international halls will feature special zones for bedding, towelling, curtains and upholstery.

Products were displayed by famous suppliers. Four country/region pavilions have been established for group suppliers.

Pavilions from Pakistan and Portugal returned this year after their success in 2007; and for the first time at the show, stalls from Taiwan and Turkey will also be established, said the organizer.

To strengthen co-operation and interaction between suppliers and buyers, a special buyer?s programme is also part of the exhibition, featuring customers from famous department stores, wholesalers and agents.

Over 100 important buyers are attending the fair from across China and also Australia, Austria, Belgium, France, Germany, Italy, Korea, New Zealand, Russia, Singapore and Taiwan.

Intertextile Shanghai Home Textiles is organized by Messe Frankfurt (HK) Ltd., the Sub-Council of Textile Industry, CCPIT and China Home Textile Association (CHTA).

 

[General Fujita]

Pakistan Telecommunication Authority ready for launch of 3G spectrum completed

Friday, 29 August 2008 02:01 Pakistan Daily
The Pakistan Telecommunication Authority has said that the country is ready for the introduction of 3G (third generation) spectrum for telecommunications. This was announced at an interactive one-day seminar titled ‘Has the clock struck 3G here” which discussed the future of 3G telecommunications in Pakistan on Thursday.

The seminar, hosted by the South Asia Forum, a private sector think-tank, highlighted key challenges in the advent of 3G and provided a platform for a candid discussion on the much-debated subject of whether the Pakistani market is mature enough for it.

The seminar was jointly sponsored by Telenor Pakistan and Nokia Siemens Networks with the PTA and Huawei Technologies co-sponsoring the event. The seminar was inaugurated and chaired by Chairman PTA Dr Mohammed Yaseen.

He assured, all present, of the PTA’s cooperation and support for the introduction of new technology and said that the PTA would soon be inviting applications for the 3G spectrum. The Chairman praised the thriving telecom sector of the country and its growth of 40 per cent since last year.

Earlier the South Asia Forum Chairman Syed Jawaid Iqbal introduced the concept of the seminar and thanked the regulator and participating companies for coming forward to address this important issue faced by the telecom industry in the country.

The seminar on the future of mobile communication served to provide a common platform to discuss issues, suggest solutions, share strategies and request policy support. Telecom operators were of the view that the 3G auction should be carried out soon as possible to provide broadband to the masses without delay and cap the digital divide. The event ended on the note that the groundwork for the launch of the 3G spectrum is complete and that it would not be too long before the actual introduction of the new technology.

 

[General Fujita]

Breast cancer screening facility planned at Pakistan Institute of Medical Sciences

Friday, 29 August 2008 02:55 Pakistan Daily
The Health Ministry plans creation of a modern facility at Pakistan Institute of Medical Sciences (PIMS) to screen women for breast cancer, whose fresh sufferers in the country total around 90,000 every year.

PIMS is among the country’s five leading hospitals where establishment of breast cancer screening centres have been planned, PIMS Executive Director Dr Abdul Majeed Rajput told participants of a one-day symposium on ‘Early Cancer Detection Among Women’ at Mother and Child Health (MCH) training centre. The proposed centres are to be raised in Karachi, Lahore, Peshawar and Quetta besides Islamabad.

The PIMS Gynaecology Department organised the symposium in collaboration with United Nations Population Fund (UNFPA).

More than 200 health experts from all over the country showed up at the event, which was organised to create public awareness of early detection and prevention of cancer among women.

Dr Rajput said project concept (PC-1) of the breast screening centre was with the Health Ministry for approval. He said the hospital administration was in touch with the ministry’s officials concerned for getting the needful done for early functioning of the centre that would ensure prevention and control of breast cancer among women.

He said the MCH centre had already launched a cervical breast cancer screening programme under which a dedicated room, having all modern facilities and equipment, had been opened. He said women of reproductive age group were screened for breast cancer at the room.

Parliamentary Secretary for Health Dr Mehreen Bhutto, who was the chief guest, declared women’s cancers remained a global public health burden.

She said a progressive rise in breast cancer incidence had been recorded all over the world during the last 10 years. She said every year, more than 0.46 million new cases of breast cancer occurred and around 231,000 women died of these diseases. She said breast and cervical cancers were the leading cause of deaths from cancer among women worldwide.

Dr Bhutto said prevention and early detection of these deadly conditions was a great challenge for the developing countries. She said under a nationwide programme, the government had approved establishment of breast cancer screening centres in the country’s five major cities and launch of four mobile breast screening vans in far-off areas. She urged media to create public awareness of breast cancer screening.

The parliamentary secretary said cervical screening programme was meant for early detection of pre-cancer lesions, which led to full-blown cancer 10 to 20 years later.

 

[dr.umer]

World Bank acknowledges Pakistan’s moves to support economy ​

ISLAMABAD, Aug 29 (APP): World Bank commended Pakistan’s steps to support the economy in face of high international prices for petroleum and food commodities. Vice President of WB for the South Asia Region, Isabel Guerrero said at the end of his two-day visit to Pakistan.

She emphasized that additional actions are needed to safeguard the

economy against further shocks and allow an effective response to the development challenges facing Pakistan, said WB press release.

“I wanted to meet counterparts in the government, especially the economic team, prior to welcoming them in Washington during the WB-IMF Annual Meetings later in the year”, said Guerrero.

“I will be visiting Pakistan regularly and look forward to working with Government and other stakeholders across this wonderful country.”

Ms. Guerrero met with the Government’s economic team, led by the Finance Minister Naveed Qamar to discuss the Government’s reform plans and the World Bank program.

In meetings with Prime Minister Yousuf Raza Gilani and Pakistan Peoples Party Co-chairman Asif Zardari, the World Bank team discussed power, infrastructure, water management, education, safety nets, public health and nutrition as priority areas for development support.

In addition to the planned loans and credits, Ms. Guerrero offered World Bank technical and analytical support to ensure Pakistan has the best international expertise to address its development challenges.

During her visit Ms. Guerrero reconfirmed the World Bank’s ongoing commitment to Pakistan. She noted that the World Bank’s investment programs in Pakistan are on track despite some political and security uncertainty over the past few months.

“This was my introductory visit to Pakistan and I had excellent meetings with the Government’s Economic team on the economic situation.

Policies and administered prices now reflect a better correlation with high international prices, but to ensure that gains made in poverty reduction are not lost.

Pakistan needs to build upon its good economic foundation taking additional bold measures to strengthen investor confidence, she said.

 

[Neo]

Pakistan Fin Min: ADB To Give $500 Million To Support Budget Soon​

ISLAMABAD -(Dow Jones)- The Asian Development Bank will give Pakistan$500 million in the next few days to support the budget, Finance Minister Syed Naved Qamar said Friday, adding that this amount could be doubled.

"Talks are underway with the Asian Development Bank to double their aid and also to double this budgetary support of $500 million," Qamar said.

The financial support will help reduce pressure on the local currency by adding to the forex reserves, he said.

He also said he was hopeful the country's macro economic stability would revive in a couple of months.

The finance minister had talks with officials of the ADB and the World Bank on enhancing their assistance to Pakistan.

 

[Neo]

Pakistan Oil and Gas Markets Investment Opportunities, Analysis and Forecasts to 2020​

Summary

This profile is the essential source for top-level energy industry data and information. The report provides an overview of each of the key sub-segments of the energy industry in Pakistan. It details the market structure, regulatory environment, infrastructure and provides historical and forecasted statistics relating to the supply/demand balance for each of the key sub-segments. It also provides information relating to the oil and gas assets (oil and gas fields, exploration blocks, refineries, pipelines, LNG terminals and storage terminals) in Pakistan. The report also analyses the fiscal regime relevant to the oil and gas assets in Pakistan and compares the investment environment in Pakistan with other countries in the region. The profiles of the major companies operating in the oil and gas sector in Pakistan together with the latest news and deals are also included in the report.

Scope

- Historic and forecast data relating to production, consumption, imports, exports and reserves are provided for each industry sub-segment for the period 1995-2020.

- Historical and forecast data and information for all the major exploration blocks, oil and gas fields, refineries, pipelines, LNG terminals and storage terminals in Pakistan for the period 1995-2020.

- Operator and equity details for major oil and gas assets in Pakistan

- Key information relating to market regulations, key energy assets and the key companies operating in the Pakistan’s energy industry.

- Detailed information on key fiscal terms (such as rents, bonuses, royalty, cost recovery, profit oil, petroleum and corporate taxes) pertaining the geography is also provided. A sample calculation detailing how fiscal terms apply to a typical asset in the regime is included.

- Information on the top companies in the Pakistan including business description, strategic analysis, and financial information.

- Product and brand updates, strategy changes, R&D projects, corporate expansions and contractions and regulatory changes.

- Key mergers and acquisitions, partnerships, private equity and venture capital investments, and IPOs

Key Topics Covered:
1 Table of contents
2 Introduction
3 Pakistan Energy Report
4 Pakistan Fiscal Regime
5 Pakistan Upstream Investment Environment Benchmarking
6 Pakistan Exploration and Production Sector
7 Pakistan Refining Sector
8 Pakistan Pipeline Sector
9 Oil & Gas Development Company Limited
10 British Petroleum Plc
11 PPL Corporation
12 Financial Deals Landscape
13 Recent Developments
14 Appendix
1.1 List of Tables
1.2 List of Figures
Companies Mentioned:
Oil & Gas Development Company Limited
British Petroleum Plc
PPL Corporation

For more information visit Pakistan Oil and Gas Markets Investment Opportunities, Analysis and Forecasts to 2020 - Market Research Reports - Research and Markets

Source: Global Markets Direct

 

[Neo]

Pakistan Edges Closer to Awarding 3G Licenses​

Speaking at a local conference, the Chairman of the Pakistan Telecommunication Authority (PTA), Dr. Muhammad Yaseen said that the regulator is working towards a tender process for awarding 3G licenses in the country.

He said that the spectacular rise of telecom industry in Pakistan and especially the mobile sector has been the focus of attention at the regulator, and that they have been watching developments of 3G networks in neighbouring countries closely.

Commenting on plans for 3G services in Pakistan he said, “We have the spectrum earmarked, and all the ground work is completed. PTA will soon be inviting applications for 3G spectrum auction."

Telenor Pakistan recently said that it is likely to invest $2.5 billion more in the country if it gets a 3G license. "We have invested almost $1.8 billion out of our commitment of $2 billion by the end-2007 and would go for a further $2.5 billion depending on the situation if we get a 3G license," Jon Fredrik Baksaas, also the president of Telenor Group, told Dow Jones Newswires earlier this month.

The government, which has the final say on the matter is currently being consulted on the issue. The government recently raised taxes - already some of the highest in the world - on mobile phone services and lowered their termination rates, which is already starting to show up as lower usage by customers.

According to figures from the Mobile World database, the country ended the first quarter of this year with some 82.5 million subscribers - representing a population penetration level of 48%. In common with many developing nations, the vast majority of the subscribers are using PrePay tariffs.

On the web: The Mobile World - Pakistan Telecommunication Authority

 

[Neo]

Pakistan to get $2bn aid package ​

Saturday, August 30, 2008

ISLAMABAD: Federal Finance Minister Syed Naveed Qamar has said Pakistan will soon receive a $2 billion aid package, from both the World Bank and Asian Development Bank.

Talking to journalists after inaugurating the e-Services project of the Securities and Exchange Commission of Pakistan (SECP) on Friday, the finance minister said that it is impossible for the government to slash petroleum products’ prices as it is already subsidising diesel by Rs18 per litre.

About the much talked about Saudi Oil Facility (SOF), Qamar said, “We are waiting for the kingdom’s response to the facility.”

The government, after taking the office, took bitter decisions to meet the economic challenges and the donors and other agencies have appreciated its endeavours to keep the budget deficit within target.

According to a press statement, the minister said that the reforms introduced by the SECP have given confidence to the corporate sector, which would bring more transparency and efficiency in the system.

The statement further said that the purpose of introducing this system is clear; it aims to improve the efficiency and effectiveness of the business processes of the SECP, create a speedy and transparent paperless environment which will make it easier and clearer for companies and the business community to interact with and obtain information from the SECP electronically, in a very short time.

In his welcome address, SECP Chairman Razi-ur-Rahman Khan discussed in detail how eServices would facilitate the corporate sector and improve the efficiency of SECP’s business processes. He said that through the eServices project, SECP provides a secure environment to the companies for the filing of returns, electronically. The use of digital signatures would help companies ensure the security and confidentiality of their data.

Earlier, ADB delegation led by Juan Miranda, Director General of the bank met Syed Naveed Qamar, Finance Minister at his office here today and discussed the over all macro economic policy environment in the South Asian region generally, and Pakistan more specifically, says an official statement issued here on Friday.

The Finance Minister stated that MOF and SBP are working in tandem to initiate and implement all difficult and urgently needed measures to attain the targeted economic and fiscal goals.

Expenditure controls and rationalisation of monetary spending in the public sector is underway, the statement added.

Qamar appreciated ADB’s role regarding its commitment for providing $500 million for accelerating the economic transformation that enables the new government to regroup recent economic initiatives.

Both the sides also discussed GOP’s commitments to structural reforms, which would contribute to the economic revival of the country.

 

[Neo]

Govt to pay Rs20bn to IPPs in two days ​

Saturday, August 30, 2008

ISLAMABAD: The government is all set to release Rs15 billion to Rs20 billion within two days to some of the independent power producers (IPPs) in a bid to bail them out of fiscal constraints and ensure maximum thermal power generation.

The release of the same amount will also be disbursed to the IPPs in next 7 to 10 days so that the power producers could pay the long-standing dues to oil companies to ensure the fuel supply chain for thermal power generation.

The government is taking these steps to basically minimize the power outages during Ramazan and ensure no load-shedding during Iftar and Sehr. “These much-awaited decisions came in a crucial meeting held here on Thursday with Federal Minister for Water and Power, Raja Pervez Ashraf, in the chair,” a senior government official who attended the meeting told The News.

Secretary and Adviser, Ministry of Water and Power, Managing Director PEPCO, Chief Executive Officers of all four DISCOs and senior officers of Ministry and PEPCO also attended the meeting.

The decision to clear the dues of IPPs will help cope with the ongoing power crisis as because of the inter-circular debt, the maximum thermal plants are being run at not a full capacity.

In the wake of inter-circular debt, the thermal power houses are not being run at the full capacity that is why the country is losing almost 1,500MW of electricity.

It is pertinent to mention that two IPPs, which produce 1,786MW of electricity in the country two months back stunned the government by putting it on notice either to pay their arrears otherwise, they would switch off the plants.

These two power plants had put the Pakistan Electric Power Company (Pepco) on one-month notice that they would switch off the plants if the arrears of the said companies amounting Rs66 billion were not paid.

The government’s decision to clear dues of the IPPs will help reduce the intensity of power crisis in the country that has adversely affected the common man life across the country. The minister directed PEPCO to reduce load-shedding in the holy month of Ramazan and that there should be no load-shedding during the Iftar and Sehr.

He said all the necessary measures would be taken to improve the generation capacity and enhance the efficiencies in order to provide relief to the consumers in this regard. He also directed PEPCO and four power distribution companies including Multan Electric Power Company, Peshawar Electric Supply Company, Hyderabad Electric Supply Company and Quetta Electric Supply Company to expedite their recovery drive.

The official sources said the four entities owe to recover about Rs40 billion. It is interesting to mention that the government departments owe to pay 50 per cent arrears out Rs40 billion.

However, the minister asked the four companies to leave no stone unturned to make maximum recovery of current and outstanding amounts by end of Sept 2008.

The meeting was told that water releases from Mangla reservoir would be increased in the first week of September that will help enhance the hydel generation by 800 to 900MW. It would provide relief to PEPCO in real terms. The officials of Ministry of Petroleum and Natural Resources informed the meeting participants that the Zamzama gas pipeline would be reconstructed by today (Friday) that would also help increase the power production by 1,000MW as the Kapco and Rouche power house would be able to add 1,000MW of electricity with the restoration of gas from Zamzama field which had been destroyed in a sabotage act.

 

[Neo]

Outflow of $12.771 million : Breakup of coalition adds to the problems of struggling KSE ​

KARACHI: Country’s capital market witnessed continuous outflow of the foreign investment, as an exodus of $12.771 million of foreign portfolio investment was registered during the week ended on Friday.

Due to worsening political situation, which is casting dark shadows on the economy too, the foreigners are adopting a cautious approach and are continuously pulling out their money from the country’s equity market.

Foreign fund managers and investors continued their cautious stance due to prevailing political and economic situation in the country and break-up in the ruling coalition.

The cumulative net outflow during last month from August 01 to August 29 stood at $51.067 million while cumulative exodus of foreign portfolio investment during current calendar year (January 1, 2008 to August 29, 2008) was recorded at $401.079 million.

According to data released by the National Clearing Company of Pakistan (NCCPL), a net inflow of Rs 207.321 million was witnessed only on Monday against an outflow of Rs 614.758 million. On Tuesday Rs 380.762 came in the country’s equity market whereas Rs 584.655 million were pulled out. Wednesday saw buying of Rs 351.41 million and selling of Rs 665.136 million by foreign investors; Thursday witnessed buying of Rs 290.642 million and selling of Rs 594.484 million while on Friday, a gross buying of Rs 475.603 million was observed against gross selling of Rs 211.114 million.

The prevailing geo-political situation and weakening economic indicators are the main reasons, which forced the foreign investors to offload their holdings, analysts pointed out.

The collapse of only five-months old ruling coalition at the beginning of the week and the worst law and order situation in the tribal areas of the country have been hurting the investors’ sentiments adversely, forcing them to pack up and go to other destinations for their investment.

Karachi stock market, which shed by around 45 percent in the past four months, has failed to regain any momentum despite the floor set on Wednesday’s stock valuations. The floor also failed to restore the foreign investors confidence.

“Unless political situation normalises, the foreign investors are unlikely to come back,” analysts said

“Foreign selling has been at heart of recent fall in local equities. While the quantum is not huge, low volumes and prevailing political and economic uncertainties have magnified its impact”, analyst Farhan Rizvi at JS Reserach said.

He added that political uncertainty resurfaced as PML-N left the ruling coalition on Monday unhappy with the delay in restoration of judges, which has negative implications for the economy.