Pakistan Economy - News & Updates - Archive

[Pk_Thunder]

Economy needs effective policies and reforms to regain stability: SBP
Declining international prices a challenge to Government
​

Amanullah Khan

Karachi—Amongst the biggest challenges for the Government will be to ensure the pass through of the decline in international commodity prices to consumers.

In this background, while recent downward adjustments in the administered prices of key fuels is appreciable, transport fares and goods transportation charges were either not adjusted downwards or saw small changes.

According to SBP report for the first quarter of financial year 2009, Pakistan needs effective policies and implementation of reforms in fiscal year 2008-09 to regain macroeconomic stability and meet economic challenges. According to State Bank of Pakistan’s First Quarterly Report for FY09 released today.

The report, however, pointed out that the sense of crisis gripping the country’s economy in the initial months of FY09 has visibly eased by November 2008, as the Government moved to address the most immediate risks, and entered into a macroeconomic stabilization programme to support medium-term reforms under the aegis of the International Monetary Fund.

It said the disbursement of the first tranche of $3.0 billion by end-November 2008 under the programme meant that any immediate risk of default on external obligations receded, with a substantial improvement in foreign exchange reserve adequacy indicators.

Also, export growth has strengthened and import growth moderated somewhat. “This lent strength to the rupee, reducing the impact of an important generator of inflationary pressures,” it added.

The gain on the external account was helped by a sharp decline in international commodity prices that is expected to substantially lower the country’s import bill, offering the possibility of a decline in the country’s very large current account deficit, and lower inflation.

“This supply-side improvement has been reinforced by the reasonably good performance of crops during kharif FY09 cropping season,” it said and added these factors appear to have already halted the persistent uptrend in inflationary pressures in the economy. Together, they could also help support a very modest improvement in the growth outlook for FY09.

There is also substantial progress on containing fiscal imbalances, with the government moving bravely to reduce subsidies, contain growth in other spending and increase revenues, the report said and added the result has been an encouraging improvement in some fiscal indicators, including a sharp fall in the fiscal deficit from 1.5 percent of GDP during Q1-FY08 to 1 percent of GDP in Q1-FY09. “This figure appears consistent with the annual target embedded in the macroeconomic stabilization programme framework,” it added.

However, notwithstanding the relative positives, there is no room for complacency, the report asserted. “While many of the country’s macroeconomic indicators may no longer be worsening, the imbalances are nonetheless still quite large,” it said and added resolving them will require disciplined efforts over an extended timeframe.

“This challenge is all the greater because of the difficult international economic environment, which has restricted the country’s ability to tap international capital markets and carries risks for other external receipts (exports, remittances, FDI, etc.),” it said.

The real Gross Domestic Product growth is likely to be significantly lower than the annual target and inflation will breach its target with a wide margin. On a positive note, however, both fiscal and current account deficits are estimated to improve in FY09, it added. Global recession and risk averse behaviour of investor would likely to severely impact international trade and level of foreign exchange inflows in the economy.

“SBP estimates for both imports and exports have been revised downwards, with a more pronounced effect on imports,” it said and added at the same time, in the event of shortfall of external financing, the burden of financing fiscal deficit will disproportionately fall on the domestic commercial banks, since government has committed not to borrow incrementally from the central bank.

In addition, foreign direct investment inflows may be substantially lower than in recent years, in which case, pressures on foreign exchange reserves could remain strong.

“Both possible developments indicate continuing risk on interest rates and exchange rate, and thus the need for continued vigilance by policymakers,” the report said Agricultural growth in the current fiscal year could be significantly better than in FY08, notwithstanding a sharp fall in sugarcane harvest.

“This expectation is based on a record rice harvest of 6.5 million tonnes, a small improvement in cotton production during Kharif FY09, supported by the possibility of a record wheat harvest,” it said and added initial information also raises the possibility of a very good showing by minor crops and reasonable growth in the livestock sub-sectors. However, large scale manufacturing (LSM) continued to decline, as it registered a negative growth of 6.2 percent in Q1-FY09 as against a reasonable growth of 7.3 percent in Q1-FY08. This decline in LSM production is broad-based, as seven sub-sectors (having 72.4 percent weight) out of fifteen registered a decline, while three (having 15.3 percent weight) registered a growth of less than one percent, it said.

“This disappointing outcome is a result of a number of factors including severe energy shortages, deterioration in domestic law & order situation, impact of pass through of international oil prices, sharp depreciation in rupee parity and most importantly, weak external demand on the back of global recession and slowdown in domestic demand,” it pointed out. Inflationary pressures remained strong in the economy during the first five months of FY09. In particular, consumer price index (CPI) and the sensitive price indicator (SPI) have seen strong YoY increases in the period.

However, after recording strong growth (YoY) during the first two months of FY09, a significant decline in wholesale price index inflation has been observed during the later months, it said.

The State Bank undertook aggressive monetary tightening during FY09, further increasing the policy rate by 300 bps in two rounds. On a cumulative basis, this means a 550 bps increase during the last 18 months.

It said in terms of monetary aggregates, the YoY growth in M2 decelerated steeply to 10.7 percent by end-November 2008, the lowest growth seen during the last seven years.

Indeed, an extraordinarily strong contraction in net foreign assets (NFA) of the banking system more than offset a sharp rise in budgetary borrowings from the central bank and continued strong demand for credit both from public sector enterprise and private sector, it added.

During July-November period of FY09, strong growth in imports, mainly due to higher import prices, outpaced the otherwise substantial improvement in export growth causing the trade deficit for the period to widen by $1.4 billion compared to the same period last year.

However, the combined impact of lower commodity prices and easing of domestic demand pressure are likely to reduce the trade deficit going forward, the report concluded.

 

[Pk_Thunder]

Iran agrees to provide oil on deferred payment​

Updated at: 2030 PST, Tuesday, December 30, 2008
ISLAMABAD: Iran has agreed to provide oil to Pakistan on deferred payment. Iranian Minister for Energy Parviz Fattah called on President Asif Ali Zardari here on Tuesday and discussed with him matters pertaining to the region and bilateral ties. He was accompanied by Dy. Minister for Energy Abbas Aliabadi and Iranian Ambassador to Pakistan.

Minister for Water and Power, Raja Pervaiz Ashraf and senior officials of the relevant ministries were also present during the call.

The Iranian Energy Minister said that Iran was keen to go ahead with projects of providing 1000 MW for Gwadar and adjoining areas for which MoU had already been signed. He said that Iran would provide oil to Pakistan on deferred payment. The President appreciated the Iranian assistance in this regard.

Parviz Fattah said that Iran and Pakistan had close bilateral ties and were tied by the bonds of history, culture and geography. He said Iran was ready to play its role in defusing tension in the region.

He also renewed the invitation by Iranian President Mahmood Ahmedinijad to President Asif Ali Zardari to visit Iran.

 

[Pk_Thunder]

Iran to build 1000 MW power plant near Pakistan border​

Updated at: 2320 PST, Tuesday, December 30, 2008
ISLAMABAD: Minister for Water and Power Raja Pervez Ashraf on Tuesday said that Iran will build a dedicated gas based power plant of 1000 MW capacity near Pakistan border to export electricity to Pakistan.

Talking to journalists here, the minister said the plant to be built by Iranian private sector near Zahidan can be made available for export of power to Pakistan in addition to the earlier agreed 1000 MW project.

He said an Iranian company would complete transmission line of 50 km in Iran side and 70 km in Pakistan side. He said that both sides agreed for early completion of transmission line.

Pervez Ashraf said both sides held a serious of meetings and showed keen desire for strengthening the bilateral cooperation between the two countries in the power sector.

He said during visit of Iranian delegation headed by Engr. Parviz Fatah, Minister of Energy, Iran the status of existing projects in power sector was reviewed and it was agreed to expedite and speed up the implementation and to remove the impediments if any.

He said both sides agreed that while carrying out the feasibility study for the transmission line of 1000 MW, a provision for transmission of an additional 1000 MW would also be kept in view.

It was also agreed to execute an implementation plan and fix the time lines for completion of the projects and a mechanism will be established for monitoring and for taking remedial measures in this regard.

Similarly, in addition to the existing technical working committee, a high level monitoring committee at ministerial level will be established. These committees will hold regular meetings at least once in two months or more often as required. The implementation plan was also prepared and agreed jointly.

Pakistan also pointed out projects for investment included coal power projects with a total capacity of about 6000 MW by 2015 requiring an investment of $7 billion, projects of alternate energy for generation of about 1000 MW by 2015 and rehabilitation and reinforcement of T&D system and system for dispersal of power of new generating plants requiring an investment of about $4.7 billion.

The Iranian side showed keen interest in all projects and assured Pakistan side to look into the prospects of investment in the projects by the Iranian companies both in public and private sector.

 

[Neo]

Export proceeds: SBP relaxes rules for repatriation​

KARACHI (December 31 2008): The State Bank of Pakistan on Tuesday announced one-time waiver for those exporters, who have failed to repatriate their export proceeds in 90 days, and instructed banks to give them Export Refinance Facility. The central bank has received complaints from various exporters' associations that banks are not allowing export refinance facilities under the scheme to exporters due to non-realisation of export proceeds keeping in view the SBP's instructions.

Therefore, the central bank has announced some relaxation to redress the exporters' problems with a view to make them eligible for financing under the EFS. However, the SBP has made it clear that one-time waiver for 90 days shall be allowed for the purpose of availing financing under EFS to all exporters whose export proceeds are overdue till date of issuance of this Circular letter (December 30, 2008).

After expiry of 90 days period, export refinance facility under the scheme will not be allowed to those exporters who failed to arrange repatriation of export overdue bills, the SBP said. However, the facility will be restored, automatically by banks, if otherwise in order, as and when exporter subsequently realises export overdue bills.

In addition banks may allow financing facility under EFS to exporters who could not arrange repatriation of export overdue bills due to bankruptcy/liquidation and litigation involving foreign buyer, provided that the respective bank confirms having received all the supporting documents and is satisfied with the same.

Where possible the financing bank may like to seek feedback from its correspondent banks in the country of importers, especially in cases where both volume of export is overdue and the financing request are for large amounts. While, allowing the facilities in such cases the financing bank will be under obligation to record the reasons for continuation of the EFS facilities to the exporter concerned, SBP said.

The information relied upon by the bank for continuation of the export finance facilities shall be verified/examined by the verification teams of the SBP BSC as also our Banking Inspection Department as usual.

The SBP said that the exemption of 90 days will not be available in case the exporter has subsequently shipped additional consignment to the same importer or its associated company, or where the payment in respect of shipments has been stuck up on account of discrepant documents, or failure of the exporter to ship goods in accordance with the requirements of the importer, provided shipments so made and discrepant documents so sent have been accepted by the importer abroad. The central bank has instructed banks to provide information of all such cases to the Finance Department.

Further in case the SBP or SBP BSC concludes that the facility of 90 days exemption or the financing facilities under EFS were provided without complying to above parameters or in contravention to instructions issued under the Export Finance Scheme, a fine @ paisa 37 per day per Rs 1000 or part thereof will be imposed on the finances availed under EFS.

The SBP BSC would recover these fines from the account of the bank maintained with them. However, in case the information relied upon by the bank in allowing facilities under the scheme were incorrectly provided by the exporter the bank will have right to recover fine so imposed by the SBP or SBP BSC (Bank) from the exporter concerned.

"It may be clarified that the method and payment of export proceeds has been defined in Para 6 of Chapter XII of F.E. Manual, 2002, which also provides a reasonable room for relaxation in period of realisation of export proceeds", SBP said.

Accordingly, where the terms of sale provide for payment earlier than six months, Authorised Dealers may allow extension in the realisation period if they are satisfied with the explanation given for delay in realisation, provided such extension does not extend the period beyond six months from the date of shipment. In addition, in order to facilitate exporters, Exchange Policy Department of SBP also considers such requests for extension on case to case basis in case of valid reasons for delay in repatriation of export proceeds.

 

[Neo]

Industrial production down 5.05 percent in four months​

ISLAMABAD (December 31 2008): The industrial production has declined by 5.05 percent in the first four months of current fiscal year over the same period of last year on the back of high input cost of energy crisis. Official figures released by the Federal Bureau of Statistics (FBS) on Tuesday show that production in all the three major sectors contributing to the Large Scale Manufacturing (LSM) declined.

The Oil Companies Advisory Committee (OCAC) reported a negative growth of 5.95 in petroleum products, the Ministry of Industries 5.42 percent and Provincial Bureau of Statistics accounted 4.31 percent decline in production.

Many sub-sectors of LSM did not perform well and the industrial output was in negative zone for last few years that indicates that the government may not be able to achieve 6.1 percent growth target set for 2008-09. The cost of production as well as energy crisis have affected the industrial sector most as all the major sub-sectors reported decline in output.

The FBS figures show that production of cotton yarn declined by 0.42 percent and cotton cloth by 0.67 percent during the period under review. The production of petroleum products except high speed diesel has declined.

In the petroleum sector, the production of jet fuel oil dipped by 13.13 percent, kerosene oil 7.07 percent, motor spirit 6.44 percent, diesel oil n.o.s. 25 percent, furnace oil 7.39 percent, lubricating oil 2.28 percent, jute batching oil 9.15 percent, salvant naptha 6.98 percent, LPG 20.33 percent, and petroleum products n.o.s. 14.43 percent.

In the electrical sector, production of deep freezers declined by 27.15 pc, air-conditioners 14.62 pc, electric tubes 16.55 pc, electric motors 29.11 pc, electric meters 14.50 pc, switchgears 17.57 pc, T.V sets 17.53 pc, and bicycles 10.92 pc during July-October 2008-09.

In steel sector, the production of pig iron declined by 12.31 percent, billet and ingots 44.31 percent and H/CR sheet/strips/coils/plates, etc declined by 25.80 percent. The production of buses in auto sector declined by 41/53 percent, jeeps and cars 42.49 pc and motorcycles 9.24 pc.

The industrial growth was dismal from past couple of years. The growth that stood at 19.9 percent in 2004-05, dropped to 5.4 percent in 2007-08 because of high cost of doing business and energy crisis that led to closure of a large number of units.

 

[Neo]

Inter-corporate debt rises to over Rs 300 billion​

ISLAMABAD (December 31 2008): The inter-corporate circular debt has risen to over Rs 300 billion in November against Rs 175 billion in June, State Bank quarterly report based on data available till end December 2008 revealed. This, argue experts in the Ministry of Finance on condition of anonymity, will severely compromise the government's ability to formulate a plan that envisages elimination of the debt by the end of 2009.

The Letter of Intent submitted to the International Monetary Fund, agrees to formulate a plan with a timeframe by March 2009 to eliminate inter-corporate circular debt. Inter-corporate debt has risen by over 71 percent in spite of the decline in the international price of oil. The circular debt is a three-edged phenomenon that has led to severe energy shortages even during the winter months when demand is considerably lower.

The SBP said that the issue of inter-corporate debt, which emerged in financial year 2008, became large and more complex during the initial months of the current fiscal because the information collected from selected corporate entities showed that it sharply increased during the first five months of current fiscal and rose to over Rs 300 billion.

The issue of inter-corporate debt, according to the SBP rose mainly as the government was providing subsidy on fuel prices to domestic consumers and power utilities faced losses. The oil prices have come down sharply during the last few months while subsidy on electricity is restricted to the life line consumers. The resolution of inter-corporate debt is critical otherwise the energy crisis will remain.

The delays in the settlement of oil price differential claims by the government and the utilities forced a few OMCs to borrow from banking system against the government guarantee in 2008. During the initial months of FY09, circular debt situation worsened despite the fact the government has phased out subsidy on fuel prices.

 

[Neo]

US cooperation in Pakistan Industrial development discussed​

ISLAMABAD (December 31 2008): US ambassador to Pakistan Anne W Patterson has said that support of Friends of Pakistan was in the offing and some European friends were also interested to invest in Pakistan. She stated this while talking to Minister for Industries and Production, Mian Manzoor Ahmad Wattoo during a meeting here on Tuesday.

They discussed US co-operation in the industrial development of Pakistan. Wattoo hoped that under the newly elected administration of Obama US would adopt policies, which will promote global peace and co-operation. He reiterated the devastating impact of war against terrorism on the Pakistan's economy and its socio-political consequences on the country.

He informed the ambassador that Pakistan produces world class textile, leather, gemstone and marble but our products have limited access to the US market. The ambassador agreed to this assertion and said that she will take up this matter with the new government in the US once it was in the office.

On the issue of establishment of Reconstruction Opportunity Zone (ROZ) the minister said that the issue had been delayed for quite some time. He requested for extending this facility to all the Export Processing Zones (EPZs) and National Industrial Parks (NIPs) along with Risalpur, established by Industries Ministry.

He further said that US Government should cooperate in development initiatives in Fata region by developing skill to divert the local youth towards productive life. Patterson showed keenness in the energy sector and informed that a workshop on this issue was already scheduled in the second week of January at Karachi. She assured that all the industry related issues would be taken up with the new government in USA.

Wattoo suggested the Ambassador to ease visa processing for the Pakistani businessmen and there should be a fast mode visa processing for them. The Ambassador responded that due to recent security issues visa processing for young Pakistani males takes more time and they were considering opening business visa window at Karachi consulate.-PR

 

[Neo]

FJA chief calls for developing Punjab as manufacturing hub​

LAHORE (December 31 2008): The Punjab province could be developed as manufacturing hub of the country wherein large industrial complexes could be built with export potential to India, Middle East, Iran and landlocked Central Asian States. The Chinese Media Chief and President Foreign Journalists Association (FJA) in Islamabad Professor Zhou Rong said this while talking to the LCCI President Mian Muzaffar Ali, here on Tuesday.

Professor Zhou Rong stressed the need for highlighting the province of Punjab as a safer place for joint ventures with foreign investors and developing Punjab as manufacturing hub. The LCCI former president Shahid Hassan Sheikh, former vice-president Aftab Ahmad Vohra and LCCI Executive Committee Member Siddiq-ur Rehman Rana were also present on the occasion.

Zhou Rong maintained that globalisation had provided Chinese investors an opportunity to relocate their large scale industry to Pakistan to reap the benefits of its most conducive business policies as compared to other regional countries. He asked the Pakistani businessmen to convince their Chinese counterparts to make investment in Pakistan for being a resource-rich country.

Highlighting the Chinese economic condition, he said China with GDP of two trillion dollars, Foreign Direct Investment of 52.4 billion dollars and Overseas Investment of 25.7 billion dollars could help Pakistan get an economic boost. He added that China could extend a lot of co-operation to Pakistan's agriculture sector that was not up-to-the-mark on account of multiple reasons.

The LCCI President Mian Muzaffar Ali said on the occasion that free trade agreement (FTA) between China and Pakistan would help increase the level of bilateral trade to 15 billion dollars in next five years. He said the balance of trade between two countries is heavily in favour of China, which requires to be turned into a win-win situation for both the countries.

Major imports of Pakistan from China include iron, steel products, tyres, tubes, chemical, medical, pharma products, fertilisers, yarn and thread of synthetic fibre, railway locomotives, spare parts hand tools and hardware products etc, he added.

He said that specific areas for investment/joint ventures could be coal mining, power generation, machinery, chemicals, building materials especially cement production, textiles, synthetic fabrics, electronics, leather, paper and paper products and foodstuffs. The possibilities of joint ventures for Halal meat production and export to Muslim countries would be one of the most promising propositions for the Chinese investors, he opined.

The LCCI chief said that the government has evolved a special incentive package for the Chinese companies under Special Economic Zone, which offers exemption of custom duties (on import of machinery/equipment) income tax and sales tax to attract foreign investment from China. Siddiq-ur-Rehman Rana suggested developing integration with Chinese economy to benefit from Chinese market potential and experiences for capacity building of Pakistan economy.

 

[Neo]

'Agricultural growth may be better than previous year'​

MULTAN (December 31 2008): Ministry of food and agriculture and Livestock has estimated that a record 6.5 million tonnes rice production and a little improvement in cotton production suggested that agricultural growth in the current fiscal year would be better than previous year. In the preceding season, the sugarcane growers were disappointed by lower prices and delayed crushing season as well as payments.

"As a result, for FY09 cropping season the growers switched from sugarcane to other crops". The sugarcane production fell in FY09 that is likely to put pressure on trade deficit and inflation in the shape of sugar import. Consequently, the area under sugarcane cultivation fell by 16 per cent showing decline in its harvest during FY09. Lower sugarcane production would result in import of sugar as well as higher sugar prices.

"Effective government intervention is required to resolve basic issues of price setting, commencement of crushing season and early settlement of payments," suggested the State Bank. A Minfal report said that the growth is supported by the possibility of a record wheat harvest against the production target of 25 million tonnes. By mid-November 2008, the wheat plantation registered a 9.3 per cent rise over the same period of last year.

"Initial information also raises the possibility of a very good showing by minor crops and reasonable growth in the livestock sub-sectors," said the report. Out of total 6.5 million tonnes of rice production, approximately 4 million tonnes will be available for exports.

Cotton harvest, which declined during the last three years, rose by 3.5 per cent to 12.1 million bales during FY09. It is still lower than the target of 14.1 million bales. The Ministry noted that the area as well as yield of cotton has declined from a peak of 760 kg per hectare in FY05 to an average of 700 kg per hectare between FY06-FY09.

"Appropriate policy and effective implementation are needed to support the cultivation of this important crop in the country," said the report. The fertilisers off-take decreased during July-November FY09 due to higher prices. The urea off-take decreased by 16.1 percent YoY basis during this period and DAP by 11.7 percent during July-November FY09.

The lower off-take reflected cautious purchases by the farmers in anticipation of a reduction in price following the collapse of international DAP prices. The price in the international market declined but the benefit was not passed on to the farmer. "Some benefits of falling international prices need to be passed on to farmers as well," suggested the experts.

The agricultural credit target for FY09 set at Rs 250 billion compared with Rs 211.6 billion actual disbursements during FY08 was up by 18.1 percent. During July-October FY09, agri-credit disbursements increased by 16.2 percent. The break-up between the farm and non-farm borrowing showed increase in the share of non-farm sector, which rose to 34.3pc in July-October FY09 from 27.9pc in July-October FY08.

 

[Neo]

Cattle dung can run 38MW power plant ​

Karachi has 0.5m cattle heads producing 5,000 tonnes manure daily that can be used to produce biogas to run power plants, vehicles, steam boilers

Wednesday, December 31, 2008
By Fasahat Mohiuddin

KARACHI: The mega-polis of Karachi is facing its worst power crisis that could be partially allayed with the help of buffalo dung.

Dung from 200,000 buffaloes housed in the Landhi Cattle Colony can power a 38MW electricity generation plant running on biogas.

Amanullah Khan an alternate energy expert and consultant for ATCO a firm based in Texas USA in his feasibility study of a biogas plant in Landhi Cattle Colony says that a 38MW power plant can be installed by using dung from cattle pens of Landhi.

The plant would be capable of supplying power to 50,000 houses and run on waste material that would be converted into energy making the area a pollution free environment.

This biogas plant will be able to supply natural gas to ten filling stations at half the price. These stations will generate their own CNG independent of utility services. Carbon credit available through the United Nations Organisation will cut cost to half.

Another advantage of this plant is that presently when the 200,000 cattle are washed all the water mixed with dung goes in to the sea polluting the coastline and destroying the seafood of Pakistan.

Amanullah Khan says the biogas plant would collect this dung contaminated water recycle it to recover gas and send back clean water to the cattle colony.

Clean water is an expensive commodity in the cattle colony and at present CDGK is supplying water to Landhi Cattle Colony on subsidized rate so that cost of the milk does not go high.

Amanullah Khan had given a presentation to the City Nazim Syed Mustafa Kamal and asked only for the land to set up plant and the buffalo dung for the American firm. Kamal gave him the green signal. It seems that the red tape blocked this vital project.

The city needs alternative energy sources such as biogas, wind power and solar energy to substitute natural gas.

Of the above sources mentioned the most appropriate one, which can be easily substituted in place of natural gas is biogas. This source can be generated from a variety of biomass material easily available around us.

Primary among the sources of biogas is buffalo dung, municipal solid waste and sewage sludge. The process of biogas conversion is simple and yields a gaseous product having 55-60 per cent methane and the balance is carbon dioxide.

The heating value of biogas is approximately 600-800 Btu/ft3. Biogas of this quality can be used to generate electricity; it may be used as fuel for a steam boiler, space heater, or refrigeration equipment; it can also be directly combusted as a cooking and lighting fuel. It can be used in vehicles using CNG as fuel. Biogas can be produced in every city and village of the country.

Electricity from Biogas can be generated for on-farm use or for sale to the local electric power grid. The most common technology for generating electricity is an internal combustion engine with a generator.

Landhi Cattle Colony houses around 200,000 cattle heads the total cattle population of Karachi is more than 500,000 heads producing 5,000 tonnes of dung daily.

This buffalo manure emits into atmosphere large quantities of methane, carbon dioxide and hydrogen sulphide, which pollute the surrounding air and the Atmosphere in the vicinity of Cattle Colony has exceeded the pollutants levels laid down by NEQS (National Environmental Quality Standards).

Urgent Action is needed to attend to this matter because Pakistan being one of the Earliest Signatories to the Kyoto Protocol, under which it is necessary to decrease the quantum of Green House Gases generated in our Country to the levels laid down by Kyoto Protocol.

How Biogas is made: Bio Gas is produced by anaerobic (in absence of oxygen) decomposition of Organic Matter (cattle dung). Decomposition of cattle dung is carried out by bacteria in two phases. In first phase the bacteria decompose the Organic matter i.e. proteins and fats to form acidic compounds thereafter in the second phase Methane-forming bacteria further decompose these acidic compounds to produce Methane (CH4), Carbon Dioxide (CO2) Water Vapors (H2O), Ammonia (NH3) and Hydrogen Sulfide (H2S) the last three components in trace quantities.

The smell and odour, which we feel in animal dung is due to the emissions of ammonia and hydrogen sulphide gases while all other components of biogas i.e. methane and carbon dioxide are absolutely odourless and tasteless.

Methane produced from cattle dung can be recovered in a biogas plant and used for power generation. This not only helps to meet the power shortage but also reduces the Green House Gas emissions.

 

[Neo]

Sugar crisis looms as ECC defers import of raw sugar​

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Tuesday deferred the proposal to allow duty free import of 0.4 million tonnes raw sugar, official sources told Daily Times on Tuesday.

ECC, which met under the chairmanship of Adviser to PM on Finance and Economic Affairs, Shaukat Tarin here at the Prime Minister's Secretariat reviewed Key Economic Indicators and overall pricing situation in the country.

ECC was informed that the sugar cane production in the country is expected to fell short by 6 million tonnes resulting in 0.7 to 0.8 million tonnes lesser sugar production than required. Keeping in view these figures, a proposal was considered in the ECC meeting to allow duty free import of 0.7 million tonnes and 0.4 million tonnes be imported in first phase so that sugar mills are able to produce required quantity within the country. However, due to the strong opposition by some federal ministers, especially from the sugar cane growing areas. The ministers argued if sugar is imported than it would have negative effects on the demand of sugar cane. The ECC had to defer the proposal till the estimation of sugar production from locally produced sugar cane is finalised, the official sources informed.

"Time is running out and if the ECC fails to react quickly, it can result in shortage of sugar and a possibility of sugar crisis from March onwards," said the sources.

ECC directed Ministry of Industries and Production to review sugar's national and international harvest and recommend an action plan regarding import of raw/refined sugar taking into consideration domestic farmers' interests.

ECC reviewed TCP's rice procurement and capacity besides considering export policy in view of bumper rice crop.

While considering Ministry of Petroleum's recommendations for seeking ECC approval of the guidelines to monitor furnace oil pricing by OGRA, it directed Ministry of Petroleum and OGRA to jointly deliberate on the subject and resubmit fresh recommendations whether furnace oil should be regulated by OGRA. The proposal considered in the meeting also sought to shift the burden of inland freight margin of furnace oil directly to its consumers. It also seeks to increase petroleum dealers margin to some extent to encourage them to sell petrol to the consumers.

The ECC noted that inflationary pressures were registering gradual deceleration owing to sharp decline in commodity pricing in international market particularly POL and Palm Oil. ECC observed that the benefit of decrease in price of petroleum products was not evident in the commensurate decrease of local commodity pricing, and directed that steps be taken to provide relief to the common man.

ECC, however, expressed satisfaction that key prices of essential commodities were registering a decline. ECC deferred Ministry of Industries and Production's proposal for issuing Revised Letter of Intent (LOI) to M/s Trans Polymer Limited for setting up Polyethylene Plant in Karachi till next meeting. It, however, directed Ministry of Industries and Production to complete its technical homework.

ECC directed MINFAL to use Gwadar port for enhanced transportation of wheat from ports to upcountry. ECC further directed MINFAL to ensure adequate wheat supply to deficit provinces and also keep a watch on stabilising nationwide wheat prices for the benefit of common man.

ECC decided to disband an earlier specially constituted committee under the chair of Finance Minister, represented by four Provincial Chief Ministers in consideration of its decision making mandate having been transferred to Daily Economic Monitoring Committee (DEMC). It was decided that in future DEMC should act as an extension of ECC.

 

[Neo]

‘European friends keen to invest in Pakistan’​

ISLAMABAD: The support from friends of Pakistan is in the offing but some European friends are interested to invest in Pakistan.

US Ambassador to Pakistan Anne W Patterson expressed these views during a meeting with Federal Minister for Industry and Production Mian Manzoor Ahmed Wattoo in his office to discuss the US co-operation in the industrial development of Pakistan. During the meeting the ambassador also assured that all Pakistan’s industry related issues would be taken up with the new government in the USA. The US might also like to assist Pakistan in the newly emerging sectors such as furniture, sports goods, agriculture implements and leather goods, she maintained.

She also showed keen interest in the energy sector and informed that a workshop on this issue was already scheduled in the second week of January at Karachi. Wattoo suggested the ambassador to ease visa processing for the Pakistani businessmen and there should be a fast mode visa processing for them. The ambassador responded that due to recent security issues visa processing for young Pakistani males takes more time and they were considering to open business visa window at Karachi consulate. Welcoming the visiting ambassador Wattoo hoped that under the newly elected administration of Barak Obama US would adopt policies, which would promote global peace and co-operation. He informed the ambassador about the devastating impact of war against terrorism on Pakistan’s economy and its socio-political consequences on the country. He assured the US ambassador that the elected leadership of the country was fully committed and dedicated to its war against terrorism. Wattoo told the ambassador that Pakistan produces world-class textile, leather, gemstone and marble but Pakistani products had limited access to the US market. The ambassador agreed to this assertion and said that she would take up this matter with the new government in the US once it was in the office.

On the issue of establishment of Reconstruction Opportunity Zone (ROZ) in Pakistan the minister said that the issue had been delayed for quite some time. He requested for extending this facility to all the Export Processing Zones (EPZs) and National Industrial Parks (NIPs) along with Risalpur, established by this ministry. The minister further said that the US government should co-operate in development initiatives in Federally Administered Tribal Areas (FATA) region by developing skill and entrepreneur initiatives to divert the local youth towards productive life.

 

[Neo]

Financial Stability Review: Pakistan’s banking sector remarkably resilient despite challenging environment​

KARACHI: Pakistan’s banking sector has remained remarkably strong and resilient, despite facing pressures emanating from weakening macroeconomic environment since late 2007, according to the assessment of the State Bank of Pakistan Financial Stability Review 2007-08 released Tuesday.

The report said that given its bank-centric nature, the stability of the financial system is derived essentially from the banking system. An assessment of the performance of the banking sector from January 2007 to June 2008 shows that Pakistan’s banking system has over the years nurtured itself such that it is able to withstand some of the shocks it has faced in the last 18 months or so.

“The banking system is on strong footing and has long term potential – a feature which has served to attract a substantial amount of FDI in the sector,” it said. The sector has been efficiently managed in private hands under professional management and has witnessed outstanding financial performance during the last few years.

The report states that with strong regulatory oversight, there has been a significant enhancement of capital and risk-weighted capital adequacy, supported by high provisioning requirements, which were tightened in 2007. Stringent loan provisioning requirement has built sufficient reserves against the NPLs’ portfolio. In contrast to the liberalised financial system in the west, which took its toll in the form of the current global financial crisis, there are stringent regulations and adequate policies in place to help the banking system manage its risks.

It pointed out that aggregate financial soundness indicators have improved since early 2000, and continue to exhibit strong performance. “Tighter provisioning requirements may have reduced profits, but have positioned banks well,” it said and added ongoing consolidation and mergers have enabled a number of banks to position themselves better.

“Having observed the experiences of the global economy, the way forward for the financial sector is to maintain both the simplicity and transparency of product structures and a gradual pace of financial liberalisation to enable the financial sector in expanding further in a more sound, healthy and efficient manner,” the Report said, and added that effective regulation is the preferred route for central banks responsible for safeguarding both monetary and financial stability.

Capital adequacy of the banking system is strong, 12.1 percent at end-June 2008, well above the internationally acceptable minimum requirement of 8.0 percent, it said and added core capital constitutes about 80.0 percent of the total capital, and Tier 1 to risk weighted assets ratio of the banking system is at 9.7 percent.

“This strong capital base is accompanied by adequate reserves on the back of stringent provisioning requirements against classified assets – the net NPLs to net loans ratio is reasonably well-contained i.e. at 1.3 percent in June 2008, comparable to international best standards,” the Report pointed out. Profitability of the banking system continues to be impressive, largely emanating from the persistent growth in high-yield earning assets and expanded business volumes. Before-tax Return On Assets of the banking system remains strong at 2.3 percent in June 2008. The strengths built up over the years are now coming in handy in managing the recent financial strains.

 

[Neo]

‘IT industry can benefit from across the globe’​

* Task Force on ICT chairman says Pakistan’s IT industry possesses potential​

LAHORE: Chairman Task Force on Information and Communication Technologies (ICT) Salim Ghauri said that the Pakistan’s IT industry possesses the potential of benefiting from the unavoidable challenges to be faced by neighbouring countries in 2009.

In a statement on IT business situation in 2009, he said the IT companies in neighbouring countries have grown out of proportion and the sustainability in growth is becoming a Herculean task there with every passing day. They have no option but to cut current expenditures heavily that would affect their business ventures, he added. He said, in an emergency situation in 2009, the Western IT managers would be looking for new vendors and new places to outsource their projects, as the new vendors are always keen to provide better services at much lower cost with quality assurance. We had witnessed this trend back in the 2001 IT industry crash and we should be ready for it in 2009, he added.

He said it is important for the Pakistan IT industry to move quickly in early 2009 and get its share of business from across the globe.

“We have always been complaining about Pakistan’s image abroad while terming it a major hurdle in getting business from the outside world but the time has come to put such approach aside, as this is a reality which will continue to stay with us for near future,” he said. “We will have to face the reality and dig opportunities out of the adverse circumstances to sustain the recession hit economies of the world.”

According to him, the year 2009 will also demand a change in attitude from the IT professionals from carefree and ‘take it easy, man’ style to a more professional approach. Now only the fittest will survive, he warned and added in the same breath that there will be room for people to join IT industry but this year will require longer hours and more hard work from the professionals to sustain and survive.

“The financial packages will in fact decrease rather than increase. Little increments in salaries will be offered, which have been inflating in previous years, as the IT industry will either have to cut the workforce or offer decreased packages,” he said, and added that the IT professionals should settle for smaller packages than losing a job.

 

[ejaz007]

Iran ready for gas deal with Pakistan, without India
Updated at: 0400 PST, Wednesday, December 31, 2008

TEHRAN: Iran will sign a deal with Pakistan to sell gas to the neighbouring country, even if India, a third party to the deal, walked out, a news agency reported Iran's oil minister as saying on Monday.

India stayed away from talks in Tehran on a proposed $7 billion pipeline in September, saying it wanted to agree transit costs through Pakistan on a bilateral basis first.

Iran Oil Minister Gholamhossein Nozari said a delegation from Pakistan had arrived in Tehran for two days.

"Iran will sign a deal with Pakistan, if India does not take part in the project," agency quoted Nozari as saying.

In July, Iran said India and Pakistan had accepted Iran's demand for gas price reviews based on market changes, denying reports by some Indian newspapers that the pipeline talks had failed after Iran demanded a review every three years.

The pipeline would initially carry 60 million cubic metres of gas daily to Pakistan and India, half for each country. The pipeline's capacity would later rise to 150 million cu metres.

Iran said it has completed 18 percent of the work for the pipeline to bring gas from its South Pars field to the Iran-Pakistan border.

Pakistan has yet to begin work on a 1,000 km (625 mile) stretch of the pipeline to link Iran with India.

Iran has the world's second-largest gas reserves after Russia. But sanctions, politics and construction delays have slowed its gas development, and analysts say Iran is unlikely to become a major exporter for a decade.

Iran ready for gas deal with Pakistan, without India