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BUSINESS Saturday, 11 May, 2013
Rs 537 billion circular debt to decide fate of OMCs in new budget
IMF likely to be next Pakistan govt’s first stop
KARACHI STAFF REPORT
The market observers foresee the circular debt in the energy sector playing a key role in defining the upcoming fiscal budget (FY14) as the lingering credit has ballooned to an alarming Rs 537 billion as of April13. This, the analysts say, is compared to Rs 144 billion in 2008, implying an increase of 273 percent. “As per our expectations, partial resolution of circular debt in the budget would improve the liquidity situation of OMC sector,” viewed M. Irfan Saeed, an analyst at InvestCap Research. Thus, he said, lower the financial charges which have been pulling down OMCs bottomlines. Being part of the highest revenue contributor (indirect taxes), PDL on petroleum products is an essential element contributing to the government’s source of revenue, said the analyst. “Considering declining POL volumetric sales and actual PDL collection meeting target for FY13 still being a question mark, we expect the reinforcement of PDL in its present form with a range bound of Rs3-14/litre on various petroleum products and thus status quo to prevail,” said Saeed. However, he said if international oil prices remained flat or fall from current levels as per expectation, one could not rule out the possibility of the government raising PDL by Rs3 to 5 per litre translating into a PDL target of Rs.150-160 billion in the upcoming budget. In budget FY13, the government had set a dividend target of Rs450 million, dividend of Rs7.15/share, from PSO. “We expect 70 percent of the target (dividend of Rs5.0/share) to be achieved in FY13,” Saeed said. Moreover, the analyst also expects the government to set the dividend target of Rs630mn (Rs10/share) in the upcoming budget for FY14 led by partial settlement of circular debt. In the upcoming budget, the extent of resolution of circular debt is expected to define the intensity of positivity that the budget fetches for the OMC sector. “Overall, we expect that the upcoming budget impact on OMC sector is neutral to positive,” said the analyst.
ISLAMABAD
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OREIGN aid is a vicious circle, and Pakistan is wallowing in the midst of it. The biggest challenge for the newly elected government shall
not be the militants hiding in its territory but potential bankruptcy and the consequences attached with trying to avoid it. Lingering on the brink of the next big economic crisis, Pakistan needs a new strategy to rescue it from being perpetually dependant on foreign agencies. Such strategies are hard to come by, and there is little doubt that whichever party makes
the government will agree to a multi-billion-dollar bailout from IMF as the easy way out. Yet this easy path will have severe repercussions of its own. Although talks have already begun for the provision of another transfusion to keep Pakistan’s finances from drying up in the next six months, IMF’s conditions for any deal will make the country sweat. The IMF may stump up around $5 billion, Pakistani officials say, just enough to repay the outstanding debt on an earlier $11 billion package that was suspended in 2011 after economic and reform targets were missed. The new IMF loan would likely spread repayments over five to 10 years, said Shahid Amjad Chaudhry, financial adviser to the pre-election interim government. Pakistan requires between $6-$9 billion to avoid a balance of payments crisis, the Asian Development Bank said. For the extra money, Islamabad looks set to turn to the ADB, World Bank and other multilateral lenders, along with countries with whom it has compelling foreign policy ties like the United States, China and Saudi Arabia.
Cement consumption swells beyond 6pc in 10 months KARACHI STAFF REPORT
A spokesman of All Pakistan Cement Manufacturers Association (APCMA) Friday said the domestic consumption of cement posted healthy rise of over 6 percent in first 10 months of this fiscal. This upward trend, the spokesperson said, could be impacted if the manufacturers were forced to bear higher transportation charges for coal, its basic fuel and for transportation of cement bags. He said the sector dispatched 27.664 million tons of cement during the first 10 months of fiscal year 20122013 that is 4.09 percent higher than the dispatches of 26.576 million tons during the corresponding period of last fiscal year. He said that in April 2013, the industry dispatched 3.123 million tons
of cement that was 3.8 percent higher than the dispatches in April 2012. He said that exports of 0.755 million tons cement in April 2013 were 2.28 percent less than the exports achieved during the corresponding period last year. However, he added, the domestic consumption of cement during the period July 2012 to April 2013 reached to the level of 21 million tons depicting an increase of 6.03 percent. APCMA has appealed to the federal government to relax the axle load limit upto 10% of the maximum cargo weight on National Highways. After the implementation of axle load, timely supply of raw materials and finished goods to destinations is being delayed. In line with the axle load restrictions trucks must have a load of 80 tons when leaving the port. This is made up of 50 tons of cargo and 30 tons
of the own weight of the truck. Trucks are weighed at the Karachi Port weigh bridge while leaving the Port. These measurements are not accurate as the KPT instruments are not calibrated and are very old. Beyond the Karachi Port weigh bridge there is another private weigh bridge called Babar Kanta where trucks are also weighed before starting their onward journey. This Kanta is more accurate, so that generally there is a difference in the weight shown by the KPT Kanta and this one. The extra load, if any, is either taken off at this point or trucks go back to the KPT yard and reduce the load there. All this activity as can be imagined, involves loading and un-loading, and extra handling, and also loss of weight of a commodity like coal as some of it flies as dust.
Lingering on the brink of the next big economic crisis, Pakistan needs a new strategy to rescue it from being perpetually dependant on foreign agencies. Such strategies are hard to come by, and there is little doubt that whichever party makes the government will agree to a multi-billion-dollar bailout from IMF as the easy way out
SBP extends farm loans tenor to five years KARACHI: The central bank Friday extended agriculture loans tenor from three to five years for Small and Rural Enterprises (SREs), the regulator reported. The farm loans are disbursed by the banks under the Credit Guarantee Scheme of the State Bank of Pakistan (SBP) to facilitate eligible farmers for purchase of tractors and other agriculture implements. “To avoid portfolio concentration in tractor and other implements financing, the aggregate financing under this category shall not exceed 20 percent of the total allocated guarantee limit of the bank,” warned an SBP circular issued Friday. STAFF REPORT
Equity market keeps breaking records in hope of ‘pro-business’ govt KARACHI ISMAIL DILAWAR
The Karachi Stock Exchange (KSE) on Friday hit another all time high on the back of what the market observers believe investors’ hope for the formation of a “probusiness” government as a result of Saturday’s historic general elections in the country. With Friday’s historic hike, the analysts say, the volume of Pakistan’s equity market has neared the $50 billion mark. The analysts are expecting the country’s largest bourse breaking more records ahead as Friday saw the benchmark KSE 100-share index peaking to a record 19,916.27 points, gaining 254.81 points or 1.30 percent compared to Thursday’s 19,661.46 points. “This is not the all time high. It is yet to come,” senior stock broker and a KSE board of director Muhammad Yasin Lakhani told Pakistan Today. Declining to predict the numbers for index’s future upsurge, the former KSE chairman attributed Friday’s hike to the investors’ optimism for the formation of a “pro-business” government in the country and good corporate results.
“The market participants are upbeat that the new government’s economic policies would be pro-business,” said Lakani who sees lawlessness, energy crises and international image-softening as major challenges facing the future elected government in Pakistan. The broker, however, warned the investors against being misled by the current spirals in index. “The people should invest keeping in view performance of the individual scrips,” he added. Other analysts were happy about the current upward trend that, they estimate, has augmented the country’s market capital beyond $ 50 billion.
The day under review witnessed market capitalization standing above Rs 4.889 trillion compared to Rs 4.836 trillion of the previous trading session. “Pakistan market is now worth approximately $ 50 billion,” rejoiced Mohammad Sohail, an equity market analyst and CEO Topline Securities. Ahsen Mehanti, a director at Arif Habib Securities, said investors’ sentiments remained bullish amid higher trades in the pre-election rally. “Stocks closed yet again at all time high led by stocks across the board on renewed foreign interest and speculations ahead of general elections tomorrow,” said
the analyst. The investors’ hope for early resolution of the lingering crisis of circular debt, having accumulated to Rs 537 billion as of April (2013) in energy sector, the issue of gas supply to fertilizer and textile sectors on political commitments had played as a catalyst on Friday. Mehanti also viewed strong oil sales data for the month of April, strong valuations in oil, cement and fertilizer sectors and easing political uncertainty as major attributable factors for a bullish market. He seconded Lakhani in citing better quarter-end earning announcements by the listed corporate entities as one of the positives for KSE. The political election-related developments in the country, however, remained at the central stage in defining direction of the stock market in recent weeks. “Investors in Pakistan market are curious to know what news will trigger the market after the May 11 elections,” said the analysts at Topline Research. Hoping for change in the political setup beyond May 11 general elections had been the major theme for 2013, the analyst said. Other positives for the stocks market,
The analysts are expecting the country’s largest bourse breaking more records ahead as Friday saw the benchmark KSE 100-share index peaking to a record 19,916.27 points, gaining 254.81 points or 1.30 percent compared to Thursday’s 19,661.46 points they said, included continuous foreign buying, as net buying standing at $198 million in 2013YTD and a sharp reduction in the SBP’s discount rate to nearly 7-years low of 9.5 percent that compelled the equity investors to shift their funds from fixed income to equities.
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TexTIle INDuSTRy GIveN RS 158.9M ISLAMABAD
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APP
HE government has so far released Rs158.900 million for five major projects of the Textile Industry Division under its Public Sector Development Programme (PSDP), official sources said Friday. The total cost of all these projects has been estimated at Rs.2081.440, out of which Rs227 million would be released during the ongoing year (2012-13). Giving break up, the source said that an amount of Rs64.400 million has been released for the Faisalabad Garment City Project and Rs62.300 million for Lahore Garment City Company. The actual cost of Faisalabad Garment City project and Lahore Garment City Company has been projected at Rs498.8 million and 586.8 million respectively, of which Rs92 million and 89 million would be released during the current fiscal year. The government also released
Rs14.700 million for Pak-Korean Garments Technology Training Institute, Karachi the source said adding the total cost of this project is Rs300 million, out of which Rs.21 million would be released this year. Similarly, out of Rs15 million funds allocated for Extension in Export Development Plan Implementa-
New gas discovery to help meet energy needs ISLAMABAD: The Eni Pakistan, in a joint venture with the PPL and KUFPEC, has recently made a new discovery of gas showing potential to efficiently meet the country’s energy needs. “The production testing gas flowed 33 million cubic feet per day is highlighting an excellent potential for the future for energy needs of the country,” says an official source. The new gas reservoir was discovered in the Kirthar Foldbelt, Sukhpur. The discovery will be appraised and sub-sequentially be commercialized through an early production scheme, making possible the gas supply within three years, the official source added. The Minister for Petroleum and Natural Resources has also appreciated the efforts of Director General (Petroleum Concessions), Eni Pakistan and its partners on the discovery of the new gas reservoirs and said that this discovery was a good news for the nation and the energy sector of the country. APP
tion Unit during current year, the government released Rs10.5 million so far. The total cost of this project is 59.2 million. The government also released 7 million for Providing and Laying of Dedicated 48 inch Diameter mild Steel Water Pipeline for Textile City Karachi.
The total cost of this project is Rs636.6 million, of which Rs10 million have been earmarked in fiscal year 2012-13, the sources added. The sources said that the Planning Commission of Pakistan has so far released Rs170.3 billion for all development projects under the Public Sector Development Programme (PSDP) against the total allocations of Rs233 billion for the fiscal year 2012-13. An amount of Rs86.2 billion has been released for 347 infrastructure development projects and Rs78.2 billion for 715 social sector projects. Similarly, Rs1.9 billion has been released for 77 other projects and Rs4 billion for the Earthquake Reconstruction and Rehabilitation Authority (ERRA). The total size of the PSDP for the year 2012-13 is Rs360 billion, including Rs100 billion foreign aid component, which is managed by the Economic Affairs Division and Rs27 billion special programmes, release of which are made by the Cabinet Division or the Finance Division.
Pakistan pavilion at IDEF-2013 Istanbul attracting visitors ANKARA NNI
Pakistan Pavilion established in the 11th International Defence Industry Fair (IDEF) 2013 being held atIstanbul from 7-10 May, is attracting a large number of visitors and prospective buyers. Pakistani stalls are one of the most visible and frequently visited. Leading defence manufacturing companies from Pakistan are participating in the fair. Participating companies include: Pakistan Ordinance Factories (POF), National Engineering and Scientific Commission (NESCOM), Heavy Industries Taxila (HIT), Defence Export Promotion Organization (DEPO), Pakistan Aeronautical Complex (PAC), Military Vehicles Research & Development Establishment (MVRDE), National Radio And Telecommunication Corporation (NTRC), Global Industrial
& Defence Solutions (GIDS), etc. Pakistan’s Secretary for Defence Production Lt. Gen. (Retd) Shahid Iqbal is leading the Pakistan delegation to the event. The delegation also includes Chairman NESCOM Mr. Muhammad Irfan Burney, Chairman POF Lt. Gen. Muhammad Ahsan Mahmood, Chairman HIT Lt. Gen. Syed Wajid Hussain, Chairman PAC Air Marshal Sohail Gul Khan, Ambassador of Pakistan to Turkey Mr. Muhammad Haroon Shaukat, Managing Director MVRDE Maj. Gen. Rehan Abdul Baqi, and other high officials. Members of the Pakistan delegation are holding meetings with their Turkish counterparts and other visiting delegations from the Middle East, Africa and Europe. Pakistan’s participation in the fair came on the heels of a successful defence exhibition “International Defence Exhibition and Seminar” or IDEAS 2012 it recently organized in Karachi.
Saturday, 11 May, 2013
Major Gainers COMPANY Wyeth Pak Ltd Rafhan Maize XD Service Ind.Ltd.XD Indus Dyeing MCB Bank Ltd.
OPEN 1446.15 4417.50 271.78 499.97 237.56
HIGH 1518.45 4638.37 285.36 512.00 249.43
LOW 1499.99 4196.63 273.00 511.00 243.85
CLOSE CHANGE 1514.87 68.72 4459.90 42.40 285.36 13.58 512.00 12.03 249.43 11.87
TURNOVER 1,200 780 21,700 500 747,000
708.50 622.00 431.09 320.50 387.90
641.04 621.00 417.00 320.50 380.00
641.04 622.00 420.67 320.50 380.35
-33.73 -31.00 -17.33 -16.86 -7.55
7,200 200 2,300 500 1,400
10.40 19.19 2.20 5.60 41.50
9.92 18.85 1.66 5.30 40.35
10.18 19.02 2.11 5.34 41.39
0.25 0.83 0.42 0.57 1.24
24,615,500 16,609,500 12,372,000 10,903,000 10,425,500
Major Losers Shezan Inter. Island Textile MithchellsFruit Gillette Pak National Foods
674.77 653.00 438.00 337.36 387.90
Volume Leaders Fauji Cement P.T.C.L.A Japan Power Telecard Limited National Bank.
9.93 18.19 1.69 4.77 40.15
Interbank Rates USD GBP JPY EURO
PKR 98.4183 PKR 151.4756 PKR 0.9720 PKR 127.9635
Forex BUY US Dollar Euro Great Britain Pound Japanese Yen Canadian Dollar Hong Kong Dollar UAE Dirham Saudi Riyal
99.70 128.31 152.03 0.9740 97.48 12.53 26.85 26.35
SELL 99.95 128.52 152.27 0.9842 99.19 12.77 27.10 26.60
Sanitation, hygiene-related interventions can prevent loss of 2.05 % of GDP ISLAMABAD: Sanitation and hygiene-related interventions could mitigate 52 per cent of economic impacts which amounts to 2.05 per cent of Gross Domestic Product (GDP). This was stated by Country Coordinator, Water and Sanitation Programme (WSP) World Bank, Fahim Sami. “The main cause of this loss is the open defection in the country which has spread the diseases in the country and it is decreasing by 1.3 per cent every year but not satisfactory and it would take years to be eliminated from the country, if it goes at this speed, he said. Moreover, the population is also increasing by 2.9 per cent every year and about 1.2 million people are being added for this need. “If we succeed in eliminating open defection, it would be helping us in achieving Millennium development goals and also helps us in the growth of GDP,” he added. The interventions that could be carried out to mitigate economic losses due to poor sanitation will not only reduce the sanitation related losses but may also provide improvements in non-sanitation areas such as water supply, Sami said. Country Coordinator said that improved access to adequate quantity and improved quality of water could mitigate 30 per cent and 36 per cent of economic losses respectively. APP
CORPORATE CORNER
Certificate distribution ceremony of FWBl-GeP KARACHI: Anis Haroon Minster for Women Development & Human Rights Government of Sindh lauded the role of the First Women Bank in Women’s economic empowerment by helping them to promote their skills and talents. Addressing the certificate distribution ceremony for participants of FWBL’s Capacity Building & Skill Development Training Program she said that a revolving fund is being created to provide soft loans to women through First Women Bank Ltd. There can be no meaningful progress if women, who comprise half of society, remain out of the mainstream of society and do not have access to opportunities, including those of quality education, healthcare, employment, protection from violence, and participation in decision-making processes in society, as well as ensuring their rights, she said.
Earlier in her welcome speech Mrs. Shafqat Sultana President said that FWBL will continue to offer Capacity building and Skill Development trainings and other services as a key means of training and facilitating future women entrepreneurs and for providing opportunities for enhancing women’s employability in various sectors. Around 75 trainees of four programs were awarded the certificates in the areas of Fashion Designing, Computer Skills and Beauty. Aurat Foundation has awarded a grant of Rs. 13.8 million to First Women Bank Ltd. under the Gender Equity Program supported by the American people through USAID. The pilot project is covering two FWBL Business Development & Training centers (BD & TC) in Karachi and Lahore for a period of 02 years. The main objectives of the program are to enhance women’s entrepreneurial development and employability through capacity building and skill development, to provide trainings in core subjects related to women’s entrepreneurship/employment and to facilitate access to loans through FWBL to successful trainees for initiating entrepreneurial activity. More than 400 women have so far completed training in the areas of Business Entrepreneurship, Marketing & Product Packaging, Food Production, Tailoring, Fashion Designing, House Keeping, Computer and Beauty. GEP is a 5 years program implemented in Pakistan by Aura Foundation in collaboration with ‘The Asia Foundation’. The program aims at advancing women’s human rights and empowerment in pursuance of the gender policies and aims of the Government of Pakistan. PR
NBP receives Consumers’ Choice Award
KARACHI: It is a proud moment for National Bank of Pakistan that a public sector enterprise has been declared recipient of Consumers’ Choice Award. The Organizers have chosen National Bank for Consumers’ Choice Award 2012 in the category of “Best Bank”. These awards are conferred every year to those companies offering their products/services to the best interest of the consumers. Nominations for the Award were made through a comprehensive and objective survey conducted by volunteers and polling was also done through website. In Pakistan, there are more than two dozen commercial banks offering freedom of choice to consumers to deal with a bank backed by long-lasting reliability, trust and confidence. The confidence of all the stakeholders in National Bank is re-endorsed various parameters. The shareholders’ equity as on December 31, 2012 exceeded Rs116 billion, which may be termed as
the highest amongst all the banks listed at the local stock exchanges in Pakistan. PR
Pakistan Steel CeO welcomes bailout package
KARACHI: CEO PSM Maj. General (r) Muhammad Javaid H.I. (M)has welcomed the Rs 11 billion bailout package to PSM. The CEO further ensured all the stakeholders that now it is his and the PSM staff’s duty to take the organisation from the ebb to apex. The CEO seconded the PM’s opinion that PSM is a national asset and has a pivotal role in national economy. The CEO said that standard operating procedures (SOP) will be introduced for the operation of the escrow account to ensure that salaries and pension of the employees of PSM are not affected. The only purpose for the opening of this account is to move PSM towards the path of revival and use the amount for the purchase of raw material which is the dire need of the corporation. Moreover, the CEO stated that the recent bailout package of Rs 11 billion given through a single tranche in a shape of soft loan is being provided by NBP under guarantee of the federal government. PR