E-paper Profit 28th December, 2011 by Profit Epaper

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Addressing the gas dilemma Page 2 The Chinese juggernaut Page 3 A year of gloom for agriculture sector Page 7 Pages: 7

profit.com.pk

Wednesday, 28 December, 2011

gas supply

govt directs DIsCOs to shortlist CEO candidates

petroleum ministry seeks revision in price criteria ISLAMABAD AMER SIAL

StImAtInG that consumers were burdened with an enormous cost of rs20 billion for new natural gas supply schemes, ministry of petroleum has moved a summary for consideration of economic Coordination Committee (eCC) requesting either restoring the old criteria or providing soft loans at five per cent markup to utility companies for new projects. Petroleum minister Dr Asim Hussain confirmed that two summaries have been forwarded to eCC for changing price criteria for new gas supply schemes and for changing price structure for LPG Air mix to meet up rising demand of LPG in the country. According to details, ministry decided to seek amendment in the existing gas supply price criteria,

which was notified in 2008 to bring the two state owned gas utility companies out of financial burden to undertake new projects. SSGC and SnGPL are eligible for a return on assets of 17 and 17.5 per cent respectively as determined by oil and Gas regulatory Authority (oGrA). new criteria enhanced the consumer cost by 2.7 times, while change in assuming consumer base from 30 per cent to 60 per cent increased the cost criteria by 5.4 times. the criteria was revised by enhancing the per consumer cost from rs20,000 to rs54000 for 13.5 km pipeline radius from gas fields in Punjab and Sindh, rs40,000 to rs108,000 for 27 km radius in Khyber Pukhtoonkhwa and rs100,000 to rs270,000 for 67.5 km radius in Balochistan. the decision cased an impact of rs34.3 billion on SnGPL and rs7.5 billion on SSGC. Share of SnGPL under the old criteria would have been

ISLAMABAD AMER SIAL

rs6.6 billion and SSGC rs1.3 billion. this would have saved the consumers of financial burden of rs17.5 billion in case of SnGPL and rs2.8 billion in case of SSGC. this caused an increase of 28 per cent in gas prices which was borne by the consumers. Increase in cost required gas utility companies to borrow funds to continue financing the ongoing capital expenditure, as oGrA determined operating cost did not include financial charges incurred on interests of 16 per cent. Due to which utilities had no incentive to launch new projects. Currently SnGPL is working on 2900 new development schemes worth rs33 billion, which are 46 per cent complete while SSGC is working on 944 schemes worth rs7.8 billion which are 76 per cent complete. new schemes will cause an additional burden of 694 mmcfd on SnGPL system and 15 mmcfd on SSGC system. SnGPL would provide gas to

1.7 million new consumers and SSGC to 65,280 new consumers. LPG Air mix: In a separate summary, Petroleum ministry has sought inclusion of cost of LPG air mix in the uniform cost of gas formula determined by oGrA in the weighted average cost of gas (WACoG). At present the guidelines are applicable for stand alone distribution projects for the supply of LPG Air mix, LnG and CnG. Currently SSGC is supply LPG Air mix to Gwadar and noshki in Balochistan and Kot Ghulam mohammad in Sindh. Gas utility companies want to extend supply to new areas which was only possible if oGrA includes cost of LPG air mix in WACoG, which the ministry estimates to cost rs308.95 per mmBtU. However, the guidelines do not allow feasibility for new projects without the specific directions of the president, prime minister, cabinet or eCC.

overnment has issued strict instructions to the board of directors of power distribution companies (DISCos) to finalise names of candidates for appointing chief executive officers of these companies before December 31. An official source said directions were issued by ministry of water and power after it was noted that boards had failed to perform their task for the last three months. Federal cabinet had directed DISCo boards in early october to finalise names of candidates. Government had initially planned to appoint new Ceos by october end to expedite restructuring of management of DISCos. the source said only four DISCos, including LeSCo, FeSCo, GePCo and QeSCo have submitted their panel of names to the Cabinet Committee on restructuring (CCor) while response from IeSCo, mePCo, PeSCo, HeSCo and SePCo was still being awaited. they were reminded that they have to finalise names before the year end so that the process for appointing new Ceos could be completed. Incumbent management of DISCos was opposing appointment of new Ceos. the boards too have some concerns on the advertised criteria for selecting new Ceos. Government allowed mePCo to include other candidates for interviews, even though the final selection would be made by the prime minister. the source said that there were concerns in official circles on the performance of the boards as many directors have non professional backgrounds. After short listing candidates, CCor would be submitting the final panel consisting three candidates to the prime minister for approval. Boards have sent panels having five to seven names of candidates. the appointment of new Ceos will start the second phase of power sector reforms which will end with the making of DISCos feasible for privatisation. the source said the establishment of a power wing in moWP having professionals to effectively address power sector issues was also facing hurdles, as the establishment division had not responded to the provision of one joint secretary, two deputy secretaries and four section officers for the last four months. Government has already transferred all financial and administrative functions of PePCo to the national transmission and Dispatch Company (ntDC) till full functioning of CPPA.

2011 Review: PEPCO did well with given resources LAHORE Nauman Tasleem

ItH the given resources, PePCo has performed very well in the year 2011 and we will make utmost efforts to provide uninterrupted electricity supplies to the country in 2012, said Pakistan electric Power Company (PePCo) managing Director rasool Khan mahsud in an interview with Profit. rasool Khan mahsud took charge of PePCo on october 1st, 2010 and since then made utmost efforts for reducing load shedding but he said outages could not be controlled unless supplies of oil and gas are increased or dependency on both products reduced. He said oil and gas is the lifeline for power plants but its unavailability remained major problem for the company during 2011 and because of the

absence of these products; the menace of load shedding haunted the country. “our energy mix comprises of 30-35 (5,5006,000 megawatts) per cent from hydel generation and 65 per cent (12,00012,500mW) from thermal plants, which runs on gas and oil therefore availability of gas and oil, is vital for power sector,” he said adding often generation of electricity declines sharply due to less availability of gas and oil. “our gas fields remained under problem due to sabotage activities by the terrorists and it results in reduction in gas supplies to power plants and consequently, the electricity production suffered badly,” PePCo mD said adding if there is smooth supplies then load shedding could end. He said company made excellent efforts after october 2011 power crisis and there has been no load shedding since then. He said if payments are made in time to the independent

power plants (IPPs) then there could be significant reduction in outages. “We faced problems in october 2011 due to oil payments to the IPPs and since payments are made in time, there is no load shedding. It reflects our round the clock efforts and commitment,” he

added. to a question of increase in electricity prices, rasool Khan mahsud said oil prices in international market are increasing and in the past it touched the $147 per barrel but then musharraf-led government did not allow to increase the electricity tariffs due to public fear and during that time the circular debt of PePCo piled up and now the current government is facing this problem. “WAPDA former chairman tariq Hameed asked Pervez musharraf for increasing electricity prices to save the power sector from the heavy debts but the latter denied it and now we are facing huge increase in electricity prices,” he said adding in the year 2011 PePCo successfully managed to control the circular debt. He said Karachi electric Supply Company (KeSC) is not generating power

as per requirement of Karachi and continuously getting huge amount of electricity from PePCo and at the same time KeSC is not paying outstanding rs45 billon to PePCo. “We have an agreement of providing 650 megawatts to KeSC but for the last three months we are giving more than 850mW to KeSC and it caused further pressure on our system,” he added. to a question of unscheduled load shedding, PePCo mD said it is carried out to save the system and if it is not done then the whole distribution system could collapse. He said forced load shedding is the better way to save the system. rasool Khan mahsud emphasised on exploring alternative resources for producing power. He said government is making great efforts for enhancing power production and also planned to install coal projects so that dependency on oil and gas could be reduced.

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Wednesday, 28 December, 2011

debate

Addressing the gas dilemma profits ali Rizvi interviews MD sNgpl arif Hameed to discuss the gas dilemma, and the possible solutions to addressing the shortfall

lines whereas the final decision is taken by the eCC and the Cabinet. While talking about the scenario where the IP project does not materialize, mr Arif Hameed said that in that case, we will have to rely more on LnG and LPG. He explained that the prices of both the fuels have risen because countries like Japan and India have signed long term contracts to cater to their energy needs. When asked about the coal gasification project mr Arif Hameed said that it is a very good project one that promises to address the energy needs of the country, however the costs of the project are very high. He explained that earlier, SnGPL was quite interested in the project however it is now a provincial project therefore it does not fall under the domain of the company.

ALI RIzvI

Iven the excessive gas shortfall in the present winters that has pushed the authorities to make some drastic decisions including gas curtailment to the CnG sector, certain industries and gas load shedding to domestic consumers, we met mr Arif Hameed, managing Director SnGPL to get his take on the exacerbating scenario that is multiplying the woes of not only the domestic consumers but also of the industrial sector. the problems are indeed troubling and there seems to be no easy way out of the quagmire, so we discussed with mr Arif, the priorities of SnGPL, the problems being faced and the possible solutions to a worsening situation.

pROfIlE

a DEplEtINg REsOuRCE “Gas in Pakistan is a rapidly depleting resource. the effective utilisation of the natural resource remains to be a priority for us and the government. Unfortunately over the past few decades authorities have failed to realise where their priorities lie. Pakistan is the largest consumer of CnG in the transport sector worldwide, followed by Iran. this obviously poses a serious dilemma for the effective allocation of gas to different sectors of the economy,” mr Arif explained. What stands out according to statistics is that 61 per cent of all vehicles in Pakistan run on CnG, whereas only 12.64 per cent of all vehicles in Iran run on the same fuel. Such a discrepancy highlights the enormity of the problem at hand. While talking to mr Arif regarding the priorities of gas distribution, he said, “our first priority lies with the domestic consumer, followed by industrial consumers and finally the commercial sector.” In response to how certain countries across the globe have adopted CnG since it is an environment friendly fuel, he agreed with the impression and said that the benefits of CnG consumption for transportation cannot be ruled out. However he pointed out that one of the reasons for encouraging the use of CnG in the transport sector was to curtail on oil imports that burdened the foreign exchange reserves and the current account.

IMplEMENtatION Of pOlICIEs “the situation could have been handled better if the policies that were formulated had been implemented. It was agreed that CnG stations would be given licenses for operation if they were spaced out between five kilometers from each other, however the policy was never adhered to, resulting in a satura-

tion of such outlets. the result was that nearly everyone wanted a CnG station,” he said. While shedding light on the shortage of gas in the country, mr Arif Hameed said, “In the last one year, there has been 90mmcf increase in demand of gas. We need to understand, that Pakistan is not purely an agrarian economy. the lifeline of the country continue to be the industries as well, and as a result of an increase in demand of gas; the curtailments to the industry, have also adversely affected it. our focus remains, to find a solution that benefits all the stakeholders.” SnGPL is catering to more than 4.1 million consumers with one of the largest distribution and transmission network connecting areas from north and Central Pakistan through an extensive network that runs the length of Punjab, Khyber Pakhtukhwa and Azad Kashmir. According to the company website, SnGPL has 3,929,842 consumers in Commercial, Domestic, General Industry, Fertiliser, and Power and Cement Sectors.

supply CONstRaINts “on our part we are faced with severe supply constraints. there has been expansion without keeping in mind consideration of supply inadequacies. Further

inefficiency of appliances is leading to wastage of an important resource. Previously the SnGPL used to authorize products with an official seal of SnGPL on all gas products, however the policy is no longer in effect. therefore, keeping a check on all the substandard equipment that wastes gas has become a hard task,” Arif Hameed explained. As far as infrastructural problems are concerned, the SnGPL mD pointed out that the pipelines in many cities are decades old therefore there are leakages. the cost of replacement of this infrastructure is great not only in terms of the intangibles, he said, like inconvenience caused to the masses but also in terms of uprooting major roads of cities which is used by a large number of vehicles for daily commutation. He said that they use laser radars to pinpoint leakages deep within the ground and based on the information try to address the problem as efficiently as possible. moreover with an amount of rs720m 1300 CnG stations have been installed with state of the art systems to ensure that gas theft is minimised. While explaining the possible solutions for addressing the gas quagmire, the mD said that the shortfall could be offset through a plethora of alternatives. these include the use of Liquefied natural Gas, around 400mcbf can be extracted indigenously to cover the shortfall while 500mcbf will be made

Fragile and Unbalanced in 2012

NOuRIEL ROuBINI

He outlook for the global economy in 2012 is clear, but it isn’t pretty: recession in europe, anemic growth at best in the United States, and a sharp slowdown in China and in most emerging-market economies. Asian economies are exposed to China. Latin America is exposed to lower commodity prices (as both China and the advanced economies slow). Central and eastern europe are exposed to the eurozone. And turmoil in the middle east is causing serious economic risks – both there and elsewhere – as geopolitical risk remains high and thus high oil prices will constrain global growth. At this point, a eurozone recession is certain. While its depth and length cannot be predicted, a continued credit crunch, sover-

eign-debt problems, lack of competitiveness, and fiscal austerity imply a serious downturn. the US – growing at a snail’s pace since 2010 – faces considerable downside risks from the eurozone crisis. It must also contend with significant fiscal drag, ongoing deleveraging in the household sector (amid weak job creation, stagnant incomes, and persistent downward pressure on real estate and financial wealth), rising inequality, and political gridlock. elsewhere among the major advanced economies, the United Kingdom is double dipping, as front-loaded fiscal consolidation and eurozone exposure undermine growth. In Japan, the post-earthquake recovery will fizzle out as weak governments fail to implement structural reforms. meanwhile, flaws in China’s growth model are becoming obvious. Falling property prices are starting a chain reaction that

will have a negative effect on developers, investment, and government revenue. the construction boom is starting to stall, just as net exports have become a drag on growth, owing to weakening US and especially eurozone demand. Having sought to cool the property market by reining in runaway prices, Chinese leaders will be hard put to restart growth. they are not alone. on the policy side, the US, europe, and Japan, too, have been postponing the serious economic, fiscal, and financial reforms that are needed to restore sustainable and balanced growth. Private- and public-sector deleveraging in the advanced economies has barely begun, with balance sheets of households, banks and financial institutions, and local and central governments still strained. only the high-grade corporate sector has improved. rising inequality – owing partly to job-slashing corporate restructuring – is reducing ag-

available once the Iran Pakistan gas Project is operational. For LnG 3 terminals have been made where two local firms and one foreign firm have been given licenses. It is pertinent to mention that the turkish firm that got the license for the project demanded the government to purchase gas if they fail to sell it to local consumers. mr Arif Hameed, while speaking about the same issue said that the turkish firm has failed to pick up consumers and it is not under the domain of SnGPL to do so on the turkish firms behalf.

aDDREssINg CONCERNs to a question regarding the supply of gas to the industrial sector for 9 months of the year SnGPL mD, Arif Hameed said that those fertiliser companies that were contracted before 1984 have a 12 month supply agreement while those contracted after 1984 have a 9 month contract. Similarly, those CnG stations that were contracted before march 2008 have a 12 month supply contract while those contracted after march 2008 have a 9 month supply contract. Briefing us about the gas load management plan, which was discussed in the economic Coordination Committee mr Arif Hameed clarified that the domain of SnGPL is to formulate guide-

gregate demand further, because households, poorer individuals, and labor-income earners have a higher marginal propensity to spend than corporations, richer households, and capital-income earners. Finally, policymakers are running out of options. Currency devaluation is a zero-sum game, because not all countries can depreciate and improve net exports at the same time. monetary policy will be eased as inflation becomes a nonissue in advanced economies (and a lesser issue in emerging markets). But monetary policy is increasingly ineffective in advanced economies, where the problems stem from insolvency – and thus creditworthiness – rather than liquidity. meanwhile, fiscal policy is constrained by the rise of deficits and debts, bond vigilantes, and new fiscal rules in europe. Backstopping and bailing out financial institutions is politically unpopular, while near-insolvent governments don’t have the money to do so. And, politically, the promise of the G-20 has given way to the reality of the G-0: weak governments find it increas-

mr Arif Hameed joined SnGPL in 1978. He was a mechanical engineer initially in the distribution department and worked his way up the ladder as Gm sales. He said he has worked in almost every department of the company from purchase to legal administration. ‘my bond with the company is one that cannot be explained in mere words. I feel genuinely disturbed that this company has had to face a plethora of problems that have adversely affected the functioning. In my work here as the managing Director I have made all possible efforts to improve upon the discipline in the company.” Given the problematic gas situation in the country, with the ordinary consumer having to face the brunt of gas loadshedding, CnG curtailment and the industry struggling, we felt that the SnGPL needs to be taken to task however after talking to mr Arif Hameed, we were forced to revisit our pessimism. mr Arif Hameed was very straightforward and acknowledged the grievances we had however, he said under his leadership SnGPL has made all possible efforts to improve efficiency of the company. What needs to be understood is that the company is merely responsible for transmission and distribution while the other decisions fall under the domain of the respective ministry and the cabinet. the company has to follow directives issued from the relevant government departments. He also acknowledged the presence of political pressure something he termed as being part of the package however he said that he believed in promoting the culture of merit and not succumbing to any pressure from any sources. He praised Dr Asim Hussain for his accommodating approach and professional attitude that is beneficial in supporting independent decision making and promoting merit. Comments and queries: ali.rizvi7957@gmail.com

ingly difficult to implement international policy coordination, as the worldviews, goals, and interests of advanced economies and emerging markets come into conflict. As a result, dealing with stock imbalances – the large debts of households, financial institutions, and governments – by papering over solvency problems with financing and liquidity may eventually give way to painful and possibly disorderly restructurings. Likewise, addressing weak competitiveness and current-account imbalances requires currency adjustments that may eventually lead some members to exit the eurozone. restoring robust growth is difficult enough without the ever-present specter of deleveraging and a severe shortage of policy ammunition. But that is the challenge that a fragile and unbalanced global economy faces in 2012. to paraphrase Bette Davis in All About eve, “Fasten your seatbelts, it’s going to be a bumpy year!” A version of this article was first published in Project Syndicate

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Wednesday, 28 December, 2011

EDITORIAL

The European dilemma

Trade not aid rI Lanka expo 2011 comes at an opportune time for Pakistan, when donors and friends alike are raising disturbing questions regarding resource mobilisation. Unfortunately, Islamabad seems to have realised ambitious budget targets are going to be embarrassing misses, and is weighing different options of communicating the failure in a way that does not erode too much dignity ahead of elections. So instead of the promised PSe privatisation drive we’ve had an ideological shift. the people’s party suddenly finds reason to revisit its original left-leaning ethos, that restructuring should suffice in place of selling state assets altogether. Few expected ejection of political appointees so close to the election in the first place. And while PSes continue to drain rs400 billion annually, official fiscal space is expected to remain tight since there has been no visible effort to reorient the export basket. there will be little to be ex-

tracted from the otherwise disturbing collapse of the rupee. And little needs to be said regarding FBr reforms. It seems we will have to rely on foreign aid that much longer, since the government is already exhausting local borrowing opportunities to fund its non-development budget. therefore initiatives like the Sri Lanka expo 2011 need to be taken seriously. to provide much needed fiscal elbow room, the government must go back to the basics of trimming losses and expanding earning. While improving trade, its best to build o and fine tune existing arrangements, before leveraging the improved profile to venture into uncharted capitals. So long as the government is without the political will to take painful but necessary steps like privatisation and FBr overhaul, it must at least build on export revenue. that way, it will draw some advantage yet from the rupee weakening environment. So far, though, there has been little of note in the ongoing fiscal year.

Syed Omer Jan Hen Giuseppe mazzini was at the forefront of the Italian political scene in the mid-nineteenth century, he was vying to unite a previously disjointed Italy. once that was achieved in 1871, mazzini reiterated that the unification of europe was the continuation of the Italian unification. While the idea made sense even back then, europe was marred by a plethora of antagonistic forces sandwiched between the German and Italian Unifications and the culmination of World War II. that moment onwards europe has collectively hankered after sustainable unity, to extinguish the demons of their violent past, but that hasn’t managed to materialise for a multitude of reasons. the question of european integration has an uncanny tendency of resulting in a throwback to the past. And with europe falling from the apogee of its heyday, the continent has found it hard to deal with the changing global picture. Historically USA has provided europe with the sole model for a single market, but global economic convulsions have meant there is an upsurge of Asia and Latin America as well. experts opine that soon the eurozone GDP could lag behind China as far as purchasing power parity is concerned. And even more alarmingly there is a possibility that China, when coupled with India, could amount to nearly twice the size of the eurozone economy. the cumulative GDP of G7 countries could diminish owing to the recent upsurge of nascent economic powerhouses. Hence, it goes without saying that europe is far from being a part of any geopolitical status quo - if one exists – and it must collectively endeavour to overcome the political and economic differences within its ranks. Considering the fact that any unification involves the collective good and the vested interests, clarity in differentiating and apt prioritising is a prerequisite for progressing together. David Cameron’s ‘holier than

Europe needs a collective eﬀort that supersedes historical animosities and egoistic approaches Benefits of MFN status

The omen factor

this is with regards to the feature, ‘mFn, a promising dream’, published yesterday. the title itself is a misnomer today, keeping in mind the fact that once, back in 1996, India had also blessed Pakistan with a similar title and since then, it has remained a subject of immense debate. there are a number of trade experts and economists that have spoken in favour of the grant of mFn status to India; negating the notions that domestic industry would suffer on several grounds as a result. As a general rule, the clauses laid down in the agreement clearly promote non-discrimination among both the countries and aim to uphold the true spirit of free trade. therefore, mFn status to India would bring greater benefits to Pakistan.

this is with regards to the article, ‘Zong and manchester Unite(d)’ published yesterday. one has to agree that Zong’s sales are going to skyrocket after the collaboration with manchester United. I have many friends who are die-hard United supporters, and they want to collect every single thing that is associated with their club. But yes the omen factor pointed out in the article is also very interesting, because Zong’s deal has come at a time when manchester United has been struggling on the pitch. there has been recent improvement though, and whether they struggle or not, the annoying bandwagon of United fans does not look like halting any times soon.

FAROOq AHMED

TALAL DAR

WAH CANTT

thou’ standpoint at the recent eU summit was a perfect example of what should not be happening, for the eurozone to climb the pecking order in the global matters. obviously, the foremost task of every individual member state is to ensure that its own unit attains as much stability as possible. this can only be achieved via responsible policy making on the part of individual governments, who should take measures that prove to be fruitful for their own interests but that also, cater the greater good of the entire zone. It is all good compelling individual states to follow a rulebook, and for those who prove to be incompetent conditional aid is another popular choice; but every country should be given an opportunity to cleanup its own mess. now, for those countries who have generated so much mess that they are forced to wash their dirty linen in public – or worse, who are dependent on others for a purge out- an authoritative, yet considerate approach on the part of the Who’s Who of the zone is required. the formulation of budgetary policies, of the countries that find themselves in a hole, is the most telling task for any authority, and therefore, it should be handled meticulously. this would require a metamorphosis of thought process at the european helm, and the powers that be must embrace the redefinitions of sovereignty and authority among other things. the interlinked web that the eurozone has become connotes that sifting collective interests from individual standpoints would take an unprecedented level of mutual understanding, barring which the european cauldron would continue to simmer on endlessly. Any planning for the future for the europeans should encompass both the fiscal policies and competitive policies and the imposition of “second stage”. the executive duties should obviously continue as they exist presently, but another important factor worth considering is the presence of a ministry representing the eurozone in international financial institutions. the creation of a european finance ministry is proving to be inevitable; and if it isn’t formulated in the days to come, it would have to be formed for better supervision of the financial sector eventually. For example, G-20 members envisage europe as a whole rather than focusing on its member states individually; and hence collective representation would prove to be unavoidable one day. Any student of european history is well aware of the historical problems that the continent has had to face. And now with the continent at the crossroads of epoch-making developments a collective effort, that supersedes historical animosities and egoistic approaches, is required for the zone to penetrate into the upper echelons of the global geopolitical structure. 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

LAHORE

The Chinese juggernaut

Basit Rizvi HInA has over the last several decades emerged as the worlds single most dynamic economy but this progress has been more marked ever since it began its transition to a more market based economy. the question though is what in effect drove them to make these changes. technological advancement in economies began from the industrial revolution that accelerated the pace of development mostly through the mechanization of work and processes, breakthroughs that were led by scientists and

engineers in their laboratories. the Chinese juggernaut picked up pace after mao Zedong and other Chinese leadership began to reverse the backwardness of the region by adopting a policy which facilitated the construction of advanced capital intensive industries. Such a strategy eventually enabled China to test the nuclear bomb in 1960 and soon after launch satellites in space in the 70’s. However the economy was still fairly poor and agrarian in nature, with little comparative advantage against other such capital intensive economies. the firms required government protection and policies of import substitution, subsidies and administrative directives. While these policies were in some measure successful, they could not jump start economic growth with the performance being relatively poor. What stood out when finally the transition of the Chinese Goliath to a market based economy started in 1979 was that the leadership under Deng Xiaoping did not resort to a policy of privatisation or trade liberalisation.

Instead it continued to strengthen the domestic industry through government patronage and simultaneously allowed private enterprises to invest in the labour intensive sectors that were comparatively repressed but consistent with Chinese comparative advantage. Such an approach paid great dividends as it enabled the country to not only achieve stability but also paved way for economic growth. What exactly are the dividends? Well, they have witnessed 9.9 per cent of average annual GDP growth and 16.3 per cent of annual trade growth over the past 32 years – growth that holds lessons for other developing nations. the result of integration into a more market based economy has been that the country is now the worlds largest exporter and second largest economy. A gargantuan 600 million people were pulled out of poverty owing to such developments. the moral of the story is that progress and economic growth are not lofty ideals but quite achievable if a dedicated team of policy makers and visionaries are bent upon producing re-

sHaHaB JafRy Business Editor

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Can the Chinese model of success be replicated by other developing nations across the globe?

sults. the global economic recession has hit the developed world hard, however it has simultaneously presented the emerging economies with the opportunity to tap into the developed markets, to fill in the void since these economies remain relatively unaffected. It comes as no wonder that one third of the worlds savings originate from Asia. therefore the way forward is for Asian countries to invest in infrastructure, human resource and capital intensive industry. more importantly after the Asian economies were shaken by the financial crisis back in the 2000’s they made a concerted effort to move towards financial self reliance. the transition of Asian economies to self reliance was in stark contrast to the massive debt creation, unprecedented leverage and credit creation frenzy of the developed economies. What eventually ensued were large im-

balances that shook the economic landscape across the globe. In the wake of such imbalances the strength of the Asian economies have increasingly been highlighted and they can continue on their path towards dynamic growth. While some may be quick to argue that the performance of a country of over 1 billion people cannot be replicated however, what policy makers need to understand is that all developing countries can enjoy similar successes to sustain economic growth and reduce poverty exponentially by merely exploiting the benefits of their backwardness, exporting technology from the developed world and upgrading industries. the recession for Asia is an opportunity to bottom fish yet again. The writer is a professional banker and financial commentator

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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Wednesday, 28 December, 2011

news

System and processes are in place and reinventing the complete system will be counter production for the GDP of the country, at least in the short term

wincom CEO, Mr Zahoor Motiwala

Mafia controls FPCCI allege Balochistan chambers Interest group vies to deprive Balochistan of its rights in fpCCI g all chambers of Balochistan to go to court if a bogus nominee elected president g

KARACHI

GHULAM ABBAS

He hot seat of president Federation of Pakistan Chambers of Commerce and Industry (FPCCI) may become a source of serious rift in the business community of the country since all chambers of commerce and industry of Balochistan have stood against one of the contestants, allegedly nominated by a strong group of FPCCI. All five chambers of commerce registered in Balochistan have termed one of the three contestants, vying for the slot of president of FPCCI in the forthcoming annual elections, as a nominee of mafia which controls the whole body. Addressing a joint press conference at Karachi Press Club on tuesday, the representatives of Lasbela Chamber of Commerce and Industry, Gawadar Chamber of

Commerce and Industry, makran Chamber of Commerce and Industry and Chaman Chamber of Commerce and Industry alleged that a mafia led by tariq Sayeed, a renowned businessman, has nominated Haji Fazal Kadir Khan Sherani as a contestant of the presidential seat from Balochistan. As Sherani is not a representative of any chamber of what is touted as a deprived province, his candidature for the hot seat was a conspiracy against not only the business community of the province but also whole country. It is worth mentioning, as per rules of FPCCI the presidential slot was to be filled on rotation bases as it was the turn of Balochistan this year. three candidates had so far filed their nomination papers for the election which was scheduled to be held on thursday between 9am and 5pm at the FPCCI head office. A tough fight was expected between three candidates namely Kadir Khan Sherani, maqsood Ismail

and mir Haji Lashkari raisani. “We have the chance to have the presidential seat of FPCCI after 12 years but the strong mafia in the body is trying to elect its blue-eyed one, a nominee of none of the Balochistan’s registered chambers,” meer naveed from Gwadar Chamber of Commerce and Industry said. “We the real representative of all trade bodies of the province have the right to decide who will be the nominee for PFCCI presidential slot”, he said adding that but the interest group in the body was not ready to give the right to the already deprived province. He alleged that Sherani was contesting the presidential slot as a member of All-Pakistan Contractors Association (APCA), an unregistered association in Balochistan. the association was registered in Lahore making him disqualified for the slot which should be filled from Balochistan.

LCCI fears massive lay-offs in wake of gas suspension LAHORE STAFF REPORT

AHore Chamber of Commerce and Industry (LCCI) on tuesday feared massive lay-offs in the industry in wake of gas suspension and urged the government to reverse the decision without any further delay for the sake of economy. In a strong statement issued, LCCI President Irfan Qaiser Sheikh, Senior vice President Kashif Younis meher and vice President Saeeda nazar said if regular supply of gas to the industry was not restored, thousands of industrial workers, particularly the daily wagers would face retrench-

ment. “If there is no gas and no electricity, how can an industrial unit continue its operations?” LCCI office-bearers urged the government to save the industry in Punjab which is providing jobs to over 15 million people. “Government would have to reset its priorities regarding provision of gas otherwise situation would go out of hands.” they said the gas closure decision is a calculated and well thought-out conspiracy against the present regime and people sitting at the helm of affairs must understand the importance of industry. they emphasised on the fact that it was the responsibility of the government to ensure level playing field to entire indus-

try in Pakistan. Discrimination with the industry in Punjab is sheer injustice that calls for an intervention by prime minister of Pakistan. “the rise in number of unemployed would definitely give air to anti-government sentiments and street crimes. It is not only the industry that would be suffering massively, but the government would also lose on many counts.” Irfan Qaiser Sheikh urged the government to immediately shelve the proposed, “Industry Closure Plan” to avert industrial closures and resultant massive lay offs. “How can the industry afford to pay the all-time high mark up when there in no gas for the industry?”

Daroo Khan from Chaman Chamber of Commerce and Industry said, interestingly, Sherani, despite being a member of Quetta Chamber of Commerce, was not nominated or selected by the chamber for the presidential election. Showing a letter of Security and exchange Commission of Pakistan (SeCP), company registration office Quetta, he said the association of Sherani was not registered in SeCP. In reply to query, Jamal-uddin, member of FPCCI said business community of Balochistan would approach prime minister, commerce minister and other concerned authorities if the mafia elected the bogus candidate from his province. He said all chambers of the province including Quetta chamber have developed a consensus on a contestant. “We will go to court if Sherani was not deleted from the contestant list”, he added. It is worth mentioning here that four vice presidents including engineer Daroo Khan Achakzai, Zubair Ali, mirza Abdul rehman and mohammad Iqbal from chambers of commerce and industry seats have already been declared elected unopposed.

psO in dire straits as receivables increase Staff report Karachi

AKIStAn’S biggest petroleum handler, Pakistan State oil (PSo) is on the verge of financial collapse since its outstanding dues from various ‘energy sector’ entities has reached to the extent of rs180 billion (which is the highest in four years). It seems that no bailing out is forth coming from ministry of finance (moF). Actual cash flows of the entity have gone negative due to incidence of more short term loans to keep daily operations afloat. It is imperative that the calculation of DCF value of such an entity may be a futile exercise and thus tantamount to mislead investors.

Index ends flat on investor pessimism KARACHI STAFF REPORT

Se 100 index closed flattish at 11,311 levels after the finance minister rejected the idea of withdrawing Capital Gains tax (CGt) or bringing it under the Presumptive tax regime (Ptr). volumes once again painted a very grim picture with 20 million shares changing hands. Furthermore, a report citing American officials as saying that US-Pakistan relationship is in troubled waters dented the already beleaguered sentiment. FFC closed in the ‘green’ up 0.7 per cent after FFC and FFBL increased the price of urea by rs.100/bag to rs.1580/bag today, but declining urea and DAP off take numbers in november weighed in on fertilizer advance as FFBL dipped 0.94 per cent and enGro closed down 0.33 per cent.

Almost all major oil and Banking stocks witnessed dismal volumes and remained out of favor with investors. Investors seem to be on a long vacation as volume shrank to merely 19.58m shares with the index remaining almost at the same level. In the light of fragile economic conditions investors remained at bay. ‘We believe today’s speech by mr. Zardari will set the tone for the rest of the current regime’s tenure,’ said Bilal Asif at HmFS. Among the top

ten stocks only four stocks crossed over the million share trading mark. the volume attrition continues to threaten the viability of stock punters and brokers. We firmly believe the stock market has incorporated the futuristic risk, hence the investors’ sentiment seems fairly justified, he added. As soon as the concerns related to economic concerns are addressed, the benchmark performance may improve accordingly. the valuations at local bench-

mark are fairly attractive, but macro economic menace has taken the investors away. the KSe 100 index closed at 11311.38 levels after gaining 1.03 points. the KSe 30 index closed at 10275.60 levels with the loss of 16.98 points, while All Share index gained 0.43 points to close at 7826.66 levels. total 86 scrips advanced 104 declined and 110 remain unchanged out of total 300 scrips traded.

sECp approves reporting of trades in unlisted tfCs ISLAMABAD: Securities and exchange Commission of Pakistan (SeCP) has approved the amendments for regulations of national Clearing Company of Pakistan Limited (nCCPL); providing for electronic reporting of trades executed in unlisted term Finance Certificates (tFCs) on tuesday. SeCP has taken the decision as part of the commission’s efforts to promote the debt capital market in Pakistan. nCCPL reporting platform will be operational from next month and all financial institutions, mutual funds, brokers and other corporate bodies will be able to report their trades through this functionality. Unlisted tFCs represent a major portion of the corporate debt market in the country. Hence, the development of a centralised platform, providing access to real-time trading information in these securities was vital. this will not only provide market participants with transparent and accurate trading information, but will also assist in the price discovery process. the trades reported through this platform will also be disseminated to the stock exchanges and displayed on their websites, to provide the debt market participants with a holistic view of the local corporate debt market and its trading activities. efforts are also underway for introducing clearing and settlement of these unlisted tFCs through nCCPL which will facilitate investors in settling their transactions and provide the debt market segment with necessary infrastructural support. SeCP has advised nCCPL to disseminate the concept paper on the above reporting platform to all of its clearing members and conduct training sessions and workshops to create awareness among market participants. Going forward, in order to ensure completeness of trading data being reported, amendments will also be made to the regulations of the Central Depositary Company whereby, movements of tFCs in CDC on account of trading activity will only be allowed if these trades are reported through nCCPL platform. STAFF REPORT

prolonged load shedding perturbs sialkot chamber SIALKOT: Addressing an important meeting of all the main trade bodies of Sialkot held at SCCI, President Sialkot Chamber of Commerce and Industry (SCCI) naeem Anwar Qureshi strongly condemned reintroduction of prolonged load shedding. He said unscheduled load shedding for extended hours is not merely disturbing the routine of the people but is also adversely affecting production of the industry. He revealed that exporters are unable to honour their commitments despite the fact that they are under an obligation to deliver consignments to their foreign buyers as per agreed terms. on this occasion, Javaid Ghuman (Superintending engineer) Gepco Sialkot told the meeting that that the load shedding was due to nonpayment of fuel charges to IPPs. He, however, assured the Sialkot business community that the situation will improve in a day or two due to payment of fuel charges to IPPs, which will bring additional 3500 megawatt electricity to the national Grid. ARIF MEHMOOd SHEIKH

plan chalked out for hill torrent management LAHORE: Punjab Irrigation Secretary, Irfan elahi has said a comprehensive plan has been chalked out to save the far-flung areas of DG Khan and rajanpur from the havoc of hill torrents. He said in this regard, work has been started on the project and rs5,398 million have been allocated for hill torrents’ management. Irfan elahi further added that the project costing rs1,605 million, has been approved for Kohra, Dahwa and Sanghar. Similarly, rs717 million has been approved for Kohra and rs3076 million has already been allocated for the management of hill torrents in Sorilund, Chahar, vidore and mithawan in Dera Ghazi Khan. ‘After the completion of these projects, thousands acres of barren land can be cultivated with the water of hill torrents which would be a good addition in agriculture products,’ he added. STAFF REPORT

aBC and OCCI seek measures to counter piracy ISLAMABAD: American Business Council (ABC) and overseas Chamber of Commerce and Industry (oCCI) have sought steps from government to counter piracy and counterfeiting of registered brands. A delegation of ABC and oCCI met with the chairman of Intellectual Property organization Pakistan (IPo-Pakistan) Hameed Ullah Jan Afridi and discussed issues of piracy and counterfeiting of registered international brands in the country. STAFF REPORT

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Wednesday, 28 December, 2011

In order to achieve something you want, you must have a vision, a roadmap and a balance sheet of life

news

siemens pakistan CEO, sohail wajahat siddiqui

‘Carriage of goods by sea’ bill approved

committee had decided that comments on the same may be obtained from ministry of commerce, State Bank of Pakistan, and Federal Board of revenue (FBr) for reconsideration of the matter by the committee.

COMMITTEE’S STANCE ‘Carriage of Goods by Sea’ bill, 2010 attempts to modernise the old law, that is, the ‘Carriage of Goods by Sea’ act, 1925 by incorporating provisions of the international convention relating to the bills of lading subject to necessary amendments and further provides for a list of legal documents concerning the carriage of goods by sea. While the Sea Carriage Shipping Documents Bill, 2010 largely aims at recognising different legal documents for purposes of carriage of goods by sea and determining their rights and obligations, and stipulating evidentiary status of such documents. It is not clear why these matters could not be covered into one consolidated law on carriage of goods by sea.

COMMENTS OF MOC KARACHI WAqAR HAMzA

S the ‘Carriage of Goods by Sea’ bill was approved by the national Assembly’s standing committee on ports and shipping last month, this bill is all set to become an act once it is introduced in the assembly. thus, traders and maritime experts demand that since the bill is in complete favour of shipping agents and freight forwarders and no

protection is given to trade, there should be a regulatory authority for making sure that there will be no fraud in Bill of Lading and no changes are made in the titles of goods by the shipping agents. the authority should also monitor the freight, they demanded. ‘Carriage of Goods by Sea’ was drafted in 2005 by the then director general ministry of ports and shipping captain Anwar Shah, and that draft was prepared with the consent of all stakeholders. But this revised

draft (that was made bill by the standing committee) was much tempered and does not protect rights of many stakeholders. It is to be noted that two documents ‘bill to enact Carriage of Goods by Sea Act, 2011’ and ‘bill to enact Sea Carriage Shipping Documents Act, 2011’ were last considered by the national Assembly standing committee on ports and shipping in the meeting held on 26th September 2011, in which Pakistan apparel forum had proposed certain amendments to the bills. Standing

Amendments proposed in the Sea Carriage Shipping Documents Bill, 2011 by the internationally recognised legal nomenclature is ‘bill of lading’ and not the ‘carrier bill of lading’. Similarly, ‘Seaway bill’ and ‘delivery order’ are internationally recognised documents relating to carriage of goods by sea. their definitions and related subsections cannot be changed or deleted. moreover, ‘consignee’ is the legal term and cannot be replaced as proposed. Definitions are exactly the same as in British ‘Car-

riage of Goods by Sea’ act, 1992 and cannot be changed. regarding Section 3 that deals with shipping documents to which this act applies, as already explained under Section 2 that documents have been listed in accordance with international shipping practice and British Carriage of Goods by Sea Act, 1992. Carrier bill of lading is just one document in use, and international shipping cannot be restricted to use of only one document. In addition, Section 4 about rights under shipping documents clearly defines the rights under various documents and how these are transferred. this is in keeping with the British act, and the amendments proposed are not workable.

SBP’S RESPONSE A summary for approval in principle for the Logistics Service Providers regulatory Authority Bill, 2011 has already been submitted by the ministry of Commerce to the Cabinet. After vetting by law division and final approval of the cabinet, the bill will be submitted to the national Assembly for its consideration. main concern of the traders’ bodies has been that freight forwarders issuing house bill of lading do not carry any liability in case of loss or damage to cargo. this ‘Logistics Service Providers regulatory Authority’ bill, 2011 provides that all logistic services providers take suitable liability insurance cover of rs1 million and those issuing their own transport document i.e house bill of lading or house airway bill, etc of rs10million, for loss or damage to the cargo handled and transported for which they are liable as per

terms of their contract. It may be added that in case of imports through freight forwarders, importers in Pakistan normally take delivery of goods on the basis of forwarder’s house bill of lading without any mBL of shipping line but in order to safeguard the interest of exporters in Pakistan, SBP has put in place all possible measures to minimise the allied risks. Pakistan Apparel Forum’s proposals regarding amendment in various section of proposed bills pertains to shilling lines and freight forwarders which requires deliberations with shipping lines and freight forwarders in the light of international trade rules and practices. We propose that prior to finalising the current bills ministry of ports and shipping may obtain the views and comments of all stakeholders.

STAKEHOLDER CONCERNS the forum desired some amendments in the bill and they include: carrier bill of lading must be issued by carrier/master of vessel; ‘consignee of the goods’ should be replaced with ‘by the owner of the goods’; ‘any seaway bill’ should be deleted; the word ‘a seaway bill’ must be replaced by ‘carrier bill of lading’; and after the word ‘contract’ in the Section 3 the words ‘as instructed by the shipper (owner)’ should be added. Jawed Bilwani, Chairman PAF, further said that if this bill is allowed it will open doors of malpractices by the freight forwarders in connivances with the shipping agents, therefore, it must be ensured that the instructions of the actual shipper (owner of the goods) are shown in all documents in each of the shipment.

CORPORATE CORNER OMD, CEO asia pacific visits pakistan

3.2617 units on the ex-dividend price of rs100.2536 per unit. Unit Holders who have opted for cash payout will receive cash dividend, net of applicable taxes. PRESS RELEASE

Emirates brings star cricketers to Edhi village

customers. Customers can now register a complaint in five easy steps: Step 1-type ‘CmP’; Step 2-type Area Code and Landline number; Step 3- type Product Code (for Landline: ‘LL’; for Broadband: ‘BB’), Step 4-send to 05 1218 1218; and Step 5-complaint registration number received, or simply type ‘HeLP’ and send to 05 1218 1218. PRESS RELEASE

Ds railways inspects lahore-sahiwal section LAHORE: Steve Blakeman Chief executive of omD for Asia Pacific, visited Pakistan last week for discussions with the Chairman of omD Pakistan Dara Bashir Khan and Ceo rizwan merchant to strategise on the 2012 growth plans of omD in Pakistan and in the region. omD Worldwide is one of the largest and most innovative media buying and planning specialists in the world and is recognised for its global imprint, strategic integration and creativity. PRESS RELEASE

united Bank limited announces Interim payout KARACHI: the Chief executive, under the authority of the Board of Directors of UBL Fund managers Limited, announced an interim payout for the period ended December 22, 2011 from UBL Liquidity Plus Fund (ULPF) and UBL Government Securities Fund (UGSF). the following interim payouts have been announced: UBL Liquidity Plus Fund (ULPF) rs2.71 per unit of par value of rs100. Unit holders holding 100 units as at December 22, 2011 will get 2.7017 units on the ex-dividend price of rs100.3057 per unit. Unit Holders who have opted for cash payout will receive cash dividend, net of applicable taxes. ULPF is a money market fund that offers an ideal short-term avenue for placement of cash. the Fund yielded a return of 11.35 per cent p.a. since inception. A payout of rs3.27 per unit of par value of rs100 was announced for UBL Government Securities Fund (UGSF). Unit holders holding 100 units as at December 22, 2011 will get

KARACHI: emirates, one of the fastest growing international airlines, provided an unforgettable experience for orphans at Karachi’s edhi village Apna Ghar, when it brought a number of star cricketers to the facility to host a coaching clinic. the children were thrilled as Yasir Hameed, Zulqarnain Haider, Shakil Ansar and Sajjad Hussain– players for Quaid-e-Azam trophy finalists Zarai taraqiati Bank Ltd (ZtBL) – signed autographs and posed for pictures. the children also had the opportunity to ask the players – who have all played at international level - about their lives as professional cricketers. “Interacting with these children and experiencing their excitement first hand is a gratifying feeling. Knowing that you may be able to make a difference to their lives is the reason I got involved with the sport in the first place,” said ZtBL player Yasir Hameed. PRESS RELEASE

ptCl launches sMs Customer Complaint service ISLAMABAD: Pakistan telecommunication Company Limited (PtCL) has launched a unique customer complaint registration service via mobile SmS for its valued landline and broadband

LAHORE: Divisional Superintendent (DS) railways Javed Anwar Bubak, along with concerned divisional officers visited Lahore-Sahiwal section. He met certain delegations at different stations and promised to solve their genuine problems at the earliest. He suspended muhammad naeem SCA (P) at Lahore cantt station for not performing his duties properly. He gave away rs200 cash prize to station master Kana Kacha on his good performance. Furthermore at okara cantt station he ordered to clear the encroachments, immediately. PRESS RELEASE

pIa hold BoDs’ meeting

LAHORE: PIA’s 336th Board of Directors’ meeting was held at Karachi. Presentation on Fleet replacement Plan was made during the meeting according to which PIA fleet will be gradually renewed and the airline will have a total number of 67 aircrafts by 2020. Board will be briefed on marketing plan which included the marketing performance and different marketing strategies. Board reviewed Hr and other matters of strategic interests during the meeting. the meeting was chaired by Ch Ahmed mukhtar, minister for defence and chairman PIA. PRESS RELEASE

KARACHI: Chairman APCMA, Aizaz Manzoor Sheikh, presenting a cheque of Rs6.5 million to Governor Punjab Sardar Latif Khosa, for flood affectees in Sindh. PRESS RELEASE

KARACHI: Mrs Sadia Rashid, President Hamdard Foundation Pakistan, dr Syed Jaffer Ahmed, director Pakistan Study Center, University of Karachi addressing the function of Hamdard Naunehal Assembly on the occasion of quaid-i-Azam 135th birth anniversary at a local hotel. PRESS RELEASE

KARACHI: The Consul General of Srilanka Mr d W Jinadasa, hosted a dinner at consulate premises. Picture shows the founder Chairman of Pak-Sri Lanka Business forum, Mr Majyd Aziz, President Mr Tarek Khan, Mr Abdul Rauf Tabani, Mr Farrukh Mazhar, and Mr Iqbal Shaikhani, with the host. PRESS RELEASE

PDF Profit_Layout 1 12/27/2011 11:41 PM Page 6

Wednesday, 28 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 11311.38 2822.88 2553.33

KSE-100 LSE-25 ISE-10

Change +1.03 -11.11 -12.6

Volume 14,940,804 439,236 11,600

Market Value 642,257,619 8,997,316 118,920

top 5 perForMers sector wise

Major Gainers Company Nestle PakistanXD UniLever Pak Ltd. Siemens Pak Unilever Pak Foods Wyeth Pak Limited

Open 2969.91 5502.82 932.53 1670.00 760.39

High 3118.40 5700.00 979.15 1712.00 798.40

Low 3099.00 5555.00 945.00 1705.00 749.99

Close 3118.40 5649.62 979.15 1708.18 786.32

Change 148.49 146.80 46.62 38.18 25.93

Turnover 360 891 620 57 515

2540.00 167.65 232.01 45.80 151.00

2494.97 166.00 231.80 44.00 151.50

2450.00 162.10 229.10 44.00 149.00

2464.17 164.83 230.19 44.00 149.30

-75.83 -2.82 -1.82 -1.80 -1.70

22 2,710 74,913 500 1,265

Volume Leaders Fatima Fert.Co. Arif Habib Co SD Pak Reinsurance Engro Foods Ltd. Jah.Sidd. Co.

23.12 26.97 14.50 23.00 4.12

23.20 27.00 14.73 23.00 4.17

22.82 25.95 14.38 22.80 4.03

22.96 26.70 14.56 23.00 4.07

-0.16 -0.27 0.06 0.00 -0.05

3,304,155 1,559,547 1,029,249 1,005,190 937,415

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

Per Tola (PKR) 53,838.00 51,608.00 977.00 1025.00

Per 10 Gm (PKR) 46,207.00 44,245.00 839.00 880.00

Per Ounce US$ 1,598.00 – 35.05 –

HIgH

lOw CuRRENt

CHaNgE

vOluME

420.50 109.55 22.80 6.78 84.74

416.00 108.00 22.52 6.65 82.62

419.75 108.56 22.52 6.75 82.74

-0.27 -0.61 0.00 0.03 -0.68

16,299 152,085 101 60,252 4,422

16.50 0.85 27.00 151.50 39.58

16.40 0.40 25.95 149.00 38.00

16.44 0.64 26.70 149.30 39.58

0.89 -0.37 -0.27 -1.70 1.88

1,800 16,880 1,559,547 1,265 411,564

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

420.02 109.17 22.52 6.72 83.42

Agritech Limited Agritech(PREF)(R) Arif Habib Co SD Clariant Pakistan Dawood Hercules

15.55 1.01 26.97 151.00 37.70

18.50 1.13 8.24 32.91 10.49

18.75 1.12 8.43 34.55 10.50

18.15 1.10 8.00 31.70 10.03

18.74 1.10 8.09 34.46 10.47

0.24 -0.03 -0.15 1.55 -0.02

2.54 50.99 6.75 18.82 1.41

27.23 3.75 42.06 6.99 79.81

Ados Pakistan AL-Ghazi TractorsXD Bolan Casting K.S.B.Pumps Millat Tractors Ltd.

89.4102 139.7929 1.1460 116.7787

5.28 176.55 28.50 24.51 365.22

2.60 51.00 6.80 18.95 1.59

2.12 50.99 6.45 18.70 1.41

2.32 50.99 6.75 18.83 1.41

-0.22 0.00 0.00 0.01 0.00

820,325 26 1,502 419,090 1

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

$100.01

Sell 90.50 118.36 141.69 1.1561 89.77 11.65 24.62 24.09 93.20

Brent Crude Oil

$107.97

Atlas Battery Ltd. Atlas Honda Ltd. Bal.Wheels Dewan Motors Exide (PAK)

162.00 125.98 23.70 1.69 159.60

27.85 3.70 43.00 6.99 81.00

27.10 3.60 41.30 6.90 80.00

27.23 3.70 42.85 6.99 80.74

0.00 -0.05 0.79 0.00 0.93

326 7,012 5,515 47 2,100

vOluME

Adam Sugar AL-Abbas Sugur AL-Noor Suger Mills Baba Farid Bawany Sugar

17.90 92.48 55.99 39.83 11.00

18.90 92.49 55.99 39.00 11.80

5.80 184.75 29.92 25.73 369.00

4.70 176.00 28.50 24.51 364.00

165.00 125.98 24.88 1.68 161.30

0.03 4.20 0.00 0.00 0.82

3,131 707 8,600 99 4,390

164.45 125.98 23.70 1.62 159.60

2.45 0.00 0.00 -0.07 0.00

1,460 5 300 27,809 1

109.00 111.18 145.05 145.58

0.69 -4.44

1,170 203

163.45 125.00 23.70 1.62 159.60

110.49 111.43 150.02 150.00

AL-Abid Silk Mills Hala Enterprise Hussain Industries Pak Elektron Ltd. Tariq Glass Ind.

23.34 7.00 3.00 3.55 8.30

24.50 7.00 3.00 3.65 8.49

Amtex Limited Azam Textile Azgard Nine Babri Cotton Bannu Woollen

1.20 1.11 3.21 8.41 14.85

1.25 1.60 3.26 8.50 14.37

27.00 27.47 3.25 109.50 110.62

AHCL-DEC AHCL-JAN ANL-DEC ATRL-DEC ATRL-JAN

26.92 27.10 3.20 109.25 110.50

5.31 180.75 28.50 24.51 366.04

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

99.95 75.44 66.08 30.23 13.76

100.00 78.00 67.00 30.23 14.00

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

10.00 34.50 0.80 1.75 0.85

18.90 92.49 55.99 39.00 11.00

1.00 0.01 0.00 -0.83 0.00

10,491 7 26 2,000 10

24.50 6.90 3.00 3.40 8.00

24.50 7.00 3.00 3.59 8.12

1.16 0.00 0.00 0.04 -0.18

500 111 100 38,312 4,396

1.19 1.11 3.08 8.41 14.26

1.24 1.11 3.11 8.41 14.26

0.04 0.00 -0.10 0.00 -0.59

103,150 1 314,901 1 1,510

26.05 26.40 3.11 108.30 109.31

26.73 26.93 3.17 108.91 109.94

-0.27 -0.54 -0.08 -0.59 -0.68

88,500 94,000 1,500 60,000 61,000

100.00 75.44 66.68 30.23 14.00

0.05 0.00 0.60 0.00 0.24

1,361 1 1,508 20 5,275

99.50 75.44 66.00 29.25 13.70

10.10 34.50 0.83 1.85 0.89

9.96 34.00 0.75 1.75 0.83

10.00 34.50 0.80 1.75 0.84

0.00 0.00 0.00 0.00 -0.01

140,195 101 42,806 26,613 214,669

0.31 34.17 0.64 1.59 15.51

0.34 34.33 0.68 1.59 15.51

0.22 34.06 0.61 1.53 14.62

0.27 34.11 0.63 1.59 15.51

-0.04 -0.06 -0.01 0.00 0.00

30,012 417,944 47,381 41,119 100

56.41 10.01 4.86 11.20 28.10

56.50 10.20 4.96 11.34 28.20

54.99 9.85 4.83 11.18 27.80

55.34 9.92 4.93 11.20 27.88

-1.07 -0.09 0.07 0.00 -0.22

16,622 80,549 331,096 102,692 60,345

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

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

syMBOl

OpEN

HIgH

lOw CuRRENt

CHaNgE

vOluME

Non Life Insurance 18.40 88.00 53.20 39.00 11.00

Fixed Line Telecommunication

Beverages Murree Brewery Co. Shezan Int’l

CHaNgE

Pharma and Bio Tech

Automobile and Parts Buy 89.50 116.46 139.74 1.1439 87.30 11.39 24.38 23.89 90.40

lOw CuRRENt

Future Contracts

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

HIgH

Personal Goods 10,566 8,000 4,334 173,937 5,502

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

OpEN

Household Goods

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

syMBOl

Food Producers

Industrial Engineering

Interbank Rates US Dollar UK Pound Japanese Yen Euro

OpEN

Chemicals

Major Losers Rafhan Product Tri-Pack Films P.S.O. Faisal Spinning Clariant Pakistan

syMBOl

Adamjee Ins Central Ins Co. EFU General Ins Habib Insurance IGI Insurance Ltd.

44.42 50.02 36.21 9.85 43.38

45.70 52.50 36.05 10.29 43.50

43.30 50.02 36.00 9.85 42.74

45.29 50.02 36.00 9.85 43.46

0.87 0.00 -0.21 0.00 0.08

102,889 50 1,804 100 2,200

13.50 1.40 65.53

14.50 1.40 65.53

0.00 0.00 0.00

2 1 157

0.34 15.17 13.59 0.70 2.54

-0.01 0.27 -0.08 0.05 -0.01

1,523 6,608 12,450 500 4,006

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

0.35 14.90 13.67 0.65 2.55

0.35 15.60 13.60 0.70 2.75

0.30 13.90 13.28 0.70 2.37

Equity Investment Instruments 1st.Fid.Leasing Mod AL-Noor Modar B.F.Modaraba B.R.R.Guardian Cres. Stand.Mod

1.58 4.50 4.25 2.06 0.49

1.60 4.30 4.00 2.15 0.50

1.58 4.10 4.00 2.06 0.42

1.58 4.30 4.00 2.06 0.50

0.00 -0.20 -0.25 0.00 0.01

7,490 10,239 1,398 100 4,815

13.00 35.70 13.00 61.23 1.13 64.00 23.75 28.58 10.00 1.81 28.80 138.65 15.75 19.00 14.00 69.57 24.00 1.23 8.91 2.18

13.02 35.88 13.00 61.23 1.15 64.08 23.75 28.58 10.41 1.84 28.80 138.65 15.75 19.45 14.00 73.82 25.01 1.25 8.96 2.18

0.02 -0.07 -0.02 0.00 -0.03 -0.10 0.00 0.00 1.00 -0.01 0.51 0.00 -0.23 0.29 -0.75 0.95 0.00 -0.05 -0.06 0.00

2,500 11,000 7,000 153 125,579 5,721 10 73 3,556 44,931 317 7 31,074 27,800 5,000 4,360 250 219,577 40,203 2

Miscellaneous Century Paper Security Paper P.N.S.C. Pak.Int.Con. SD TRG Pakistan Ltd. Murree Brewery Grays of Cambridge Shifa Int.Hospitals Media Times Ltd P.I.A.C.(A) Pak Hotels Pak Services Sui North Gas Sui South Gas American Life EFU Life Assur AKD Capital Ltd. Pace (Pak) Ltd. Netsol Technologies Pak Telephone

13.00 35.95 13.02 61.23 1.18 64.18 23.75 28.58 9.41 1.85 28.29 138.65 15.98 19.16 14.75 72.87 25.01 1.30 9.02 2.18

13.15 36.35 13.00 64.20 1.16 65.00 23.90 28.69 10.41 2.08 29.70 140.00 15.99 19.50 14.00 74.90 25.01 1.45 9.08 3.05

Mutual Funds fund

Oﬀer

Repurchase

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

501.2900 114.7196 103.6501 100.6900 519.3500 519.0900 516.9700 453.1500 82.9800

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

PDF Profit_Layout 1 12/27/2011 11:41 PM Page 7

Pro-business policies and supportive taxation laws can work wonders in increasing the GDP growth of the country

Wednesday, 28 December, 2011

news

gillette pakistan CEO, saad amanullah Khan

large scale manufacturing up by 2.07pc during July-October ISLAMABAD

a yEaR Of glOOM fOR

agRICultuRE sECtOR LAHORE

IMRAN AdNAN

GrICULtUrIStS and farmers have termed the year 2011 as ‘black year’ for agriculture as imposition of General Sales tax (GSt) on agriculture inputs/implements and withdrawal of subsidies have multiplied cost of farming in the country. Speaking to Profit, Pakistan Agricultural Scientists Association (PASA) President Jamshed Iqbal Cheema estimated that on the one hand withdrawal of subsidies and levy of GSt had increased the input cost by over 35 per cent, while on the other hand agriculture produce prices , except wheat, dropped by nearly 25 per cent that caused huge losses to farmers. the country had witnessed negligible agriculture performance in 2011 that had compromised its growth. the imposition of GSt on fertilisers had shown 30 per cent decline in diammonium phosphate (DAP) usage, besides drop in urea and pesticides usage, he maintained. He further stated that loans to agriculture sector also witnessed a declining trend because both the provincial and federal governments had already over borrowed from banking channels that left hardly any amount for agriculture. He urged the economic managers to allocate an amount equivalent to the share of agriculture in GDP, which was 23 per cent. Cheema said loaning had not only shrunk for farmers but also for those involved in the business of agricultural inputs and agricultural produce. He pointed out that even the loan spread had been squeezed for rice sheller, flour mills and

agriculture produce distributors (arhtis). He said decrease in loaning to agriculture sector badly hit the farmers, as market forces had limited liquidity to buy agriculture produce. Citing an example, he pointed out that government had announced rs1,050 as support rate for 40 kilograms of wheat, but it could be ensured only when markets had sufficient funds and competition, otherwise farmers could not benefit from the support price. PASA president said absence of food processing industries, storage and other value-addition industries was another issue, which could not be tackled by any government despite tall claims during the outgoing year. “no new scheme or investment was brought in this sector which could not only overcome waste of perishable and non-perishable agricultural commodities but could also help both producer and consumer in shape of sustained prices,” he regretted. Agri Forum Pakistan Chairman muhammad Ibrahim mughal also believed that the year 2011 was the worst year for agriculture sector. He pointed out that the country had missed almost all major crop targets. Government had fixed cotton crop target of 14.5 million bales, while it was being expected that the country would miss it by 1.8-2 million bales. Similarly, government fixed wheat sowing target of 22 million acre, whereas it would be missed by over 2.1 million acres due to high input cost and shortage of much needed inputs, he added. He pointed out that huge increase in agriculture and food products imports further disturbed the trade balance, which was a matter of great concern for an agricultural economy. He underscored that it was the worst year for formers as fertiliser

prices witnessed an unprecedented of over rs800 in 2011, mainly because of suspension of natural gas supply to fertiliser plants. the country was already short of urea fertiliser and absence of price control further aggravated the situation by offering an opportunity to profiteers and hoarders. Conservative estimates indicated that profiteers had fleeced some rs10 billion from poor farmers by exploiting the situation, he maintained. responding to a question, he said, in real terms agriculture sector witnessed zero growth due to anti-agriculture policies and did not see any positive change in 2012 as neither policymakers had wish to bring change, nor they had vision. Pakistan Basmati Growers Association President Hamid malhi said that it was a hard year for farmers. He also pointed out that massive increase in the cost of agriculture inputs compromised its growth. He indicated that it was not an agenda item for the government in the whole policy making process. “It would not be wrong, if we say that the government had ruined agriculture sector in 2011,” he underscored. He said he did not expect any positive change from the present regime, but he was optimistic about the future of agriculture. the new government might bring some silver lining for agriculture. Almost all agriculture and farmers bodies had urged government to cut agriculture inputs cost, improve marketing system and enhance loan spread besides investing in research to increase per acre yield. these steps were essential to overcome food shortage and avoid any threat to food security in the future, they concluded.

JALALUddIN RUMI

eSPIte ongoing energy crisis, floods and war on terror, Large Scale manufacturing (LSm) sector of the country continued its better performance during the first four months of current fiscal year (July-october) with 2.07 per cent growth over the same period last fiscal year 2010-11. According to latest figures released by Federal Bureau of Statistics (FBS) on tuesday, Quantum Index number of LSm industries stood at 104.16 points in first four months of fiscal year 2011-12 as compared to 102.05 points of July-october period of the year 2010-11. According to statistics, LSm recorded growth of 4.68 per cent during the month of october over the month of September, Quantum Index number of LSm industries stood at 105.48 points in october 2011 as compared to 100.76 points of September 2011. trade analysts and economic experts believed that if the present trend continues in large scale manufacturing as well as in agricultural sector, government could achieve the revised economic growth target of 3.6 per cent in current fiscal year. Quantum Index numbers (QIn) of large scale manufacturing industries has been computed in the FBS on the basis of latest production data of 112 items received from various

CNg kit ban aggravating suzuki sales KARACHI STAFF REPORT

ItH the recent ban on import and installation of CnG kits by auto assemblers, Pak Suzuki motor Company Limited (PSmCL), is bound to take a hit since, majority of its sales are of CnG variant models. on the flip side though, CnG unavailability and recent proposals to bring CnG prices at 80 per cent parity with petrol (as opposed to the current 55 per cent), along with a planned 25 per cent increase in CnG prices early next year, are poised to increase demand of smaller engine size vehicles (of which PSmC is the market leader) and likely to (at least partially) mitigate the impact of this ban. the current Auto Industry Development Programme (AIDP) is also slated to be revamped during 2012, which adds to the uncertainties surrounding the sector. 9MCY11 EARnIng REvIEw: PSmC’s bottom line grew by a whopping 73 per cent to rs672mn, during 9mCY11 (9mCY10:

T-bill yield surpasses DR KARACHI

STAFF REPORT

IGHer Current Account (C/A) deficit and substantial borrowing of the government sector to finance the deficit has once again raised the demand for money. this is reflected from the secondary market t-bill yields which are currently at 12.08 per cent, surpassing the Dr (Discount rate) of 12 per cent. Last time market witnessed such a pattern was on november 6, 2008, where t-bill yields surged to 13.45 per cent compared to the policy rate of 13.0 per cent. Following this, the SBP raised the Dr by 200bps to 15 per cent on november 12, 2008. So does this mean that the market is pricing in the Dr hike? ‘our answer is no! However, the market is expecting a huge bailout from the Central Bank,’ said muzzammil Aslam and Furqan Ayub at JS. So far, SBP has sponsored money shortfall through consistent open market operation

Injections (current outstanding rs262 billion) which, analysts said, in our view, is not sustainable or a viable option, even in the shortterm. We believe, it has to be replaced with either SBP printing money or retirement of government’s huge debt balances to banking companies, they added. M2 gROw MERELY AT 2.92 pER CEnT fROM JuLY TO DEC 9: Due to the surge in C/A deficit, the money supply has witnessed a meager growth of 2.92 per cent versus 6.18 per cent last year. net Foreign Asset (nFA) contracted by rs117 billion versus an expansion of rs72 billion during the same period last year. However, the net Domestic Asset (nDA) has increased by rs318 billion versus rs285 billion last year. It is interesting to note that the government borrowing for budgetary support has actually increased by rs719 billion versus rs371 billion last year. the difference between nDA and budgetary borrowing stands at a net retirement of rs274 billion

by Public Sector enterprises (PSes). For this, government (in order to ease off the burden on energy companies), has converted PSes debt into t-bills and PIBs, which has further deteriorated the banking sector’s advance to deposits and in turn strengthen investments to deposits. this has resulted in banking sector straying away from its original role of being an intermediary and facilitator to the private sector. T-BILL YIELD HIgHER THAn THE DR: Analysts believe that the money growth of 2.92 per cent is not enough to offset the impact of inflation (expected to be around 12 per cent in FY12). In addition, government’s persistent failure to mobilise resources has increased the demand for money. Hence, t-bill yield has officially surpassed the Dr rate (first time since november 2008). recall, SBP has aggressively eased its policy stance by 200 bps to 12 per cent in FY12 so far. one year t-bill yields which were at 13.68 per cent on January 1, 2011,

sources i.e. oil Companies Advisory Committee (oCAC), ministry of industries and production and provincial bureaus of statistics. oCAC supplied data of 11 items, ministry of industries and production supplied the data of 36 items and provincial bureaus of statistics provided data for 65 items. According to FBS figures, oCAC group grew by 0.41 per cent during first four months of the ongoing financial year; ministry of Industries registered a growth of 0.50 per cent and provincial BoS showed growth of 2.15 per cent in July-october period. In oCAC, commodities showed negative growth including jet fuel oil (5.56 per cent), diesel oil (38.98 per cent), lubricating oil (2.70 per cent), solvent naphtha (7.89 per cent), and LPG (12.98 per cent) during first four months of current fiscal year 20112012 against same period last year. meanwhile in oCAC, the following products showed positive growth rate including kerosene (35.20 per cent), motor spirit, (11.32 per cent), high-speed diesel (18.32 per cent), furnace oil, (1.08 per cent), and jute-batching oil (1.12 per cent). ministry of industry index registered a negative growth of 0.50 per cent comprising 35 main industries in QIn of LSm. Industries showing positive growth includes, sugar (1.52 per cent), cigarettes, (1.11 per cent), cotton yarn, (6.67 per cent), cotton cloth, (2.21 per cent), Phos Fertilisers (4.53 per cent) and LCvs (17.97 per cent).

touched a year low of 11.76 per cent on november 2, 2011. Since then the yields have bounced back to 12.10 per cent as of yesterday. A similar pattern has been witnessed in PIBs as well. IS THE MARKET pRICIng In AnOTHER HIKE In THE DR? We believe the current situation is quite different when compared to 2008, they said, adding that today the country is engulfed with fiscal crisis which is the outcome of lower savings and higher government expenditures. However, in 2008 the crisis emanated from balance of payment risk, which led to fast depletion of foreign reserves and in turn huge nFA contraction. Furthermore, the government was aggressively printing money to subsidise the higher oil prices in 2008. therefore, we believe the risk of further hike in Dr is not on the cards but if government fails to address its lower saving issue then we are not far from a further hike in Dr, they added.

rs388mn), which translates to a 9mCY11 ePS of rs8.16 (9mCY10: rs4.71). net sales witnessed a YoY upsurge of 22 per cent to rs38.5bn, during the period under review, mainly on account of 7.5 per cent YoY price hikes and 17 per cent volume growth. A combination of improved gross margin in 9mCY11 (3.78 per cent versus 3.13 per cent in 9mCY10), higher operating efficiency, and a 5 per cent jump in other income is to be attributed to the improvement in the company’s bottom line. 3QCY11: YELLOw CAB SCHEME: With a QoQ PAt growth of a massive 109 per cent to rs393mn (2QCY11: rs187mn), commencement of taxi deliveries during September 2012 has indeed bode well for PSmCL, with its top line registering a 43 per cent QoQ increase to rs15.3bn. the depreciating rupee and higher input costs squeezed gross margin by 35bps to 4.15 per cent, during the period under review. Bottom line also received support during the quarter in the form of a 16 per cent reduction in finance costs and lower effective tax rate (29 per cent versus 42 per cent in 2QCY11).