Pakistan Economy - News & Updates - Archive

[dr.umer]

US EXIM Bank assures Pakistan of support for energy sector ​

WASHINGTON, Oct 23 (APP): The US EXIM Bank has assured Pakistan of its support for its power sector as top officials the country apprised the Bank of challenges as well as the efforts the government is making to resolve the power crisis. The Pakistani delegation led by Deputy Chairman, Planning Commission, Salman Faraqi briefed the senior EXIM Bank officials about current challenges facing the energy sector, strategic vision and direction of the elected government to resolve power crisis and strategy of the government for a financially viable and sustainable power sector.

The members of the Pakistani team shared with the EXIM Bank the measures that have already been taken during the last six months to stabilize the economy, to rationalize and streamlining the institutional set-up in the energy sector for speedy decision-making, to improve the financial situation of the power sector and to mitigate the impact of elimination of subsidies on the poor and the vulnerable.

They highlighted huge opportunities available in the energy sector and openness of the government to all modes of investment including public-private partnership. In this context, financing of Thar Coal Project, Gudu Power Project, small to medium hydro projects including Tarbel-IV, Munda Dam, Kurrum Tangi and large water reservoirs such as Basha Dam came under discussion.

“Clearly, the government is moving forward to tap huge indigenous potential in hydro and coal related power generation to resolve the power crisis on long-term basis,” said the Deputy Chairman of the Planning Commission.

The delegation proposed establishing an Infrastructure Financing Facility for Pakistan to seek support of the US EXIM Bank. Given the robustness of the banking system with a very high presence of foreign banks, the proposed facility would help Pakistan meet its urgent needs in power and energy sector.

The senior management showed keen interest in various power projects as well as proposal for the Infrastructure Financing Facility. They underlined the already growing relationship between Pakistan and US EXIM Bank that supported acquisition of 777-LR for PIA and is considering two power projects.

They assured support of the EXIM to the power sector of Pakistan and it was agreed that the Government of Pakistan would initiate discussions with its banking sector regarding the specific proposal and prepare a policy framework for further negotiations with the EXIM Bank. In the meantime, the EXIM Bank would carry out internal discussions.

The Pakistani delegation also included Ismail Qureshi, Secretary, Ministry of Water and Power, Shakil Durrani, Chairman, WAPDA, Asad Ali Shah, Member, Thar Coal and Energy Board, Aslam Sanjrani, Managing Director, Thar Coal and Energy Board, Fayyaz Elahi, Managing Director, Private Power and Infrastructure Board and Abdul Wajid Rana, Economic Minister at the Pakistani embassy in Washington.

 

[dr.umer]

Rs 50 billion lifeline for stock market​

23 Oct 2008

ISLAMABAD: The Securities and Exchange Commission of Pakistan (SECP) held consultations with the three stock exchanges on Wednesday night, paving the way for a Rs 50 billion package for the equity market, aimed at providing ‘comfort’ to foreign investors and a ‘soft landing’ to the market after the proposed removal of the ‘floor’ on Oct 27.

The Karachi Stock Exchange had put a floor under the index level of 9,144 points on Aug 28 to halt a free fall after the market had lost 41 per cent in four months.

The regulators on Wednesday approved a Rs20 billion market support fund, which would invest in seven giant state-owned entities to save their stock values from nosediving.

A late night statement on Wednesday by the SECP said chairman Razi-ur-Rehman briefed participants (board of directors of the three stock exchanges) on the modalities of the new Rs20 billion open-end fund being set up by the government. It would be managed by NIT.

'The SECP today gave the formal approval for establishing the required fund', the regulator’s statement said, adding that the NIT was in the process of finalising details for a smooth operation.

The fund would invest in seven state-owned entities — Oil and Gas Development Corporation, Kot Addu Power Company, Pakistan Petroleum Limited, Sui Southern Gas Company, Sui Northern Gas Pipelines Limited, Pakistan State Oil Company and the National Bank.

The SECP observed that in addition to the market operation, the fund was being provided with a Rs 30 billion government guarantee to enable it to write ‘put options’ on the seven entities.

A technical adviser was being appointed to advise NIT on pricing the ‘put option’. The facility would be available to foreigners who were on investors’ list on Aug 27.

Sources told Dawn that foreign investment in the stock market was currently valued at $2billion and brokers and traders feared that foreigners could pull back their portfolio investment to the tune of $400million once the floor was removed.

The guarantee of Rs30 billion had been provided to foreign investors to give them the comfort of reimbursement of their loss in case stocks fell below the ‘floor’ in one year.

The offshore investors were at liberty to sell their stocks if they fetched considerably higher prices during the year.

The SECP stated that participants of the meeting, considering a proposal made by 103 members of the KSE for the closure of CFS market, were of a consensus that the CFS market should not be discontinued immediately to avoid any ensuing liquidity crises and until there were alternative products available in the market.

'It was unanimously agreed that the risk management of the product be further improved to remove the negatives that still exist in the system,' the regulator said.

In order to further strengthen the CFS and deliverable futures market and to reduce the risk therein the a number of additional risk management measures were proposed to be adopted with effect from Oct 27 in order to plug loopholes before opening of the markets.

The meeting also accepted a number of other proposals: strict compliance of mandatory collection of VaR-based margin by the brokers from clients in each markets effective from Oct 27; implementation of 'new capital adequacy regime' with effect from Jan 1,; uncapping of 'investor protection fund' at KSE effective October 27, 2008; transfer of risk management from the stock exchanges to the National Clearing Company of Pakistan Limited with effect from Dec 1, 2008; and regular bi-weekly reports to be submitted by the exchanges to the SECP in respect of regulatory compliance, compliance with risk management requirements and monitoring and surveillance effective from Nov 17.

The Fund building by the SECP comes on top of the several confidence building measures announced by the State Bank of Pakistan earlier in the week.

The KSE is currently in a state of limbo, showing a negligible three points decline on Wednesday and the historic low volume of just 123,600 shares. Average turnover in the 12 months prior to the current market turmoil was in the region of 185 million shares a day.

 

[dr.umer]

Parliamentary body to solve power tariff issue​

October 23, 2008

KARACHI: Federal Minister for Water & Power Raja Pervez Ashraf extended the deadline for payment of bills by 10 days on Wednesday and decided to form a parliamentary committee to resolve the issue of new electricity tariff in a meeting with business leaders at the Governor House Sindh.

He said that the government would call a meeting of all stakeholders including the business community in Islamabad in a day or two to discuss the issue at length.

Sheikh Fazle Jalil, Chairman Korangi Association of Trade and Industry (KATI) said the meeting with Raja Pervez Ashraf ended on a good note as he decided to extend the deadline for paying electricity bills by 10 days until the matter is solved with all stakeholders.

He said that businessmen would be leaving for Islamabad to discuss the matter with the government.

“We have also asked the government to reconstitute both National Electric Power Regulatory Authority (NEPRA) and Oil and Gas Regulatory Authority (OGRA).”

Anjum Nisar, President Karachi Chamber of Commerce and Industry (KCCI) and others from the FPCCI and industrial associations of Karachi were present in the meeting with the minister to discuss the standoff over KESC bills.

They deliberated upon this issue with the federal minister that the business community as well as the general public of Karachi were angry over excessive billing by the KESC due to the recent hike in tariff and said that unless the issue of excessive billing is resolved by the KESC, no bills would be paid.

Naveed Ismail, Managing Director KESC and Dr Ishratul Ebad, Governor Sindh, were also present in the meeting.

Muhammad Iqbal Ebrahim, Chairman All Pakistan Textile Mills Association (APTMA) after meeting Raja Pervez Ashraf said that gas companies sought 33 per cent increase in tariff while the increase in electricity tariff of around 60 per cent has already threatened the industry. “It’s not a good omen,” he said.

He said that the parliamentary committee that has been constituted for solving the power tariff issue in the next 10 days would also decide on the gas tariff issue.

 

[Neo]

Economic managers asked to prepare revival plan​

ISLAMABAD (October 22 2008): Prime Minister Yousuf Raza Gilani has asked the economic managers to chalk out a comprehensive plan for revival of the economy. During a presentation by Advisor to Prime Minister on Finance Shaukat Tarin and his team on economic agenda on Monday, October 20, the Prime Minister had directed the economic managers to work out an effective strategy for revival of the economy.

The nine-point agenda would not only propose measures to attract local and foreign investment, but would also improve socio-economic progress in the country. The economic revival plan would particularly focus on immediate measures needed to ensure smooth working of industrial and manufacturing sectors in the country.

Beside Advisor to Prime Minister on Finance, other members of the economic team are Secretary, Finance, Dr Waqar Masood, Federal Minister for Water and Power Pervaiz Ashraf and Special Assistant to Prime Minister on Economic Affairs Hina Rabbani Khar.

Tarin informed the Prime Minister that the proposed economic agenda would be announced within eight weeks. Primarily, major focus of the economic agenda is to enhance economic stability and socio-economic uplift in the country. The proposed economic agenda would be instrumental in meeting economic challenges for accelerated development of human resources, health, education, energy and banking sectors.

 

[Neo]

Africa seen buying more rice from Pakistan​

CHIANG MAI (October 22 2008): African nations, which buy some 9 million tonnes of rice a year from Asia, are likely to import the bulk of white rice from Pakistan and Vietnam because of competitive prices. "In Pakistan the new season has started, their prices are very competitive," said the head of the rice division at an international trading house.

"With government intervention from Thailand, I think Africa will buy from Pakistan and Vietnam, especially white rice." The benchmark Thai rice price is likely to decline from $660 per tonne after the government cut the price it will pay farmers for their paddy rice by nearly 15 percent, but it is much higher than the other origins.

Pakistan, which is expecting a bumper crop, is quoting non-basmati rice at around $390-$400 per tonne, while Vietnam is offering a similar variety at $420 per tonne, traders said on the sidelines of a global seminar in Chiang Mai. African countries, including the top buyers Nigeria and South Africa, are well stocked and are unlikely to tap the international market before December. "Nigeria is covered for 3 to 4 months, they have something like 400,000 to 450,000 tonnes," said one rice exporter. Nigeria annually imports 1.2 million tonnes of rice.

 

[Neo]

Saudi-Pak conference to help bring more investment: Naveed​

ISLAMABAD (October 22 2008): Federal Minister for Privatisation and Shipping Syed Naveed Qamar on Tuesday said the on-going Saudi-Pak Investment Conference in Saudi Arabia would help bring more foreign investment in Pakistan. Talking to a private TV channel, he said the conference is aimed at promoting contacts between private sectors of the two countries.

At such forums, Pakistan would apprise foreign investors about investment-friendly policies and conducive atmosphere for investors in Pakistan. Pakistan will be able in getting more and more foreign investment in short span of time as Pakistan is an attractive and safe destination for investors, he optimistically said.

 

[Neo]

Pakistan and India resume Kashmir trade after 60-year freeze​

CHAKOTI (October 22 2008): Trucks loaded with apples, onions and nuts crossed the line of control in Jamu and Kashmir for the first time in decades on Tuesday as nuclear-armed India and Pakistan opened a trade link aimed at easing tension. The decision, taken only last month, to allow limited trade across the line of control in Kashmir symbolises attempts to solve the Kashmir dispute by creating "soft borders" allowing the free movement of goods and people.

"I'm quite confident that this beginning will lead us to proper and regular trade and commerce," Sardar Attique Ahmed Khan, prime minister of Azad Kashmir, told reporters. But Khan cautioned against hopes the opening of trade across Line of Control (LOC), would lead to a quick solution of the more than 60-year dispute of Kashmir. "All these steps, cross-LOC trade, communication, people-to-people contacts, talks, all these things slowly and gradually they are contributing factors towards the ultimate resolution," Khan said.

"But no high hopes should be attached, no wild wishes should be attached to only the one event of today. But this is a great success," he said. The Occupied Kashmir's puppet governor, N.N. Vohra, said the trade link was a major step in a slow-moving peace process: "Today is a historic day ... The trade volume will increase."

On Tuesday, white doves of peace were released as 14 Pakistani trucks bedecked with the national flag crossed a bridge into Indian Kashmir carrying rice, onions and dried fruit. Schoolchildren chanted "Long Live Pakistan" and "Kashmir will become a part of Pakistan" as a brass band played patriotic music.

"A DREAM COME TRUE": Indian trucks garlanded with marigolds and banners reading "long live cross-border trade" set off the other way loaded with apples, honey and nuts. "I'm delighted, it's a dream come true," said 35-year-old lorry driver Gulam Hassan Baba.

It was the first time vehicles had been allowed across the LOC and the newly constructed Aman Setu, or Peace Bridge, since a 1948 war. But it does go some way towards meeting one of the demands of freedom fighter in Occupied, who have been leading months of pro-independence protests, some of the biggest in years.

A bus service connecting Srinagar, Indian Kashmir's summer capital, and Muzaffarabad, capital of Pakistani Kashmir, was launched in 2005, one of many confidence-building measures undertaken since the two sides began a peace process in 2004. But because of elaborate security checks, suffocating bureaucracy and mistrust, only 9,000 passengers have travelled between the two sides of Kashmir on the "peace bus" service.

For the time being, trade will take place just once a week, with a limited list of goods allowed. Khuwaja Farooq, head of the Muzaffarabad Chamber of Commerce, said he wanted free trade. "It should be a permanent feature ... but as of now, nothing seems permanent," he said.

AFP ADDS FROM SALAMABAD (IHK): A convoy of 13 trucks carrying mostly apples set off on the historic trip to Azad Jammu and Kashmir. "It is a historic day which will surely help the economy of both parts of Kashmir," said occupied Kashmir's Governor N.N. Vohra as he flagged off the convoy from Salamabad, 12 kilometres (seven miles) from the Line of Control.

"I hope it will herald peace in the region," he said of what officials on both sides are aiming to turn into a twice-weekly trading event. The largely symbolic crossing shortly after midday was the first time vehicles were allowed to cross Aman Setu or Peace Bridge on the Line of Control since India and Pakistan fought a war over the region in 1947.

"Vehicles from both the sides have crossed over making history," senior Indian industries official Pawan Kotwal said at Kaman Post, just near the Peace Bridge, as reporters from both sides waved at each other. A freedom struggle launched in occupied Kashmir in 1989 although violence has fallen sharply since the nuclear-armed states began a peace process in 2004 aimed at settling all issues including the future of Kashmir.

But in the past few months, the occupied Kashmir has witnessed the biggest pro-independence demonstrations since the movement in 1989, triggering a violent crackdown by Indian security forces. "The items were scanned in x-ray machines," police officer Faisal Qayoom said. Kashmiri truckers from both sides said they were delighted about the resumption of trade. "I'm very happy to be part of this historic moment," said Ghulam Hassan Baba, a driver from Srinagar.

 

[Neo]

Agri credit disbursement up 28pc ​

Thursday, October 23, 2008

KARACHI: Disbursement of to agriculture sector by commercial and specialised banks increased 28.36 per cent year-on-year to Rs46.618 billion during the first quarter (July-September) of the current fiscal year, the State Bank (SBP) said on Wednesday.

Overall credit disbursement by five major commercial banks including Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank Limited, National Bank of Pakistan (NBP) and United Bank Limited (UBL) went up 31.52 per cent to Rs25.638 billion compared to the first three months of the last fiscal year.

Zarai Taraqiati Bank Limited (ZTBL), the largest specialised bank, disbursed Rs8.7 billion compared to Rs7.2 billion last year while disbursement by Punjab Provincial Co-operative Bank Limited (PPCBL) was down at Rs0.819 billion from last year’s Rs1.265 billion. Besides, 14 domestic private banks also loaned a combined Rs11.42 billion up 36.97 per cent.

It may be recalled that the State Bank of Pakistan has set an indicative agriculture credit disbursement target of Rs250 billion for the current fiscal year which is 25 per cent higher than the Rs200 billion target of the last fiscal year and 18 per cent higher than the actual disbursement of Rs212bn in FY08.

 

[Neo]

Pak, Saudi entrepreneurs sign MoUs ​

Thursday, October 23, 2008

KARACHI: Pakistani entrepreneurs have signed several Memorandum of Understandings (MoUs) with investors in Saudi Arabia for setting up industries in agriculture, dairy farming, livestock, fisheries, food processing, manufacturing and power generation in Pakistan.

According to information reaching on Wednesday, these MoU have been signed at the largely attended “Investment Conferences” jointly held by Government of Pakistan and Finance Ministry of Saudi Arabia in Riaz and Jeddah.

Investment conference at Jeddah was told that Al-Tuwairqi Group will expand its steel mills at Port Qasim with an additional investment of $1 billion while Samba Group of Saudi Arabia will streamline the projects in agriculture, dairy, power generation and livestock in Pakistan with the help of BOI.

Federal Minister for Investment and Privatisation Syed Naveed Qamar, who is leading Pakistani delegation, held meetings with Saudi trading and investment groups in presence of some leading Pakistani businessmen.

Qamar invited Saudi business groups to invest in Pakistan as it was offering best investment opportunities. He pointed out that Pakistan’s private sector was also very active and mutual investment and trading cooperation between the sectors of two countries will bring in positive results.

 

[Neo]

ADB to provide trade finance ​

Thursday, October 23, 2008

ISLAMABAD: The Asian Development Bank (ADB) and Sumitomo Mitsui Banking Corp (SMBC) announced on Wednesday that they had entered into a risk-sharing agreement that would enhance support for international trade in developing countries of Asia.

The Risk Participation Agreement Initiative, which comes under the umbrella of ADB’s Trade Finance Facilitation Programme (TFFP), will extend trade finance facilities to selected financial institutions on a risk-sharing basis, with transactions ranging from short-term letters of credit to tenures that last up to two years.

The programme will be introduced in phases. Phase-I will be launched in Pakistan and Sri Lanka while phase-II will extend its coverage to include financial institutions in Cambodia, Lao PDR, Mongolia, the Philippines and Vietnam.

TFFP plays an important role in ADB’s efforts to develop public-private partnerships through risk mitigation. The programme works with private sector financial institutions to support trade in developing countries by sharing the risk of financing and guaranteeing trade transactions.

These types of risk-sharing agreements can be particularly important in developing intra-regional trade between smaller developing countries and in supporting the growth of small and medium-sized enterprises that are involved in international trade.

“We are very pleased to work with SMBC by sharing risk in some of Asia’s lowest income countries to support development through trade,” said Philip Erquiaga, Director General of ADB’s private sector operations.

“ADB aims to attract private capital to support development in the poorest countries of Asia. Trade is an important component of economic development and the ADB is working to promote trade by developing, among other things, public-private partnerships that involve risk-sharing arrangements.”

 

[Neo]

Punjab explores new avenues to promote tourism ​

Thursday, October 23, 2008

LAHORE: Punjab Minister for Tourism, Chaudhry Abdul Ghafoor has said that the provincial government is determined to promote tourism sector, in order to explore new avenues to attract maximum number of foreigners.

He said that no government in the past did the needful to promote this sector which is a major source of earning for a number of countries around the globe. He was addressing a seminar on “Challenges in Hospitality, Travel and Tourism” arranged by the Lahore Chamber of Commerce and Industry (LCCI) in collaboration with the Tourism Development Corporation of Punjab (TDCP) on Wednesday.

Ghafoor said that responsibility lies with Pakistani ambassadors posted abroad to highlight a positive image of the country that has been tarnished by the anti-social elements. He was also of the view that neighbouring India was earning $5 billion annually through tourism industry but in Pakistan the situation is not that encouraging.

He said that private sector’s recommendations would be prioritised in the new tourism policy to ensure their maximum participation. Ghafoor also urged both the print and the electronic media to play their role in the promotion of this sector. Speaking on the occasion, LCCI Acting President, Mian Muzaffar Ali said that the tourism sector, if encouraged and promoted on modern lines, can help the country earn millions of dollars through foreign exchange.

There is need to create awareness among the business community and investors about the vast potential of tourism sector, especially in the scenic Northern Areas of Pakistan. If intelligently promoted, the northern areas could be rated among the world’s best tourist spots. Although rich in natural beauty, these areas are neglected in terms of availability of basic amenities, education and health.

Tourism is the main source of foreign exchange in several countries like Switzerland, Sri Lanka. “We must develop this sector to attract local and foreign tourists, he added. The country could earn billions of dollars every year from tourism, he asserted.

TDCP Managing Director, Mian Waheedud Din in his address said that it is striving to meet their objectives by focusing on regional and domestic tourism since its inception in 1987.

On domestic level, he said that cultural exchange programmes with other provinces are also being arranged.

 

[Neo]

Cut in non-productive expenditures may ease crisis ​

Thursday, October 23, 2008

LAHORE: Former Chairman Pakistan Pharmaceutical Manufacturers Association and Chairman Highnoon Group of Industries, Jawaid Tariq Khan has demanded that the government further reduce non-productive expenditures in order to bring the country out of its financial crisis.

He asked the government to stop borrowing from banks and increase import duty on luxury goods and said that the current economic crisis is due to the wrong policies of the previous government.

Speaking at a press conference here on Wednesday, he pointed out that due to the policies of the previous government Pakistan’s economy has converted into a consumer economy from producing economy. He said that non-productive expenditures of the government increased manifold resulting in heavy borrowing from the banking sector. He said to bring the country out of the crisis, the government should cut down on non-development expenditure by 40 per cent and stop borrowing from banks.

He also said the revenue collecting agencies have failed to bring tax collection to the level of other developing countries of the world. He called for a revamp of the industrial sector by encouraging it to make new investments and in some cases give subsidy to make it competitive so the exports could be increased to the maximum.

Imports of all luxury goods should be stopped including the imports of vehicles above 2000cc. Prices of petrol and hi-octane should be according to international prices but the price of diesel and kerosene oil should be subsidised.

 

[Neo]

Pakistani investors may lose billions in Dubai: PEW ​

Thursday, October 23, 2008

ISLAMABAD: The Pakistan Economy Watch has said that international financial turmoil and receding oil prices have shaken the oil-rich Arab nations with Dubai among the worst hit.

Dubai, known as the safe heaven among investors, traditionally relies on realty, tourism and financial sectors that are badly hit due to global recession. It is no longer regarded as financially invincible and its boom is under threat, said Dr Murtaza Mughal, President Pakistan Economy Watch.

Dubai’s debt is much more than GDP, which is soaring at an alarming rate creating new financial challenges. The federal and state governments are also keeping critical data secret, which is adding to nervousness of investors.

Mughal said the situation had the pushed international and local investors to withdraw a minimum of 60 billion dollars from Dubai and flight of capital continued. He cautioned that Pakistanis should be vigilant before making any new investments.

Dubai has asked the UAE and Abu Dhabi, the richest among the seven units, for help but could get only 33 billion dollars. Some big international concerns, including banks, finance houses and developers have realized the situation and altered major investment plans. “Some institutions have dropped idea for investment in Dubai while others have started mergers,” he said, adding that the local property giants had started firing their employees.

Lending to the property sectors amounts to 17-20 percent of the total loans issued by the banks in Dubai and some banks are feeling pressure of the situation. The international turmoil has also cut the number of visitors to Dubai which is yet another blow to the city-state which saw the boom on weak foundation.

 

[Neo]

Rs50 billion lifeline for stock market​

ISLAMABAD, Oct 22: The SECP held consultations with the three stock exchanges on Wednesday night, paving the way for a Rs 50 billion package for the equity market, aimed at providing ‘comfort’ to foreign investors and a ‘soft landing’ to the market after the proposed removal of the ‘floor’ on Oct 27.

The Karachi Stock Exchange had put a floor under the index level of 9,144 points on Aug 28 to halt a free fall after the market had lost 41 per cent in four months.

The regulators on Wednesday approved a Rs20 billion market support fund, which would invest in seven giant state-owned entities to save their stock values from nosediving.

A late night statement on Wednesday by the SECP said chairman Razi-ur-Rehman briefed participants (board of directors of the three stock exchanges) on the modalities of the new Rs20 billion open-end fund being set up by the government. It would be managed by NIT.

“The SECP today gave the formal approval for establishing the required fund”, the regulator’s statement said, adding that the NIT was in the process of finalising details for a smooth operation.

The fund would invest in seven state-owned entities -- Oil and Gas Development Corporation, Kot Addu Power Company, Pakistan Petroleum Limited, Sui Southern Gas Company, Sui Northern Gas Pipelines Limited, Pakistan State Oil Company and the National Bank.

The SECP observed that in addition to the market operation, the fund was being provided with a Rs 30 billion government guarantee to enable it to write ‘put options’ on the seven entities.

A technical adviser was being appointed to advise NIT on pricing the ‘put option’. The facility would be available to foreigners who were on investors’ list on Aug 27.

Sources told Dawn that foreign investment in the stock market was currently valued at $2billion and brokers and traders feared that foreigners could pull back their portfolio investment to the tune of $400million once the floor was removed.

The guarantee of Rs30 billion had been provided to foreign investors to give them the comfort of reimbursement of their loss in case stocks fell below the ‘floor’ in one year.

The offshore investors were at liberty to sell their stocks if they fetched considerably higher prices during the year.

The SECP stated that participants of the meeting, considering a proposal made by 103 members of the KSE for the closure of CFS market, were of a consensus that the CFS market should not be discontinued immediately to avoid any ensuing liquidity crises and until there were alternative products available in the market.

“It was unanimously agreed that the risk management of the product be further improved to remove the negatives that still exist in the system,” the regulator said.

In order to further strengthen the CFS and deliverable futures market and to reduce the risk therein the a number of additional risk management measures were proposed to be adopted with effect from Oct 27 in order to plug loopholes before opening of the markets.

The meeting also accepted a number of other proposals: strict compliance of mandatory collection of VaR-based margin by the brokers from clients in each markets effective from Oct 27; implementation of “new capital adequacy regime” with effect from Jan 1,; uncapping of “investor protection fund” at KSE effective October 27, 2008; transfer of risk management from the stock exchanges to the National Clearing Company of Pakistan Limited with effect from Dec 1, 2008; and regular bi-weekly reports to be submitted by the exchanges to the SECP in respect of regulatory compliance, compliance with risk management requirements and monitoring and surveillance effective from Nov 17.

The Fund building by the SECP comes on top of the several confidence building measures announced by the State Bank of Pakistan earlier in the week.

The KSE is currently in a state of limbo, showing a negligible three points decline on Wednesday and the historic low volume of just 123,600 shares. Average turnover in the 12 months prior to the current market turmoil was in the region of 185 million shares a day.

 

[Neo]

Balochistan peace must for oil exploration: Zardari​

ISLAMABAD, Oct 22: President Asif Ali Zardari said on Wednesday that the government would restore peace in Balochistan and make it safe for oil and gas exploration after holding dialogue with stakeholders.

At a briefing on energy crisis and the pace of oil and gas exploration in the province by officials of the ministry of petroleum and natural resources at the presidency, he said energy security was as much vital for the nation as food security.

Sources in the petroleum ministry told Dawn that the president agreed with views being held by most of exploration companies and officials of the ministry that without bringing lasting peace to Balochistan, no major increase could be witnessed in exploration and production of oil and gas in the province.

Mr Zardari, they added, was informed that the confidence of investors interested in gas and oil fields in Balochistan could only be restored through peace and peace was not possible until tribes were taken into confidence.

An official announcement said the president stressed the need for innovative and out-of-the-box solutions to increase oil and gas production. He called for stepping up oil and gas exploration.

He said that the economy could not be sustained without energy. “There is a pressing need for multiplying domestic energy production.”

Mr Zardari said energy security, like food security, was critical in the modern world. He called for devising a comprehensive energy security plan. An effective energy security plan also involved dialogue at the regional level for cooperation in the filed of energy, he said.

He stressed the need for carrying out aerial surveys for exploration of oil and gas.

The president said that during his visit to Beijing, he found the Chinese political leadership keen to assist Pakistan in all development activities.

Mr Zardari called upon relevant officials to develop new models of private-public partnership in the oil and gas sector with Chinese entrepreneurs.

The sources said that the president was also briefed on the issues which could arise from the privatisation of the Qadirpur gas-field and the ongoing maintenance of the same gas field and its impact on energy situation.