Pakistan Economy - News & Updates - Archive

[Neo]

KARACHI (July 13 2006): The World Bank (WB) has asked the federal government to update the "National Ports Master Plan" to re-evaluate the role of existing ports in the country. Pakistan should develop a carefully managed strategy for increased competitiveness and enhance global integration aimed at accelerating industrialisation and growth.

According to documents made available to Business Recorder, the WB further said, the cost and service level provided by the internal and external transport systems is just one element of a country's competitiveness.

As tariff levels fall, the economic distance to market (defined as the sum of all time and cost expenditure for moving a consignment to a market, including freight rates, handling cost, transit time, delivery predictability, loss and damage, insurance costs, etc) plays a more critical role in determining competitiveness. While freight rates are still important in the final price of the product, the other elements of generalised costs, such as predictability and reliability, become increasingly important in the composition of total distribution cost.

Improving port infrastructure to international standards, both cargo handling capacities and port draft to accommodate larger size vessels.

An efficient, low-cost trade and transport system, offering high levels of reliability and service standard. This will not guarantee export success and the attraction of large-scale inward direct investment. But the obvious is likely to ensure that participation in modern high value, time-sensitive manufacturing will either be deterred entirely or confined.

 

[Neo]

ISLAMABAD (July 13 2006): The government is likely to announce Sunday as working day at the ports, rationalisation of port charges, procurement of new cargo handling system, testing/certifcation of commodities through latest equipment, and linkage of terminal operators/airports with Pakistan Automated Customs Clearance System (PACCS) for efficient clearance of consignments.

Sources said that the decisions have been taken in the last meeting of the Trade Facilitation Committee (TFC) constituted under the National Trade Corridor Improvement Programme.

The Ministry of Food and Agriculture will upgrade its laboratories for fast track testing and reporting of the international cargo at the ports. Three departments of the ministry ie animal quarantine, plant protection and seed certification are involved in issuance of certificates at ports.

Sources said that the Civil Aviation Authority (CAA) would purchase latest scanning machines and cargo handling system to expedite clearance process and strengthening security at airports.

It has been decided that the Ministry of Port and Shipping would approach port officials, trade/chambers, shipping lines/agents, terminal operators and freight forwarders to collect data on their present fee structure for rationalising the clearance charges.

On the recommendations of the CBR, the Ministry of Port and Shipping will explore the possibility of making Sunday a working day at ports in consultation with all stakeholders.

Sources said that clearance time under PACCS is already below 5 hours and soon the system would be rolled out to other ports. In this connection, all port officials, terminal operators will ensure compatibility of the IT network with the PACCS. For transfer of information among these organisations, the EDI (electronic data interface) would be developed in consonance with PACCS system.

The Ministry of Ports and Shipping said that ports free storage period has been reduced to 5 days and these arrangement were implemented from July 1, 2006. The port's wet charges (tonnage, pilotage) have been reduced by 15 percent, effective from July 1, by both Karachi Port Trust (KPT) and Port Qasim Authority (PQA).

The CBR Chairman was of the view that there was need to understand exactly what is charged by whom and for which actions/services. Once this information is available then the possibility of rationalisation of charges could be discussed reducing the cost of doing business. The reduction of charges should be effectively passed on to importers/exporters in a transparent way.

The CBR Chairman also suggested that IT networks of the ports should be synchronised with PACCS. The CBR will replicate the PACCS to other ports in the coming three months.

 

[Neo]

BEIJING (July 13 2006): President Pervez Musharraf underlined the need for translating the existing Sino-Pak deep-rooted diplomatic bonds of friendship into a strong and vibrant economic partnership.

Pakistan is currently engaged in preparing a comprehensive plan to attract Chinese investment in the country and giving boost to their bilateral trade ties, the President said in an interview published this week by the Shanghai-based World Market Magazine. In its cover-page report, the magazine highlighted the future prospects of Sino-Pak economic co-operation in various sectors.

The President spoke high of reinforcing Sino-Pak commercial interaction, stating, "Our economic and trade relations are not commensurate with the excellent political and strategic partnership".

Referring to a Framework Agreement singed during his visit to Beijing February this year, he said it provided a strong base for enhancing and deepening their economic and trade co-operation. He said Pakistan was actively working on a plan to set up Pak-China industrial and high technology zones in the country for attracting investment and joint ventures from China.

 

[Neo]

KARACHI (July 13 2006): A Pak-Iran investment company would shortly be established with a capital of 25 million dollars. This was informed by Consul General of the Islamic Republic of Iran in Karachi, Syed Musa Hosseini during a meeting with members of Korangi Association of Trade and Industry during his visit to the Association's office here, says Kati statement on Wednesday.

Kati Chairman, Gulzar Firoz on this occasion said Iran had a total area of 1.6 million square kilometers having a population of around 68 million. The per capita GDP of around 7,000 dollars with a GDP growth of 6 percent is remarkable. The total import trade volume was around 40.969 billion dollars and exports 60.102 billion dollars.

Gulzar further said it has been observed that for the last five years or so, Iran had emerged as a strong economy. He said the friendly business ties between the two countries were strengthening with the passage of time. The Kati chief pointed out that there was a long list of goods, which are presently being imported from Iran.

This in particular includes petroleum, oil from bituminous, dry fruits, chemicals, chickpeas, dried shelled and wet blue leather. Major items, which are exported from Pakistan to Iran, include rice, cotton products and leather goods, etc.

Gulzar said the latest statistics of trade between Iran and Pakistan available with Kati show a rapid growth both in exports and imports between the two countries. There is need to improve trade between the two countries and for that both the countries at all levels should work in close harmony, he added.

In order to improve the trade, Gulzar suggested frequent exchanges of business delegations between the two countries, increase in trade fairs and exhibitions.

He said the visa for multiple entries to Iran should also be given to genuine businessmen on the recommendation of Kati so that the members of Kati might travel to Iran with ease.

The Consul General of Islamic Republic of Iran in Karachi emphasised the need to improve trade relations between the two countries. He said efforts by both the sides had been initiated and four agreements were signed in 2005 between Pakistan and Iran to boost bilateral economic relations and it was agreed to set up a mechanism to ensure the trade of two countries to $1 billion.

Musa also stated that he would honour the recommendations of Kati for issuance of visa to businessmen. Commercial Attaché of the Islamic Republic of Iran, Manochehar Razai, also expressed his views on the occasion. In the end a Kati crest was presented to the Consul General of Iran.

 

[Neo]

KARACHI, July 12: The mounting American pressure for filtration of wire transfer of the US dollar is causing blockade in transfer of money to Pakistan, as TTs (telegraphic transfers) take 10 to 15 days to reach the desired destinations or they are returned for detail information, market sources say.

Both banks and exchange companies find it difficult to transfer money for individuals as they think the TT should not take more than 72 hours. They fear that the extraordinary pressure on money transfers could divert the business from the official channel to the illegal mode of transfers -- Hundi system -- which was under strict vigil after the 9/11 incident.

They said around 70 per cent TTs were either blocked or returned with advice to provide further details.For obvious reasons bankers and exchange companies’ operators were not ready to own their comments on the situation but accepted that the Americans had tighten their grip on money transfers, especially from the Middle East on the suspicion of terrorist connections.

Bankers said the return cost the customers $40 to $50 per TT because of lengthy recovery process.

Last week the State Bank asked all exchange companies to close their Nostro accounts with exchange companies abroad by 25th of this month. The SBP said foreign currencies of home remittances or against export of foreign currencies (other than US$) should either be received in exchange companies’ Nostro accounts with the banks abroad or in foreign currency accounts maintained with the banks in Pakistan.

“Some exchange companies were misusing the TT facility and money was transferred with fake identity cards and it was revealed when investigated,” said an owner of an exchange company. He said it was a good step taken by the SBP. But others believe that the decision was taken on American pressure. Exchange companies said their business would decline by 50 per cent after the closure of Nostro accounts and tight monitoring on money transfer.

The American check after the 9/11 has produced positive results for Pakistan as huge remittances started coming through the banking channel. However, the bankers said the recent blockade could hurt the legal system of transferring money. “Banks have opened their own exchange companies and now they would face the same problem as other exchange companies are facing.”

Both inflows and outflows of money are under strict monitoring of the US authorities. A banker said banks and exchange companies would have to face their share of problems in handling remittances from the Middle East because most of the money came from this region and Pakistan was one of the major destinations of those outflows.

“Transfer of money through banks with all details is in favour of Pakistan, as the country will have all track records. Initially people may face problem but in the long run it will be beneficial,” said Salman Jaffrey, chief dealer at Jahangir Siddiqui.

According to a recent report emanating from Dubai, money transfer agencies like Western Union had delayed or blocked thousands of cash deliveries on the suspicion of terrorist connections simply because senders or recipients had names like Mohammed or Ahmed.

“If most common Muslim names — Mohammad and Ahmed — are suspicious then more than half of Pakistanis would avoid sending their money through legal channel and the Hundi system would flourish,” said an exchange company manager.

Pakistan is expected to receive about $4.2 billion as remittances this year and most of them will come from the Middle East. Pakistanis have strong presence in the Middle East and the business with Dubai also increased substantially during the last 10 years. The frequent transfer of small amount among family members living in both the countries is common. Now a quick transfer will not be possible.

“The details being asked for the transfer of money clearly indicate that the transfer should be made through a bank account that keeps complete information about the sender and the purpose of sending money,” said Aamir Aziz, a businessman.

He said opening a foreign currency account in a local bank was very difficult as it also required a guarantee and was time-taking. Even after the opening of foreign currency account, the currency would be kept for at least two weeks in the account then there will be a possibility of transfer.

 

[Owais]

WASHINGTON (July 12 2006): Foreign Minister Khurshid Kasuri on Monday evening said in his meetings with senior US officials, he expressed gratitude of Pakistan in respect of F16s, which has been notified to Congress. "This deal will go through," he said.

"It is quite a big package. It is between 4 and 5 billion dollars, details of which are being worked out." Responding to a newsman's query, Kasuri said the US administration "have been very positive, and they have notified to Congress. Some 36 aircraft are available: 18 new, and with an option to buy another 18 new aircraft; 26 old ones were part of this notification. They have to locate those, and they will have to be upgraded also".

"We are interested in a certain number of aircraft," he said without specifying, and added it covers munitions also valuing 4.3 million dollars. He said midlife upgradation is called for our existing fleet of 34 F16s. He stated that before the October 8 earthquake struck, "we were looking for a much larger package, we reduced the number."

The US is, however, prepared to sale "as many as we want".

The Foreign Minister disclosed that "now, we are working the financing arrangement. This is what we have been discussing today. We need some sort of financing arrangements, which we are discussing.

We are paying, what we need is financing arrangement, and this is what we need to look at and our finance people and the US side would be looking at". It is a government-to-government level discussion, he said. "So, we will work out on a lot of details. We are looking for the best financing arrangement for these aircraft."

"We explained that we had an earthquake and a lot of expenses have gone into that, and we need a more favourable arrangements for payment and we will be discussing the modes of payment," he said, adding "we discussed it with Secretary of State and National Security Advisor".

In the Congress, there is plurality of views, so there could be some objecting voices, may be, but he said that his impression is that it would get through. In his meetings with senior officials, he said, he gathered that they do not expect any hitches, though Congress has different people having their own points of view. "I think, they don't expect any difficulty in getting it through the Congress."

Neo, I already posted this news in F16 Thread.

 

[Neo]

Thursday, July 13, 2006

KARACHI: The ministry of commerce’s decision to restrict the import of used vehicles to boost the local car industry is giving positive results.

Market experts said the government’s decision to restrict the import of used cars has also encouraged authorized dealers and buyers, who indulge in speculation, of new cars.

“Despite rising import of cars and slight increase in the car-financing rate, sales of locally assembled and manufactured cars went up by 22.2 percent to 155,514 units during 2005-06,” Abdul Azeem, a market analyst said.

The government had been encouraging importers of used cars for the last two years by increasing depreciation cost on imported used cars. But this year the ministry of commerce has banned import of above five-year-old cars and has also bound the importer under the baggage and residence schemes to show an earning certificate at the time of clearing the car.

“On-money for locally assembled cars has now started moving up, which had come down during the last 15 months,” H M Shahzad, chairman of the All Pakistan Motor Dealers Association (APMDA), said. In the last 11 days, On-money on most popular Mehran car has gone up to Rs 40,000 from Rs 22,000, Suzuki Alto to Rs 35,000 from Rs 25,000, Cultus Rs 61,000 from Rs 32,000. Similarly Toyota Corolla has gone up to Rs 70,000 from Rs 40,000, the Shahzad said.

Since the commerce ministry has banned the import of more than five-year-old used cars, people who had booked above five-year old cars/vehicles are looking towards the federal government.

“The commerce ministry’s decision is being implemented from July 1 and it is causing confusion and uncertainty among the importers whose consignments were shipped in May and June and have yet not reached Karachi,” the APMDA chairman said.

Shahzad termed the implementation of the government’s decision from July 1 unfair

The PDMA has urged the government to clear the used cars over five years old that were shipped before July 1, he added.

Local industry: According to latest available figures released by the Pakistan Automotive Manufacturers Association (PAMA), car sales were recorded at 155,514 units in 2005-06 compared with the sales of 127,300 units in 2004-05, showing a growth of 22.2 percent.

Car production was also up at 160,642 in 2005-06 compared with 127,300 units in 2004-05, depicting a growth of 27.1 percent.

Toyota Corolla was the market leader in 1300-2000cc cars segment and its sales increased by 32.7 percent from 23,000 units in 2004-05 to 30,527 units in 2004-05. Production increased by 35.2 percent to 31,094 units in 2005-06 against 23,000 in 2004-05.

Honda City (37.7 percent sales growth) is also the momentum driver for the continuing increment in local car sales and production with sales of 16,100 and production of 18,173 units. Pak Suzuki replaced its Baleno model with Suzuki Liana whose sales are also improving on a consistent basis as per the released figures.

Cars with engine capacities of 1300cc and above now constitute 43 percent of total car sales against 42 percent in 2004-05. In contrast, the 800cc category’s slice in the pie shrank from 31 to 28 percent. The share of 1000cc cars improved marginally from 27 to 29 percent.

In the 1300cc and above segment, which recorded a 24 percent growth, market share of Toyota Corolla rose from 43 to 46 percent. The 1000cc category recorded a growth of 33 percent.

Suzuki Alto remained the star with a growth of 46 percent (its own market share in the category improving from 34 to 37 percent). Suzuki Cultus also showed above-industry growth of 37 percent. In this segment, Santro was the only brand whose sales grew by only two percent.

The 800cc segment’s unit sales rose by 10.3 percent. Daihatsu Cuore’s market share in the segment declined from 22 to 18 percent, and that of Suzuki Mehran improved from 78 to 82 percent.

“The auto sales is likely to be robust in 02006-07 as well,” said Mr Azeem. “Even though the leasing rates have started to edge up due to rising interest rates, the demand-supply gap still remains large enough for auto assemblers to post impressive sales performance in the current fiscal.”

 

[Neo]

kARACHI: Pakistan’s first liquefied natural gas (LNG) import terminal is expected to come online in the year 2010, coinciding with the period when the country is projected to feel the impact of its depleting oil and gas reserves.

The fast pace of economic growth in the last few years has also changed the energy consumption pattern with natural gas becoming the single largest source of fuel. However, where its consumption has increased so have the prices, the latest making headlines early this month.

While a transnational gas pipeline is unlikely to be built any time in this decade, the exploration and production companies continue to build pressure on the government for getting the wellhead gas pricing formula updated and linking it directly with expansion in exploration activities.

But even the prospects for the import of LNG are bitterly marred by the cost factor. Sui Southern Gas Company that is facilitating the implementation of the project has short-listed the names of interested companies and is now in the process of further evaluation.

Japan and South Korea have long dominated the LNG market but energy-starved booming economies like Chine and India are poised to become major players in coming years.

European countries, desperate to reduce dependence on Russian gas, are also eyeing LNG imports. In the region, Spain has already emerged as one of the fastest growing LNG importers.

This has made all the more challenging for Pakistan to secure long-term import contracts stretching over a period of 20 years as almost all the LNG importing countries have already entered into longer duration arrangements with the 13 exporting nations.

According to Energy Information Administration (EIA) of US Energy Department, the cost along the LNG supply chain has reduced over the past years and the market has expanded.

However, heavy investment is still needed for building a terminal and associated facilities including re-gasification plant, storage infrastructure, etc.

In the case of Pakistan, the cost has been estimated at $500 million with Bundal Island, Port Qasim and KPT lower harbour cited as the ideal spots for the project.

It has been spelled out in LNG Policy 2006 that at least one party of the consortium carrying out the project must have experience along the supply chain. This move is particularly aimed at attracting such companies, which are operating liquefaction facilities in other countries.

In some cases, multinational companies operating liquefaction plant and terminals in one country, export LNG to their own import destinations in other countries.

The News has learnt that under such arrangement every party of a consortium is allocated surplus amount of LNG for their own clients, which helps in ensuring availability of supplies and diversification of market.

But as Japanese and Korean importers continue to pursue more flexible and short-term contracts, it will create problems for other countries wanting to import LNG.

Spot purchase of LNG, for Pakistan, is an unfeasible option. The importers wholly or mostly dependent on the liquefied gas will always be ready to pay more, thus leaving little bargain space for new comers.

However, the brotherly relations that Pakistan enjoys with Middle Eastern exporters like Qatar and Oman, gives it an upper hand over other countries in negotiating sustainable LNG supplies at relatively lower rates.

 

[Owais]

Plan approved for OGDC GDRs offer by September 30


ISLAMABAD (July 13 2006): The Privatisation Commission and its consultants--Citigroup and Goldman Sachs--on Wednesday approved a plan to offer the Oil and Gas Development Company's (OGDC) 'global depository receipts' (GDRs) by September 30, it is learnt.

Sources said that a 20-member consultants' team for OGDC's GDRs, that arrived here late on Tuesday night, held a series of meetings with the Privatisation Commission and OGDC officials on Wednesday to discuss the strategy for the transaction.

The consultants' team was told by OGDC officials that the audited accounts of the company for last fiscal year would be available for its evaluation by August 15. The consultants will work out the value for GDRs on the basis of the audited accounts and other technical data including OGDC shares value in the domestic stock market.

Sources said the consultants' team raised various questions about the company's data, in particular, regarding future exploration and production plan and the net sales of its products in 2005-06.

A joint official team, representing Privatisation Commission, OGDC, and Petroleum Ministry, responded to the queries raised by the visiting team and apprised it that all basic data and information was available for GDRs assessment and offer it through London Stock Exchange (LSE).

After appointing CitiBank and Merry Lynch as consultants by Privatisation Commission, OGDC had provided them the necessary data for the transaction some time back and their visiting team was in Pakistan for its physical verification.

Sources said the visiting team was asked to complete the evaluation process on top priority and make sure to complete the transaction within the stipulated period.

The government of Pakistan is very ambitious about OGDC's GDRs offering and authorities working on the plan want to put in place a fool proof strategy to get desired results.

Sources said the official team also shared with the visiting team the government plan of organising country and company shows in different important countries to give a better understanding of the company's financial and technical position and get maximum response from the global investors. The two sides agreed that London and Washington were better destinations for holding shows for GDRs offering.

 

[Owais]

Rs 350 million approved for export promotion schemes

ISLAMABAD (July 13 2006): The Export Development Fund (EDF) Board, which met here on Wednesday with Commerce Minister Humayun Akhtar in the chair, approved Rs 345 million for different ongoing schemes relating to the promotion of exports.

The Board reviewed progress of the ongoing schemes financed through by EDF, besides proposal for carrying out sectoral studies to pinpoint impediments and suggest remedies to the government.

The meeting was attended by EPB Chairman Tariq Ikram, Secretary, Ministry of Textile Industry, Masood Alam Rizvi, Vice Chairman, EPB, Zafar Mahmood, President of Federation of Pakistan Chambers of Commerce and Industry and representatives other prominent trade associations.

 

[Owais]

Arrangements made for import of LNG: SSGC
RECORDER REPORT KARACHI (July 13 2006): The government has made arrangements to import liquid natural gas (LNG) by 2010 and there would not be an energy gap in demand and supply in the country.

Managing Director Sui Southern Gas Company (SSGC) Munawar Basir Ahmed stated this while giving a presentation regarding SSGC's vision/mission, Pakistan's National Energy Plan, SSGC's achievements and future plans at SSGC head office here on Wednesday.

He said that the SSGC has made short, medium and long-term programmes to cater for rising energy demands. The first LNG station would be set up by 2010 at one place either Karachi Port or Port Qasim or Bandel Island, he added.

The MD said that energy would deliver progress in future of Pakistan because all industries dependant on this sector. The government has realised and is making efforts to bring energy to Pakistan from several sources.

Ahmed said that the gas supply mainly coming from Sindh, which is 89 percent while only 11 percent from Balochistan. He said the company has the largest coverage in Sindh to provide gas to the industries.

*He said that gas prices have not risen as fuel prices have shot up. Only seven percent in gas prices went up while there was a 50 percent increase in oil prices. Despite the minimal raise in the gas prices the SSGC is still devising ways and means to bring down gas prices, he said.

Ahmed said that around 1.9 million people are SSGC valued customers and the company is striving to provide quality services to both residential and industrial users. In this regard the SSGC extended the network to the remotest areas of Sindh and Balochistan. In last three years the company had provided gas to 400 villages.

He said that the company had doubled the supply to 1200 million cubic feet from 1999, which was 600 million cubic feet. The substantial increase made gas available to 150 districts.

The MD stated the business community should come forward and provide a solution to the government and other utilities in regard to their shortfall. He said that the business community should also identify leakage in the power supply and as well as other utilities that would enable sufficient supply for industries and residents.

He said the SSGC has allocated Rs 43 billion for supply of non-stop gas and the company had spent Rs 20 billion till now. There was no support from the budget but the company resorted to self-revenue generation.

He gave a detailed scenario of company's performance and a project in human resource management, social reforms, disaster management programme and sports programmes. Azim Siddiqui, senior general manager of the SSGC presented the company's performance and corporate overview.

He said the company's vision is to be a model utility and to provide quality services. To meet energy requirement to be environment friendly is the company's mission. He said that company's network spreads to 3,079km, its distribution network is 27,679km and its compression capacity is 62,600BHP.

HE ELABORATED THE CORPORATE STRATEGY OF THE COMPANY THAT IS:

-- Consistence appreciation in shareholders value.

-- Focus on improved, friendly and efficient customer service.

-- Expansion of transmission and distribution network.

-- Security of assets and good house keeping.

-- Human resource development.

He said that the gas sales have substantially increased to 357.80bcf in 2006 from 234.55bcf of 2002. Transmission reached 3,079 km. Industrial connections were provided to 267 industrial units in 2006 as compared to 180 in 2002 while domestic connections were provided to 79,041 households in 2006 as compared to 60,603 in 2002.

Operational revenue is Rs 63.24 billion in 2006 as compared to 32.91 billion in 2002. Cash O&M percentage of revenue declined to 6.13 percent in 2006 as compared to 9.8 percent in 2001, he said. Naeem Rehman Ahmed, Senior General Manager of SSGC presented a live operation of the company's control through advanced technology.

On the occasion Salahuddin Haider, Founder President 21st Century Club and OUAC gave the opening remarks for the presentation. Later the audience visited different SSGC's departments.

 

[Owais]

Azgard-9 to pay balance for PAFL on July 15


ISLAMABAD (July 13 2006): The new owner of Pak-American Fertiliser Ltd (PAFL), Azgard-9, will make the final payment of over Rs 15 billion to the Privatisation Commission for the strategic purchase of shares of the privatised plant on July 15th, PC sources told Business Recorder here on Wednesday.

They said that the PC has confiscated Rs 350 million earnest money of Ibrahim Fiber group as it failed to make 25 percent down payment.

Pak American Fertilisers Limited (PAFL), a subsidiary of National Fertiliser Corporation, is located at Iskanderabad in Mianwali district and its new plant is designed to produce 600 tons/day ammonia and 1,050 tons/day urea using natural gas as feedstock and fuel. The plants are latest in design. The project has over 11,481 kanals land, comprising 6,432 kanals for factory, 2,818 kanal for Housing Colony and 2,230 kanal for experimental farm. The buyers intend to make fresh investment for expansion of plant capacity and to increase production to bridge the shortfall in the demand and supply of urea.

They said that they were determined to work in order to create a win-win scenario for both the public and the private sectors and operate in a highly socially responsible manner, supporting the community, the environment and the workforce, and assured that anybody who wished to work on merit basis would be retained.

 

[Owais]

First Investment Bank to launch Rs 500 million TFCs

KARACHI (July 13 2006): The First International Investment Bank Limited (Interbank) is issuing rated, secured and listed Term Finance Certificates (TFCs) of Rs 500 million during the current year. The announcement was publicised in the Abridged Prospectus published on June 30, 2006 in Business Recorder.

According to a press release issued on Wednesday, The amount of Rs 500 million comprises of private placement (pre-IPO) of Rs 375 million and initial public offer (IPO) of Rs 125 million.

The TFCs offers to the general public and institutional investors will be in sets of ten TFCs, each set having an aggregate face value of Rs 5,000, or in multiples thereof or such other denomination as may be agreed between the Interbank and the Pre-IPO investors.

The proposed TFC issue is for a tenor of five years carrying a profit rate of 6 months KIBOR plus 225 bps (Basis Points). Principal redemption will be in eight equal semi annual instalments commencing from the 18th month after the issuance.

UBL is the market maker for the TFC and has agreed in the prospectus to offer a bid/offer quote to small investors, thus giving them an opportunity to buy and sell this TFC during its five-year life.

The instrument will be secured by way of first parri passu charge on present and future assets of the bank with a 25 percent margin. The Bank intends to utilise the proceeds of the TFCs to establish its asset management business, strengthen the brokerage function and further expand the investment portfolio.

The Pakistan Credit Rating Agency (Pacra) has assigned a rating of 'A+' (Single A plus) to TFC issue. The rating indicates a low expectation of credit risk and a strong capacity for timely payment of financial commitments.-PR

 

[Owais]

SBP sells Rs 20,500 million treasury bills

KARACHI (July 13 2006): The State Bank of Pakistan (SBP) sold Rs 20,500 million of Treasury bills on Wednesday in a 8-day repo operation at 7.74 percent to mop up funds from the money market.

 

[Owais]

Institutional support lifts share prices

KARACHI (July 13 2006): The share market for the second consecutive session closed on a positive note as buying from financial institutions and some offshore investors bloomed at the Karachi Stock Exchange, placing almost all the blue chips and trading stocks in the plus column. Green remained the colour of the day as prominent scrips managed to close in the positive zone.

The market steadily picked up its momentum and closed at 9920, up by 265 points compared to previous session's closing. Volumes picked up by 60 percent to 209 million as against 131m yesterday. NBP once again was the volume leader, contributing 29 million shares.

MCB followed suit and performed pretty well during most part of the day, however, came under pressure during the latter part. The E&P sector attracted punters. Both the heavyweights of the market, OGDC and PTC closed at their upper circuits and contributed 107 and 29 points respectively towards the index gain. POL and PPL, the other two E&P giants also managed to recover and closed up by Rs 11.2 and Rs 10.5 respectively.

Gainers outnumbered the losers and stood at 189 as against 75 companies that closed in red while 35 companies closed with no change. Rabia Hussain from JS Capital Market said that the market opened 10 points minus but immediately gained momentum and moved to the positive zone. Activity was seen across the board with most of the scrips giving a positive closing.

The main reason behind volume led bullish trend was the Prime Minister's positive statement on local TV channel that the task force report for March 2005 crisis did not mention any names of brokers/individuals and action will be taken only if proof will be found in the forensic report. The major gainers were OGDC, POL, Lucky and DGKC.

The sentiment was depressed earlier because of the reports that a team has arrived to conduct forensic investigations against the manipulations and price manoeuvring during 2005 market crash. However, fresh volley of buying surfaced from all quarters after active support from financial institutions and some offshore clients. Several traders said that a couple of brokers have received huge orders in OGDC, NBP, PPL, POL and MCB from their respective overseas investors, building a handsome rally.

The market also geared up on the rumours that some high official in an interview to a television channel (yet to be telecast) has categorically said that Dr Tariq Hasan, former chairman of the SECP is held responsible from March 2005 debacle. He was too slow to implement rules and regulations, resulting in sharp plunged in stock values.