Profit 18th November, 2011 by Profit Epaper

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Negligence in the agri-sector Page 3 Nashpa well two: excavating hope Page 2 Biogas, an answer to Pakistan’s energy crisis Page 8 Pages: 8

profit.com.pk

Friday, 18 November, 2011

power criSiS

ISLAMABAD JALALUDDIN RUMI

HE total volume of power sector circular debt has risen to Rs650 billion while outstanding liabilities of Pakistan Power Purchase Company (PEPCO) stand at Rs364 billion. This is against the receivables which are estimated at around Rs300 billion, officials of Ministry of Water and Power revealed on Thursday in the National Assembly Special Committee. The Special Committee meeting chaired by Engineer Usman Taraki was called to find out the reasons that have led to the unprecedented power crises in the country.

Circular debt rises to Rs650b g

5 billion unitS unaccounteD for

Explaining the phenomenon of circular debt, Secretary Water and Power Imtiaz Qazi said that the power generation companies produced 24 billion units, out of which PEPCO received bill payment against only 19 billion units, whereas 5 billion units / per annum were unaccounted due to line losses and power theft. He said that the government has been giving a subsidy of Rs2 on each unit of electricity but the Finance Division did not release the allocated funds for subsidy to PEPCO, which has exacerbated the already worsening situation of circular debt accumulation. Qazi told the committee that during the three years tenure of the current government, the price of electricity has been increased by 78 per cent, excluding the increase in power tariff due to regular fuel adjustments.

non payment of billS Non payment of electricity bills by the government departments, the private sector especially in FATA, and some areas of Sindh have contributed to inflating the circular debt. This coupled with up to 20 per cent line losses and nonpayment of price differential claims by the Finance Division on account of subsidy, are the major factor behind mounting circular debt in the power sector. According to Chairman PEPCO Rasul Masud, PEPCO’s receivables from the government sector are approximately Rs188 billion. It has to receive Rs8 billion from various departments of federal government on account of electricity bills, Rs30.55 billion is outstanding from provincial governments while Rs46 billion has to be received from Karachi Electric Supply Company. Chairman PEPCO informed the committee that currently various projects of power generation were under construction and he claimed that by end of 2012 about 3000 megawatts of electricity will be added to the national grid.

Senate finance committee

regulated market vital for price control ISLAMABAD JALALUDDIN RUMI

ENATE special committee on finance, while rejecting free market economy – terming it anticonsumer –, decided to revive regulated market for effective price control. Three member sub-committee headed by Senator Ishaq Dar with Senator Professor Khursheed Ahmed and Senator Sughra Imam directed ministry of finance to consult ministries of law and justice, food security. Sub-committee also asked industries to draft legislation on price control within two weeks. Committee chairman Senator Ishaq Dar said people are at mercy of few influential businessmen, who exploit them and charge un-justified price from them. While criticising government’s treatment of fertiliser sector, he said government is providing gas to fertiliser sector on a subsidised rate but the impact was not delivered to consumers. Committee unanimously believed that revival of magistracy system in all four provinces is one of the major tools to check unjustified price hikes and profiteering. Members of committee were of the view that food crisis is approaching and Pakistan should prepare itself by reviving its agriculture sector, that would in turn ensure its food security. Otherwise, there would no option but to accept imports from developed countries, they reiterated. He informed the committee that Consumer Price Index (CPI) has witnessed a declining trend from October 2010 to October 2011. However, there has been an increase in September he added.

Dollar reserves increase to $17.031 billion

DefenDing rppS

KARACHI STAFF REPORT

During the briefing Masud Khan defended the government’s policy of rental power plants and argued that the rental power plants were the immediate available solution to address the power crises. Committee member Shahid Khaqan Abbasi stormed out from the committee room over the justification given by Chairman PEPCO regarding rental power plants. Shahid Khaqan said that the incumbent power ministry officials should resign as they have failed to resolve the power crises. The power ministry has given Rs16 billion to rental power plants but despite the capital injection, power production of rental power plants remained negligible. He claimed that the rental power plants are producing less than 100 megawatts of electricity. The chairman committee and other members also expressed their dissatisfaction over the performance of the ministry of water and power and asked them to increase production from the hydel sources of electricity generation.

HE country’s liquid foreign exchange reserves, have nominally increased to $17.031 billion during the week that ended on November 11, Central Bank reported. Last week up to November 4, the country held $17.028 billion. The week saw State Bank of Pakistan’s (SBP) dollar reserves decreasing to $13.269 billion from $13.280 billion of the preceding week. While the greenback holding of commercial banks swelled to $3.762 billion against $3.748 billion of last week.

Karachi circular railway project

Work on $1.58 billion project to start by June 2012 KARACHI

GHULAM ABBAS

ORK on ‘Revival of Karachi Circular Railway (KCR)’ the much delayed $1.58 billion foreign funded project is likely to start by June 2012. Government has decided to resolve all financial matters by April next year. In a recently held meeting at ministry of finance in Islamabad, which was attended by representatives of Karachi Urban Transport Corporation (KUTC), proponent of KCR project, Sindh Government, and others, issues

related to finance, re-lending of funds, resettlement of thousands of project affectees were discussed. According to sources, all major issues related to project have almost been resolved while some technical hindrance in release of funds from government of Japan and others were there to be resolved within next few months. In the meeting held on 5th November, 2011, it was also agreed as per demand of Japan International Cooperation Agency (JICA) that KUTC would share profit and losses of the project as it was sharing almost 7 per cent of the project. Japan was providing for at

least 93 per cent cost of KCR project. During the next few months technical team of JICA would also visit the country to finalise financial matters besides other aspects related to the project. It is worth mentioning here that for the last 6 years, the project was under various studies. The report was furnished in March 2006 for revival of KCR. Different survey teams of Japan had come to Pakistan and made PC-1 but as cost of project was increased in two years foreign team had made the new study with modified cost. Government of Japan had earlier promised to release $872.316 million STEP loan for the KCR project and

it had commissioned a study under the aegis of Japan External Trade Organization (JETRO). In the last six years, studies related to Resettlement Action Plan (RAP), Initial Environment Assessment (IEA) and allocation of land for thousands of affectees have already been finalised and approved by concerned authorities. Japanese government, as a first parameter, would combine KCR‘s 30km loop with modern signaling and telecommunication system. Under the project which is needed to overcome traffic problems in the country, was planned to make at least two dedicated tracks along with main line from

City (Railway) Station to Drig Road Station of 14.5 km, which would later be linked to the airport with distance of 6 km, at a cost of $179.464 million. It may be recalled that Pakistan Muslim League-Q led Sindh government had winded up local train service in January 2000 and had again decided to revive system after realising its importance in 2004. Later, to mitigate traffic problems in the country’s most congested cities Tokyo had commissioned 100 per cent funding for the project under “STEP Loan” at 0.2 per cent markup rate for a 40 year payback time, including a 10 year grace period.

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Friday, 18 November, 2011

debate

Nashpa well two: excavating hope KunwAR KHuLDune SHAHID

hroughout the course of history, the discovery of oil or indeed its correlated activities have always connoted an aura of ecstasy. the monetary significance is obvious, but digging out – or indeed locating – volumes of black gold is a moment of triumph; an epoch-making breakthrough that promises to ameliorate everything. Be it the groundbreaking revelations in South American oil producing giants Columbia and Brazil, the customary mining disclosures in oil leviathans like Algeria, Libya et al or indeed Daniel-Day Lewis stumbling upon an opulent mine in New Mexico 1898 in ‘there will be blood’ – the rapture is earth-shattering. An oil reserve is seventh heaven under the ground, so to speak. Considering the power predicament in our neck of the woods, the aforementioned ecstasy can be multiplied by any scalar number and it won’t suffice in depicting the sheer vitality that any such unearthing possesses. ogDCL’s (oil and gas Development Company Limited) recent oil discovery, from Nashpa well two, is one such moment that augurs optimism and is being touted as a historic undertaking – with scores of reasons buoying up the claim.

geography anD location the well that is hogging all the headlines, ‘Nashpa well two’, is located in the Nashpa block which is a part of Khyber Pakhtunkhwa and extends to within Punjab as well. For the geography geeks; Nashpa is located in North-West Frontier region at 33°13’59” north of the equator and 71°19’59” east of the Prime Meridian. For physics geeks; if one were to drop a plumb line from the point where Nashpa is located – on a map pinned on a wall – it would neatly bifurcate Bhakkar and Peshawar, with its displacement ratios being 1:3 between the latter and the former respectively. Also if an imaginary triangle ABC between rawalpindi, Nashpa and Peshawar is drawn on the map, it would border on a right-angle triangle with the length AB (distance between Naspha and rawalpindi) being twice that of BC (distance between Nashpa and Peshawar).

power Shortage the oil discovery comes under the hangover of the worst power crisis in the history of Pakistan. the amplitude of hue and cry that engulfs the shortage has reached an all-time high, with both the industrial sector and the masses being criminally victimised. With such an abundance of reserves, the shortage is not only lamentable but also flummoxing. the oil escavation that was preceded by a noteworthy gas discovery, would inevitably solve the power puzzle, by reducing our dependence on the ever

escalating imports and by eventually making us self-sufficient with regards to power production.

opulence of naShpa blocK the block spreads over areas of Khyber Pakhtunkhwa and Punjab. Mela and the aforementioned Nashpa have been the two prominent zones that have been located for oil – in 2006 and 2008 respectively. the principal protagonist in the excavation task has been ogDCL, with strong backup courtesy ghPL (government holding Private Limited). According to PPL’s (Pakistan Petroleum Limited) data there is a 26.05 per cent PPL working interest and the recoverable reserves amount to 51 Bcf gas and 16.63 million barrels (MMbbl) oil. Mela oil field contains 14 MMscf gas and 4,458 bbl oil, while Nashpa oil field has 20 MMscf gas; 5,310 bbl oil. however the recent revelation has further bolstered the prospects of the lucrative area.

naShpa well one the first installment of the Nashpa expedition took place in June 2009. Nashpa well one was dug down to the depth of 4384 meters, which resulted in a successful exploration. the reserves in Nashpa, when coupled with 2006’s discovery of Mela reserve, ensured that the region was acknowledged as a rich reservoir of oil. the often flaunted ‘discovery of the decade’ tal Block is also an affluent region, which is within proximity of Nashpa Block. Encompassing and being engulfed by oil rich zones, Nashpa block became the hub of attention for ogDC, PPL and ghPL and hence expedition were planned for the future citing the prospect of further inroads into oil and gas reserves.

pay for supplies is hindering the investment plan of ogDC. A gargantuan amount of rs93 billion ($1.07 billion) is due as back payments. While, the lack of payment had not significantly derailed the company’s progress, what was unambiguous was that such a trend would have eventually taken its toll on the company. there was a call of bond issuance or bank loans as a possible way out of the quagmire. however that was being shelved for up to a year with the hope that the situation would improve with the passage of time. this lack of payment on the distributors’ part delayed the payment to fuel suppliers, who in turn are indebted to oil refiners. the total amount – called circular debt – is said to amount up to rs300 billion, and it was crystal clear that a breakthrough was the need of the hour on a multitude of fronts.

the earth-Shattering excavation With an estimated output of 3370 barrels per day, the oil reservoir in Nashpa well two is a major boost for not only ogDC, but for the nation as a whole. the aforementioned figure of 3370 barrels equates nearly one-fifth of the company’s current crude output. Nashpa well two was drilled down to a depth of 4340 meters, intending to delve into potential reserves at Datta, Shinawari, Samanasuk, Lumshiwal, hangu and Lockhart formations. the task proved successful both in the domains of gas and oil. “Datta Sandstone” has been the first to bear fruit with massive volumes of hydrocarbon located – the aforementioned potential of ‘3370 barrels per day or crude oil and 11 MMFCD through 32/64 choke at well head flowing pressure 3800 psi.

Zin blocK factor ogDc anD the Share criSiS ogDC is the grand daddy of exploratory activities in Pakistan. It operated on a fifty per cent interest with Pakistan Petroleum and government holding Private. however, this hasn’t been a fruitful year for the company, as far as its shares are concerned. there has been a slump off late within the realm of KSE100 Index that has threatened to plunge ogDC into paramount losses – a cumulative decline of 9.2 per cent has been witnessed this year. however, Nashpa well two promises to be the saviour of the biggest player in the energy exploration realm. It is being prognosticated that owing to new oil and gas discoveries, ogDC can enhance its profitability and is expecting up to 20 per cent addition to its oil and gas production this year.

payment preDicament According to resources, local oil refineries and gas distributors’ failure to

ogDC has launched a multi-pronged attack on oil excavation and one of the targeted zones has been Zin block as well. In fact, if one were to discern the underground insinuations and couple it with the dire straits that the power and energy sectors find themselves in, Zin block could be a major factor in nationwide enhancement. ogDC has backed the zone as one of its most lucrative target areas and numerous development projects are already underway, with many more to follow. results are expected soon according to the company voices.

KSe’S gain ogDC is a unanimously acknowledged powerhouse in the Karachi Stock Exchange, and hence, any promising exploration activity has a bearing on the stock exchange. ogDC along with PPL are the biggest gainers owing to the recent discoveries, and the latest market numbers are vindicating the claim. After

the oil discovery’s news broke, both the stocks attracted a strong purchase trend and close to the weekend they singlehandedly pushed the 100-Index up by a massive 61 points. According to topline Securities ogDC and PPL have a 56 per cent, and 25 per cent stake respectively in Nashpa fields. Add this to the potential of Zin block and ogDC and PPL might rule the roost in the near future.

oil exploration incentive According to reports, government of Pakistan has earmarked a substantial amount of rs1135 million for exploratory activities in the country. the sum has been allocated over the past eight years, and is a statement of intent from our hierarchy. the aforementioned amount has been given to ogDCL’s research and Development division. this particular division has been going great guns recently and with the money allocation – for conducting geological surveys and mapping projects in a multitude of potent blocks – the output can be magnified further. the word is that Pakistan Basin Study project has also been conducted, for which the company hired services of other companies. the task was carried through with technological virtuosity, with the latest available techniques and machinery being utilised.

naShpa well three anD proSpectS the Nashpa success story might just prove itself to be a blockbuster trilogy. After ‘Nashpa well one’ proved to be an oil fertile zone and ‘Nashpa well two’ followed suit in terms of potential and profitability, ‘Nashpa well three’ is another prospect that is whetting the appetite of the oil extractors, consumers and all other stakeholders. ogDC and its allies are on the look out for further possibilities, not only in the Nashpa zone but in Zin block as well. there are four, five other projects in the pipeline that promise to further enhance the flow from fields and it bodes well for the future.

epilogue ‘Nashpa well two’ is a major breakthrough towards digging the nation out of the power quagmire, and it is a massive boost for ogDC and its allies - the discovery has a lot hinging upon it. With expectations pertaining to a precipitous increase in output on an all-time high, the Nashpa block has evolved from being a ray of hope to now a luminous bundle of light.

The writer is Sub-editor, Profit and can be reached at khulduneshahid@gmail.com

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Friday, 18 November, 2011

EDITORIAL

Negligence in the agri-sector

On inflation and income

T is troubling, though not entirely surprising, to note that inflation has outpaced income growth over the last few years, meaning dipping real incomes for the bulk of the population. What is really surprising, though, is that food inflation has remained much higher than overall inflation for most preceding years. Taken with the next worrying finding, that unemployment too has not so steadily risen, and you have a disturbing mix already wreaking havoc in far too many places in the world for authorities in Islamabad to continue fearlessly with their complacency. Unfortunately, the government has been behind the curve on most of its promises, meaning budget debriefing at the fiscal-end will likely be the usual rerun of justifying falling short of targets, again. But with elections approaching, and governance in shambles, and development and growth targets badly off track, there is a real possibility of food inflation turning into the

proverbial straw that breaks the camel’s back. With three-fourths of the population comprising youth, three-fourths of which is unemployed, the situation is grim. And it is made worse for those investing large sums in education only to find place in the unemployment queue. Food inflation, which stokes unemployment, is yet another tale of inefficient use of limited resources. The government extends billions in subsidies and bailouts, most of which is channeled to nonproductive avenues, which only bolsters the cycle of inefficiency. The time has come when Islamabad can no longer dilly-dally on issues of pressing concern. If inflation is not tamed, with special focus on food prices, the government will have only itself to blame if people-fury turns into a violent, rioting mob. The sums it would then spend to control agitation would be far greater than targeted subsidies needed to rationalise price distortions in the food market.

Tariq Bucha

T is ironic that the agriculture sector – the economy’s backbone and the largest national employer – continues to receive unplanned and ad hoc patronage from the government. Often official policy has reflected frantic juggling in relevant ministries. However, whenever there have been planned injections and thought out initiatives, results have spoken for themselves. For example, when the present dispensation took over in ’08 and raised wheat price from Rs625 to Rs950 per 40 kg, it has led to reserve availability of six million tones today. And, we will still have a residue carryover of stock of three million tones when the new crop comes in. The policy fulfilled the planned criterion of providing a fillip to the farmer economy, whose additional incomes were designed to stimulate area and crop enhancement. But this year, the basic input cost of production has risen dramatically resulting in per acre cost of wheat to rise to almost Rs1075 per kg. If the government does not announce support price within a week or so the farmers may shift to other more viable crops. As a matter of calculation minimum profit which a farmer expects is around Rs1200 per 40 kg .In an environment when energy is scarce and there are daily increases in the price of electricity, the end price of wheat is bound to register a quantum increase, and subsequently harm the urban sector with no fault of the farmer. It goes without saying that it is the government’s prime responsibility to protect people from unnecessary and unjustifiable bouts of food inflation. But with prices of crucial inputs going through the roof, the farming sector has no choice but to pass the price burden onto the next link in the chain. In such circumstances, it is not

The government must shift focus from a primarily input strategy to an output strategy OGDC and Nashpa well two The latest discovery of oil in the Nashpa zone is a major boost to a nation that is being hit hard by the power crisis on a daily basis. The rich reserves that have drawn everyone’s attention are like a ray of hope that becomes visible in the darkest times; seriously, there could not have been a more opportune moment for the discovery. Let’s hope that OGDC and other stakeholders ensure that this reservoir is properly utilised. So often our inner problems become our biggest hurdle, hopefully the divisions and political brawls will stay clear and we can truly prosper from this promising situation.

PIA management decides to decrease flight frequency If we take it on face value, the introduction of Indus Air, which is the newest, cheapest and upcoming domestic airline in Pakistan; is a surprise package for a number of Pakistanis. But in order to facilitate these airlines, PIA has decreased its flights both on the domestic and international front. This decision of the management is harmful for the interest of the passengers of PIA, who are already suffering from the terrible service being provided by them. The management has its own vested interest in the introduction of the new airlines which need to be brought to the notice of the people.

ALI KHAn

AMjAD TARIq

really fair to blame farmers for price hike in the end product. The most prudent policy posture for the government to adopt presently is to make subsidies more targeted, for immediate positive impact both on commodity prices and the centre’s cramped fiscal space. Of the 32 odd per cent of the population that lives in urban centres, a surprising 80-85 per cent chunk survives below subsistence level. If staple food continues to become unaffordable for this segment, undesirable economic, social and political results are bound to follow. There can be no other way. Food must be made affordable, especially for the middle and lower income groups. India’s is a good example to follow. Like most progressive economies, they ensure food price stability for the lower classes by provisioning food stamps, cards, etc. Also, there are numerous instances of cartelisation across industries. In the textile sector, primarily, manufacturers and ginners have combined to dictate market trends, allowing cotton buying only when they desire. Therefore, the government also needs to adopt a proactive policy of intervention. The government must also shift focus from a primarily input strategy to an output strategy. Price trends in the market are kept under far better check if the end product is subsidised, ensuring sales at right prices and appropriate timing. We are not pushing for unfair advantages for the agriculture sector. Rather, our focus is making the government realise that ensuring fair advantages, and subsequently fair profits to farmers, especially the 85 per cent lot with holdings below 25 acres, is in the interest of all parties concerned. But first the government must shift from its present fire-fighting strategy for the sector. Farmers must be freed from the squeeze that prevents progressive expansion, and brings numerous subsequent price distortions in the wider economy. And while we’ll wait for the agriculture tax debate till the next column, it is pertinent to mention that measures like GST, excise tax, etc, also make inputs far more expensive than previously. In the resulting scenario, farmers can hardly jack up prices to a certain extent, allowing for their own subsistence while registering no extra profits, and end consumers end up paying much more for the same quantity. This must change. The sooner the better. The writer is President, Farmers Associates Pakistan

LAHORE

Shari’a matterS

Road to Islamic banking

Humayon Dar

ITH the success of almost full and successful conversion of National Commercial Bank (NCB) of Saudi Arabia, and relatively smaller but equally successful conversions of Middle East Bank into Emirates Islamic Bank, Sharjah National Bank into Sharjah Islamic Bank, and relatively slow (but important in a Pakistani context) and yet to be completed conversion of Khyber Bank into an Islamic bank, we do not observe any further full conversions of conventional banks into fully-fledged Islamic banks. Many industry

observers would have expected to see full conversion of the likes of Muslim Commercial Bank and Habib Bank, but despite Islamic windows of these banks full fledged conversion does not seem to be on the horizon. Why? A number of new Islamic banks have been set up in different parts of the world in the last few years. This means that a new breed of shareholders is entering the Islamic financial services industry. Also, the incumbent players in Islamic banking & finance are opening new banks in new jurisdictions. Five Islamic banks in UK, for example, have shareholdings from the Middle Eastern investors. The likes of Dubai Islamic Bank, Kuwait Finance House and Al Rajhi Bank have gone to new countries in their attempts to internationalise their businesses. It may be argued that this is not the reason for lack of conversion, as the article should attempt to answer why this is happening and not the conversion of conventional banks. There are a number of reasons for this lack of conversion, firstly, it appears as if the governments in most of the countries

where Islamic banking exists do not believe in Islamic banking. Apart from Malaysia where promotion of Islamic banking is part of the government policy, no other government is fully committed to Islamic banking and finance. Pakistan is not an exception to this trend. While State Bank of Pakistan has supported Islamic banking for some time now, but other government authorities in Islamabad are at best indifferent to this phenomenon. Secondly, the subsidiary model has worked against the full conversion of conventional banks. In the UAE, for example, all the major players in the market have Islamic subsidiaries (in the form of investment companies and specialised consumer finance companies). In Pakistan, now almost all the big players have limited Islamic operations, and it appears as if the shareholders are not interested to further develop Islamic banking. Thirdly, shari'a requirements in terms of irreversibility of the process of Islamisation may in fact be a hindrance to full conversion of conventional banks. While, it is acceptable

Shahab jafry Business Editor

Kunwar KhulDune ShahiD Sub-Editor

babur Saghir Creative Head

ali riZvi News Editor

maheen SyeD Sub-Editor

hammaD raZa Layout Designer

Is it time for Pakistan Tehrik-e-Insaf to start patronising Islamic banking?

in shari'a for a conventional bank to get involved in Islamic banking and finance (as long as they observe segregation of Islamic business for the conventional), shari'a does not allow Islamic banks to do any shari'a repugnant business. This means that being a conventional bank with some Shari'a compliant business is considered as the optimum form of business. This is consistent with other economic phenomena. For example, the firms facing a choice between debt and equity would almost always adopt a mixed debt-equity capital structure. This means that in an environment where there is a choice between Islamic and conventional banking, it will always be the case that conventional bank would like to offer Islamic financial products to the extent of demand for such products. Conventional banking, being less restrictive, will always remain a choice, even if it is not a preferred one. Unless governments in the Muslim

countries start supporting and promoting Islamic banking and ensure that there is a level playing field for Islamic banks, conventional banks will continue to operate as they have traditionally been for a long period. In the current political environment, it is a window of opportunity for a major political party to adopt Islamic banking as a part of its election manifesto to appeal to an increasing number of shari'a sensitive people. If the likes of Pakistan Muslim League and Pakistan Peoples Party fail to capitalise on this opportunity, is it time for Pakistan Tehrik-e-Insaf to start patronising Islamic banking? The writer is a Shari’a advisor to a number of banks and financial institutions and can be contacted at humayon@humayondar.com

For comments, queries and contributions, write to: muneeb ejaZ Layout Designer

email: profit@pakistantoday.com.pk ph: 042-36298305-10 fax: 042-36298302 website: www.pakistantoday.com.pk

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Friday, 18 November, 2011

We have to fully normalise our relationship with India and we cannot do this without invoking the MFN principle

news

commerce Secretary, Zafar mahmood

24pc increase in loans alarms APTMA LAHORe

STAFF REPORT

LL Pakistan Textile Mills Association (APTMA) Chairman Mohsin Aziz, while commenting on report of State Bank about non- performing loans (NPLs), said abnormal surge of more than 24 per cent increase in NPLs, from Rs494 billion to Rs629 billion, in just one year was alarming and disappointing. In a statement issued, he said reasons for such an abnormal increase in NPLs were twofold: higher interest rates being the basic cause, and second being shortage of utilities supply. He said because of these

reasons industry was not performing, which resulted in abnormal increase in NPLs. APTMA Chairman was gravely concerned over impact of NPLs on textile industry, which was already struggling for survival in unfavorable atmosphere prevailing in the country. He said textile industry, being capital and labour intensive was not performing well because of high interest rates. Recent reduction of discount rate of just two per cent was totally insufficient for investment. He said reduced gas supply to textile mills, in Punjab particularly where textile units are concentrated, had crippled this industry. He lamented the fact that more

than 120 days in the current year textile mills in Punjab were either closed or running at very low capacity. Such a sorry state of affairs, he emphasised, should not be allowed to continue as it would lead to a loss in major export earnings from textiles. It would also cause massive unemployment, he believed. If high interest rate is not addressed and is not brought down to a single digit figure clubbed with control on power shortages to textile industry, not only would NPLs grow, but simultaneously it would also result in stagnation of exports, he said. This in turn would lead to a very low growth rate of 2-2.5 per cent which had peaked at 8.5 per cent a few years

PC briefed on secondary public offering of PPL

punjab approves rs36 billion irrigation project

ago – the required rate for a developing country like Pakistan – he added. He said impact of such increase in NPLs on industry further damages industries’ image in banking sector, as it restricts banks from extending further loans to the industry, in which BMR is essential to keep product in line with technologically advancing world requirement. He therefore, stressed upon government – especially state bank – and all economic ministries to look into this state of affairs, very seriously. Both, reduction of interest rates and power shortages, if not addressed urgently will have drastic irreversible consequences, he concluded.

Sponsors inject equity of $25 million in byco oil pakistan limited KARACHI

ISLAMABAD JALALUDDIN RUMI

HE Privatization Commission Board directed Privatisation Commission (PC) to obtain approval of the transaction structure and other related issues for Pakistan Petroleum Limited (PPL) from the Cabinet Committee on Privatisation (CCOP) and timely conduct its upcoming Secondary Public Offering (SPO). The PC Board chaired by Federal Privatisation Minister Ghous Bux Khan Mahar also gave approval to go ahead with the privatisation process of Pakistan Mineral development Corporation (PMDC)’s eight Salt and Coal Mines projects. The projects which got approval are Lakhra Coal Mines Jamshoro, Sor-Range Coal Mines, Quetta, Degari Coal Mines, Kalat, Sharigh Coal Mines, Sibi, Khewara Salt Mines, Jehlum, Warcha Salt Mines, Khushab, Kalabagh Salt mines, Mianwali and Jatta/ Bahaddur Khel/ Karak Salt Quarries, Karak. The

Council of Common Interest (CCI) has already given approval for these transactions. The PC board directed the Transaction Committee to complete the due diligence process after which financial advisors of interested parties to submit Statements of Qualifications (SoQ) to the Board in a week for finalizing the pre-qualified bidders for National Power Construction Commission. At least ten foreign and local interested parties have submitted Expressions of Interest (EOI) for the transaction structure of NPCC out of which party would found financially and legally eligible will participate in the bidding process. The Cabinet Committee on Privatization (CCOP) and PC board have already approved the privatization of Transaction Structure of NPCC. The bidding process would be open to PC Board and CCOP will approve the bidding results, lead to the issuance of Letter of Intent to successful bidder. PC expects to fetch $ 42

million by the sale of NPCC established in 1974 under the Ministry of Water and Power. The successful bidder will be required to continue to operate the Company as a going concern. Up to 12 percent shares were allocated for employees of NPCC through the Benazir Employee Stock Option Scheme (“BESOS”). The matter pertaining to the privatisation of Small and Medium Enterprise (SME) Bank also came under discussion and it was decided that the transaction committee should review the status and reinitiate the process. The PC board further decided to devise investment policy for PC Funds in accordance with the Finance Division’s guidelines. The meeting formulated various recommendations for Cabinet Committee On Privatisation (CCOP) and reviewed the status and progress of the ongoing and upcoming transactions. Earlier, the minutes of the previous meeting were approved.

STAFF REPORT

PONSORS of (Byco oil Pakistan Limited) BOPL have recently injected an additional equity of around $25 million to ensure a timely completion of the oil refinery project. With this additional fund injection into the company, debt and equity ratio will be approximately 28:72. This ratio not only depicts an extremely well capitalised balance sheet, but also unparalleled sponsor commitment, as infrastructure projects in the country are generally being financed with over 70 per cent debt, and less than 30 per cent equity. Byco Oil Pakistan Limited (“BOPL”) is expected to commence precommissioning, commissioning and start up process of its refinery in early 2012. This refinery has a crude processing capacity of 120,000 barrels per day, and will be the largest refinery in Pakistan. In addition, Byco Group already operates an existing refinery of 35,000 barrels per day and a petroleum marketing network comprising of – as things stand - 213 retail outlets. More importantly, Byco will pioneer introduction of ‘Isomerisation technology’ in Pakistan which will help value add surplus naphtha – presently being exported – into motor gasoline.

LAHORE: Punjab government has approved a mega project of Rs36 billion to rejuvenate the irrigation system in the province. Under the project, drip irrigation system will be installed over an area of 120,000 acre and some 9,000 water channels will be upgraded and restored. Provincial Minister for Agriculture and Livestock, Malik Ahmad Ali Aulakh disclosed that the project had been initiated, which would be completed in six years. Addressing the steering committees of agriculture and livestock supply chain management and irrigation project development, he underscored that by improving supply chain management and participation in star farm network, agriculture and livestock products export could jump up to $4 billion. STAFF REPORT

outstanding dues: KeSc fails to honour its commitment KARACHI: Despite repeated promises and claims, KESC has not made any outstanding payments to SSGC since August 2011. As a result, SSGC’s receivables have ballooned to Rs32 billion, as of November 17, 2011. This alarming situation is forcing SSGC to substantially curtail gas supplies to KESC. Even without any Gas Sales Agreement (GSA) with KESC, SSGC has not cut off gas supplies to the former only because it does not want Karachi to suffer prolonged power outages. In fact, in the month of Ramadan this year, gas utility increased supply to 200 mmcfd. It must be mentioned that SSGC purchases gas from local and foreign E&P companies. STAFF REPORT

fbr extends date for filing of St/fe returns for oct ISLAMABAD: The Federal Board of Revenue (FBR) has extended the date for filing of Sales Tax and Federal Excise Returns for the period of October to November 25, 2011. In a letter issued, the Inland Revenue Wing of FBR has communicated to all chief commissioners of Large Taxpayer Units (LTU) and Regional Tax Offices (RTO) that the date for filing of Sales Tax /Federal Excise Returns. STAFF REPORT

excel backtracks from picic acquisition KARACHI: Excel Insurance Company Limited has withdrawn its intention to acquire 40 per cent equity shares in PICIC Insurance Limited. This was notified by Next Capital Limited, the Excel Insurance’s managers to the offer, to the shareholders and members at Karachi Stock Exchange (KSE). The company cited the lapse of time period to make the ‘Public Offer to Acquire’, as a reason for its withdrawal from the acquisition of 40 per cent voting shares in PICIC Insurance. STAFF REPORT

telecom operators impose service charges LAHORE: The toughest competition in the telecom sector has pushed almost all cellular operators against the wall. Earlier, mobile operators imposed service charges for accessing helpline; now, most operators have started deducting service charges or operational fee on scratch card reloads. The largest cellular operator, Mobilink, has recently issued a public notice in which it has disclosed that all pre-paid subscribers will be charged an operational fee of one per cent on Jazz Load and two per cent on scratch card top-up. STAFF REPORT

Traded volumes nosedive to record 28m shares at KSE KARACHI STAFF REPORT

ARACHI stocks market remained bearish Thursday with trade volumes nosediving to record lows of 28.66 million shares on account of, what the analysts said, the investors’ cautiousness ahead of ahead of the policy announcement due to be made by the central bank at the end of this month. The day also saw benchmark, KSE 100-share index, losing 79.35 points or 0.66 percent on the back of global markets’ fall after the Fitch report. Market index closed at 11,913.42 points against 11,992.77 points on Wednesday after hitting respective intraday high and low of 12,025.02 and 11,908.06 points. “Bearish activity (was) witnessed at the KSE on global markets fall after Fitch report stated that EU debt crises could

spread to US banks,” viewed Ahsan Mehanti, director at Arif Habib Investments. Total shares traded at the readycounter were recorded at historic low of 28.661 million compared to 51.340 million of the previous day. This depicts a slump of 22.679 million shares. “Trade hit record lows as investors remained cautious ahead of the State Bank’s policy announcements due at the end of this month,” Mehanti said. Trading value also sharply contracted to Rs1.9 billion compared to Rs3.1 billion of the previous day. Market capitalisation also remained downward and decreased, albeit slightly, to Rs3.103 trillion, compared to Rs3.122 trillion on Wednesday. Of total 316 traded scrips, 57 were categorised as gainers and 146 as losers. The rest, 113, remained unchanged. “Rise in brent crude oil prices near to

$112 and easing circular debt concerns in the energy sector invited the investors’ interest in blue chip oil stocks despite concerns for rising fiscal deficit in the country,” viewed Ahsan Mehanti. Fatima Fertliser Company appeared as volume leader of the day with 4.7 million of its shares traded at highest per share rate of Rs24.05. Company share

price decreased to Rs23.16 from the opening rate of Rs23.86. Other scrips that followed were Fauji Fertiliser, Pak Oilfileds, PTCL, Engro Corporation, Bank Al-Habib, DG Khan Cement, NIB Bank, National Bank of Pakistan and LOTTE Pakistan PTA which counted their traded shares respectively at 1.8 million, 1.4 million, 1.3 million, 1.3

million, 1.1 million, 1.1 million, 0.847 million, 0.831 million and 0.780 million. Turnover at future market also declined from 4.7 million shares to 2.7 million with only 16 scrips gaining against 91 losers and one unchanged. Engro NOV was the volume leader on this side having 0.509 million of its shares traded during the day.

Layout Profit 18-11-11pages_Layout 1 11/18/2011 3:24 AM Page 5

Friday, 18 November, 2011

President Zardari has recommended for currency swap agreement between Pakistan and Egypt to give impetus to the existing level of mutual trade

news

chairman boi, Saleem h mandviwalla

SALES TAX REGIME

KCCI demands FBR to defer decision rules introduced in Sro 1012 allow commercial importers to claim refund for 5 per cent sales tax by issuing zero rated invoices g Zero rated tax regime undermined by eliminating segments of ‘commercial importers, traders and wholesalers’ g

KARACHI

Drastic measures without consultation with relevant representatives of trade and industry raise questions about sincerity of concerned authorities

STAFF REPORT

ARACHI Chamber Of Commerce & Industry (KCCI) has demanded deference of implementation of SRO1012 dated 4th November 2011 with immediate effect. The proposed postponement is until necessary consultations are held with all stakeholders including chambers of commerce and trade Bodies before any changes are made in “Zero rated Sales Tax” regime. In his letter to Chairman FBR Mian Abrar Ahmad President KCCI, has demanded immediate appointment for a detailed discussion with representatives of KCCI along with other major stakeholders. He was of the view that framework and procedures provided in SRO 283 for “Zero rated Sales Tax” regime for five export sectors has so far worked smoothly for both the trade and industry by ensuring a level playing field. Therefore rate of Sales Tax for both Industrial and Commercial importers should be maintained at “Zero” to avoid distortions in tax policy. The action would also prevent misuse of zero rated facility

and eliminate the scope of corruption which is an integral part of “Refund” process. Mian Abrar Ahmad informed that delegations of Pakistan Chemicals and Dyes Merchants Association and Pakistan Yarn Merchants Association led by their chairmen visited KCCI and requested to immediately raise the issue with concerned authority while demanding suspension of SRO 1012 and asked to reinstate SRO 283. A large number of representations from KCCI members belonging to trade and industry as well as affiliated trade bodies, expressing serious grievances over drastic changes unilaterally made in “Zero rated Sales Tax regime for 5 export sectors” under SRO No1012 dated 4th November 2011. This cancels and supersedes SRO No.283 (I) 2011 dated 1st April 2011. President KCCI articulated

that assessing officers of relevant collectorates are misinterpreting conditions of SRO 1012 and charging value addition on sales tax as well as withholding income tax at normal applicable rates (3 per cent to 5 per cent) on commercial imports of notified items. In some cases, total incidence of taxes charged by customs has been 13 per cent to 14 per cent on consignments cleared on or after 4th November 2011. Ironically, new rules introduced in SRO 1012 provide for commercial importers to claim refund for 5 per cent sales tax by issuing “zero rated” invoices to registered industrial buyer. Whereas, the very idea of “Zero Rated Sales Tax” was evolved and implemented to eliminate “Refunds”; this has been a major source of corruption and has resulted in heavy losses to the ex-

chequer as well. Modified scheme will once again open floodgates of corruption that is always an integral part of “Refund” procedures. President KCCI voiced that apparently true spirit of zero rated tax regime has been undermined by eliminating entire segments of “commercial importers, traders and wholesalers” from the scope of this scheme. These important segments are a vital link in supply chain of raw materials and intermediates mainly catering to small and medium sized industries and exporters. The sector is not just a source of indirect finance to SMEs, but it also generates employment opportunities. Such measures may lead to closure of well-established markets in major cities of Pakistan dealing in chemicals, yarns and fibers, processing aids and accessories used in all major export oriented industries. Under amended conditions it would be impossible for commercial importers and wholesalers to survive and compete with imports by those registered as industry whether or not they have a physical presence or actually conduct any exports. Mian Abrar stated such drastic measures without consultation with relevant representatives of trade and industry are not only surprising but also raise questions about sincerity of concerned authorities in providing a fair and equitable environment for investment in various sectors of economy which have potential and will to generate substantial revenue for exchequer.

lcci urges govt to remove taxes on furnace oil LAHORe STAFF REPORT

AHORE Chamber of Commerce and Industry urged government to remove taxes on furnace oil to ensure relief to industry and industrialists, who are under tremendous pressure. An acute gas shortage and expensive alternate fuels like furnace oil has also added to the aforementioned pressure. In a statement issued here, LCCI President Irfan Qaiser Sheikh, Senior Vice President Kashif Younis Meher and Vice President Saeeda Nazar said industry is the biggest job provider and its closure would not create social unrest. It would also deprive government of much-needed revenue to run its affairs he added. Therefore it is the duty of government to ensure availability of cheaper alternate fuel to industry if it is unable to provide gas, he said. “The rise in number of unemployed workers would definitely give air to anti-government sentiments because industry closure would throw millions of industrial workers out of jobs.” LCCI office-bearers urged government to immediately take concrete measures to avert industrial closures and resultant massive lay offs. “How can the industry afford to pay the all-time high mark up of 16 per cent when there in no gas for the industry?” they asserted. They said around 40 per cent of industrial units in Punjab run on gas. Hence, gas suspension means industrial production is cut to half of its capacity resulting in a loss of millions of rupees to exchequer. They said there is a global phenomenon that industry is given top priority whereas in Pakistan it is neglected and other sectors are given priority. They also urged government to get obsolete gas geysers and heaters with latest solar geysers and heaters to ensure gas to industry. The ‘discriminatory attitude’ of government was not only denting its goodwill and reputation but it has also put a question mark on its ability to manage and govern things. They said industrial units in Sindh were getting almost uninterrupted supply except two- to-three hour load shedding periods. Pointing out that gas suspension plan is a death knell for exportbased industry and productivity, LCCI office-bearers sought Prime Minister’s intervention and help for a regular supply of gas to industry in Punjab or removal of taxes on furnace oil. How industry would manage export orders worth millions of dollars when there is no gas, was a popular question. They were also anxious about thousands of daily wagers who have a single source of income. And above all, they wanted to know how government plans to convince both local and foreign investors for investment when it is unable to manage supply of gas to existing industrial units. LCCI office-bearers said the gas suspension decision had sent a very negative signal to foreign buyers.

CORPORATE CORNER govt of Khyber pukhtunkhwa launches line growth.” PRESS RELEASE its first ever integrated pfm strategy microsoft’s play fair Day spotlights $1.5b disadvantage of piracy

ISLAMABAD: Finance Minister of government of Khyber Pukhtunkhwa, Muhammad Humayun Khan, inaugurated the first ever integrated Public Finance Management (PFM) strategy based on the principles of promoting efficiency, accountability and transparency within government system. The workshop was attended by the representatives of the donors' community and government of Khyber Pukhtunkhwa. The integrated PFM strategy aims at mitigating risks identified in the PEFA and FRA, the Secretary Finance informed the audience. PRESS RELEASE

KARACHI: Manufacturing companies in Brazil, Russia, India and China that choose to use illegal software steal more than $1.5 billion from their inmarket competitors that choose to play fair by using genuine software. Microsoft released the findings of the first-ever study that examines the financial impact using illegal software has on the competitive landscape within developing economies. In support of the inaugural Play Fair Day, which is a global initiative to emphasise the importance of utilising legitimate software, this commissioned study quantifiably proves the harm software piracy has on businesses that choose to play fair. PRESS RELEASE

netSol signs agreement with minsheng financial leasing

pakistan contributes to Sap apj’s 3rd quarter performance KARACHI: Pakistan has been one of the key countries contributing to the improved performance of SAP APJ revenues. Commenting on SAP APJ’s performance and Pakistan’s growing market, Hassan Jamal, Country Liaison Manager, SAP Pakistan said, “Pakistan has made a solid contribution to SAP APJ region’s bottom-

implement the NFS solution. The agreement, which includes product licenses, business process consultancy and on-site implementation services expands and reinforce a strategic partnership between NetSol and Minsheng that began in 2009. PRESS RELEASE

emirates places order for 50 boeing 777-300 ers

DUBAI: Emirates, one of the world’s fastest growing airlines, placed the single largest aircraft order in dollar value an additional 50 Boeing 777300 ER aircraft, worth approximately US$18 billion (AED 66 billion) in list price. This record breaking long-range aircraft order, adds to Emirates existing world’s largest fleet of 95 777s in service including nine 200 ERs, 10-200 LRs, 12 -300s, 61-300 ERs and three freighters. PRESS RELEASE

fares, including taxes with certain conditions attached. Passengers can choose from a diverse range of more than 100 business and leisure destinations, including Hong Kong, Seychelles, Kathmandu, Madrid, New York, Sao Paulo, Beirut, Athens, Beijing, Muscat, Delhi, Goa, Melbourne and recently-launched routes to Budapest, Brussels, Montreal and Venice via the airline’s Doha hub. PRESS RELEASE

LAHORE: Ayla Majid, Director, ISE, Muhammad Uzair, Director audit. Tourism Promotion Services Ltd, Junaid Iqbal, former CEO, BMA Financial Services Ltd, Farid Alam, FCA, CEO, AKD Securities Ltd, Zeeshan Afzal, Executive Vice President, Arif Habib Corporation at the Accountants for Business Global Forum 2011. PRESS RELEASE

Qatar airways announces three day worldwide sale LAHORE: NetSol Technologies Ltd, a worldwide provider of global IT and enterprise application solutions, announced that it has signed agreement with Minsheng Financial Leasing Company Ltd, a leading provider of aircraft leases in Asia, to

DOHA: Qatar Airways has launched a three-day global sale; offering incredible savings on return fares to and from over 100 destinations worldwide. Passengers anywhere in the world, where Qatar Airways operates to, can now avail the special fares. The savings are based on return

MUZAFFARABAD: Mr Nichlas Stewart Hales, Managing Director Pakistan Tabacco Company is being warmly received by Mr Aamir H Kazi, General Manager Pearl-Continental Hotel, Muzaffarabad. PRESS RELEASE

Layout Profit 18-11-11pages_Layout 1 11/18/2011 3:25 AM Page 6

Friday, 18 November, 2011

06 Markets top 10 sectors

24% 09% 35% 10% 08%

Chemicals

01% 07% 02% 03% 01%

General Industrial

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 11913.42 3118.17 2664.92

KSE-100 LSE-25 ISE-10

Change -79.35 -35.71 -14.76

Volume 23,331,124 1,404,463 38,680

Market Value 1,885,011,647 34,465,272 96,520

Major Gainers Company Sanofi-Aventis Mithchells Fruit P.S.O. Jubilee Life In Pak Oilfields Ltd.

Open 140.55 79.20 248.91 58.84 361.10

High 145.00 83.00 254.00 61.50 364.49

Low 142.00 83.00 245.10 59.99 360.50

Close 145.00 83.00 252.58 61.50 363.45

Change Turnover 4.45 740 3.80 304 3.67 546,522 2.66 3,747 2.35 1,430,951

5675.00 3049.98 419.90 880.00 321.90

5501.00 2980.06 383.65 877.00 316.00

5527.60 3002.67 384.13 879.71 316.86

-64.40 -31.11 -19.71 -18.79 -4.54

Major Losers UniLever Pak Ltd. Nestle PakistanXD Indus Dyeing XD Siemens Pak National Ref.XD

top 5 perForMers sector wise Symbol

open

high

low current

change

volume

404.69 120.40 6.98 93.80 334.90

396.00 116.10 6.75 89.30 308.94

396.87 117.57 6.77 92.03 310.82

-6.98 -1.21 -0.12 1.02 -14.37

61,485 833,559 399,510 91,674 314,938

15.00 31.05 71.99 143.49 40.80

14.00 29.29 65.17 137.50 37.06

15.00 29.30 70.64 139.79 37.39

0.00 -1.53 2.05 -0.90 -1.57

1,500 2,485,646 855 4,017 244,529

Oil and Gas Attock PetroleumXD Attock Ref.XD Byco Petroleum Mari Gas Co.XB National Ref.XD

403.85 118.78 6.89 91.01 325.19

17 30 558 35 42,764

Agritech Ltd. Arif Habib CoXDXB SD Biafo IndustriesXD Clariant Pakistan Dawood Hercules

15.00 30.83 68.59 140.69 38.96

Volume Leaders Fatima Fert.Co. Fauji FertilizerSPOT Pak Oilfields Ltd. P.T.C.L.A Engro Corporation

23.86 183.63 361.10 10.86 133.11

24.05 183.00 364.49 11.05 132.55

23.10 180.45 360.50 10.80 130.30

23.16 181.78 363.45 10.87 132.01

-0.70 -1.85 2.35 0.01 -1.10

4,735,720 1,872,992 1,430,951 1,395,771 1,346,175

Bullion Market Gold 24K Gold 22K Silver (Tezabi) Silver (Thobi)

Per Tola (PKR) 57,028.00 51,608.00 1,084.00 1025.00

Per 10 Gm (PKR) 48,944.00 44,245.00 931.00 880.00

Per Ounce US$ 1,758.00 – 35.05 –

Interbank Rates US Dollar UK Pound Japanese Yen Euro

23.25 1.41 8.60 34.00 11.00

23.59 1.45 9.00 34.50 11.00

-0.31 0.00 0.07 -0.48 -0.56

Al-Abbas Cement Attock CementXD Berger Paints Bestway Cement Cherat Cement

2.00 51.11 11.79 8.11 7.66

29.62 2.49 41.17 7.72 22.00

Buy 86.70 116.47 135.98 1.1202 84.24 10.99 23.58 23.10 86.69

Sell 87.40 117.62 137.21 1.1269 86.35 11.23 23.72 23.21 89.11

Brent Crude Oil

$112.39

6.93 184.30 28.50 7.00 108.00

2.00 51.99 12.00 9.11 8.19

1.90 50.81 11.60 8.11 7.50

1.92 51.02 11.91 8.11 8.01

-0.08 -0.09 0.12 0.00 0.35

26,799 108,952 4,762 100 197,042

58.00 169.52 117.00 2.63 168.53

30.40 3.25 42.00 7.95 22.00

28.14 2.21 39.12 7.01 20.95

28.14 3.08 39.60 7.65 22.00

-1.48 0.59 -1.57 -0.07 0.00

14,022 614,084 16,802 993 70

Abdullah Shah Colony Sugar Mills Engro Foods Ltd. Habib Sugar Mills Habib-ADM Ltd.XD

8.00 1.75 23.52 28.10 11.58

8.00 1.75 23.90 28.50 11.70

7.90 184.30 28.50 6.90 108.00

6.93 184.30 28.25 6.25 102.60

58.00 170.00 118.00 2.79 169.99

0.00 0.00 -0.24 -0.30 0.00

10 90 5,055 5,004 2

58.00 168.94 117.94 2.51 168.53

0.00 -0.58 0.94 -0.12 0.00

2,000 240 302 39,802 31

109.00 111.18 145.05 145.58

0.69 -4.44

1,170 203

58.00 168.50 117.00 2.43 168.53

110.49 111.43 150.02 150.00

(Colony) Thal AL-Qadir Textile Amtex Limited Annoor Textile Artistic Denim XD

1.70 11.25 1.67 13.00 18.50

1.11 11.25 1.70 14.00 18.50

31.00 30.82 4.01 120.42 119.16

AHCL-NOV AHCL-OCT ANL-OCT ATRL-NOV ATRL-OCT

31.00 30.82 4.25 121.50 120.30

Abbott Laboratories Ferozsons (Lab) Ltd. GlaxoSmithKline Pak. Highnoon (Lab) IBL HealthCare XD

102.49 80.00 68.92 28.09 10.92

103.00 80.00 68.26 28.09 11.92

6.93 184.30 28.26 6.70 108.00

P.T.C.L.A Pak Datacom LtdXD Telecard Limited Wateen Telecom Ltd WorldCall Telecom

10.89 35.03 0.95 .68 1.13

10.98 34.01 1.00 1.70 1.19

P.T.C.L.A Pak Datacom Ltd. Telecard Limited Wateen Telecom Ltd WorldCall Telecom

11.47 31.65 1.09 1.51 1.32

8.00 1.74 22.54 27.88 11.50

0.00 -0.01 -0.98 -0.22 -0.08

53 23,501 91,748 70,820 2,995

1.11 11.25 1.45 14.00 18.25

1.11 11.25 1.60 14.00 18.49

-0.59 0.00 -0.07 1.00 -0.01

1,000 500 132,822 1,000 1,049

29.45 29.28 3.90 117.90 116.50

29.51 29.32 3.95 119.21 117.71

-1.49 -1.50 -0.06 -1.21 -1.45

376,500 516,500 24,500 201,000 200,000

101.00 78.10 67.01 27.65 10.99

102.10 80.00 68.06 28.09 11.92

-0.39 0.00 -0.86 0.00 1.00

1,283 45 1,557 100 25,154

10.71 34.01 0.90 1.65 1.06

-0.18 -1.02 -0.05 -0.03 -0.07

470,873 500 68,502 152,954 235,458

10.65 34.01 0.90 1.52 1.00

11.77 32.66 1.09 1.68 1.35

11.42 31.65 1.01 1.47 1.15

11.64 32.66 1.03 1.50 1.28

0.17 1.01 -0.06 -0.01 -0.04

4,752,418 1,430 194,249 449,333 649,632

0.50 36.38 0.75 1.70 41.36

0.50 36.50 0.77 1.70 41.80

0.36 36.10 0.70 1.56 41.25

0.50 36.10 0.71 1.60 41.53

0.00 -0.28 -0.04 -0.10 0.17

1 1,022,035 38,682 752,756 220,355

63.16 11.15 5.94 11.15 29.95

64.00 11.29 6.08 11.35 30.20

62.50 10.75 5.79 10.70 29.55

62.69 10.89 5.83 10.89 29.91

-0.47 -0.26 -0.11 -0.26 -0.04

32,694 944,906 319,287 1,929,563 175,090

Electricity Genertech Hub Power Co.XD Japan Power K.E.S.C. XR Kot Addu PowerXD

Banks Allied Bank Ltd Askari Bank B.O.Punjab Bank Al-Falah Bank AL-Habib

Symbol

open

high

low current

change

volume

Non Life Insurance 7.00 1.70 22.50 27.50 11.50

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

volume

Pharma and Bio Tech

Automobile and Parts Agriautos Indus.XD Atlas Battery Ltd. Atlas Honda Ltd. Dewan Motors Exide (PAK)

change

Future Contracts

General Industrials Cherat PackagingXD ECOPACK Ltd Ghani Glass LtdXD MACPAC Films Merit Pack

low current

Personal Goods 40,885 8,285 3,035 25,300 63,850

Construction and Materials

Ados Pakistan AL-Ghazi Tractors Bolan CastingXD Ghandhara Ind. Hinopak Motor

International Oil Price WTI Crude Oil

$102.49

24.70 1.50 9.00 35.00 11.52

Industrial Engineering

87.1242 137.1160 1.1310 117.2082

US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal Australian Dollar

23.90 1.45 8.93 34.98 11.56

high

Household Goods

Industrial metals and Mining Crescent Steel Dost Steels Ltd. Huﬀaz Seamless Pipe Int. Ind.Ltd. Inter.Steel Ltd.

open

Food Producers

Chemicals

5592.00 3033.78 403.84 898.50 321.40

Symbol

Adamjee Ins XD Ask.Gen.Insurance Atlas Insurance Central Ins Co. Century Insurance

49.64 8.50 34.49 48.67 7.16

49.50 8.50 35.00 50.00 7.50

48.60 8.10 33.86 48.00 7.06

49.40 8.47 33.99 49.79 7.50

-0.24 -0.03 -0.50 1.12 0.34

6,785 1,651 1,110 3,909 1,500

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.30 14.89 17.71 0.86 7.25

-0.02 -1.00 -0.25 -0.02 -0.01

9,463 13,487 19,659 9,495 2,100

Life Insurance American Life East West Life Assur EFU Life Assur

14.50 1.40 65.53

14.50 2.34 68.80

Financial Services AMZ Ventures A Arif Habib InvesXD Arif Habib Ltd. Dawood Equities Invest & Fin.Sec.

0.32 15.89 17.96 0.88 7.26

0.35 15.50 18.34 1.09 7.26

0.22 14.89 17.20 0.86 7.25

Equity Investment Instruments 1st.Fid.Leasing Mod 1.70 AL-Noor ModarXD 3.98 Allied RentalModXDXB 19.90 Atlas Fund of Fund 6.00 B.F.ModarabaXD 5.56

1.50 4.00 19.90 6.10 5.56

1.50 3.60 19.88 5.90 5.00

1.50 4.00 19.90 5.90 5.56

-0.20 0.02 0.00 -0.10 0.00

15,000 25,100 3,700 414,000 7

13.50 31.53 35.00 6.50 31.00 15.85 70.48 1.55 70.50 25.00 61.00 28.10 15.50 7.96 1.93 10.80 0.92 1.82 1.03 17.55 19.97 68.10 27.00 1.64 10.70 2.60

13.50 31.79 35.52 7.00 31.00 15.85 70.66 1.56 70.60 25.00 62.39 28.10 15.50 7.96 1.96 10.87 0.93 1.89 1.10 17.65 19.99 68.13 27.13 1.68 10.72 2.60

0.00 0.00 1.52 0.00 0.00 0.05 0.66 -0.07 -0.20 0.00 0.00 0.00 -0.43 0.00 -0.05 0.01 -0.10 0.01 -0.01 0.01 -0.06 -0.66 0.03 -0.01 -0.27 0.00

4,133 270 1,630 205 101 2,061 3,273 623,313 1,725 45 401 400 3,670 1 16,139 1,395,771 176,661 145,392 208,827 6,800 38,961 1,400 800 92,273 184,026 1

Miscellaneous Century Paper Pak Paper Prod. Security Paper Johnson & Philips Pakistan Cables P.N.S.C.XD Pak.Int.Con. SD TRG Pakistan Ltd. Murree BreweryXDXB Grays of Cambridge Pak Tobacco Co. Shifa Int.Hospitals Hum Network XD Media Times LtdXR P.I.A.C.(A) P.T.C.L.A Telecard Limited Wateen Telecom Ltd WorldCall Telecom Sui North GasXDXB Sui South GasXDXB EFU Life Assur AKD Capital Ltd.XD Pace (Pak) Ltd. Netsol Technologies Pak Telephone

13.50 31.79 34.00 7.00 31.00 15.80 70.00 1.63 70.80 25.00 62.39 28.10 15.93 7.96 2.01 10.86 1.03 1.88 1.11 17.64 20.05 68.79 27.10 1.69 10.99 2.60

14.00 31.79 35.70 7.00 32.55 16.00 71.80 1.69 71.40 25.00 65.40 29.50 15.93 7.96 2.14 11.05 1.05 2.00 1.16 17.79 20.10 69.20 27.25 1.75 11.00 3.00

Mutual Funds fund Alfalah GHP Cash Fund Askari Islamic Asset Allocation Fund Askari Islamic Income Fund Askari Sovereign Cash Fund Atlas Income Fund Atlas Islamic Income Fund Atlas Money Market Fund Atlas Stock Market Fund Crosby Dragon Fund

oﬀer 501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800

repurchase 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

nav 501.2900 111.8516 102.6136 100.6900 514.2100 513.9500 516.9700 444.2600 81.3500

fund HBL Money Market Fund HBL Multi Asset Fund HBL Stock Fund IGI Income Fund IGI Stock Fund JS Principal Secure Fund I JS Principal Secure Fund II KASB Cash Fund Lakson Equity Fund

oﬀer 100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000 106.3763

repurchase 100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000 103.2779

nav 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087 103.2779

Layout Profit 18-11-11pages_Layout 1 11/18/2011 3:25 AM Page 7

Friday, 18 November, 2011

it is really unbelievable that cabinet committee on energy (ccoe) is taking such a serious issue of power crisis in such a non-serious manner

news

07 PIA INCREASES FUEL Biogas, an answer to SURCHARGE BY 50 per cent Pakistan’s energy crisis pm, yousuf raza gilani

KARACHI

WAqAR HAMZA

LAHORe

IMRAN ADNAN

AKISTAN is spending almost 20 per cent of its foreign exchange on fossil fuels imports. Annually $7 billion is being eaten away in import of conventional energy resources that is equivalent to 40 per cent of total imports by the country, but the country still lacks far behind in tapping the vast potential of alternate energy resources.

3000mw power potential in Sugar inDuStry A research conducted by the University of Agriculture, Faisalabad, suggests that the country’s energy demand is expected to increase three fold by 2050, but supply position is not inspiring in anyway. It indicates that Pakistan has almost 3,000 MW power generation potential in sugar industry through biogas, but it is hardly producing some 700MW. Study points out that the renewable and sustainable energy resources are the best substitute to the conventional fuels and energy sources. It estimates that Pakistan has almost 159 million animals that produce almost 652 million kilogram of manure daily from cattle and buffalo only, which can be used to generate 16.3 millioncubic-meters biogas per day and 21 million tonnes of bio fertiliser per year. It can easily compensate around 20 per cent of nitrogen and 66 per cent of phosphorus requirement in the crop fields, the study estimates.

introduction of biogas units reportedly increased; subsequently positively impacting household incomes. Research highlights that livestock sector in the country is growing at the rate of four per cent per annum. Energy production by using animal feces is highly sustainable, economically viable and socially acceptable, besides being environment friendly. It points out that Pakistan is anticipated to act as an energy corridor for the region as it holds important strategic location by bordering the Arabian Sea, India, China, Iran and Afghanistan. To keep-up this position, the study recommends, Pakistan will have to strive hard for energy selfsufficiency.

small biogas power generation units is increasing steadily as this decentralised source of energy can ensure uninterrupted power supply to villages. Though, many agencies like Pakistan Dairy Development Company (PDDC), Pakistan Council for Renewable Energy Technologies (PCRET) and Rural Support Programs Network (RSPN) are working to disseminate this renewable energy technology, but the need of a national biogas policy is imperative to bring this technology at the farmer’s doorstep and boost its success rate, the study recommends and adds that installations of biogas bottling plants can be an added opportunity.

learning from the eu

10,000 unitS to be Set up in 5 yearS

It indicates that European Union (EU) has legislated that each member country should be producing at least 22.1 per cent of their electricity from renewable resources in order to stick to the commitment of producing energy from best alternative energy sources. Pakistan, by following the same code of conduct may fulfill its energy needs and satisfy the role of being an environment friendly nation. Nearly 70 per cent of the country’s rural population can easily benefit from biogas energy as these plants are low-cost and can be run with a small budget. Research discloses that demand for

In addition, the study recommends that Pakistan can also explore biogas potential of citrus pulp, paper industry, slaughter house and street waste. It indicates that poultry waste is ideal substrate to produce biogas. Rice straw, when used for biogas production in comparison with other resources like cotton gin, etc. was found best for methane production but when cotton gin mixed with livestock dung was

economic anD Social benefitS

fermented; it produced more gas in lesser time. Domestic bio-gas generation was initiated in Pakistan in 1959 and a significant number of plants were operational in different parts of the country. The government launched Biogas Support Program (BSP) in 2000, which had achieved a target of installing some 1,200 bio-gas units, whereas another 10,000 units are expected to be set up in the next five years that would tap almost 27 per cent of the country’s biogas potential.

Highlighting the economic and social benefits of biogas generation, the research indicates that a biogas unit of 10-cubic-meter size is anticipated to save almost Rs92,062 per annum on account of conventional fuels spent otherwise. In addition, women’s opportunity cost, with

IR passengers have been hit with sharp fuel surcharges, as cost of traveling on Pakistan International Airlines (PIA) flights has increased exponentially. PIA has increased the fuel surcharge by 50 per cent on domestic and international flights with effect from November 5, 2011 while other domestic airlines, Airblue and Shaheen Airways, are yet to decide on a possible surcharge. Aviation experts say there is no valid justification for imposing fuel surcharge at a time when oil prices have begun to stabilise in the international market. Most of the international airlines had announced cuts in fuel surcharge. AllNippon Airways, Cathay Pacific and Singapore Airlines set the precedent and followed by other airlines. Some believe that by imposing additional fuel surcharges, PIA has paved the perfect way for upcoming airlines such as, Air Indus and Bhoja Air, to flourish their business on domestic routes at the cost of exchequer. “Fuel surcharges are being added on airline tickets to partially recover the increase in operational costs due to fluctuations in jet fuel prices. Airlines often include fuel surcharges on top of base fare in order to cover increasing fuel prices because it is easy to add and remove fuel surcharges when prices increase or go down,” said Shah Murad, an aviation lawyer. “International airlines began adding fuel surcharges on international routes in 2008 when oil prices hit a record high of $147 a barrel,” said Murad. Despite knowing all this, surprisingly, PIA has imposed additional fuel surcharges without any legitimate reason to make up for lost profits. Now due to exorbitant fare increase, air traveler would not prefer to travel on PIA flights which will definitely create financial troubles for ailing airline. Ironically, base fares of PIA are already higher as compared to other domestic and international airlines. In current year, this is the second time PIA has imposed fuel surcharges. In April, 2011 Pakistan International Airlines (PIA) had also increased the fuel surcharge due to the soaring prices of the oil in international market. PIA has increased $40 at one-way ticket for US and Canada under fuel surcharge head, for other European countries including Britain $20 and $10 have been increased for Middle East, India and Far East countries. Besides, Rs150 to Rs300 have been added up to the one-way tickets for domestic flights. In May, 2011 the Board of Directors of PIA took decision to link fuel surcharge to oil prices in international market. It is common in the airline industry that fuel surcharge may rise, fall or removed, subject to fuel prices however, in case of PIA, even fuel prices go down, but airfare will remain unchanged. PIA has never cut fuel surcharge despite declining fuel prices in the international market. Fuel costs constitute approximately 45 per cent of the total operating cost of PIA flight operations.

international investors remain risk-averse towards pakistan g

foreign direct, portfolio investment down by 58pc in july-octfy12 g only $238 million flew into country against $571.8 million in fy11 KARACHI

ISMAIL DILAWAR

HE net inflow of foreign investment into Pakistan shrank significantly by 58 per cent during first four months of current financial year. Central bank reported that foreign investors invested only $238 million during July-October FY12 against $571.8 million of corresponding period last year. Review period saw investment from foreign private and public sectors contracting, respectively, to $239.4 million and $1.3 million from previous year’s $610.5 million and $38.7 million, State Bank said. This depicts an absolute decrease of 60.8

per cent or $371 million in foreign private investment and 96.6 per cent or $37.4 million in foreign public investment over same months in FY11. Of the total private investment, Foreign Direct Investment (FDI) depleted by 28 per cent to $340.2 million compared to $470.5 million of the same period last year. FDI, against privatisation proceeds, remained zero thus unreported by central bank. While portfolio investment at country’s stocks market showed an absolute slump of $240.8 million to stand at minus $100.8 million compared to $140 million of FY11. Portfolio investment from the public sector also remained downward at minus $1.3 million, down 96.6 per cent when compared to last year’s minus $38.7

million. Foreign investment against debt securities, showing the net sale or purchase of special US$ bonds, Eurobonds, FEBC, DBC, treasury bills and Pakistan Investment Bonds, was no exception. It came down by $37.4 million to minus $1.3 million against minus $39 million of JulyOct FY11. A region wise analysis of SBP’s investment data reveal that investment from developed nations of Europe and North American regions, decreased more sharply, by 90 per cent, to $36.4 million compared to previous $354.9 million. Investment from Western Europe shrank to negative $168.6 million against positive $140.6 million. While from North America it reduced to $174.4 million from $ 195.3 million.

From United States – Pakistan’s largest source of FDI – the investment went down by 10.5 per cent to $174 million compared to $ 194.7 million of FY11. Tsunami-hit Japan, however, stood as an exception with investment from the Far Eastern industrial giant showing 92 per cent increase to $2.5 million against the previous $1.3 million. The investors from developing economies of Afro-Asian regions seemed less wary of risky investment climate in the terrorism hit Pakistan, as investment from South registered a nominal decrease of 9.8 per cent. The direct and portfolio investment from developing nations slid to $204 million compared to $226 million previously, SBP reported. Whereas investment from African

countries inched up by 34 per cent to $22 million, Asian investors appeared to be risk-averse and invested 16.6 per cent less, $160.7 million, compared to $192.7 million previously. Analysts termed the ongoing downward trend in foreign investment as critical for the resource constrained country saying dollar inflow was the only permanent factor that could rid Pakistan of its balance of payment woes. Exacerbated by ongoing diplomatic cold war between Washington and Islamabad, investment climate in the terror stricken country has not been conducive for a considerably time. This is due to a deteriorating law and order situation and ever-present political instability.