Pakistan Economy - News & Updates - Archive

[Owais]

Computerised refund system not pointing flaws in exporters' claims



ISLAMABAD (June 17 2006): The computerised 'risk-based refund analysis system' is not pointing out real flaws in the refund claims filed by exporters, resulting in blockage of refund payments.

Sources told Business Recorder on Friday that processing of refund claims is done through Sales Tax Automated Refund Repository computer system (Starr). Exporters' data is also checked through the 'risk-based analysis system'.

In certain cases, one system clears the application for issuance of refund, but the other raises serious objections, making it difficult for tax officials to sort out genuine cases.

Sources said that CBR has issued instructions to all collectors of sales tax to sanction sales tax refund in cases which are verified by the 'risk-based analysis system'. This system contains database of exporters including return, purchase invoices and invoice summary etc Starr system is operative for processing of refund claims for quite some time.

Keeping in view the Board's directive, the collectorates started issuance of refund after carrying out analysis of exporters' data available with the system, applying the Starr checks. The processing of refund claims under the 'risk-based system' has created many difficulties in processing of the claims. The collectors are not clear whether to issue refund or not in cases where the system raises objections.

Due to these objections the sales tax staff is unable to sanction or reject refund claims, which is increasing the overall pendency of refund claims at the level of collectorates. The collectors have communicated several ambiguities in the 'risk-based analysis system' for addressing.

Sources said that the system analyses the data only to the extent of 'purchase invoices'. No analysis is made regarding 'bill of entry' or 'shipping bill' filed by exporters under the system. Thus, the system raises objections pertaining to 'bill of entry'/'shipping bill'.

The system declares sales tax invoices as valid where the Starr refund program shows objection as 'blacklisted, non-filer, invoice summary not furnished, abnormal tax profile' and other such objections.

The refund claims due to these objections are inadmissible under the provisions of the Sales Tax Act, whereas the same are declared as admissible under the risk-based system, which is very confusing, sources added.

The system is also raising objections that an exporter has filed multiple sales tax returns resulting in blockage of refund. On the other hand, a registered taxpayer is entitled to file revised sales tax return to correct any omission or wrong declaration under section 26(3) of the Sales Tax Act, 1990.

The objection of 'multiple return' does not clarify whether a claimant is filing multiple return erroneously or revised sales tax return has been filed to correct the error.

The system also contains data of utility bills of the exporters. But it invariably shows objections as violations of different sections of the Sales Tax Act. This issue also needs to be addressed by the Board. The Board should clarify to the collectors whether only the risk-based analysis system is to be followed, or Starr objections be also taken into consideration, sources said.

 

[Owais]

Mutual funds asked to extend outreach to remote areas

KARACHI (June 17 2006): Advisor to Prime Minister on Finance and Economic Affairs, Dr Salman Shah, has called upon the mutual funds industry to expand its outreach to tap the potential savings in remote cities, towns and rural areas of the country. Speaking at the Asia Finance Conference on 'Fund Managers: Pakistan's Capital Market' here on Friday.

He said that the financial sector in Pakistan was making very fast progress and it was necessary that all available savings within the country should be brought into the capital market. He said that Pakistan's capital market "is emerging one, and involves high risk".

He said that the risk could be mitigated by making long-term investment in mutual funds as the mutual fund managers would be doing all the research and taking precautions on behalf of the investors.

He said that the opportunities being offered by the stock market should be wide and should reach the general public throughout the country, whereas the mutual funds industry and brokerage houses were concentrated in a few cities. "They need to ensure equal distribution of the services and facilities throughout the country," he added.

He said the government was making sincere efforts to broaden the tax net, putting more money into infrastructure development, setting aside bigger amounts for development as the broader tax net would provide fiscal space for the government to lower the taxes further down.

 

[Owais]

Rs 193.10 billion Sindh budget presented

KARACHI (June 16 2006): Sindh Finance Minister Syed Sardar Ahmed on Thursday presented before the provincial assembly a Rs 193.10 billion tax-free provincial budget for 2006-07 amid protests from the opposition on the law and order situation and the worst kind of pandemonium witnessed.

The Provincial Budget 2006-07 is a Rs 302.24 million surplus budget, as the total estimated receipts stand at Rs 193.40 billion. The opposition members led by Nisar Ahmed Khuhro staged walkout from the house following a worst nature of uproar created by them. They were chanting slogans against the deteriorating law and order situation, price hike, Kalabagh Dam and Thal Canal. The opposition members carrying placards kept on standing during their stay in the house.

Syed Sardar Ahmed delivering his budget speech said the general revenue receipts are Rs 147.63 billion, 16.265 percent higher as against the overall revised estimates of Rs 126.962 billion. Budget includes the highest-ever Rs 50 billion pitched in for the Development Programme comprising Rs 24 billion for the Provincial ADP, Rs eight billion for the District ADP (already dispatched), Rs 5.3 FPA, Rs 10.5 billion federally assisted projects, Rs 250 million Drought Emergency Relief Assistance (DERA) and Rs 1.95 billion for SDSSP.

The revenue receipts include Rs 63.468 billion Divisible Pool Tax transfers and Rs 5.83 billion federal grant-in-aid, being given as per new order 2006. It also includes straight transfers comprising royalty on oil and gas, excise duty and surcharges on gas of Rs 37.90 billion against the revised estimates of Rs 37.146 billion and district support grant estimates at Rs 18.606 billion.

The province's own receipts are pitched at Rs 22.808 billion against the revised estimates of Rs 18.381 billion. The current capital receipts are estimated at Rs 9.248 billion and the capital expenditure is expected to be Rs 11.727 billion with a deficit of Rs 2.47 billion.

For 2006-07, combined share of local governments is estimated at Rs 56.754 billion as against the revised estimates of Rs 52.833 billion for 2005-06 with an increase of 7.4 percent. Local governments are being provided with their funds in accordance with Provincial Finance Commission (PFC) formula. As per existing formula population, backwardness, and tax collection are the major criteria including some funds on transition basis and five percent on the basis of performance.

General revenue expenditure for 2006-07 is estimated at Rs 139.224 billion against the revised estimates of Rs 126.184 billion for 2005-06, an increase of 10.3 percent over the revised estimates. The major functional allocations include Rs 21.121 billion for general administration, Rs 17.763 billion for law and order, Rs 3.494 billion community services, Rs 19.367 billion social services, Rs 9.266 billion economic services, Rs 0.940 billion subsidies, Rs 10.326 billion Debt Servicing and Rs 56.948 billion for local governments and other unallocable.

"The Budget 2006-07 is a tax-free budget and no new taxes are envisaged. However, with a view to rationalise and simplify some of the existing tax instruments some of the rationalisation measures are being introduced through Finance Bill 2006," Sardar Ahmed said.

Explaining, he said that stamp duty paid on allotment order or transfer of allotment order issued by developer, builder etc is being abolished for all flats irrespective of their size, bungalows, residential houses and built up commercial premises. This is being done to simplify the process of allotment, he said.

He said that the stamp duty on articles of association and memorandum of association at the time of registration of new companies is being abolished to facilitate greater registration of new companies in the province.

Stamp duty on mortgage deed with and without possession are being reduced from five percent to three percent and from 4.2 percent to two percent respectively for bringing these at par with stamp duty on conveyance deed, Sardar Ahmed informed. With a view to streamline collection of motor vehicle tax, the categories of vehicles are being reduced from 40 to 11 to simplify collection. While stamp duty on power of attorney authorising the attorney to sell immovable property is being reduced from five percent to three percent to bring it at par with stamp duty on conveyance deed, he added.

The Sindh government has increased water sector allocation from Rs 888 million to Rs 1.5 billion for facilitating early completion of programmes. Sardar Ahmed informed the house that development budget for the agriculture sector for 2006-07 has been increased by 103 percent while that of forest, wildlife and the CDA sector has been raised by 23 percent.

For overcoming water constraints, the Sindh government is introducing new technologies of drip and sprinkler irrigation through a new project titled "High Efficiency Irrigation System" costing Rs 134.34 million, which would be made available to farmers at subsidised rates ie 80percent cost will be borne by the Sindh government and only 20 percent by the growers.

For the coming year the Sindh government would invest around Rs 6.5 billion in the road sector both through normal allocation of Rs 4.5 billion and Rs two billion through ADB assisted Sindh Road Sector Programme.

On the side of education, the Sindh government has enhanced the education budget by three times from Rs 4.1 billion to Rs 12.7 billion for improving service delivery. The existing incentive programmes will continue and will be further refined.

The minister said that the health development budget is being raised to Rs 850 million against the revised budget of Rs 750 million.

In order to bring the salary of the police staff in Sindh at par with those in Punjab, an amount of Rs 500 million has been allocated in the new budget.

"In pursuance of Government of Pakistan's announcement, the Sindh government would be increasing the pay of government employees with effect from July 2006.

Speaker Muzaffar Hussain Shah was in the chair. Immediately after the presentation of Finance Bill, he adjourned the session to meet again on Monday at 9:30 am.

 

[Owais]

Rs 32 billion allocated for ADP


KARACHI (June 16 2006): Sindh Government has allocated Rs 32 billion for Annual Development Plan (ADP) for the fiscal year 2006-07, registering an increase of 33 percent over the current's year Rs 24 billion. According to Sindh budget for 2006-07, presented before Sindh Assembly here on Thursday, the development outlay includes Rs 08 billion for district governments.

The provincial component of the ADP will be entirely funded by the provincial government whereas the district governments will fund their component from the 'Singly Line Transfer', which will be administrated from July 2006 onwards based on the PFC Award.

In terms of priority, the government has assigned Rs 20.83 billion allocations to different sectors including Rs 5.5 billion as Special Packages (Rs 2 billion for Karachi, Rs 1.5 billion for Hyderabad and Rs 2 billion for Rural Package; Rs 4.5 billion for Communication; Rs 1.55 billion for Water & Power; Rs 1.5 billion for Education; Rs 1.36 for Agriculture & Livestock; Rs 1.29 for PP&H; Rs 1.1 billion for Mines & Minerals; Rs 1.08 for MPAs Programme; Rs 850 million for Health and Rs 600 million for Industries.

In water sector, the Sindh government has increased the allocation from Rs 888 million to Rs 1.5 billion for facilitating early completion of programmes. As many as 70 kms of canal will be extended and 50 new structures will be constructed.

The most important initiative undertaken by the government towards water management is setting up of a Small Dams Corporation for construction of small dams. Other than financing the on-going mega projects in water sector, the federal government has agreed to fund the Chotiari Phase-II project, as well as the long awaited' Makhi Farash Link Canal Project'.

Completion of these projects will go a long way in meeting the irrigation requirements of this province. The development budget of the Agriculture Sector for 2006-07 has been increased by 103 percent while that of Forest, Wildlife and CDA Sector has been raised by 23 percent.

The Sindh Government has approved different projects of desalination plants coupled with windmills and solar panels for production of energy and conversion of saline water into sweet water at various locations in the coastal belt at an estimated cost of Rs 200 million.

For improving the productivity of high value products like fruits, vegetables and flowers, an integrated programme has been launched under which, one export zone station at Karachi and seven satellite stations in different cities will be set up for storage, grading and packaging for high quality products for export.

The Sindh Government had earlier agreed to extend subsidy on the electricity bill of the private tube wells for lowering the cost of production and boosting agriculture in the province.

For this the Sindh Government allocated Rs 250 million in the budget and a proposal was also evolved for an effective implementation of the subsidy. This has been slightly delayed, however, governing is enhancing the subsidy to Rs 300 million and it would begin from July 2006.

Under the component of development of meat and milk production in Sindh the government has decided to establish cattle colonies at various places in the province and in the first phase these are being set up in Mithi, Thatta, Tando Allahyar, Shadadkot, etc.

These cattle colonies would be equipped with modern facilities of shades, water, drainage, feed mill, cold storage etc. A State-of-the-Art Dairy Village and Export Processing Zone is being set up at Ghagar Phatak, on public private participation basis.

The Sindh Government has decided to stop the licensing as well as contract system at Zero Point Badin with a view to provide relief to fishermen and encourage them to generate their revenue without any hindrance and without any middleman.

In addition, the government would be providing infrastructure facilities (like small jetties, cold storage, chillers etc) and training fishermen through development schemes in the next financial year. Similar facilities will also be established at Keenjhar and Manchhar Lake for the local fishermen community.

For overcoming extreme improvement in the coastal regions of Thatta and Badin, the Sindh Government would be launching the "Sindh Coastal & Inland Community Development Project" with the assistance of ASB at an estimated cost of Rs 2.4 billion from next year.

The Sindh Government has introduced new technologies of Drip and Sprinkler irrigation through a new project, titled "High Efficiency Irrigation System" costing Rs 134.34 million, which would be made available to farmers on subsidised rates ie 80 percent cost, will be borne by Sindh Government and only 20 percent by growers.

Under industrial infrastructure, Small Industrial Estates are being set up near Ghaghar Phattak and at Super Highway and SIE Larkana would be extended. For the coming year the Sindg Government would be investing around Rs 6.5 billion in the road sector both through normal allocation of Rs 4.5 billion and Rs 2 billion through the ADB assisted Sindh Road Sector Programme. With this allocation, over 400 kms of road would be improved and around 350 kms of new roads will be constructed.

The government has enhanced the education budget by three times from Rs 4.1 billion to Rs 12.7 billion for improving service delivery. The existing incentive programmes will continue and will be further refined. free textbooks will be provided to over 4.7 million children from class one to ten in all government schools and partnerships will be established with the district governments for various activities.

For girls' stipends, other than the Rs 1000 for all girls in class five to 10, a differential policy has been devised for low outcome districts/talukas for which Rs 500 million have been allocated for the Stipend Programme for the coming year.

With a view to bring the salary of the teachers in rural areas at par with those posted in urban areas the Sindh Government has decided to extend a Remote Area Allowance to the primary school teachers posted in rural areas at a cost of Rs 1.1 billion approximately for encouraging availability of teachers in rural areas.

Under health, with a view to gradually upgrade the overall condition of all the hospitals in the province, the Sindh Government has earmarked Rs 1 billion in the new budget for providing grants to all the hospitals for improvement.

The service structure of the paramedical staff in Sindh has been improved by upgrading their scales for facilitating better remuneration and benefits to them. This would have a budgetary implication of Rs 80 million approximately.

An amount of Rs 100 million has been provided in the budget to provide incentive to the doctors for posting in rural areas.

The Health Development Budget is being raised to Rs 850 million against revised budget of Rs 750 million. Under this portfolio major hospitals in the province are being equipped with modern machinery for improving the diagnostic capability of the public hospitals. Under this Lithography machines, Angiography and Angioplasty machinery, MRI and CT scanners are being provided at different teaching hospitals in the province.

A cancer hospital is being established with the help of Pakistan Atomic Energy Commission for which a plot at the cost of Rs 3.5 million has been procured and handed over to PAEC for establishing of a cancer hospital at Nawabshah.

Accident Emergency & Ancillary Services Complex is being set up at Civil Hospital Karachi thorough federal financing at a cost of Rs 1.43 billion. Similar units will be established in PMCH Nawabshah, Liaquat University Hospital & Gambat Institute of Medical Sciences through the ADP.

After the opening of Sukkur Medical College, the provincial government has decided to upgrade the Civil Hospital Sukkur to a Teaching Hospital. The provincial government has also decided to establish a medical collage at Mirpurkhas.

An allocation of Rs three billion was kept in the Social Security Fund last year. The procedure and the rules of operation of this fund are under preparation. A Rs three billion allocation has been provided for next year to provide relief to the people in distress.

In view to manage various employees benefit schemes scientifically through an integrated institutional framework the provincial government intends to undertake a study to evolve an integrated system for a more cohesive management of various employees benefits.

 

[Neo]

KIEV (June 17 2006): Pakistan and Ukraine in wide ranging discussions identified new areas of co-operation including oil and gas development, storage of liquefied gas, dairy products and heavy machinery.

In the second round of bilateral consultations between Pakistan's Athar Mahmood, Additional Secretary (Europe) Ministry of Foreign Affairs and Ambassador of Pakistan Major General Taj ul Haq (Retd) and Ukraine's Yuriy Kostenko, Deputy Foreign Minister consular issues and security related matters including scientific and technological co-operation were discussed.

Talks were held in a friendly and cordial atmosphere and covered whole gambit of Pak-Ukraine bilateral relations, a statement released by the Foreign Office said.

The two sides focused on further strengthening of political and economic relations. Ukraine was briefed on regional and international issues of mutual interest including Kashmir dispute, the ongoing composite dialogue with India, situation in Afghanistan, Iran's nuclear issue, Iraq and Pakistan's efforts in the fight against terrorism and prevention of drug trafficking.

The Ukrainian Deputy Foreign Minister expressed appreciation for President General Pervez Musharraf's role in the war against terrorism.

During talks, new areas of co-operation such as Ukrainian expertise in oil and gas development, storage of liquefied gas, dairy products, automobiles and heavy machinery were identified.

 

[Neo]

KARACHI (June 17 2006): A California-based Kuwaiti Oil Company, Z-teck, will set up a mega oil refinery in Karachi. This was announced in an official statement issued here on Friday. It said that a Memorandum of Understanding (MoU) was signed at the Chief Minister House.

Chief co-ordinator of the Kuwaiti firm, Zafar Ali and Sindh Secretary Labour, Nasir Hayat signed the MoU. Sindh Chief Minister Dr Arbab Ghulam Rahim, and the Director of Z-tech, Shaikh Mamoud Dawod Al-Sabah were present on the occasion of the signing ceremony.

The refinery would be set up at Port Qasim and will have a capacity of refining 150,000 barrel of oil. The Kuwaiti firm would come up with an investment to the tune of 1.2 billion dollars. Speaking on the occasion Arbab said that the government of Sindh would fully encourage the foreign investment in the province. The Chief Minister stated that the government of Sindh is determined to set up industrial zones in the province.

 

[Neo]

FRIDAY, JUNE 16,

LONDON: South Asia, particularly India, is set to become the next big home and destination for fairly-traded products and the 'Fairtrade' brand.

Speaking at a two-day 'Globalisation and Sustainable Development Forum' here on Thursday evening on the "enormous untapped potential" of countries like India and Pakistan, Harriet Lamb, Executive Director of the Fairtrade Foundation said the organisation planned to invest upto 50 million pounds in developing economies, some of the biggest being in South Asia.

At the symposium organised by the Commonwealth Business Forum and the Royal Commonwealth Society and attended by an audience comprising leaders of business, government and civil-sector organisations, Lamb said he was certain both producers and consumers in India would buy into the Fairtrade concept with greater enthusiasm in the years to come.

Among its line of products which can carry the brand Fairtrade counts footballs from Pakistan, 'Basmati' rice from the Himalayan foothills of India, cotton, cashew-nut and tea.

In India, it aimed to work not only with farmers but also move into manufacturing, "next phase we'll be getting into processing companies that's where we add value," he said.

Fairtrade also has interest in building a national market in India. "Barista is a popular chain. I think Fairtrade coffee will become quite popular."

As de-regulation opens up the Indian market to further investment opportunities, producers have greater opportunities to sell their products abroad, and have a better sense of what their competition might be.

Lamb said western companies often placed exhausting quality-control demands on third -world farmers, limiting their capability of selling to the west, and even if they could, they would have to at less than competitive rates.

A 200 million pounds industry, Fairtrade promotes sustainable development based on trade, not aid which is unsustainable, and meets consumer demand while investing in the future communities.

Working with local cooperatives and with trade unions, it builds on existing networks to lobby for competitive, equitable trade practice, and keeps market prices high enough to cover production costs, and stable enough to allow farmers the security to plan for and invest in the future.

 

[Neo]

KARACHI, June 16: Dr Salman Shah, adviser to the prime minister on finance and economic affairs, has said Pakistan will become major manufacturing country of the world with the high economic growth ranging from 6 to 8pc and it will slash the poverty significantly.

Speaking at the Asia Conferences, organised by the Dawn Group of Newspapers on Friday, the adviser said that economic scenario had changed during last six years.

The topic of the inaugural session was “Fund Managers: Pakistan’s Capital Market” and most of the speakers observed that Pakistan had great potential to invite the international funds flowing world over, however, a number of steps suggested for both the fund managers and regulators for stabilising the market.

Dr Shah said that six years before the profit of the Karachi Stock Exchange was Rs30bn and the KSE-100 index was just at 1,200-level and in April 2006 the index crossed the 11,000-barrier and the profits reached to Rs250bn.

He said the bank credits to the private sector had also multiplied and in the outgoing fiscal year Rs450bn were consumed by the private sector. The government had made record high allocation for infrastructure development to gear up the economy, he added.

He said the 6-8pc high economic growth would reduce the poverty to half in next 15 years. Discussing the share business, he said that we needed a lot of IPOs in the future.

The other speakers said that the country had enormous potential to grow in mutual fund sector. Kalim Aziz, senior analyst at Kairos Investment Management, London, said how outsiders look inside Pakistan was important. He said the demand economy of the country was very attractive for the investors.

He said the key driver of markets was the liquidity. “How much liquidity is available is very important for the growth. If the interest rate is low more liquidity will be available while the higher interest rate will develop pressure on liquidity,” he added. He said India was a good example of the demand economy. “Any company which claims that it has global operation has stakes in India and that is why asset management is vibrant in that country,” he said and added that the performance of the emerging market was liquidity driven.

The CEO AKD Securities Nadeem Naqvi said that for the first time in the human history one third population of the world was involved in the industrialisation. Earlier the industrialisations were limited to few nations influencing much lesser population.

He said Pakistan required aligning with the two giants India and China. “These countries are neighbor to Pakistan and the economic alignment will produce favorable results for the country. This should be taken seriously and we should not miss this train”.

He said that Pakistan had natural resources essential for growth of the economy but seriously lacked skilled people.

“We will remain slaves of the knowledge-based economy if we fail to promote education and produce skilled workforce, he said.Mutual Fund Association of Pakistan chairman Najam Ali briefly discussed the performance of the mutual funds. He said the growth was satisfactory as the total fund reached Rs167 billion this year compared to Rs124bn in April 2005.

Earlier, Dawn Group of Newspapers CEO Hameed Haroon welcomed the participants and expressed hope that the series of Asia Conferences would help give a better understanding of the economy.

 

[Neo]

KARACHI: Pakistan, India and Bangladesh can make South Asia a well-built textile hub for the world if the three countries join hands for multilateral corporation and trade.

This was stated by Haroon Farooki, President Karachi Chamber of Commerce and Industry (KCCI) after inaugurating the Seventh SAARC Trade Fair 2006 here on Friday. Saeeda Malik, Sindh Minister for Women Development was also present.

Haroon Farooki said the Asian countries must collaborate with each other to survive in this era of globalisation. “We (SAARC countries) should bolster each other instead seeking support of European countries. Exchanging of technologies, sharing of expertise and offering of available resources could strengthen the economics of Asian region,” he added. “Although SAARC was formed 20 years back its objective could not be achieved by its member countries so far.”

KCCI chief urged SAARC countries, particularly India and Bangladesh to not to create trade competition among the regional countries, saying the products of three countries do not have any level of competition.

“Some European and developed countries do not want the developing countries to overcome their economic plight and stand in the row of develop countries,” he added.

Referring to the recent trade ties, KCCI chief said that Pakistan has signed Free Trade Agreement (FTA) with Sri Lanka and it would also ink same agreement with Bangladesh on July 26 whereas dialogues between Pakistan and India are in the pipeline in this regard which appear to be on positive note. Haroon Farooki said the regional countries have started realizing the importance of economic power which should be exempted from political relations.

 

[Neo]

KARACHI: The government is fully committed to implementing its approved privatisation programme with utmost transparency, through a fair, open and competitive process with a view to ensuring maximum sale proceeds for the assets.

Zahid Hamid, Federal Minister for Privatisation & Investment, stated this while addressing the Board of the Privatisation Commission on Friday.

Addressing the meeting, the minister said that privatisation, deregulation and liberalisation were part of the dynamic and highly successful economic reforms which had been initiated by then Finance Minister now Prime Minister Shaukat Aziz, which were being widely appreciated at home and abroad.

During the period October 1999 to May 2006, a huge amount of Rs337 billion had been realised from only 58 transactions. Moreover, as a result of the improvement in investment climate, Foreign Direct Investment had increased tenfold in five years, from US$322 million in 2000-01 to well over $3 billion in 2005-06, the highest level in Pakistan’s history.

The minister also reviewed progress of transactions relating to Initial Public Offering (IPO) and the Secondary Public Offering of the shares of various entities.

The board was informed that the government’s highly successful “Privatisation for the People” programme had helped in broadening, deepening and strengthening the capital market and in significantly increasing its capitalisation.

The number of stockholders had increased to more than a million and huge financial benefit had been passed on to ordinary small investors as a result of appreciation in share prices.

PC board members, senior officials of the respective ministries and transaction managers attended the meeting.

 

[Owais]

Pakistan, Japan ink agreement to reduce carbon emission MULTAN (updated on: June 18, 2006, 14:40 PST): Pakistan and Japan on Sunday signed an agreement to reduce carbon dioxide emission, generated from Nitric Acid production and make environment friendly to the people under Kyoto protocol.Mitsubishi Corporation's Chief Executive Officer Hajime Katsumura and Pak Arab Fertilisers (Pvt) Limited's Fawad Ahmed Mukhtar signed the agreement at a colourful ceremony here.Pak-Arab, a fertiliser manufacturer in Pakistan established in 1979, has entered into an agreement to participate in the first Clean Development Mechanism,(CDM) project in Pakistan under the Kyoto Protocol at an estimated cost of Rs.1.5 billion.This CDM Project is expected to reduce 1.15 million ton of carbon dioxide every year through the reduction of nitrous oxide (N2O), green house gas (GHG), generated from the Nitric Acid production.The CDM project undertaken by Pak-Arab will generate foreign exchange earnings of about Rs 1.00 billion per annum for the country.In his speech, Mitsubishi Corporation's CEO Hajime Katsumura said that it was a significant occasion that we are going to sign an agreement to make the atmosphere pollution free.The first CDM project was launched by. Prime Minister Shaukat Aziz on 28 April 2006 and the contract for its implementation was signed today by Hajime Katsumura and Fawad Ahmed Mukhtar.

 

[Owais]

Body to resolve natural resources disputes soon ISLAMABAD (June 18 2006): The government has decided to constitute a Dispute Resolution Committee (DRC) under the chairmanship of petroleum minister to resolve disputes amongst stakeholders over the country's natural resources, well-placed sources in the ministry told Business Recorder.Petroleum secretary, representative of defence Ministry and provincial secretaries for mines and minerals would be members of the committee, notification for which is yet to be issued, sources added.The decision was taken by the economic co-ordination committee (ECC) of the cabinet in its meeting on June 14, on a summary of the petroleum ministry to grant Coal Bed Methane (CBM) exploration and production licence to any American company and deal with possible dispute between the federal and provincial governments in this regard.Sources said Cathy Oil and Gas Limited (COGL), one of the American companies, had submitted a proposal for exploration and production of CBM and intends to first conduct reconnaissance survey covering an area of 40,000 square kilometres.Company's experts would fly over entire Indus Basin (minus areas where coal licences had already been issued and areas of potential surface minable resources) and apply USA's BellGeospace technology with the US government's approval and would use USGS aircraft for this purpose.Sources said the company had demanded exclusive rights for exploration and production of CBM in areas which are believed to have potential (as a result of the reconnaissance survey), adding the CBM would not be supplied in the local market being very expensive and would be used in their own petrochemical plants and sold at deregulated prices.According to sources, the firm had set several conditions prior to make an investment: one of which was unified regulatory control over the exploration and production operations to avoid serious conflict of interest among coal mining, coal gasification, coal seam water production and CBM.Sources further said the federal government had issued exclusive petroleum exploration and production rights to the E&P companies, which are not producing CBM, however, they may claim their legal rights on CBM in their licensed areas.Secondly, the Sindh government has taken up the matter with the federal government, claiming that CBM is the property of provinces and it should be regulated by them rather than the centre.The petroleum ministry, sources said, was of the view that CBM is hydrocarbon and covered under the definition of petroleum, which is the federal subject in accordance with the Constitution.The ministry had proposed the provincial government would regulate CBM ensuring that (a) provincial governments will not grant rights to explore and produce CBM over areas already awarded by the federal government for petroleum exploration without the consent of respective companies on case to case basis; (b) CBM operations do not hinder petroleum exploration and production activities; and (c) the federal government would have the right to issue licences for exploration and production in the CBM-licensed areas.It was also proposed that the E&P company needs to follow the procedure as given in the petroleum rules and exemptions or exclusivity can be granted to the company in any manifesto whatsoever and it would provide a level playing field to existing and new entrants.Sources said the petroleum ministry had referred the matter to the law ministry for comments, which observed that, in case CBM being the by-product of coal and is not categorised as petroleum, the question of transfer of any power by the federal government to the Sindh government under article 146 (1) of the constitution would be free from doubt.However, the law ministry agreed to the petroleum ministry's proposals but recommended that it would be appropriate to seek opinion of some experts of international repute on CBM as to whether or not the same is petroleum.Sources said though the ECC had approved the proposal, the Sindh government might approach the highest level for revision of the decision.

 

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Rs 95.987 billion NWFP budget presented ...................................................PESHAWAR (June 18 2006): The NWFP government on Saturday presented Rs 95.987 billion tax-free budget for financial year 2006-07, with the current expenditure estimated at Rs54.5 billion and capital expenditure of Rs 14 billion. Presenting the budget in the provincial assembly.Finance Minister Siraj-ul-Haq said that the province would get Rs 36.994 billion from the federal divisible pool, which would be Rs 6.221 billion more than the outgoing financial year.The receipts from the federal divisible pool include Rs5.301 billion in the head of 2.5 percent GST and Rs 737 million in the head of 'royalty' on development surcharge on natural gas and oil while an amount of Rs 9.712 billion would be received in grant-in-aid from the federal government.The provincial government has also kept an amount of Rs 8 billion as net profit on hydropower generation from the federal government. The budget document said that only 8 percent of the provincial budget has been generated from the province's own sources. The province expects 15.7 percent increase in its resources from the federal government.The resources for the year have been estimated at Rs 67.542 billion and the running expenditure would require Rs 54.5 billion. This amount is 6.7 percent higher than Rs 51.062 billion of the current financial year.The budget has been divided into welfare, administrative and developmental sectors to disseminate clear and correct information about the sanctioned funds for each and every sector.An amount of Rs 42.255 billion has been earmarked for welfare sector; Rs 12.244 billion under administrative head; and Rs 26.618 million for annual development programme (ADP). The welfare budget is 52.8 percent, administrative 15.10 percent and developmental budget 32.82 percent of the total outlay.The developmental fund of Rs 26.62 billion is 26.8 percent more than the current financial year budget, which was Rs21 billion. The share of provincial government in the development programme is Rs 14.957 billion, which is 34 percent higher than 11.20 billion of the current financial year. The annual developmental programme for the next financial year also includes foreign assistance of Rs 7.679 billion.The provincial development programme comprises 1006 schemes, including 773 ongoing and 233 new projects. The budget also hints at Initial Public Offering (IPO) of the shares of the Islamic banking division of Bank of Khyber (BoK) in the capital market. The amount generated from the IPO would be adjusted in the equity of the Islamic banking division of the bank. Furthermore, 24 percent strategic shares of BoK would be selling to Islamic banks on merit basis. During next financial year the purchase and selling of wheat would be carried under Islamic banking.EDUCATION: An amount of Rs 18 billion has been earmarked for promotion of education in the province. The amount is 25 percent more than the current financial year education fund of Rs 15.61 billion, 61 percent of which would be spent on primary and 31 percent on higher education.Two new degree colleges would be established in the province with creation of 3181 new vacancies in the colleges, and both boys and girls up to class X would be provided free textbooks. Two each MA/MSc qualified teachers would be appointed in private schools and the provincial government would bear the expenses of their salaries.The self-finance scheme has been abolished in all colleges of the province from next financial year to establish supremacy of merit and elimination of the discrimination on the basis of rich and poor in the education sector.Health section of the welfare budget has been sanctioned Rs 4.5 billion in the next financial year, showing an increase of 15.4 percent as compared to current financial year. The increase concerns 15 percent increase in the salaries and creation of 123 new posts in the department.The provincial government during next financial year has planned to recruit 4000 nurses in this connection, 1400 nurses and 722 female technicians would be recruited in the first phase. Different hospitals and health facilities in Peshawar would be given a grant of Rs112 million and for encouraging free medical treatment in private hospitals a grant of Rs 100 million would be granted.The provincial government is also planning phase-wise provision of free food to patients of the public sector hospitals. The initiative is being taken from Lady Reading Hospital (LRH) at a cost of Rs 5 million.Rs 100 million for endowment fund, Rs7 0 million for emergency medicines and Rs 30 million for Cardiology Unit of LRH and Rs 10 million for Khyber Medical College.HYDEL POWER PROJECTS: Rs 300 million has been sanctioned for the launching of hydropower generation projects in the province. In this connection, Malakand-III Project, started at a cost of Rs 6.3 billion, would be completed in December this year. The project would generate 80 mega watt electricity. The government would start work on three new projects and start feasibility study of three more projects in the next financial year.Similarly, an estimated amount of Rs 824 million has been reserved for construction of 20 small dams in the province.INDUSTRIES AND MINERALS: This section has been given an amount of Rs 405 million for projects like establishment of 'Marble City' in Buner, establishment of industrial estates in Karak, Nowshera and Mardan, establishment of polytechnic institutes and vocational centres in Chitral, Kohistan, Karak, Shangla, Malakand and Dir Upper, female technical institutes in Mansehra, Peshawar, Haripur and Tank and establishment of furniture factories in Batagram and Dir.

 

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ONBOARD SPECIAL AIRCRAFT (June 18 2006): President General Pervez Musharraf on Saturday expressed strong hope for Pakistan to get full membership of the Shanghai Co-operation Organisation (SCO), saying it would not only benefit the country, but will also help the regional grouping achieve its goal of peace, stability and promoting economic co-operation in the region.

He also held important meetings with presidents of China, Russia, Iran and Afghanistan on the margins of SCO summit on June 15, besides having interaction with the leading Chinese and SCO business leaders to project Pakistan as an ideal destination for investment.

"I am very hopeful and reasonably sure that we will get the full membership of the (SCO) grouping," President told reporters while flying back home after attending the SCO summit and a regional conference in Almaty, Kazakhstan.

The President said the six-nation grouping fully realises that Pakistan can play a very important role in the SCO, adding Pakistan currently has an observer status along with Iran, India and Mongolia that groups China, Russia and four Central Asian states as its full members.

"It is not just that we are seeking a full membership but Pakistan also has a role," he said, adding Pakistan was geo-strategically located to provide connectivity and linkages to the member states in the region.

He said the SCO charter has two important elements - countering terrorism and economic development - and in both Pakistan had an important role that everyone realised.

Pakistan will also have economic and political advantages from becoming a full member of the SCO, he added.

Earlier, speaking at the second summit of the Conference on Interaction and Confidence Building Measures in Asia (CICA) at Almaty, the President on Saturday said Pakistan favours negotiated and peaceful solution of controversy over Iran's nuclear issue. "The recent tension over the Iranian nuclear issue has been a source of deep concern to all of us. Therefore, we welcome the renewed diplomatic efforts to find a negotiated settlement as well as the US decision to directly engage with Iran," President Musharraf said.

"We have been supporting Iran-EU-3 dialogue and search for a diplomatic solution especially by Russia and China," he said.

Talking about the ongoing Pakistan-India dialogue process, he said the two countries have a unique peace opportunity in South Asia. He stated the implementation of a number of CBMs in diverse sectors has improved relations and security environment in South Asia.

The President also met President of Kazakhstan Nursultan Nazarbayev in Almaty on Saturday. The two leaders discussed bilateral issues, situation in the region and trade and economic relations between the two countries.

In separate interviews with Chinese media, the President said Pakistan which itself has been a victim to terrorism is in the forefront of the nations fighting this menace.

"All along Pakistan has been focused on preservation of international and regional peace, security and stability."

During his three-day stay here, the President had an extensive interaction with the local Chinese electronic and print-media, including China central television, Phoeix TV, Dragon TV Shanghai, China Radio International and the China Daily. The Chinese media, including the China Daily and the Shanghai Daily published special supplements on the eve of the President's visit.

The interviews covered wide-ranging subjects, including Pakistan's peace efforts to normalise relations with India.

 

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KARACHI (June 18 2006): Airblue's flight ED 702 landed at Gwadar Airport on Saturday Morning with a full load of passengers to mark the launch of Pakistan's fastest growing airlines seventh domestic destination and the introduction of its operations on the socio-economic routes.

On board the first flight were Jalal Shah, Regional Director South, CAA, and Air Commodore (Retd) Munawar Siddiqui, Chairman JS Air, Shahid Khaqan Abbasi, Airblue's Chief Operating Officer and other dignitaries. The inaugural flight was received by members of the local administration headed by Ahmed Bux Zehri, Director General Gawadar Development Authority, Civil Aviation and Airport Security Force officials, and the newly appointed Airblue Gawadar team.