Tag Archives: policy

India central bank chief endorses advisors on policy rate cut

MUMBAI: India’s central bank governor Duvvuri Subbarao endorsed the unanimous recommendation of all external members of the bank to cut its policy interest rate last month the first cut in 9 months minutes of the quarterly meeting released on Saturday showed.

Four of the six members suggested that the Reserve Bank of India (RBI) should reduce the policy rate by 25 basis points in the third quarter policy review as global conditions were favourable and marginal decline in WPI inflation provided room for some monetary easing.

On January 29 India’s central bank lowered its key policy repo rate by 25 basis points (bps) to 7.75 percent to help support an economy set to post its slowest annual growth rate in a decade.

It also unexpectedly reduced the cash reserve ration (CRR), the share of deposits banks must keep with the central bank, by 25 bps to 4.00 percent, to infuse an additional 180 billion rupees into the banking system.

The committee consists of seven external members, apart from the governor and the deputy governors.

The panel’s role is purely advisory, with the governor having the final say in deciding rates.

Two of the members felt that a 25 basis points reduction in the repo rate alone might not induce banks to reduce their lending rates and advised a cut in the banks’ cash reserve ratio (CRR) of 25 basis points to nudge the lending rates down was in order.

This would also enable loan rates to reduce more than deposit rates.

One of the other two members felt that the Reserve Bank should make use of open market operations (OMOs) to manage liquidity and keep the CRR unchanged.

These two members recommended a sharper reduction in the repo rate by 50 basis points and use of OMOs to manage liquidity.

Copyright Reuters, 2013

Business backs Liberal freight policy


There is business support for the Tasmanian Opposition’s plan to solve international freight problems, but the State Government’s calling it a ‘splash and dash’ announcement.


The Liberals have promised to spend $33 million over three years to attract a new international shipping service.


Exporters have been struggling with high costs since the last operator quit Bell Bay two years ago.


The state’s main business lobby has welcomed the Liberals’ announcement.


Michael Bailey from the Chamber of Commerce and Industry says a solution is desperately needed.


“There wouldn’t be a business in Tasmania that wouldn’t be excited about this announcement as far as I could tell,’ he said.


The Infrastructure Minister, David O’Byrne, has criticised the Opposition’s proposal, saying calculations show it would only cater for about 30 per cent of international exports.


Mr O’Byrne says the Liberals have failed to say where the money would come from.


There are fears Tasmania’s recycling will soon be sent to landfill, if high freight costs aren’t dealt with.


Recycling materials collected from kerbsides is shipped to China and south east Asia, but the service has been losing money since Tasmania lost its international shipping service two years ago.


Craig Fraser from Veolia, which handles the waste, says international shipping costs have risen from $26 dollars a tonne to $67.


“So that’s a 41-dollar per tonne increase, so that’s pretty significant and it’s very difficult for us to maintain our business and look to grow our business when we’ve got these sort of extra costs,” he said.

Topics: sea-transport, rural, tas

First posted February 12, 2013 06:18:21

National energy policy push in Gove rescue bid


Chief Minister Terry Mills will travel to Europe next week to discuss the future of the Gove alumina refinery with executives of mining giant Rio Tinto.


Mr Mills has returned from Perth where he met with energy company representatives as part of his preparation for the trip.


He says he is aiming to achieve an agreement to provide gas to Rio Tinto’s Pacific Aluminium refinery without jeopardising the Northern Territory’s own domestic gas supply, sourced from Italian company Eni.


Eni pipes gas from the Blackfield field in the Bonaparte Basin of the Timor Sea, about 110 kilometres from the northern Australian Coast, to Wadeye, west of Darwin.


It is used by the Territory’s major utilities body, Power and Water Corporation, to produce electricity.


Most existing and now developing gas production in the Territory is pre-sold to overseas customers without provision for domestic needs.


In Western Australia, there is a requirement that at least 15 per cent of gas drawn must be reserved for domestic use.


Mr Mills says an aggregated gas supply must be found for the Territory.


“But I cannot and will not risk taking actions that result in upward pressure on Territory power prices,” he said.


Analysts say that Pacific Aluminium is losing about $30 million a month in operating the Gove refinery.


This is because the market price of alumina is down, and the refinery is powered by expensive diesel fuel.


Rio Tinto wants two switch to gas power, with the Territory helping to secure a gas supply and the Commonwealth underwriting the cost of a $900 million pipeline.


The Chief Minister says his talks in Perth revealed an emerging issue of international demands competing against domestic market requirements.


“A response to this must form the basis of our national energy policy, and I intend to have this matter remain on the COAG agenda,” he said.


“This is not just a Territory issue but an issue of national significance.”


Mr Mills will first travel to Canberra for talks before his departure for Europe.


He says finding a supply of gas for Gove is just part of his mission.


“We need to start thinking more broadly,” he said.


“It is not just about Gove; this is about linking up our pipelines in the Territory to the Cooper Basin (in WA) or to others.


“Once we set that framework, we’ve got the room to move to expand the domestic market and provide not only Territory security but national security.”


If the Gove refinery were to close, the nearby town of Nhulunbuy is expected to lose more than than half of its population of about 4,000 people.

Topics: government-and-politics, mining-industry, oil-and-gas, nt, darwin-0800

First posted February 01, 2013 12:06:08

Liberal MP urges Abbott to detail IR policy

Updated January 09, 2013 15:20:14

Tony Abbott is coming under internal pressure to outline a new industrial relations (IR) policy, including a crackdown on union power and changes to unfair dismissal laws.

Rising Liberal MP Josh Frydenberg, who is a former advisor to John Howard and Alexander Downer, has called on the Opposition Leader to put forward urgent changes to workplace laws to deal with union “militancy” and a slump in productivity.

“Now is the opportunity for the Coalition to go on the front foot and put forward proposals that make unfair dismissal laws less of a burden on small business,” Mr Frydenberg said in a newspaper opinion piece.

He also wants more individual flexibility arrangements in the Fair Work Act, and new curbs on union power.

“Standing still is not an option. In today’s challenging economic climate, industrial relations reform is more important than ever and the clock is ticking,” he said.

However a report released last year found Australia’s productivity problems were not as bad as widely thought.

Despite Mr Frydenberg’s push for Mr Abbott to put forward a new IR policy, the Opposition’s finance spokesman, Andrew Robb, said it would be “irresponsible” for the Coalition to release all its policies when an election is still so far off.

“Extra time allows us to review, refine and enhance our menu of options, which includes several hundred individual policy initiatives,” Mr Robb wrote in a newspaper opinion piece, adding the Coalition had a “comprehensive suite of policies” ready to go.

Mr Abbott has previously said the Coalition’s workplace relations policy would make individual flexibility arrangements “more workable”, but has sought to reassure voters any changes will not be ideologically driven.

The Coalition has been guarded when questioned about its workplace relations policy, wary of the strong anti-WorkChoices campaign run by Labor and the unions at the 2007 and 2010 elections.

It has not yet released the details of its full policy, instead saying it will be made public before the election later this year.

Acting Workplace Relations Minister Kate Ellis says Mr Frydenberg’s comments show the Coalition’s policy will be based on “job cuts, slashing entitlements, and around making workers easier to sack”.

“We don’t have to just look back to the Howard government for evidence of this. We can look to the current state Liberal governments,” Ms Ellis told ABC News.

“We know that Tony Abbott is under pressure to attack basic workplace entitlements – entitlements like penalty rates, like the right to a family-friendly roster – (and) to remove unfair dismissal protections.

“And we’ve seen that not just in this (opinion) piece today, but we’ve seen it previously from members of Tony Abbott’s own team – like Jamie Briggs, like Arthur Sinodinos – who have all been promoted.”

Several Coalition MPs, including Mr Briggs – a shadow parliamentary secretary – have previously expressed a need to wind back some of Labor’s workplace relations policies, although they are quick to accept that some aspects of the WorkChoices laws went too far.

Mr Frydenberg has this morning declined requests for an interview.

Mr Downer has praised Mr Frydenberg for showing “real leadership” by raising problems with the current industrial relations framework, and the need to improve Australia’s productivity levels.

“Industrial relations reforms are a critical part of doing that, and he’s highlighted that point,” Mr Downer told ABC radio’s The World Today program.

“I think it’s important that Liberals come out and show leadership on this issue.”

Mr Downer says individual workplace contracts should not be ruled out as an option, so long as there is a proper no disadvantage test in place.

A number of business groups are pushing the Coalition to put forward changes to increase workplace flexibility and increase flexibility, arguing the current Fair Work laws are “stifling business investment”.

“Many of the major industrial disputes over the past few years have centred around union claims which would not have been permitted under the previous laws,” the Australian Industry Group said in a response to the Government’s review of the Fair Work Act last year.

Topics: industrial-relations, business-economics-and-finance, liberals, government-and-politics, australia

First posted January 09, 2013 12:00:07

ACT public transport policy ‘a failure’


A report has described Canberra’s public transport policy as a spectacular failure.


The national study by a Royal Melbourne Institute of Technology (RMIT) academic found Canberra was no where near meeting any of its sustainable transport targets.


It says the national capital has experienced a sustained decline in public transport and a steady rise in car driving over most of the past two decades.


Canberra was the only capital city where public transport share actually fell in the five years to 2011.


The report blames poor policies which have focussed on road construction while reversing successful public transport measures in place until the late 1980s.


Study author Paul Mees says very little has been done in the ACT to encourage people away from using cars.


“Most of the investment has gone into building new motorways like the Gungahlin Drive extension and the widening of Parkes Way,” Dr Mees said.


“And basically nothing really meaningful has been done to improve public transport.


“There have been a few gimmicks like bikes on buses, and things like that.


“But the bottom line in terms of service frequency, connections, speed and directness of service… then that’s generally got worse in the last few years.”


The study says Sydney is the nation’s sustainable transport capital, with the highest rates of public transport.


The ACT Government has announced a fare increase for ACTION bus services from next month to cover increasing costs and network improvements.


The Minister overseeing public transport services Shane Rattenbury concedes the territory was heading in the wrong direction in its policy.


Mr Rattenbury says the study highlights an over-reliance on road building.


“Certainly we need to get the balance right and put more effort into public transport, Mr Rattenbury said.


“That’s why I’m very pleased that as a result of the Greens-Labor parliamentary agreement we are moving towards developing light rail in the ACT.


“I think that can provide the paradigm shift to really shake up public transport and improve it in the ACT.”

Topics: road-transport, states-and-territories, canberra-2600, act

First posted January 15, 2013 08:33:39

New LPG policy to be unveiled next month: Dr Asim

LAHORE: Lahore High Court Chief Justice Umar Ata Bandial remarked that all the government’s decisions should be in accordance with the law, adding that the latter is responsible to abide by the constitution and the law.

A bench of LHC was hearing the case against the imposition of tax on LPG and petroleum products.

Petroleum Advisor Dr Asim Hussain offered an unconditional apology in his statement over the stay order which was accepted by the court.

Dr Asim told the court that the government has withdrawn the notification regarding imposition of tax on LPG, adding that the new LPG policy will be unveiled next month.

Talking to media following the hearing, the petroleum advisor said that steps should have to be taken in order to counter energy crisis.

Policy decision on used cars to be made this week

KARACHI: The National Tariff Commission has invited auto makers and related companies with financial and technical details to deliberate upon the most critical issue faced by the industry these days, on November 22 in Islamabad. It is expected that a big decision will take place regarding used car policy.

Auto vendors and car manufacturers have praised the National Tariff Commission (NTC) for calling a meeting to evaluate the duty structure of new and used cars besides the duty protection provided to the local car industry. The import of used cars has been termed “dumping” and has devastated the sales of local manufacturers.

Pakistan Automotive Manufacturers Association (PAMA) and Pakistan Association of Automotive Parts Accessories Manufacturers (PAAPAM) officials point out that the mandate of the NTC is to protect the interests of the local industry against the unscrupulous trading mafia. They asked the NTC to go through the tariff structure of India and Thailand for used cars, which would force it to advise the government to do away with the used car import regime. Besides charging normal duties, the other conditions of used car imports in these countries are so stringent that they discourage commercial imports. The industry expects the NTC to act according to its mandate and advise the government to do away with used car policy, they said.

“If used car imports are not banned, as per practice in India or Thailand, the local car industry will shut down and there will be massive layoffs,” officials said. “In the election year, this will create more problems and social unrest,” they added.

Iqbal Shah, vice president Pakistan Automotive Manufacturers’ Dealers Association (PAMADA) said that, across the world, the prices of commodities were compared with similar products but in Pakistan, the trader lobby had misled the government and consumers claiming that used cars were cheaper. A used car of any specification was still far more expensive, even after enjoying close to 60 percent depreciation and being given duty lower than global price, they said.

“The arbitrary fixation of used cars is causing billions of rupees in loss to the exchequer. The foreign exchange spent on CKD of a locally produced 1300 cc car is approximately Rs0.5 million, which means that the almost double foreign exchange is spent on import of five-years-old junk at the cost of local industry and local jobs,” claimed a PAAPAM official.

According to Nadeem Malik of Procon Engineering, the NTC should have acted upon much earlier. “This is a matter of the industry’s survival, which should not be made a public appeasing exercise,” he said, adding that nowhere in the region were concessions provided on used car imports except in Pakistan. By adopting such a liberal policy, the government was giving undue tax rebates to the importer mafia at the cost of local industry, he said.

A locally manufactured brand new Suzuki Mehran is the cheapest car available in the market whereas a five-year-old used small car is 30 percent to 40 percent more expensive.

Chairman All Pakistan Motor Dealers Association (APMDA), H.M Shahzad, blamed local manufacturers for failing to promote indigenisation of vehicles and their components. Indigenisation of production was based on two different types of deletion plans: the Industry Specific Deletion Plan (ISDP) and Product Specific Deletion Plan, he said. The assemblers were supposed to set annual targets for each assembled vehicle under these deletion plans, he said. During this period extraordinary incentives were given to the assemblers; the duties on import of parts were substantially reduced and import duties on CBUs were enhanced, however they failed to achieve the targets, said Shahzad.

“Suzuki has now been in business for 30 years while Toyota and Honda have been in business for 20 years but the low-cost car is still a dream,” said Shahzad. During all this time OEMs continued to enjoy the facilities provided by the government at the expense of the consumer. Only Pak Suzuki had carried out tangible deletion in its 800 cc models, the other two assemblers had no noticeable achievement to speak of. No progress had been made in terms of localisation of engine, transmission or electrical components/assemblies.

View the original article here

Govt considering uniform drug pricing policy


LAHORE: Arshad Farooq Faheem, chief executive officer of the Drug Regulatory Authority of Pakistan (DRAP), has said that the government is considering to introduce a uniform drug pricing policy in the country to bring at par the prices of same products being manufactured by different companies, while addressing pharmaceutical manufacturers here at the Lahore Chamber of Commerce and Industry (LCCI) on Thursday.


“All the contract manufacturers in the pharmaceutical industry have been given legal cover besides extending their validity till the announcement of the new policy due on December 31, 2012,” he said.


He added that as many as 14,000 registration applications are pending with the authority and the process has be expedited to resolve the issues of product registration and renewal of licenses of pharmaceutical manufacturers.


The CEO said that the new fee structure for fresh registration (for local manufacturing), import license and contract manufacturing (local) and contract manufacturing for export purpose has been put off till there’s a mutual understanding between the stakeholders and DRAP. He assured the pharmaceutical manufacturers of his full cooperation on all issues being faced by pharmaceutical industry. Speaking on the occasion, LCCI President Farooq Iftikhar invited the attention of the CEO of DRAP towards the shortage of medicines and stressed the need for accelerating the process of registration of new medicines. Furthermore, he also urged the DRAP CEO to take practical measures for removing the reservations of the pharmaceutical sector before granting most favoured nation status to India.


Pakistan Pharmaceutical Manufacturers Association (PPMA) Chairman Javaid Akhai said that in order to ensure swift disposal of pending registration applications, it is proposed that a committee be established to hold frequent meetings to discuss and approve the applications and registration letters of approved products to be issued immediately.


He added that it has been a longstanding demand of the local industry to devise and implement one price policy.


“The cost of production has registered a sharp increase adding to the financial woes of the pharma industry,” he said. “It is therefore requested that one price policy be formulated in close coordination with the Pakistan Pharmaceutical Manufacturers Association at the earliest.”

Google told to fix privacy policy

  CNIL’s president said Google might face legal action if it did not make the requested changes EU watchdogs have said Google must revise its privacy policy.


It follows the firm’s decision in March to consolidate 60 separate privacy policies into a single agreement.


The move allowed it to pool data from across its products, including use of its video site YouTube, social network Google+ and smartphone system Android – potentially helping it target adverts.


French data privacy regulator CNIL – which led the inquiry – said the US company had “months” to make changes.


Google has been told it should give clearer information about what data is being collected and for what purpose. It has also been told to give users more control over how the information is combined.


It has been warned that if it took no action, CNIL would “enter a phase of litigation”.


Google said it needed more time to provide a detailed response.


“We have received the report and are reviewing it now,” said Peter Fleischer, its global privacy counsel.

Continue reading the main story image of Rory Cellan-Jones Rory Cellan-Jones Technology correspondent

Google had a lot riding on the decision from the EU data protection watchdogs.


The revised privacy policy, which came into force on 1 March, gives its advertisers access to a much richer pool of data from users across its many services.


Now CNIL has issued a critical report on the policy, and called for changes, with a warning that there could be litigation if Google does not respond.


But the search giant has gone into spin mode, pointing out that that its policy has not been ruled illegal and it hasn’t been asked to roll it back.


A spokesman was also eager to point out that Microsoft had unveiled a similar privacy code this week.


But Google – like Microsoft before it – is now firmly in the sights of the world’s regulators, with an EU competition ruling the next hurdle to clear.


The search firm insists that everything it does is in the interest of its users – its problem is that the world is no longer quite so inclined to see it as a big friendly giant.

“Our new privacy policy demonstrates our long-standing commitment to protecting our users’ information and creating great products. We are confident that our privacy notices respect European law.”


Although Google has not been directly accused of acting illegally, it has been accused of providing “incomplete and approximate” details raising “deep concerns about data protection and the respect of the European law”.

French investigation

CNIL carried out the investigation into Google on behalf of the 27 members of the European Union. Although Greece, Romania and Lithuania have yet to sign up to the findings, non-EU states Croatia and Liechtenstein have done so.


After studying Google’s revised policy in depth, the agency said it believed Google had failed to place any limit on the “scope of collection and the potential uses of the personal data”, meaning it might be in breach of several of the bloc’s data protection principles.


Specifically, CNIL said it was unhappy that users were unable to determine or control what kinds of data were being processed and for what use.


It noted that the revised privacy policy did not distinguish between search engine queries, typed-in credit card numbers or telephone communications.


Furthermore it highlighted the wide range of potential uses Google might have for the data including product development, security, advertising and academic research.


It said that EU data protection laws place limits on such activities and proposed the following changes:

Google must “reinforce users’ consent”. It suggests this could be done by allowing its members to choose under what circumstances data about them was combined by asking them to click on dedicated buttons.The firm should offer a centralised opt-out tool and allow users to decide which of Google’s services provided data about them.Google should adapt its own tools so that it could limit data use to authorised purposes. For example, it should be able to use a person’s collated data to improve security efforts but not to target advertising.Auke Haagsma, from Microsoft-funded lobby group Icomp on the Google decision


CNIL’s president Isabelle Falque-Pierrotin said the company had “three or four months” to make the revisions, otherwise “authorities in several countries can take action against Google”.

‘Important step’

UK-based privacy campaign group Big Brother Watch welcomed the news.


“It’s absolutely right that European regulators focus on ensuring people know what data is being collected and how it is being used,” said the organisation’s director, Nick Pickles.


“Unless people are aware just how much of their behaviour is being monitored and recorded it is impossible to make an informed choice about using services.


“This ruling is an important step to putting consumers in control of their personal information and ensuring that companies like Google are not able to easily disregard people’s privacy in pursuit of more information and greater profits.”


The news coincides with Google’s test of a new unified search tool that works across several of its products.


Users involved in the trial are able to check through the contents of their Gmail, Google Calendar and Drive cloud storage services through the main search tool on the site’s Google.com homepage.

Google Drive screenshot Participants in a trial can do a unified search of Google’s Drive file storage service and other services

The pilot is being limited to participants in the US at this time.


Google still faces the results of a separate investigation by the EU into whether it has abused its position as the most popular internet search tool by directing users to its own services by placing them high in its results.


News site Search Engine Land has also reported that the US Federal Trade Commission (FTC) is “strongly considering” its own investigation into whether Google and others have complied with guidelines for the disclosure of information about how paid advertisements appear in search results and whether the rules should be updated.

Ministers focus on energy policy

 Last week Npower and British Gas announced that they would increase UK gas and electricity prices Senior members of the cabinet will meet later to formulate a policy for dealing with the UK’s future energy demands.


David Cameron and Nick Clegg will be discussing ways to keep costs down with the chancellor, chief secretary to the Treasury and energy secretary.


The decisions will help frame the new Energy Bill expected within weeks.


Chancellor George Osborne wants a new wave of gas-fired power stations and reductions in subsidies to renewable energy sources, but Lib Dems disagree.


Mr Osborne’s coalition partners are happy to see more gas power in the short term but insist that the UK should continue to support renewables, such as wind power, to ensure that people are insulated against possible future rises in gas prices.


And they argue that the UK should not waver from its legally binding climate change targets.


The chancellor says his approach would help to keep bills down.

Continue reading the main story
Households facing rising energy bills this winter aren’t going to be helped by more inquiries or investigations”

End Quote Department of Energy and Climate Change The talks come just over a week after energy regulator Ofgem warned that the UK could face blackouts within a few years, unless steps were taken to secure future energy supply.


BBC environment analyst Roger Harrabin said: “The frustrated power firms, who are expected to provide billions of pounds of energy infrastructure, are pleading for a policy to be made – and kept for the long term.”


Meanwhile, consumer body Which? has said the prime minister should launch an urgent, independent review into the rising cost of household energy bills.


Last week Npower and British Gas both announced that they were increasing gas and electricity prices in the UK.


The firms both blamed the government’s policies as well as wholesale prices.


SSE – which trades as Scottish Hydro, Swalec and Southern Electric – also said it would raise its prices.

‘Top concerns’

In a letter to Mr Cameron after the price hikes, Which? executive director Richard Lloyd said the energy market was “broken”.


He said a review was needed to look at rising prices and whether competition between suppliers could be made to work more effectively to help consumers.


Mr Lloyd said that with the average bill up 13% since a government energy summit a year ago, “it is no wonder consumers tell us that energy prices are one of their top financial concerns”.


Shadow energy secretary Caroline Flint said Which? was right to say that Britain’s energy market was “not working in the public interest”.


She called for “a complete overhaul of our energy market”.


But a spokesman for the Department of Energy and Climate Change said: “Households facing rising energy bills this winter aren’t going to be helped by more inquiries or investigations that could take years to complete and implement.


“We know what the problems are, we want to get on with tackling them now. We’re focusing on action, not more words.”


The spokesman added that reforms by the government and Ofgem, including electricity market reform through the forthcoming Energy Bill and Ofgem’s ongoing retail market review, offer “the quickest way to boost consumer confidence in the energy market”.

Scottish Power SSE British Gas Npower E.On EDF

World food day: Food ministry directed to urgently frame policy

Presid­ent Zardar­i said agricu­lture in Pakist­an is beset with many challe­nges.  “We need to minimise post-harvest losses and search for new markets so that food is not wasted and the growers are benefitted,” says President Zardari. PHOTO: AFP/FILE

ISLAMABAD: 

President Asif Ali Zardari called upon the Ministry of National Food Security and Research to urgently chalk out a comprehensive national food security policy to further promote and develop the agricultural sector and to create environment for the facilitation of the farmers and their associations.


In his message on the occasion of World Food Day, he said, “I am confident that we will rise to the challenges of food security not only in Pakistan but also in other food deficient countries in the region so as to achieve the goal of food security
for all.”


He said agriculture in Pakistan is beset with many challenges.


“We need to minimise post-harvest losses, increase value addition and search for new markets so that food is not wasted and the growers are benefitted,” he said.


Published in The Express Tribune, October 16th, 2012.

Exploring other options: Govt urged to announce alternative energy policy

Speake­rs say househ­old demand should be shifte­d to renewa­ble energy.  Speakers say household demand should be shifted to renewable energy. ILLUSTRATION: JAMAL KHURSHID

ISLAMABAD: 

Speakers at a conference on Alternative and Renewable Energy (ARE) have stressed that the government announce a new power generation policy focusing on alternative energy to ease the burden of the household sector on the national grid in the coming years.


“The government should shift 60% of the household sector power load to alternative energy in the next couple of years. Even if a 40% shift is achieved, the demand for about 4,000 megawatts (MW) of electricity could be eased on the national grid,” said speakers and participants in the conference which concluded on October 15.


The conference was titled “Towards an Energy Secure Pakistan” and held by the Renewable Energy Association of Pakistan (REAP), the Tawanai program of the Institute of Policy Studies (IPS), and the Alternative Energy Development Board (AEDB). During the conference, several recommendations with regard to achieving energy security were made for the government, financial institutions, business and industry, as well as the common man.


Speakers and participants strongly recommended a new policy with an emphasis on power generation through energy technologies which use renewable sources of energy such as wind, solar, mini hydel, biomass and geo-thermal energy. They also demanded passage of a law for distributed generation and use of ARE systems for lightening up public places, offices, hospitals, schools, etc; and promotion of energy conservation and efficiency through the use of ARE.


They also supported proposals calling for the promotion of a manufacturing base in Pakistan for ARE technologies, the standardisation of ARE technologies, certification of products to discourage substandard equipment, and financial incentives for the promotion of ARE.


Power generation through mini- and micro-hydel systems on canals was also strongly recommended, as such projects can be installed in large numbers across the country at various seasonal and regular canals in Punjab and Khyber-Pakhtunkhwa, and on streams and rivers in Gilgit-Baltistan and Azad Jammu and Kashmir, to provide power to surrounding areas and villages in off/on grid configurations.


Chief guest lieutenant general (retired) Tariq Majeed said that the country was facing energy shortages and renewable energy would help overcome the crisis. “The private sector should be encouraged to make investments in the renewable energy sector,” he said, adding that investment by the private sector would also create jobs and overcome unemployment.


REAP President Asif Jah said that the masses should be made aware of the applications of renewable energy devices.“We can tackle the energy crisis in two years by using renewable energy appliances,” he said. “The government should approve a viable policy in this regard.” He said that the active involvement of the banking sector was essential in ensuring financing for the renewable energy sector, and that a one-window operation should be initiated to implement the plan.


Published in The Express Tribune, October 16th, 2012.

Fears exploration permits policy to create inequity

Posted October 10, 2012 11:26:53

The group representing mineral exploration businesses says a new Queensland Government policy will give unfair advantage to large mining companies.

The State Government plans to introduce a competitive cash bidding process for exploration permits on coal, petroleum and gas tenements.

Association of Mining and Exploration Companies (AMEC) spokesman Bernie Hogan says the changes will make the process less competitive.

“They have to prove already that they have the wherewithal, the funds, the technical expertise to explore those areas,” he said.

“All this process really does is ensure that the most prospective land will end up with those with more funds in the bank.”

He says the policy creates inequity.

“AMEC expects that this will further disadvantage the mid-tier miners because they just simply cannot compete with multinationals in a straight-out cash bid,” he said.

“It definitely hands the tenements to the larger end of the industry.”

Mr Hogan says he is also concerned the policy could be expanded to other commodities such as gold.

Topics: activism-and-lobbying, public-sector, mining-rural, mining-industry, mount-isa-4825, longreach-4730, mackay-4740, rockhampton-4700, toowoomba-4350

Fiscal policy should be growth friendly: IMF body


TOKYO: The world economy needs to balance austerity with growth if it is to recover fully from the global financial crisis, a key IMF committee said in Tokyo on Saturday.


“Fiscal policy should be appropriately calibrated to be as growth-friendly as possible,” the International Monetary and Financial Committee said in a communiqué.


The statement came after days of back and forth between those — led by Germany — urging no let-up from belt-tightening and those arguing for a loosening of the grip of austerity.


International Monetary Fund Managing Director Christine Lagarde said on Thursday she was happy for Greece — struggling under the weight of cuts demanded by international creditors — to have two more years to meet its deficit-reduction targets.


But the following day, Germany’s finance minister Wolfgang Schaeuble said there was “no alternative” to cutting bloated national balance sheets.


Speaking to reporters, Lagarde played down growing speculation of a rift on the depth and timeline for painful austerity cuts in debt-addled Eurozone economies.


“There have been a lot of debates on fiscal adjustment. And what sometimes has been presented as disagreement is more about perception than reality,” she said.


“We all recognise credible, medium-term adjustments are necessary in all advanced economies… (but) the pace and type of measures obviously need to be calibrated on a country-by-country basis. It cannot be one-size-fits-all.”


She added that fiscal policy alone “is not sufficient”.


“On these points, there was complete agreement,” she said.


The International Monetary and Financial Committee, which issued Saturday’s communiqué, is a body made of up two dozen central bankers and government ministers who advise the IMF’s board on its work.


Days after the Fund warned the world’s economy was growing at a slower rate than previously thought, the committee said there remained “substantial uncertainties and downside risks”.


“Key policy steps have been announced, but effective and timely implementation is critical to rebuild confidence,” it said.


“We need to act decisively to break negative feedback loops and restore the global economy to a path of strong, sustainable and balanced growth.


“Advanced economies should deliver the necessary structural reforms and implement credible fiscal plans. Emerging market economies should preserve or use policy flexibility as appropriate to facilitate a response to adverse shocks and support growth.”


The communiqué said monetary easing — like that practised by the US Federal Reserve and other central banks — had been helpful, but it was vital that “credible medium-term fiscal consolidation plans” were put in place.


“In the euro area, significant progress has been made. The ECB’s decision on Outright Monetary Transactions and the launch of the European Stability Mechanism are welcome. But further steps are necessary.


“We look forward to timely implementation of an effective banking and a stronger fiscal union to strengthen the monetary union’s resilience, and structural reforms to boost growth and employment at the national level.”


Asked about Eurozone powerhouse Germany’s reluctance to allow Spain access to the ESM, the bloc’s new 500-billion-euro war chest, Lagarde said it was a matter for European countries.


“We collectively acknowledged and praised actually both (Germany and Spain) and the European Central Bank for… completing the incorporation and capitalisation of the European Stability Mechanism.


“So the tools are there. but in terms of using them, clearly it’s up to them to decide when it is appropriate.”


Spain would like the ESM to be able to recapitalise its banks directly, so as to lessen the sovereign debt load, but Germany, the Netherlands and Finland have said this will not be possible until a cross-border mechanism for bank balance-sheet supervision is in order.


The communiqué said Washington had to resolve the looming problem of the so-called “fiscal cliff” — a collision of tax hikes and reduced public spending due to hit early next year.


Observers have warned this could knock the already-wobbly US recovery off track.


The committee said that Japan, the world’s third largest economy, which has struggled to refloat itself after a series of set-backs, including the quake-tsunami disasters last year, needed to secure funding for this year’s budget.


The Japanese government has warned it could soon face shutdown if a deadlocked parliament does not take its foot off the brake and allow it to borrow more money.

‘New trade policy should give fresh impetus to business’

Govt asked to pay attent­ion to domest­ic trade as well.  “The volume of business and trade has plunged and it has become difficult for traders to keep themselves afloat,” says FCCI President. ILLUSTRATION: JAMAL KHURSHID


FAISALABAD: Businessmen have suggested that the new trade policy should contain measures that can give a fresh impetus to trade and business in the country, at a time when a host of challenges are slowing down the growth of the industry.


Faisalabad Chamber of Commerce and Industry President Zahid Aslam, while talking to the media here on Wednesday, said the challenges and crisis confronting trade and business not only slowed down the pace of progress of the national economy but also caused unemployment and dissatisfaction among the workforce.


“The volume of business and trade has plunged and it has become difficult for traders to keep themselves afloat,” he said.


Aslam pointed out that the trade and business, which contributed substantially to economic improvement and productivity growth, were unable to keep sufficient stock due to uncertainty and lack of clear policies. This, he added, made it imperative that traders and businesses should be given priority and importance in the trade policy. “Impetus to domestic trade will automatically accelerate exports from the country.”


In the past, the domestic side of the trade policy had not been given due importance, leading to creation of a gap between internal and external trade, he said and stressed the need for a paradigm shift in formulation of the trade policy.


Published in The Express Tribune, October 11th, 2012.


View the original article here

Monetary policy: State Bank cuts benchmark interest rate to 10%

Move was widely antici­pated after better-than-expect­ed inflat­ion number­s for Septem­ber. Punjani noted that the bond market also appeared to have been anticipating the interest rate to go down to 10%. PHOTO: FILE

The discount rate is the interest rate that the State Bank of Pakistan charges commercial banks when they borrow money from its discount window to meet short-term liquidity needs. This interest rate is not directly linked to the interest rates that banks charge their borrowers, but it is very closely correlated with the Karachi Interbank Offer Rate (Kibor), which is used in most lending contracts as the benchmark interest rate.

The move is likely to have a negative impact on the profitability of the banks, which have already seen a steady decline in their net interest margin: the difference between the rate that they charge their borrowers and what they pay out as interest payments to their depositors.

In a statement issued to the press, the State Bank justified the cut by pointing to the slowing rate of inflation over the past several months. The consumer price index – the main measure of inflation in the economy – dropped below 9% for the first time in nearly six years in September, leading many analysts to predict that the central bank would continue with its recent spate of interest rate cuts.

Yet, even though the move had been anticipated for several days now, the actual cut nonetheless surprised many analysts who had been anticipating a 1% reduction in the benchmark interest rate, which would have taken the discount rate below the psychological 10% barrier. In the end, the State Bank appears to have exercised caution and cut the rate to exactly 10%, disappointing those who had been hoping for a single-digit benchmark rate.

Others, however, felt that the size of the rate cut was justified at the current level. “The Karachi Stock Exchange has rallied since the inflation announcement for September, which suggests that the market has priced in a 50 basis point [0.5%] cut in the discount rate,” said Furqan Punjani, research analyst at BMA Capital, in a note issued to clients on Wednesday. Punjani noted that the bond market also appeared to have been anticipating the interest rate to go down to 10%, with prices on government bonds rising to reflect a yield closer to that mark.

The discount rate is now at its lowest since the current Pakistan Peoples’ Party-led administration took office. The last time the rate was this low was in January 2008, right before the State Bank announced an increase to 10.5% at the end of that month. The last time the economy had single-digit interest rates – at least at the benchmark level – was in July 2007.

Published in The Express Tribune, October 6th, 2012.

Bank of Japan holds steady policy, warns on economy

TOKYO: The Bank of Japan on Friday held off fresh easing measures, opting not to build on last month’s boost to its asset-purchase scheme but warned the economy faced risks from a deeper global slowdown.

The BoJ said in a statement its policy board had voted unanimously to keep rates at between zero and 0.1 percent and left an 80 trillion yen ($1.02 trillion) asset purchase programme in place.

Last month, the BoJ unveiled plans to boost the fund by 10 trillion yen as pressure increased on the central bank to follow similar moves by its European and US counterparts.

However, it left the door open to further measures further down the line as it assesses the impact of its latest move on the stuttering economy.

“Regarding risks, there remains a high degree of uncertainty about the global economy, including the prospects for the European debt problem,” the BoJ said.

It was also concerned about, “the momentum toward recovery for the US economy, and the likelihood of emerging and commodity-exporting economies simultaneously achieving price stability and economic growth.”

Reiterating concerns over a slowdown at home, the BoJ said: “Exports and industrial production have been relatively weak as overseas economies have moved somewhat deeper into the deceleration phase.”

The statement said the bank “recognises that Japan’s economy faces the critical challenge of overcoming deflation”, adding that it “will proceed with monetary easing in a continuous manner”.

Japan’s new economy and fiscal policy minister Seiji Maehara, an advocate of more stimulus measures, attended Friday’s policy meeting, a move to seen as part of a government move to pressure the bank to take more action. Maehara, who also serves as a national strategy minister, was the first economy and fiscal policy minister to attend the meeting since Heizo Takenaka in 2003.

Ahead of the meeting, Maehara, who took office on Monday, said he wanted to attend the meeting “based on the government stance of calling for strong easing financial measures to end deflation”.

Maehara is eligible to attend BoJ meetings and express his opinions, but has no right to vote on monetary decisions by the independent central bank.

Friday’s move comes after closely-watched quarterly BoJ Tankan survey released Monday found sentiment among large manufacturers fell to “minus three” in September from “minus one” in June.

And there were warnings things could get worse, with economists saying any possible impact from Japan’s territorial dispute with China was not fully reflected in the survey, as a majority of companies had given answers well ahead of the September 28 deadline.

Japanese businesses have taken a hit from a flare-up between Tokyo and Beijing over the ownership of islands in the East China Sea.

Japan’s nationalisation in September of three islands in the chain, called Senkaku in Japan and Diaoyu in China, triggered anti-Japan rallies across China.

Major Japanese companies were forced to close factories temporarily and reports have emerged of demand for Japanese goods being hit.

Analysts said the BoJ’s inaction Friday had been expected.

“Hopes for more easing on the heels of the prior BoJ move were slim at best,” said Yutaka Miura, senior technical analyst at Mizuho Securities.

“But stocks nevertheless reacted to the renewed rise in the yen, which, while not dramatic, was enough to push the major indexes into the red,” Miura told Dow Jones Newswires.

The Nikkei index, which initially fell in response to the announcement, was up 0.35 percent in the afternoon while the yen bought 78.36 yen, compared with 78.45 yen in morning trade.

Mixed hopes regarding upcoming monetary policy

LAHORE: While businessmen are expecting a further reduction in policy rates by the State Bank of Pakistan (SBP) on October 5, economists think that the central bank went too far in its last monetary policy and should maintain current rates.

Both, the businessmen and the economists, agree that Pakistan is facing cost push inflation. However, the former believe that high interest rates stifle growth without addressing inflation while the later caution that any decrease in interest rates would trigger hyper and uncontrollable inflation in the long run.

Group leader of All Pakistan Textile Mills Association (Aptma) Gohar Ejaz said that this point has been debated many times with the economists.

He said it was after several presentations made by Aptma to the economic team at the presidency, that the interest rates were cut by two percent in the last monetary policy.

He said the critics should appreciate that the inflation has come down since then.

Ejaz said even the increase in petroleum rates have had no impact on inflation. He predicted that the load of non-performing loans would reduce when the results of the last quarter are published by the SBP.

He said that interest rates in Pakistan should be in line with the rates prevailing in the other economies of the region. “High bank mark-up is the largest cost burden on the manufacturing sector,” he said, adding that it is making the domestic industries uncompetitive both in the domestic and foreign markets.

He said the government should immediately privatise all loss making public sector enterprises to ease pressure of cost push inflation.

Senior economist Naveed Anwar Khan said businessmen view monetary policy that was followed by the SBP as ineffective in the face of supply side inflation He said the SBP, in its last monetary policy, had succumbed to the pressure from vested interests. “Historical evidence shows that the loose monetary policy during cost push inflations in the past has backfired,” he added.

Khan cited the example of first oil shock in the early 1970s when the central bank took an expansionary stance to accommodate the growth slowdown. He said that cost push inflation accelerated even on low interest rates and the growth further slowed down.

Former Senior Vice President of Allied Bank Muhammad Ashraf said the central bank had learnt a lesson from their experience in the 1970s, which provides a strong foundation for monetary practice in current times.

He agreed that a tight policy stance may not directly address supply-side pressures. However, he said tight monetary stance acts as a barrier to a spill over from cost push inflation to more generalised and entrenched set of inflationary pressures.

“Cost push inflation tends to spill over through its impact on expectations,” he said, adding that it could go out of control if the central bank showed leniency in its policy stance.

President of Lahore Chamber of Commerce and Industry Farooq Iftikhar said the oil shock in the 1970s was an extraordinary measure which had puzzled the central bank at that time.

However their response to the shock shows that the central bankers were convinced that the solution to cost push or supply side inflation lies in loose monetary policy.

He said the current cost push inflation in Pakistan is because of other factors that are likely to remain for some times.

He said the question that the SBP is faced with at the moment is whether Pakistan should compromise on the growth and go into oblivion or provide the industry with a breathing space by lowering interest rates.

Upbeat on dovish monetary policy, bulls rule KSE

KARACHI: The main capital market closed higher on Thursday as investors awaited tomorrow’s monetary policy announcement.


The Karachi Stock Exchange (KSE) benchmark 100-share index ended 0.49 percent, or 76.75 points, higher at 15,788.96 on total volume of 137.58 million shares.


“The local market posted a new record high as optimism increased that tomorrow’s monetary policy announcement will cut rates,” said a dealer.


“Leveraged companies and dividend yielding stocks remained in the limelight.”


The central bank is expected to announce a monetary policy decision on Friday.


Pakistan’s consumer price index (CPI) rose 8.79 percent in September from a year earlier, the Pakistan Bureau of Statistics said on Monday.


The year-on-year rate in August was 9.1 percent. On a month-on-month basis, the CPI increased by 0.79 percent from August, according to the bureau. (Reuters)

Policy on cards to let market forces decide agri prices

Presen­t mechan­ism benefi­tting the big player­s, small grower­s stay depriv­ed. “Government was ensuring availability of agri-inputs before starting of upcoming sowing seasons particularly wheat crop in the country,” says an official of API. PHOTO: FILE/REUTERS

ISLAMABAD: A policy is on the cards for minimising government’s intervention and role to determine the prices of agricultural commodities in the country.

“The policy is focusing to let market forces decide the prices of all agriculture produces and eliminating the role of government institutions for price fixation,” an official of Agriculture Policy Institute (API) told APP. He said that the aim of the policy was to protect and safeguard the rights of all stakeholders including growers, buyers and consumers in the country.

It was observed that the support price mechanism was largely benefitting large landholders and large scale producers whereas small scale farmers were deprived of the support price. The policy is being formulated to pay proper attention to small landholders who consist 90% of the total agricultural land in the country but they were not getting prices for their produce due to middlemen, he added.

He said that the other objective of the policy was to provide a platform for the small growers to sell their produces on rational prices in the open market. Besides, he said that the prices of inputs like fertilisers, pesticides, seeds and labour cost also increased which inflated the prices of agricultural commodities.

He said that adulteration in fertilisers and pesticides was another cause harming the growers by reducing the per acre output, adding that the federal government directed the provinces to keep proper check and deal with iron hands with adulators. He said that government was ensuring availability of agri-inputs before the starting of upcoming sowing seasons particularly the wheat crop in the country.

Published in The Express Tribune, October 2nd, 2012.

ECC still undecided on policy for new entrants in motorcycle industry

Discus­sion contin­ued for four hours, but conclu­ded withou­t a final decisi­on. Yamaha wants to invest $150 million in a plant that will manufacture motorcycles of 100cc engine capacity and above. PHOTO: FILE

ISLAMABAD: The Economic Coordination Committee (ECC) failed to take a final decision regarding incentives for new entrants in the motorcycle industry on Tuesday, after the Ministry of Industries strongly opposed a plan proposed by the Ministry of Commerce. The meeting was deliberating the terms on which to allow reentry of Japanese bike maker Yamaha in the Pakistani market, which critics say will come at the cost of local manufacturers. Finance Minister Dr Abdul Hafeez Sheikh had presided over the meeting.

Sources told The Express Tribune that the ECC meeting discussed only one agenda on Tuesday – that regarding new entrants in the motorcycle industry. The discussion continued for four hours, but concluded without a final decision.

During the meeting, the Ministry of Commerce tabled a new entrant policy for the motorcycle industry, complete with duty and tax cuts. It was to be applied to motorcycles of 100cc engine capacity and above, which had been made using the latest technology.

The commerce ministry had proposed a reduction in tariff for new entrants on the import of Completely Built Units (CBU) from 65% to 35%. On the other hand, local industry had demanded that the tariff be reduced only to 50%, in order to protect it.

Yamaha wants to invest $150 million in a plant that will manufacture motorcycles of 100cc engine capacity and above. The Japanese firm had left the Pakistani market some time ago, but now wishes for a reentry.

Countering the Ministry of Commerce’s proposal, the Ministry of Industries told the ECC that 86 local manufacturers operating in the country would be forced to wind up their businesses if new entrants were allowed with the proposed reduction in tariff.

The Ministry of Industries had pleaded to the ECC that Yamaha should not be allowed incentives that come at the cost of local manufactures, which currently produce 1.6 million motorcycles per year. These manufactures had made heavy investments in manufacturing, and Pakistanis would be forced to rely on imports if bike makers were forced to wind up operations, officials had said. “We need to give some protection to local manufacturers,” they concluded.

“The Economic Coordination Committee (ECC) has agreed in principle to gradually reduce the tariff for new entrants so that existing local manufacturers will not be hurt,” sources said; adding that a majority of federal ministers had supported the Ministry of Industries’ stance.

Agenda for Wednesday

The ECC will meet again on Wednesday (today) to discuss the Yamaha issue along with other items, including: the import of LNG, indemnity for hydropower projects in Azad Jammu and Kashmir, and the renewal of Rs2 billion guarantee for Pakistan Steel Mills.

The ECC will consider approving government guarantees for the building of hydropower projects in Azad Jammu and Kashmir (AJK), in order to meet a key demand of foreign investors keen to invest in the state.

Foreign firms had told the Ministry of Water and Power that international lenders are not willing to provide loans for hydropower projects in AJK because of the state’s legal status. They had sought government guarantees to win loans and undertake the projects.

The issue of guarantees had first emerged after South Korea-based Star Hydropower Limited sought guarantees from the Government of Pakistan for investing in the 147 megawatt Patrind Hydropower Project, which is to be built on the boundary of Abbottabad and Muzaffarabad (AJK). The firm will complete the project in three-and-a-half years, at an estimated cost of $400 million.

The ECC will also consider a new proposal for the import of one billion cubic feet per day (bcfd) of LNG. The Ministry of Petroleum and Natural Resources has proposed the LNG import project be implemented in three phases. In the first two phases, 400 million cubic feet of LNG per day (mmcfd) will be imported in the first round, and the same quantity will be imported again in the second round. In addition to these, 200 mmcfd of LNG will be imported on a fast-track basis from international sources through direct negotiations, competitive bidding or spot purchases.

The ECC will also discuss a summary sent by the Production Division, seeking the renewal of a Rs2 billion government guarantee for the financially-troubled Pakistan Steel Mills. It will also decide whether to release latex foam imported from India by Shafi Lifestyle Limited, Lahore.

Published in The Express Tribune, October 3rd, 2012.

Thai central bank chairman calls for scrapping of rice policy as stocks mount

Wednesday, 03 October 2012 15:23 Posted by Shoaib-ur-Rehman Siddiqui

thailand-central-bank BANGKOK: The chairman of the Thai central bank urged the government to scrap a politically sensitive and hugely expensive scheme to subsidise rice farmers, saying it was a threat to stability in a country which has faced repeated unrest in recent years.

Traders said the intervention scheme, which helped Prime Minister Yingluck Shinawatra win power in 2011, jeopardised Thailand’s position as the world’s top rice exporter, warning that the government would eventually be forced to sell its mounting stockpiles of rice at a steep loss.

“The country will be doomed if the government proceeds with the rice-pledging scheme,” Bank of Thailand Chairman Virabongsa Ramangkura was quoted on Wednesday as telling the Nation daily, a day after the cabinet endorsed the scheme, with restrictions.

The scheme is estimated to cost as much as 3.5 percent of annual economic output.

It is also likely to continue hurting exports well into 2013, with the government forced to stockpile record amounts of rice in already overflowing warehouses.

Thailand is now stuck with 12 million tonnes, or around one third of the global rice trade, priced so far above what other countries sell the grain for that its exporters have been shut out of the global market.

Virabongsa, an economist parachuted into his job in June by Yingluck despite opposition from central bank officials, has in the past sided with the government.

“This government demonstrates stability. But if there’s anything to rock the stability, it’s this scheme,” he told the newspaper, adding that it would require huge deficit-financed budgets and would open the door to corruption.

Weekly Review: KSE-100 closes flat as monetary policy announcement draws closer

Bourse remain­ed mostly in red the entire week, clawin­g back up on Friday over positi­ve sector-specif­ic news.  Bourse remained mostly in red the entire week, clawing back up on Friday over positive sector-specific news.

KARACHI: 

The stock market closed flat for a second week running as investors took a more cautious approach in the build-up to the monetary policy announcement on October 5. The benchmark KSE-100 index closed lower by 8 points (0.1%) during the week ended September 27.


There were a couple of news flows, creating sector-specific activity in a relatively uneventful week and the bourse remained in the red for a majority of the week, before clawing its way back up on Friday, to close at similar levels as that of last week.


With the announcement right around the corner, investors are widely expecting a cut in interest rates, following three consecutive months of single-digit inflation. A survey conducted by KASB Securities revealed that approximately 80% of market participants were expecting a cut of 50-100 basis points.


That anticipation was affirmed by inflation numbers for August, which stood at 9.5%. However, it should be noted that fuel prices surged again and their lagging effect on inflation will only manifest in the coming months. The interest rate currently stands at 10.5%.


Investor participation dropped significantly during the week as well as volumes plummeted into double figures and stood at 95 million shares traded on average each day, down 27% over the previous week.


This, however, did not hamper foreign investment as foreigners were net buyers of equity worth $4.8 million during the week, following up on the $3.9 million net buying in the previous week. On the other hand, the rupee depreciated 0.4% vis-à-vis the US dollar as repayments of International Monetary Fund debts draw nearer.


In sector-specific news, there were good news for the fertiliser sector, as the government announced to use the gas infrastructure development cess (GIDC), earned on gas sales to fertiliser plants, to subsidise the cost of setting up transmission lines from various gas fields to the beleaguered fertiliser plants on the Sui Northern Gas Pipelines network.


The GIDC was implemented with the intention of setting up alternative sources for the fertiliser plants, and the government’s decision to actually use the proceeds for that purpose was viewed as a positive step.


Oil marketing companies (OMCs) also had something to look forward to, after the news that the government was planning to increase marketing margins for petrol and diesel by Rs1 and Rs1.5 in the light of the depreciating rupee. Significant activity was witnessed in all three major OMCs (Pakistan State Oil, Shell and Attock Petroleum) as a result.


The decline in average volumes was complemented by the decline in average daily values as it fell 38% to Rs2.77 billion traded per day. The market capitalisation of the KSE declined 0.3% to Rs3.89 trillion by the end of the week.


Winners


Abbot Laboratories


Abbott Laboratories (Pakistan) Limited engages in the manufacture, import, and marketing of pharmaceutical, nutritional, diagnostic, diabetes care, molecular, hospital, and consumer products.


Media Times Limited


Media Times Limited is engaged in printing and publishing daily English and Urdu newspapers namely, and also the production, promotion, advertisement, distribution and broadcasting of television programmes through satellite channels.


Indus Dyeing


Indus Dyeing and Manufacturing Company engages in the manufacture and sale of yarn in Pakistan. It offers cotton, melange, man-made fibre and core spun lycra, among other products, and exports primarily to the US, Japan, Hong Kong, Indonesia, Malaysia, and India.


Losers


Siemens Engineering


The company’s principal activity is manufacturing, installing and selling of electronic and electrical capital goods. It also executes projects under contracts. It operates in three segments; Energy, Industry and Healthcare.


Ibrahim Fibres


The principal business of Ibrahim Fibres Limited is the manufacture and sale of polyester staple fibre (PSF) and yarn. The polyester fibre division of the company produces a range of lustres and varieties. Its manufacturing units are located in Faisalabad. PTA Limited exports PTA to customers in both Asia and Europe.


Mari Gas


Mari Gas Company Limited principally engages in the drilling, exploration, production, and sale of hydrocarbons in Pakistan. It explores for natural gas, crude oil, condensate, and LPG.


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

Govt urged to reevaluate agriculture policy

KARACHI: Stakeholders have called upon the government to reevaluate its agriculture policy and declare agriculture as an industry, according to a statement on Saturday.

“Economic renaissance in Pakistan is totally dependent on agriculture growth,” said Ahmad Jawad, CEO of Harvest Tradings and Member Export of the Islamabad Chamber of Commerce and Industry (ICCI). “Pakistan urgently needs a sustainable agricultural policy to improve the balance of trade and put the economy back on the track,” he said.

Several farmers are being forced to sell their yield at lower rates and are being exploited by the middlemen every year, he said.

The agricultural loans limit should be increased up to Rs400,000 per acre against the existing limit of a few thousand rupees and Zarai Taraqiati Bank Limited (ZTBL), whose mandate is to serve the agriculture sector, must wake up and implement their vision practically, he said.

Jawad said that their crop production remained stagnant for several years, while the population kept on increasing. He said that small farmers are not benefiting from increased food prices, since the input costs increased tremendously.

National price monitoring committees should be strengthened at the district, provincial and national levels, while food banks should be set up at the provincial level and in food-insecure areas, he suggested.

Jawad said that 43 percent of Pakistan’s labour depends on agriculture and the yield gap in the four major crops of Pakistan was three times more than the best producers in the world such as China and Egypt.

Low yield is affecting the financial position of the 43 percent labour, leading to poverty in rural areas.

Approximately 25 percent of fruits and vegetables production is also lost due to the absence of required storages, he said.

The national policy on agriculture should aim at setting in place the enabling and supportive measures and viable environment to promote growth in the sector. The policies and strategies should be formulated keeping in mind the productivity and market-driven growth.

Structural changes in the economy have brought new issues and challenges in the agricultural sector.

Acute labour shortage, limited availability of suitable land and increasing cost of production arising from the energy crisis and competition for resources, as well as intense competition in the global market, resulting from trade liberalisation, he said.

Jawad also said that per acre yield could be improved through large-scale introduction of hybrid seeds and mechanised farming, high efficiently irrigation systems such as drip irrigation and reduction in wastage of crop through introduction of privately-owned storage facilities.

“The provincial governments should ensure more storage capacity through public-private partnership,” he suggested.

Govt should review policy on imported cars

KARACHI: Dozens of medium and small-sized auto parts makers have decided to slash jobs at their units subsequent to the Original Equipment Manufacturers (OEMs) cut down in production on the back of lower demand for locally assembled cars, report sources in the automobile industry.

They said that scores of vending units were not receiving regular orders for spare parts production whereas a number of them failed to get any business from OEMs since the start of FY13.

Further, sources report that the sales of local cars dropped steeply in July. In this scenario, OEMs announced their weekly and monthly non-production days to reduce their operational expenses, said an auto analyst.

Car sales have declined by more than 30 percent in July, registering the all time lowest production of OEMs, an analyst of the automobile sector said, adding that the decline spelled into reduced production of cars. The current situation of the local industry was impacted by the sizeable inflow of imported used cars in the previous financial year, which gave a tough time to the local automobile industry that has now cut back, said an auto vendor.

Between 2011 and 2012, more than 55,000 used cars were imported as against the 16,000 used cars that were imported between 2010 and 2011, showing an increase of 243 percent within a year.

The import of used cars not only took away from the share of the local automobile industry but also had an adverse impact on the local engineering industry. This in turn resulted in the closing down of medium and small-sized business units, said Mehsud Khan of Mehran Commercial.

“If the age of used cars was not relaxed to five years for imports, the vending industry could have witnessed a growth for sustainable basis coupled with its positive impacts on localisation and employment opportunities,” said Ather A Khan of A One Tech.

“The situation is worsening now with the increase in import of used cars, which is slowing down the localisation process and forcing the vending industry to slash production and cut jobs,” analysts added.

Khan further said that imported cars have a negative impact on the economy as there is less revenue collection. A used imported completely built unit only contributes half as much as a vehicle manufactured in the country by local OEMs and allied industries, which have over 3.5 million employees whose jobs are now at stake, he said.

Local industries are protected everywhere in the world so Pakistan should be no exception, analysts added. They said that the government should review its policy on imported cars in the greater interest of the local economy, protect the local automobile industry from complete devastation and save the jobs of thousands of workers, added Khan.

Nadeem Malik of Procon Engineering said that vendors are finding it extremely difficult to continue with the existing HR strength as the OEMs have reduced production and are closing down their plants for four to five days every month, therefore the orders for locally produced parts have also been reduced.

Malik said that the relaxation in age of importable used cars has played havoc and many downstream units of vendors have either been closed or have reduced employment amid shortfall in orders from OEMs.

Oil exploration: New petroleum policy promises incentives

OGDC’s major oil and gas discov­ery was Nashpa-2, expect­ed to produc­e 3,370 bpd and 11 mmcfd of gas. United Energy discovered Gharo-1 oil and gas field in July, 2012 which is producing 520 bpd of oil and 0.03 mmcfd of gas.

ISLAMABAD: 

Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain expressed confidence that the new Petroleum Policy, 2012 provided significant incentives for the exploration and production companies operating in Pakistan’s oil and gas sector, according to a press statement released on Tuesday. He further said that the companies should take advantage from the incentives offered by the policy.

To reduce the prevailing demand and supply gap, the energy and production companies were successful in discovering new hydrocarbon reserves.

United Energy discovered Gharo-1 oil and gas field in July, 2012 which is producing 520 barrels per day (bpd) of oil and 0.03 million cubic feet per day (mmcfd) of gas.

Oil and Gas Development Company’s major oil and gas discovery was Nashpa-2, expected to produce 3,370 bpd and 11 mmcfd of gas.

Published in The Express Tribune, September 19th, 2012.

View the original article here

Brent rises above $112 after Japan eases policy

SINGAPORE: Brent crude rose above $112 a barrel on Wednesday after Japan’s central bank announced it would boost asset purchases to stimulate the economy of the world’s third biggest oil consumer.


Japan’s move to ease monetary policy in the face of a slowing global economy helped oil prices erase early losses fuelled by concerns over demand and signs that top oil exporter Saudi Arabia was pumping more oil to bring down prices.


“This is bullish for the Japanese economy, the movement in oil prices is a reaction to the BOJ announcement,” said Ken Hasegawa, a commodity sales manager at Newedge Japan.


The Bank of Japan expanded its asset buying and loan programme, currently its primary monetary easing tool, by 10 trillion yen ($127 billion) to 80 trillion yen, with the rise meant for purchases of government bonds and treasury discount

bills.


Japan’s action follows similar bond-buying strategies announced earlier by the U.S. Federal Reserve and the European Central Bank, hoping the liquidity boost would help spur economic activity.


Brent November crude rose 55 cents to $112.58 a barrel by 0627 GMT, snapping two straight days of losses.


US October crude was up 62 cents at $95.91 a barrel. The contract expires on Thursday. U.S. November crude rose 58 cents to $96.20 a barrel.


Wednesday’s price gains, if sustained, will worry oil producers, particularly members of OPEC, who are working to boost supply to bring down prices.

Oil exploration: New petroleum policy promises incentives

OGDC’s major oil and gas discov­ery was Nashpa-2, expect­ed to produc­e 3,370 bpd and 11 mmcfd of gas. United Energy discovered Gharo-1 oil and gas field in July, 2012 which is producing 520 bpd of oil and 0.03 mmcfd of gas.

ISLAMABAD: 

Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain expressed confidence that the new Petroleum Policy, 2012 provided significant incentives for the exploration and production companies operating in Pakistan’s oil and gas sector, according to a press statement released on Tuesday. He further said that the companies should take advantage from the incentives offered by the policy.

To reduce the prevailing demand and supply gap, the energy and production companies were successful in discovering new hydrocarbon reserves.

United Energy discovered Gharo-1 oil and gas field in July, 2012 which is producing 520 barrels per day (bpd) of oil and 0.03 million cubic feet per day (mmcfd) of gas.

Oil and Gas Development Company’s major oil and gas discovery was Nashpa-2, expected to produce 3,370 bpd and 11 mmcfd of gas.

Published in The Express Tribune, September 19th, 2012.

Czech central bank signals looser policy using range of tools

Tuesday, 18 September 2012 11:49 Posted by Shoaib-ur-Rehman Siddiqui

central-bank-czechPRAGUE: Czech monetary policy will likely be looser than the central bank has forecast and the board has a range of policy tools at its disposal, bank Governor Miroslav Singer was quoted as saying on Tuesday.

The central bank cut its main interest rate to a record low 0.5 percent in June and forecast that interest rates could go lower.

Singer said in an interview with newspaper Mlada Fronta Dnes that, with rates so low, it is not possible to “avoid debate about what could potentially be next.”

“We are almost at the end with one tool, but we have a whole range of (tools),” he said.

Dollar takes breather ahead of BoJ policy decision

TOKYO: The dollar fell on profit-taking against the yen in Asia Tuesday after posting recent gains on expectations the Japanese central bank will announce a fresh set of monetary easing measures.


The greenback had been bought since the Federal Reserve announced Thursday a third round of bond-buying, or quantitative easing (QE3), that stoked speculation the Bank of Japan (BoJ) would follow suit at the end of a two-day meeting Wednesday.


The dollar eased to 78.63 yen in Tokyo afternoon trade from 78.70 yen late Monday in New York.


While a Fed plan to flood markets with dollars would usually have sent the greenback plunging, the unit was supported by expectations of BoJ loosening as well as warnings from Tokyo of market intervention to weaken the Japanese currency.


A poor reading on a key index of manufacturing in New York — the second straight monthly contraction — also kept a cloud over the dollar while Japanese exporters were active yen buyers after a three-day weekend in Japan.


The euro bought $1.3099 compared with $1.3114, while trading at 103.00 yen, from 103.22 yen.


“Hopes for more BoJ easing are high, especially among non-Japanese investors,” said Hiroshi Maeba, head of FX trading at UBS in Tokyo, told Dow Jones Newswires.


Heightened geopolitical risk stemming from anti-Japanese demonstrations in China over a disputed group of islands in the East China Sea could also weaken the yen, traders said.


“Some investors are already pricing in the next developments in the anti-Japanese rallies, and that could include political chaos,” said Yoichi Ito, chief analyst at Sumitomo Mitsui Trust Research Institute.


Against other Asia-Pacific currencies, the US dollar rose to 54.28 Indian rupees from 53.80 rupees on Monday, to 30.88 Thai baht from 30.80 baht, to Tw$29.33 from Tw$29.27, to 1,118.10 South Korea won from 1,114.52 won.


It also firmed to 41.71 Philippine pesos from 41.47 pesos and to Sg$1.2248 from Sg$1.2225.


The dollar eased to 9,492.00 Indonesian rupiah from 9,500.04 rupiah.


China’s yuan rose to 12.41 yen from 12.38 yen while the Australian dollar fell to $1.0464 from $1.0529. (AFP)

Choosing battles wisely, the gaps in PTI’s economic policy

Delvin­g into the detail­s of the plan, it is not surpri­sing to find a strong libera­l agenda at its core. The party must decide if it wants to be merely populist, or if it wishes to affect sustainable socio-economic change in the country. ILLUSTRATION: JAMAL KHURSHID

LONDON: 

The Pakistan Tehreek-i-Insaf (PTI’s) announcement of its economic plan is a welcome development and indicates increasing maturity of Pakistan’s political space. It has opened up discourse on a mainstream party’s thinking on issues that really matter to the common man.

Delving into the details of the plan, it is not surprising to find a strong liberal agenda at its core. There are, nevertheless, important gaps in the PTI’s policy from a centrist’s viewpoint. Its key weakness is the lack of attention paid by the PTI’s economic think-tank to actual policy details and their implications.

For instance, under the fiscal balance rule – which implies that the government budget deficit remains constant at the current level – every additional rupee spent has to be matched by incoming revenue. Even if we assume that the tax-to-GDP ratio can be increased to 15% of GDP from less than 10% currently, the extra government spending envisaged under PTI’s welfare program implies that the currently precarious fiscal situation will not improve at all.

This implies that clear spending priorities have to be laid out; ie, which part of government expenditures will be cut to finance the difference. This is an important point, in my view, which has been totally ignored. Indeed, this is even more relevant if the promise of reducing the fiscal deficit to 4.5%, from more than 8% currently, is to be achieved. Such a target, if set out over five years, implies a minimum drag of 1.5 percentage points of GDP per year, assuming a very low fiscal multiplier.

Moreover, the more populist measures, such as demolition of Prime Minister houses, etc, will do little to improve the fiscal situation. Indeed, a better idea would be to utilise them as hospitals or schools, thus avoiding destruction of useful capacity. On this front, usefulness of productive office space for government officials needs to be recognised as well, before promising a largely populist measure with no genuine economic benefit.

Another important point is the lack of details on the level and nature of taxes envisaged under the revenue generation plan. Bringing the agricultural sector in the tax loop is key, and so is reduction of indirect taxation and its replacement with direct sources to reduce economic distortions. However, studies around the world show that implementation of tax policies is often a tricky issue, and here the solutions proposed by PTI are very likely to run into institutional constraints.

In this area, further details on implementation, in order to show credible political willingness to carry out taxation reforms, are more important than reiterating the principle itself.

Expansion of the welfare state; with associated negative implications for the fiscal balance and, in turn, public sector debt; and rising investment spending are inherently inconsistent over the short-term. This will do little to reverse the crowding-out of the private sector, which is occurring in the economy currently.

Moreover, the deteriorating law and order situation and a very weak infrastructure base are clear constraints on the supply side, and will again need detailed policy actions rather than just headline comments. Specifically, there is a strong role for the private sector to play on the infrastructure side, and a very liberal agenda is a potential hindrance here. Looking at the experience of other emerging economies, a sharp rise in investment ratios has often come alongside liberalisation of the financial sector and enhanced credit provision; which, as we know now, can lead to asset bubbles with devastating consequences for future growth if not handled properly. The projected investment boom requires careful policy calibration, with a focus on efficient allocation of resources preferably via the capital markets – therefore, the plan looks overly optimistic and lacking details on plausible drivers.

More broadly, generating an investment boom in Pakistan would require significant strengthening of institutions and the deregulation of key sectors. However, looking at other aspects of the economic plan, these pro-investment conditions are, to a certain extent, internally inconsistent with PTI’s view on probing potentially confidence-sapping scandals and corruption cases. For instance, consider India’s struggle with the Coalgate scandal, which led to capital flight from the country.

Experiences of other countries show that political instability tends to be highly correlated with inferior economic outcomes. Here, the PTI will soon need to prioritise the battles it wants to pick once it comes to power. As such, PTI’s strong emphasis on accountability of legacy corruption appears irrelevant (and highly populist) when judged against the greater goal of securing a brighter economic future, given the distraction and negative confidence contagion it will generate.

It must be noted that current changes in the global landscape have opened up a golden opportunity for Pakistan in the external trade sector. The sharp rise in Chinese labour costs is increasingly making Chinese products uncompetitive, thus opening space for Pakistani exporters. Increasing exports has been a broad policy mantra of all regimes: however, the sad fact is that Pakistan has made little progress on this front – despite the existence of excess labour. It is reasonable in this context to question PTI’s headline target. In this area, a detailed plan of incentives needs to be articulated in order to reconnect Pakistan’s export sector with the world.

Strengthening of the regulatory framework, however, needs to be appreciated. Nonetheless, a balance will be required so as not to depress genuine activity. Stronger implementation of common sense rules will require a combination of strong legislative frameworks and robust implementation regimes. Here, a purely ‘moral high ground’ driven approach is unlikely to be enough and will need specific designing of incentives and punishments to ensure adequate compliance in light of spending plans.

The plan is a step in the right direction, but needs further thinking on several important fronts. A number of emerging countries have managed to engineer sharp increases in their growth rates over the last 12 years, despite having no tangible resource export base. In most instances, the drivers of such sustained growth trajectories have been strong institutions, pro-reform governments, enhanced productivity of the labour force and supportive demographics.

There is no reason why Pakistan cannot do the same.

THE WRITER IS HEAD OF GLOBAL MACROECONOMICS FOR EDF TRADING (ONE OF EUROPE’S LARGEST COMMODITY MERCHANTS). PREVIOUSLY, HE HAS WORKED AS A GLOBAL MACROECONOMIST FOR GOLDMAN SACHS INTERNATIONAL

Published in The Express Tribune, September 17th, 2012.

Auto industry invited to discuss import policy

Move comes after manufa­cturer­s lodged protes­ts over import rules. It is estimated that 55,000 used vehicles have been imported in the previous year.

LAHORE: The Secretary Ministry of Industries Shafqat Naghmi has invited the local auto industry, next week, to separately discuss the issue of the import of used cars.

Naghmi took the decision after the association of local car manufacturers and auto vendors lodged protests against the government for not taking them into confidence as they did with the All Pakistan Motor Dealers Association (APMDA).

Since, both the Pakistan Automobile Manufacturers Association (Pama) and the Pakistan Association of Auto Parts and Accessories Manufacturers Association (Paapam) refused to sit with the APDMA in the meeting scheduled for September 13, 2012, saying that the APDMA is a trade body not a manufacturer, thus the secretary has invited them for a separate meeting next week.

The APDMA, however, met Naghmi and apprised him on the potential which used cars posses in Pakistan. They asked for a further lenient import policy and revising the depreciation limit of imports to 10 years.

Earlier, in separate letters to the ministry, both the Pama and Paapam questioned the wisdom of a trade body indulged in imports as the ministry should serve the interests of the local manufacturers.

Paapam Chairman Nabeel Hashmi said that the APDMA is not registered with the Directorate General of Trade Organisations (DGTO) as a representative body of traders. Hashmi said that most of the 80,000 cars that entered the Pakistani market in the last two years were shipped from Japan where the total number of Pakistanis residing is only 10,000.

“No importer in Pakistan is allowed to import used cars commercially. This facility is only available to overseas Pakistanis through transfer of resident and gift scheme,” he said. It is worth mentioning the local auto Industry has seen its worst two months in terms of sales and it has lead to suspension of production by local industry. Also, it is estimated that 55,000 used vehicles have been imported in the previous year.

Published in The Express Tribune, September 14th, 2012.

Long time coming: New, revamped investment policy next month

World leader­s compla­in about lethar­gic decisi­on-making proces­s as invest­ment falls to all-time low.  The government also intends to organise a business forum on the sidelines of D-8 Summit in October this year. DESIGN: FAIZAN DAWOOD

ISLAMABAD: 

The country will revamp its investment regime and improve decision-making as investment has plunged to historic lows and world leaders have expressed negative views about the decision-making process, which has been marred by bureaucratic red tape.


This was discussed during Prime Minister Raja Pervez Ashraf’s visit to the Board of Investment (BOI) Secretariat on Tuesday to get an update on the investment situation and come up with plans to improve the scenario.


BOI officials briefed the premier on the views expressed by world leaders during their meetings with Pakistani authorities, according to officials.


Investment in the country has dropped to the lowest level at 12.4% of total size of economy. In 2008, foreign direct investment stood higher at $5.4 billion, but dipped to $813 million in 2012.


The prime minister was told that Russian President Vladimir Putin, Turkish Prime Minister Recep Tayyip Erdogan, Japanese foreign minister and a former South Korean ambassador had negative perceptions about investment-related decision-making in Pakistan.


In a bid to improve the situation, the BOI was working on a number of steps including introducing a new investment policy, a five-year investment strategy and holding international investment conferences.


President Asif Ali Zardari, who is expected to visit South Korea in December, may also use the occasion to woo Korean investors, who could be an important investment source for Pakistan.


Two Korean conglomerates have already expressed interest in investing in special economic zones of Pakistan, according to officials.


The government also intends to organise a business forum on the sidelines of D-8 Summit in October this year as part of efforts to attract world investors and improve the country’s image.


In the meeting, the BOI officials said the board would unveil new investment policy next month which would promise further liberalisation and opening of more sectors for foreign investment. The policy will be supplemented with a five-year investment strategy.


The policy will be presented in the 6th BOI board meeting to be held next month. After board’s approval, it will be sent to the cabinet for the go-ahead.


The previous investment policy was announced in 1997, which paved the way for liberalisation, deregulation and opening up of financial and capital markets. Before this, foreign investment was allowed only in the manufacturing sector.


The premier was told that the “global economic recession, power outages, law and order situation and other domestic factors necessitated the need for further liberalisation of investment policy.”


The BOI has expressed the hope that formation of industrial clusters through the Special Economic Zones Act will bring Pakistan on world’s investment radar. President Zardari is expected to sign the SEZ Bill on September 10, which has already been approved by parliament.


The government is trying to remove other bottlenecks in the way of investment, particularly bureaucratic snags, in an effort to ensure fast track approval of investment projects.


To empower the BOI and make it a one-window facility for foreigners, the rules of business will be amended. In this regard, proposals have already been sent to the Cabinet Division.


At present, the BOI had no role in approval of foreign investment projects and economic ministries were creating hurdles instead of facilitating investment, the BOI complained to the premier.


The BOI officials also proposed that experts and professionals from other fields and ministries could be hired to work under the board, which would enhance its capacity.


Published in The Express Tribune, September 5th, 2012.

Government announces petroleum policy 2012

ISLAMABAD: Announcing the new Petroleum (Exploration & Production) Policy, 2012, Adviser on Petroleum & Natural resources Dr. Asim Hussain said in order to accelerate exploration, the period of Exploration License has been reduced from 9 years to 7 years i.e., 5 years initial term (Phase-I of3 years + Phase-II of 2 years) + Two renewals of one year each.


Addressing press conference here Monday, he said similarly appraisal renewal period has been reduced from two years to one year. In order to attract much needed foreign investment in E&P sector, better gas price has been given; US$6 per MMBTU for Zone-III, $6.3 per MMBTU for Zone-II, $6.6 per MMBTU for Zone-I, $7 per MMBTU for Zone Offshore Shallow, $8 per MMBTU for Zone Offshore Deep & $9 per MMBTU forZone Offshore Ultra Deep). Windfall Levy has been reduced from 50% to 40%.


He said base price of crude oil and condensate for Windfall Levy has been increased from $30/barrel to$40/barrel; which will escalate each calendar year by $0.5/barrel; Windfall Levy will be equally shared between Federal Government and Provincial Government. Gas pricing Ceiling of $100/barrel replaced with $110/barrel; 5% carried interest (Government Holding 2½%, Provincial Government Holding 2½%);


Dr. Asim said Provincial Government Holding company shall also have first right to makeup required minimum Pakistan working interest without reimbursement or payment of any past cost; Renewal of lease after expiry of lease term for another five years subject to payment of an amount of 15% of wellhead value; Sale of 90% share of pipeline specification gas to Government of Pakistan and 10% by E&P companies to any buyer with prior consent of Government;


He said a bonanza of $1/MMBTU shall be given for first three discoveries in offshore area. Policy, 2012 gas price will also be extended to leases for additional 10% production over and above commitmentof Development plan approved by the Government. Introduce TCM/ OCM to monitor physical progress of minimum work commitment and other obligations.


He said 10% of royalty will be utilized in district where oil and gas is produced for infrastructure development; For pricing and delivery obligations for natural gas, the gas will be delivered at outlet flange (Field Gate/ Delivery Point).


Sui Southern Gas Company (SSGCL) and Sui Northern Gas Company Limited (SNGPL) will be responsible for laying pipelines for which they will get tariff on transportation of gas as approved by Oil & Gas Regulatory Authority (OGRA). For offshore, gas will be delivered at nearest access point to an existing regulated transmission system; or at the shore within coastal locations, he added. (PPI)

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.

Monetary Policy: Interest rate cut not enough, say exporters made in pakistan

Bringi­ng discou­nt rate down to single digits would prove more benefi­cial for promot­ion of trade and indust­ry. The cut in discount rate was a longstanding demand of the textile exporters as their production had been badly affected by various factors, including the high interest rate. DESIGN: MOHSIN ALAM

FAISALABAD: 

Textile exporters, while welcoming a 150-basis-point reduction in interest rate, have said the move is not enough to put the trade and industry back on track as the interest rate is still very high and should be brought down to single digit.

They were responding to the cut in discount rate to 10.5% in the monetary policy, announced by the State Bank of Pakistan on Friday. They termed the decision a realistic support to the textile industry and a step in the right direction.

Talking to the media here on Saturday, Pakistan Textile Exporters Association Chairman Rana Arif Tauseef pointed out that bringing the discount rate down to single digits would prove more beneficial for the promotion of trade and industry.

“This will help encourage long-term investment and with zero load-shedding it will accelerate economic activities,” he said.

The cut in discount rate was a longstanding demand of the textile exporters as their production had been badly affected by various factors, including the high interest rate.

Tauseef said high mark-up and less availability of cheaper credit for the private sector were hindering investments.

Published in The Express Tribune, August 12th, 2012.

Market Watch: Investors stakeout on the sidelines for SBP policy rate cut

Benchm­ark KSE-100 index adds 2 points.  Benchmark KSE-100 index adds 2 points.


KARACHI: The stock market witnessed another dull trading session, which saw it close with only a couple of points gained. Investors had relegated themselves to the sidelines in anticipation of the State Banks’ monetary policy announcement due Friday late afternoon, unsure whether a cut in the central bank’s benchmark policy rate would be announced or not.


“Dull activity was seen in the market as investors remain uncertain on the discount rate cut in the upcoming monetary policy. Some profit-taking was seen in fertiliser stocks due to news about a likely reduction in urea prices; while major activity was seen in mid-cap stocks,” said Topline Securities Senior Manager Equity Sales Mohammad Rizwan.


The Karachi Stock Exchange’s (KSE) benchmark 100-share index crawled up 0.01% or 1.90 points to end at the 14,761.49 points level. Trade volumes plummeted to 36 million shares compared with Thursday’s tally of 74 million shares. The value of shares traded during the day was Rs1.52 billion.


“Second and third-tier stocks dominated volumes,” concurred JS Global analyst Ahmed Rauf. “Pakistan State Oil remained the outperformer after announcing a bonus issue yesterday. It closed up 1.8% with volumes of 1.2 million shares.”


Shares of 269 companies were traded on the last trading day of the week. At the end of the day 117 stocks closed higher, 101 declined while 51 remained unchanged.


Quice Food was the volume leader with 3.43 million shares losing Rs0.92 to finish at Rs3.01. It was followed by Maple Leaf Cement with 3.16 million shares gaining Rs0.16 to close at Rs7.54 and the Karachi Electric Supply Company with 2.74 million shares closing flat at Rs4.27.


Foreign institutional investors were net buyers of Rs111.35 million, according to data maintained by the National Clearing Company of Pakistan Limited.


The State Bank has announced a rate cut of a significant 150 basis points, which will help recover some profitability for highly-leveraged companies and help boost investor sentiment in key stocks that have been struggling so far.


Published in The Express Tribune, August 11th, 2012.

CCI likely to approve new petroleum policy for 2012-13

Explor­ation and Produc­tion Policy 2012 ensure­s higher gas prices.  RIGHTFUL SHARE: 50% of all reserves exploited in a province will belong to the province only, but the DGPC will have discretionary powers in this regard.


ISLAMABAD: The Council of Common Interest (CCI) is likely to formally approve the Petroleum Exploration and Production Policy 2012 in its meeting today (Wednesday), which ensures higher gas prices for exploration companies. The CCI has already approved the new petroleum policy in principle.


“After the new policy is ratified, the government hopes to auction 36 blocks to oil and gas exploration companies,” an official of the petroleum ministry said.


The current wellhead gas price is $4.5 per Million British Thermal Unit (MMBTU), while the petroleum ministry has proposed $6 to $9 per MMBTU. The petroleum ministry has also proposed a price bonanza of $1 per MMBTU for offshore fields, for the first three discoveries of offshore reserves.


According to the draft of the Petroleum Exploration and Production Policy 2012, provinces have been allowed to receive royalty in the form of gas – instead of cash – to meet energy requirements of the province. However, this can only be implemented after formal approval of the federal government. Provinces have also been allowed to utilise 50% of the royalty in the district where the oil and gas is produced; for infrastructure development and to placate unrest among the disturbed local populace.


To settle the dispute between provinces and the federal government over oil and gas reserves, a technical committee under the chairmanship of the secretary, Petroleum and Natural Resources, will be formed. The committee will comprise of a nominee from each of the provinces, the Directorate General of Petroleum Concessions (DGPC), the Director General Gas, the Oil and Gas Regulatory Authority, transmission and distribution companies, Pakistan Petroleum Exploration and Production Companies Association, and concerned exploration and production (E&P) companies. The committee will be empowered to resolve key issues between E&P and gas marketing companies.


At present, Liquefied Petroleum Gas (LPG) is a deregulated product, and LPG producers determine its price. However, under the new policy, the regulator will determine the LPG producer price for new LPG projects. After the 18th amendment, provinces have been given 50% rights over oil and gas reserves, but the DGPC in the petroleum ministry has been given discretionary powers in this regard in the new petroleum policy.


For grant of petroleum rights after expiry of the lease period, the DGPC can renew the lease term for another five years if the existing leaser agrees to pay an amount equivalent to 15% of the wellhead value to the government; otherwise the DGPC will invite bids.


The federal government, in consultation with the provincial government, will also be able to share royalty, windfall production, windfall levies on crude oil, condensate and natural gas rentals, and revenues raised through any other method with locals of the area.


Under the new policy, exploration companies shall have the right to sell 10% of their share of pipeline specification of gas directly to any buyer, with prior consent from the government. Gas prices under the policy will also be extended to the companies who produce an additional 10% over and above their commitment in accordance with the approved development plan by the government, to the extent of additional production only.


Published in The Express Tribune, August 8th, 2012.

Trade and sound economic policy can promote peace

It has genera­lly been argued that war with a tradin­g ally is econom­ic suicid­e.  It has generally been argued that war with a trading ally is economic suicide. ILLUSTRATION: JAMAL KHURSHID

KARACHI: 

What kinds of policy choices make conflicts more or less likely? While the answers to this question are not definitive and exact, research that attempts to answer this question generally takes as a starting point those features of economies that are believed to increase the likelihood of conflict and then points to the failure of governments to address them.


Indeed, according to research conducted by Harvard University, many of the structural factors that are associated with conflict – low levels of education and high dependence on natural resources – are themselves in part a function of government policies.


Political scientist William Reno for example describes ways in which political leaders take deliberate actions to undermine their economies (and their governments) in order to enrich themselves personally. By weakening state institutions (in some cases signaled by fiscal collapse) and destroying infrastructure for production, leaders may make rebellion or violence more attractive: they reduce the direct costs as well as the opportunity costs of violence.


The impact of government policies, however, may be more contentious when they are undertaken with the express intention of fostering economic development. There is for example much anecdotal evidence that the structural adjustment (or “austerity”) programmes implemented throughout the 1980s and 1990s spawned civil conflicts. These policies, while formally implemented by governments, were strongly promoted by international financial institutions such as the World Bank and the IMF, who made the granting of loans conditional upon the adoption of their policies. Even now, a significant cross-section of Pakistanis – wrongly or rightly so – feel that IMF policies are not in their best interest. In a number of countries – such as Venezuela and Morocco – such programmes led directly to street violence. But can the rise in civil wars also be put down to these policies? Surprisingly, when the World Bank turned to study civil wars it did not attempt to study the role of the structural adjustment programmes it helped impose.


However studies by the World Bank or the WIDER research group to look at the effects of policies consistent with structural adjustment have found no direct relationship between these policies and conflict.


Trade and war


Researchers have put some effort into trying to find out whether international trade increases or decreases the likelihood of conflicts (so far no comparable work has been done to find links between internal trade and civil war). The results of this research matter for foreign policy. If, for example, the US increases trading relations with China will this lead to a greater risk of conflict – perhaps by strengthening China and giving it commercial power over the US or, by introducing interdependence and stronger mutual interests, will it reduce risks? Both positions have been put forward by political scientists and advocated by policy makers.


Liberal theorists focus more on the gains to both parties from trade. They argue that where trade is mutually beneficial, to fight with a trading partner would be committing “commercial suicide.” Related arguments claim that, through exchange, trading partners develop greater understanding for each others’ cultures. Political philosophers, meanwhile, suggest that trade reduces the risk of conflict because trade alters cultures.


The belief that the net effects of trade and cross-investment will be to reduce violent conflicts has found considerable support among policy makers. In Europe for example the view motivated the creation of the European Coal and Steel Community in 1951, later to develop into the European Union. The logic is also supported by empirical research that demonstrates that once proximity is taken into account, states that trade with each other are indeed less likely to fight each other. Maybe this, more than any other, is reason enough why India and Pakistan should promote mutual trade.


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

Bike makers up in arms over changing govt policy

As protec­tions are lifted, manufa­cturer­s warn of ‘impend­ing doom’. TWO-WHEELS: 2m is the total number of motorcycles produced in Pakistan in fiscal 2012.

LAHORE: Changes in current policy governing the motorcycle industry – following the Board of Investment’s initiatives to incentivise a Japanese motorcycle manufacturer’s re-entry in the Pakistani market at zero rates – have purportedly shaken the confidence of investors and local manufacturers.

Stakeholders say the sector had progressed tremendously due to consistent policymaking on part of the government, but the new policy has threatened their – protected – growth.

“The plan to allow a new investor to import all motorcycle parts at zero duty will be a negation of previous policies, and will encourage producers to bypass local vendors and manufacturers,” said a representative of an Original Equipment Manufacturer (OEM). “This policy u-turn is worrisome and against the interests of the country and future industrialisation,” he added.

Industry players say that the portrayal of the motorcycle manufacturer as a ‘new investor’ conveniently overlooks the fact that the same brand was produced and marketed for decades in Pakistan, and was only forced to wind up due to its failure to compete with other brands – especially those from China. Stakeholders are dismayed at the government’s insistence in granting special status to this OEM on its re-launch.

“Motorcycle production has increased from 100,000 units at the start of the century, to around 2 million this fiscal year,” an official from Atlas Honda told a group of journalists, here in Lahore. “No other industrial sector has shown such high and sustained growth during the past decade. In fact, Pakistan has emerged as a global leader in the production of 70cc motorcycles.” He claimed that Pakistan now exports 125cc bikes as well.

Stakeholders complain that government claims that new investment will introduce new technology to the country are mere eyewash, as existing players have introduced the latest Euro-2 engines in their products without any special incentives. Current players are even willing to import hybrid and EFI-based engines without special incentives, they say. This is because many engine parts complying with new emission standards are produced locally, they claim.

They say that local industry, based on projections of increase in demand, has already embarked on capacity enhancement plans. By the end of the current fiscal year, they say they will have invested around $100 million in the sector, out of which a sizeable amount has already been invested, while plans for the rest are being submitted.

Published in The Express Tribune, July 18th, 2012.

Developing an Islamic monetary policy

Dual moneta­ry system can be implem­ented in a countr­y like Pakist­an. CREATING RIPPLES: 8% is the market share of Islamic banking in the banking sector of Pakistan. ILLUSTRATION: JAMAL KHURSHID

SUSSEX: Despite tremendous growth in Islamic banking and finance globally, it is not easy to convince Pakistani bureaucrats and policymakers that this new form of banking and financial business can potentially be used to run economic and financial matters of the Pakistan economy in a Shariah compliant way.

In fact, a number of sceptics of Islamic banking & finance argue that Islamic financial products are in essence similar to their conventional counterparts and that Islamic banks do nothing but mimic conventional banks. This observation has some merit. Islamic financial products seem to mimic conventional products in terms of pricing and their financial behaviour and economic characteristics. This is primarily because financial regulators treat Islamic products similar to the conventional products and emphasise that the two sets of financial products must not differ much in terms of their risk return profiles and financial characteristics.

Moreover, there is no Islamic-finance-enabling infrastructure in most of the countries where Islamic banking exists. In particular, there are no well-developed Islamic money market operations, except in Malaysia where a number of Islamic money market instruments are developed to allow Islamic banks to have access to liquidity management tools. But even there, a distinct Islamic monetary policy has yet to emerge. This lack of enabling infrastructure is a main reason for mimicking of conventional products in Islamic banking & finance.

It is argued that attempts to develop an Islamic monetary policy may pave way for creating the first vibrant Islamic money markets in the countries where Islamic banking is significant. Pakistan is one such country where Islamic banking is reaching 8% of the banking sector, yet there is huge dissatisfaction with the current Islamic product offerings, especially by the more conservative religious class that argues for a purist model of Islamic banking. Development of an Islamic monetary policy by the State Bank of Pakistan and implementing it along with its conventional monetary management may give rise to a dual monetary system – something that some people contend to be consistent with the dual banking system as it allows for the parallel operations of Islamic and conventional banks in a country.

It must be emphasised that the suggestion of a dual monetary system is not a far-fetched idea. In fact, there are living examples wherein a country has multiple currencies. In the UK, for example, apart from Bank of England, Bank of Scotland, Royal Bank of Scotland and some other banks issue their own pounds. Malaysia also provides another example, where apart from the main currency Ringgit issued by Bank Negara Malaysia (the central bank), the State of Kalantan also issues gold coins for some of its employees that may wish to be paid in this alternative currency. In fact, any country that allows holding of multiple currencies (as in the form of foreign currency accounts) is technically a multiple currency regime.

The open market operation in monetary management is based on the interest rate mechanism, which makes it clearly and unambiguously Shariah repugnant. Hence, there is a definite and clear-cut need for developing a monetary policy that is in line with the practice of Islamic banking and finance. This will require developing money market instruments that are not based on the interest rate mechanism but rather are based on the Shariah compliant principles and are consistent with the product offerings by Islamic banks. On a more philosophical level, this may lead to a need for creating an asset-based money rather than the current debt-based money.

THE WRITER IS AN ECONOMIST AND A PHD FROM CAMBRIDGE UNIVERSITY.

Published in The Express Tribune, July 9th, 2012.

Monetary policy: Interest rate left unchanged at 12%

State Bank unders­cores need for fundam­ental reform­s, partic­ularly in energy sector.  State Bank underscores need for fundamental reforms, particularly in energy sector. DESIGN: MUHAMMAD SUHAIB

KARACHI: 

The State Bank of Pakistan (SBP), while stressing the need for fundamental reforms to turn around the economy, has kept the benchmark interest rate – called the policy rate – unchanged at 12% in the face of high inflation and unchecked government borrowing from banks.


“The economy basically needs fundamental reforms to engineer a turnaround in its performance,” the SBP said on Friday in its monetary policy statement, which is released after every two months.


“Inflation expectations cannot be effectively anchored around single-digit targets without limiting fiscal borrowings from the banking system, particularly from the SBP,” the central bank said and noted that despite a sluggish GDP growth, inflationary pressures had not subsided.


The statement highlighted that the government borrowed Rs414 billion directly from the central bank during July 2011 to May 2012 and took the total borrowed stock level to Rs1,660 billion. “This contradicts the SBP (Amendment) Act 2012 that requires the government to maintain zero quarterly borrowing and retire the total stock in next seven years,” said BMA Capital analyst Nurali Barkatali.


Consumer Price Index (CPI) – the broadest measure of inflation – increased by 12.3% in May year-on-year. According to the SBP, a noteworthy aspect of inflation behaviour is its persistence at this high level alongside slack economic activity.


In financial year 2012-13 beginning July, the central bank is not expecting a sharp increase in inflation, but it may remain around current levels.


The central bank also highlighted the importance of private investment in the economy. “While managing the external and fiscal pressures remain more of an immediate concern, the real challenge lies in reviving private investment in the economy. At the same time, scheduled banks continue to avoid extending credit to private businesses, which are already suffering from energy shortages,” it said.


According to provisional data, private investment-to-GDP ratio has dropped to 12.5% in FY12, prompting the need for fiscal reforms. The SBP said absence of an enabling business environment due to persistent energy shortages and precarious law and order conditions had dampened the demand for fresh private credit.


The government, on the other hand, is accumulating short-term domestic debt at a rapid pace. All these have made the monetary policy ‘less effective’, the SBP commented.


It, therefore, underscored the need for urgent energy sector reforms to boost business confidence and arrest the declining investment-to-GDP ratio. The central bank also suggested that limiting and retiring budgetary borrowings from the banking system and implementation of consistent and credible policies would help in moving away from this undesirable equilibrium.


It also pointed to the unending debt and financial problems in the euro zone, which have increased uncertainty in the global economy, affecting somewhat Pakistan as well.


Current account deficit


Commenting on developments in the external sector, the SBP said the issue was not the size of the external current account deficit, but lack of sufficient external inflows to finance it. Cushioned by robust worker remittances of $10.9 billion, the current account deficit was $3.4 billion in the first 10 months (July-April) of FY12.


After calculating the estimated deficit for the remaining two months, it is likely to remain around 1.7% of GDP for FY12, which, according to the SBP, is not large for a developing country like Pakistan.


Dollar’s strength and oil prices


The US dollar, being a safe haven for investors, has strengthened significantly in the past few weeks against almost all currencies, especially the euro, and Pakistani rupee is no exception.


On the other hand, appreciation of the US dollar in international markets is probably one explanation why oil prices have eased somewhat, dropping from a peak of $130 per barrel (Saudi Arabian light crude) on April 3 to $97 per barrel on June 1.


“This, together with expected global slowdown, may keep oil prices softer compared to earlier projections. Given that almost one-third of Pakistan’s total import bill comprises oil payments, this would be a positive development,” the SBP commented.


Citing an example, it said that keeping in view the current quantum of crude and petroleum product imports at 21 million tons, a decline of $5 per barrel in international oil prices could save up to $700 million in import payments in FY13.


Published in The Express Tribune, June 9th, 2012.

PPL violates policy and pays Rs72m in donations, sponsorships

Audito­rs made observ­ation in audit report for 2010-11. Audit report said the PPL management made payments of Rs68.814 million as donation to 18 organisations and Rs3.906 million in sponsorship to 24 organisations in 2010-11, in defiance of government instructions. PHOTO: PPL

ISLAMABAD: Pakistan Petroleum Limited (PPL), a state-owned oil and gas explorer, is found to be involved in irregularities worth millions of rupees in paying donations and sponsoring charitable, educational and sports organisations in violation of government’s policy.

In a report, the Auditor General of Pakistan observed that PPL made irregular payments of Rs72.72 million in donation and sponsorship to different organisations in 2010-11.

According to the corporate donation and sponsorship policy announced by the Finance Division, the paying organisation is required to ensure that “provision of the amount of donation exists in the annual budget”.

The organisation should ensure that the purpose of donation is consistent with its objectives and operations and has relationship with business activities of the organisations concerned or adds directly to promotion of their business. The policy further states that donations are subject to availability of budget and thus are not unlimited.

The audit report said the PPL management made payments of Rs68.814 million as donation to 18 organisations and Rs3.906 million in sponsorship to 24 organisations in 2010-11, in defiance of government instructions.

Furthermore, no provisions for such expenditures existed in the company’s budget for the year, which was clearly against government instructions as well as PPL’s own policy of donation and sponsorship.

Auditors pointed out that the main function of PPL is exploration and production to enhance its hydrocarbon reserves, aimed at bridging the increasing energy deficit and securing long-term growth.

Being a government-owned organisation with a 71% stake, it has exclusive rights to exploration and production business and has limited business competitors. The purpose of donations and sponsorships was not consistent with the objectives and operations of the company, the auditors said.

The matter was brought to the notice of PPL management on February 15 this year through preliminary observation. In its reply on February 22 and 24, the management said PPL, being an exploration and production company, did not fall in the category of development finance institutions (DFIs) and therefore the framework did not apply to it.

However, the auditors said “the reply is not tenable as the Finance Division (Regulations Wing-11) has issued the directive for autonomous and semi-autonomous bodies and that is equally applicable to PPL.”

The auditors concluded that donation and sponsorship could not be a management initiative to acquire business and were against PPL’s policy. Therefore, “it is irregular and unjustified.”

Published in The Express Tribune, May 19th, 2012.