Profit 18th November, 2011

Friday, 18 November, 2011Pages: 8 profit.com.pk

regulated marketvital for price control

ISLAMABADJALALUDDIN RUMI

SENATE special committee onfinance, while rejecting free marketeconomy – terming it anti-

consumer –, decided to revive regulatedmarket for effective price control. Threemember sub-committee headed bySenator Ishaq Dar with Senator ProfessorKhursheed Ahmed and Senator SughraImam directed ministry of finance toconsult ministries of law and justice, foodsecurity. Sub-committee also askedindustries to draft legislation on pricecontrol within two weeks. Committeechairman Senator Ishaq Dar said peopleare at mercy of few influentialbusinessmen, who exploit them andcharge un-justified price from them.While criticising government’s treatmentof fertiliser sector, he said government isproviding gas to fertiliser sector on asubsidised rate but the impact was notdelivered to consumers. Committeeunanimously believed that revival ofmagistracy system in all four provinces isone of the major tools to check un-justified price hikes and profiteering.Members of committee were of the viewthat food crisis is approaching andPakistan should prepare itself by revivingits agriculture sector, that would in turnensure its food security. Otherwise, therewould no option but to accept importsfrom developed countries, they reiterated.He informed the committee thatConsumer Price Index (CPI) haswitnessed a declining trend from October2010 to October 2011. However, there hasbeen an increase in September he added.

Dollar reserves increaseto $17.031 billion

KARACHISTAFF REPORT

THE country’s liquid foreignexchange reserves, havenominally increased to $17.031

billion during the week that ended onNovember 11, Central Bank reported.Last week up to November 4, thecountry held $17.028 billion. Theweek saw State Bank of Pakistan’s(SBP) dollar reserves decreasing to$13.269 billion from $13.280 billionof the preceding week. While thegreenback holding of commercialbanks swelled to $3.762 billionagainst $3.748 billion of last week.

Negligence in the agri-sector Page 3

Nashpa well two: excavating hope Page 2Biogas, an answer to Pakistan’s energy crisis Page 8

ISLAMABADJALALUDDIN RUMI

THE total volume of power sector circular debt has risento Rs650 billion while outstanding liabilities of PakistanPower Purchase Company (PEPCO) stand at Rs364 bil-lion. This is against the receivables which are estimated

at around Rs300 billion, officials of Ministry of Water and Powerrevealed on Thursday in the National Assembly Special Committee.The Special Committee meeting chaired by Engineer Usman Tarakiwas called to find out the reasons that have led to the unprece-dented power crises in the country.

KARACHIGHULAM ABBAS

WORK on ‘Revival of KarachiCircular Railway (KCR)’ themuch delayed $1.58 billionforeign funded project is

likely to start by June 2012. Governmenthas decided to resolve all financial mattersby April next year.

In a recently held meeting at min-istry of finance in Islamabad, whichwas attended by representatives ofKarachi Urban Transport Corporation(KUTC), proponent of KCR project,Sindh Government, and others, issues

related to finance, re-lending of funds,resettlement of thousands of projectaffectees were discussed. According tosources, all major issues related toproject have almost been resolvedwhile some technical hindrance in re-lease of funds from government ofJapan and others were there to be re-solved within next few months.

In the meeting held on 5th Novem-ber, 2011, it was also agreed as per de-mand of Japan InternationalCooperation Agency (JICA) that KUTCwould share profit and losses of the proj-ect as it was sharing almost 7 per cent ofthe project. Japan was providing for at

least 93 per cent cost of KCR project.During the next few months technicalteam of JICA would also visit the countryto finalise financial matters besides otheraspects related to the project.

It is worth mentioning here that forthe last 6 years, the project was undervarious studies. The report was furnishedin March 2006 for revival of KCR. Differ-ent survey teams of Japan had come toPakistan and made PC-1 but as cost ofproject was increased in two years for-eign team had made the new study withmodified cost. Government of Japan hadearlier promised to release $872.316 mil-lion STEP loan for the KCR project and

it had commissioned a study under theaegis of Japan External Trade Organiza-tion (JETRO). In the last six years, stud-ies related to Resettlement Action Plan(RAP), Initial Environment Assessment(IEA) and allocation of land for thou-sands of affectees have already been fi-nalised and approved by concernedauthorities. Japanese government, as afirst parameter, would combine KCR‘s30km loop with modern signaling andtelecommunication system.

Under the project which is needed toovercome traffic problems in the country,was planned to make at least two dedi-cated tracks along with main line from

City (Railway) Station to Drig Road Sta-tion of 14.5 km, which would later belinked to the airport with distance of 6km, at a cost of $179.464 million.

It may be recalled that PakistanMuslim League-Q led Sindh governmenthad winded up local train service in Jan-uary 2000 and had again decided to re-vive system after realising itsimportance in 2004. Later, to mitigatetraffic problems in the country’s mostcongested cities Tokyo had commis-sioned 100 per cent funding for the proj-ect under “STEP Loan” at 0.2 per centmarkup rate for a 40 year payback time,including a 10 year grace period.

5 billion unitS unaccounteD forExplaining the phenomenon of circular debt, Secretary Water andPower Imtiaz Qazi said that the power generation companiesproduced 24 billion units, out of which PEPCO received bill paymentagainst only 19 billion units, whereas 5 billion units / per annumwere unaccounted due to line losses and power theft. He said thatthe government has been giving a subsidy of Rs2 on each unit ofelectricity but the Finance Division did not release the allocated fundsfor subsidy to PEPCO, which has exacerbated the already worseningsituation of circular debt accumulation. Qazi told the committee thatduring the three years tenure of the current government, the priceof electricity has been increased by 78 per cent, excluding theincrease in power tariff due to regular fuel adjustments.

non payment of billSNon payment of electricity bills by the government departments,the private sector especially in FATA, and some areas of Sindh havecontributed to inflating the circular debt. This coupled with up to20 per cent line losses and nonpayment of price differential claimsby the Finance Division on account of subsidy, are the major factorbehind mounting circular debt in the power sector. According toChairman PEPCO Rasul Masud, PEPCO’s receivables from thegovernment sector are approximately Rs188 billion. It has to receiveRs8 billion from various departments of federal government onaccount of electricity bills, Rs30.55 billion is outstanding fromprovincial governments while Rs46 billion has to be received fromKarachi Electric Supply Company. Chairman PEPCO informed thecommittee that currently various projects of power generation wereunder construction and he claimed that by end of 2012 about 3000megawatts of electricity will be added to the national grid.

DefenDing rppSDuring the briefing Masud Khan defended the government’s policy ofrental power plants and argued that the rental power plants were theimmediate available solution to address the power crises. Committeemember Shahid Khaqan Abbasi stormed out from the committee roomover the justification given by Chairman PEPCO regarding rental powerplants. Shahid Khaqan said that the incumbent power ministry officialsshould resign as they have failed to resolve the power crises. The powerministry has given Rs16 billion to rental power plants but despite thecapital injection, power production of rental power plants remainednegligible. He claimed that the rental power plants are producing lessthan 100 megawatts of electricity. The chairman committee and othermembers also expressed their dissatisfaction over the performance ofthe ministry of water and power and asked them to increase productionfrom the hydel sources of electricity generation.

Circular debt

rises to Rs650b

power criSiS

g

g

Work on $1.58 billion project to start by June 2012Karachi circular railway project

Senate finance committee

Layout Profit 18-11-11pages_Layout 1 11/18/2011 3:23 AM Page 1

Nashpa well two: excavating hopeKunwAR KHuLDune SHAHID

Throughout the course of

history, the discovery of oil or

indeed its correlated activities

have always connoted an aura of

ecstasy. the monetary significance is

obvious, but digging out – or indeed

locating – volumes of black gold is a

moment of triumph; an epoch-making

breakthrough that promises to

ameliorate everything. Be it the

groundbreaking revelations in South

American oil producing giants Columbia

and Brazil, the customary mining

disclosures in oil leviathans like Algeria,

Libya et al or indeed Daniel-Day Lewis

stumbling upon an opulent mine in New

Mexico 1898 in ‘there will be blood’ –

the rapture is earth-shattering. An oil

reserve is seventh heaven under the

ground, so to speak. Considering the

power predicament in our neck of the

woods, the aforementioned ecstasy can

be multiplied by any scalar number and

it won’t suffice in depicting the sheer

vitality that any such unearthing

possesses. ogDCL’s (oil and gas

Development Company Limited) recent

oil discovery, from Nashpa well two, is

one such moment that augurs optimism

and is being touted as a historic

undertaking – with scores of reasons

buoying up the claim.

geography anD locationthe well that is hogging all the

headlines, ‘Nashpa well two’, is located

in the Nashpa block which is a part of

Khyber Pakhtunkhwa and extends to

within Punjab as well. For the

geography geeks; Nashpa is located in

North-West Frontier region at 33°13’59”

north of the equator and 71°19’59” east

of the Prime Meridian. For physics

geeks; if one were to drop a plumb line

from the point where Nashpa is located

– on a map pinned on a wall – it would

neatly bifurcate Bhakkar and Peshawar,

with its displacement ratios being 1:3

between the latter and the former

respectively. Also if an imaginary

triangle ABC between rawalpindi,

Nashpa and Peshawar is drawn on the

map, it would border on a right-angle

triangle with the length AB (distance

between Naspha and rawalpindi) being

twice that of BC (distance between

Nashpa and Peshawar).

power Shortage the oil discovery comes under the

hangover of the worst power crisis in

the history of Pakistan. the amplitude of

hue and cry that engulfs the shortage

has reached an all-time high, with both

the industrial sector and the masses

being criminally victimised. With such

an abundance of reserves, the shortage

is not only lamentable but also

flummoxing. the oil escavation that was

preceded by a noteworthy gas discovery,

would inevitably solve the power puzzle,

by reducing our dependence on the ever

escalating imports and by eventually

making us self-sufficient with regards to

power production.

opulence of naShpa blocKthe block spreads over areas of Khyber

Pakhtunkhwa and Punjab. Mela and the

aforementioned Nashpa have been the

two prominent zones that have been

located for oil – in 2006 and 2008

respectively. the principal protagonist in

the excavation task has been ogDCL,

with strong backup courtesy ghPL

(government holding Private Limited).

According to PPL’s (Pakistan Petroleum

Limited) data there is a 26.05 per cent

PPL working interest and the recoverable

reserves amount to 51 Bcf gas and 16.63

million barrels (MMbbl) oil. Mela oil field

contains 14 MMscf gas and 4,458 bbl oil,

while Nashpa oil field has 20 MMscf gas;

5,310 bbl oil. however the recent

revelation has further bolstered the

prospects of the lucrative area.

naShpa well onethe first installment of the Nashpa

expedition took place in June 2009.

Nashpa well one was dug down to the

depth of 4384 meters, which resulted in

a successful exploration. the reserves in

Nashpa, when coupled with 2006’s

discovery of Mela reserve, ensured that

the region was acknowledged as a rich

reservoir of oil. the often flaunted

‘discovery of the decade’ tal Block is

also an affluent region, which is within

proximity of Nashpa Block.

Encompassing and being engulfed by oil

rich zones, Nashpa block became the

hub of attention for ogDC, PPL and

ghPL and hence expedition were

planned for the future citing the

prospect of further inroads into oil and

gas reserves.

ogDc anD the Share criSiSogDC is the grand daddy of exploratory

activities in Pakistan. It operated on a

fifty per cent interest with Pakistan

Petroleum and government holding

Private. however, this hasn’t been a

fruitful year for the company, as far as its

shares are concerned. there has been a

slump off late within the realm of KSE100

Index that has threatened to plunge ogDC

into paramount losses – a cumulative

decline of 9.2 per cent has been witnessed

this year. however, Nashpa well two

promises to be the saviour of the biggest

player in the energy exploration realm. It

is being prognosticated that owing to new

oil and gas discoveries, ogDC can enhance

its profitability and is expecting up to 20

per cent addition to its oil and gas

production this year.

payment preDicamentAccording to resources, local oil

refineries and gas distributors’ failure to

pay for supplies is hindering the

investment plan of ogDC. A gargantuan

amount of rs93 billion ($1.07 billion) is

due as back payments. While, the lack of

payment had not significantly derailed

the company’s progress, what was

unambiguous was that such a trend

would have eventually taken its toll on

the company. there was a call of bond

issuance or bank loans as a possible way

out of the quagmire. however that was

being shelved for up to a year with the

hope that the situation would improve

with the passage of time.

this lack of payment on the distributors’

part delayed the payment to fuel

suppliers, who in turn are

indebted to oil refiners. the total

amount – called circular debt – is said to

amount up to rs300 billion, and

it was crystal clear that a

breakthrough was the need of the hour

on a multitude of fronts.

the earth-Shattering excavation

With an estimated output of 3370

barrels per day, the oil reservoir in

Nashpa well two is a major boost for not

only ogDC, but for the nation as a whole.

the aforementioned figure of 3370

barrels equates nearly one-fifth of the

company’s current crude output. Nashpa

well two was drilled down to a depth of

4340 meters, intending to delve into

potential reserves at Datta, Shinawari,

Samanasuk, Lumshiwal, hangu and

Lockhart formations. the task proved

successful both in the domains of gas

and oil. “Datta Sandstone” has been the

first to bear fruit with massive volumes

of hydrocarbon located – the

aforementioned potential of ‘3370

barrels per day or crude oil and 11

MMFCD through 32/64 choke at well

head flowing pressure 3800 psi.

Zin blocK factorogDC has launched a multi-pronged

attack on oil excavation and one of the

targeted zones has been Zin block as

well. In fact, if one were to discern the

underground insinuations and couple it

with the dire straits that the power and

energy sectors find themselves in, Zin

block could be a major factor in

nationwide enhancement. ogDC has

backed the zone as one of its most

lucrative target areas and numerous

development projects are already

underway, with many more to follow.

results are expected soon according to

the company voices.

KSe’S gainogDC is a unanimously acknowledged

powerhouse in the Karachi Stock

Exchange, and hence, any promising

exploration activity has a bearing on the

stock exchange. ogDC along with PPL

are the biggest gainers owing to the

recent discoveries, and the latest market

numbers are vindicating the claim. After

the oil discovery’s news broke, both the

stocks attracted a strong purchase trend

and close to the weekend they single-

handedly pushed the 100-Index up by a

massive 61 points. According to topline

Securities ogDC and PPL have a 56 per

cent, and 25 per cent stake respectively

in Nashpa fields. Add this to the

potential of Zin block and ogDC and PPL

might rule the roost in the near future.

oil exploration incentiveAccording to reports, government of

Pakistan has earmarked a substantial

amount of rs1135 million for

exploratory activities in the country. the

sum has been allocated over the past

eight years, and is a statement of intent

from our hierarchy. the aforementioned

amount has been given to ogDCL’s

research and Development division.

this particular division has been going

great guns recently and with the money

allocation – for conducting geological

surveys and mapping projects in a

multitude of potent blocks – the output

can be magnified further.

the word is that Pakistan Basin Study

project has also been conducted, for

which the company hired services of

other companies.

the task was carried through with

technological virtuosity, with the latest

available techniques and machinery

being utilised.

naShpa well three anD proSpectSthe Nashpa success story might just

prove itself to be a blockbuster trilogy.

After ‘Nashpa well one’ proved to be an

oil fertile zone and ‘Nashpa well two’

followed suit in terms of potential and

profitability, ‘Nashpa well three’ is

another prospect that is whetting the

appetite of the oil extractors,

consumers and all other stakeholders.

ogDC and its allies are on the look out

for further possibilities, not only in the

Nashpa zone but in Zin block as well.

there are four, five other projects in

the pipeline that promise to further

enhance the flow from fields and it

bodes well for the future.

epilogue

‘Nashpa well two’ is a major

breakthrough towards digging the

nation out of the power quagmire, and it

is a massive boost for ogDC and its

allies - the discovery has a lot hinging

upon it. With expectations pertaining to

a precipitous increase in output on an

all-time high, the Nashpa block has

evolved from being a ray of hope to now

a luminous bundle of light.

The writer is Sub-editor,

Profit and can be reached at

[email protected]

debate02Friday, 18 November, 2011

Layout Profit 18-11-11pages_Layout 1 11/18/2011 3:23 AM Page 2

IT is ironic that the agriculture sector –the economy’s backbone and the largestnational employer – continues to receiveunplanned and ad hoc patronage fromthe government. Often official policy has

reflected frantic juggling in relevant ministries.However, whenever there have been planned in-jections and thought out initiatives, results havespoken for themselves. For example, when thepresent dispensation took over in ’08 and raisedwheat price from Rs625 to Rs950 per 40 kg, it

has led to reserve avail-ability of six milliontones today.

And, we will stillhave a residue carry-over of stock of threemillion tones when thenew crop comes in. Thepolicy fulfilled theplanned criterion ofproviding a fillip to thefarmer economy, whoseadditional incomeswere designed to stim-

ulate area and crop enhancement. But this year,the basic input cost of production has risen dra-matically resulting in per acre cost of wheat torise to almost Rs1075 per kg. If the govern-ment does not announce support price withina week or so the farmers may shift to othermore viable crops. As a matter of calculationminimum profit which a farmer expects isaround Rs1200 per 40 kg .In an environmentwhen energy is scarce and there are daily in-creases in the price of electricity, the end priceof wheat is bound to register a quantum in-crease, and subsequently harm the urban sec-tor with no fault of the farmer.

It goes without saying that it is the govern-ment’s prime responsibility to protect peoplefrom unnecessary and unjustifiable bouts of foodinflation. But with prices of crucial inputs goingthrough the roof, the farming sector has nochoice but to pass the price burden onto the nextlink in the chain. In such circumstances, it is not

really fair to blame farmers for price hike in theend product.

The most prudent policy posture for thegovernment to adopt presently is to make sub-sidies more targeted, for immediate positiveimpact both on commodity prices and the cen-tre’s cramped fiscal space. Of the 32 odd percent of the population that lives in urban cen-tres, a surprising 80-85 per cent chunk sur-vives below subsistence level. If staple foodcontinues to become unaffordable for this seg-ment, undesirable economic, social and politi-cal results are bound to follow. There can be noother way. Food must be made affordable, es-pecially for the middle and lower incomegroups. India’s is a good example to follow.Like most progressive economies, they ensurefood price stability for the lower classes by pro-visioning food stamps, cards, etc.

Also, there are numerous instances of carteli-sation across industries. In the textile sector, pri-marily, manufacturers and ginners havecombined to dictate market trends, allowing cot-ton buying only when they desire. Therefore, thegovernment also needs to adopt a proactive pol-icy of intervention. The government must alsoshift focus from a primarily input strategy to anoutput strategy. Price trends in the market arekept under far better check if the end product issubsidised, ensuring sales at right prices and ap-propriate timing.

We are not pushing for unfair advantagesfor the agriculture sector. Rather, our focus ismaking the government realise that ensuringfair advantages, and subsequently fair profits tofarmers, especially the 85 per cent lot withholdings below 25 acres, is in the interest of allparties concerned. But first the governmentmust shift from its present fire-fighting strategyfor the sector. Farmers must be freed from thesqueeze that prevents progressive expansion,and brings numerous subsequent price distor-tions in the wider economy. And while we’llwait for the agriculture tax debate till the nextcolumn, it is pertinent to mention that meas-ures like GST, excise tax, etc, also make inputsfar more expensive than previously. In the re-sulting scenario, farmers can hardly jack upprices to a certain extent, allowing for their ownsubsistence while registering no extra profits,and end consumers end up paying much morefor the same quantity. This must change. Thesooner the better.

The writer is President, Farmers AssociatesPakistan

IT is troubling, though not entirelysurprising, to note that inflation hasoutpaced income growth over thelast few years, meaning dipping realincomes for the bulk of the

population. What is really surprising, though,is that food inflation has remained muchhigher than overall inflation for mostpreceding years. Taken with the next worryingfinding, that unemployment too has not sosteadily risen, and you have a disturbing mixalready wreaking havoc in far too many placesin the world for authorities in Islamabad tocontinue fearlessly with their complacency.

Unfortunately, the government has beenbehind the curve on most of its promises,meaning budget debriefing at the fiscal-endwill likely be the usual rerun of justifyingfalling short of targets, again. But withelections approaching, and governance inshambles, and development and growthtargets badly off track, there is a realpossibility of food inflation turning into the

proverbial straw that breaks the camel’s back.With three-fourths of the populationcomprising youth, three-fourths of which isunemployed, the situation is grim. And it ismade worse for those investing large sums ineducation only to find place in theunemployment queue.

Food inflation, which stokesunemployment, is yet another tale ofinefficient use of limited resources. Thegovernment extends billions in subsidies andbailouts, most of which is channeled to non-productive avenues, which only bolsters thecycle of inefficiency. The time has come whenIslamabad can no longer dilly-dally on issuesof pressing concern. If inflation is not tamed,with special focus on food prices, thegovernment will have only itself to blame ifpeople-fury turns into a violent, rioting mob.The sums it would then spend to controlagitation would be far greater than targetedsubsidies needed to rationalise pricedistortions in the food market.

On inflation and income

The governmentmust shift focusfrom a primarilyinput strategy to anoutput strategy

Negligence in the agri-sector

Tariq Bucha

OGDC and Nashpa well two

The latest discovery of oil in theNashpa zone is a major boost to a na-tion that is being hit hard by the powercrisis on a daily basis. The rich reservesthat have drawn everyone’s attentionare like a ray of hope that becomes visi-ble in the darkest times; seriously,there could not have been a more op-portune moment for the discovery.Let’s hope that OGDC and other stake-holders ensure that this reservoir isproperly utilised. So often our innerproblems become our biggest hurdle,hopefully the divisions and politicalbrawls will stay clear and we can trulyprosper from this promising situation.

AMjAD TARIqLAHORE

PIA management decides to de-crease flight frequency

If we take it on face value, the introduc-tion of Indus Air, which is the newest,cheapest and upcoming domestic airlinein Pakistan; is a surprise package for anumber of Pakistanis. But in order to fa-cilitate these airlines, PIA has decreasedits flights both on the domestic and in-ternational front. This decision of themanagement is harmful for the interestof the passengers of PIA, who are alreadysuffering from the terrible service beingprovided by them. The management hasits own vested interest in the introduc-tion of the new airlines which need to bebrought to the notice of the people.

ALI KHAnLAHORE

E D I T O R I A L

Road to Islamic banking

WITH the success of al-most full and success-ful conversion ofNational CommercialBank (NCB) of Saudi

Arabia, and relatively smaller but equally suc-cessful conversions of Middle East Bank intoEmirates Islamic Bank, Sharjah National Bankinto Sharjah Islamic Bank, and relatively slow(but important in a Pakistani context) and yetto be completed conversion of Khyber Bankinto an Islamic bank, we do not observe anyfurther full conversions of conventional banksinto fully-fledged Islamic banks. Many industry

observers would have expected to see full con-version of the likes of Muslim CommercialBank and Habib Bank, but despite Islamic win-dows of these banks full fledged conversiondoes not seem to be on the horizon. Why?

A number of new Islamic banks havebeen set up in different parts of the world inthe last few years. This means that a newbreed of shareholders is entering the Islamicfinancial services industry. Also, the incum-bent players in Islamic banking & finance areopening new banks in new jurisdictions. FiveIslamic banks in UK, for example, haveshareholdings from the Middle Eastern in-vestors. The likes of Dubai Islamic Bank,Kuwait Finance House and Al Rajhi Bankhave gone to new countries in their attemptsto internationalise their businesses. It may beargued that this is not the reason for lack ofconversion, as the article should attempt toanswer why this is happening and not theconversion of conventional banks.

There are a number of reasons for thislack of conversion, firstly, it appears as ifthe governments in most of the countries

where Islamic banking exists do not be-lieve in Islamic banking. Apart fromMalaysia where promotion of Islamicbanking is part of the government policy,no other government is fully committed toIslamic banking and finance. Pakistan isnot an exception to this trend. While StateBank of Pakistan has supported Islamicbanking for some time now, but other gov-ernment authorities in Islamabad are atbest indifferent to this phenomenon.

Secondly, the subsidiary model has workedagainst the full conversion of conventionalbanks. In the UAE, for example, all the majorplayers in the market have Islamic subsidiaries(in the form of investment companies and spe-cialised consumer finance companies). In Pak-istan, now almost all the big players havelimited Islamic operations, and it appears as ifthe shareholders are not interested to furtherdevelop Islamic banking.

Thirdly, shari'a requirements in terms ofirreversibility of the process of Islamisationmay in fact be a hindrance to full conversionof conventional banks. While, it is acceptable

in shari'a for a conven-tional bank to get in-volved in Islamicbanking and finance (aslong as they observe seg-regation of Islamic busi-ness for the conventional), shari'a does notallow Islamic banks to do any shari'a repug-nant business. This means that being a con-ventional bank with some Shari'a compliantbusiness is considered as the optimum formof business. This is consistent with other eco-nomic phenomena. For example, the firmsfacing a choice between debt and equitywould almost always adopt a mixed debt-eq-uity capital structure. This means that in anenvironment where there is a choice betweenIslamic and conventional banking, it will al-ways be the case that conventional bankwould like to offer Islamic financial productsto the extent of demand for such products.Conventional banking, being less restrictive,will always remain a choice, even if it is not apreferred one.

Unless governments in the Muslim

countries start supportingand promoting Islamicbanking and ensure thatthere is a level playingfield for Islamic banks,conventional banks will

continue to operate as they have traditionallybeen for a long period. In the current politicalenvironment, it is a window of opportunityfor a major political party to adopt Islamicbanking as a part of its election manifesto toappeal to an increasing number of shari'asensitive people. If the likes of Pakistan Mus-lim League and Pakistan Peoples Party fail tocapitalise on this opportunity, is it time forPakistan Tehrik-e-Insaf to start patronisingIslamic banking?

The writer is a Shari’a advisor to anumber of banks and financial institutions

and can be contacted [email protected]

Humayon Dar

For comments, queries and contributions, write to:

email: [email protected] ph: 042-36298305-10 fax: 042-36298302 website: www.pakistantoday.com.pk

babur SaghirCreative Head

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F r i d a y, 1 8 N o v e m b e r, 2 0 1 1

Is it time forPakistan Tehrik-e-Insafto start patronisingIslamic banking?

Kunwar KhulDune ShahiDSub-Editor

maheen SyeDSub-Editor

Shari’a matterS

Layout Profit 18-11-11pages_Layout 1 11/18/2011 3:24 AM Page 3

Friday,18 November,2011

04news

commerce Secretary, Zafar mahmood

We have to fully normalise ourrelationship with India and wecannot do this without invokingthe MFN principle

KARACHISTAFF REPORT

KARACHI stocks market re-mained bearish Thursday withtrade volumes nosediving to

record lows of 28.66 million shares on ac-count of, what the analysts said, the in-vestors’ cautiousness ahead of ahead ofthe policy announcement due to be madeby the central bank at the end of thismonth. The day also saw benchmark,KSE 100-share index, losing 79.35 pointsor 0.66 percent on the back of globalmarkets’ fall after the Fitch report. Mar-ket index closed at 11,913.42 pointsagainst 11,992.77 points on Wednesdayafter hitting respective intraday high andlow of 12,025.02 and 11,908.06 points.“Bearish activity (was) witnessed at theKSE on global markets fall after Fitch re-port stated that EU debt crises could

spread to US banks,” viewed AhsanMehanti, director at Arif Habib Invest-ments. Total shares traded at the ready-counter were recorded at historic low of28.661 million compared to 51.340 mil-lion of the previous day. This depicts aslump of 22.679 million shares.

“Trade hit record lows as investorsremained cautious ahead of the StateBank’s policy announcements due at theend of this month,” Mehanti said.

Trading value also sharply contractedto Rs1.9 billion compared to Rs3.1 billionof the previous day.

Market capitalisation also remaineddownward and decreased, albeit slightly,to Rs3.103 trillion, compared to Rs3.122trillion on Wednesday.

Of total 316 traded scrips, 57 werecategorised as gainers and 146 as losers.The rest, 113, remained unchanged.

“Rise in brent crude oil prices near to

$112 and easing circular debt concerns inthe energy sector invited the investors’interest in blue chip oil stocks despiteconcerns for rising fiscal deficit in thecountry,” viewed Ahsan Mehanti.

Fatima Fertliser Company appearedas volume leader of the day with 4.7 mil-lion of its shares traded at highest pershare rate of Rs24.05. Company share

price decreased to Rs23.16 from theopening rate of Rs23.86.

Other scrips that followed were FaujiFertiliser, Pak Oilfileds, PTCL, EngroCorporation, Bank Al-Habib, DG KhanCement, NIB Bank, National Bank ofPakistan and LOTTE Pakistan PTA whichcounted their traded shares respectivelyat 1.8 million, 1.4 million, 1.3 million, 1.3

million, 1.1 million, 1.1 million, 0.847 mil-lion, 0.831 million and 0.780 million.

Turnover at future market also de-clined from 4.7 million shares to 2.7 mil-lion with only 16 scrips gaining against 91losers and one unchanged.

Engro NOV was the volume leader onthis side having 0.509 million of itsshares traded during the day.

Traded volumes nosedive to record 28m shares at KSE

punjab approvesrs36 billion irrigation projectLAHORE: Punjab government has approved a megaproject of Rs36 billion to rejuvenate the irrigation systemin the province. Under the project, drip irrigation systemwill be installed over an area of 120,000 acre and some9,000 water channels will be upgraded and restored.Provincial Minister for Agriculture and Livestock, MalikAhmad Ali Aulakh disclosed that the project had beeninitiated, which would be completed in six years.Addressing the steering committees of agriculture andlivestock supply chain management and irrigation projectdevelopment, he underscored that by improving supplychain management and participation in star farmnetwork, agriculture and livestock products export couldjump up to $4 billion. STAFF REPORT

outstanding dues: KeScfails to honour its commitmentKARACHI: Despite repeated promises and claims, KESChas not made any outstanding payments to SSGC sinceAugust 2011. As a result, SSGC’s receivables have balloonedto Rs32 billion, as of November 17, 2011. This alarmingsituation is forcing SSGC to substantially curtail gassupplies to KESC. Even without any Gas Sales Agreement(GSA) with KESC, SSGC has not cut off gas supplies to theformer only because it does not want Karachi to sufferprolonged power outages. In fact, in the month of Ramadanthis year, gas utility increased supply to 200 mmcfd. Itmust be mentioned that SSGC purchases gas from local andforeign E&P companies. STAFF REPORT

fbr extends date forfiling of St/fe returns for octISLAMABAD: The Federal Board of Revenue (FBR)has extended the date for filing of Sales Tax and FederalExcise Returns for the period of October to November25, 2011. In a letter issued, the Inland Revenue Wing ofFBR has communicated to all chief commissioners ofLarge Taxpayer Units (LTU) and Regional Tax Offices(RTO) that the date for filing of Sales Tax /FederalExcise Returns. STAFF REPORT

excel backtracks from picic acquisitionKARACHI: Excel Insurance Company Limited haswithdrawn its intention to acquire 40 per cent equityshares in PICIC Insurance Limited. This was notified byNext Capital Limited, the Excel Insurance’s managers tothe offer, to the shareholders and members at KarachiStock Exchange (KSE). The company cited the lapse of timeperiod to make the ‘Public Offer to Acquire’, as a reason forits withdrawal from the acquisition of 40 per cent votingshares in PICIC Insurance. STAFF REPORT

telecom operators impose service chargesLAHORE: The toughest competition in the telecomsector has pushed almost all cellular operators againstthe wall. Earlier, mobile operators imposed servicecharges for accessing helpline; now, most operators havestarted deducting service charges or operational fee onscratch card reloads. The largest cellular operator,Mobilink, has recently issued a public notice in which ithas disclosed that all pre-paid subscribers will becharged an operational fee of one per cent on Jazz Loadand two per cent on scratch card top-up. STAFF REPORT

24pc increase inloans alarms APTMA

LAHOReSTAFF REPORT

ALL Pakistan TextileMills Association(APTMA) ChairmanMohsin Aziz, whilecommenting on re-

port of State Bank about non- per-forming loans (NPLs), said abnormalsurge of more than 24 per cent in-crease in NPLs, from Rs494 billion toRs629 billion, in just one year wasalarming and disappointing.

In a statement issued, he saidreasons for such an abnormal in-crease in NPLs were twofold: higherinterest rates being the basic cause,and second being shortage of utili-ties supply. He said because of these

reasons industry was not perform-ing, which resulted in abnormal in-crease in NPLs.

APTMA Chairman was gravelyconcerned over impact of NPLs ontextile industry, which was alreadystruggling for survival in unfavor-able atmosphere prevailing in thecountry. He said textile industry,being capital and labour intensivewas not performing well becauseof high interest rates. Recent re-duction of discount rate of justtwo per cent was totally insuffi-cient for investment. He said re-duced gas supply to textile mills,in Punjab particularly where tex-tile units are concentrated, hadcrippled this industry.

He lamented the fact that more

than 120 days in the current yeartextile mills in Punjab were eitherclosed or running at very low ca-pacity. Such a sorry state of affairs,he emphasised, should not be al-lowed to continue as it would leadto a loss in major export earningsfrom textiles. It would also causemassive unemployment, he be-lieved. If high interest rate is notaddressed and is not brought downto a single digit figure clubbedwith control on power shortages totextile industry, not only wouldNPLs grow, but simultaneously itwould also result in stagnation ofexports, he said. This in turnwould lead to a very low growthrate of 2-2.5 per cent which hadpeaked at 8.5 per cent a few years

ago – the required rate for a devel-oping country like Pakistan – headded. He said impact of such in-crease in NPLs on industry furtherdamages industries’ image inbanking sector, as it restrictsbanks from extending furtherloans to the industry, in whichBMR is essential to keep productin line with technologically ad-vancing world requirement.

He therefore, stressed upongovernment – especially state bank– and all economic ministries tolook into this state of affairs, veryseriously. Both, reduction of inter-est rates and power shortages, ifnot addressed urgently will havedrastic irreversible consequences,he concluded.

Sponsors inject equityof $25 million in bycooil pakistan limited

KARACHISTAFF REPORT

SPONSORS of (Byco oil PakistanLimited) BOPL have recentlyinjected an additional equity of

around $25 million to ensure a timelycompletion of the oil refinery project.With this additional fund injection intothe company, debt and equity ratio willbe approximately 28:72. This ratio notonly depicts an extremely well capitalisedbalance sheet, but also unparalleledsponsor commitment, as infrastructureprojects in the country are generallybeing financed with over 70 per centdebt, and less than 30 per cent equity.Byco Oil Pakistan Limited (“BOPL”) isexpected to commence pre-commissioning, commissioning and startup process of its refinery in early 2012.This refinery has a crude processingcapacity of 120,000 barrels per day, andwill be the largest refinery in Pakistan. Inaddition, Byco Group already operates anexisting refinery of 35,000 barrels perday and a petroleum marketing networkcomprising of – as things stand - 213retail outlets. More importantly, Bycowill pioneer introduction of‘Isomerisation technology’ in Pakistanwhich will help value add surplusnaphtha – presently being exported –into motor gasoline.

PC briefed on secondarypublic offering of PPL

ISLAMABADJALALUDDIN RUMI

THE Privatization Com-mission Board directedPrivatisation Commis-

sion (PC) to obtain approval ofthe transaction structure andother related issues for PakistanPetroleum Limited (PPL) fromthe Cabinet Committee on Pri-vatisation (CCOP) and timelyconduct its upcoming Second-ary Public Offering (SPO).

The PC Board chaired byFederal Privatisation MinisterGhous Bux Khan Mahar alsogave approval to go ahead withthe privatisation process ofPakistan Mineral developmentCorporation (PMDC)’s eightSalt and Coal Mines projects.

The projects which got ap-proval are Lakhra Coal MinesJamshoro, Sor-Range CoalMines, Quetta, Degari CoalMines, Kalat, Sharigh CoalMines, Sibi, Khewara SaltMines, Jehlum, Warcha SaltMines, Khushab, KalabaghSalt mines, Mianwali andJatta/ Bahaddur Khel/ KarakSalt Quarries, Karak. The

Council of Common Interest(CCI) has already given ap-proval for these transactions.

The PC board directed theTransaction Committee to com-plete the due diligence processafter which financial advisors ofinterested parties to submitStatements of Qualifications(SoQ) to the Board in a week forfinalizing the pre-qualified bid-ders for National Power Con-struction Commission.

At least ten foreign andlocal interested parties havesubmitted Expressions of In-terest (EOI) for the transac-tion structure of NPCC out ofwhich party would found fi-nancially and legally eligiblewill participate in the biddingprocess.

The Cabinet Committee onPrivatization (CCOP) and PCboard have already approvedthe privatization of Transac-tion Structure of NPCC. Thebidding process would be opento PC Board and CCOP will ap-prove the bidding results, leadto the issuance of Letter of In-tent to successful bidder.

PC expects to fetch $ 42

million by the sale of NPCC es-tablished in 1974 under theMinistry of Water and Power.

The successful bidder willbe required to continue to op-erate the Company as a goingconcern. Up to 12 percentshares were allocated for em-ployees of NPCC through theBenazir Employee Stock Op-tion Scheme (“BESOS”).

The matter pertaining tothe privatisation of Small andMedium Enterprise (SME)Bank also came under discus-sion and it was decided thatthe transaction committeeshould review the status andreinitiate the process.

The PC board further de-cided to devise investmentpolicy for PC Funds in accor-dance with the Finance Divi-sion’s guidelines.

The meeting formulatedvarious recommendations forCabinet Committee On Pri-vatisation (CCOP) and re-viewed the status and progressof the ongoing and upcomingtransactions. Earlier, the min-utes of the previous meetingwere approved.

Layout Profit 18-11-11pages_Layout 1 11/18/2011 3:24 AM Page 4

05

Friday,18 November,2011

news

CORPORATE CORNERgovt of Khyber pukhtunkhwa launchesits first ever integrated pfm strategy

ISLAMABAD: Finance Minister of government ofKhyber Pukhtunkhwa, Muhammad Humayun Khan,inaugurated the first ever integrated Public FinanceManagement (PFM) strategy based on the principles ofpromoting efficiency, accountability and transparencywithin government system. The workshop wasattended by the representatives of the donors'community and government of Khyber Pukhtunkhwa.The integrated PFM strategy aims at mitigating risksidentified in the PEFA and FRA, the Secretary Financeinformed the audience. PRESS RELEASE

pakistan contributes to Sapapj’s 3rd quarter performance KARACHI: Pakistan has been one of the keycountries contributing to the improvedperformance of SAP APJ revenues. Commentingon SAP APJ’s performance and Pakistan’sgrowing market, Hassan Jamal, Country LiaisonManager, SAP Pakistan said, “Pakistan has madea solid contribution to SAP APJ region’s bottom-

line growth.” PRESS RELEASE

microsoft’s play fair Day spotlights$1.5b disadvantage of piracyKARACHI: Manufacturing companies in Brazil,Russia, India and China that choose to use illegalsoftware steal more than $1.5 billion from their in-market competitors that choose to play fair by usinggenuine software. Microsoft released the findings ofthe first-ever study that examines the financialimpact using illegal software has on the competitivelandscape within developing economies. In supportof the inaugural Play Fair Day, which is a globalinitiative to emphasise the importance of utilisinglegitimate software, this commissioned studyquantifiably proves the harm software piracy has onbusinesses that choose to play fair. PRESS RELEASE

netSol signs agreementwith minsheng financial leasing

LAHORE: NetSol Technologies Ltd, a worldwideprovider of global IT and enterprise applicationsolutions, announced that it has signed agreementwith Minsheng Financial Leasing Company Ltd, aleading provider of aircraft leases in Asia, to

implement the NFS solution. The agreement, whichincludes product licenses, business processconsultancy and on-site implementation servicesexpands and reinforce a strategic partnership betweenNetSol and Minsheng that began in 2009. PRESS RELEASE

emirates places orderfor 50 boeing 777-300 ers

DUBAI: Emirates, one of the world’s fastestgrowing airlines, placed the single largest aircraftorder in dollar value an additional 50 Boeing 777-300 ER aircraft, worth approximately US$18 billion(AED 66 billion) in list price. This record breakinglong-range aircraft order, adds to Emirates existingworld’s largest fleet of 95 777s in service includingnine 200 ERs, 10-200 LRs, 12 -300s, 61-300 ERsand three freighters. PRESS RELEASE

Qatar airways announcesthree day worldwide sale DOHA: Qatar Airways has launched a three-dayglobal sale; offering incredible savings on returnfares to and from over 100 destinationsworldwide. Passengers anywhere in the world,where Qatar Airways operates to, can now availthe special fares. The savings are based on return

fares, including taxes with certain conditionsattached. Passengers can choose from a diverserange of more than 100 business and leisuredestinations, including Hong Kong, Seychelles,Kathmandu, Madrid, New York, Sao Paulo,Beirut, Athens, Beijing, Muscat, Delhi, Goa,Melbourne and recently-launched routes toBudapest, Brussels, Montreal and Venice via theairline’s Doha hub. PRESS RELEASE

chairman boi, Saleem h mandviwalla

MUZAFFARABAD: Mr Nichlas Stewart Hales,Managing Director Pakistan Tabacco Company isbeing warmly received by Mr Aamir H Kazi,General Manager Pearl-Continental Hotel,Muzaffarabad. PRESS RELEASE

President Zardari has recommendedfor currency swap agreement betweenPakistan and Egypt to give impetus tothe existing level of mutual trade

LAHORE: Ayla Majid, Director, ISE, Muhammad Uzair,Director audit. Tourism Promotion Services Ltd,Junaid Iqbal, former CEO, BMA Financial ServicesLtd, Farid Alam, FCA, CEO, AKD Securities Ltd,Zeeshan Afzal, Executive Vice President, Arif HabibCorporation at the Accountants for Business GlobalForum 2011. PRESS RELEASE

SALES TAX REGIME

KCCI demandsFBR to defer decision

KARACHISTAFF REPORT

KARACHI ChamberOf Commerce & In-dustry (KCCI) hasdemanded deferenceof implementation of

SRO1012 dated 4th November 2011with immediate effect. The pro-posed postponement is until neces-sary consultations are held with allstakeholders including chambers ofcommerce and trade Bodies beforeany changes are made in “Zerorated Sales Tax” regime.

In his letter to Chairman FBRMian Abrar Ahmad President KCCI,has demanded immediate appoint-ment for a detailed discussion withrepresentatives of KCCI along withother major stakeholders. He was ofthe view that framework and proce-dures provided in SRO 283 for“Zero rated Sales Tax” regime forfive export sectors has so far workedsmoothly for both the trade and in-dustry by ensuring a level playingfield. Therefore rate of Sales Tax forboth Industrial and Commercial im-porters should be maintained at“Zero” to avoid distortions in taxpolicy. The action would also pre-vent misuse of zero rated facility

and eliminate the scope of corrup-tion which is an integral part of “Re-fund” process.

Mian Abrar Ahmad informedthat delegations of Pakistan Chemi-cals and Dyes Merchants Associationand Pakistan Yarn Merchants Asso-ciation led by their chairmen visitedKCCI and requested to immediatelyraise the issue with concerned au-thority while demanding suspensionof SRO 1012 and asked to reinstateSRO 283. A large number of repre-sentations from KCCI members be-longing to trade and industry as wellas affiliated trade bodies, expressingserious grievances over drasticchanges unilaterally made in “Zerorated Sales Tax regime for 5 exportsectors” under SRO No1012 dated4th November 2011. This cancelsand supersedes SRO No.283 (I) 2011dated 1st April 2011.

President KCCI articulated

that assessing officers of relevantcollectorates are misinterpretingconditions of SRO 1012 and charg-ing value addition on sales tax aswell as withholding income tax atnormal applicable rates (3 per centto 5 per cent) on commercial im-ports of notified items. In somecases, total incidence of taxescharged by customs has been 13per cent to 14 per cent on consign-ments cleared on or after 4th No-vember 2011. Ironically, new rulesintroduced in SRO 1012 providefor commercial importers to claimrefund for 5 per cent sales tax byissuing “zero rated” invoices toregistered industrial buyer.Whereas, the very idea of “ZeroRated Sales Tax” was evolved andimplemented to eliminate “Re-funds”; this has been a majorsource of corruption and has re-sulted in heavy losses to the ex-

chequer as well. Modified schemewill once again open floodgates ofcorruption that is always an inte-gral part of “Refund” procedures.

President KCCI voiced that ap-parently true spirit of zero rated taxregime has been undermined byeliminating entire segments of“commercial importers, traders andwholesalers” from the scope of thisscheme. These important segmentsare a vital link in supply chain ofraw materials and intermediatesmainly catering to small andmedium sized industries and ex-porters. The sector is not just asource of indirect finance to SMEs,but it also generates employmentopportunities. Such measures maylead to closure of well-establishedmarkets in major cities of Pakistandealing in chemicals, yarns andfibers, processing aids and acces-sories used in all major export ori-ented industries. Under amendedconditions it would be impossiblefor commercial importers andwholesalers to survive and competewith imports by those registered asindustry whether or not they have aphysical presence or actually con-duct any exports.

Mian Abrar stated such drasticmeasures without consultation withrelevant representatives of tradeand industry are not only surprisingbut also raise questions about sin-cerity of concerned authorities inproviding a fair and equitable envi-ronment for investment in varioussectors of economy which have po-tential and will to generate substan-tial revenue for exchequer.

g rules introduced in Sro 1012 allow commercial importers toclaim refund for 5 per cent sales tax by issuing zero rated invoicesg Zero rated tax regime undermined by eliminatingsegments of ‘commercial importers, traders and wholesalers’

Drastic measures without consultationwith relevant representatives of tradeand industry raise questions aboutsincerity of concerned authorities

lcci urges govt to removetaxes on furnace oil

LAHOReSTAFF REPORT

LAHORE Chamber of Commerce and Industry urgedgovernment to remove taxes on furnace oil toensure relief to industry and industrialists, who are

under tremendous pressure. An acute gas shortage andexpensive alternate fuels like furnace oil has also added tothe aforementioned pressure. In a statement issued here,LCCI President Irfan Qaiser Sheikh, Senior Vice PresidentKashif Younis Meher and Vice President Saeeda Nazar saidindustry is the biggest job provider and its closure wouldnot create social unrest. It would also deprive governmentof much-needed revenue to run its affairs he added.Therefore it is the duty of government to ensure availabilityof cheaper alternate fuel to industry if it is unable toprovide gas, he said. “The rise in number of unemployedworkers would definitely give air to anti-governmentsentiments because industry closure would throw millionsof industrial workers out of jobs.” LCCI office-bearersurged government to immediately take concrete measuresto avert industrial closures and resultant massive lay offs.“How can the industry afford to pay the all-time high markup of 16 per cent when there in no gas for the industry?”they asserted. They said around 40 per cent of industrialunits in Punjab run on gas. Hence, gas suspension meansindustrial production is cut to half of its capacity resultingin a loss of millions of rupees to exchequer. They said thereis a global phenomenon that industry is given top prioritywhereas in Pakistan it is neglected and other sectors aregiven priority. They also urged government to get obsoletegas geysers and heaters with latest solar geysers andheaters to ensure gas to industry. The ‘discriminatoryattitude’ of government was not only denting its goodwilland reputation but it has also put a question mark on itsability to manage and govern things. They said industrialunits in Sindh were getting almost uninterrupted supplyexcept two- to-three hour load shedding periods. Pointingout that gas suspension plan is a death knell for export-based industry and productivity, LCCI office-bearers soughtPrime Minister’s intervention and help for a regular supplyof gas to industry in Punjab or removal of taxes on furnaceoil. How industry would manage export orders worthmillions of dollars when there is no gas, was a popularquestion. They were also anxious about thousands of dailywagers who have a single source of income. And above all,they wanted to know how government plans to convinceboth local and foreign investors for investment when it isunable to manage supply of gas to existing industrial units.LCCI office-bearers said the gas suspension decision hadsent a very negative signal to foreign buyers.

Layout Profit 18-11-11pages_Layout 1 11/18/2011 3:24 AM Page 5

top 5 perForMers sector wiseSymbol open high low current change volume Symbol open high low current change volume

Food ProducersAbdullah Shah 8.00 8.00 7.00 8.00 0.00 53Colony Sugar Mills 1.75 1.75 1.70 1.74 -0.01 23,501Engro Foods Ltd. 23.52 23.90 22.50 22.54 -0.98 91,748Habib Sugar Mills 28.10 28.50 27.50 27.88 -0.22 70,820Habib-ADM Ltd.XD 11.58 11.70 11.50 11.50 -0.08 2,995

Household Goods(Colony) Thal 1.70 1.11 1.11 1.11 -0.59 1,000AL-Qadir Textile 11.25 11.25 11.25 11.25 0.00 500Amtex Limited 1.67 1.70 1.45 1.60 -0.07 132,822Annoor Textile 13.00 14.00 14.00 14.00 1.00 1,000Artistic Denim XD 18.50 18.50 18.25 18.49 -0.01 1,049

Personal GoodsAHCL-NOV 31.00 31.00 29.45 29.51 -1.49 376,500AHCL-OCT 30.82 30.82 29.28 29.32 -1.50 516,500ANL-OCT 4.01 4.25 3.90 3.95 -0.06 24,500ATRL-NOV 120.42 121.50 117.90 119.21 -1.21 201,000ATRL-OCT 119.16 120.30 116.50 117.71 -1.45 200,000

Future ContractsAbbott Laboratories 102.49 103.00 101.00 102.10 -0.39 1,283Ferozsons (Lab) Ltd. 80.00 80.00 78.10 80.00 0.00 45GlaxoSmithKline Pak. 68.92 68.26 67.01 68.06 -0.86 1,557Highnoon (Lab) 28.09 28.09 27.65 28.09 0.00 100IBL HealthCare XD 10.92 11.92 10.99 11.92 1.00 25,154

Pharma and Bio TechP.T.C.L.A 10.89 10.98 10.65 10.71 -0.18 470,873Pak Datacom LtdXD 35.03 34.01 34.01 34.01 -1.02 500Telecard Limited 0.95 1.00 0.90 0.90 -0.05 68,502Wateen Telecom Ltd .68 1.70 1.52 1.65 -0.03 152,954WorldCall Telecom 1.13 1.19 1.00 1.06 -0.07 235,458

Fixed Line TelecommunicationP.T.C.L.A 11.47 11.77 11.42 11.64 0.17 4,752,418Pak Datacom Ltd. 31.65 32.66 31.65 32.66 1.01 1,430Telecard Limited 1.09 1.09 1.01 1.03 -0.06 194,249Wateen Telecom Ltd 1.51 1.68 1.47 1.50 -0.01 449,333WorldCall Telecom 1.32 1.35 1.15 1.28 -0.04 649,632

ElectricityGenertech 0.50 0.50 0.36 0.50 0.00 1Hub Power Co.XD 36.38 36.50 36.10 36.10 -0.28 1,022,035Japan Power 0.75 0.77 0.70 0.71 -0.04 38,682K.E.S.C. XR 1.70 1.70 1.56 1.60 -0.10 752,756Kot Addu PowerXD 41.36 41.80 41.25 41.53 0.17 220,355

BanksAllied Bank Ltd 63.16 64.00 62.50 62.69 -0.47 32,694Askari Bank 11.15 11.29 10.75 10.89 -0.26 944,906B.O.Punjab 5.94 6.08 5.79 5.83 -0.11 319,287Bank Al-Falah 11.15 11.35 10.70 10.89 -0.26 1,929,563Bank AL-Habib 29.95 30.20 29.55 29.91 -0.04 175,090

Non Life InsuranceAdamjee Ins XD 49.64 49.50 48.60 49.40 -0.24 6,785Ask.Gen.Insurance 8.50 8.50 8.10 8.47 -0.03 1,651Atlas Insurance 34.49 35.00 33.86 33.99 -0.50 1,110Central Ins Co. 48.67 50.00 48.00 49.79 1.12 3,909Century Insurance 7.16 7.50 7.06 7.50 0.34 1,500

Life InsuranceAmerican Life 14.50 14.50 13.50 14.50 0.00 2East West Life Assur 1.40 2.34 1.40 1.40 0.00 1EFU Life Assur 65.53 68.80 65.53 65.53 0.00 157

Financial ServicesAMZ Ventures A 0.32 0.35 0.22 0.30 -0.02 9,463Arif Habib InvesXD 15.89 15.50 14.89 14.89 -1.00 13,487Arif Habib Ltd. 17.96 18.34 17.20 17.71 -0.25 19,659Dawood Equities 0.88 1.09 0.86 0.86 -0.02 9,495Invest & Fin.Sec. 7.26 7.26 7.25 7.25 -0.01 2,100

Equity Investment Instruments1st.Fid.Leasing Mod 1.70 1.50 1.50 1.50 -0.20 15,000AL-Noor ModarXD 3.98 4.00 3.60 4.00 0.02 25,100Allied RentalModXDXB 19.90 19.90 19.88 19.90 0.00 3,700Atlas Fund of Fund 6.00 6.10 5.90 5.90 -0.10 414,000B.F.ModarabaXD 5.56 5.56 5.00 5.56 0.00 7

MiscellaneousCentury Paper 13.50 14.00 13.50 13.50 0.00 4,133Pak Paper Prod. 31.79 31.79 31.53 31.79 0.00 270Security Paper 34.00 35.70 35.00 35.52 1.52 1,630Johnson & Philips 7.00 7.00 6.50 7.00 0.00 205Pakistan Cables 31.00 32.55 31.00 31.00 0.00 101P.N.S.C.XD 15.80 16.00 15.85 15.85 0.05 2,061Pak.Int.Con. SD 70.00 71.80 70.48 70.66 0.66 3,273TRG Pakistan Ltd. 1.63 1.69 1.55 1.56 -0.07 623,313Murree BreweryXDXB 70.80 71.40 70.50 70.60 -0.20 1,725Grays of Cambridge 25.00 25.00 25.00 25.00 0.00 45Pak Tobacco Co. 62.39 65.40 61.00 62.39 0.00 401Shifa Int.Hospitals 28.10 29.50 28.10 28.10 0.00 400Hum Network XD 15.93 15.93 15.50 15.50 -0.43 3,670Media Times LtdXR 7.96 7.96 7.96 7.96 0.00 1P.I.A.C.(A) 2.01 2.14 1.93 1.96 -0.05 16,139P.T.C.L.A 10.86 11.05 10.80 10.87 0.01 1,395,771Telecard Limited 1.03 1.05 0.92 0.93 -0.10 176,661Wateen Telecom Ltd 1.88 2.00 1.82 1.89 0.01 145,392WorldCall Telecom 1.11 1.16 1.03 1.10 -0.01 208,827Sui North GasXDXB 17.64 17.79 17.55 17.65 0.01 6,800Sui South GasXDXB 20.05 20.10 19.97 19.99 -0.06 38,961EFU Life Assur 68.79 69.20 68.10 68.13 -0.66 1,400AKD Capital Ltd.XD 27.10 27.25 27.00 27.13 0.03 800Pace (Pak) Ltd. 1.69 1.75 1.64 1.68 -0.01 92,273Netsol Technologies 10.99 11.00 10.70 10.72 -0.27 184,026Pak Telephone 2.60 3.00 2.60 2.60 0.00 1

Symbol open high low current change volume

Oil and GasAttock PetroleumXD 403.85 404.69 396.00 396.87 -6.98 61,485Attock Ref.XD 118.78 120.40 116.10 117.57 -1.21 833,559Byco Petroleum 6.89 6.98 6.75 6.77 -0.12 399,510Mari Gas Co.XB 91.01 93.80 89.30 92.03 1.02 91,674National Ref.XD 325.19 334.90 308.94 310.82 -14.37 314,938

ChemicalsAgritech Ltd. 15.00 15.00 14.00 15.00 0.00 1,500Arif Habib CoXDXB SD 30.83 31.05 29.29 29.30 -1.53 2,485,646Biafo IndustriesXD 68.59 71.99 65.17 70.64 2.05 855Clariant Pakistan 140.69 143.49 137.50 139.79 -0.90 4,017Dawood Hercules 38.96 40.80 37.06 37.39 -1.57 244,529

Industrial metals and MiningCrescent Steel 23.90 24.70 23.25 23.59 -0.31 40,885Dost Steels Ltd. 1.45 1.50 1.41 1.45 0.00 8,285Huffaz Seamless Pipe 8.93 9.00 8.60 9.00 0.07 3,035Int. Ind.Ltd. 34.98 35.00 34.00 34.50 -0.48 25,300Inter.Steel Ltd. 11.56 11.52 11.00 11.00 -0.56 63,850

Construction and MaterialsAl-Abbas Cement 2.00 2.00 1.90 1.92 -0.08 26,799Attock CementXD 51.11 51.99 50.81 51.02 -0.09 108,952Berger Paints 11.79 12.00 11.60 11.91 0.12 4,762Bestway Cement 8.11 9.11 8.11 8.11 0.00 100Cherat Cement 7.66 8.19 7.50 8.01 0.35 197,042

General IndustrialsCherat PackagingXD 29.62 30.40 28.14 28.14 -1.48 14,022ECOPACK Ltd 2.49 3.25 2.21 3.08 0.59 614,084Ghani Glass LtdXD 41.17 42.00 39.12 39.60 -1.57 16,802MACPAC Films 7.72 7.95 7.01 7.65 -0.07 993Merit Pack 22.00 22.00 20.95 22.00 0.00 70

Industrial EngineeringAdos Pakistan 6.93 7.90 6.93 6.93 0.00 10AL-Ghazi Tractors 184.30 184.30 184.30 184.30 0.00 90Bolan CastingXD 28.50 28.50 28.25 28.26 -0.24 5,055Ghandhara Ind. 7.00 6.90 6.25 6.70 -0.30 5,004Hinopak Motor 108.00 108.00 102.60 108.00 0.00 2

Automobile and PartsAgriautos Indus.XD 58.00 58.00 58.00 58.00 0.00 2,000Atlas Battery Ltd. 169.52 170.00 168.50 168.94 -0.58 240Atlas Honda Ltd. 117.00 118.00 117.00 117.94 0.94 302Dewan Motors 2.63 2.79 2.43 2.51 -0.12 39,802Exide (PAK) 168.53 169.99 168.53 168.53 0.00 31

BeveragesMurree Brewery Co. 110.49 111.43 109.00 111.18 0.69 1,170Shezan Int’l 150.02 150.00 145.05 145.58 -4.44 203

Mutual Funds

fund offer repurchase navAlfalah GHP Cash Fund 501.2900 501.2900 501.2900 Askari Islamic Asset Allocation Fund 114.7196 111.8516 111.8516Askari Islamic Income Fund 103.6501 102.6136 102.6136 Askari Sovereign Cash Fund 100.6900 100.6900 100.6900 Atlas Income Fund 519.3500 514.2100 514.2100 Atlas Islamic Income Fund 519.0900 513.9500 513.9500Atlas Money Market Fund 516.9700 516.9700 516.9700 Atlas Stock Market Fund 453.1500 444.2600 444.2600 Crosby Dragon Fund 82.9800 81.3500 81.3500

fund offer repurchase navHBL Money Market Fund 100.2768 100.2768 100.2768 HBL Multi Asset Fund 87.0103 85.3042 85.3042 HBL Stock Fund 97.6745 95.2922 95.2922 IGI Income Fund 101.8987 100.8898 100.8898IGI Stock Fund 112.3545 109.6141 109.6141 JS Principal Secure Fund I 121.5000 111.5200 117.3900 JS Principal Secure Fund II 104.1200 96.5000 101.5800 KASB Cash Fund 0.0000 0.0000 100.1087Lakson Equity Fund 106.3763 103.2779 103.2779

Markets

Friday, 18 November, 2011

06

top 10 sectors

24% 01%Construction & Materials

Chemicals General Industrial

07%Electricity

02%03%

Fixed Line Telecommunication

01%Equity Investment Instruments

Financial Services

09%Banks35%Oil & Gas10%Personal Goods08%

International Oil PriceWTICrude Oil

$102.49

BrentCrude Oil

$112.39

STOCK MARKET HIGHLIGHTS

Index Change Volume Market ValueKSE-100 11913.42 -79.35 23,331,124 1,885,011,647 LSE-25 3118.17 -35.71 1,404,463 34,465,272ISE-10 2664.92 -14.76 38,680 96,520

Major Gainers

Company Open High Low Close Change TurnoverSanofi-Aventis 140.55 145.00 142.00 145.00 4.45 740Mithchells Fruit 79.20 83.00 83.00 83.00 3.80 304P.S.O. 248.91 254.00 245.10 252.58 3.67 546,522Jubilee Life In 58.84 61.50 59.99 61.50 2.66 3,747Pak Oilfields Ltd. 361.10 364.49 360.50 363.45 2.35 1,430,951

Major Losers

UniLever Pak Ltd. 5592.00 5675.00 5501.00 5527.60 -64.40 17Nestle PakistanXD 3033.78 3049.98 2980.06 3002.67 -31.11 30Indus Dyeing XD 403.84 419.90 383.65 384.13 -19.71 558Siemens Pak 898.50 880.00 877.00 879.71 -18.79 35National Ref.XD 321.40 321.90 316.00 316.86 -4.54 42,764

Volume Leaders

Fatima Fert.Co. 23.86 24.05 23.10 23.16 -0.70 4,735,720Fauji FertilizerSPOT 183.63 183.00 180.45 181.78 -1.85 1,872,992Pak Oilfields Ltd. 361.10 364.49 360.50 363.45 2.35 1,430,951P.T.C.L.A 10.86 11.05 10.80 10.87 0.01 1,395,771Engro Corporation 133.11 132.55 130.30 132.01 -1.10 1,346,175

Bullion MarketPer Tola (PKR) Per 10 Gm (PKR) Per Ounce US$

Gold 24K 57,028.00 48,944.00 1,758.00Gold 22K 51,608.00 44,245.00 –Silver (Tezabi) 1,084.00 931.00 35.05Silver (Thobi) 1025.00 880.00 –

Interbank RatesUS Dollar 87.1242UK Pound 137.1160Japanese Yen 1.1310Euro 117.2082

Buy SellUS Dollar 86.70 87.40Euro 116.47 117.62Great Britain Pound 135.98 137.21Japanese Yen 1.1202 1.1269Canadian Dollar 84.24 86.35Hong Kong Dollar 10.99 11.23UAE Dirham 23.58 23.72Saudi Riyal 23.10 23.21Australian Dollar 86.69 89.11

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Friday,18 November,2011

it is really unbelievable thatcabinet committee onenergy (ccoe) is taking such aserious issue of power crisisin such a non-serious manner

news

07 pm, yousuf raza gilani

LAHOReIMRAN ADNAN

PAKISTAN is spending almost 20 percent of its foreign exchange on fossilfuels imports. Annually $7 billion isbeing eaten away in import of

conventional energy resources that is equivalentto 40 per cent of total imports by the country,but the country still lacks far behind in tappingthe vast potential of alternate energy resources.

3000mw power potential in SugarinDuStryA research conducted by the University ofAgriculture, Faisalabad, suggests that thecountry’s energy demand is expected to increasethree fold by 2050, but supply position is notinspiring in anyway. It indicates that Pakistanhas almost 3,000 MW power generationpotential in sugar industry through biogas, but itis hardly producing some 700MW. Study pointsout that the renewable and sustainable energyresources are the best substitute to theconventional fuels and energy sources. Itestimates that Pakistan has almost 159 millionanimals that produce almost 652 millionkilogram of manure daily from cattle and buffaloonly, which can be used to generate 16.3 million-cubic-meters biogas per day and 21million tonnes of bio fertiliser peryear. It can easily compensatearound 20 per cent ofnitrogen and 66 per centof phosphorusrequirement in the cropfields, the studyestimates.

economic anDSocialbenefitS

Highlighting theeconomic andsocial benefits ofbiogas generation,the researchindicates that a biogasunit of 10-cubic-metersize is anticipated tosave almost Rs92,062per annum on accountof conventional fuelsspent otherwise. Inaddition, women’sopportunity cost, with

introduction of biogas units reportedlyincreased; subsequently positively impactinghousehold incomes. Research highlights thatlivestock sector in the country is growing at therate of four per cent per annum. Energyproduction by using animal feces is highlysustainable, economically viable and sociallyacceptable, besides being environment friendly.It points out that Pakistan is anticipated to act asan energy corridor for the region as it holdsimportant strategic location by bordering theArabian Sea, India, China, Iran and Afghanistan.To keep-up this position, the study recommends,Pakistan will have to strive hard for energy self-sufficiency.

learning from the euIt indicates that European Union (EU) haslegislated that each member country should beproducing at least 22.1 per cent of theirelectricity from renewable resources in orderto stick to the commitment of producingenergy from best alternative energy sources.Pakistan, by following the same code ofconduct may fulfill its energy needs and satisfythe role of being an environment friendlynation. Nearly 70 per cent of the country’srural population can easily benefit from biogasenergy as these plants are low-cost and can berun with a small budget. Research discloses

that demand for

small biogas power generation units isincreasing steadily as this decentralised sourceof energy can ensure uninterrupted powersupply to villages. Though, many agencies likePakistan Dairy Development Company(PDDC), Pakistan Council for RenewableEnergy Technologies (PCRET) and RuralSupport Programs Network (RSPN) areworking to disseminate this renewable energytechnology, but the need of a national biogaspolicy is imperative to bring this technology atthe farmer’s doorstep and boost its successrate, the study recommends and adds thatinstallations of biogas bottling plants can be anadded opportunity.

10,000 unitS to be Set up in 5 yearSIn addition, the study recommends thatPakistan can also explore biogas potential ofcitrus pulp, paper industry, slaughter houseand street waste. It indicates that poultrywaste is ideal substrate to produce biogas.Rice straw, when used for biogasproduction in comparison withother resources like cotton gin,etc. was found best formethane production butwhen cotton gin mixedwith livestock dung was

fermented;it produced

more gas inlesser time.

Domestic bio-gasgeneration was

initiated in Pakistan in1959 and a significant

number of plants wereoperational in different parts of

the country. The governmentlaunched Biogas Support Program(BSP) in 2000, which hadachieved a target of installing

some 1,200 bio-gas units, whereasanother 10,000 units are expectedto be set up in the next five yearsthat would tap almost 27 per cent

of the country’s biogas potential.

KARACHIISMAIL DILAWAR

THE net inflow of foreign invest-ment into Pakistan shrank sig-nificantly by 58 per cent duringfirst four months of current fi-

nancial year. Central bank reported thatforeign investors invested only $238million during July-October FY12against $571.8 million of correspondingperiod last year.

Review period saw investment fromforeign private and public sectors contract-ing, respectively, to $239.4 million and$1.3 million from previous year’s $610.5million and $38.7 million, State Bank said.This depicts an absolute decrease of 60.8

per cent or $371 million in foreign privateinvestment and 96.6 per cent or $37.4 mil-lion in foreign public investment oversame months in FY11. Of the total privateinvestment, Foreign Direct Investment(FDI) depleted by 28 per cent to $340.2million compared to $470.5 million of thesame period last year. FDI, against privati-sation proceeds, remained zero thus unre-ported by central bank.

While portfolio investment at coun-try’s stocks market showed an absoluteslump of $240.8 million to stand at minus$100.8 million compared to $140 millionof FY11. Portfolio investment from thepublic sector also remained downward atminus $1.3 million, down 96.6 per centwhen compared to last year’s minus $38.7

million. Foreign investment against debtsecurities, showing the net sale or pur-chase of special US$ bonds, Eurobonds,FEBC, DBC, treasury bills and PakistanInvestment Bonds, was no exception. Itcame down by $37.4 million to minus $1.3million against minus $39 million of July-Oct FY11. A region wise analysis of SBP’sinvestment data reveal that investmentfrom developed nations of Europe andNorth American regions, decreased moresharply, by 90 per cent, to $36.4 millioncompared to previous $354.9 million.

Investment from Western Europeshrank to negative $168.6 million againstpositive $140.6 million. While fromNorth America it reduced to $174.4 mil-lion from $ 195.3 million.

From United States – Pakistan’slargest source of FDI – the investmentwent down by 10.5 per cent to $174 mil-lion compared to $ 194.7 million of FY11.

Tsunami-hit Japan, however, stood asan exception with investment from the FarEastern industrial giant showing 92 percent increase to $2.5 million against theprevious $1.3 million. The investors fromdeveloping economies of Afro-Asian re-gions seemed less wary of risky investmentclimate in the terrorism hit Pakistan, as in-vestment from South registered a nominaldecrease of 9.8 per cent. The direct andportfolio investment from developing na-tions slid to $204 million compared to$226 million previously, SBP reported.

Whereas investment from African

countries inched up by 34 per cent to $22million, Asian investors appeared to berisk-averse and invested 16.6 per centless, $160.7 million, compared to $192.7million previously.

Analysts termed the ongoing down-ward trend in foreign investment as crit-ical for the resource constrained countrysaying dollar inflow was the only perma-nent factor that could rid Pakistan of itsbalance of payment woes. Exacerbated byongoing diplomatic cold war betweenWashington and Islamabad, investmentclimate in the terror stricken country hasnot been conducive for a considerablytime. This is due to a deteriorating lawand order situation and ever-present po-litical instability.

g foreign direct, portfolio investment down by 58pc in july-octfy12 g only $238 million flew into country against $571.8 million in fy11

Biogas, an answer to Pakistan’s energy crisis

international investors remain risk-averse towards pakistan

PIA INCREASES FUELSURCHARGE BY 50 per cent

KARACHIWAqAR HAMZA

AIR passengers have been hit with sharpfuel surcharges, as cost of travelingon Pakistan International Airlines (PIA)

flights has increased exponentially. PIA hasincreased the fuel surcharge by 50 per cent ondomestic and international flights with effect fromNovember 5, 2011 while other domestic airlines,Airblue and Shaheen Airways, are yet to decide ona possible surcharge. Aviation experts say there isno valid justification for imposing fuel surchargeat a time when oil prices have begun to stabilise inthe international market. Most of the internationalairlines had announced cuts in fuel surcharge. All-Nippon Airways, Cathay Pacific and SingaporeAirlines set the precedent and followed by otherairlines. Some believe that by imposing additionalfuel surcharges, PIA has paved the perfect way forupcoming airlines such as, Air Indus and BhojaAir, to flourish their business on domestic routesat the cost of exchequer. “Fuel surcharges arebeing added on airline tickets to partially recoverthe increase in operational costs due tofluctuations in jet fuel prices. Airlines ofteninclude fuel surcharges on top of base fare in orderto cover increasing fuel prices because it is easy toadd and remove fuel surcharges when pricesincrease or go down,” said Shah Murad, anaviation lawyer. “International airlines beganadding fuel surcharges on international routes in2008 when oil prices hit a record high of $147 abarrel,” said Murad. Despite knowing all this,surprisingly, PIA has imposed additional fuelsurcharges without any legitimate reason to makeup for lost profits. Now due to exorbitant fare

increase, air traveler would not prefer to travelon PIA flights which will definitely create

financial troubles for ailing airline.Ironically, base fares of PIA arealready higher as compared to otherdomestic and international airlines.In current year, this is the second

time PIA has imposed fuelsurcharges. In April, 2011 Pakistan

International Airlines (PIA) had also increased thefuel surcharge due to the soaring prices of the oilin international market. PIA has increased $40 atone-way ticket for US and Canada under fuelsurcharge head, for other European countriesincluding Britain $20 and $10 have beenincreased for Middle East, India and Far Eastcountries. Besides, Rs150 to Rs300 have beenadded up to the one-way tickets for domesticflights. In May, 2011 the Board of Directors of PIAtook decision to link fuel surcharge to oil prices ininternational market. It is common in the airlineindustry that fuel surcharge may rise, fall orremoved, subject to fuel prices however, in case ofPIA, even fuel prices go down, but airfare willremain unchanged. PIA has never cut fuelsurcharge despite declining fuel prices in theinternational market. Fuel costs constituteapproximately 45 per cent of the total operatingcost of PIA flight operations.

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