Ringing alarm bells: Public-sector banks lead the pack in risky lending

Govt owned banks also seem helple­ss in recove­ring defaul­ted amount­s.  According to the State Bank of Pakistan (SBP), net NPLs of public-sector banks stood at Rs98.2 billion as of June 30, 2012; up from Rs73.5 billion at the end of the third quarter of fiscal 2012 – a quarter-on-quarter rise of 33.6%. PHOTO: FILE

KARACHI: 

The share of net non-performing loans (NPLs) in loans extended by all banks and development finance institutions (DFIs) has increased from 5.7% in the third quarter of fiscal 2012, to 6.1% in the fourth quarter. The public-sector banks segment is the largest contributor to the quarterly rise in net NPLs.


NPLs usually refer to loans that are in default, or are close to a default. The term ‘net NPLs’, on the other hand, pertains to those loans against which banks have yet to make provisions for credit losses. In most cases, a loan becomes ‘nonperforming’ after being in default for 90 days.


According to the State Bank of Pakistan (SBP), net NPLs of public-sector banks stood at Rs98.2 billion as of June 30, 2012; up from Rs73.5 billion at the end of the third quarter of fiscal 2012 – a quarter-on-quarter rise of 33.6%. Meanwhile, the percentage of net NPLs in public-sector banks increased from 10.4% to 12.7% on a quarter-on-quarter basis.


While talking to The Express Tribune, Summit Capital Senior Research Analyst Sarfraz Abbasi said the main reason for growing net NPLs in public-sector banks’ lending is their clients’ insufficient capacity to make loan repayments. “High interest rates, poor law and order, and the economic slowdown have gradually weakened the repayment capacity of companies that borrow largely from public-sector banks.”


Although the segmented share of local private banks in the net NPLs of all commercial banks is still larger than that of public-sector banks, the former seem to have reduced their overall share considerably in the last quarter of fiscal 2012. Net NPLs of local private banks decreased by 7.6% to Rs98.8 billion on a quarter-on-quarter basis, and their share in the net NPLs of all commercial banks combined reduced from 58.9% to 49.9% on a quarterly basis.


Local private banks increased their cash recovery against non-performing loans in April-June to Rs13.7 billion, as opposed to Rs10.2 billion in the preceding quarter – a rise of 34.3%. Meanwhile, cash recovery by public-sector banks against non-performing loans improved 60% to Rs3.2 billion in the final quarter of fiscal 2012 – as opposed to Rs2 billion during the preceding quarter. Nevertheless, the volume of public-sector banks’ cash recovery in the final quarter of fiscal 2012 is only a fraction of their net NPLs, which total Rs98.2 billion.


According to Farhan Mahmood, who serves as head of research at Topline Securities, the rise in net NPLs of public-sector banks is largely attributable to power-sector companies, which borrow heavily from the former.


“Circular debt has particularly affected energy-sector companies, which resort to public-sector banks for borrowing in order to meet financial commitments. Their inability to pay back loans due to the spiralling circular debt has resulted in the rising net NPLs of state-owned banks,” he said.


However, Mahmood is of the opinion that the situation will improve in the coming months. “The reduction of 350 basis points in the monetary policy rate over the last one year is likely to improve the ability of borrowers to pay their loans,” he said. “Going forward, I foresee that the growth in NPLs is likely to slow down. Power-sector loans are mostly government-backed, so there’s hope that banks will get their money back.”


Published in The Express Tribune, August 30th, 2012.

Brazil auto sales near record in August on tax break: source

SAO PAULO: Car sales in Brazil surged in August to what may be their best month ever, a source with access to registration data said on Thursday, as customers rushed to take advantage of a tax break they expected to end this week.


The government said on Wednesday that it would extend tax incentives for most locally made cars for another two months to bolster an incipient economic recovery. Until then, August sales had climbed to the fastest pace in nearly two years.


Tax breaks have provided much-needed relief for the local auto industry after credit tightened and sales stalled in the first half. But production has been slow to recover as carmakers focus on clearing inventories and bracing for a potential hangover after the temporary tax relief expires.


That may have changed after sales climbed past 358,000 cars and light trucks through Aug. 29, according to the industry source, threatening to break Brazil’s monthly sales record of 381,552 vehicles in December 2010.


Automobile output from January to July this year dropped 8.5 percent from the first seven months of 2011, heading toward its first annual contraction in a decade.


The Brazilian auto industry, which makes up more than a fifth of the country’s industrial output and 5 percent of its gross domestic product, has become a focal point of President Dilma Rousseff’s efforts to reignite a stalled economy.


But tax relief has come on the condition that carmakers avoid layoffs, making it harder for companies such as General Motors Co to shift production to more efficient plants.


The political pressure has added to plunging productivity in the auto industry. Output per employee, calculated with data from automaker group Anfavea, dropped by 12 percent in the first half of 2012 to its lowest in eight years.


Brazil is the world’s fourth-biggest auto market, with most local production coming from Italy’s Fiat SpA, Germany’s Volkswagen AG and US-based General Motors and Ford Motor Co.

Volvo to cut car production by 10pc

Thursday, 30 August 2012 17:11 Posted by Shoaib-ur-Rehman Siddiqui

STOCKHOLM: Swedish carmaker Volvo, owned by Chinese Zhejiang Geely, is to cut production in Sweden about 10 percent and axe 200-300 jobs due to slower than expected sales, a union said on Thursday.


Volvo, bought by Geely from Ford Motor in 2010 for $1.8 billion, has said it aimed to increase sales by 2020 to 800,000 from just over 400,000 cars. That includes 200,000 cars in China, a leap from the 47,000 sold there in 2011.


Michael Blohm of the IG Metall blue collar union at Volvo’s Torslanda plant in the western city of Gothenburg said management had told staff a slowdown in sales meant production would have to be reduced.


“They want to go down from 57 cars an hour to 52 or 50,” said Blohm. That would also mean that between 200 and 300 people working at the plant from a recruitment company would not have their contracts extended, he said.


“They (management) said before the summer break that sales had gone down. When we came back, they said they had gone down further,” he said, adding that about 2,000 staff work on the production line at Torslanda.


He said the plant had already been closed for four days before the annual mid-year break, which also had the effect of reducing production.


A Volvo spokesman declined to comment, but noted the company was due to release its first-half results next week. The United States is the biggest single market for Volvo at 67,273 units in 2011. Sweden came second at 58,463 and China was third.


Figures from industry group Bil Sweden showed that Volvo sales in Sweden over the period January to July fell 10 percent compared with the same period of 2011.


Figures from European industry group ACEA showed Volvo car sales fell 9 percent in the January-June period year-on-year to 116,364 in the European Union.

Chile manufacturing output near flat, rates seen held

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SANTIAGO: Chile’s manufacturing output rose a slim 0.2 percent in July from June due to global financial turbulence hitting the sector, Finance Minister Felipe Larrain said, though the Andean country’s key interest rate is seen being held steady in the short term.


The small, export-dependent Andean country is bracing for a more marked economic slowdown in the second half of the year due to euro zone debt woes and ebbing demand from top metals consumer China. But brisk domestic consumption has so far helped buoy the economy, which grew 5.4 percent in the first half of the year.


Market watch: Bourse declines as investors bank profits

Benchm­ark KSE-100 index falls 83 points.  Benchmark KSE-100 index falls 83 points .


KARACHI: Investors opted to bank their profits on Wednesday following news that the competition watchdog challenged the establishment of a unified telecom gateway led by Pakistan Telecommunication Company Limited (PTCL). 


The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 0.55% or 83.2 points to end at 15,151.31 points.


“Traders booked profits as investor confidence weakened after news that the Competition Commission of Pakistan (CCP) challenged Pakistan Telecommunication Authority (PTA) over implementation of the international clearing house (ICH),” said Mujtaba Barakzai, analyst at JS Global Capital.  The proposed ICH gateway will converge all international calls to a single technical gateway led by PTCL against the current practice of being handled by 14 long distance international operators. PTCL led the selling, shedding 5.3% of its value, to close near its daily lower limit.


Index heavyweight Oil and Gas Development Company – falling 0.05% – dragged the market into the red zone as well, Barakzai added.


“Concerns for rising circular debt in the energy sector played a catalyst role in bearish sentiments at the bourse,” said Ahsan Mehanti of Arif Habib Corporation.


Engro Corporation witnessed a fall of 0.05% over the uncertainty that the fertiliser giant will be given gas from other sources other than the Sui gas network. The new plant of Engro Fertilizers operated for only 33 days due to gas shortage on the Sui network in the first six months of 2012.


Trade volumes fell significantly to 197.7 million shares compared with Tuesday’s tally of 304.5 million shares.


PTCL was the volume leader with 33.6 million shares shedding Rs0.91 to finish at Rs16.4. It was followed by Pace Pakistan – a real estate development company – with 15.5 million shares gaining Rs0.33 to close at Rs3.10 and Telecard Limited with 15.1 million shares losing Rs0.23 to close at Rs2.44.


Foreign institutional investors were net buyers of Rs118.7 million, according to data maintained by the National Clearing Company of Pakistan Limited.


Shares of 348 companies were traded on the third trading session of the week. The value of shares traded during the day was Rs 4.2 billion, considerable decline from Rs7.2 billion witnessed on Tuesday.


Published in The Express Tribune, August 30th, 2012.

Circular debt swells to Rs425 billion

Govt plan to curtai­l spiral­ling debt fails to achiev­e object­ives.  FEDERAL SPENDING: Rs360b is the amount the government pays in subsidy annually to the energy sector.


LAHORE: The continuous increase in power tariff by the federal government to curtail the circular debt does not seem to be working as planned. The energy sectors’ current payables have swelled to Rs425 billion against the receivables of Rs385 billion which will compel the decision makers to announce further hikes in tariffs in the near future, said a top energy manager of the country.


Talking to The Express Tribune on the condition of anonymity, he said that the hike will enable the sector to lower the per unit subsidy – currently standing above Rs3 per unit. The current cost per unit sold to consumers is Rs8.85 per unit whereas the breakeven price of each unit is Rs11.90. The government is forced to provide the amount as subsidies due to the gap – approximately Rs30 billion per month or Rs360 billion a year. However, the failure of the government to release subsidies regularly has created problems for the National Transmission and Dispatch Company (NTDC) to pay back the money to oil and gas companies hence, the circular debt trap. Besides other bottlenecks, unrealistic end-consumer tariffs are primarily responsible for not recovering the surging cost of power generation.


“The hikes in tariffs should be coupled with competent and vibrant distribution companies (DISCOs) as most of the chief executive officers of DISCOs are unsuitable persons for the post especially if we talk of recoveries”, he said. The present management of most of the Discos miserably failed to recover billed amounts from various categories of consumers. Primary reason for this failure is their ineptness and bad governance; the senior official said adding that most of these senior managers were unsuccessful in devising a system for timely recovery of accruals, he said.


The built-in flaws in the power systems and inefficiencies on part of the DISCOs were termed as the major reasons of the present energy fiasco, he said.


The hike in electricity tariff will help the sector overcome the circular debt issue slightly, said Energy Management Cell Member Ijaz Rafique Quraishi. “National Electric Power regulatory Authority (Nepra) should also be allowed to revise the tariff on weekly basis as most of the electricity is generated through furnace oil,” Quraishi said. Tariff prices will fluctuate accordingly as the Oil and Gas Regulatory Authority (Ogra) has been permitted to revise the oil prices weekly.


However, the revision of oil prices four times a month will worsen the situation for the producers because they will bear the additional cost of the fuel in case of regular hikes, he said. “Our staff will get busy in calculating the tariff rates as they are doing in shaping up the billings of unrealistic end consumer tariff,” he said.


We have to recover Rs400 billion from power consumers. Ministry of Finance has to pay Rs30 billion monthly as subsidy but the cash inflows are irregular. The amount of subsidy has mounted to Rs150 billion and we are waiting for the finance ministry to release the funds, Quraishi added.


Published in The Express Tribune, August 30th, 2012.

ECB to oversee all euro zone banks: report

FRANKFURT: The European Commission, the executive arm of the European Union, plans to give the European Central Bank oversight of all banks in the euro zone, German paper Sueddeutsche Zeitung reported, citing EU Commissioner Michel Barnier.


Under the plans, the ECB will oversee all banks that have tapped the European Stability Mechanism from January next year, all banks relevant to the financial system from July and all remaining banks from 2014, Barnier told the paper in an interview.


Countries outside the euro zone can subject their banks to the oversight of the ECB voluntarily, said the commissioner, according to Sueddeutsche.


The plans are in line with demands from the Austrian financial regulator, who said on Thursday that the ECB should take charge not only of banks considered vital for the banking system.


European Union leaders agreed in June to set up a single banking supervisor for Europe centred around the ECB, a plan they hope will help break the “vicious” link between the euro zone’s debt crisis and struggling banks.


The European Commission will present a detailed proposal on Sept. 12 for that supervisor.


Details have yet to be agreed about how the ECB will work with local regulators in individual countries and with the existing European Banking Authority, the pan-EU watchdog.

ICAP to revamp curricula, training methodology

Will collab­orate with busine­ss school­s for improv­ing studen­ts’ qualit­y.  “We’ve helped build IBA, LUMS and many other key educational institutions in the country that prepare professionals for Pakistan,” USAID Deputy Mission Director Edward Birgells. PHOTO: FILE


KARACHI: Institute of Chartered Accountants of Pakistan (ICAP) President Rashid Rahman and Assessment and Strengthening Program-Associates in Development (ASP-AiD) Chief of Party Azhar Saeed signed on Thursday a memorandum of understanding (MoU) to strengthen ICAP’s education programme by revamping its curricula, study material, training methodology and testing system.


The United States Agency for International Development (USAID) will fund the Assessment and Strengthening Program, which is going to be implemented by the Associates in Development, said USAID Deputy Mission Director Edward Birgells while addressing a press conference after the MoU signing ceremony.


Besides revamping ICAP’s education programme, the agreement will also lead to collaboration between ICAP and Pakistani business schools and universities for the improvement of quality and quantity of students’ intake. Additional professional development programmes for ICAP will also be designed under the MoU.


According to a statement released by the US Consulate General, the agreement is also intended to strengthen ICAP’s regulatory role and ability to scrutinise activities of its members while expanding its branding capacity as a leading financial regulatory entity.


“We’ve helped build IBA, LUMS and many other key educational institutions in the country that prepare professionals for Pakistan,” Birgells told the audience. “But at the end of the day, no assistance can be effective without a strong ownership and vision of the recipient organisations.”


Birgells said he was not in a position to state the actual amount that USAID was going to spend under this agreement. Replying to a question, he said it was an ‘open-ended’ initiative, adding that he could not comment on its duration.


Published in The Express Tribune, August 31st, 2012.

Ford sued over F-150 fuel injection system

NEW YORK: Ford Motor Co has been sued for allegedly infringing a patent that covers a fuel-injection system it uses in its top-selling F-150 truck.


According to a federal complaint made public on Thursday, TMC Fuel Injection System LLC of Wayne, Pennsylvania, is the assignee and owner of the January 2008 patent, which covers a fuel flow process that improves fuel economy, cuts exhaust emissions and reduces idle speed.


It was invented in 2002 by a Harvard University-trained engineer that TMC employed, Shou Hou, who in later years communicated several times with Ford personnel about TMC, possibly licensing the technology to the automaker, the complaint said.


TMC said that in August 2008, Ford decided against licensing the technology but has been incorporating it in vehicles, including the F-150.


Saying it has been “irreparably harmed” by Ford’s “willful and deliberate” infringement, TMC is seeking a halt to any infringement, plus compensatory and triple damages.


Ford spokesman Todd Nissen declined to comment and said the Dearborn, Michigan-based automaker had just learned about the lawsuit.


TMC filed its case with the US District Court in Philadelphia.


Robert Sachs, a partner at Shrager, Spivey & Sachs, who represents TMC, did not immediately respond to requests for comment.


Ford’s F-Series pickups are by far the largest-selling vehicle in the United States, as reported by automakers.


Sales totaled 350,455 from January to July, 44 percent higher than No. 2-ranked Toyota Camry, and 57 percent higher than the F-Series’ main rival, the Chevrolet Silverado-C/K.


Ford shares fell 3 cents to $9.29 in afternoon trading on the New York Stock Exchange.


The case is TMC Fuel Injection System LLC v. Ford Motor Co, US District Court, Eastern District of Pennsylvania, No. 12-04971.

Market watch: Oil, gas sector propels bourse to 52-week high

Benchm­ark KSE-100 index surges 102 points.  Benchmark KSE-100 index surges 102 points.


KARACHI: Index heavyweight – oil and gas sector – drives the stock market to a 52-week high on Thursday ahead of expected healthy payouts in upcoming corporate results.


The Karachi Stock Exchange’s (KSE) benchmark 100-share index surged 0.68% or 102.4 points to end at 15,253.71point level.


“Index heavyweight – the oil and gas sector – witnessed bullish sentiments from investors on the expectation of healthy payout and increasing refining margins of Pakistan Oilfields (POL) and National Refinery Limited (NRL),” said Topline Securities Equity Dealer Samar Iqbal.


NRL closed the day on its upper limit of 5% while Attock Refinery gained 4.2%. POL also gained 2.2% as traders expect cash and hefty bonus dividend with the upcoming full year result.  “Prominent amongst the volume leaders were large cap banking stocks showing improvement in corporate profitability along with telecom stocks, probably on 3G licence sensation,” said Escorts Capital Chief Operating Officer Hasnain Asghar Ali.


The telecom sector once again was the highest traded industry on hopes of international clearing house (ICH) development despite Competition Commission of Pakistan calling the plan anti-competitive.


Since August 10, PTCL’s share has gained 21% following reports of a proposed ICH gateway that will converge all international calls to a single technical gateway led by PTCL against the current practice of being handled by 14 long distance international operators.


Pakistan Telecommunication Company Limited (PTCL) led the volumes chart with 23.9 million shares gaining Rs0.66 to finish at Rs17.04.


It was followed by Telecard Limited with 18.9 million shares gaining Rs0.31 to close at Rs2.75 and Jahangir Siddiqui and Company with 16.6 million shares losing Rs0.85 to close at Rs14.75.


Foreign institutional investors were net buyers of Rs357.9 million – a significant increase from Rs118.7 million yesterday, according to data maintained by the National Clearing Company of Pakistan Limited.


Shares of 366 companies were traded on Thursday. The value of shares traded during the day was Rs6.9 billion. Trade volumes jumped to 220 million shares compared with Wednesday’s tally of 197.7 million shares.


Published in The Express Tribune, August 31st, 2012.

Auchan profit drops 30pc, outlook worrying

Thursday, 30 August 2012 17:28 Posted by Parvez Jabri

PARIS: French supermarket giant Auchan said Thursday its net profit fell by 30 percent to 237 million euros ($297 million) in the first half of 2012, and warned that the outlook for the rest of the year was worrying.


Despite a difficult economic environment, particularly in the eurozone, Auchan said it managed to increase sales by 5.5 percent to 22.4 billion euros.


Operations in Asia and eastern Europe were less affected, it explained.


Operating profit as measured by earnings before interest payments, taxes, depreciation and amortisation rose by 9.7 percent to 1.1 billion euros.


Without exceptional items net profit would have risen by 12 percent, the company said.


Chief executive Vianney Mulliez said that “the perspectives for the second half remain worrying in the eurozone.”


The situation remained uncertain in the home market of France, with increased charges on businesses and reduced spending by households, he added.


Auchan, which already generates more than half of sales abroad, announced earlier in August a franchising deal which will see the 13 Max Hypermarkets in India rebranded under Auchan colours and a dozen new shops opened per year.

Copyright AFP (Agence France-Presse), 2012

How far will Islamabad go to attract US investors?

Bilate­ral invest­ment treaty under discus­sion opens all sector­s to foreig­n invest­ment, includ­ing defenc­e.  Bilateral investment treaty under discussion opens all sectors to foreign investment, including defence. PHOTO: FILE


ISLAMABAD: Pakistan is keen on getting American investment, but how far is Islamabad willing to go for the investment dollar?


Quite far, if the draft of a bilateral investment treaty (BIT), currently under negotiations, is to be believed.


The extraordinary leverages being negotiated under the BIT include foreign investment in all sectors, and that does not exclude defence under the current draft, and foreigners, regardless of their nationality, filling senior management positions in these foreign ventures.


Both Washington and Islamabad have been locked in discussions over the treaty for the last three days and hope that talks will continue, according to senior officials of the American negotiating team.


Foreign senior management


In a background briefing to a select group of journalists, senior visiting US officials said the “investors can choose senior management without regard to nationality.”


This would be a departure from the existing practice under which intelligence agencies grant a no-objection certificate (NOC) for allowing foreigners to work at senior positions in Pakistan.


Currently, intelligence agencies have denied NOCs to roughly 200 people on security concerns, according to the Board of Investment (BOI) officials.


On the issue of appointment of executives by US firms from countries hostile towards Pakistan, the BOI said “the country’s security will not be compromised at any cost.”


To another question, the US officials said there will be no restriction on investment in any sector, except government procurements.


US firms can invest in both, manufacturing and services sectors, officials said.


Contents of the treaty


While the US officials largely remained tightlipped over the contents of the treaty, according to a legal document duly signed by both countries and available with The Express Tribune, “each party shall accord to investors of the other party treatment no less favorable than that it accords … to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments in its territory.”


The treaty will also ensure that no state can expropriate or nationalise the assets and investments covered under the treaty. There will also be no ban on exports, imports and there will be no condition of achieving a given level or percentage of domestic content. The host country also cannot force the investor to transfer the technology.


Nuclear investments


Would the Americans be able to invest in the country’s nuclear industry?


Yes, according to BOI officials, but only in civil nuclear technology including nuclear power production.


The US team had meetings with the officials of Pakistan Atomic Energy Commission and Conventional and Open Programme Directorate of Strategic Planning Division, according to the BOI officials.


The US officials, however, refused to share details of their meetings.


Conclusion of the treaty


While commenting on the likely conclusion of the bilateral treaty, the US officials said the negotiations were at the final stage but nothing can be said about the signing of the treaty.


Pakistan, however, announced on Wednesday that the treaty will be finalised on the sidelines of the United Nations General Assembly session, scheduled for September.


The US officials said both the sides were in the process of finalising ‘non-confirming measures’ that include non-discriminatory treatment to investors, basic investment protection from minimum standards and access to respective markets.


Published in The Express Tribune, August 30th, 2012.

China’s ICBC first-half profit up 12.5pc

Thursday, 30 August 2012 17:39 Posted by Parvez Jabri

 


HONG KONG: The Industrial and Commercial Bank of China, the country’s biggest lender by assets, said Thursday its first-half net profit rose 12.5 percent from a year earlier on growth in interest and fee income.


Net profit for the six months to June 30 was 123.16 billion yuan ($19.39 billion), up from 109.48 billion yuan during the same period a year ago, it said in a filing to the Hong Kong bourse.


The profit was higher than the average 122.67 billion yuan net profit forecast by five analysts polled by Dow Jones Newswires.


The bank’s net interest income, which accounts for nearly 80 percent of its operating income, grew 16.9 percent to 204.06 billion yuan while net fee and commission income was up 1.9 percent.


But ICBC warned of future challenges amid an uncertain global economic outlook.


“Currently the recovery of the world economy is slow and faces a complex situation, domestic economic growth has slowed,” said ICBC, one of the mainland’s big four lenders.


It also warned that the banking industry “is experiencing a profound change”.


Another Chinese banking giant, the Agricultural Bank of China, on Wednesday posted a 20.8-percent rise in first-half profit, driven by interest income growth.

Copyright AFP (Agence France-Presse), 2012

Google, Apple CEOs in talks on patent issues

google logoSAN FRANCISCO: Google Inc CEO Larry Page and Apple CEO Tim Cook have been conducting behind-the-scenes conversations about a range of intellectual property matters, including the ongoing mobile patent disputes between the companies, according to people familiar with the matter.

The two chief executives had a phone conversation last week, the sources said. Discussions involving lower-level officials of the two companies are also ongoing.

Page and Cook are expected to talk again in the coming weeks, though no firm date has been set, the sources said. One source told Reuters that a meeting was scheduled for this Friday, but had been delayed for reasons that were unclear.

The two companies are keeping the lines of communication open at a high level against the backdrop of Apple’s decisive legal victory in a patent infringement case against Samsung, which uses Google’s Android software.

A jury awarded Apple $1.05 billion in damages last Friday and set the stage for a possible ban on sales of some Samsung products in a case that has been widely viewed as a “proxy war” between Apple and Google.

One possible scenario under consideration could be a truce involving disputes over basic features and functions in Google’s Android mobile software, one source said. But it’s unclear whether Page and Cook are discussing a broad settlement of the various disputes between the two companies – most of which involve the burgeoning mobile computing area – or are focused on a more limited set of issues.

Competition between Google and Apple has heated up in recent years with the shift from PCs to mobile devices. Google’s Android software, which Apple’s late founder Steve Jobs denounced as a “stolen product,” has become the world’s No.1 smartphone operating system even as it has embroiled the hardware vendors who use it, including Samsung and Google’s Motorola unit, in patent infringement lawsuits.

Apple in recent months has moved to lessen its reliance on Google’s products. Apple recently unveiled its own mobile mapping software, replacing the Google product used in the iPhone, and said it would no longer offer Google’s YouTube as a pre-loaded app in future versions of its iPhone.

Cook took the helm at Apple a year ago, and Page stepped into the top job at Google just a few months before that.

Apple and Google declined to comment on any discussions.

Sindh govt signs MoU for 50MW wind power project

Czech firm to provid­e requir­ed materi­al, machin­ery and techno­logy.  Sindh has the potential of generating 50,000MW power through wind in the coastal belt of the province. PHOTO: FILE


KARACHI: The Sindh government has signed a Memorandum of Understanding (MoU) with WIKOVWIND AS – a Czech company – for the generation of 50 megawatts (MW) of electricity through the wind corridor in Gharo Jhimpir, Thatta.


The MoU was inked by Sindh Board of Investment Director General Muhammad Riazuddin and WIKOVWIND Company head Martin Wichterle in the presence of Sindh Chief Minister Syed Qaim Ali Shah, Sindh Minister for Finance Syed Murad Ali Shah and Sindh Minister for Information Sharjeel Enam Memon, among others. A delegation of investors from the Czech Republic also witnessed the ceremony.


Minister for Finance Syed Murad Ali Shah, while giving out the details of the MoU, said that the Sindh government will execute the project and arrange the funds, while the Czech company will provide required material, machinery and technology.


He added that financing for the 50MW power generation project will be arranged before December 31 this year, while construction will start in January 2013.


On the occasion, Wichterle said that investing in power generation through wind was a great opportunity, and that his company will bring in more business for the local industry. He added that the Czech Republic wants to enhance its business and investments opportunities in Pakistan, and many other power generation projects are under consideration which will help in resolving the energy crisis faced by the country. Meanwhile, he said, bilateral cooperation in trade and investment will also be boosted significantly.


“Sindh is the first province to take the lead in power generation through wind resources. The province has has the potential of generating 50,000MW of power through wind in the coastal belt of the province” said Qaim Ali Shah, while addressing the gathering.


The Sindh Chief Minister said that investment-friendly policies of the Sindh government are attracting more and more foreign investment in the province, which also reflects the confidence of investors on the government’s initiatives.


Later, while talking to media persons, the CM revealed that a foreign company also wants to invest in power generation through coal in the Badin district.


Published in The Express Tribune, August 31st, 2012.

Incoming funds: Huge Indian investment in Pakistan’s bourses expected

Law does not restri­ct portfo­lio invest­ment from India.  ” India’s stock market is expensive while Pakistan’s is fairly cheap,” MD of Emerging Economics Research Muzzamil Aslam. PHOTO: FILE.

KARACHI: 

Stock market analysts have shown optimism that huge portfolio investment from India to Pakistan will follow the recent easing of investment restrictions that have hindered the cross-border movement of capital for decades.


India allowed Pakistani citizens and companies incorporated in the country to make investments in India in all sectors other than defence, space and atomic energy in the beginning of August. This announcement was followed by the reduction of items in the sensitive trade list by almost one-third besides the grant of permission to Pakistanis to buy shares in Indian companies.


“There’s likely to be more inflow into, rather than outflow from, Pakistan with regard to the recent developments. India’s stock market is expensive while Pakistan’s is fairly cheap,” says Muzzamil Aslam, Managing Director of Emerging Economics Research.


“You can have an oil share in Pakistan at half the price you’ll pay in India,” adds Aslam, who served as chief economist at JS Global until recently.


There was no provision in Pakistan’s laws that specifically restricted portfolio investment from Indian citizens, he said. Just like any other national, Indians would also buy shares in the Pakistani market through their regular trading accounts in international brokerage houses, he added.


“But Indian brokerage companies are now likely to collaborate with their Pakistani counterparts in a way that global financial services’ firms, like JPMorgan and Morgan Stanley, do by joining hands with local brokerage firms to trade on the Pakistani stock market. This development has a strong symbolic value,” Aslam said.


The recent abolition of some investment restrictions is likely to result in Indian and Pakistani brokerage houses joining hands to promote stock trading in each other’s country, which is expected to increase portfolio investment across the borders.


News stories in the Pakistani media say that Pakistani and Indian brokerage houses have decided to set up representative offices in the two countries after the successful conclusion of the recent visit of a Pakistani parliamentary delegation to Delhi.


There was an outflow of private portfolio investment from Pakistan amounting to $71.1 million in 2011-12. In 2010-11, the net private portfolio investment was $344.5 million. Similarly, in the first month of fiscal 2012-13, portfolio investment stood at $28.8 million, which came from the United Kingdom, Hong Kong, Switzerland and Australia, among others.


However, the volume of private portfolio investment from India to Pakistan has traditionally been negligible.


While Pakistan exported goods worth $272 million to India in calendar year 2011 as opposed to the imports from India costing $1.6 billion in the same year, media reports have quoted members of Indian and Pakistani business communities as saying that the volume of illegal trade between the two countries is approximately $10 billion annually.


Aslam stated that the size of Pakistan’s stock market was relatively small. “Of the approximate market capitalisation of $40 billion, free float is just about 25%, which means $10 billion,” he said, referring to the shares that are available to investors for trading on the stock market.


“Out of the $10 billion, about $2 billion is already foreign-owned,” he noted, saying that even a considerably small inflow, which is between $300 and $400 million, will leave a huge impact on the prices of Pakistani stocks.


Published in The Express Tribune, August 31st, 2012.

HBL gears up for franchise banking

Servic­e to be initia­ted in major cities first; to be expand­ed nation­wide.  HBL will initiate franchise banking, whose services could be availed between 9:00AM to 9:00PM.


PESHAWAR: Habib Bank Limited (HBL) Regional General Manager (Operations) Afaq Zaidi has said the bank will initiate franchise banking, whose services could be availed between 9:00AM to 9:00PM.


Talking to the APP here on Thursday, he said that franchise banking will be started in the Peshawar and Mardan districts of Khyber-Pakhtunkhwa, besides other big cities of the country, in the first phase. The system, he said, would later be extended to more cities.


He said the facility will benefit those who do not have a bank account, and that such persons could easily transfer money through their mobile phones. The transaction, he said, will take only a minute to complete.


In the second phase, beginning from October 1, 2012, the facility will be extended to overseas Pakistanis. They will be able to transfer their remittances at any time through the service, and their families will easily be able to collect the payments in any city of the country.


The model, he said, is already successfully in operation in Sri Lanka, Bangladesh and India. As HBL has a vast network in Pakistan, Pakistani consumers will not face any problems with these services, he said. He said that franchise banking operations will be completely commercial, and that people can benefit from it even if they access it only through their mobile phones.


Published in The Express Tribune, August 31st, 2012.

Stamp of approval: Iranian team coming soon to check wheat quality

Pakist­an plans to export 1m tons from surplu­s stock.  Pakistan has surplus wheat stock of 1.5 million tons and even after export of one million tons, 0.5 million tons will remain in surplus. CREATIVE COMMONS

ISLAMABAD: 

An Iranian inspection team is expected to arrive soon to check the quality of Pakistani wheat – a step further in efforts by both countries to enter into a barter trade arrangement under which Pakistan will export one million tons of wheat.


“Pakistan will start exporting one million tons of wheat to Tehran after the Iranian team completes examination of the commodity,” a senior official of the Ministry of Food Security and Research told The Express Tribune. “Wheat will be supplied at a price of $300 per ton,” he said.


Pakistan has surplus wheat stock of 1.5 million tons and even after export of one million tons, 0.5 million tons will remain in surplus.


According to a statement issued here on Wednesday, a meeting, held under the chairmanship of Secretary of Ministry of Food Security and Research Ahmed Bakhsh Lehri, reviewed the wheat situation in the country.


Provincial food secretaries, managing director of Pakistan Agriculture Storage and Services Corporation (Passco), senior officials of the food security and research ministry, representatives of the State Bank of Pakistan, Ministry of Commerce and Federal Board of Revenue (FBR) were present in the meeting.


They discussed the supply of wheat and stocks with the government and its associated grain trading organisations. They noted that the country had surplus stock and the commodity’s export had risen appreciably after a significant increase in international prices.


The meeting participants agreed that the Ministry of Food Security and Research, in collaboration with relevant stakeholders, would regularly monitor wheat stock and its supply in the country. In this regard, a monitoring committee was constituted, which will be headed by the additional secretary of the ministry.


It was emphasised that the ministry, in association with the provincial agriculture departments, would make sure that proper measures were taken during the upcoming Rabi sowing season to encourage farmers to cultivate more area with wheat and enhance productivity.


The officials also underscored the need for making coordinated efforts to streamline the supply of agriculture inputs like fertiliser, herbicides and credit to the farmers.


Water availability and its possible impact on sowing of the next wheat crop also came under discussion. The officials decided that a separate meeting, to be attended by representatives of the provincial agriculture departments and other agencies concerned, would be held soon to review the situation and make recommendations.


The officials asked the Agriculture Policy Institute to coordinate for the meeting and come up with a strategy to boost wheat production in the country.


Published in The Express Tribune, August 30th, 2012.

RBC profit jumps 73pc, bank surprises with div hike

Thursday, 30 August 2012 16:58 Posted by Shoaib-ur-Rehman Siddiqui

TORONTO: Royal Bank of Canada profit rose 73 percent in the fiscal third quarter, topping estimates on the back of higher loan volumes and fixed income trading results, prompting the bank to unexpectedly raise its quarterly dividend.


RBC, Canada’s largest bank, said on Thursday it earned C$2.2 billion, or C$1.47 a share, in the May-July period. That compared with a year-earlier profit of C$1.3 billion, or 83 Canadian cents a share, when the bank took a big charge related to the sale of its US bank.


On a continuing operations basis, which excludes results related to assets sold off over the past year, profit rose 18 percent to C$1.8 billion.


The bank raised its quarterly dividend by 5 percent to 60 Canadian cents a share, making it the fourth Canadian bank to raise its dividend this quarter.


Excluding one-time items, the bank earned C$1.31 a share in the quarter, while analysts had expected C$1.18, according to Thomson Reuters I/B/E/S.


Canadian banking income rose to a record C$1.1 billion from C$888 million A year earlier, helped by strong volume growth in deposits, mortgages and other loans.


Capital markets income, which includes investment banking, trading and advisory fees, leapt to C$486 million from C$259 million, driven by higher fixed income trading and client growth in the bank’s lending and loan syndication businesses.

Corporate results: KAPCO profits decline on circular debt woes

High short-term borrow­ing and gas shorta­ge haunts the countr­y’s larges­t indepe­ndent power produc­er.  High short-term borrowing and gas shortage haunts the country’s largest independent power producer.

KARACHI: 

Kot Addu Power Company Limited (Kapco), the country’s largest independent power producer (IPP), profits declined 7% to Rs6.07 billion primarily due to the circular debt in fiscal 2012.


This decline in profitability is attributable to cost paid on short-term financing and augmenting levels of outstanding payables amidst haunting circular debt, said BMA Capital analyst Nurali Barkatali.


Along with the result, the board of directors in a meeting held on Tuesday also declared a final cash dividend of Rs3.15 per share, taking cumulative full year 2012 dividend to Rs6.9 per share, according to a notice sent to the Karachi Stock Exchange on Wednesday.


Overall performance seems to be improving. The company’s profits rose 35% to Rs1.7 billion in the final quarter (April to June 2012) of the financial year.


The result was in line with market estimate and hence the power producer’s stock price rose 1.5% to close at Rs49.04 during trade at the Karachi Stock Exchange on Wednesday.


Net sales increased by 35% due to generation on expensive fuel furnace oil which stood at 97% in fiscal 2012 as compared to 89.5% in fiscal 2012, said Global Securities analyst Arif Shaikh. Increasing gas shortage has compelled power producers to rely on the expensive furnace.


The impact did leave a mark. Finance cost went up by 12% to Rs9.9 billion due to higher working capital requirements after generation on furnace oil and also rising payables to Pakistan State Oil.


Liquidity injection is likely to improve generation; however, the company received no gas during January to March 2011 and operated on furnace oil.


The company’s receivables from the Water and Power Development Authority are forcing the company to rely heavily on borrowing from the financial institutions. With the announcement from the government to issue TFCs worth Rs140 billion to curtail circular debt, the company has received Rs35 billion.  It is expected to provide much needed relief to the company, which in effect is expected to lower the company’s financial charges in the near future.


Taxation rate decline by 24% on a yearly basis due capital expenditure of Rs1 billion that brought down the effective tax rate to 30% against corporate tax rate of 35%, added Shaikh. Capital expenditure of Rs1 billion in fiscal 2012 on three turbines, which was expected to increase efficiency by 0.16%, will translate into fuel saving and could be a possible earnings trigger for the company.


Published in The Express Tribune, August 30th, 2012.

Pakistan considering importing LNG from Qatar via India

Indian termin­al will receiv­e gas, supply to Pakist­an throug­h pipeli­ne.  India has offered supply of 200 million cubic feet per day (mmcfd) of LNG for a period of five years. PHOTO: FILE


ISLAMABAD: Pakistan is considering importing liquefied natural gas (LNG) from Qatar via India, which will receive the gas at its terminal and supply through a planned pipeline from its territory to Pakistan’s border.


“A proposal was under consideration for import of LNG through a terminal in India,” Secretary Petroleum Dr Waqar Masood told The Express Tribune here on Wednesday.


The government was also planning to import LNG directly from India through a pipeline, which India would lay over 60 km to Wagah border, he said. The LNG import from Qatar is separate from this programme.


“Officials of Pakistan and India will hold negotiations on the possibility of LNG trade between them here on Thursday (today),” said a senior official of the Ministry of Petroleum and Natural Resources.


An Indian team was to reach Islamabad on Wednesday night to discuss LNG trade, its prices and mode of transportation. India has offered supply of 200 million cubic feet per day (mmcfd) of LNG for a period of five years.


According to sources, India has planned to expand its pipeline network for LNG supply across the border. It has already laid a 100km pipeline for transport of LNG to Bhatinda, from where the pipeline will be extended to Pakistan’s Wagah border.


Indian LNG trading company Petronet Private Limited (PPL) has an LNG receiving and re-gasification terminal at Dahej, Gujarat with original handling capacity of 5 million tons per annum (mtpa). Later, the capacity was expanded to 10 mtpa.


The terminal meets around 20% gas demand of India. PPL has sourced 7.5 mtpa of LNG through a long-term contract with RasGas, Qatar with back-to-back sales arrangement with GAIL India, Indian Oil Corporation and Bharat Petroleum Corporation.


“India too faces gas shortage, estimated at over 4 billion cubic feet per day (bcfd) and the question arises whether it will be able to provide gas to Pakistan,” an energy expert pointed out.


India has also an oil refinery in Bhatinda from where it wants to export oil to Pakistan. It has offered to lay an oil pipeline to the border for export to Pakistan.


Published in The Express Tribune, August 30th, 2012.

LPG prices likely to go up by Rs19 per kg

Domest­ic market takes cue from rising Saudi contra­ct prices.  SINDH, BALOCHISTAN: Rs129 per kg will be the retail price after the increase. PHOTO: CREATIVE COMMONS.


ISLAMABAD: Following an increase in the Saudi Aramco contract price for gas, the retail price of liquefied petroleum gas (LPG) in Pakistan is likely to be increased by Rs19 per kg from next month.


“Local LPG producer prices are expected to rise by Rs19,000 per ton with effect from September 3,” forecast Belal Jabbar, spokesman for the LPG Association of Pakistan.


The new Saudi price for September has been fixed at $946 per ton, an increase of $171 compared to the price for August. The price hike has been primarily due to the recent surge in oil prices and stockpiling of LPG by energy-hungry China and other developing countries.


“The increase in Saudi prices is likely to push up retail prices in Pakistan by Rs19 per kg. The price for domestic (11.8kg) and commercial (45.4kg) cylinders will rise by Rs224 and Rs863 respectively,” Jabbar said.


In Sindh and Balochistan, the retail price of LPG is expected to reach Rs129 per kg, in Punjab Rs139 per kg and in AJK and northern areas Rs145 per kg.


The government, which is the largest producer of LPG in the country, will be the major beneficiary of the increase in prices.


Published in The Express Tribune, August 30th, 2012.

Kerry-Lugar aid: US relies more on NGOs than govt for disbursement

Govt receiv­es $485 millio­n while NGOs get $1.53 billio­n of the total funds.  Govt receives $485 million while NGOs get $1.53 billion of the total funds.


ISLAMABAD: The parliament’s accountability arm on Thursday sought a list of non-governmental organisations receiving funds from the United States after the government revealed that 76% of the total $2.08 billion US assistance has been pocketed by these NGOs in the last three years.


To a question on actual disbursements and their utilisation under the much-trumpeted Kerry Lugar Act, an official of the Economic Affairs Division told the Public Accounts Committee that the US disbursed $2.08 billion in three years.


The government received only 24% or $485 million of the funding while the rest $1.53 billion was disbursed through NGOs, said EAD Additional Secretary Rao Ifthikhar.


Under the Kerry Lugar Act 2009, the US has legislated to provide $7.5 billion in civilian assistance over a period of five years. The emphasis of the assistance is energy production, economic growth, agriculture improvement, education, health and infrastructure across the country.


International donors in recent times have opted to channel their funds through non-governmental organisations rather than the government.


The Act envisages $1.5 billion in assistance every year. However, the total disbursements indicate that the US delivered only 45% of the promised funds in the last three years and most of them were spent through NGOs, leaving issues of transparency unaddressed.


Pakistan has been trying convincing the US to disburse at least half of the KL money through the government channels in an effort to make best use of the aid money. Rao said Pakistan has taken up the matter with the US authorities but still there was no change in disbursement formula.


Pakistan has no control over the money being spent through NGOs. Moreover, these NGOs’ administrative expenses are extremely high, leaving little behind to be spent on operations. The PAC will give its views after seeing the list of the NGOs.


The PAC also showed its apprehensions over the policy under which the federal government obtains foreign loans and re-lends to provinces and departments. It found that after relending the loans, the federal government did not have any control to avoid misuse of funds. At the end of the day the money is returned by the federal government, putting burden on the taxpayers, it observed.


“Most of the money borrowed from abroad is being misused and in past cases have been reported where officials like Salman Farooqi, Secretary General to President and former Agriculture Secretary Zafar Altaf did not have record of use of foreign funds, said PAC member and former federal minister Riaz Hussain Pirzada. He further said that corruption level is the highest in foreign loans.


The PAC directed the Auditor General of Pakistan to hold a meeting with stakeholders to workout a mechanism for ensuring better utilisation of foreign loans.


EAD Secretary Javed Iqbal told the PAC that the division had proposed new mechanism under which periodic reviews of the foreign-funded projects will be held and the secretaries of the respective departments will be responsible for delaying the project and improper utilisation of the funds.


Published in The Express Tribune, August 31st, 2012.

China will be top smartphone market in 2012: survey

Thursday, 30 August 2012 19:55 Posted by Shoaib-ur-Rehman Siddiqui

SAN FRANCISCO: China will overtake the United States as the biggest market for smartphones amid a surge in low-cost handsets, a survey said Thursday.


The research firm IDC said China will account for 26.5 percent of all smartphone shipments in 2012, compared to 17.8 percent for the United States.


“Looking ahead, the PRC smartphone market will continue to be lifted by the sub-$200 Android segment,” said Wong Teck-Zhung, senior analyst at IDC.


“Near-term prices in the low-end segment will come down to $100 and below as competition for market share intensifies among smartphone vendors.”


IDC said the move to 4G, or faster mobile networks, is another major growth catalyst and that growth is continuing in virtually all markets.


“The fact that China will overtake the United States in smartphone shipments does not mean that the US smartphone market is grinding to a halt,” said IDC’s Ramon Llamas.


“Now that smartphones represent the majority of mobile phone shipments, growth is expected to continue, but at a slower pace. There is still a market for first-time users as well as thriving upgrade opportunities.”


IDC said it sees strong growth in India, which has the lowest smartphone penetration in the Asia region as operators roll out more affordable data plans and generous subsidies, and that it would be the third largest market by 2016.


A separate survey this week said smartphones are set to make up a majority of the global handset market next year, fueled by surging demand from consumers in both wealthy and emerging nations.

Copyright AFP (Agence France-Presse), 2012

US rates little changed before Bernanke

NEW YORK: Short-term US interest rates were little changed on Thursday, as traders awaited possible clues from Federal Reserve Ben Bernanke on whether the central bank is preparing more stimulus to bolster a sluggish economy.


Low trading volume in cash and futures markets underscored reluctance among some traders to accumulate bets on further policy easing.


A Reuters poll showed fund managers now see less than a 50 percent chance the Fed will embark on a third round of quantitative easing next month.


Still expectations remain high the Fed would do something at its Sept. 12-13 policy meeting.


US interest rates futures signaled a market outlook that the Fed would stick to a near zero interest rate policy into 2015, longer than the Fed’s current guidance of keeping rates near zero until late 2014.


“Everyone is expecting a shift in an extension of the forward rate guidance,” said Bret Barker, portfolio manager at TCW in Los Angeles, which manages $127 billion in assets.


US Treasury bill rates were modestly lower with three-month rates at 0.095 percent, down 0.5 basis point from Wednesday’s close.


The overnight rate on repurchase agreements was last at 0.18 percent, up from 0.16 percent from late on Wednesday. Repurchase agreements are a key source of funding for Wall Street where Treasuries and other investments are used as collateral in exchange for cash.


Wall Street firms will likely need cash on Friday to settle their purchases of new Treasuries sold this week, analysts said.


The US Treasury Department will sell $29 billion in seven-year notes at 1 p.m. (1700 GMT) after selling a combined $35 billion in two-year supply and $35 billion in five-year debt on Tuesday and Wednesday.


In unsecured lending, the London interbank offered rate on three-month dollars fell for a sixth straight session to 0.42075 percent, its lowest since October.


FED SEEN HOLDING RATES NEAR ZERO


The Fed adopted a policy rate target of zero to 0.25 percent in December 2008 at the height of the global credit crisis.


On Thursday, rates futures implied traders place roughly a 66 percent chance the central bank would leave rates near zero at the end of 2014.


This compared with 28 percent chance last Tuesday, a day before the Fed released its minutes on its July 31-Aug 1 meeting where most policy-makers reckoned more stimulus would be “fairly soon” unless the economy improves at a “substantial and sustainable” pace.


In the wake of the minutes, traders have been anticipating more clues in Chairman Ben Bernanke’s opening remarks at 10 a.m. (1400 GMT) on Friday at a gathering of global central bankers in Jackson Hole, Wyoming.


Most of the traders’ focus has been on whether he will hint at a third round of quantitative easing (QE) in the form of large scale bond purchases. Two years ago at the same event, he laid the groundwork on the second bout of QE that involved the Fed buying $600 billion in long-dated federal debt.


In a Reuters poll published on Thursday, only 44 percent of fund managers now think the Fed will announce a third round of quantitative easing after recent data showing a modest improvement in US economy. This was lower than from 70 percent in the same poll last month.


There has also been chatter the Fed might lower the interest it pays on excess reserves to banks, although analysts see such a move as remote due to the possible disruption to money markets.


Any of the above measures should keep short-term rates low.

Refinery sales rise 6% in July

Attock Group plays the lead role in pumpin­g up the volume.  MINORITY SHARE: 44% of Pakistan’s total oil demand is fulfilled by domestic refiners. PHOTO: FILE


KARACHI: Refinery sales increased 6% to 697,000 tons in July 2012 although volatility in international oil prices continued to induce volatility in domestic operations, according to Topline Securities.


The improved output from Attock group refineries – Attock Refinery Limited (ARL) and National Refinery Limited (NRL) – were the primary reason behind higher sales, while Byco sales also played its role though it was shutdown in the comparable period last year. Furthermore, despite higher output, countries reliance on the imported fuel increased, with local production fulfilling only 44% of the domestic demand.


Uncertain outlook for the refinery margins may lead to sector’s underperformance going forward.


Capacity utilisation stood at 71%


Domestic refineries operated at approximately 71% capacity in July 2012 against 67% in July, 2011 primarily on account of increased output from ATRL and NRL. During the period under review, both refineries operated at 91% and 87% respectively. Furthermore, Byco, which continues to be marred with adverse operating environment, operated at 23% of its name-plate capacity which was shutdown in the same period last year. On the other hand, Pak Arab Refinery Limited (Parco) and Pakistan Refinery Limited (PRL), operated at 76% and 68% down from previous year’s 79% and 75%, respectively.


The higher performance of ATRL is on account of better product mix and relative immunity to circular debt as it benefits from their integral position in the Attock Group.


Gaining market share


Though Parco remained the market leader; its market share decline to 42% against 45% with ATRL and NRL gaining the lost ground.


Published in The Express Tribune, August 31st, 2012.

Post-bailout issues: Steel mill opens LCs to buy coal, iron ore

Credit lines were obtain­ed after releas­e of bailou­t fund.  RAW MATERIAL: 110,000 tons of coal is being imported by the PSM from Australia and Canada over the LCs. PHOTO: FILE


KARACHI: Pakistan Steel Mills (PSM) – the country’s largest industrial entity – has opened two letters of credit (LCs) for the purchase of 0.11 million metric tons of coal. These LCs were opened on release of the first tranche of the bailout package announced by the government as per the business plan of the steel giant.


National Bank of Pakistan established the line of credit for the purchase of two shipments of coal from Australia and Canada of 55,000 metric tons each, a PSM press release on Thursday said.


PSM is currently in dire need of raw materials including coal and iron ore – primary ingredient in steel production – which are being imported from Canada and Australia.


PSM CEO Major-General (retd) Mohammad Javed commended the efforts of the PSM’s finance department for its role in the arrangement of LCs through the bailout package.


He hoped that after the continuous availability of raw materials; production levels will improve as per the business plan. These coal shipments will reach the Pakistan Steel jetty in the coming months to streamline the process of the mill, he said.


The Rs3.8 billion – first instalment – of the Rs15 billion bailout package was released to the PSM to cover the purchase of raw materials and July salaries of its employees.


The PSM suffered Rs21.4 billion losses during fiscal year 2011-12, ended on June 30, the second highest in the last four years, which swelled the accumulative losses incurred by it to Rs71.4 billion.


Published in The Express Tribune, August 31st, 2012.

Diamer Bhasha dam: Japanese aid keeps plans afloat

Tokyo agrees to financ­e power houses of the 4,500MW projec­t.  Tokyo agrees to finance power houses of the 4,500MW project. DESIGN: ESSA MALIK

ISLAMABAD: 

Japan has agreed in principle to finance the power houses of the Diamer Bhasha dam, renewing hopes that the project will not be suspended. The dam has been designed to generate 4,500 megawatts of electricity, which Pakistan direly needs, besides storing water for agriculture purposes.


According to a senior government official, Japan has agreed to finance the construction of the power houses of the dam through the Japan International Cooperation Agency (JICA). He said the move, if it materialises, will create a win-win situation for both parties: it will provide much-needed funding for the project and an opportunity to JICA to sell its equipment.


However, the exact amount of the funding has not yet been worked out as modalities will be finalised later on, the official added. Meanwhile, the authorities have informed the premier about this development.


The project was originally meant to be completed by 2017, but suffered setbacks after its lead financer reportedly backtracked from commitments. It is currently facing delays of up to three to four years. Officials say Japan’s decision is good news for the country: the $11.2 billion project can still be kept alive, after the Asian Development Bank (ADB) recently reportedly refused to fund the dam.


The ADB had committed $4.5 billion to $5 billion for construction of the project. The bank had also pledged that it would act as the government’s investment banker in raising the money from international capital markets to meet funding requirements.


According to media reports, the ADB has now refused to provide financing for the dam. According to a senior government functionary, the ADB has reiterated an old stance: it will be difficult for the lending agency to arrange the entire funding on its own, and it needs collaboration from other international lending agencies as well. The ADB itself has not clarified the news reports


Officials say that talks with the ADB continue, to convince the lending agency not to withdraw its support even if there are problems in arranging funds from other international lending agencies.


In its efforts to keep the ADB on board, the government has increased the land acquisition compensation cost to more than twice the original. The ADB had suggested the government increase the cost – in order to appease the affected population and avoid future litigation. The cost of the land acquisition project was less than Rs48 billion originally, but has since soared to Rs116.6 billion, according to the Planning Commission.


The World Bank has already refused to provide funds for the initiative, fearing a backlash from India as New Delhi considers Gilgit-Baltistan a disputed territory. However, the United States has assured up to $500 million in assistance for the project; to be paid out of the $7.5 billion Kerry Lugar aid package.


Published in The Express Tribune, August 31st, 2012.

Water wars: Wullar Barrage set to figure in Pak-India talks

India mainta­ins amendm­ents in constr­uction plan can addres­s reserv­ations.  India maintains amendments in construction plan can address reservations.


ISLAMABAD: Locked in a decades-long battle over water flows, Pakistan and India continue to play cat and mouse over the construction of dams and barrages.


India is trying to navigate its way out of a debate with Pakistan over the construction of Wullar Barrage, also known as the Tulbul Project, while Pakistan wants to take the issue up when foreign ministers of both nations meet in Islamabad next month, sources said.


“India is trying to evade the topic of Wullar Barrage which would divert water from River Jhelum so that its construction can begin without intensive deliberations with Pakistan.” The official added Pakistani authorities decided in a recent meeting held at the Foreign Office to raise strong objections during the upcoming bilateral talks.


The two sides have already held secretary-level talks in Islamabad on May 12-13, 2011 with follow-up deliberations held in New Delhi on March 27-28 this year. The secretaries reiterated their commitment to increase cooperation, but no major breakthrough was made over the construction of the barrage.


Some media reports quoted Indian officials as saying they prefer to seek international arbitration to resolve the nearly two-decade long dispute.


When asked to comment on India’s resistance to engage in bilateral talks with Pakistan, an official from the Ministry of Water and Power said “Pakistan will also prefer to go to an international court of arbitration if the two sides fail to reach an amicable settlement and India tries to go ahead with the project.”


Pakistan maintains the barrage is in violation of the Indus Water Treaty (IWT). “India has the Wullar Lake and does not need additional water storage,” said an official.


Under the treaty, Pakistan is entitled to water from the three Western rivers Indus, Jhelum and Chenab. Pakistan maintains the construction of Wullar Barrage will convert the natural lake into a man-made storage with a capacity of 0.324 million acre feet (MAF) and adversely affect the flow of water into the country.


India, on the other hand, maintains certain amendments in the design and structure of the barrage can address Pakistan’s reservations. In the earlier rounds of talks, India has said it has the right to build the barrage under the IWT and that the navigation project will only be used to transport water and not as a storage facility.


Published in The Express Tribune, August 30th, 2012.

India assures six-month visa to auto part makers

Diplom­at promis­es flexib­le visa policy for busine­ssmen.  EASING CURBS: 5,000 businessmen have been given visas by India over the last six months. PHOTO: FILE


LAHORE: Indian Commercial Attaché Arvind Saxena, while assuring the business community of introducing a flexible visa policy soon, has announced that Delhi will issue a six-month visa with permission for three entries to managing committee members of the Pakistan Association of Automotive Parts and Accessories Manufacturers (Paapam).


Speaking at a luncheon hosted by Paapam here on Thursday, Saxena said Pakistani businessmen were always facilitated whenever they desired to meet their counterparts in India and over 5,000 businessmen had been given visas in the last six months.


“The association’s chairman, former chairman and managing committee members will be facilitated and they will be able to visit India thrice in six months, without the need for informing any government agency including police.”


He agreed with a proposal that Indian visa procedures should be streamlined for the whole business community in a bid to step up people-to-people contacts.


Addressing the issue of non-tariff barriers, the diplomat stressed that the businessmen of Pakistan should not be afraid of such barriers, which were not at all Pakistan-specific and were debatable.


Speaking on the occasion, Paapam Chairman Nabeel Hashmi said the auto part manufacturers were seeking technical collaboration with Indian companies for manufacturing hi-tech parts in Pakistan.


“Paapam is looking forward to developing contacts with Indian manufacturers, besides analysing the possibility of joint ventures with them,” he said.


Praising the Indian government for allowing investment from Pakistan, Hashmi termed it a positive step, but pointed out that procedures had not been clarified for Pakistani investors and these should be flexible for enhancing trade in the region.


In an attempt to strengthen trade ties, Indian manufacturers of all auto sectors including two and three wheelers, cars, trucks, buses and tractors have been invited to visit Pakistan and set up manufacturing facilities to cater to the needs of Pakistan and central Asian states. “This can be a win-win situation for both countries and their auto industries,” he said.


He also pointed to the issue of rejection of letters of credit issued by Pakistani banks and vice versa, calling for its solution.


In addition to this, the barriers in the way of auto part exports to India include separate customs clearance procedures, environmental certifications and safety certifications, which are difficult to get. Imports from other countries did not face the same hurdles in India and these should be removed, Hashmi said.


He pointed out that trade promotion was the only way to minimise political tensions in the region and said Pakistan and India should not mix trade with politics. “If we have strong trade relations, the political ties will get better automatically.”


Published in The Express Tribune, August 31st, 2012.

President calls for greater market access

Says prefer­ential treatm­ent will offset countr­y’s losses.  “[Cheap] cotton and lowcost labour is the springboard for the Pakistani textile industry,” says President Asif Ali Zardari while addressing textile millers. PHOTO: REUTERS/ FILE


ISLAMABAD: Reiterating his call for preferential treatment and greater market access for Pakistani products, President Asif Ali Zardari has said that it is time for the international community to think of ways to compensate countries impacted most adversely by the war on terror, including greater market access.


Addressing the All Pakistan Textile Mills Association Annual Dinner held at the Presidency, the president said the ongoing war against militancy has inflicted huge damage to Pakistan’s economy. He said the huge economic cost of the war compelled the government to curtail its Public Sector Development Programme, which had put great pressure on the business community; increasing their input costs and adversely impacting their competitiveness.


“Pakistan’s position in the world of textiles is being adversely affected. We are being reduced from our position as principal suppliers to back up suppliers,” he remarked.


He said the textiles and clothing sector was a mainstay of Pakistan’s exports and a symbol of Pakistan’s manufacturing excellence. Highlighting the importance of the sector, the President said that cotton and low cost labour is the springboard for the industry.


He said that in order to aid the textile industry, a limit has been set on the exports of low-valued yarn. This, he said, has been done to improve availability of raw material in the domestic market for the value-added textiles sector.


The president said he was aware of the effect of energy shortages on the textiles sector, which had hampered production, employment and exports; and that issues would be resolved soon.


The president urged the business community to explore new markets for their products, besides planning for the long term, adopting new methodologies and focusing on infrastructure development to maintain their competitiveness.


Published in The Express Tribune, August 29th, 2012.

Market watch: Bourse climbs led by oil, telecom sectors

Benchm­ark KSE-100 index surges 71 points.  Benchmark KSE-100 index surges 71 points


KARACHI: The stock market continued its upward trend on Tuesday following the announcement of the new petroleum policy and rumours of a major change in the telecom sector operations.


The Karachi Stock Exchange’s (KSE) benchmark 100-share index rose 0.47 per cent or 70.99 points to end at 15,242.65 points level.


Index heavyweight Oil and Gas Development Company and Pakistan Petroleum Limited led the climb following announcement of an increase of 60% in prices for exploration companies for oil and gas extraction in the Petroleum Policy 2012 announced on Monday.


The telecom sector also helped the momentum over International Clearing House (ICH) implementation rumours, according to JS Global Capital Analyst Jawad Khan. The gateway ICH will converge all international calls to a single technical gateway led by Pakistan Telecommunication Company Limited (PTCL) against the current practice of being handled by 14 long distance international operators. PTCL rose to its daily upper circuit limit and was the highest traded share for the second consecutive day.


PTCL was the volume leader with 23.1 million shares gaining Re1 to finish at Rs17.3. It was followed by Telecard Limited with 22.9 million shares gaining 0.43 to close at Rs 2.67 and Fauji Cement with 19.7 million shares losing Rs0.17 to close at Rs6.9.


“Investor interest was also witnessed in oil and banking sectors on strong earnings outlook amid hopes for signing of Bilateral Investment Treaty with the US,” said Arif Habib Corporation analyst Ahsan Mehanti. Trade volumes jumped to 304.5 million shares compared with Monday’s tally of 260 million shares.


Foreign institutional investors were buyers of Rs258.9 million and sellers of Rs467.6 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.


Shares of 325 companies were traded on Tuesday. At the end of the day 165 stocks closed higher, 136 declined while 24 remained unchanged. The value of shares traded during the day was Rs 7.2 billion.


Published in The Express Tribune, August 29th, 2012.

GM to invest $1bn in Russian plants

Wednesday, 29 August 2012 15:26 Posted by Parvez Jabri

MOSCOW: US auto giant General Motors will invest a billion dollars in its Russian plants by 2018 to build more cars for the expanding market, a GM executive said Wednesday.


“We will invest an additional $1 billion into Russia, expand the capacity of the plant in Saint Petersburg to 230,000 cars per year and of the joint enterprise with AvtoVAZ in Togliatti to 120,000,” said Jim Bovenzi, the president of GM Russia, as quoted by Interfax news agency in Russian.


The automaker’s current Russian production capacities at the two locations are 98,000 and 95,000 vehicles per year respectively, Bovenzi said.


The company also operates a factory in Russia’s western exclave of Kaliningrad. Its total Russia investment has currently reached $500 million, Bovenzi said.


Russia’s car market has expanded over the last decade to become one of the biggest in the world and second only to Germany in Europe. In 2011 sales grew by an annualised 39 percent to reach 2.65 million cars, according to a report by the accounting and advisory group Ernst and Young.

Copyright AFP (Agence France-Presse), 2012

Euribor rates hit new all-time low on ECB rate cut hope

Wednesday, 29 August 2012 15:18 Posted by Imaduddin

FRANKFURT: Bank-to-bank lending rates fell to new all-time lows on Wednesday as expectations grew that the European Central Bank could cut interest rates as soon as next month to help combat the euro zone crisis.


The reduction in Euribor rates extended a fall in interbank rates that began late last year when the ECB flooded money markets with cheap longer-term loans.


Three-month Euribor rates, traditionally the main gauge of unsecured bank-to-bank lending, eased to 0.288 percent from 0.290 percent.


Six-month Euribor rates also fell, to 0.549 percent from 0.553 percent. Shorter-term one-week rates remained unchanged at 0.092 percent, while Eonia overnight rates ticked up to 0.111 percent from 0.110 percent.


Dollar-priced three-month bank-to-bank Euribor lending rates  fell to 0.743 percent from 0.747 percent and overnight dollar rates also fell to 0.308 percent from 0.310 percent.


The ECB’s move to stop paying interest on banks’ deposits has prompted banks to make stronger use of the current account facility, which still pays 0.75 percent interest for the required reserves.


A total of 332 billion euros was parked in the ECB’s deposit facility overnight. Banks’ current account deposits at the ECB edged up to 529 billion euros.


Euribor rates are fixed daily by the Banking Federation of the European Union (FBE) shortly after 0900 GMT.

Export Import bank for traders on the cards

Propos­al to be includ­ed in Strate­gic Trade Policy Framew­ork 2012-2015.  The focus of the new trade policy is the Export Development Initiative, for which Rs60 billion have been requisitioned for the next three years (2012-15). PHOTO: FILE


ISLAMABAD: The establishment of an Export Import bank (EXIM) will be one of the main features of the upcoming three-year Strategic Trade Policy Framework (STPF 2012-2015), which is likely to be announced next week.


“The Ministry of Commerce has proposed establishing an EXIM bank in the new STPF-2012-2015 to facilitate exporters and make them competitive with regional competitors, like India and Bangladesh,” Director General Trade Policy Safdar Sohail has told APP. He said the establishment of an EXIM bank was a need of the hour, if Pakistan wishes to bring its trade system at par with international standards.


“All regional countries – including India, Bangladesh and China – have EXIM banks; Pakistan is the only country without this facility,” he said. He said the formation of such a bank will help boost trade and facilitate traders. He further revealed that the ministry has already finalised the STPF, and will formally announce it once the Prime Minister – who is scheduled to attend a STPF briefing at the Ministry of Commerce – gives his approval.


The official, however, did not disclose how much funds have been proposed by the ministry for the establishment of the bank. “Once the government approves the proposal of establishing the bank, the ministry will then work out other formalities, including funding, etc,” he said.


The government is set to introduce STPF 2012-2015 during the first week of September, with a special focus on export development initiatives, launching of the EXIM bank, and measures to cope with new trade challenges.


The focus of the new trade policy is the Export Development Initiative, for which Rs60 billion have been requisitioned for the next three years (2012-15), he added. He stated, however, that this fund is still the lowest as compared to other regional countries.


Published in The Express Tribune, August 29th, 2012.

China’s AgBank first-half net profit up 20.8pc

Wednesday, 29 August 2012 15:08 Posted by Parvez Jabri

HONG KONG: Agricultural Bank of China, one of the mainland’s big four lenders, said Wednesday first-half profit rose 20.8 percent, driven by interest income growth despite the country’s slowing economy.


AgBank, the country’s biggest rural lender by assets, said in a filing to the Hong Kong bourse that net profit for the six months to June 30 was 80.52 billion yuan ($12.67 billion), up from 66.67 billion yuan a year ago.


Net interest income, which accounts for nearly 80 percent of its operating income, rose 15.86 percent to 167.69 billion yuan.


“At present, the banking industry in China is facing complex and challenging internal and external situations,” chairman Jiang Chaoliang said, citing the European sovereign debt crisis and China’s slowing economy as factors.


“In view of regulatory policy environment, marketisation reforms of China’s financial markets have accelerated and commercial banks are being challenged by intensifying competition and risk exposure,” he added.


Company president Zhang Yun said the bank faces “even more complex and stern challenges” in the second-half.


Chinese Premier Wen Jiabao has called for the break-up of a banking “monopoly” on lending that has squeezed private businesses, which fuelled resentment as companies struggle to access much-needed credit.


Beijing said in June that it would set new rules for bank’s capital requirements from January next year, in line with international moves aimed at reducing risk.

Copyright AFP (Agence France-Presse), 2012

Cushioning troubled PSEs: Government ignores ceiling for sovereign guarantees

Provid­es guaran­tees of Rs532b agains­t thresh­old of Rs413b.  Provides guarantees of Rs532b against threshold of Rs413b. PHOTO: REUTERS/ FILE


ISLAMABAD: In violation of laws enacted to ensure fiscal discipline, the federal government has extended Rs532.4 billion worth of sovereign guarantees to the bleeding public sector enterprises (PSEs), according to an official report, indicating hidden risks to economic stability of the country.


Total sovereign guarantees by June 2012 swelled to Rs532.4 billion, according to the Ministry of Finance. This includes $2.7 billion or Rs254.2 billion in foreign currency guarantees and Rs278.2 billion in local currency guarantees.


The sovereign guarantees extended to the PSEs exceed the limit imposed under the Fiscal Responsibility and Debt Limitation Act of 2005, which says that the guarantees, both renewed and new, should not be more than 2% of gross domestic product (GDP) in any fiscal year.


By this account, the guarantees should not have exceeded Rs413 billion. The actual guarantees stood at 2.6% of GDP, according to the finance ministry.


The guarantees for commodity operations are not included in the limit of 2% as these are secured against the underlying commodity and are essentially self-liquidating.


Interestingly, the finance ministry has itself admitted the risks posed by the significant increase in sovereign guarantees to the macroeconomic stability of the country.


“Such off balance sheet transactions cannot be overlooked in order to gain a holistic view of a country’s fiscal position and unveil the hidden risks associated with the obligations made by the government outside the budget,” says a finance ministry’s document.


It adds that the reported debt levels of a sovereign country may be understated by not including such contingent liabilities.


For the last five years, the country’s debt burden has almost doubled due to declining revenues in terms of GDP and increasing expenditures. By June this year, total public debt soared to 60% of GDP or Rs12.4 trillion, according to the finance ministry.


Of the total, domestic debt was Rs7.5 trillion or 36% of GDP and external debt was roughly Rs5 trillion or 24% of GDP.


In the past five years, the PPP-led coalition government issued cumulative sovereign guarantees of Rs848 billion to the PSEs, according to the ministry’s documents. The government also defaulted on sovereign guarantees given to the independent power producers for the first time in the country’s history.


In the previous fiscal year ended June 30, the budget deficit also swelled to a historic high of 8.5% of GDP or Rs1.76 trillion, which resulted in massive borrowing from the banking system.


The violation of the Fiscal Responsibility and Debt Limitation Act is a breach of parliament’s privilege and the parliamentarians should take notice of persistent violation by the finance ministry, said Dr Ikramul Haq, a columnist and an expert in fiscal affairs.


He suggested that parliament should constitute a review committee to determine the problems and causes leading to violation of the Act and recommend measures for their rectification.


Haq said the high sovereign guarantees and massive borrowing to finance the deficit indicate that the country may soon get trapped in a vicious debt cycle.


Published in The Express Tribune, August 28th, 2012.

Corporate results: Lotte Pakistan baffles market by posting loss

Analys­ts expect­ed the PTA manufa­cturer to genera­te profit.  Lotte reported net loss of Rs294 million in the first six months of 2011 compared with net profit of Rs3.70 billion reported in the same period last year, according to a notice sent to the Karachi Stock Exchange on Tuesday.

KARACHI: 

Lotte Pakistan reported a loss during January to July 2012 despite market consensus estimating the company to post a profit.


Lotte reported net loss of Rs294 million in the first six months of 2012 compared with net profit of Rs3.70 billion reported in the same period last year, according to a notice sent to the Karachi Stock Exchange on Tuesday.


The result is much lower than street expectation as a consensus of three research houses expected the bottom-line to stand around Rs250 million.


“The result is below our expectation due to a higher than anticipated impact of currency depreciation,” said Shahjar Research Investment Analyst Raza Hamdani.


Surprised by the result, investors sold the stock and wiped off 4% stock value as the scrip closed at Rs7.11 during trade at the Karachi Stock Exchange on Tuesday.


Lotte Pakistan PTA is a supplier of purified terephthalic acid (PTA), an essential raw material used in the polyester industry. Over 30 per cent of PTA is sold to the Polyethylene Terephthalate (PET) sector while the rest goes to polyester staple fibre and other sectors. PET is used in the plastics industry for the production of bottles and bed sheets.


The overall sluggish performance is primarily attributable to weak PTA-PX margins and secondary by lower other income, said BMA Capital analyst Muhammad Affan Ismail.


Sales declined by 13% to Rs27 billion compared with Rs31 billion recorded last year.


PTA prices dipped to a 22-month low during the period under review owing to concerns emanating from large new manufacturing plants coming online and extremely low prices of substitute cotton, according to a research note issued by BMA Capital.


Finance income of the company decreased by massive 61% to Rs198 million due to lower cash balance, thus further denting the bottomline.


Cash balance of the company was substantially reduced during July to August 2012 owing to repayment to the parent company for a loan and capital expenditure incurred on co-generation power plant. Moreover, 4% deterioration in the rupee against the dollar also dented other income.


The company also announced that commercial operations of its co-generation power project that uses waste heat recovery function.


After incorporating the impact of captive power plant, the valuable cost savings and sale of surplus electricity will provide significant support to the upcoming profits, said Ismail.


Published in The Express Tribune, August 29th, 2012.


Correction: In an earlier version of the article, the year 2012 was mistakenly written as 2011 at one instance. The error has been rectified.

Govt should simplify registration process for new molecules: PBP

Bureau advoca­tes approv­ing drugs which have been cleare­d in two out of three most develo­ped countr­ies.  Bureau adds over regulation is against the interests of both consumers and the industry. PHOTO: REUTERS/FILE


KARACHI: The government should simplify the process for registering new molecules as delays in registration can deprive patients of newly discovered drugs and other advanced technologies, the Pharma Bureau Pakistan (PBP) advocated in a press release on Wednesday.


The statement said that the PBP is a strong proponent of prudent regulation of the pharmaceutical industry, however it strongly opposed over regulation. “This is against the interests of both consumers and the industry,” the press release said.


The bureau urged the government to form a simple and transparent formula in this regard.


“The government should approve the drug that has been approved in two of the three developed economies, i.e. the United States, European Union and Japan. These countries have highly credible regulatory bodies and the drugs they approve undergo rigorous clinical trials and other processes before their citizens can consume them,” the body suggested.


The PBP spokesperson added that pricing is a crucial issue in drug regulation and so is the availability of a drug.


“To ensure sustained supplies of drugs at reasonable rates, a simple pricing formula should be formed that may reflect the prices of the same drug in other countries of the South Asian region,” he said.

Sweden needs rate cut to counter crown rise

Wednesday, 29 August 2012 15:54 Posted by Muhammad Iqbal

STOCKHOLM: Sweden’s central bank will need to cut interest rates further to stop inflation undershooting its 2 percent target as the crown is stronger than expected due to the crisis in the euro zone, a leading economic think tank predicted on Wednesday.


The National Institute of Economic Research said it expected stronger economic growth in the Nordic state than elsewhere in Europe, but the pace would still be well down on 2010 and 2011, the recovery years after the global financial crisis.


“In order to speed up the recovery and make progress toward meeting the inflation target, monetary policy will need to be expansionary for a prolonged period,” the NIER said in new forecasts.


“In the forecast, the repo rate will be lowered to 1 percent before year-end,” it added. The central bank’s benchmark repo rate is currently set at 1.5 percent.


The central bank kept rates unchanged at its most recent meeting in July, and said on balance it expected rates to remain at the current level for just over a year. Markets are forecasting a cut during that period.


The bank’s next rate announcement is due on Sept. 6, but NIER said its forecast assumed that the rate would by cut by 25 basis points at the October and December policy meetings.


“If the crown were to continue strengthening, for example as a consequence of increased uncertainty about the future prospects for the euro, it might be necessary to lower the repo rate further,” it added.


The Rijksbank’s deputy first governor said on Tuesday that the bank was keeping an eye on the crown currency, which hit a 12-year high against the euro this month, reflecting the economy’s resilience and posing risks to Sweden’s export-driven economy.


The NIER said the crown was now at a level it had not expected it to reach before 2016.


It said that Sweden’s economy was performing better than elsewhere in Europe, but said the underlying trend was less solid than gross domestic product (GDP) data showed.


“For the full year 2012, GDP is forecast to increase by a modest 1.3 percent,” it added. That pace would rise slightly to 1.8 percent in 2013. Gross domestic product (GDP) expanded 6.2 percent and 3.9 percent in 2010 and 2011 respectively.


New data from an NIER survey also revealed a mixed economic picture. While consumer confidence for August was relatively steady at 5.4 points after 5.6 in July, manufacturing sector confidence slid to minus 9 from minus 3.


The services sector, on the other hand, has become more optimistic, the survey noted, even if the reading of 16 remained below the historic average, the NIER said.


“Levels suggest the manufacturing sector is moving sideways or declining slightly, while the domestic economy is growing at a sub trend rate,” SEB bank said in a research note.


The NIER’s previous forecast had pegged 2012 GDP growth at 0.7 percent while 2013 was seen at 2.3 percent.


“Growth in 2012 and 2013 will be too weak for the labour market to improve,” NIER added.


“Instead, unemployment will rise to almost 8 percent at the end of 2013 and thereafter decrease. The weak economy and an appreciating krona will hold down inflationary pressure.”

ECB acts within mandate, but special measures needed: Draghi

Wednesday, 29 August 2012 15:10 Posted by Parvez Jabri

FRANKFURT: The European Central Bank will always act within its mandate to ensure price stability in the euro area, but exceptional measures might be required to achieve that, ECB head Mario Draghi said on Wednesday.


“The ECB will do what is necessary to ensure price stability. It will remain independent. And it will always act within its mandate. Yet it should be understood that fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools,” Draghi wrote in an article for German weekly Die Zeit.


The ECB, seen by many as the only European body capable of putting out the fires of the long-running eurozone crisis, is under intense pressure to don its fire-fighting helmet once again and relaunch a contested programme to buy up the sovereign bonds of debt-wracked countries and bring down their borrowing costs.


But Draghi’s German colleague on the ECB governing council, Bundesbank chief Jens Weidmann, is strongly opposed to such a move, arguing that the practice is tantamount to monetary financing, where the central bank prints money to pay off a country’s debt — something expressly forbidden under the ECB’s statutes.


In his article, to be published in Die Zeit on Thursday but released in advance, Draghi countered that “when markets are fragmented or influenced by fears, our monetary policy signals do not reach citizens evenly across the euro area.


“We have to fix such blockages to ensure a single monetary policy and therefore price stability for all euro area citizens,” the Italian central banker said.


“This may at times require exceptional measures. But this is our responsibility as the central bank of the euro area as a whole.”


The ECB launched its bond-buying blitz under the Securities Market Programme (SMP) in 2010, a move that helped debt-wracked eurozone countries that were finding it difficult to drum up financing in capital markets.


The programme was controversial from the start, with critics saying it was outside the ECB’s mandate. Two top German monetary officials — ECB chief economist Juergen Stark and former Bundesbank president Axel Weber — both quit in protest over the practice.


Earlier this month, Draghi said the ECB “may” resume bond purchases, but only under strict conditions that are still in the process of being worked out.


Financial markets are speculating that Draghi will unveil the details of the new programme at the ECB’s next policy meeting on September 6.

Copyright AFP (Agence France-Presse), 2012

ECB acts within mandate, but special measures needed: Draghi

Wednesday, 29 August 2012 15:10 Posted by Parvez Jabri

FRANKFURT: The European Central Bank will always act within its mandate to ensure price stability in the euro area, but exceptional measures might be required to achieve that, ECB head Mario Draghi said on Wednesday.


“The ECB will do what is necessary to ensure price stability. It will remain independent. And it will always act within its mandate. Yet it should be understood that fulfilling our mandate sometimes requires us to go beyond standard monetary policy tools,” Draghi wrote in an article for German weekly Die Zeit.


The ECB, seen by many as the only European body capable of putting out the fires of the long-running eurozone crisis, is under intense pressure to don its fire-fighting helmet once again and relaunch a contested programme to buy up the sovereign bonds of debt-wracked countries and bring down their borrowing costs.


But Draghi’s German colleague on the ECB governing council, Bundesbank chief Jens Weidmann, is strongly opposed to such a move, arguing that the practice is tantamount to monetary financing, where the central bank prints money to pay off a country’s debt — something expressly forbidden under the ECB’s statutes.


In his article, to be published in Die Zeit on Thursday but released in advance, Draghi countered that “when markets are fragmented or influenced by fears, our monetary policy signals do not reach citizens evenly across the euro area.


“We have to fix such blockages to ensure a single monetary policy and therefore price stability for all euro area citizens,” the Italian central banker said.


“This may at times require exceptional measures. But this is our responsibility as the central bank of the euro area as a whole.”


The ECB launched its bond-buying blitz under the Securities Market Programme (SMP) in 2010, a move that helped debt-wracked eurozone countries that were finding it difficult to drum up financing in capital markets.


The programme was controversial from the start, with critics saying it was outside the ECB’s mandate. Two top German monetary officials — ECB chief economist Juergen Stark and former Bundesbank president Axel Weber — both quit in protest over the practice.


Earlier this month, Draghi said the ECB “may” resume bond purchases, but only under strict conditions that are still in the process of being worked out.


Financial markets are speculating that Draghi will unveil the details of the new programme at the ECB’s next policy meeting on September 6.

Copyright AFP (Agence France-Presse), 2012

Market watch: Bourse climbs on Supreme Court verdict

Benchm­ark KSE-100 index surges 132 points.  Benchmark KSE-100 index surges 132 points.


KARACHI: Investors welcomed the Supreme Court decision on Monday and continued lifting the bourse above the 15,000-point level.


The Karachi Stock Exchange’s (KSE) benchmark 100-share index surged 0.88 per cent or 132.48 points to end at 15,171.66 point level.


“Market welcomed Supreme Court’s verdict as it indicated that the judiciary and the government are trying to find a middle ground in the dispute,” said Topline Securities Equity Dealer Samar Iqbal. The apex court granted Prime Minister Raja Pervez Ashraf’s time on Monday and adjourned the hearing till September 18 in the National Reconciliation Ordinance implementation case.


Augmenting the positive sentiment was the announcement of the new petroleum policy 2012 which bodes well for index heavyweight oil and gas sector, added Iqbal.


Trade volumes fell 260 million shares compared with Friday’s tally of 306 million shares.


Engro Corporation further continued its upward move as it seems likely now that the fertiliser giant will be given gas from other sources other than the Sui gas network. The new plant of Engro Fertilizers operated for only 33 days due to gas shortage on the Sui network in the first six months of 2012.


Foreign institutional investors were buyers of Rs228 million and sellers of Rs380 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.


Rumours regarding International Clearing House (ICH) also resurfaced which created positive buying momentum in PTCL, which was the highest traded share and close at its daily upper limit. The gateway ICH will converge all international calls to a single technical gateway led by PTCL against the current practice of being handled by 14 Long Distance International operators


Pakistan Telecommunication Company Limited was the volume leader with 33.5 million shares gaining Re1 to finish at Rs16.3. It was followed by Lafarge Pakistan with 20.3 million shares firming Rs0.3 to close at Rs6.0 and Fauji Cement with 17.8 million shares increasing Rs0.3 to close at Rs7.1.


Shares of 350 companies were traded on the first trading session of the week. The value of shares traded during the day was Rs6.0 billion.


Published in The Express Tribune, August 28th, 2012.

IPI pipeline: Iran may ask India to push ahead

Presid­ents to meet today; projec­t will likely be discus­sed.  India has cited security concerns, as the proposed pipeline passes through volatile regions of Pakistan’s Balochistan province. ILLUSTRATION: JAMAL KHURSHID


Iranian President Mahmoud Ahmadinjead is likely to ask Indian Prime Minister Manmohan Singh to fast track the Iran-Pakistan-India pipeline project when the two meet in Tehran on Wednesday, Indian news agency IANS has reported.


The meeting is expected to revive stalled negotiations over the ambitious $7 billion pipeline proposal that seeks to bring Iranian gas to India via Pakistan, reported IANS.


Iran and Pakistan have already sealed a bilateral deal on the pipeline, but India has yet to take a decision due to various reasons. India has cited security concerns, as the proposed pipeline passes through volatile regions of Pakistan’s Balochistan province, IANS said. Transport and transit fees are also contentious issues.


Apart from scepticism about the economic and logistical viability of the pipeline, the project is also opposed by the US, which feels its implementation will amount to a defeat of the superpower’s larger strategy of isolating Tehran in the region. In India, the pipeline has been virtually written off, but there are signs that it may yet be revived.


Early this month, an Indian parliamentary panel asked the petroleum ministry to “vigorously” pursue and settle all pending issues related to the project, as it would help address the country’s growing energy demand.


Published in The Express Tribune, August 29th, 2012.

Italy raises 9.0bn euros at lower rates

Wednesday, 29 August 2012 15:21 Posted by Parvez Jabri

MILAN: Italy raised 9.0 billion euros ($11.3 billion) at a six-month debt sale on Wednesday, paying sharply lower rates for the second day running owing to growing expectations of ECB intervention.


Borrowing costs on the six-month issue dropped to 1.585 percent from 2.454 percent on July 27, the Bank of Italy said, confirming analysts expectations of a successful sale ahead of a more challenging auction on Thursday.


On Tuesday, Rome had raised 3.75 billion euros on zero coupon bonds and inflation-linked debt, with sharply lower yields amid speculation obout a possible intervention by the European Central Bank.


Prime Minister Mario Monti said in an interview with Il Sole 24 Ore newspaper on Wednesday that the success of Tuesday’s auction was a sign that the government’s economic policy was working to soothe investor fears.


The Treasury faces a bigger test on Thursday when it will issue up to 6.5 billion euros in five- and 10-year bonds. Analysts expect the auction to give a clearer idea of investor sentiment.


Italy, eurozone’s third largest economy and one of the biggest markets for sovereign bonds, is in a severe recession that has curbed interest in Rome’s 10-year debt.

Copyright AFP (Agence France-Presse), 2012

Oil companies withhold Rs40b of gas surcharge

Call for resolv­ing debt issue first, PAC summon­s federa­l secret­aries.  UNENDING: Rs370b was the circular debt until August 24. PHOTO: FILE


ISLAMABAD: As petroleum companies refuse to pay Rs40 billion in state revenues while first seeking a solution to the circular debt problem, an irked Public Accounts Committee (PAC) on Tuesday summoned the three most powerful federal secretaries for their inability to restrict the debt pile-up.


The decision to call the federal secretaries for finance, water and power and petroleum was taken after auditors disclosed that the oil and gas exploration companies were refusing to pay gas development surcharge to the government. The PAC meeting, chaired by Nadeem Afzal Chan, had been called to discuss irregularities and embezzlement of funds in the Ministry of Petroleum and Natural Resources.


The Director General Audit Customs and Petroleum said the companies were reluctant to pay the surcharge and some of them were seeking adjustments on account of inter-corporate debt. According to the audit’s calculations, he added, the outstanding GDS has soared to roughly Rs40 billion.


In February last year, the auditors had recovered Rs33 billion from the oil and gas exploration companies that the petroleum ministry had forgone.


Despite a barrage of questions about the exact amount of state revenues being withheld by these companies, Secretary Petroleum Dr Waqar Masood could not give proper replies, inviting criticism from the PAC members.


Either the petroleum secretary was not prepared for the meeting or hiding certain facts as how could he be ignorant about the receivables, remarked Yasmeen Rehman of the PPP.


The PAC chairman observed that the federal secretaries complain that they are being humiliated in the PAC meetings but after today’s meeting it seems that the country’s affairs can now only be run by insulting senior bureaucrats in an effort to extract information from them.


The secretary petroleum, however, disclosed that the circular debt had once again increased to Rs370 billion by August 24. The disclosure confirms the views held by experts that the government has been making half-hearted attempts and is not serious about resolving the issue once and for all.


The finance ministry has made two unsuccessful attempts to clear the arrears, but ended up paying over Rs550 billion on account of circular debt in the last two years.


The Rs370 billion outstanding debt shows that the government may have to take another hit in a bid to absorb the debt, as the status quo will strangle the entire power sector that the government may not afford ahead of general elections.


The experts say the government is taking refuge behind subsidies that it pays to pick up the difference between cost of electricity generation and end-consumer price. They add it is not addressing other causes like line losses, theft and failure to recover bills due to corruption in different tiers of the state.


The secretary petroleum could not give a satisfactory response to the questions asked about the administrative actions taken to improve governance, the biggest cause of soaring circular debt after the financial aspect.


Endorsing the petroleum companies’ stance, Masood said without cleaning the circular debt the companies would not be able to pay state revenues. “If the companies were forced to pay due taxes, they may get bankrupt,” he said.


However, the auditors differed with the secretary petroleum, saying most of the companies, which were not paying the GDS, were not at all affected by the circular debt.


Published in The Express Tribune, August 29th, 2012.

One more year: Ministry seeks extension in WAPDA chief’s tenure

Term ending in Septem­ber, extens­ion may spark contro­versy.  Term ending in September, extension may spark controversy.


ISLAMABAD: Amid unsuccessful attempts to raise funds for the $13 billion Diamer-Bhasha Dam, the Ministry of Water and Power is seeking one-year extension in service for the chairman of Water and Power Development Authority (Wapda).


According to sources, the ministry has sent a summary to Prime Minister Raja Pervez Ashraf, proposing one-year extension in service for Wapda Chairman Shakeel Durrani, who will complete his five-year term next month.


The sources point out that the post of Wapda chairman is for five years and the extension of one year may give rise to controversy.


During Durrani’s tenure, many projects were delayed, resulting in addition of billions of rupees to the cost. In one such example, the cost of Neelum-Jhelum hydropower project on Neelum River in Azad Jammu and Kashmir (AJK) has swelled to Rs333 billion compared to Rs130 billion in 2008 because of the delay.


In the case of Diamer-Bhasha Dam, the cost has gone up to $13 billion against earlier estimate of $8.4 billion. This project was scheduled to be completed in 2016-17, but was delayed and is now expected to reach completion in 2020-22. Kurram Tangi Dam is another project whose cost has escalated as a result of the delay in work.


The current recommendation for extension in service is contrary to what the water and power ministry planned in October 2010. At that time, the ministry drew up a plan to cut the tenure of Wapda chairman from five to three years and show the door to Shakeel Durrani. At that time, Prime Minister Ashraf was the water and power minister.


In Durrani’s place, it was planned to appoint then secretary for water and power Shahid Rafi as Wapda chairman. However, the plan did not materialise.


When approached, the water and power ministry’s spokesman refused to comment.


However, Wapda spokesman did talk to The Express Tribune and dispelled the impression that Wapda had failed to search for alternative avenues for generating funds for the gigantic Diamer-Bhasha Dam after multilateral donors backed out.


Highlighting the achievements of the current chairman, the spokesman said the Neelum-Jhelum hydropower project, having capacity to produce 969 megawatts of cheap electricity, was launched during Durrani’s tenure in 2008.


The chairman also settled the issue of compensation to people displaced by the Diamer-Bhasha project and was in the process of acquiring land for the dam, he said.


In addition to these, he said, work on Gomal Zam Dam was completed during Durrani’s tenure.


According to the spokesman, the chairman also helped raise funds for the Tarbela 4th Extension project and completed the first mega power project in Gilgit-Baltistan.


Published in The Express Tribune, August 28th, 2012.

China’s key money market rate up on PBOC guidance

Wednesday, 29 August 2012 14:02 Posted by Imaduddin

SHANGHAI: China’s benchmark money market rate jumped 43 basis points on Wednesday, rebounding from the two-month low it hit on Tuesday, after the central bank surveyed primary dealers on potential demand for 28-day reverse bond repurchase agreements for the first time ever.


 The survey, aimed at maintaining market liquidity without re-inflating asset bubbles, implied that the People’s Bank of China (PBOC) is likely to further delay a much-anticipated cut in banks’ required reserve ratio (RRR), traders said.


The PBOC routinely surveys traders one day before regular open market operations on Tuesday and Thursday.


Expectations of a new RRR cut have lingered in the market since June, even though the PBOC had already twice cut both official interest rates and RRRs this year to counter a slowdown in the world’s second-largest economy.


Among other considerations, however, authorities appear concerned that pouring more long-term money into the system may not actually help, given that the slowing economy is actually trimming its capital demand, in particular for medium- and long-term funds.


GUIDANCE


 The benchmark seven-day repo rate surged 42.88 bps to 3.5251 percent at midday. On Tuesday, it hit its lowest level since late June amid improved liquidity in the market.


“The roller-coaster trading implies market is responding to the PBOC’s new strategy of using its reverse repos to guide money market rates,” a trader at another Chinese state-owned bank in Beijing said.


 ”An increased range of tenors in PBOC reverse repos will make it easier for the PBOC to adjust short-term funding costs. Its intention appears to be maintaining the stability of short-term funding costs for now.”


If the PBOC keeps its seven-day reverse repo unchanged on Thursday against Tuesday’s 3.4 percent, the secondary market’s rate of 3.09 percent on Tuesday would imply that banks that lend at lower rates would lose money, traders said.


This situation caused a rebound in market rates, they said.


The PBOC has relied on regularly injecting and draining cash through reverse repos since May, but traders said the short tenor of the repos, first limited to 7 days, had the effect of draining base money.


The central bank began to increase its use of 14-day reverse repos in recent weeks, and now appears poised to add the longer 28-day reverse repo contract to the mix.


 It has also pledged to use money market operations as its key tool to guide interest rates as part of a liberalisation and reform of the way borrowing costs are set.

Distrustful competitors: ‘Conventional insurers will crush the Takaful sector’

Takafu­l operat­ors finall­y break silenc­e over the new rules.  Takaful Rules, 2012 would make Pakistan the second country after Indonesia to officially allow takaful windows, which enable firms to offer Shariah-compliant and conventional products side by side, provided client money is segregated. ILLUSTRATION: JAMAL KHURSHID

KARACHI: 

After a long spell of public silence over the recently introduced rules for Islamic insurance, or Takaful, in Pakistan, one of the five Takaful companies has finally gone public in its criticism of the policy revision that will allow conventional insurance companies to set up parallel windows for Islamic insurance operations.


In an interview with The Express Tribune, Pak-Qatar Family and General Takaful Senior Manager Syed Adnan Hasan said that the establishment of Islamic insurance windows by conventional insurance companies will ‘crush’ the business of existing Takaful operators.


All Takaful companies had boycotted the ceremony held in July where the Securities and Exchange Commission of Pakistan (SECP) Chairman Muhammad Ali officially announced the promulgation of the Takaful Rules, 2012.


While Takaful companies refused to speak to the media on this issue, they went to court against the revised rules which, they claimed, would distort the Takaful businesses in Pakistan by letting conventional insurance companies conduct it in a manner “against the principles of Shariah.” Subsequently, on August 2, the Sindh High Court restrained the SECP from implementing the new rules.


“Insurance companies, by using their existing corporate structure and branch network for Takaful windows, will actually crush current Takaful operators,” Hasan said. He added that the prospective new entrants will take undue advantage of the low cost of entry in the wake of the new laws by setting up Takaful windows. “It is like letting somebody join a race just a few steps away from the finishing line.”


The Takaful Rules, 2005, which governed the Islamic insurance sector in Pakistan before the promulgation of the new rules, did not allow conventional insurance companies to sell Takaful products. Currently, there are two family Takaful and three general Takaful companies in Pakistan. As for the conventional insurance sector, seven life insurance and 30 non-life insurance companies are operating in Pakistan.


Takaful operators collected Rs3.3 billion in gross premiums in 2011, which is equal to 2.8% of the gross premiums of Rs119.7 billion that conventional insurance firms received in the same period.


“The growth rate of Takaful is good. However, we still have a long way to go. In a country with the insurance penetration of 0.4% of the gross domestic product (GDP) after 65 years of its birth, a lot still remains to be done. We have little tendency to save,” he said.


Premiums of Takaful companies grew at an average of 91.6% year-on year between 2006 and 2011. In contrast, the average annual growth rate of conventional insurance companies over the same period was a modest 16.5%.


“Conventional insurers must set up full-fledge Takaful entities (as subsidiaries) while satisfying the minimum paid-up capital requirement to be decided by the SECP,” Hasan said. He added that all the other requirements that existing Takaful players had to meet must be satisfied by any new player entering the Takaful segment. “No shortcuts should be allowed.”


In an interview with The Express Tribune last month, State Life Insurance Corporation of Pakistan Chairman Shahid Aziz Siddiqi had indicated that his company – which is the largest player in life insurance in the country with over Rs293 billion in total assets by the end of 2011 – was likely to launch Islamic insurance products by setting up a Takaful window within a year.


“Those who are called ‘giants’ may be so, but in their own industry, which is conventional insurance. Only time will tell who the giant in the Takaful segment is,” Hasan said in an apparent reference to State Life’s plans to enter the Islamic insurance segment.


“Their commitment will simply be with those products/businesses which seem profitable, irrespective of whether they are Shariah-complaint or not,” he said.


When contacted, a spokesperson for State Life refused to speak on the issue.


Published in The Express Tribune, August 29th, 2012.

Japan air-con giant Daikin buys US firm for $3.7bn

Wednesday, 29 August 2012 14:23 Posted by Imaduddin

TOKYO: Japan’s Daikin industries, the world’s biggest air-conditioner company, said Wednesday it would acquire rival Goodman Global in a $3.7-billion deal as it looks to tap the huge North American market.


The acquisition would see the Osaka-based firm pick up the much smaller Goodman to add a “strong fourth pillar” to its key global operations in Japan, China and Europe.


US-based Goodman focuses on North America, the world’s single biggest heating, ventilation and air-conditioning market, and has an expertise in central air conditioning, said Daikin.


“Most systems in this market are ducted-style, a segment where we have little presence,” Daikin Chief Executive Noriyuki Inoue said in a statement. “Goodman and Daikin can enjoy a complementary relationship by having more channels in the market to offer Goodman’s market-leading ducted products and Daikin’s existing products,” he added.


However, investors were unimpressed with Daikin’s Tokyo-listed shares falling 3.53 percent to 2,073 yen on Wednesday.


Ratings agency Moody’s also threw cold water on the deal, saying it had put Daikin’s credit rating on review for a possible downgrade even though the acquisition would boost the Japanese firm’s presence in North America.


“The transaction will be financed with a combination of debt and cash-on-hand,” it said in a statement after the deal was confirmed.


“(It) will have a significant impact on the size of Daikin’s balance sheet and will negatively affect” its financial profile.


The purchase of Goodman, which has about 4,500 employees and posted sales of $2.1 billion last year, would be completed in the fourth quarter of 2012, assuming regulators approve the deal, Daikin said.


The Japanese firm, which has 44,000 employees worldwide and posted $15.52 billion in sales in its latest fiscal year, had started acquisition talks two years ago, but they were put on ice after last year’s quake-tsunami disaster and atomic crisis.


The move comes as Daikin fends off stiff competition from rivals including China-based Gree Electric Appliances and US-based Carrier Corp.


Japanese companies have been aggressively seeking mergers and acquisitions abroad in recent years, taking advantage of the yen’s strength to diversify their operations and make them globally competitive.

Copyright AFP (Agence France-Presse), 2012

New petroleum policy: Govt aims to give significant boost to production

Wellhe­ad gas price increa­sed by 60% to attrac­t explor­ation firms.  Wellhead gas price increased by 60% to attract exploration firms. DESIGN: MUHAMMAD SUHAIB

ISLAMABAD: 

In an attempt to attract much-needed investment and plug the growing gap between supply and demand of energy, the government on Monday unveiled a new petroleum policy, aimed at increasing crude oil and gas production by 49% and 19% respectively within a year.


In the new policy, wellhead gas price has been increased by 60% from an average of $4.2 per million British thermal units (mmbtu) to $6.7 per mmbtu, an encouragement for exploration companies to step up their activities in the country.


At a press conference held to highlight key features of the policy, Adviser to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain boasted that the government had given a comprehensive document to enhance oil and gas production in the country, terming the day ‘historic’.


Before announcing the policy, Hussain met with chief executive officers of exploration companies, which committed to increasing the production of oil and gas.


“We hope crude oil production will rise to 100,000 barrels per day from the current 67,000 bpd and gas output will increase to five billion cubic feet per day (bcfd) from 4.2 bcfd by the middle of next year,” he said.


This way, the country will be able to meet 25% of its oil requirements from domestic sources, he said.


Sounding optimistic, Hussain said the upcoming winter would not be tough in terms of gas shortage. “We will add 400 to 500 million cubic feet per day (mmcfd) of gas to the system from existing fields,” and the supply in Punjab was also better where the industry was receiving gas for five days a week, he said.


“We have also found a solution to the gas shortage for fertiliser companies and they will receive direct supply from the gas fields,” he said, adding Pakistan would be in a position to export fertiliser in a year. However, restrictions on compressed natural gas (CNG) stations will remain in place.


“The government will eliminate gas subsidy gradually and only lifeline consumers will be provided subsidy,” he stressed.


Hussain admitted that progress on liquefied natural gas (LNG) and liquefied petroleum gas (LPG) projects had been slow, but said the government would find a solution very soon. India has also offered 200 million cubic feet (mmcfd) of LNG for a period of five years.


In a bid to encourage investment, the petroleum ministry has planned road shows abroad on the new policy and the Turkmenistan-Afghanistan-Pakistan-India gas pipeline.


Discussing the increase in wellhead gas prices, Hussain pointed out that the index price in the international market was going up, making it necessary to jack up prices in the country as well to attract exploration companies.


“Premier Oil will invest $30 to $40 million in exploration and Kufpak has made the same commitment.”


For Zone-III, gas price has been set at $6 per mmbtu, for Zone-II $6.3 per mmbtu, for Zone-I $6.6 per mmbtu, for offshore shallow projects $7 per mmbtu, for offshore deep projects $8 per mmbtu and for offshore ultra deep projects $9 per mmbtu.


The government will give $1 per mmbtu to the companies on first three discoveries from offshore fields.


Attributing the delay in new policy to the 18th Constitutional Amendment, Hussain said a directorate had been established in the petroleum ministry, which would be represented by all provinces.


Responding to a question, he said the central government had proposed investment of 50% royalty in infrastructure development in the districts where oil and gas was found. However, provinces opposed the proposal and it was decided that 10% of royalty would be spent in such districts.


Under the policy, exploration and production companies will have the right to sell 10% of production to third party whereas state-owned companies will have right over 90% production.


The validity of exploration licence has been reduced from nine years to seven years – initial term of five years plus two renewals of one year each.


Base price of crude oil and condensate for windfall levy has been increased from $30 per barrel to $40. It will increase each calendar year by $0.5 per barrel. The windfall levy will be equally shared by the central and provincial governments.


Published in The Express Tribune, August 28th, 2012.

Fatima Fertilizer switches to profit

The manufa­cturer expect­s to perfor­m better than peers.  Industry giant Engro Fertilizers has reported a loss for the period under review.

KARACHI: 

Fatima Fertilizer has posted a profit of Rs2.59 billion in the first six months of 2012 against a loss of Rs153 million in the preceding period primarily by selling more fertiliser.


The Arif Habib Group subsidiary sold 170,000, 185,000 and 87,000 tons of urea, calcium ammonium nitrate (CAN) and Nitro-Phosphate (NP) respectively, showing 23% decline in urea sales whereas encouraging 13% growth in CAN sales on a yearly basis. These sales led the revenue to clock in at Rs12.6 billion during January to June 2012, said BMA Capital analyst Farid Aliani.


Bulk of the sales came in June, more than making up for dismal sales performance in the first five months, added Aliani.


The board of directors approved the result in a meeting held on Monday in Copenhagen, Denmark.


The company is expected to perform better than its peers as it is provided protection by getting gas around 80% cheaper than rest of the industry for being a new player in the industry. The company is in second years of operation. Industry giant Engro Fertilizers has reported a loss for the period under review.


The result is, however, lower than market estimate as analyst expected the bottom-line to be on average around Rs3.7 billion.


Deviation from estimates primarily came from the topline where the company offered heavy discounts on products compared to peers in order to boost sales, according to Shajar Research.


The company’s stock price declined Rs0.41 to close at Rs23.62 during trade at the Karachi Stock Exchange.


Published in The Express Tribune, August 29th, 2012.

Twin cities lead trading of online second-hand items

Online classi­fied portal – Dekho.com.pk – releas­es decade old listin­gs data.  “In Pakistan, the use of online shopping or trading mediums is still relatively new; despite this the figures are so promising,” said Bilal Qureshi, Market Developer at Dekho. PHOTO: dekho.com.pk


KARACHI: Pakistan’s twin cities Rawalpindi and Islamabad are the trading capitals in online second-hand items with a value of Rs7,766 per capita; Dekho.com.pk – an online free classifieds site for used items – said in a press release on Tuesday.


The online classified portal has compiled the data of all the postings it received during last ten months, according to officials.


Lahore and Karachi were the second and the third largest markets for the online trade of second hand items with Rs6,904 per capita and Rs1,722 per capita respectively – Pakistan has an overall per capita of Rs851; it said.


The press release further said that Lahore has the highest value for second hand cars with an average price of Rs785,036 followed by the twin cities and Karachi with the average price of Rs761,252 and Rs626,951 respectively – possibly owing to Karachi being the first city on port-entry for all second hand imports.


Rawalpindi/Islamabad, however, prove to be the more technologically ambitious of the cities with an average price of Rs13,149 for second-hand mobile phones – mostly smartphones – followed by Lahore and Karachi where the average value for second hand mobile phone is Rs12,526 and Rs11,284 respectively.


Further analysis show the average price for houses in Karachi is Rs21.9 million compared to Rs13.6 million in Lahore. Rawalpindi/Islamabad has one of the lowest average values for houses with an average value of Rs13.5 million; the press release said.


In terms of sheer numbers, Lahore is the online classified trading leader in Pakistan according to Dekho.com.pk with over 47% of the online classified trading market share. Karachi holds 23.4% of the market, Rawalpindi and Islamabad hold 21.4%, Peshawar holds 1.2% and Quetta holds 0.3% of that market segment; it said.


“In Pakistan, the use of online shopping or trading mediums is still relatively new; despite this the figures are so promising,” said Bilal Qureshi, Market Developer at Dekho.com.pk.


Published in The Express Tribune, August 29th, 2012.

Investment treaty: Pakistan, US make headway amid criticism

Both agree on clause­s dealin­g with financ­ial, insura­nce servic­es.  Pakistan and the US will sign the agreed clauses today (Wednesday) while negotiations will continue on the disputed matters. DESIGN: MUHAMMAD SUHAIB

ISLAMABAD: 

Amid criticism of ‘extraordinary’ protection to American investors, Pakistan and the United States have made progress on contentious issues that have so far delayed the signing of a bilateral investment treaty.


The breakthrough was achieved during second day of negotiations held here on Tuesday, said Pakistani officials after the parleys. Both the sides have agreed on the clauses of the treaty dealing with financial and insurance services, they added. Pakistan also addressed US concerns about investment protection in the communications sector.


The US team was led by Kimberley Claman, Senior Director for Investment Affairs and Financial Services while Pakistan was represented by Dr Raania Ahsen, Director General Policy and Planning. Representatives of other relevant departments were also present in the meeting.


According to Pakistani officials, both the countries will not adopt measures that expressly nullify or amend contractual provisions that specify the currency of denomination or the rate of exchange of the currencies aimed at ensuring “greater certainty”.


Experts voice concern over the protection being offered to the Americans under the investment treaty. They argue that the government is offering too much in return for getting virtually nothing.


The legal experts are taking an exception to the clause in the treaty that makes it mandatory for Pakistan to notify the US in advance about any amendments in laws and decisions on investment. They argue this is tantamount to surrendering the sovereignty and an infringement on the authority of the executive.


For the satisfaction of the US, it has been added to the text of the treaty that laws, regulations, procedures and administrative rulings of general application relating to any matter covered by this treaty are promptly published or otherwise made publicly available in order to what the authorities called ensuring transparency.


According to the officials, Pakistan and the US will sign the agreed clauses today (Wednesday) while negotiations will continue on the disputed matters. Pakistan hopes that the investment treaty will be finalised on the sidelines of the United Nations General Assembly session, scheduled for September.


The US and Pakistan have already agreed on the arbitration clauses, according to which an investor will seek local remedies before knocking the doors of international arbitration forums for breach of contractual obligations.


While both sides make tangible progress on key areas, certain issues still remain unresolved. According to the government officials, the State Bank of Pakistan had certain reservations about the treaty and the US team was scheduled to meet SBP officials to sort out the issues.


Opponents of the treaty also express fear that the US may use the legal document to exploit natural resources of Balochistan.


Published in The Express Tribune, August 29th, 2012.

Gazprom says costs too high for Shtokman to go ahead

Wednesday, 29 August 2012 15:38 Posted by Muhammad Iqbal

STAVANGER: An official at Russia’s top gas producer Gazprom said on Wednesday that the company agreed with partners at Shtokman giant gas enterprise that the project is not feasible for now as the costs are too excessive.


Vsevolod Cherepanov, head of Gazprom’s production department, said that Gazprom agreed with France’s Total and Norway’s Statoil that costs are too high for the project to be implemented at the moment.


“All parties have come to the conclusion that the financing is to high to be able to do it for the time being,” he said.


“We are collecting new data. We have extensive gas resources. We shouldn’t take hasty decisions.”


The partners have been unable to kick-start the remote project in the Barents Sea due to a number of challenges such as high tax bills and nasty weather conditions.

Pakistan, India to discuss construction of LNG pipeline

Delhi plans to extend its gas pipeli­ne to Wagah border.  India had already laid a pipeline network covering 100kms for transporting LNG to Bhatinda, from where the pipeline could be extended to Pakistan. PHOTO: FILE


Islamabad and Delhi are expected to discuss a plan to lay a pipeline from India to Pakistan for export of liquefied natural gas (LNG) in a meeting to be held in Islamabad in the first week of September.


According to sources, Pakistan and India, during the deliberations, will also touch issues of LNG pricing and transport facility. They said India was planning to expand its pipeline network for shipment of LNG across the border.


The sources pointed out that India had already laid a pipeline network covering 100kms for transporting LNG to Bhatinda, from where the pipeline could be extended to Pakistan’s Wagah border to inject gas into the network of Sui Northern Gas Pipelines Limited (SNGPL).


Indian LNG trading company, Petronet Private Limited (PPL), has an LNG receiving and re-gasification terminal at Dahej, Gujarat with original handling capacity of five million tons per annum (mtpa). The capacity of the terminal, which is meeting around 20% of the country’s gas demand, was expanded to 10mtpa in June 2009.


The LNG price for the Dahej project is linked with Japan’s crude cocktail price. India may also link the price of gas for Pakistan with Japan’s price.


PPL has a long-term contract with RasGas, Qatar for supply of 7.5mtpa of LNG with back-to-back sales arrangement with GAIL India, Indian Oil Corporation and Bharat Petroleum. It has also made arrangements with Exxon Mobil’s Gorgon venture in Australia for supply of 1.44mtpa.


India also has an oil refinery in Bhatinda from where it desires to export oil to Pakistan as well. In this regard, Delhi has expressed interest in building a pipeline to Wagah for supply of oil to Pakistan.


An energy expert said Pakistan would have to use the option of pipeline if it wanted to import LNG from India. However, he suggested that Pakistan should first try to find out whether India was in a position to export gas in the face of shortages there.


“India currently faces shortage of over four billion cubic feet of gas per day (bcfd), which poses a question mark over whether it will be able to provide gas to Pakistan,” he said, adding there were some other questions which needed to be answered before going for LNG imports from India.


“The proposed import of 200 million cubic feet per day (mmcfd) of LNG may be a short-term arrangement,” he said, adding the quality of pipeline would need to be examined to find out how long it would be able to channel the gas if a long-term contract was reached between the two countries.


He pointed out that India was importing 75% of LNG in a long-term arrangement with Qatar and 30% of the requirement was being met through spot purchases.


“Pakistan may cost $3 to $4 per million British thermal units (mmbtu) in terms of terminal toll, profit and transportation of LNG through the pipeline,” he said, adding, however, the cost of LNG ranged between $13 and $18 per mmbtu in India.


Discussing gas wastage in the country, the expert said “efficiency of gas appliances in Pakistan is 30% to 35%, prompting the need for the government to focus on using most efficient appliances,” he said.


Published in The Express Tribune, August 26th, 2012.

Weekly review: KSE-100 stays steadfast above 15,000-point barrier

Sector-specif­ic activi­ty result­ed in volume­s jumpin­g 73%.  Sector-specific activity resulted in volumes jumping 73%.

KARACHI: 

The stock market continued its strong performance from the previous week and managed to stay firmly above the 15,000-point barrier during two days of trading following the Eid holidays on the first three days of the week.


The KSE-100 index managed to make small gains of 39 points (0.26%) during the week, as investors participated actively after the religious holidays. Most of the activity was sector-specific and the fertiliser and cement sectors remained in the limelight during both sessions.


Thursday saw the index post a strong performance, climbing 80 points which continued into Friday, as the index reached an intra-day high of 15,162 points;, the selling pressure forced it to close in the red, at 15,039 points, down by 41 points for the day.


Volumes were impressive during the week, as average daily volumes stood at 269 million shares traded per day, up 73% over the previous week. However, most of the increased activity was witnessed in the second-tier stocks as average daily volume rose only 12% to Rs5.23 billion shares traded per day.


The fertiliser sector was at the forefront as Engro Corporation witnessed increased activity following the announcement that the government was working towards providing uninterrupted gas supply to the fertiliser plants on the Sui Northern Gas network.


Engro gained 8.1% during the week as a result of these developments. On the other hand, Fauji Fertilizers appeared to be under pressure and shed 1.5% of its value on Friday after news emerged that its next quarter earnings are likely to disappoint investors.


The cement sector had mixed fortunes as it posted a strong performance on Thursday, only to be dragged back down on Friday. Lucky Cement, DG Khan Cement and Fauji Cement were the outstanding performers during the week.


The KSE hit a three year high market capitalisation during the week at Rs3.84 trillion, up 0.26% over the previous week.


What to expect?


The coming week will be critical for the stock market as normal trading sessions will resume for the first time since the beginning of Ramazan.


It will be crucial for the market to sustain itself above the 15,000 point barrier, as it consolidates due to lack of positive triggers.


The political scenario will also play an important role as the case against the prime minister is taken up by the judiciary and any developments on that front can swing the market both ways in the coming week.


Published in The Express Tribune, August 26th, 2012. 

From an employee in Paris to an employer in Karachi

Butt shuns reward­ing job in France, founds logist­ics firm in Pakist­an.  Butt shuns rewarding job in France, founds logistics firm in Pakistan. DESIGN: SAMRA AAMIR

KARACHI: 

Can someone, in the right state of mind, resign from a job, which pays €175,000 a year or €15,000 a month, to start his own business in Karachi – well known for its unsafe business environment?


And that, too, when he doesn’t belong to a business family or have a family business and when he is posted in Paris, arguably the world’s most romantic city, and travels to a couple of countries every week as part of his job.


My answer to these questions would have been a straight ‘No’, hadn’t I met Abid Butt, founder and chief executive of e2e (end-to-end) Supply Chain Management, a Karachi-based logistics company.


It must have been a bold decision back then as Butt, 30 at that time, was working for Geodis, France’s leading logistics’ company, and was married and had a child.


Six years later, Butt’s company, which he and his friend started by investing Rs1 million each, grossed Rs6.5 billion in annual revenues, proving the risk was well worth it.


The LUMS graduate, who also holds an MBA from Insead – one of the world’s leading business schools – got a perfect exposure to the international logistics industry during his two years at Geodis.


Butt founded e2e in February 2006 to tap what he foresaw was a “growing global market for movement of goods”. His international expertise helped e2e grow its topline by a massive 1,918% between 2008 and 2010.


As a result, e2e was ranked Pakistan’s fastest growing company by AllWorld Network, an international ranking that highlights growing companies in emerging markets to expand entrepreneurial economy.


“I always knew I can’t work for others for my whole life,” Butt told The Express Tribune. He said he encourages others to go for entrepreneurship using his favourite quote – Pan ki dukan ho, apni ho.


“There is unlimited upside for entrepreneurship in terms of economic gains,” Butt said, adding, “If the business clicks, there is no limit to how much you can earn.”


However, the success didn’t come easily as there were upsets and challenges that Butt had to survive to get where he stands today.


While working with Geodis, Butt had met with a shipping tycoon in 2005 during a visit to Pakistan. In that meeting, the latter offered him work, which Butt turned down.


“He could not afford me anyway,” Butt said referring to his salary at Geodis. The shipping tycoon then pitched the idea of creating a new company on a partnership basis.


Butt resigned from Geodis and started the new company End-to-End Logistics in May 2005. “I invested Rs6 million and he invested Rs9 million,” he said, refusing to disclose his partner’s identity.


The company recorded its first profit within six months, he said, but he and his partner developed differences. “I realised I could not work with him because of similar issues I faced in the past. He was showing too much authority.” Eventually, the partnership ended.


Butt’s partner intimidated him, saying he would ruin his career as the tycoon was controlling 50% of the total shipping business.


Butt’s friend, who had a freight forwarding company, advised him to start a new company and avoid his partner’s threat. In February 2006, the two friends partnered and started e2e Supply Chain Management from a one-room office in Zamzama.


Given Butt’s friend also had contacts in the shipping business, e2e was able to get some business. “We got initial boost from shipping by air and sea,” Butt said. They started developing good terms with shipping lines and got more business.


Starting from four employees, e2e now employs a workforce of 400 people. With 700 customers – both national and multinational companies – e2e has become a logistics giant, managing the entire pharmaceutical and textile sectors.


While investors are skeptical of investing in Pakistan, Butt had a different approach. He wanted to work in the market he understands the best.


“While at Geodis, I realised how local companies were winning over big firms in eastern European countries,” Butt said. That’s when he started thinking about Pakistan and what’s missing there.


In Pakistan, shipping companies were only shipping, trucking companies were only trucking, he said. There was no warehousing as such, “that’s when I thought about a company to do all of this and the name end-to-end (e2e) was coined.”


With its end-to-end strategy, the company is taking an initiative to solve supply chain problems facing the agriculture sector.


Currently, 40% of the country’s agricultural produce is lost because of bad logistics, Butt said. The e2e team is experimenting with a system to get produce from farms to markets with only three to four percentage of wastage, he added.


Responding to a question about e2e’s future, Butt said, “My mission is to make e2e not only the number one logistics company in Pakistan but also to make it number one logistics company in South and Central Asia.”


Published in The Express Tribune, August 26th, 2012.

Market watch: Bourse declines as investors book profits

KSE’s benchm­ark 100-share index falls 41 points.  KSE’s benchmark 100-share index falls 41 points.


KARACHI: Investors decided to book profits on the last trading session of the week ahead of the Supreme Court hearing from Monday. 


The Karachi Stock Exchange’s (KSE) benchmark 100-share index fell 0.27 per cent or 41.37 points to end at the 15,039.18 points level.


The stock market carried over positive sentiment from the previous day and managed to post an intra day high of 15,162 points, however, selling pressure in the second half pulled the bourse down.


Prime Minister Raja Pervez Ashraf is due to appear before the Supreme Court on Monday over his failure to comply with orders to reopen corruption cases against President Asif Ali Zardari.


Decline in global equity markets and loan repayment of $397 million to International Monetary Fund also fuelled negative investor sentiment, said JS Global Capital analyst Shakir Padela.


Trade volumes surged to 306 million shares compared with Thursday’s tally of 221 million shares.


Major losers of the day were the cements stocks which had been leading the rally previously. Foreign institutional investors were net sellers of Rs106 million worth of shares, according to data maintained by the National Clearing Company of Pakistan Limited.


Pakistan Telecom­munication Company Limited rose to its upper limit of Re1 to close at Rs15.29.


Shares of 323 companies were traded on Friday. At the end of the day 171 stocks closed higher, 120 declined while 32 remained unchanged. The value of shares traded during the day was Rs5.0 billion.


Lafarge Pakistan was the volume leader with 38.9 million shares that closed unchanged at Rs5.7. It was followed by Flying Cement with 26.5 million shares firming Re1.0 to close at Rs4.9 and Fauji Cement with 24.7 million shares declining Re0.1 to close at Rs6.8.


Published in The Express Tribune, August 25th, 2012.

Bundesbank opposed to ECB buying member states’ bonds

Posted by Shoaib-ur-Rehman Siddiqui

Jens-WeidmannBERLIN: German central bank chief Jens Weidmann criticised as dangerous any plan by the European Central Bank (ECB) to buy member states’ bonds, according to Monday’s edition of Spiegel magazine.

In early August, the ECB suggested it could start unlimited buying of stricken member states’ bonds to drive down their crippling borrowing costs, following trouble in Spain and Italy.

The ECB “may undertake outright open market operations of a size adequate to reach its objective,” its chief Mario Draghi said.

“For me such a policy comes close to financing states with the printing press,” Weidmann told the magazine. “In a democracy, it should be the parliaments and not the central banks that decide such a sharing of risks.”

“The manna from central banks will forever sharpen greed,” the Bundesbank chief said. “One should not underestimate the danger that financing by central banks can get one hooked like a drug.”

Draghi is due to say more about new measures to fight the sovereign debt crisis on September 6, during his monthly press conference in Frankfurt, which follows a meeting of ECB governors and a decision on key interest rates.

The ECB already has an instrument to buy bonds of member states on the secondary market, where they change hands once they have been issued, but it has not been used for several months.

Copyright AFP (Agence France-Presse), 2012

G4S Pakistan buyout to be done in two weeks

Deal expect­ed to be much lower than report­ed $10 millio­n: Sehgal.  Deal expected to be much lower than reported $10 million: Sehgal. PHOTO: EXPRESS/FILE

KARACHI: 

One of the few businesses that should understandably thrive amidst terrorism, bank robberies, kidnappings and extortion is private security. However, it seems to have lost its appeal in Pakistan, as a leading foreign security company has decided to sell its local operations to its Pakistani partner.


G4S, which operates in the country as Wackenhut Pakistan Limited, is going to pull out of the market by selling the business to its chairman in the region for about $10 million, the UK-based Financial Times recently reported.


However, Ikram Sehgal – who serves as chairman of G4S’s Pakistani operation – called the amount of $10 million “speculative” while talking to The Express Tribune.


“I’m not going to reveal the actual figure, but it’s nowhere near $10 million for sure. The reported figure is simply wrong. A consortium of banks is helping us carry out the deal,” he said, while contradicting the Financial Times’ claim, which was also repeated in a subsequent story by international news agency Reuters.


Sehgal said the buyout was a result of “hostile government policies towards foreign security companies.” He said it had now become difficult for foreign security firms to operate in Pakistan under constant hostility from the government while a number of security companies operated with no government licence at all.


Sehgal, who already has a 50% stake in the business, added that there were no other contenders for the business, as he had the right of first purchase because of his current association with the company.


The company employs over 11,000 personnel with a major concentration in Karachi, Islamabad and Lahore. Its major customers are multinational companies and banks, according to Sehgal. It also employs roughly 150 women guards. “The deal is expected to take place within the next 14 days,” he added.


According to the Financial Times report, the decision of G4S to exit the Pakistani market is in line with its strategy of making smaller disposals of less profitable businesses while expanding its footprint in emerging markets.


“The government doesn’t allow foreign companies to take part in private security business,” said All Pakistan Security Agencies Association (APSAA) Chairman Brigadier (retired) Rashid Ali Malik while talking to The Express Tribune.


Wackenhut and Brink’s used to be the only foreign security companies in Pakistan, which received their licences at least 20 years ago, according to Malik. Brink’s — which had a licence to provide Pakistani financial institutions with cash in transit service — became Phoenix some years ago. The other foreign security company, G4S, is now being made to pull out of Pakistan while leaving its business to its Pakistani partner, Wackenhut Pakistan Limited, Malik added.


A report published in The Express Tribune on July 5, 2010, said 300,000 private security guards worked in Pakistan, almost equal to all active-duty personnel in the paramilitary forces.


Published in The Express Tribune, August 26th, 2012.

Jury didn’t want to let Samsung off easy in Apple trial

Apple-vs-SamsungSAN FRANCISCO: Jurors did not want to let Samsung Electronics Co Ltd off easy in the landmark patent trial against Apple Inc, even though they felt Apple’s damages demands were too high, according to the foreman.

Apple won a sweeping victory against Samsung on Friday in a San Jose federal courtroom.

A nine-member jury found the Korean company had infringed on several Apple features and design patents and awarded the iPhone maker $1.05 billion in damages, which could be tripled because the jury also decided that the Korean firm had acted willfully.

In an interview on Saturday, Velvin Hogan, 67, said Apple’s arguments about the need to protect innovation were persuasive. Hogan worked as an engineer for decades before he retired, and holds a patent of his own.

“We didn’t want to give carte blanche to a company, by any name, to infringe someone else’s intellectual property,” Hogan told Reuters a day after the verdict was delivered.

However, Hogan said Apple’s damages demand of up to $2.75 billion were “extraordinarily high,” partly because it was unclear whether Apple had enough component supply to sell more phones even if it wanted to.

“We wanted to make sure the message we sent was not just a slap on the wrist,” Hogan said. “We wanted to make sure it was sufficiently high to be painful, but not unreasonable.”

Hogan said jurors were able to complete their deliberations in less than three days — much faster than legal experts had predicted — because a few had engineering and legal experience, which helped with the complex issues in play. Once they determined Apple’s patents were valid, jurors evaluated every single device separately, he said.

“All of us feel we were fair, that we can stand by our verdict and that we have a clear conscience in that we were totally not biased one way or another,” Hogan said.

India opens doors further for Pakistan

Reduce­s SAFTA sensit­ive list and allows invest­ment in stock market.  Reduces SAFTA sensitive list and allows investment in stock market. PHOTO: FILE

KARACHI: 

After allowing foreign direct investment from Pakistan, India has approved reduced sensitive trade list by 30% and also allowed Pakistanis to purchase shares in Indian companies.


Gilani, in a statement while commenting on the recently concluded successful visit of a Pakistani parliamentary delegation to India, said India’s decision to allow Pakistani investors to invest in that country and also permission to buy shares in their stock market, including opening of bank branches by the respective countries, were a significant development, he said.


India approved reduction of 30% (264 tariff lines) from the SAFTA Sensitive list for Non Least Developed Countries (NLDCs) allowing the peak tariff rates to reduce to 5% within three years, as per agreed SAFTA process of tariff liberalisation on August 17, 2012, according to a press statement issued by High Commission of India in Islamabad. This shall reduce India’s sensitive list for Pakistan from 878 to 614 tariff lines.


The bilateral trade dialogue with Pakistan resumed in April 2011. Sustained discussions at various levels resulted in the drawing of a roadmap for an uninterruptible and irreversible trade liberalisation process. India has also agreed upon a liberalised visa regime and opened Integrated Check Post to encourage two-way trade.


Both countries have held huge exhibitions in each others countries in a bid to boost trade. Official bilateral trade between India and Pakistan is just $2.7 billion annually and heavily tilted in New Delhi’s favour. But Indian and Pakistani business community have estimated that up to $10 billion worth of goods are routed illicitly, carried by donkeys through Afghanistan or shipped by container from Singapore and Dubai.


The Reserve Bank of India decided on August 22, 2012 that a Pakistani citizen may, with the prior approval of the Foreign Investment Promotion Board of India, purchase shares and convertible debentures of an Indian company, under Foreign Direct Investment Scheme. Such Indian company should not engage in sectors pertaining to defence, space and the atomic energy, adds the statement.


Published in The Express Tribune, August 26th, 2012. 

Rupee dips to all-time low against dollar

On the back of high oil prices, deplet­ing forex reserv­es and debt servic­ing.  The rupee fell to 94.75 to the greenback in trading in Karach, down from 94.70 on Thursday. PHOTO: FILE


KARACHI: The Pakistani rupee sank to an all-time low against the dollar Friday on high oil prices and forex reserve fears as the country prepared to repay nearly $400 million to the International Monetary Fund (IMF).


The rupee fell to 94.75 to the greenback in trading in Karachi on Friday, down from 94.70 on Thursday, and has now lost 33% of its value against the US currency since March 2008.


“The increase in the international oil price… has affected Pakistan’s foreign exchange reserves and they could suffer further with the repayment of IMF’s instalment due today,” said analyst Mohammad Sohail of Topline Securities.


“These factors have contributed to the panic in the currency market.”


An official of the Ministry of Finance said that Pakistan was set to pay $397 million to the IMF on Friday and hoped it would have a ‘minimal effect’ on the reserves, which stand at $15.18 billion, according to the central bank.


The official added that Pakistan has already repaid $901.4 million to the IMF in previous three instalments.


The Washington-based fund bailed out on Pakistan with an $11.3 billion loan package launched in November 2008 as the country faced 30-year-high inflation rates and fast-depleting reserves, as well as a deadly insurgency.


Sohail said the panic in the currency market may continue next week, if the international oil and commodity prices do not stabilise to a comfortable level.


On the other hand, reacting to the news Pakistani businessmen have urged the government to scrap any further borrowing plans.


Islamabad Chamber of Commerce and Industry President Yassar Sakhi Butt said that the country has to pay $3.4 billion in 2012-13, $3.43 billion in 2013-14 and $1.35 billion in 2014-15 to retire IMF’s loan and country’s foreign exchange reserves will continue to face pressure due to the debt servicing in the next three years.


Therefore, the government should not choose short-term gains over long-term economic instability, he maintained.


Published in The Express Tribune, August 25th, 2012.

Landline, Broadband: PTCL concludes loyalty campaign

Promot­ion, which ran for one year, conclu­ded with remark­able result­s in Ramaza­n this year, says PTCL.  Promotion, which ran for one year, concluded with remarkable results in Ramazan this year, says PTCL. PHOTO: FILE

ISLAMABAD: 

Pakistan Telecommunications Company Limited (PTCL) has said that it has concluded its landline and broadband loyalty campaign, which offered every new PTCL Double-up unlimited subscriber free cordless sets after first bill payment.


“Thousands of customers got free cordless sets through this offer. The promotion, which ran for one year, concluded with remarkable results in Ramazan this year,” said PTCL in a press release.


The Double-up unlimited packages facilitate customers with benefits like free wifi, unlimited downloads, unlimited local and nationwide on-net minutes, free Smart TV and Rs1.25 per minute mobile call charges.


Published in The Express Tribune, August 26th, 2012.

National Savings Schemes profit rates slashed

New profit rate on Specia­l Saving Certif­icates will be 10.8%.  New profit rate on Special Saving Certificates will be 10.8%.

ISLAMABAD: 

The government has reduced the profit rates on National Saving Schemes effective August 27, 2012 (Monday).


The decision was taken after the reduction in the interest rates in the monetary policy statement released earlier by the State Bank of Pakistan. According to the Central Directorate of National Saving Schemes‚ the new profit rate on Special Saving Certificates – a three-year maturity scheme on which profit is paid semi-annually – will be 10.8%.


Profit rates have been reduced on the Regular Income Certificates – a five-year maturity scheme on which profit is paid monthly from the date of issue –by 1.32% and on Defense Certificates – a ten-year maturity scheme with a feature of automatic reinvestment after maturity – by 1.18%.  The investments in the schemes are fully guaranteed by the government.


Published in The Express Tribune, August 26th, 2012.

Corporate results: Suzuki profits speed up five times

Punjab taxi scheme helps countr­y’s larges­t assemb­ler move from making millio­ns to billio­ns.  The automobile giant sold 61,439 cars in the first half of the year compared with 41,621 units in the same period last year.

KARACHI: 

Pak Suzuki profits shot up five times form the millions to billions with the Punjab taxi scheme acting as the turbocharger.


The country’s largest automobile assembler profits grew by 392% to Rs1.37 billion in the first six months of 2012 against Rs279 million reported in the same period last year, according to a notice sent to the Karachi Stock Exchange on Friday.


Completion of the yellow cab scheme and increase in car prices twice (January and April 2012) by 7% to pass on the rupee depreciation helped jack up the profitability, said BMA Capital analyst Zoya Ahmed. The Punjab government allocated Rs4.5 billion in fiscal 2012 (July 2011 to June 2012) budget to provide 20,000 yellow cabs to youth of the province.


Moreover, change in taxation scheme on account of turnover tax adjustment also played its part as the company’s effective tax rate reduced to 26.5% during January to June from 48% in the same period last year, added Ahmed.


The automobile giant sold 61,439 cars in the first half of the year compared with 41,621 units in the same period last year. The two cars selected for the taxi scheme Mehran and Bolan lead the growth.


Mehran – the company’s highest selling car – witnessed an increase of 45% to 18,117 units followed by Bolan registering a 101% increase to 13,692 units.


Liana was the only car of the company that showed a drop in sales by 11% to 251 units.


Lower financial charges by 27% and higher other income by 23% to Rs332 million also contributed in strengthening the bottom-line.


Going forward, Suzuki is expected to see a drop in sales with the completion of the yellow cab scheme coupled with discontinuation of Alto, one of the largest selling cars in fiscal 2012.


The company’s stock went against the trend and rose 3% to close at Rs98.49 during trade at the Karachi Stock Exchange on Friday.


Published in The Express Tribune, August 25th, 2012.

GM’s Opel may cut 30pc of jobs in Germany

Saturday, 25 August 2012 17:32 Posted by Shoaib-ur-Rehman Siddiqui

general-motorsFRANKFURT: General Motors Co’s ailing German unit Opel may have to cut a third of all jobs in the country, German newspaper Bild reported on Saturday citing a source.

The person said Opel had agreed on a phased strategy with its parent General Motors that began by cutting the working hours of several thousand workers, a move announced earlier this week.

The newspaper reported that GM has given Opel a clear goal of 30 percent for the job cuts.

But Steve Girsky, president at GM Europe denied the report.

“There is no such strategy,” he was quoted as saying by the paper. “It is not true that Opel plans such job cuts in Germany.”

GM lost $747 million last year on its European operations, which include Vauxhall in Britain, as weak economies hit car sales in the region, forcing automakers to confront high fixed costs tied to running about 10 more car plants than needed in Europe, where demand for new vehicles is sliding.

In a separate statement Opel said: “The claim that Opel wants to cut one in every three jobs in Germany is untrue. It is irresponsible to our customers, our dealers and our approximately 40,000 employees. The Bild article damages our brand and puts our business at risk.”

Opel earlier this week agreed with labour representatives to halt production for a total of 20 days at its main German factory in Ruesselsheim and its component plant in Kaiserslautern between September and the end of the year.

Maruti may double capacity at new India plant: report

Saturday, 25 August 2012 13:18 Posted by Imaduddin

maruti 400NEW DELHI: Japanese-owned Maruti Suzuki may double capacity at its planned car plant in India’s Gujarat state, a report says, as it reviews strategy following deadly labour unrest at another major factory.

The Gujarat plant — due to open 2015-16 — will be the first for India’s biggest carmaker outside the northern state of Haryana, where a riot by workers last month at its Manesar factory led to the death of a manager and injury to 96 supervisors.

Dow Jones Newswires, quoting an unnamed senior Gujarat state official, said  initial capacity of the new plant could be as high as half a million cars per year — twice what Maruti originally envisioned.

Maruti is investing 40 billion rupees ($727 million) to build the factory.

The report late Friday came as Suzuki Motor Chairman Osamu Suzuki travelled to the western Gujarat state to meet chief minister Narendra Modi.

Suzuki is on a week-long visit to India to take stock of the situation at Maruti, which is crucial to the Japanese firm’s fortunes because it contributes one-third of its pre-tax profit and accounts for half of its production outside Japan.

A Maruti spokesman would not comment when asked about plans to enlarge the initial planned capacity of the Gujarat plant at Mehsana, 100 kilometres (60 miles) from the state’s main city of Ahmedabad. Deepesh Rathore, an analyst at consulting firm IHS Automotive, told India’s Mint newspaper “there is a sense of urgency to start operations from Gujarat as Manesar has been problematic for them”.

Last month’s violence at the Manesar plant, near New Delhi, was the worst since Maruti cars started rolling off assembly lines in India in 1983. Maruti’s other factory is located in nearby Gurgaon.

The Indian unit, the country’s largest carmaker by sales, lost $9 million a day during a subsequent 21-day plant shutdown, which ended earlier in the week, analysts estimate.

Gujarat, with its long coastline allowing easy exports, has emerged as a popular centre for car production with US giants General Motors and Ford also setting up factories there.

Copyright AFP (Agence France-Presse), 2012

Meeting of minds: Pakistan, US close to signing investment treaty

Both countr­ies will reach accord next month, US team arrivi­ng.  Bilateral Investment Treaty (BIT) is a commitment to reciprocally promote and protect investment, thus Pakistan’s investment in the US will also be reciprocated. DESIGN: SAMRA AAMIR

ISLAMABAD: 

After negotiating for over eight years, Pakistan and the United States will seal Bilateral Investment Treaty (BIT) on the sidelines of upcoming United Nations General Assembly session, said Board of Investment (BOI) Chairman Saleem Mandviwalla here on Friday.


To resolve the remaining procedural issues, a six-member US delegation is also arriving in Islamabad, according to an announcement made by the BOI Secretariat. The UN General Assembly session will take place next month.


The US team will hold negotiations with Pakistani authorities from August 27-28 to resolve issues of considerable importance and conclude BIT, it added.


The US and Pakistan are again looking to resume dialogue on various issues including energy, investment and trade after resumption of Nato supplies. Pakistan had blocked Nato shipments after the killing of its 24 soldiers in an air attack by US forces in November last year.


Talks on BIT started in 2004 and continued until 2006 but many issues remained unresolved. The biggest stumbling block was arbitration rules in case of any dispute.


After a five-year deadlock, the BOI took the initiative to restart the negotiation process in 2011. According to the BOI, consultation with local stakeholders also picked up momentum to firm up Pakistan’s position on different issues.


In March this year, Pakistan and US initialled the treaty and continued to discuss non-conforming measures (NCMs), which will be attached with the treaty text as its integral part.


The US is the largest investor in Pakistan and conclusion of BIT will deepen economic and investment relations. BIT is a commitment to reciprocally promote and protect investment, thus Pakistan’s investment in the US will also be reciprocated under international law and covenants, said the BOI.


It added Pakistan is confident that the two-day discussions will resolve all outstanding issues, paving the way for signing the treaty as scheduled.


Mandviwalla expressed the hope that BIT will lead to Free Trade Agreement (FTA) between the two countries, resulting in market access and increase in exports to the US markets and more investment from the US.


Both the countries have already signed draft of the treaty earlier this year, triggering criticism and accusations that the BOI had sold the country’s interests.


However, the BOI defended its position, claiming that the US has agreed to a dispute resolution mechanism where local remedy will be sought first before opting for a state-to-state resolution or taking the matter to the international court of arbitration.


For the last three years, the US had not been willing to agree to take any disputed matter first to Pakistani courts.


Insiders claim that from the beginning, the US wanted to include the option of arbitration even after a decision of the Supreme Court.


According to recent decisions of the international court of arbitration, if the interest of an investor is harmed because of any of the reasons – a law, a judgment by a court or because of violation of treaty, the decision of the international arbitration will take precedent. The US is seeking extraordinary protection for its businesses including security, which has also been agreed.


Published in The Express Tribune, August 25th, 2012.

Turkish central bank sees increased risks to growth forecast

turkey-central-bankANKARA: Turkey’s central bank governor said on Saturday economic data showed a slight slowdown in the economy since July and that downside risks to Turkey’s medium-term growth forecast of 4 percent had increased.

“No country, including China, can easily post 8 or 9 percent growth figures this year or in 2013. Therefore, it is not possible for Turkey to post 8 or 9 percent growth figures like the past two years,” Erdem Basci told reporters at a roundtable.

“That is why we have landed on the runway. Okay, let’s unbuckle our seatbelts, grab our suitcases and continue by road,” Basci said.

The central bank and the country’s finance minister have previously said Turkey’s economy was experiencing a soft landing – a relatively gradual slowdown that does not lead to a collapse into recession.

The government is targeting growth of 4 percent this year, down from 8.5 percent in 2011.

On Thursday, Fitch said it may raise Turkey’s long-term rating to investment grade if it makes progress towards its potential growth rate, trims inflation to its target rate and narrows the current account gap.

In a report on the Turkish economy, the ratings agency said the country’s soft landing was on track so far, but that its large external financing requirement still left it vulnerable to adverse shocks to the global financial environment.

Govt to constitute real estate regulator

RERA will frame laws govern­ing land market, licens­ing, regist­ration of agents.  RERA will frame laws governing land market, licensing, registration of agents. DESIGN: FAIZAN DAWOOD.

ISLAMABAD: 

The government plans to establish a Real Estate Regulatory Authority (Rera) in the next 3 years in a bid to improve the performance of the land markets and to enhance the real estate investment in the country, said an official.


The regulator will evolve laws and procedures for licensing and registration of real estate agents and companies and will develop a database on land, housing and real estate transactions.


The official said that the establishment of Rera will help at large to abolish the unregulated land market in the absence of licensing and registration regulations for real estate agents and companies. It will also help to bring an end to non-transparent and uncertain land transactions, scarcity, hoardings and speculation.


The Securities and Exchange Commission of Pakistan and real estate market representatives will enforce the law framed by the regulatory authority.


According to a Household Integrated Economic Survey (HIES) report, an average Pakistani family spent Rs888 every month as rent in the year 2001-02, which surged to Rs2,693 in 2010-2011, depicting an increase of 13.12% in the period. The report further said that during the same timeframe, average house rent in rural areas was 2.7 % higher than the corresponding increase in urban areas.


Published in The Express Tribune, August 26th, 2012.

CCB first-half profit rises 14.5pc

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imq234HONG KONG: China Construction Bank, the country’s No.2 lender, said first-half earnings rose 14.5 percent, its smallest half-year increase since 2009 , as new regulations bit away at its ability to charge freely for services such as financial advice.

CCB said it made a net profit of 106.28 billion yuan in January-June, higher than the 92.8 billion yuan it recorded a year ago and better than expectations for a 100.8 billion yuan net profit, according to a Reuters poll of nine analysts.

In the second quarter, the bank made a net profit of 54.78 billion yuan, according to Reuters calculation of company figures. This was better than expectations for 50.8 billion yuan, according to the same Reuters survey.

Samsung to contest US verdict in favour of Apple

sout23

SEOUL: South Korea’s Samsung Electronics said on Saturday it will contest a US court ruling that it must pay rival technology giant Apple damages of more than $1 billion for patent violations.

“We will move immediately to file post-verdict motions to overturn this decision in this court and if we are not successful, we will appeal this decision to the Court of Appeals,” Samsung said.

The statement came just hours after a jury in San Jose, California awarded Apple $1.05 billion for infringement of patents for its iconic iPhone and iPad, while rejecting Samsung’s counterclaims of infringement of wireless patents.

The decision appeared to be an overwhelming victory for Apple, but it was not immediately clear whether it would halt sales of Samsung devices or affect newer models released since the case was filed.

Samsung in an earlier statement said the verdict was “a loss” for consumers and that Apple had “manipulated” the patent system.

The South Korean firm also said the verdict was “not the final word” in this case or other similar battles around the world.

“It will lead to fewer choices, less innovation, and potentially higher prices,” it said.

“It is unfortunate that patent law can be manipulated to give one company a monopoly over rectangles with rounded corners, or technology that is being improved every day by Samsung and other companies.”

Copyright AFP (Agence France-Presse), 2012

IP gas project: Who will finance Pakistan’s side of pipeline?

Pakist­an and Iran to meet next month to finali­se deal on laying Pakist­an’s portio­n.  The project is expected to facilitate the import of 700 million cubic feet of gas every day through the 2,100-kilometre pipeline. PHOTO: FILE

ISLAMABAD: 

As Russia and China have not given confirmed financing the IP gas pipeline project, Pakistan and Iran will resume talks in the first week of September to finalise the arrangement of finance to lay Pakistan’s side of the pipeline.


Russia and China are conducting due diligence of the project although there has been no response so far, said an official.


Pakistan will also urge the Iranian team to double its pledged amount to $500 million during the upcoming meeting of the working group on IP gas pipeline project. “Iran has already committed to raise $250 million financing for the gas pipeline project through its commercial banks,” sources said.


The project is expected to facilitate the import of 700 million cubic feet of gas every day through the 2,100 kilometre pipeline which will ease the current energy crisis in Pakistan.


Iran-Pakistan gas pipeline is expected to reach the zero border point in the first half of next Iranian calendar year beginning 20 March 2013. National Iranian Gas Company (NIGC) Managing Director, Javad Oji in a recent statement, said that work on the 56-inch Seventh Iran’s Gas Trunkline from Iranshahr, southeast of Iran to Pakistan border and Zahedan city is complete and it is expected to come on stream in September 2013.


Coordination committee to meet on Monday


In another group meeting, a special Iranian team will participate in the two-day coordination committee meeting on the IP gas pipeline project scheduled to meet in Islamabad on Monday to review progress of the project.


Pakistan and Iran had formed the joint working body to finalise a deal with the latter to lay Pakistan’s portion of the pipeline during a meeting held in Islamabad on July 17 and 18.


The Joint Working Group comprised experts from technical, legal, financial and commercial sectors to work out details with respect to implementation of the Iran-Pakistan gas pipeline project.


“This group will also examine the impact of US sanctions against Iran on IP gas pipeline project,” sources added. State-owned National Bank of Pakistan (NBP) and Oil and Gas Development Company Limited (OGDC) walked away from the project last year fearing US sanctions. In March this year, the world’s largest bank Industrial and Commercial Bank of China Limited (ICBC) after agreeing to finance Pakistan’s side of the pipeline also shied away.


“If the two countries reach an agreement, Iran would also provide material for the pipeline,” source added.


German based firm ILF has completed detailed engineering design of IP gas pipeline project and according to the interim feasibility report, the cost of the project is between $1.2 and $1.5 billion.


“If the project is materialised with the participation of local companies, the cost of the project fall while the cost would go up if foreign companies complete the project. Sources also hinted that local and Iranian companies could wrap up the project.


Published in The Express Tribune, August 25th, 2012.

New Novartis drug ‘potential in heart treatment’

i456MUNICH: An experimental drug from Novartis may help up to half of heart failure patients for whom no effective treatment is available, although the evidence so far is indirect.

Results of a mid-stage clinical trial of the drug known as LCZ696, unveiled on Sunday, gauged its effectiveness by measuring whether patients had lower levels of a protein linked to the debilitating condition.

Researchers said that the drug successfully reduced levels of the protein NT-proBNP, although they cautioned that larger studies were needed to see if this “biomarker” signal would translate into better outcomes in clinical practice.

Novartis, long a major player in cardiovascular medicine, is looking to LCZ696 as one of two new treatments for heart failure that could revive its fortunes at a time when top-selling blood pressure pill Diovan is facing generic competition.

The Swiss company said it had not yet decided whether to advance LCZ696 into final-stage testing for the particular group of patients studied in the latest trial. However, Laurie Letvak of its critical care unit said the results were “a great first step”.

The US-led study looked at a hard-to-treat group of patients with so-called preserved ejection fraction heart failure. These patients have heart chambers that are stiff but are still able to pump a reasonable amount of blood, as measured by ejection fraction.

Heart failure is a condition where the heart struggles to pump blood around the body. Unlike a heart attack, in which a heart artery becomes blocked, it develops progressively.

People with preserved ejection fraction are still able to pump more than 40 percent of blood from the heart’s left ventricle, against 55-70 percent for a healthy heart.

MORE WORK TO DO

Patients given LCZ696 showed sharp reductions in NT-proBNP after 12 weeks compared to those on Diovan, although the difference was no longer significant by 36 weeks, Dr Scott Solomon of the Brigham and Women’s Hospital told the annual meeting of the European Society of Cardiology.

Encouragingly, the size of the heart was also reduced in patients on the new drug a good sign in heart failure.

Solomon, whose findings are being published online by The Lancet medical journal, was cautious about reading too much into the results, saying simply “further testing of this compound could be warranted”.

Other experts not involved in the research were also wary.

“To date, there’s been no intervention that has been helpful for this patient group, so this is at least a signal,” said Dr Mariell Jessup, medical director of the Penn Medicine Heart and Vascular Center in Philadelphia.

“It’s interesting but there’s lots more work to do.”

LCZ696 is a combination of Diovan, or valsartan, and another class of drug called a neprilysin inhibitor.

Neprilysin inhibitors have had a chequered history, with Bristol-Myers Squibb suffering a major setback 10 years ago when its product Vanlev flopped due to cases of angioedema, a swelling of the face, neck, lips and throat.

LCZ696 was well tolerated in the latest Novartis-funded study, which involved 301 patients.

Novartis is also testing the medicine in another group of heart failure patients with reduced ejection fraction, as well as assessing its role in fighting high blood pressure.

The company has a second experimental drug for acute heart failure called RLX030 in final Phase III trials, for which clinical trial results are expected later this year.

BHP upbeat despite commodity weakness

imayuiSYDNEY: Mining giant BHP Billiton said on Sunday it aimed to increase production and hike spending despite a 35 percent slump in yearly profit, citing “attractive opportunities” despite cooling in key market China.

The world’s biggest miner also reiterated its commitment to the huge Olympic Dam copper and uranium project delayed last week after it declared its first profit drop in three years saying it would one day be a “very major” mine.

BHP chief Marius Kloppers said the firm hoped to spend $22 billion on projects this year, up from $20 billion last year, playing down the decision to scrap the Olympic Dam expansion in favour of a cheaper option.

“The combination of high exchange rate, high cost and high energy costs which we’ve got in Australia at the moment is a pretty unique set of circumstances,” Kloppers told ABC television.

“If you can get any of those variables to change plus we can make some technological breakthroughs then we still think this is a wonderful ore body which is going to be a very major mine in due course.

“I would not be satisfied entirely if we didn’t manage to grow volumes by about 10 percent or so over each of the next two years,” Kloppers said.

Declaring a drop in annual profit to $15.42 billion amid plunging commodity prices, BHP warned Wednesday there would be no major project approvals over the next 12 months and the viability of more costly parts of its business was under review.

But Kloppers said “in reality what we are talking about is just slowing the rate of capex growth going forward”, as he hailed China’s prospects after Australia’s resources minister declared the commodities boom “over”.

“I must emphasise that we’re clearly going to be investing a great deal of money in the next 12 months,” he said.

“The rate of growth in China may have slowed down a bit, (but) China’s economy is very definitely still growing, and growing at the highest rate of the major economies in the world,” added Kloppers.

“We believe that while the absolute demand growth for products is going to be lower than we’ve seen in some recent years we still believe there are very attractive opportunities for our company and indeed for Australia.”

He said it would be a “couple of years” before the revamped Olympic Dam expansion went ahead, adding that BHP’s major focus was in the energy and copper sectors, seeing them as key earners along with iron ore and coal needed for steel production.

Looking ahead Kloppers said potash fertiliser would be a priority, with BHP hoping it “can become a substantial profit driver for the company in due course”.

BHP failed in a hostile takeover bid for the fertiliser group Potash Corporation in 2010 after the deal was knocked back by the Canadian government.

Copyright AFP (Agence France-Presse), 2012

‘Donors willing to finance Kalabagh Dam’

Govt asked to revive projec­t after ADB refuse­d funds for Bhasha Dam. The construction of Kalabagh Dam has been a longstanding dispute among provinces, which forced the government to abandon the project. PHOTO: CREATIVE COMMONS

ISLAMABAD: The Punjab Forum, emboldened by the refusal of international donors to finance Diamer-Bhasha Dam, has asked the government to think seriously about construction of another big dam called Kalabagh.

“We have already lost over $36 billion due to delay in construction of Kalabagh Dam. The government must now consider construction of the dam since both the Asian Development Bank (ADB) and World Bank have no objection to funding the project,” said Baig Raj, President of the Punjab Forum in a statement issued here on Friday.

However, the ADB had gone back on its commitment to fund Diamer-Bhasha Dam while the World Bank had already refused to provide money, he said.

A four-year delay in funding added $500 million per year to the $12 billion project and deprived the country of $8 billion in annual benefits at the rate of $2 billion per year, said Raj.

The construction of Kalabagh Dam has been a longstanding dispute among provinces, which forced the government to abandon the project.

“Opposition to Kalabagh is not based on technical grounds, rather it is a political issue being raised to destabilise the country,” Raj said.

Expressing sorrow over loss of life and property in current floods in Nowshera, he stressed that the only way to save the city in future was construction of Kalabagh Dam. He held the Awami National Party (ANP) responsible for the losses as it was one of the biggest opponents of the dam.

Raj was of the view that Khyber-Pakhtunkhwa and Sindh would not turn dry after the dam was constructed, rather these provinces would become barren in absence of this mega project.

“Bhasha Dam will not help irrigate agriculture land as no canal can be made in the hilly terrain while Kalabagh will irrigate seven million acres of land and produce 3,800 megawatts of electricity,” he said.

Published in The Express Tribune, August 25th, 2012.

Sony to end optical disc drive business: report

Saturday, 25 August 2012 15:15 Posted by Muhammad Iqbal

qwx4TOKYO: Sony Corp is to stop producing optical disc drives for PCs by next March, Asahi newspaper said on Saturday, part of a restructuring aimed at reviving the fortunes of the company that gave the world the Walkman.

Sony Optiarc Inc, based in Atsugi, south of Tokyo, will cease production of the drives, which use a device to read and write information, and make most of the employees in Atsugi and at a factory in Malaysia, totalling about 390 at least, redundant, Asahi said without quoting sources.

The unit, which was founded in 2006 as a joint venture with NEC Corp and became Sony’s 100 percent subsidiary two years later, has not fared well due to shrinking PC sales and fierce price competition with foreign rivals.

In April, Sony’s new president, Kazuo Hirai, outlined a revival plan that stakes Sony’s future on mobile devices such as the Xperia smartphone, gaming and digital imaging, while developing new businesses, including a medical unit.

Hirai also promised to cut 10,000 jobs six percent of its global workforce this business year and big cost reductions in the TV unit that has produced losses amounting to about $12 billion in the past decade.

Sony earlier this month slashed its forecast for operating profit in the year to March 2013 and lowered sales expectations for key products including its handheld PSP and PS Vita devices.

Shares of Sony have lost some 40 percent since it announced the revival plan, but hovered about 5 percent above a trough of 877 yen after it announced the disappointing forecast on Aug 2.

Scientists apply coating to extend fruits’ shelf life

Innova­tive edible coatin­g will reduce post-harves­t losses. Innovative edible coating will reduce post-harvest losses. PHOTO: FILE

FAISALABAD: 

Scientists from the National Institute of Food Science and Technology, University of Agriculture Faisalabad (UAF) have started applying the innovative edible coating technology under a joint project of Pakistan and US aimed at extending the shelf life of fruits.

The project’s Principal Investigator Dr Masood Sadiq Butt revealed this while briefing food scientists on the breakthrough.

The core objective of the project, funded by the Higher Education Commission, is to reduce post-harvest losses and improve nutritional attributes of fruits.

Butt elaborated that the process involved the development of edible coating materials and their application to fruit through dipping and spraying. “These coatings act as a barrier to weight loss due to evaporation of water and protect fruits from other environmental factors,” he said.

Research was being conducted in this regard on different kinds of fruits like apple, mango, apricot and strawberry by applying different coatings, he pointed out.

Most of the fruits are perishable in nature and are harmed by environmental factors. Different techniques are used to enhance their shelf life and the application of edible coatings is an efficient tool in this regard.

Butt expressed the hope that the increase in shelf life would pave the way for farmers and traders to export the fruits and earn revenue for the country.

Published in The Express Tribune, August 26th, 2012.