profitepaper pakistantoday 08th july, 2012

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Sunday, 8 July, 2012

Iran plans to sell oil via consortium, evade ban DUBAI AGENCIES

Iran has reached agreements with European refiners to sell some of its oil through a private consortium, an official said on Saturday, a move designed to circumvent sanctions intended to put pressure on Tehran to halt its nuclear programme. The head of the oil products exporters' union said the agreement between the exporters' union, Iran's central bank, and the oil ministry would get round a European Union ban on shipping insurance for tankers carrying Iranian oil, though he gave few details and did not name the refiners involved. The EU put into effect a ban on the importation, purchase, or shipping of Iranian oil on July 1, and the Islamic Republic will see its oil exports fall by more than 50 percent this month from last year's regular levels, costing it billions of dollars a month in revenue.

"There have been discussions with European refiners, and a final agreement has even been reached," said hassan Khosrojerdi, the exporters' union head, according to Iran's Mehr News Agency. "In accordance with the agreement, it is planned that 20 percent of Iran's oil exports will go through this private consortium."

So, what’s the plan?

Govt finalises strategy for release of funds g

ISLAMABAD APP

The Ministry of Finance has finalised a strategy regarding release of funds for the financial year (FY) 2012-13 for current and development expenditure. The release of funds for the current and development expenditure has been restricted at level of 20 per cent of budget estimates for the period of July-September 2012, official sources informed APP. During October-December 2012, 20 per cent of budget estimates may be released and 30 per cent of budget estimates during January-March 2013, the sources further added. Moreover, the remaining balance of 30 per cent may be released during the last quarter of financial year 201213, they added. however, all releases and payments may be made pre-audit system of Auditor General of Pakistan Revenue (AGPR) or through Assignment Account Procedure and any direct payment through State Bank of Pakistan (SBP) may be made as special case with the prior approval of the Finance Secretary. Proposals for re-appropriation and technical supplementary grant out of lump provisions in the budget 2012-13 may be referred to budget wing for comments and clearance.

Government throws air into the LPG mix g

LPG Air Mix is all set to raise gas prices by 27pc and in turn scare the daylight out of the already petrified consumes ISLAMABAD

T

AMER SIAL

hE novel method under intense consideration of the government to overcome natural gas shortages in the power and industrial sector, LPG Air Mix, if implemented will immediately hike the consumer gas tariff by 27 percent, says the summary available with the Pakistan Today presented before the Economic Coordination Committee on July 3.

The summary presented different volume scenarios, from 10 mmcfd to 150 mmcfd for the LPG Air Mix. The most debated volume was 150 mmcfd, which if implemented would increase the gas prices by 26.95 percent or Rs 83.26 per mmBTU based upon the current weighted average cost of gas (WACOG) of Rs 392.21 per mmBTU. The calculation was based upon the Saudi CP of $ 861 per ton.

The summary proposes that the supply of LPG for the projects will be ensured through open bidding, while Oil and Gas Regulatory Authority (OGRA) would be determining cost of LPG as well as WACOG on monthly basis. The two gas utility companies will work out the modalities for injection of LPG air mix to selected industrial and power consumers.

It proposes that the cost of LPG air

mix in WACOG will be determined by OGRA in estimated revenue requirement (ERR) of the gas companies. Petroleum Ministry is of the opinion that minimum impact will be passed to domestic and commercial consumers and maximum impact to beneficiaries industrial and power sector.

An official source said Chairman OGRA Saeed Ahmad Khan opposed the Ministry of Petroleum policy saying that it would result in over burdening the ex-

isting consumers. This invited ire of Petroleum Minister Dr. Asim hussain who termed his argument as lies. he said OGRA Chairman was going beyond his mandate by intervening in the policy issues which were only the prerogative of the ministry.

The minister said that the regulator could only implement, monitor and regulate the policy finalised by the government and could not express any views on the policy which was beyond its man-

Minor disappointment g

Stocks, euro slide NEW YORK

Minor crops performance less than anticipated targets in 11-12 ISLAMABAD ONLINE

The performance of minor crops has remained less than the anticipated targets in 2011-12 mainly due to bad weather during the crop season.

According to an official the minor crops accounted for 17 per cent towards agriculture while their contribution in overall Gross Domestic Product (GDP) was around 4.3 per cent in 2011-12.

Official said that the production of gram for the year 2011-12 was 281 thousand tones against the target of 676 thousand tones. The unsatisfactory performance of this important pulse crop was because of bad

weather during the crop season.

Similarly the production of onion was recorded at 1,640 thousand tones as compared with 1,872 thousand tones target and 2010-11 achievement. The reduction in this crop was attributed to 14.9 per cent decrease in area sown. Among oilseed crops, the production of sunflower remained 55.7 per cent less against the target of 559 thousand tones mainly because of 26 per cent reduction in area sown.

The poor performance of one of the major oilseed crop is expected to put more pressure on already higher edible oil imports. however, the output of potato that is 4,104 thousand tones has surpassed the target of

3,328 thousand tones and also 201011 production of 3,492 thousand tones.

On the other hand maize, one of the important major crops, performed extraordinarily better with the production of 4,271 thousand tones against the target of 3,656 thousand tones and previous year’s production of 3,707 thousand tones.

The official further said that the achievement may be attributed to increase in area sown (11.2 per cent), use of high quality hybrids and improved Production technologies.

Since this production was unusually high so target for 2012-13 has been increased too much and fixed at 4.3 million tons.

AGENCIES

Stocks fell, the euro hit a two-year low against the dollar and oil slumped more than 3 percent on Friday after disappointing U.S. jobs growth reinforced worries the American economy was mired in a slow-growth rut. The U.S. Labor Department reported that employers created only 80,000 jobs in June, far fewer than needed to bring down the 8.2 percent unemployment rate and adding to evidence that Europe's debt crisis was weighing on global growth. Although the jobs creation was weaker than expected, many investors said it was not bad enough to spur the Federal Reserve to launch a third round of quantitative easing. "This isn't disappointing enough for QE3, but it suggests an extended period of sluggish growth and limited improvement on the jobs front," said Eric Teal, who helps oversee $4.5 billion as chief investment officer at First Citizens Bancshares Inc in Raleigh.

United good, disjointed bad g

IMF chief tells everyone that to secure recovery the world must work together. Most of us sort of know that…

ISLAMABAD ONLINE

The global community must work together to meet the challenges thrown up by the global financial crisis and to ensure future stability and growth, says the head of International Monetary Fund (IMF) Christine Lagarde.

During a speech in Tokyo—the first stop in a three-country trip to Asia the IMF Managing Director said in today’s interconnected world, countries could not afford to look only at events within national borders.

“This crisis does not recognize borders. This crisis is knocking at all our doors,” said Lagarde. “For make no mistake. This is a global crisis,” she added.

The crisis beyond European borders Lagarde said over the past few months,

the outlook for the global economy had become increasingly worrying. There are signs that activity is slowing across both advanced and emerging market economies.

The IMF is due to release its growth forecast for the global economy on July 16. It is expected to be lower than anticipated in the institution’s April World Economic Outlook.

Lagarde acknowledged that major steps had been taken to stabilize the European debt crisis, but warned that without continued, decisive measures, the damaging effect on stability and growth would be felt not just in Europe, but worldwide.

To address the common threats facing the global economy, “solutions need to be grounded in cooperation,” said Lagarde.

IMF research suggests that a coordinated strengthening of policies across the Group of 20 leading economies (G-20) could raise global GDP by 7 percent and boost jobs by 36 million over the medium term.

Lagarde identified major areas which needed addressing to “break the main chains of this crisis: weak sovereigns, weak banks, and weak growth.”

By weak sovereigns, Lagarde was referring to the weak fiscal positions and high national debt of some advanced economies.

She said countries must deal decisively with the issue of public debt, as well as restoring the health of the financial sector. But in addition, there needed to be structural reforms, whether in labor, service, or product market reforms.

date. however, the source said the Finance Minister had to intervene and asked the petroleum minister to at least allow the ECC members to have a listen of the other point of view.

Chairman OGRA said the weighted average cost of gas formula proposed by the ministry will be significantly increasing gas prices from the current level of $ 4 mmBTU considering the imported cost of $ 9 mmBTU. After a detailed discussion the ECC approved import of LPG equivalent to 250 tons with a cost computed on the basis of weighted average cost of gas. however, key decision of procurement methodology and tendering will be brought to ECC through a detailed presentation in the next meeting. ECC also requested law ministry to look further into the matter regarding price determination of LPG on monthly or six monthly basis.

The summary says the guidelines for LPG air mix will be applicable to distribution projects of piped LNG and CNG by the sui companies to retail consumers. All expenditure incurred in installing, maintaining and operating these projects including cost of gas shall be included as permissible expenditure in the revenue requirements of the respective gas companies. however, the gas utilities will ensure prudency in expenditure and ensure ring fencing of all capital and revenue expenditures.

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Business 02 Obama calls for rebuilding US economy Sunday, 8 July, 2012

Is there something on fire?

Smuggled cigarettes smoke up Rs 10b of the national exchequer g

ISLAMABAD APP

Around 15 billion smuggled and duty-non-paid cigarettes are sold annually in the country causing loss of more than Rs 10 billion to the national exchequer.

According to sources, besides financial loss, this illicit trade undermines public health agenda as these tobacco products fail to comply with the regulations issued by the government.

Most of these packs do not even carry the Urdu health warning while the regulations prohibiting consumer promotions are also being blatantly violated, they added.

People, while commenting on the situation, said that there is a need to take action for curtailing sale of smuggled and duty-nonpaid tobacco products in the local markets to avoid heavy financial losses.

They also stressed the need for strict implementation of tobacco control laws in the country. They said that sincere efforts were needed to prevent the spread of tobacco use besides check on smoking at indoor public places, tobacco product, advertising and promotion.

When contacted, an official he said that in line with the spirit of Framework Convention on Tobacco Control (FCTC), the government had already enacted various tobacco control measures through the Prohibition of Smoking and Protection of Non-Smokers health Ordinance 2002.

The said law contains provisions restricting smoking at public places, restricting advertising and promotion of tobacco products and prohibiting sale of cigarettes to minors, he added. he said Pakistan was the 5th country in Asia, and the 26th in the entire world, which had introduced pictorial health warnings on cigarette packs.

WASHINGTON AGENCIES

U

S President Barack Obama said on Saturday the United States needed to do more than just reclaim jobs lost to the recession, as he called for rebuilding the economy to make it secure for future generations. "Our mission isn't just to put people back to work - it's to rebuild an economy where that work pays; an economy in which everyone who works hard has the chance to get ahead," Obama said in his radio and Internet address.

The comment came after new Labor Department statistics showed that the June jobless rate was unchanged from May at 8.2 percent, with 12.7 million people in the ranks of the unemployed.

The United States added only 80,000 jobs in June, the third month of weak jobs growth amid a sluggish economy that has kept hiring on hold, the department data made public on Friday showed.

The figure was far below what is needed just to keep pace with growth in the labor force, signaling no relief in sight

for an unemployment rate that has held above 8.0 percent for more than three years. The disappointing report toughened the challenge ahead for Obama, who is fighting to keep his job in the November presidential election against charges by Republican challenger Mitt Romney that his administration has failed to revive the economy.

Romney argued that Friday's weak US jobs report was proof Obama's economic policies were failing, saying "this kick in the gut has got to end."

On Friday, Obama signed a bill funding scores of transportation projects across the country as well as a bill keeping interests on student loans from increasing.

Both passed Congress last week "Those steps will make a real difference in the lives of millions of Americans," the president said in the radio address. "But make no mistake we've got more to do."

Economists were divided over whether the slump in the employment market was bad enough to push the Federal Reserve into additional stimulus for the economy at its July 31-August 1 pol-

icy board meeting.

"We do not believe today's report is sufficient to shift the Fed into action at the next FOMC meeting," Barclays analyst Michael Gapen said.

Gapen noted that the Federal Open Market Committee had extended its bondswap programme to year-end at its June meeting, when the central bank slashed a half percentage point from its 2012 economic growth forecast to a tepid 2.4 percent rate at best.

Nomura economists highlighted the risk that instead of a temporary soft patch this could be the beginning of a longerlasting downshift in economic activity.

"A persistent deterioration in labor market conditions would likely spur the Federal Reserve to adopt an even more accommodative stance," they said.

The data showed a sharp slowdown in hiring across most major industries during the second quarter as the economy struggled to gain traction against pressures from Europe's debt crisis.

The average number of jobs added in April, May and June was 75,000 jobs, only a third of the first quarter's pace.

LCCI gets chummy with Uncle Sam Ashton to g

US urged to grant duty-free access to Pakistani merchandise LAHORE ONLINE

The Lahore Chamber of Commerce and Industry Saturday urged the US Administration to take urgent and immediate measures to grant duty-free access to Pakistani merchandise that would ultimately help overcome its economic woes.

In a statement issued here, the LCCI President Irfan Qaiser Sheikh said that Pakistan needs extra-ordinary cooperation from the United States as it was a frontline ally with the United States while facing the brunt of war on terror even today when the rest of the world is on the path to progress and prosperity.

"Economic stability of Pakistan through prompt direct market access to US is must economic viability of this country." Market access will help rehabilitate and reconstruct the totally

damaged basic industrial infrastructure besides generating jobs of millions of jobless people.

Besides this there exists a vast scope for US investors to make investment in several sectors including power, textile, food, livestock, diary and petroleum etc. The US Administration must convince the potential investors to put their money in Joint Ventures with Pakistanis.

Irfan Qaiser Sheikh said that if the United States comes forward at this point in time when the country is passing through unprecedented challenging times, the trade, economic and cultural ties between the two countries would flourish further.

The LCCI President said that the Lahore Chamber of Commerce and Industry was putting in its best efforts for promotion of trade and resultant economic prosperity. he said that it goes without saying

that America tops among the major trading partners of Pakistan and there are many areas including political, social, economic, defence and etc., in which both countries collaborate and cooperate with each other. A significant volume of Pakistan's exports find their way to US markets and likewise Pakistan imports fairly large amount of goods from America.

Considering the historic relations of both the countries and the critical role of America in the economy of Pakistan, the LCCI wishes to expand these ties for the mutual benefit of the two countries.

The LCCI President also called for US help on energy issue that has contributed to the extent in aggravating the economic situation in Pakistan. he said that hundreds and thousands of industrial workers are today without jobs in because of ongoing energy crisis.

Asmussen sees EU bank supervisor in place in ‘13 The European Central Bank will be able to fully act as Europe’s unified banking supervisor only from next year, a top ECB policymaker told an Italian daily on Saturday, adding it was important to keep the new role distinct from monetary policy MILAN AGENCIES

ECB Executive Board member Joerg Asmussen also told La Stampa daily that Italy had made great progress in terms of improving its public finances, but had now to address the problem posed by its near-zero potential growth.

"There are several practical issues to solve to get to a (unified) European banking supervision," Asmussen was quoted as saying. "I believe that European supervision will be fully operational only during 2013."

EU leaders agreed at the end of June to set up a single banking supervisor in Europe as a pre-condition to letting the euro zone's rescue funds directly inject cash into lenders, without lending to a government first.

Asmussen said Spain, which has requested aid for its troubled banks, would likely experience a temporary increase in its public debt.

"As soon as the new mechanism is in place, the credit would be transferred. The increase in (public) debt would be temporary."

Asmussen said the ECB believed it was important to ensure that its new role as banking supervisor was clearly separated from its monetary policy mandate.

"We must make sure this is guaranteed through distinct decisional and organisational processes," he said.

Asked if Italy could continue to face the euro zone debt crisis without tapping international aid, Asmussen said: "I think Italy can manage by itself if it advances without delays on the reform path and if tackles its growth problem in a serious way." he said some international institutions have indicated Italy's growth potential is currently close to zero.

"Italy must grow," he said. "Acting solely on the side of public finances is not enough."

Asmussen said he was worried by a growing rift between northern and southern Europe, when asked about German media describing the outcome of the latest EU summit as a defeat for Chancellor Angela Merkel.

"We must ask ourselves only if Europe won. But this way of looking at things is disappearing."

attend EU-China dialogue in Beijing BEIJING AGENCIES

European Union foreign policy chief Catherine Ashton will visit Beijing on Monday and Tuesday for talks aimed at boosting coordination on foreign affairs and security, a European diplomatic source said. The third round of the high level EU-China Strategic Dialogue will see Ashton meet Premier Wen Jiabao, as well as State Councillor Dai Bingguo, who is in charge of foreign policy, and Defence Minister Liang Guanglie. The first Strategic Dialogue was attended by Ashton and Dai in September 2010 in the southwestern Chinese province of Guizhou. The second meeting was held in hungary in May 2011. At the last EU-China summit, which was delayed from October 2011 to February this year because of the European sovereign debt crisis, China renewed its support for the euro. The third Strategic Dialogue will help prepare the ground for the next EUChina summit in Brussels in the autumn.

The EU is the largest market for Chinese exporters, who are suffering the effects of the European economic crisis.

Rate rigging probe escalates in UK and Germany LONDON/FRANKFURT AGENCIES

A global investigation into manipulation of interbank lending rates widened on Friday with Britain's fraud squad taking up the case and sources telling Reuters that Germany's markets regulator had launched a probe into Deutsche Bank. Authorities in the United States, Europe, Japan and Canada are examining more than a dozen big banks over suspected rigging of the London Interbank Offered Rate (Libor). Britain's Barclays has so far been the only bank to admit wrongdoing, agreeing last week to pay a fine of more than $450 million. The rate-fixing scandal has exploded into the front ranks of politics, especially in Britain, where politicians say the bankers responsible should end up in jail. Barclays CEO Bob Diamond was forced to resign this week and told a parliamentary committee that some of his firm's former staff could face criminal charges. The Libor rates, compiled from estimates by large banks of how much they believe they have to pay to borrow from each other, are used to determine interest rates on trillions of dollars worth of contracts around the world.