Profit 13th December, 2011 by Profit Epaper

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Pakistan, ADB to sign MoU on Bhasha Dam today Page 8 Decisions determine success Page 2 Banking on the bigger bully Page 3 Pages: 7

profit.com.pk

Tuesday, 13 December, 2011

Railways on the verge of collapse, committee told g

Losses exceed Rs45 billion in current fiscal year g Sixty per cent locomotives over age g Pakistan still operating 53 year old engines ISLAMABAD

JALALUDDIN RUMI

He Pakistan railways (Pr) will have to end its operations and become a chapter of history if the government fails to curtail the losses that touched a record high of rs45 billion in the current fiscal, despite rs25 billion subsidy. The National Assembly Standing Committee on railways while expressing its displeasure over transfer of Chairman railways; warned the government to support the cash strapped entity through timely release of funds and the issuing of the notification of railway Board; that could not be formed since January 2010. In the NA meeting chaired by Chair-

man Sardar Ayaz Sadiq, the committee directed minister for railways, Ghulam Ahmad Bilour, to finalise the policy and the mechanism for the evacuation of 2143.29 Acre encroached railway land and submit the report to the NA committee in the next meeting scheduled mid January 2012. The committee asked the ministry officials to draw the mechanism to stop the expansion of railway land encroached by people of Katchi Abadis. The railway minister expressed his disagreement over the committee suggestion that government should appoint the Secretary, Chairman railways, Gm railways, and other key officials over BS-20 for at least three years as consecutive transfers on key posts were affecting the

performance of railways. Bilour while showing his reservation over the suggestion said that it would be difficult for him to establish a working relationship with officials over whom he does not have the authority to transfer or replace. The NA committee asked the government to announce and form the railway executive Committee and railway Board that could evaluate the performance of the officials and assign them targets to reform the loss making entity. The committee was told that out of a total 494 locomotives; sixty per cent were over age. Committee was told that 277 locomotives are over 33 years old while only 122 locomotives were included in the railway fleet in the last 17 years. The railway officials said that the

average age of a locomotive according to international standards is 20 years while Pakistan railways is still operating 53 year old locomotives. The railway officials briefed the committee that 100 locomotives would be repaired through public-private partnership; 96 locomotives would be repaired through rs6.1 commercial loan while 46 locomotives will be repaired by railway cash revenue after which 349 operational locomotives would join the railway fleet. minister railways said that due to Public Procurement regulatory authority (PPrA), the ministry is facing delay in the procurement of locomotives for the last two years. The NA committee directed the regularisation of 4385 railway workers and TLA employment mechanism

Dr Pervaiz Abbas appointed new chairman Gwadar Port Authority

NaNdipur power project machiNery

Gilani orders immediate release

KARACHI STAFF REPORT

450 megawatts project has been delayed for past two years Meeting approves reconstitution of board of directors World Bank shows interest in Dassu Dam project Kacchi Canal project to provide water to barren land of Dera Bugti in Balochistan g g

ISLAMABAD

MIAN ABRAR

FTer knowing that despite federal cabinet’s orders to accelerate work on Nandipur Power Project, the machinery of the project was still lying at Karachi Port, Prime minister Syed Yusuf raza Gilani directed the authorities that immediate steps should be taken to release Nandipur Power Project machinery to make the project operational by early next year, Profit has learnt. Prime minister Gilani passed these directions during a briefing by ministry of Water and Power on Neelum Jhelum Hydropower Project here at Prime minister’s House which was attended by minister for Water and Power Naveed Qamar, minister for Kashmir Affairs and Gilgit-Baltistan manzoor Ahmad Wattoo, Secretary Finance, Secretary ministry of Water and Power, Secretary economic Affairs Division and other senior officials of the relevant ministries. A source told that during a meeting, it was informed that the machinery was yet to be installed on the project site as the same had not been released by federal government authorities from Karachi port. The 450 megawatts project has been delayed for the past two years as the project was to be made operational in Punjab. earlier, it had been reported that law ministry did not wet the project due to legal hazards for two years and later the matter was also raised in the national assembly by an opposition mNA Khwaja mohammed Asif. The meeting also approved reconstitution of board of directors by inducting relevant stakeholders. Ceo of Neelum Jhelum Hydropower Project said that after winning the arbitration case, work had been resumed in full swing and hopefully would be complete in 2016 with generation capacity of 960 mW. Ceo also said the earthquake of 2005 led to

modification in the design of the project to make it earthquake-proof. The alteration in the design caused substantial increase in cost, because it entailed massive additional civil works. The management of the project also briefed about the funding plan and identified problems which they said would be resolved with ease. Chairman WAPDA said it was easy to take up Tarbela extension Power Project because the tunnel to be used for extension project was constructed during 1970s. He further said World Bank had shown considerable interest in the Dassu Dam project which would produce 4300 mW electricity after completion. munda Dam Project on Swat river, the chairman said, would be an excellent project because it would not only produce electricity but also save large areas of Khyber Pukhtoonkhwa from floods because these were caused by Swat river and not by Kabul river. Chairman said work on Boonji Dam had to be reviewed in view of one study that revealed that faultlines were in close proximity of the dam site. Chairman urged upon completion of Kacchi Canal project because its completion within next eight months would provide water to the barren land of Dera Bugti, Balochistan. Prime minister also appreciated ministries of Water and Power, Finance, Petroleum, WAPDA and others for doing excellent work during this season as people of the country and industrial sector had to face minimum possible load shedding. Prime minister said timely action of federal ministries had frustrated the designs of political opponents who were planning to cash in on possible unrest due to shortage of energy during the season. Prime minister further directed ministries to take measures well in advance to minimise impact of canal closures by bridging the possible power gap by increasing Thermal Power Generation. Prime minister said his government had added

within a month’s time. The committee asked the secretary railways to conduct a forensic audit for fixation of a clear cut responsibility of negligence, incompetence in case contaminated oil is used in railway engines. The locomotive oil should be changed with fresh oil after 120 thousand km while in Pakistan railway locomotives oil was not even changed after 275 thousand km that led to breakage of locomotives. The committee Chairman Sardar Ayaz Sadiq while giving his comments in the meeting said that delay in the release of funds by the finance division would lead railways to the brink of collapse. The committee appreciated the retrieval of 492 Acre railway land by the railway police in the last one and a half year.

3500 mW in National Grid during its tenure, so far, which was an impressive performance by any stretch of the imagination. Prime minister further said that democratic government had also provided electricity to thousands of villages in the country during the period. In view of the very good response from the private sector in the power sector as highlighted by Chairman WAPDA, Prime minister approved the one-window operation in order to facilitate potential investors who were interested in investing in Pakistan due to bright prospects in this sector. Prime minister also urged ministry of information and ministry of water and power to project government’s successful efforts in undertaking the short, medium and long-term projects to overcome energy shortage in the country. The credit should be earned by showcasing performance in this sector, Prime minister said. Prime minister said credit goes to the democratic government for launching work on Diamer Bhasha Dam, which was approved by Council of Common Interests through a consensus decision, unlike Kalabagh Dam, which has fallen victim to political controversies. Prime minister expressed the resolve of his government to take up decisions in successive cabinet meetings about Public Sector enterprises which had been making a big hole in the pocket of public exchequer for many years. The matter of circular debt will be taken upfront so that people do not confront unscheduled load-shedding. Prime minister said that important and immediate decisions would be taken regarding LNG to overcome shortage of electricity in the country because the entire import of LNG would be used for producing 2200 mW electricity. earlier, Chief executive officer of Kohala Hydropower Project said in his briefing that work on the project was progressing well and about 28 per cent work of the project had already been completed.

ormer Joint Secretary of ministry of Ports and Shipping Dr Pervaiz Abbas is going to be made the chairman of Gwadar Port Authority, while outgoing chairperson of Karachi Port Trust (KPT) Nasreen Haque is likely to be made the chairperson of National Insurance Corporation (NIC). Profit learnt that Dr Pervaiz Abbas was working in the ministry of ports and shipping as Joint Secretary before being transferred to another department, and now he has been recalled for taking charge of GPA chairmanship. GPA Chairman Aslam Hayat, who was made Chairman KPT recently in lieu of Nasreen Haque, is going to take charge of the port very soon; though Karachi port has not received the notification yet in this regard. Nasreen Haque, who has strong connections in the power corridor and was made the chairperson KPT in the present government, is likely to take charge of another important organisation NIC soon, sources added. However, appointment of Aslam Hayat, who was working as Chairman GPA, as Chairman KPT has raised serious concerns as he has to appear in the hearing at Supreme Court regarding the apex court’s suo motu action for handing over Gwadar Port to Port of Singapore Authority (PSA) under an agreement by the government. Aslam Hayat is the signatory of the agreement, sources added. Since Aslam Hayat does not have any port development and management experience, he is apparently a bad choice for this very important position of the biggest port of the country and might not fulfill the responsibility quite well, sources added. one of the biggest issues he is going to face is deep water project of KPT, on which the port has spent $1 billion from own funds but the project is far behind its schedule as it was supposed to become operational in June 2009. And four berths of the project were supposed to be made operational by December 2010. Similarly, the port has to make an act of the project without which it is not clear whether this Deep Water Port would be part of KPT or an independent entity. ‘And if this is to be made part of KPT, this will face a disastrous problem namely Karachi Dock Labour Board that in turn would make this project a pain. Therefore, deep water container port has to be made an independent entity through devising its act,’ experts believe.

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Tuesday, 13 December, 2011

debate

Decisions determine success T

DuRDAnA nAjAM

He Wall Street sit in is a war against economic hegemony that has left many penniless because someone out there has made money from few “creative ideas” in a highly deregulated financial atmosphere. From the fall of Berlin wall; the symbol of communism, to the weakening of Wall Street ; the symbol of capitalism, the signals have been clear – economics could haunt the government in ways that it could even find itself running out of time. The so called Arab Spring is a testimony to it. The institution of economics cannot be left on unchecked innovations, any move on the likes of derivates or speculative market, could pull off the ranks one has achieved in no times. economics is a serious matter. The tendency of economics, to raise income disparity among people, if left to chance, is manifold and that is where the intervening invisible hand of government plays its role to define the limits. every economy has its recessionary or inflationary periods, or it could be dysfunctional at the worst of its time. This tweaking could be managed through right and reformatory policies to keep the boat afloat or to let productivity take the raps. There is no reason for Pakistan not to actually

swim through the choppy economic waters, once reformatory fixes are applied to it. If Pakistan could jump the fences and manage to deliver nearly three per cent growth under sever circumstances dotted with two massive floods, hostile domestic security environment, political instability and uncertainty and host of other problems, it could do even better if the government’s interest in growth and development could be enhanced on serious notes. The case could be made that it is the directionless, thoughtless, haphazard or in some cases no economic policies of the government that has created the mess we have to live with today. A reform in “decision making” could alter the equation of developmental approach of this government and once that is done problems would begin falling like nine pins.

DeCiSion MAKinG iS A PoLiCy iSSue What is that one thing, Pakistan should do, to lift itself off its socio-economic crisis? make the right decisions! This would be the answer of any observing mind. To elaborate further, one would say that there is hardly any reason why Pakistan could not progress, only if it learns to make right decisions. What does it mean to make right decision and what does it take to make right decision? These questions nag an ordinary mind more so after knowing that the implementation of only two words could change the fate of this country. Decision making is a policy issue.

Nothing on the government agenda moves unless a note is generated. From the origination of the note to its implementation, there could be any amount of discussions and deliberations, eventually setting the pitch for a set of people to make a choice; to adopt or to drop the order originated in the note. An issue with serious implications would kick off debates involving anyone who could matter or could be affected by the policy decision. Policy development is actually at the heart of decision making that sets the stage for takeoff on the right speed and altitude.

PoLiCy MAtteRS

policy making, kept asking for the policy on rPPs. Surprisingly there was none. The decision to buy rPPs was taken behind closed doors; a decision that needed no note, no deliberations no questioning and no policy. Who is the accused? Is it the federation that blundered? The debris of rPP stinks of the embezzled money to the tune of billions of rupees that sunk the country deeper into financial as well as moral darkness. Had right minds been applied to make right decisions perhaps this notorious deal of rPPs would never have seen the light of the day.

Decisions emanate from policy and whenever there is no policy, be it a memo, a whitepaper or a policy paper, there would be cases lined up in supreme court seeking justice for a country that has lost its tax payers hard earned money to usurpers. During the hearing of rental Power Plants case (rPPs) the Chief Justice of Pakistan Iftikhar mohammad Chaudhry, only to emphasise the importance of

DiSiLLuSioneD LeADeRShiP Production is a game of choices and decision making. This world is by default built on the theory of comparative advantage. even human beings are designed on the same formula. The essence of democracy lies living with differences and the essence of economic growth lies in understanding the difference that could allow one to leap ahead in a competitive environment. It is this door that we have not opened fully; perhaps we have yet to know what we are good at and what we are not good at. However, the decision to tap on our resources is in waiting. The desire to unfold the myth of untapped country is the call of the day. Today the industries of Pakistan have run out of gas, the question is that has Pakistan run out of gas as well? It has not. When musharaf decided to put every industry and the energy sector of Pakistan on gas, and when his regime, and the one that followed it, went on dispensing senseless number of permits for putting up CNG stations across the length and breadth of Pakistan the fault lied in decision making. The fault lied in policy formulation and its pursuance. Last but not the least the fault lied with the authority commanding the regime that lacked vision, and the spirit of planning. Had the depleting energy been replaced by new discoveries, or by alternative energy measures, we might not be having the massive trade imbalance that we are put to face today.

BAD PoLitiCS on WRonG eConoMiC teRMS The recent economic scoreboard has posted 19 per cent increase in our import bills and 13 per cent decrease in export, leaving us with 58.3 per cent trade imbalance. The import bill owes its bloat to oil products and power machineries, on the export front we lost in the textile sector. Analysts said the demand of Pakistan’s products particularly textile, cotton, and leather have been losing their demand in foreign markets specifically in the US and eU.

64 yeARS ARe enouGh to tAKe the Shot

one can blame the financial crises in US and eU for this slide but one cannot forgive the economic managers and policy makers of their short-sightedness. Governments have to choose between spending and not spending. If Pakistan government has chosen to spend on its sick industries to the tune of 1 trillion rupees in three years, and had not bothered to revive the energy sector that has caused lost markets and lost opportunities to its industrialists and employees both, it is called bad politics on wrong economic terms. These are policy issues and can best be solved only if the policy framework is turned straight.

No doubt the history of Pakistan is loaded with examples of policy failures. on matters where policies have been made they too have seen stagnation and worst delays in implementations. What use does a policy possess if its implementation is half hearted or if it fails to deliver the kind of result it plans to do? Though the reasons for the deteriorating foreign and domestic investment in Pakistan are numerous, one that stands out to haunt is the complacency of the political leadership in compromising policies for political expeditions. The show is not over yet, with the revival of a consultation process and changing the paradigm from disposal of files to the disposal of work, situation can be averted. The Wall Street sit in is against “greed” something, that could ruin even the best of polices as we are sure of America having one; it is this wall of greed that needs to be torn down for a successful socio-economic journey in Pakistan sixty four years of calling is perhaps enough to take the shot...at least now. The writer is currently doing Executive MA in Governance and Public Policy, from FC College, Lahore. She can be reached at durdananajam456@hotmail.com

‘Not everything’ wrong in power sector

SADIA ZAfAR BAIg

Here has been a lot of outcry in the media that the current government and ministry of power have done nothing to overcome electricity shortage. Though, the country faced load shedding for few days in the month of october but it was overcome instantly and since then no load shedding is carried out for the domestic sector while the duration of load shedding for the industrial sector also reduced sharply. I am not saying that everything is going very good in the ministry of power but at least it should be given credit for things it has initiated or completed in the recent years. The power sector was totally ignored in the previous government’s era and even the constant requests for providing funds were not taken seriously. The energy demand with passage of every day increased. Interestingly, the home appliances import was relaxed

during 2003-2007 and power demand increased more than 15 per cent every year and putting extra load on power demand. However, then-government did not take any serious steps to cope with the emerging energy demands. As soon the current government took charge in 2008, the country was facing huge load shedding and the industrial sector was in deep energy crisis. Looking at the need of the energy, the current democratic government gave importance to energy sector and not only initiated different projects but also improved the transmission and despatch system. The government has taken short-term and long-term measures to overcome energy crisis and added around 3,000mW electricity in the national grid but at the same time the energy demand also increased at the same ratio. In long-term projects one of the biggest dams in the country’s history i.e. DiamerBhasha dam has been initiated and importing electricity from Central Asian countries

is underway. In short-term projects, the government adopted energy conservation policy, which remained very useful to overcome power shortage. It was hard efforts of ministry of power that hydel generation in 201011 increased as compare to 2009-10. In 2010-11, the hydel generation remained 31.45 billion units whereas in 2009-10, it was 27.61 billion units thus an increase of 3.84 billion units was observed. Diamer-Bhasha dam was one of the important projects for producing energy, as with its completion the country would get 4,500mW electricity and at the same time the life of Tarbela Dam would increase by 35 years. on the despatch and transmission sector, the National Transmission and Despatch Company (NTDC) is working on different projects and all of them would enhance the current distribution system. The new grid stations would be installed under these projects. The 500KV grid stations were upgraded and new grid stations of 220KV were set up. Sim-

ilarly, new transmission lines are laid and all these steps would reduce line losses and improve electricity distribution of the country. NTDC has arranged finance from different sources including donor agencies i.e. Asian Development Bank (ADB), Japan International Cooperation Agency (JICA). The donor agencies have shown their satisfaction in the projects and it reflects the commitment of the government departments for serving people. In the ongoing projects NTDC will work on transmission arrangements for power dispersal of Ghazi Brotha; muzaffargarh-Gatti 500 KV transmission line; upgradation of NPCC Islamabad; 500/220 KV inter connection facility in Karachi; new 500KV grid station at Sahiwal along with 220KV system expansion; new 220 KV grid station at Khuzdar and Dadu; 220KV grid station Ghazi road, Lahore with 220KV line and extension of 8 new 220KV grid stations of NTDC system. Pakistan Power electric Company

(PePCo) initiated energy conservation plan, which also saved around 700mW. Under this plan, people are educated to turn off all extra lights, use energy savers and put the thermostats of their air conditioners on 26 degree. All of these messages to the masses are giving positive results. These steps have been taken by the government and now as a responsible citizen; we should also come foreword and play our due role. We should not just criticize the government but think that how can we play our role. Housewives can play an important role in this regard. I think if we identify our individual responsibilities then this power crisis could be overcome. The protests and burning government property is not solution. The power crisis is not a local problem rather it is a regional issue. our neighbouring country India is facing more than 50,000mW of shortfall and long hours of load shedding is seen. India would take not less than 12 years to overcome its power crisis but the situation in Pakistan is different, as we have the capacity to overcome energy crisis in a few years. The writer is employee of NTDC/PEPCO

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Tuesday, 13 December, 2011

EDITORIAL

Capital quantum requirements

Rupee sounds alarm bells

INANCIAL markets anticipating a rupee fall to 92 against the dollar by Jun ’12 does not bode well for the economy as a whole, especially our export structure is no way strong enough to leverage the weakness for revenue gains. It is an apt description of our current financial situation – deficits bloating out of control, investors fleeing, revenue inflow not nearly good enough and high unemployment combining with low growth and high inflation to deepen the current bout with stagflation. If these projections fail to shake our able fiscal and monetary managers, then the middle and lower income groups can just forget about subsistence and survival getting any easier until, at least, a change of administration in Islamabad. There are a couple of interesting features about the rupee losing value so aggressively. The Pakistani currency has largely lost against the dollar when the reserve currency is itself under immense downward pressure. Its recent gains have owed more to safe-

haven trading as investors sought refuge from the euro’s dramatic unwinding. For the rupee-dollar exchange to have sunk to its lowest in the present environment speaks of inherent weaknesses in the local economy. Yet this phenomenon is not singular to Pakistan. After years of trumpeting India’s BrIC rise, mumbai’s Dalal Street seems beset by many similar problems, including an aggressive investor outflow and a frightening pace of rupee depreciation, threatening collapse of New Delhi’s investment economy model. It seems Southeast Asia must also reinvent itself, just like much of the world has done in the aftermath of the monstrous collapse of ’08. Fortunately, Pakistan was spared much of the collateral damage, being poorly linked with the international economy. Yet unfortunately, we created pitfalls of our own, ensuring we didn’t remain unscathed when all else were suffering. There is still time to recollect, and the rupee warning is perhaps the last before collapse becomes inevitable.

Aahyan Mumtaz

ere we go again. In a seemingly arbitrary move, so claimed in the name of promoting capital market development, the regulator has put forward a proposal calling for enhanced minimum Capital requirement (mCr) for brokerage houses. From a market participant perspective, this new regime has come at a time where the economic situation is not favorable, capital markets are lacking interest, and several businesses are closing down due. In my mind, the new regime has, instead of helping in improving the situation, has facilitated the fall. Sorry sir, the timing has been severely off on this one. For those not familiar with this term, minimum Capital requirement (mCr) is a regulatory requirement which is required to be held for a certain level of assets. Banks are not unfamiliar with this as regulations in this regard have been in place since 2005. Now it seems that regulators want brokerage firms to get used to the idea as well. Initially proposing rs400m capital requirement for eligibility of brokerage license, raising it exponentially and suddenly from the current rs20m, has scared brokers and investors alike. And so it should. The concept paper proposes that a minimum of rs400m should be kept in paid-up capital at all times for any broker who wishes to indulge in trading and clearing activities. In a time where business is already really hard to come by, this is another burden – and a serious one threatening going concern status – added to an already long list of depressive issues faced by brokers. There is effectively a one-point rationale for imposing this requirement: to protect brokers’ clients in case the former is declared bankrupt or defaults. The concept behind this is that brokers, like banks having a substantial capital base, would be in a position to absorb losses in case they occur, thus protecting their client/depositor base. However, does this take into account the number of brokers which will be forced into default because of this requirement? Why would management want to over-in-

Is enhanced Minimum Capital Requirement the right move? Mobilink’s spending

Advertisements

mobilink spends billions on advertisement. It’s just that their advertisement is on a different tone, a corporate tone. I believe when it comes to perceptions people view themselves as serious business minded individuals who actually want to dress and act like the models in the mobilink ads. The Ufone ads are a good laugh but no one wants to be one of the models they use, like how many of us would want to fall for the ‘teri mehrbani’ girl or the guy who gets kicked out by his wife all the time. The piece is masterfully written and the writer deserves a lot of praise for generating spark and entertainment in financial pages – an act many fail to pull off.

With these advertisements, Ufone targets the pre-paid customers; however, what they forget is that pre-paid customers are all about costs. As funny as the TVC's are, advertisements might not necessarily attract people towards buying a cellular phone connection. moreover, the bulk of the pre paid customer might not even get the humor that they put into their ads. While presenting the case to the customer through a TVC, it’s the simplicity that matters more keeping in mind the target market in Pakistan. Zong and their simplistic TVC's, have earned them a position above Ufone in the leadership position even though they entered the game after Ufone.

SAMeeA ZAfAR

M.PASHA

LAhORE

kARAchI

vest in a business which is already lacking attractiveness when they know a portion of the capital is going to be lying idle given the liquidity crunch in the market? Why is it that a set quantum of capital requirement is found only in Pakistan, where under the Basel II accord, each institution is allowed to set its own capital according to the riskiness of its own assets? This move lacks economic justification, is prone to compliance issues, and is accompanied by a severe case of bad timing. Basel II mentions Capital Adequacy ratio (CAr) at 8 per cent of the financial institution’s capital to its riskweighted assets. It makes sense in so much that it ensures a certain level of shareholder money is always at stake in the business so that the management does not take totally undue risks, at least theoretically. In reality, the global events seen recently may have proved that this is not enough for institutions to make irrational and absurd decisions, but those have been due to a myriad of other reasons beyond the scope of my writing here. There is no mention of minimum amounts of paid-up capital which are a must for a company to operate, like we have in Pakistan. Does it actually help? Learning from banks, almost half of them are in violation of their mCrs. In such times, it has forced them to get sold or merge, thereby increasing concentration in the banking industry. How has less competition in any industry ever been helpful to the consumer? It wouldn’t come as a surprise if the same is observed in brokerages. The important difference that needs to be made is between Capital Adequacy and minimum Capital; they are two distinct concepts often confused together. Having a minimum capital requirement does not enhance an institution’s risk absorption capability. This is because that money is not available to absorb losses and only the capital which is above the minimum specified amount can absorb loss. minimum capital does not take into account the distinct need of individual houses as well as the risks they take which are unique to themselves. Capital adequacy on the other hand tells you if a bank has the specified amount of capital given the risks it has exposure to. Practically, it is only this which can provide confidence to an investor while minimum capital just puts pressure on the viability of business, results in over-capitalisation in some cases, hence is an inefficient regulation. Ironically, the regulator itself recognizes that mCr does not substitute other means of addressing risk, such as strengthening risk management, applying internal limits, strengthening the level of provisions and reserves, and improving internal controls. maybe, no definitely, these are the areas where regulation is required. The writer is a financial analyst and freelance journalist

Banking on the bigger bully

Kunwar Khuldune Shahid

eING a vulnerable little kid, wedged in the intricacies of school life, is no mean task. From the pocket money mugs to the lunchbox grabbers, there is a wide array of bullies that you encounter on a daily basis. You want to stand up against the unwarranted status quo, but your bony excuse for an anatomy doesn’t allow your innermost desires to materialise. So, during every recess you dutifully acquiesce to the de-

mands of that fat final year bully who weighs quadruple as much as you do and towers twice as high. even though it’s none of his business, but once you’re told that he doesn’t like you taking gym lessons from that bloke from the west, that’s the curtain call on your nascent friendship. And of course your knees begin to tremble whenever he articulates ‘that’ rhetoric, “You’re either with me or against me” – that’s when you realise that it is difficult to stand up against someone against whom you’d need to stand up on a stool just to look directly in the eye. However, there’s a kid in the class next door who has the aforementioned bully in his pocket. He’s a bully in his own right; but his browbeating is not the ‘in your face’ or ‘twisting your arm’ kind – he dragoons with the wherewithal in his wallet not via the fat in his thighs. And now, with you desperate for the gym lessons to improve

your physique, hobnobbing with this little tycoon seems the logical thing to do; especially since the fat bully continues to cross all limits in throwing his weight around. The Iran-Pakistan (IP) pipeline has been under the shroud of US bullying for ages. US has been trying to coerce Pakistan into shelving the project, owing to the scores of problems that it has on the Iranian front. Nevertheless with nearly 5,000 mW of power shortage in Pakistan, an affordable source of natural gas to bolster the power generation is the unmistakable need of the hour. And now with NATo’s airstrikes adding fuel to the fire, the news that the government is likely to appoint a Chinese bank lead consortium as the financial advisor for the $1.2 billion worth Iran-Pakistan gas pipeline means only one thing: we’re banking on the bigger bully. With the Chinese consortium we’d be sure of warding off the unwar-

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

Pakistan is relying on China to ward oﬀ US pressure over the IranPakistan pipeline

ranted American pressure that stands between us and the solution to our power predicament. And this isn’t merely a case of hobnobbing with a magnate; a segmented approach towards the project ensures that both the parties – Pakistan and China – are now responsible for the construction, operation and transportation networking of the pipeline in their assigned territories. Hence in this little school life analogy; not only are we asking that affluent kid to join our gym classes and hence keeping the bully threat at bay, he’d also be in charge of ensuring that we put enough muscle weight on by supervising an allocated weight training routine. Iran-Pakistan pipeline project is touted to bring in 750 mmcfd of gas flow by 2014. With the power shortage being prognosticated to rise up to 11,000 mW

in the coming years and the estimated gap between demand and supply forecasted to increase from 1.6 bcfd, as things stand, to over 2.5 bcfd in 2014-15; the IP pipeline is more than a glimmer of hope. Couple the aforementioned daunting numbers with the escalating price of fuel alternatives like furnace oil, LNG and coal, and the gas obtained through the IP pipeline becomes a veritable bargain. All in all, we need a lot of bulking up to do and pounds of muscle to gain before we can even think about standing up to any bullying on our own. The boy from gym has been a nuisance for the fat bully and the little tycoon has been downright intimidating; about time we took a leaf out of their books. The writer is Sub-Editor, Profit. He can be reached at khulduneshahid@gmail.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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Tuesday, 13 December, 2011

With its important geographic location, a vast expatriate population segment, and extensive socioeconomic relations across the world, Pakistan presents some fabulous opportunities for the airline industry

News

Country Manager etihad Airways, Amer Khan

ECC allows 200,000 tonne urea import for Rabi crop ISLAMABAD

STAFF REPORT

CoNomIC Coordination Committee (eCC) decided to allow import of 200,000 tonnes of urea for rabi crop of 2011-12 and constituted two committees on the summaries moved by ministry of industries for removal of levy of 16 per cent sales tax on agriculture tractors and purchase of 200,000 tonnes of sugar from Pakistan Sugar mills Associations (PSmA). The committee met under the chairmanship of Federal minister for Finance and economic Affairs Dr Abdul Hafeez Shaikh. eCC after having detailed deliberations in the light of the urea situation and the

supply of gas for its production took the decision of importing urea for rabi crop 2011-12. It may be recalled that on a summary circulated by the ministry of industries earlier on 13th September 2011, eCC had constituted a committee under the chairmanship of senior minister for industries. The Committee will look into the sugar situation in the country; quantity of sugar from different mills and their respective prices, additional expenses as per tender terms, and ensure that there should is no violation of PePrA condition in finalising the lifting of sugar from PSmA, and the role of TCP. Chairman eCC Dr Abdul Hafeez Shaikh opined that the rest of the sugar mills that are not participat-

funD ReLeASe DeLAy

textile Standing Committee expresses reservation ISLAMABAD JALALUDDIN RUMI

ATIoNAL Assembly Standing Committee on textiles industry expressed strong reservations over delay of release of funds by finance division to the ministry, with members of the committee stating that it would hamper not only the implementation process on Textile Policy 2009-14 but also would also delay release of rs10.7 billion refunds to textile exporters already being withheld for the last two years. NA textile Industry meeting held under the chairmanship of Haji muhammad Akram Ansari asked government to immediately announce and direct Trading Corporation of Pakistan (TCP) to procure one million cotton bails from farmers in order to stop its declining trend of cotton prices in the local market which has reduced to rs2200 per bale. Committee members expressed their anger over continuous absence of federal textile minister makhdoom Shahabuddin and lack of interest in ministry affairs. Committee member asked minister to raise the issue of dangerous trend in decline of cotton prices in open market in the cabinet meeting. Committee member Abdul rashid Godil while expressing displeasure over non payment of refunds of textile exporters said exporters don’t need government’s assistance in upgradation of machinery but they want their refunds back. He said ministry has demanded $200 million from government for implementation on projects under textile policy while they don’t even have funds to pay refunds back to exporters. The primary target of textile policy was to double the rate of value from the present $1000 per bale to $2000 per bale over next five years. Increased capacities required to generate this level of output were forecasted to call for an additional investment of around $8 billion largely to be undertaken by private sector. It was proposed in the policy that government should invest about 25 per cent of total investment requirement over next five years. This comes to $2.5 billion or around rs200 billion over five years and rs40 billion annually.

ing in the tender should also be invited in it, so that there is no complain in future. eCC also constituted a committee on the proposal floated by the ministry of industries in its summary for the removal of 16 per cent sales tax on agriculture tractors. The committee headed by minister for industries, secretaries revenue, finance, industries and advisor to Prime minister on agriculture will submit its report before the next eCC hopefully, by this week. The summary by the ministry of industries, pleading its case maintained that increase in the prices of tractors has made it difficult for the farmers to purchase new tractors and convert traditional farming into mechanical farming for higher yield, especially

when cost of other agriculture inputs has gone up substantially. Furthermore, Zarai Taraqiati Bank Limited (ZTBL) has also not been extending loans for purchase of tractors since April 2010; creating another impediment for the farmers. The production of tractors since march 2011 has also declined drastically from over 72,000 units to around 20,000 units per annum. Among others who attended the meeting included Chaudhry Pervaiz elahi Senior minister for Industries, Ghulam Ahmad Bilour, minister for railways, Ghous Bux mehar minister for Privatisation, Anwar Ali Cheema ministrer of Production, Changez Khan Jamali minister for Science and Technology, and secretaries of all the concerned ministries and heads of corporations.

Pakistan macro statistics: pointing towards headwinds KARACHI STAFF REPORT

eDerAL Bureau of Statistics (FBS) released country’s trade prints for the first five months of FY12. As per the data released, Pakistan registered an export growth of 7.64per cent YoY to $9.38 billion in 5mFY12, while imports rose by a hefty 20.20 per cent YoY to $18.45 billion. resultantly, the trade deficit for the period came in at $9.0 billion, up 36.73 per cent YoY. These numbers are likely to put more pressure on current account deficit which, in 4mFY12, was recorded at $1.55 billion. We expect the C/A deficit to further widen by $500800 million in November, said muzzammil Aslam at JS. Furthermore, the country’s inability to attract financial account flows - ranging from foreign investments to debt related flows paints a dull picture for the overall macro situation. Given that ImF re-payments are to start in Febru-

ary 2012 - we expect it to put more pressure on the balance of payments, he said, adding that this may in turn create room for speculators to manipulate local currency, which has already lost four per cent YTD to dollar. After a brief spell of a surplus of one year, Pakistan’s external account has reverted back to its usual deficit track. The deficit is mainly led by higher import bill, up by 20.2 per cent during 5mFY12. Already in 4mFY12, both petroleum products and crude oil registered a hefty growth of 46 per cent YoY and 76 per cent YoY, respectively. As a result, the share of oil imports rose to 41 per cent of the total import bill versus 33 per cent during last year. The rise in oil imports is mainly driven by higher international oil prices which registered an average growth of 38 per cent YoY. Average oil prices in 4mFY12 were reported at $107/bbl versus $77/bbl during corresponding period last year. This can be further validated if one looks at oil market-

ing company industry sales data which shows a paltry three per cent growth in overall volumetric sales. FBS reported a contraction of 10 per centYoY in exports toS$1.55 billion in November. Decline in exports is primarily driven by on going global debt crisis coupled with declining global commodity prices. However, we believe the export growth to revive in the months to follow, as last month witnessed fewer working days than usual due to the eid holidays. Going forward, we expect Pakistan to report $1.6 billion worth fewer exports in FY12 than last year. The deteriorating external account pressures have also started to appear at local currency bonds. money supply (m2) for the first five months witnessed a meager growth of 1.32 per cent versus 4.53 per cent in the same period last year. Net Foreign Asset (NFA) registered a contraction of rs110bn compared to last year’s surplus of rs69 billion.

fauji fertiliser slumps under urea price drop, development cess KARACHI: Amid all the noise of possible reduction in urea prices and imposition of Gas Infrastructure Development Cess (the cess), the stock of Fauji Fertiliser Company Limited (FFC) has lost its vigour by 17.9 per cent, underperforming the benchmark index by 14.5 per cent since start of November 2011. We are of the view that the market has overplayed the aforementioned negatives as positives like strong dividend yield, relatively lower risk of gas curtailment and upwards revision in urea price due to persistence gas curtailment are still intact, said Syed Abid Ali at AHL. Imposition of cess and uncertainty regarding its pass through impact has downplayed on the stock price of FFC. After imposition of cess, price of feed gas would take a leap of 194 per cent to rs300/mmbtu. This would require a rs200 per bag price increase for FFC to keep margins intact. According to earnings sensitivity regarding cess pass through impact on the stock of FFC. If the company is unable to pass through impact of rising cost due to cess, it is likely to erode its CY12 earnings by 14.2 per cent to rs23.7 per share. We do not rule out the possibility of gradual increase in the Urea prices to pass through of the impact of the cess. eNGro had to face a stern action by the government, when they increased Urea prices by rs400 per bag in one go, he added. STAFF REPORT

SBP licenses Silkbank for islamic banking KARACHI: Silkbank Limited has been granted a license by the State Bank of Pakistan (SBP) to commence its Islamic banking operations in Pakistan. It is a result of strong financial growth in their existing conventional banking system that they will venture in establishing a dynamic Islamic banking system replete with cuttingedge products and services. expressing his views on this development, executive Director of Silkbank, m A mannan, who himself is a seasoned Islamic banker, said “the Bank already has the finest and most talented Islamic banking team in the country along with a stateof-the-art infrastructure, allowing it to deliver in the shortest possible time.” STAFF REPORT

KCCi demands inclusion of KeSC high ups in eCL KARACHI: Furious industrialists of Karachi have, in unison, demanded government to include names of Karachi electric Supply Company’s high officials in exit Control List (eCL) to avoid fly of money, the company’s management clarified. Addressing a press conference after a joint meeting of all trade associations of the city and officials of Karachi Chamber of Commerce and Industry (KCCI), mian Abrar President KCCI, has termed existing management of the company as corrupt, blackmailers and against national interests. He said as industrialists of the city have serious apprehensions about the management leaving the country and in turn leaving the company indebted by billions of rupees; government should immediately include company’s high ups in eCL. GhULAM ABBAS

Fertiliser sector mutes optimism, KSE ends flat KARACHI STAFF REPORT

He benchmark KSe100 index closed flat (gaining 0.1 per cent) after rallying as much as one per cent earlier in the day. market opened on a positive note on the back of strong regional markets. However, profit taking during the day stalled the positive momentum somewhat. Volumes improved slightly as 46 million shares were traded. eNGro closed four per cent down – a 32 month low – owing to gas curtailment issues. Furthermore mTL closed at its upper limit amid rumours that GST on tractors might be re-

moved. After an initial surge which saw KSe-100 index climb 144 points in intra-day trading, the index quickly retreated and abandoned its gains to end up flat for the day. The morning burst of energy emanated from fertiliser sector with rumours of a urea price hike by engro, which were eventually deemed to be false causing the sector stocks to end up in the red zone by the end of trading. The daily trading volume came in at 45 million shares with FFC and LoTPTA perched on top of the leader board. LoTPTA enjoyed a positive trading session as it gained four per cent over its last closing

price as international PTA-PX margins have begun improving since the beginning of the month, when they slumped to annual low. With the quarter coming towards an end, we may see savvy investors loading their Christmas baskets with

their favorite bargain equities, which appear plentiful at this point due to recent beat down taken by the market as a whole, said Ali Hussain, Senior Investment Analyst at HmFS. KSe 100 index closed at 11477.12 levels with the gain of

12.51 points, while KSe 30 index lost 56.32 points to close at 10598.16 levels. All Share index closed at 7942.03 levels after gaining 5.24 points. Total 107 scrips advanced 114 declined and 88 remain unchanged out of total 309 scrips traded.

Layout Profit 7 pages_Layout 1 12/13/2011 12:21 AM Page 5

Tuesday, 13 December, 2011

Inflation, which rose at its fastest pace for one and half years in November to hit an annual rate of 9.5 per cent, is now the number one problem for Turkish economy

News

turkish Central Bank Governor, erdem Basci

PIA’s business plan and other fairy tales PICASSO

‘m

erAY aziz hum watno’, rejoice and make merry. The print media informs us that PIA has ‘unveiled’ a strategy to restructure the airline. We can be forgiven for saying, ‘about time’, as we ea-

gerly

scan the columns of print to see the bright future which awaits us. What are the components of mr Ahmed mukhtar’s business plan? Does he really have a plan for PIA’s business? Were we wrong in assuming that his business plans are aimed at enhancing his personal fortunes only? A leading english language newspaper reports, “According to the (business) plan, strengthening the culture of ethics and compliance was the key to success to control costs and to improve the financial health of the corporation”. We couldn’t agree more. In other words, theft, nepotism, inefficiency and a lack of commitment and loyalty to the organisation are the root causes of PIA’s ills. Whether it is lucrative appointments such as GSAs (General Sales Agents), contracts for purchase of spares, leasing of aircrafts etc., everyone; from the Chairman at one end of the spectrum to the lowest rung involved in pilferage of toiletries and foodstuffs, seems to be doing his bit to destroy the airline. But if mr Ahmed mukhtar’s ‘plan’ is built upon the pious

hope of suddenly injecting a ‘culture of ethics’, pray let us know how he will perform this miracle. He could, of course, start with himself, which would be a good beginning. But what about the 18000 PIA employees who have collectively done their bit to bring PIA to the verge of collapse. exactly one year ago, a story about PIA appeared in these columns. It told the tale of a committee appointed by the then PIA Chairman to propose the way forward for PIA. The committee concluded that, in essence, PIA’s problem was mismanagement and lack of professionalism. The column concluded with the words, “giving PIA the bailout it is seeking will be a criminal waste of public money, particularly since nothing except the fortunes of PIA’s top management will change. There is still time to pull out the privatisation proposals from the archives and do this nation a favour by taking a decision which will be good for the airline and good for the travelling public”. But let us go back to mr Ahmed mukhtar’s business plan. A second pillar is “to control costs. “ We must look at this noble resolve in the context of the rather inconvenient fact that costs as a percentage of total revenue are on an increasing trend ever since 2003 and particularly over the three years during which mr. mukhtar has been l o r d a n d

master of PIA. The third good resolution has been described as “aggressive marketing for revenue generation which will help double revenue generation in five years.” Give me a break Chairman, we know all about PIA’s aggressive marketing. In any case, why have you chosen to desist from aggressive marketing since you took over as Chairman in 2008? The fact of the matter is that PIA just cannot become viable if it continues to remain in government control. It has a history of pie-in-the-sky plans and presentations to gullible governments which only results in billions in tax payer’s money being poured down the drain. In other words, during the three years period of the present government and the present Chairman, PIA has lost more than one billion US dollars. In the face of this stark reality, how does PIA expect us to swallow their juvenile assurances that they can turn everything around in the next five years. If we fall for this confidence trick, all that will happen is that the Chairman and his merry men will continue to have a rollicking good time at the expense of the airline for as long as they last. Then they will make way for the next bunch of conmen to present another “ business plan ” to secure a few good years for themselves.

CORPORATE CORNER Getz Pharma becomes first Pakistani company to take part in global conference

LAHORE: The recently concluded World Congress for Diabetes held by the International Diabetes Federation at the World Trade Centre in Dubai saw many global pharma corporations, doctors, scientists, academics, nurses and professionals. Pakistan's leading brand generic, pharmaceutical company, Getz Pharma, became the first Pakistani company to participate in this conference on a global level. Getz Pharma is the largest exporter of pharmaceuticals in Pakistan today. PRESS RELEASE

Boeing, etihad Airways announce order for ten 787-9 dreamliners LAHORE: Boeing and etihad Airways announced an order for 10 Boeing 787-9 dreamliners and two Boeing 777 freighters. Valued at a combined $2.8 billion at current list prices, this order would make etihad the world’s largest airline customer of the 787-9. etihad has a total of 41 787s on order. The order also increases etihad’s current Boeing 777 backlog to 12 airplanes, which includes 10 previously ordered 777-300ers (extended range). PRESS RELEASE

nhA executive board holds meeting

IsLAmAbAd: Chairman National Highway Authority, Syed muhammad Ali Gardezi, has said that financial discipline has brought about a healthy improvement in the constructive affairs of the authority and to date rs11.43 billion has been paid to the contractors. This has paved way to gear up the pace of work on ongoing schemes. The executive board discussed various aspects of typical cross section of Faisalabad-Gojra section of Faisalabad-multan motorway (m-4), including widening of shoulders, adding one complete lane and provision of median in the centre. PRESS RELEASE

emirates launches in-flight Wi-fi facility

Erdogan – the Turkish phenomenon SyeD OMeR jAn

T’S seldom that nations meet personalities who are larger than life and influential to such an extent that they leave an ever-lasting footprint for generations to revere and remember. It’s rare, but when it happens, it results in such magic and transformation that nations evolve and transcend beyond comprehension. If I allow my imagination to back-track some of the names that pop out of my mind are people like, Ghandi, Quaid e Azam and Nelson mandela. Today, I would like to draw your attention to someone if not of similar stature yet, but no doubt, a contender on the road to similar limelight. I am referring to erdogan, the current Turkish Prime minister, who has been in power for about 8 years now. He is known as being a moderate Islamist and advocate of secular democracy who is slowly becoming the world’s most influential leaders. It is not every day that politicians are greeted in a reception reserved for rock stars and the Turkish leader is not at all alien to such standing ovations

and has been received by thousands of fans cheering in the airport holding aloft posters of their hero on multiple occasions. erdogan was ranked the most admired world leader in a 2010 poll of Arabs and many site him as the kind of leader they would like to have instead. He has greatly enhanced Turkey’s international reputation; reined in its once omnipotent military, pursued economic policies that have trebled per capita income and unleashed new entrepreneurship and has for the most part maintained a prowest stance. erdogan and his justice and development party, better known by its acronym AKP has drawn support from both the religious and conservation classes and is regarded with suspicion by secular absolutists. For Arab Islamists, Turkey’s success is proof that they can modernize their countries without breaking away from their religious moorings. erdogans message to all brethren Arab states is to be good muslims, but make sure your constitution is like, Turkey’s secular. “Do not fear secularism, because it does not mean being an enemy of religion.” er-

dogan wears a business suit, but he prays in the mosque. In the eight years that erdogan has been in power, Turkey’s per capita GDP has grown nearly threefold, from $3,492 to $10,079. The dramatic improvement in the lives of ordinary Turks is a major reason his socially conservative, pro business justice and development party, won its third general election in June, by a landslide. From the eyes of western observers, the rise of political Islam conjures up visions of extremist, reactionary states, like Iran and Iraq. But, Turkey proved its critics wrong by not becoming another Iran. Also erdogan has pushed harder than his secular predecessors for an ultimate Western endorsement: admission into the eU. Not just that, from the year 2002 to 2010, Turkey’s GDP grew by a compounded rate of 4.8 per cent, more than russia, Brazil and South Korea. In 2010, their GDP grew by 8.9 per cent and eU’s grew by 1.9 per cent. Turkey today, has become the world’s 17th largest economy, behind Spain and Canada. With time, erdogan has grown more ambitious abroad, with US support, he has sought to turn

Turkey into a moderator of other regional rifts, bringing Syria and Israel as close as they have ever come to peace talks. In the political arena, his next challenge is to rewrite the Turkish constitution. The fear in the air that he will dilute Turkey’s secularism has now been replaced with a growing concern that he will push for executive power to be concentrated in the office of the President, where Presidency in Turkey is an ornamental position. There are talks of him switching roles similar to the medvedev-Putin swap in moscow. All this is a true testament of how far erdogan, the Islamist iconic hero, has come that his critics no longer fear him of turning Turkey into another Iran, rather there is a euphoric element in the air of Turkey’s rise to acme and erdogan’s critical role for almost a decade working towards its success day and night. The writer is Texas A&M University graduate who is currently employed with Telenor in the Products - Commercial Division. He can be reached at syed.jan@gmail.com

KARACHI: Customers on a growing number of emirates A380s, can now surf, share, email, or tweet their way across the emirates network, as the airline launches Wi-fi internet connectivity with leading industry service provider, onAir. Customers can access the service of the Wi-Fi in the sky onboard their flight using their Wi-fi enabled devices including smartphones, tablets and laptops. PRESS RELEASE

fRont RoW launches winter collection LAHORE: FroNT roW, the men’s, ladies’ and kids’ fashion garments specialist, has launched a winter 20112012 collection, in stores. The items of the new range include shirts, pants, uppers, trousers, jackets, hand bags, jewellery, etc. FroNT roW, produces and distributes clothing, accessories and related products for young people and their brand represents a casual lifestyle that is driven from a surfing heritage. PRESS RELEASE

kARAchI: Mr Masood hashmi of Orientm Mccann Erickson presenting S h hashmi Memorial Gold Medal to Mohammad khurran. Ms Sabina Mohsin and Mr Talib karim are also seen in the picture at the recently held convocation of IoBM. PRESS RELEASE

Layout Profit 7 pages_Layout 1 12/13/2011 12:22 AM Page 6

Tuesday, 13 December, 2011

06 markets top 10 sectors

24% 09% 35% 10% 08%

Chemicals

01% 07% 02% 03% 01%

General Industrials

Construction & Materials Electricity Banks

Fixed Line Telecommunication

Oil & Gas

Financial Services

Personal Goods

Equity Investment Instruments

STOCK MARKET HIGHLIGHTS Index 11477.12 2899.33 2625

KSE-100 LSE-25 ISE-10

Change +12.51 17.57 -3.55

Volume 37,127,024 967,045 14,900

Market Value 2,297,229,393 44,050,522 1,663,490

top 5 perFormers sector wise

Major Gainers Company Colgate Palmolive Millat Tractors Ltd. AL-Ghazi Tractors Unilever Pak Foods Atlas Honda Ltd.

Open 605.74 371.29 174.55 1698.33 117.00

High 635.98 389.85 183.27 1745.00 122.00

Low 623.00 370.00 177.99 1705.00 121.90

Close 630.64 388.12 183.25 1709.33 117.00

Change Turnover 24.90 275 16.83 25,837 8.70 5,018 11.00 24 0.00 100

5434.80 743.33 778.74 2505.65 244.00

158.83 9.18 3.25 5.07 40.90

5475.00 717.00 780.00 2540.00 235.00

5381.00 717.00 740.00 2490.00 235.00

5385.04 743.33 778.74 2516.52 235.00

-49.76 8 0.00 5 0.00 31 10.87 11 -9.00 19

164.00 9.65 3.60 5.37 42.69

156.01 9.30 3.21 5.10 41.09

157.69 9.56 3.26 5.19 41.78

-1.14 0.38 0.01 0.12 0.88

4,339,829 3,575,655 3,567,709 3,274,502 3,068,853

Per Tola (PKR) 56,045.00 51,608.00 1,044.00 1025.00

Per 10 Gm (PKR) 48,101.00 44,245.00 896.00 880.00

Per Ounce US$ 2,786.00 – 35.05 –

419.00 116.90 21.51 6.95 91.25

410.55 112.50 20.01 6.85 88.25

ChAnGe

voLuMe

Attock Petroleum Attock Refinery Burshane LPG Byco Petroleum Mari Gas Co.

411.29 115.05 20.96 6.90 90.37

16.99 28.54 5.81 155.00 34.19

Crescent Steel Dost Steels Ltd. Huﬀaz Seamless Pipe Int. Ind.Ltd. Inter.Steel Ltd.

19.31 1.20 8.40 29.07 10.01

0.71 -1.95 0.04 -0.03 -0.35

36,564 463,796 41 113,350 16,930

2.11 51.93 14.30 7.52 20.22

17.50 28.85 5.00 158.35 34.70

17.50 28.25 5.00 153.00 33.90

17.50 28.40 5.00 157.80 33.90

0.51 -0.14 -0.81 2.80 -0.29

500 386,065 3,000 4,858 37,823

28.56 3.42 40.17 7.70 85.83

Ados Pakistan AL-Ghazi Tractors AL-Khair Gadoon Bolan Casting Dewan Auto Engg

89.1434 138.5734 1.1451 118.2309

5.25 174.55 4.51 28.50 0.75

20.00 1.33 8.50 29.53 10.49

19.00 1.15 8.35 29.00 9.80

19.79 1.25 8.35 29.25 9.80

0.48 0.05 -0.05 0.18 -0.21

615 7,365 2,122 6,422 2

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

International Oil Price WTI Crude Oil

Sell 89.30 119.15 139.52 1.1437 88.48 11.50 24.29 23.77 92.00

Brent Crude Oil

Atlas Battery Ltd. Atlas Honda Ltd. Dewan Motors General Tyre Ghandhara Nissan

167.13 117.00 2.13 17.00 2.33

2.30 52.79 14.00 7.68 20.53

2.00 50.06 14.00 7.35 20.11

2.30 51.65 14.00 7.64 20.30

0.19 -0.28 -0.30 0.12 0.08

370,668 3,527 95 1,173 1,564,009

29.00 3.50 40.75 7.70 89.51

28.60 3.35 40.00 7.60 86.10

5.99 183.27 5.51 28.01 0.78

5.30 177.99 5.50 28.00 0.78

169.00 122.00 2.20 18.00 2.97

166.60 121.90 2.10 17.00 2.60

110.49 111.43 150.02 150.00

28.85 3.35 40.75 7.70 86.10

5.30 183.06 5.51 28.01 0.78

$107.07

167.00 122.00 2.20 17.25 2.60

109.00 111.18 145.05 145.58

voLuMe

Adam Sugar AL-Noor Suger Mills Chashma Sugar Mills Colony Sugar Mills Dewan Sugar

17.00 52.34 7.99 1.76 2.11

16.02 54.95 8.30 1.80 2.15

Diamond Ind. Hala Enterprise Pak Elektron Ltd. Singer Pakistan Tariq Glass Ind.

8.20 6.01 4.06 14.07 8.30

9.18 6.90 4.38 15.06 8.50

(Colony) Thal Ali Asghar Textile Amtex Limited Artistic Denim Mills Ashfaq Textile

1.40 0.55 1.30 21.00 8.96

1.40 0.46 1.33 21.00 9.00

AHCL-DEC ANL-DEC ATRL-DEC BAFL-DEC BAHL-DEC

28.55 3.34 115.75 11.85 29.02

28.95 3.60 117.30 11.90 29.00

0.29 -0.07 0.58 0.00 0.27

6,065 8,506 1,095 890 2,553

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

101.11 74.10 66.12 29.60 12.60

102.00 76.80 66.25 29.75 12.99

105 5,018 4,492 639 173

-0.13 5.00 0.07 0.25 0.27

923 100 602 6,734 3,003

0.69 -4.44

1,170 203

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

10.24 36.49 0.81 1.80 1.00

16.00 52.80 8.30 1.80 2.10

-1.00 0.46 0.31 0.04 -0.01

7,138 1,902 49,195 1 296

9.18 6.90 3.94 13.07 8.31

9.18 6.90 3.94 15.06 8.39

0.98 0.89 -0.12 0.99 0.09

1 50 389,302 501 11,224

1.11 0.41 1.20 21.00 8.11

1.40 0.41 1.23 21.00 9.00

0.00 -0.14 -0.07 0.00 0.04

8,000 2,000 30,238 400 550

28.40 3.35 113.00 11.75 29.00

28.76 3.35 113.50 11.75 29.00

0.21 0.01 -2.25 -0.10 -0.02

53,500 82,500 240,000 26,500 500

101.00 75.50 65.12 29.30 12.99

-0.11 1.40 -1.00 -0.30 0.39

227 21 1,593 1,151 1,014

101.00 75.50 65.11 29.30 12.60

10.48 36.25 0.88 1.99 1.04

10.08 35.95 0.78 1.77 0.91

10.15 36.25 0.82 1.80 0.93

-0.09 -0.24 0.01 0.00 -0.07

1,783,870 2,075 13,572 156,283 1,076,370

6.25 0.37 36.45 0.60 1.56

6.00 0.42 36.70 0.70 1.68

6.00 0.31 36.45 0.57 1.50

6.00 0.31 36.50 0.60 1.57

-0.25 -0.06 0.05 0.00 0.01

1,186 16,006 901,477 36,483 488,458

58.53 10.01 5.33 11.75 28.75

59.49 10.39 5.47 11.99 29.40

58.50 10.15 5.25 11.56 28.95

59.00 10.27 5.31 11.80 29.00

0.47 0.26 -0.02 0.05 0.25

16,287 122,208 281,491 1,265,356 157,733

Electricity Altern Energy Genertech Hub Power Co. Japan Power K.E.S.C.

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

oPen

hiGh

LoW CuRRent

ChAnGe

voLuMe

Non Life Insurance 16.00 52.80 7.97 1.80 2.10

Fixed Line Telecommunication 0.05 8.51 1.00 -0.49 0.03

SyMBoL

Adamjee Ins Ask.Gen.Insurance Atlas Insurance Century Insurance Cres.Star Insurance

42.99 8.50 36.00 6.94 2.97

43.45 8.79 36.40 6.94 2.97

42.25 7.87 35.40 6.50 2.00

42.64 7.87 36.40 6.94 2.97

-0.35 -0.63 0.40 0.00 0.00

8,309 2,990 215 400 501

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.30 16.43 15.00 0.80 2.70

-0.03 0.12 0.29 -0.02 0.16

35,272 402 4,491 5,998 31,436

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 Investmen Arif Habib Ltd. Dawood Equities F. Nat.Equities

0.33 16.31 14.71 0.82 2.54

0.36 16.43 15.10 1.00 2.87

0.27 15.50 14.70 0.80 2.35

Equity Investment Instruments 1st.Fid.Leasing Mod AL-Noor Modar Elite Cap.Mod Equity Modaraba F. Dawood Mut.Fund

1.56 3.99 2.20 0.85 1.85

1.60 4.10 2.20 1.33 1.85

1.54 4.10 2.20 0.87 1.85

1.60 4.10 2.20 1.25 1.85

0.04 0.11 0.00 0.40 0.00

1,041 5,000 22,335 25,109 35,000

13.01 31.90 36.00 13.25 66.50 1.30 62.11 112.00 23.50 60.75 15.75 7.00 1.92 16.52 17.54 14.75 68.55 25.00 1.43 9.72

13.50 31.90 36.50 13.80 66.70 1.34 65.25 116.00 23.50 60.75 16.50 8.94 1.93 16.70 17.54 14.75 68.55 26.69 1.50 9.75

0.17 -0.15 1.41 0.61 -0.03 -0.09 3.04 0.04 0.00 2.83 0.50 0.98 0.00 0.01 -1.00 -1.00 -1.19 0.53 -0.05 -0.09

8,174 3 500 3,388 213 558,470 7,863 1,624 10 100 598 2 16,524 104,896 157,854 600 595 120 130,639 102,203

Miscellaneous Century Paper Pak Paper Prod. Security Paper P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Shezan Inter. Grays of Cambridge Pak Tobacco Co. Hum Network Ltd. Media Times Ltd P.I.A.C.(A) Sui North Gas Sui South Gas American Life EFU Life Assur AKD Capital Ltd. Pace (Pak) Ltd. Netsol Technologies

13.33 32.05 35.09 13.19 66.73 1.43 62.21 115.96 23.50 57.92 16.00 7.96 1.93 16.69 18.54 15.75 69.74 26.16 1.55 9.84

13.55 31.90 36.50 14.00 68.50 1.45 65.32 116.00 23.50 60.75 16.50 8.94 2.06 17.45 18.90 14.76 70.49 26.69 1.58 10.22

mutual FuNds fund

$98.28

ChAnGe

Pharma and Bio Tech

Beverages Murree Brewery Co. Shezan Int’l

LoW CuRRent

Future Contracts

Automobile and Parts Buy 88.50 117.13 137.27 1.1285 85.73 11.18 23.97 23.49 88.91

hiGh

Personal Goods

General Industrials Cherat Packaging ECOPACK Ltd Ghani Glass Ltd MACPAC Films Packages Limited

oPen

Household Goods

Construction and Materials Al-Abbas Cement Attock Cement Berger Paints Cherat Cement D.G.K.Cement

SyMBoL

Food Producers 412.00 113.10 21.00 6.87 90.02

Industrial Engineering

Interbank Rates US Dollar UK Pound Japanese Yen Euro

LoW CuRRent

Industrial metals and Mining

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

hiGh

Oil and Gas

Agritech Limited Arif Habib Co SD Bawany Air Products Clariant Pakistan Dawood Hercules

Volume Leaders Fauji FertilizerXD Lotte PakPTA Azgard Nine Jah.Sidd. Co. National Bank

oPen

Chemicals

Major Losers UniLever Pak Ltd. Siemens Pak Bata (Pak) Ltd. Nestle PakistanXD Fazal Textile

SyMBoL

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

oﬀer

Repurchase

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

100.2768 87.0103 97.6745 101.8987 112.3545 121.5000 104.1200 0.0000

100.2768 85.3042 95.2922 100.8898 109.6141 111.5200 96.5000 0.0000

nAv 100.2768 85.3042 95.2922 100.8898 109.6141 117.3900 101.5800 100.1087

Layout Profit 7 pages_Layout 1 12/13/2011 12:22 AM Page 7

Tuesday, 13 December, 2011

Media owners are very risk averse. everyone is at a sustaining level. there is virtually no regulation from PeMRA in terms of content, and whether it is being legally aired

News

07 Pakistan, ADB to sign MoU on Bhasha Dam today

Ceo, oMD, Rizwan Merchant

Red-tapism a major hurdle in privatisation g

Project to add 4500MW power to national grid Bhasha Dam to help bring industrial and agriculture revolution g

ISLAMABAD

ONLINE

He government of Pakistan and Asian Development Bank will exchange memorandum of Understanding (moU) Tuesday on Diamir Bhasha Dam which was a major development for the project. This was said by Chairman WAPDA Shakil Durrani who called on Prime minister Syed Yusuf raza Gilani on monday. Chairman WAPDA informed that the ADB has also had agreed to become Financial Advisor for the Bhasha Dam which augurs well for the HydroPower mega project. He said that no mega projects were taken up during the last forty years. The chairman informed that the ground breaking ceremony of the Project by the Prime minister in october this year along with its earlier approval by the Council of Common Interests gave the requisite confidence to international financial institutions that there was no going back. He said that the project would not only add 4500 mW of power to the national grid but would also prove to be a lifeline for the agriculture and industrial sectors. The Chairman was grateful to the Prime minister for his direction to the ministry of Finance to release one hundred million dollars to National Highway Authority for the widening and improvement of the KKH from Tha Kot to the site of the Bhasha Dam. “It is of fundamental importance because in absence of infrastructure, the heavy machinery for the project cannot be transported to the site,” the Chairman said. Bhasha Dam’s capacity of 8 mAF water and power generation capacity of 4500 mW would help bring industrial and agriculture revolution in the country besides creating thousands of job opportunities. The Chairman said that the project would recover the

entire cost within seven years. The Chairman said that the project would produce electricity worth two billion dollars annually besides creating sufficient water storage capacity for the agriculture to irrigate 2 million acres of land in the country. It is easy to imagine the boost the agriculture sector would get when two million acres of land would be irrigated, he stated. He further said that Diamir Bhasha Dam would also increase the life of Tarbela dam for another 35 years because the downstream silting would be reduced to a considerable extent. The

Chairman also informed the Prime minister that there was at present sufficient water in the water reservoirs required for the power generation and for irrigation purposes of rabi crops. At present, water reservoirs are filled with six million mAF water, which is almost double the water available during the last ten years. In the last ten years water reservoirs stood at an average 3.5 million mAF which resulted in less power generation and water available for irrigation, adversely affecting the agriculture and industrial sectors, Durrani said. The Chairman also requested the Prime minister to inaugurate the Khan Khawr Hydropower Project with 72 mW capacity, District Shangla, KPK, which is 265 Km from Islamabad on the silk route. Jinnah Hydropower Project with the capacity of 96 mW, district mianwali, is also complete and ready for inauguration by the Prime minister, the Durrani said. The Project is located on the right side of Jinnah Barrage on Indus river about 5 Km downstream of Kalabagh.

Chairman WaPDa Shakil Durrani

PM appoints PSo, uSf heads, extends date to exchange Rs5 note ISLAMABAD

Downside risks to remain high in ’12 – StanChart

STAFF REPORT

rIme minister Syed Yusuf raza Gilani has appointed Naeem Yahya mir as managing Director Pakistan State oil (PSo) and A riaz Asher Siddiqui as Chief executive officer (Ceo), Universal Service Fund (USF) with immediate effect. Naeem Yahya mir is an expert in refinery facility planning and management, technology support, marketing and process and problem solving. He has a diverse experience of working in related fields in Kuwait, Saudi Arabia, Far east, Pakistan, middle east and european markets. riaz Asher Siddiqui is an expert in business development, brand strategising and project management. He is a telecom professional and has a vast experience of business development, telecom brands and project management. In another decision, on the request of the general public and recommendations from State Bank of Pakistan (SBP), Prime minister Syed Yusuf raza Gilani has approved extension in the date of exchange of rs5 (five) bank note by commercial banks for a further period of one year up to 31st December, 2012.

SHAHAB jAfRy

LoWING export growth, weak private credit off-take and risks of higher inflation will fuel downside risks for the Pakistani economy, according to investment bank Standard Chartered’s ‘Global Focus 2012 – Fragile West, resilient east’ report. ECOnOmICs Of ELECtIOns: The report expects the run-up to the general election to be characterised by ‘populist measures’ aimed at supporting growth, even at the cost of essential measures needed to streamline the economy. “reforms that are critical to reducing the build-up of debt and containing inflation – including tax measures and a reduction in energy subsidies – will be stalled or even scaled back in some cases”, the report notes, as the government is unlikely to forego “record spending”. Therefore, the fiscal deficit is expected to show little respect for the budgeted four per cent target, settling instead at around 6.5 per cent of GDP in FY12. POLICy-ImPACt COntRAdICtIOns: The report seems to contradict itself, first expecting “combination of

higher government spending and accommodative monetary policy” to boost growth, then noting “heavy government borrowing from banks has crowded out private-sector credit”, implying declining investment and hence growth. Similarly, it mentions “visible improvements in the security environment” as supportive for the growth outlook, before mentioning “the country’s uncertain political and security environment” along with the its energy paralysis, is deterring both foreign and local investment. However, despite noting a “stronger Pakistani rupee” in ’11, it expects inflation to “persist and rise in FY12”, mainly due to rupee weakness and continuing money printing to meet the government’s deficits. It forecasts the rupee at 94 to the US dollar by end-’12. RAtE-EAsIng At An End, fOR nOw: Private credit growth slowed to 1.6 per cent year-on-year (Nov ’11) against 5.5 per cent in 2010, despite the 200bps rate cuts in H2-11, according to the report. The main reason, of courses, is heavy government borrowing, an unsustainable position pushing inflation higher. The bank expects the rate-easing to end for the time being, the SBP’s

Nov 9 decision to hold steady means markets will now demand higher premiums to hold government paper. “This could force the government to print money to finance its large deficits, fueling inflation”. Interestingly, identifying a trend that has so far escaped local analysts, StanChart expects the central bank to reverse its monetary posture in the second quarter of next year. “We expect the SBP to keep rates on hold in Q1-12, and see a strong possibility that rising inflation will force it to hike as early as Q2-12,” it notes. dIffICuLt yEAR: The outgoing year has been a particularly difficult one with regard to Pakistan-US relations, compromising one of our most significant fund flows, and the bank expects the situation to worsen before it gets any better. “US aid flows to the military remain suspended, including $2 billion of payments under the Coalition Support Fund. The disbursement of non-military aid, including the $7.5 billion pledged under the Kerry-Lugar Bill, has been slow; only $179 million was released in FY11,” the report adds. This means the government’s fiscal space will remain restricted, strengthening downside pressures for FY-12.

PPB creating problems for private sector investors disinterested in buying PPB offered properties LAHORe

Nauman Tasleem

eD-TAPISm and lengthy process of Punjab Privatisation Board (PPB) are major obstacles in privatising precious land of the province, the sources told Profit. They said the board has evolved such process, which instead of helping the buyers in private sector are creating problems for them. But the policymakers of the province instead of ratifying and improving the process are satisfied with it terming it a ‘transparent’ system. The board has managed to accumulate a few million rupees in the recent years and in return has paid hefty salaries to its office bearers. The investors from private sector are least interested in buying the properties offered by PPB, only because of the lengthy process. These investors said they could not bound their capital for long time, as after successful biding, it took at least six months for the board to handover land to the successful bidder. It takes approval of two committees and Punjab Chief minister before the land is being handed over to successful bidder. According to rules, PPB gives an advertisement in two prominent national dailies telling about the location of the land, which is to be sold. The advertisement is repeated after one week and then an open auction is held at given place. As soon as any buyer purchases land, he/she is asked to deposit the whole amount in one month. However, after depositing the whole amount, it is not clear till when the possession of land would be given to the successful bidder. As after depositing the whole amount, the case is referred to the committee of PPB, which constitutes 12 members including PPB Chairman, Planning and Development Chairman, Bank of Punjab Chairman, Secretary PPB, Senior member Board of revenue, Punjab Finance Secretary, Industries Secretary, Colonies Secretary and two members of Punjab Assembly. The auction case is presented before this committee and after approval the case is referred to Cabinet Committee for Privatisation. Sources said often the committee members of PPB do not come due to their busy schedules and the case in lingered on. “In the recent one year, many cases were delayed because of lack of interest or overburden of these members,” said the sources. After approval by PPB committee, the case is sent to Cabinet Committee for Privatisation, which also takes time in passing the case. Cabinet Committee for Privatisation comprises of Chairman Sardar Zulfikar Khosa, mPAs rana Sanaullah Khan, Chaudhry Abdul Ghafoor, mian mujtaba Shujaur rehman, Kamran michael, Chief Secretary and Senior member Board of revenue. “Seldom all the members are available for approval and it takes around two or three months for getting the documents signed from the committee,” said an official of PPB, while seeking anonymity. He said after approval from two committees, the case is presented before Punjab Chief minister, who gives the final approval. He said the process is followed only to maintain transparency in the process of privatisation. However, he also admitted that because of this lengthy process PPB is getting very less inquiries. “We have prime land in Lahore and other districts for auction, but still investors are not coming to buy it,” he added.