Pakistan Economy - News & Updates - Archive

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Poverty ratio down by 10 percent in four years: Cheema

LAHORE (June 05 2007): Provincial Minister for Industries, Muhammad Ajmal Cheema has said that rapid industrialisation is going on in Pakistan and all the spheres of the industrial sectors are contributing to this phenomenal growth.

While addressing a seminar here on Monday, he said that all the industries should take progressive steps in the development of their products because latest technology and new business trends are now part and parcel of a successful industrial revolution. He said that industrialists should ensure the latest technology. He said that during last 4 years poverty ratio has been decreased by 10 percent and more than 1.5 million new job opportunities have been created.

He said that we have to improve our infrastructure, build better facilities, introduce advance technology in machinery and expertise, skilled and semi-skilled work force, and above all, they must be quality conscious to compete with the development world.

Muhammad Ajmal Cheema said that the Government of Punjab and the Ministry of Industries would provide all kind of assistance to all those organisations that have a good business plan for the industrial growth of Pakistan.

http://www.brecorder.com/index.php?id=573272&currPageNo=1&query=&search=&term=&supDate=

 

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Wapda to commission 136 megawatts project

LAHORE (June 05 2007): Water and Power Development Authority (Wapda) will commission a 136-megawatt (MW) Rental Power Project by the end of this month. This project will contribute 3.2 million units of electricity per day to the national grid to share the electricity consumption load on the power system.

The project is being elected at the premises of Bhikhi Grid Station in Sheikhupura district near the load center so as to minimise the loss of electricity during its transmission to the consumption centres.

It is pertinent to mention that besides devising an energy conservation programme, Wapda planned to inject two-rental thermal power stations of 286MW in this power generation system in order to reduce gap between demand and supply of electricity in the country. One such rental powerhouse of 150MW capacity was earlier commissioned in March this year.

http://www.brecorder.com/index.php?id=573329&currPageNo=1&query=&search=&term=&supDate=

 

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Chinese company working on Sondha power plant

KARACHI (June 05 2007): China National Machinery Import Export Corporation is working on a 375MW coal-based power plant being setup at Sondha, Jheruk in Thatta district besides coal mining at a cost of 400 million dollars and at present 200 persons are working at the site.

Project Manager Zhu Jianan said this, while leading a delegation of China National Machinery Import Export Corporation, which met Sindh Minister for Mines and Mineral Development, Irfanullah Khan Marwat at his office on Monday.

The delegation told the minister that project feasibility report had been prepared. The minister assured the delegation that the government of Sindh would extend all co-operation to the company in the settlement of power tariff and start of final work. It was decided that the company would give a detailed briefing on June 7 with CMC's Vice-President Qin Ruijuan to lead the delegation.

A meeting will be held on June 11 in Islamabad under the chairmanship of Prime Minister Shaukat Aziz, which will be attended, among others, by members of Thar Coal Task Force, Energy Adviser to Prime Minister's Planning Committee, representatives of Nepra, Wapda, PPIBs and officials of Board of Investment. In the meeting proposals will be put up regarding finalisation of tariff. Marwat said the government's all out effort was that maximum investment is being made by foreign companies in the coal-based power plants.

 

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EU ban on Pak seafood likely to go

KARACHI: The government has hinted seafood processors, de-listed by the European Union on quality concerns that they could resume exports to the region by July 2007 following a go-ahead by the 27-nation bloc authorities.

Informed sources said a recent meeting between the exporters and senior officials of the Federal Ministry Of Food, Agriculture And Livestock (MINFAL) concluded on assurance from the authorities to resume export by July 2007 following a consultation with the EU authorities.

“Actually all the processing factories have declared themselves prepared to face another inspection from experts of the EU bloc after removing deficiencies,” said a source privy to the talks between the two sides.

“As 11 out of 12 have informed the authorities about their restructuring plan, the government believes it should ask the EU to consider their de-listing,” sources said adding the EU has mandated the MFD (Marine Fisheries Department) to examine the factories and come up with final recommendations.”

He said the federally-administered MFD had a mandate from the EU to check revised quality measures adopted by the processing factories and provincial institutions, which would soon coordinate with the concerned bodies before finally moving to the EU.

“There is a final meeting expected between the exporters and the MFD in near future,” the source said and added that this meeting would provide MFD with a clear picture to present before EU team.”

The government in March 2007 finally received a verdict from the EU, which informed Pakistani fishery authorities about de-listing of all the processing factories on quality grounds, putting ban on more than $80 million country’s exports.

The EU decision came after more than a month its team visited Karachi fish harbour and other fisheries installations in January 2007 to check seafood quality being to its member countries. In February 2005 the EU team wrapped up its visit on warnings that Pakistani authorities should maintain seafood quality as per the set standards otherwise they would lose their largest seafood export market.

The exporters appear confident to meet the quality standard desired by the EU’s Food and Veterinary Office (FVO) in its last visit. However, things on part of the provincial government-controlled administration have not changed a lot.

“There are also commitments from the federal and provincial governments to enhance harbour conditions in a move to satisfy the EU authorities,” said the source citing latest meeting of federal and provincial officials to discuss the situation.

“A meeting in this regard held last week discussed several projects at length. Sources of funding for these projects were also discussed. The federal government offered Rs20 million to upgrade the harbour before the EU visit and funding for new projects is expected too,” source said.

He said the Prime Minister himself visited Karachi last month and asked for serious efforts to improve seafood quality with development of modern facilities at the Karachi fish harbour. The State Bank suggested seafood exports at $160 million by June 2006 up from $138.94 million exported during 2004-05, as the EU countries remained the largest buyers of the Pakistani products with more than 50 per cent share in total shipments. The EU contributes more than 60 per cent of total seafood export fro the country, as the 27-nation block has been the largest single buyer of Pakistani seafood for more than two decades.

http://www.thenews.com.pk/daily_detail.asp?id=59061

 

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June 05, 2007
Market capitalisation up Rs1tr in 5 months

KARACHI, June 4: The paper value of corporate Pakistan has shown an unfathomable increase of rupees one trillion to surpass Rs3.8 trillion on June 6 from Rs2.7 trillion at the close of business on Dec 31, 2006. It could be a moment to rejoice.

But there is a fly in the cocktail. Almost all of the increase has come from staggering rise in the market value of 650-odd stocks of companies already listed at the stock exchanges while new offerings have been negligible.

Doddering at the height of 13,000 points, the KSE-100 index represents rise of close to 3,000 points in less than half the year. Many market strategists admit that most of the shares in some of the sectors, such as banks and cement, are now highly ‘over-valued’. The pre-budget buying now in full swing, the party is likely to last for the time being. The market participants, nonetheless, hold a consensus view that for the bourse to keep up its bull run, there is a dire need for new listings.

The enormous gains that small investors had made from subscriptions in IPOs of state-owned companies, such as the OGDC and Pakistan Petroleum (PPL) a few years ago, had tended to bring them in droves to the Pakistan's capital markets.

Some estimates suggested that from less than 100,000, the number of investors in equities rose to 500,000. But that was until the stock market crash of March 2005. Both the needy and greedy small investors lost all that they had earned and more. The reverberation of those investors' scream still echoes in the corridors of Parliament. But that aside, the government has almost stingily held on to all its holdings in public companies. None of those promises of divestment of shares in many mega stocks have materialised. The private sector listings have also been all but too slow. The result is that too much cash is chasing too few shares. On any given day, volumes are almost always generated in as many shares as can be counted on the finger tips of one hand: NBP; DGKC; MCB; Lucky Cement; MCB and one or two others.

Only nine new companies have entered the equity market to raise capital this year, amounting to Rs5.3 billion, including premium of Rs3.9 billion. Five new companies had sought listing last year, compared with 14 IPOs worth Rs13.6 billion (including green shoe option) recorded in 2005.

One major reason for companies to shun listing, which the Stock Exchanges have been propagating, is the lack of incentives. “It is the removal of 10 per cent tax benefit to listed companies as compared to unlisted companies which was available until June 2002, that have put off companies from entering the capital market,” said an official at the KSE.

He said that companies had no reason to seek listing and take on themselves all the responsibilities of complying with audit as well as the 'code of corporate governance', when they had no incentives to do so. Matters, he said, were being pursued with the government. Budget proposals for each of the last several years have asked for differentiation in tax rates for listed and unlisted companies. It is the same this year too. But would the ministry budge from its stand is difficult to tell.

If the stock market players are to be believed, equal taxation for both listed and unlisted companies is one of the reasons that only 658 of the 50,000 registered companies have sought listing at the stock exchanges. And even so, out of those 658 listed entities more than 100 are lame ducks sitting on the 'defaulters' counter'.

Another 200 companies are such in which no trading takes place since almost all of the shares are held by sponsors in large frozen blocks. Of what use are they to the small investors, though for the benefit of the exchange, they do add to the total market capitalisation that the bourse is able to display.

Among companies currently coming up for raising capital from equity markets, around 10 companies can be counted that are in one of the following stages of listings: “Companies in process of formal listings”; “prospectus/offer for sale cleared by the Exchange' and those that have 'Applied for listing'.

To satiate the appetite for more stocks and rein in volatility in few actively traded scrips, it is imperative for the government to take the lead in offerings of just a part from its almost wholly-controlled corporate giants.

A private company cannot be expected to enter the market, even if some of the hassles of compliance with complicated code of corporate governance were to be relaxed. And equalising tax rates for listed and unlisted companies is not how everybody visualises as a means to increase the depth of the market.

“To ask for a lower tax rates for listed companies does not make sense,” says Mr Iqbal Ismail, chairman, ACE Securities.

He argues that those companies sought listing at the bourse and benefited by raising capital through IPOs and right shares. If there was no benefit of remaining listed, there would have been a bee-line for seeking de-listing, but that is not the case. Mr Ismail suggests and several market participants and analysts were found to concur with the view that all new companies who apply for listing should be given the incentive of tax holiday for say three to five years. There is little time left for the budget makers to make a last minute changes and at least for now, it looks like the idea would have to remain just that.

http://www.dawn.com/2007/06/05/ebr2.htm

 

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Tuesday, June 05, 2007

Budget 2007-08: Rs 50m penalty for making illegal cartels

* New Competition Policy and Law

By Sajid Chaudhry

ISLAMABAD: The federal government on Monday has decided to announce New Competition Policy and Law in the forthcoming budget 2007-08.

This policy is aimed at imposing an all time high of Rs 50 million penalty against forming of unauthorised cartels and unjustified process of goods and services transportation in the country.

Upon non-compliance of any order, notice, or requisition of the commission an amount not exceeding Rs 1 million as penalty would be payable. Continuation of violation of any order of the commission would also attract a further penalty of up to Rs 1 million for each day after such violation.

The official sources at Monopoly Control Authority (MCA) told Daily Times on Monday that in this regard proposed Competition Act, 2007 is being tabled in the National Assembly and will be ready with other budget documents on June 9, 2007. The jurisdiction of the proposed Competition Commission, which would replace existing MCA, upon approval from parliament would also include activities of government or private undertakings.

The composition of the proposed Competition Commission of Pakistan would include five or seven members, federal government would appoint chairman of the commission, not more than two members of the commission shall be employees of the federal government. Private sector is also expected to get for the first time the member ship of the proposed Commission. The commission would have powers to authorise any officer to enter and search any premises for the purpose of enforcing any provision of this law.

In this regard, the definition of the ‘undertakings’ is being broadened to bring in to the jurisdiction of commission the activities of private as well as government bodies.

According to the new definition of ‘undertaking’, any natural or legal person, government body including regulatory authority, body corporate, partnership, association, trust or other entity in any way engaged, directly or indirectly, in the production, supply, distribution of goods or provision or control of services and shall include an association or undertakings, the official said.

The proposed law would counter the deceptive marketing practices in the country. These practices shall be deemed to be resorted or be continued in any undertaking resort to; the distribution of false or misleading information that is capable of harming the business interests of any other undertaking. The distribution of false or misleading information to consumers, including the distribution of information lacking a reasonable basis, related to the price, character, method or place of production, properties for use or quality of goods. False or misleading comparison of goods in the process of advertising, fraudulent use of another’s trade mark, firm name, or product labeling or packing.

According to the official, for a contravention of any provision of Chapter II of the Act, an amount not exceeding Rs 50 million or an amount not exceeding 15 percent of the annual turn over of the undertaking would be imposed.

The penalty would be imposed if any undertaking would limit its production, sale and unreasonable increase in prices or other unfair trading conditions. Price discrimination is set by charging different prices for the same goods or services from different customers in the absence of objective justifications that may justify different prices. Tie-ins are where the sale of goods and services is made conditional on the purchased of other goods or services.

If the penalty amount mentioned in the decision of the commission is not paid within prescribed time, attachment of immoveable or sale of moveable property, attachment of bank accounts, appointment of receiver, recovery through Land Revenue Act or deduction from receivables of the undertaking would be initiated.

http://www.dailytimes.com.pk/default.asp?page=2007\06\05\story_5-6-2007_pg5_1

 

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Tuesday, June 05, 2007

Cattle population increases 44.7% in 10 years

By Hasan Ali

LAHORE: The cattle population had increased by 44.7 percent in 10 years from 20.4 million in 1996 to 29.6 million in 2006, said the Federal Secretary, Statistics Division, Asad Elahi.

He said this during an unveiling ceremony of ‘Pakistan Livestock Census 2006’ held here on Monday.

He said that the population of bullocks, 3 years and above age had increased by 13 percent from 1996 to 2006 period, whereas the population of cows 3 years and above age increased by 51.2 percent and the population of milk cows increased by 37.8 percent while the young stock by 52.3 percent.

Mr Elahi further said during the time span of 10 years the population of buffaloes stood at 27.3 million at the country level, which was 34.8 percent higher as it was 20.3 million in 2006.

“The population of sheep according to the livestock census 2006 stood at 26.5 million in Pakistan which was 12.5 percent higher as compared to the that of livestock census 1996,” he said adding that the population of goats in the country reached 53.8 million in 2006 as it was 41.2 million in 1996. The livestock census 2006 shows that the population of camels had gone up by 13 percent from 0.82 million in 1996 to 0.95 million in 2006, while the number of horses had increased by 3.1 percent from 0.33 million in 1996 to 0.34 million in 2006, he said.

Federal secretary further said the population increased by 18.1 percent in 2006 over 1996 from 0.13 million to 0.16 million while the number of asses had increased by 19.9 percent during the inter-census period from 3.56 million in 1996 to 4.27 million in 2006.

Mr Elahi said over the years, the livestock sector has emerged as a leading sub-sector of the agriculture sector in Pakistan, it contributes over 11 percent to the GDP during 2005-06 which is more than the aggregated contribution of entire crop sector of the country.

“The major objectives behind the livestock census was to provide current estimates of commercially important lives and poultry birds by age, sex and breed,” he said adding that the census also develop basic information on composition of livestock herds. Livestock census also help in ascertaining the number of livestock holders reporting animals and poultry birds, while it also provides estimates of animals vaccinated, fallen sick, treated, purchased, sold and died and it also ascertain the number of work animals by type of work.

http://www.dailytimes.com.pk/default.asp?page=2007\06\05\story_5-6-2007_pg5_8

 

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Tuesday, June 05, 2007

Developmental sectors export fails to meet target

By Tanveer Ahmed

KARACHI: The export of developmental sectors showed dismal performance as nearly all items in this sector failed to meet their targets in the first ten months of current financial year.

As a whole, government set a target of $1.18 billion for July-April period of current financial year, however the actual export proceeds of developmental sectors stood at $1.10 billion.

“Keeping in view the export performance of these items so far, the total target of $1.348 billion would be hard to realise,” exporters opined when Daily Times contacted them for comments on the export performance of developmental sectors. The developmental sectors include engineering goods, cutlery, marble and granite/onyx manufacturing, fish and fish preparations, fruits and vegetables, chemical products, gems and jewellery, meat and meat preparations, cement, furniture, etc.

Country exported $1.213 billion worth of these products during the whole of the last financial year. Based on this performance during the last financial year, government set a target of $1.348 billion for the current financial year.

The export performance of these items in July-April period also marred the efforts of the government to boost the export of non-traditional sectors especially the much focus was laid on the promotion of export of these items during the trade policy of current financial year. The country’s main reliance on few sectors especially textile for its export earnings has been causing troubles because of stiff competition, the textile sector is confronting from its regional competitors. According to an analyst of the foreign trade, despite the pledges of the government to switch over from the textile to other sectors for boosting the exports for long-term basis the policies in this regard have not worked out, because no tangible incentives have been offered to these sectors like the textile sector. “Well thought-out strategies are needed to enhance the export of these items and increase their share in overall export, which unfortunately have not been formulated so far,” exporters said.

The breakup of the export of developmental sectors show that export of fish and fish preparations stood at $157 million compared to its target of $172 million in July-April period of 2006-07. The chemical exports were $315 million against $391 million target, engineering goods were $217 million as against $228 million, and cement export stood at $107 million against the target of $125 million and no export of poultry products was made despite a target of $2 million.

On the other hand, the export of gems and jewellery stood at $32 million as against $29 million, meat and meat preparations at $33 million exceeding the target of $21 million, the fruits and vegetables export were $133 million against the target of $125 million marble and granite/onyx manufacturing were $22 million against the target of $25 million.

http://www.dailytimes.com.pk/default.asp?page=2007\06\05\story_5-6-2007_pg5_9

 

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Tuesday, June 05, 2007

400MW: Highest power shortage hits city

KARACHI: Bin Qasim Power Plant Unit 5 and the Korangi Thermal Power Plant were shut down for repairs from early Monday morning, causing a shortage of 400 MW to the city. Consequently, many areas went without electricity in unannounced load shedding over a minimum of three hours. The same shortage took place Sunday when Bin Qasim’s Unit 3 was being repaired.

A spokesperson for the Karachi Electric Supply Corporation (KESC) said that Unit 4 of the power plant was already being repaired and would be made operational by next week. Unit 3 was repaired Sunday and Unit 5 was shut down for repairs from Monday morning. “When the shortage reaches 400 MW, two groups in the system are affected and have to be intermittently shut down for two hours each, as a result of which major areas in the city take a blow,” said the spokesman.

The Korangi Thermal Power Plant was also reportedly shut down for repairs after an unexpected leakage was detected in one of its boilers. However, the KESC spokesperson said it was a small problem that did not have a major impact on the shortage.

This shortage comes shortly after the KESC CEO announced that he expected load shedding to continue for the next five years. Official figures put the peak load factor at 2,328 MW as a record for April 2007 as against last year’s breaking peak load level recorded in July 2006. Add the expected yearly increase in demand at nine to ten percent and the problem is magnified. Wapda says that the country generates a total of 11,200MW but that total consumption needed during the summer rises to 12,500MW, causing power failures.

http://www.dailytimes.com.pk/default.asp?page=2007\06\05\story_5-6-2007_pg12_3

 

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Salman seeks national consensus for continuity of policies

ISLAMABAD (June 06 2007): Pakistan is among the fastest growing economies in the world as its economy has reached $150 billion from mere $70 billion a few years ago, adviser to prime minister on Finance Dr Salman Shah said on Tuesday.

Talking to PTV, he said national consensus should be evolved for not disturbing vibrant policies of any past government in a bid for country's development. Every political party should pledge that good policies of past governments should not be discontinued.

Pakistan has attracted record $6 billion investment during last year. Volume of economy is increasing. According to labour survey five million new jobs were created last year, while investment to GDP ratio was 23.5 percent. The economy has come out from Selective Default (SD) in 1999 to B-1.The target is to improve the ratings further upto AAA.

Target is to take debt to GDP ratio to 20 percent. It was 100 in 1999 now is at 50 percent. Share of the income of middle class from total income of country has increased upto 56 from 46 percent in recent years, he said.

While the share of bottom 20 percent population has increased from 5 to 12.5 percent indicating that income is flowing towards middle and lower class as compared to upper class. From 1999 to 2007, only agriculture production remained 10 times high. A bumper wheat crop of 23.5 million tonnes was harvested this year.

The leading investment Bank Goldsman has placed Pakistan one of the largest economies of the world in the coming years. Population has fourth largest workforce in the world. Pensions, salaries would be increased in the upcoming budget, more than the ratio of inflation. Subsidy would be offered on food items and oil.

Currently inflation ratio is around 7.5 percent and the salaries would be enhanced more than it. Old pensioners would be provided comparatively more increase. Employment schemes would be announced in the next budget with subsidies on mark up.

Small development schemes would be encouraged in villages aiming to make them self sufficient. 'Aik Hunar Aik Nagar' programme would be initiated in far-flung areas to develop food products, handicrafts, food processing, home made industries, he said.

http://www.brecorder.com/index.php?id=573593&currPageNo=1&query=&search=&term=&supDate=

 

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'Pakistan on way to achieve MDGs'

UNITED NATIONS (June 06 2007): Pakistan told the executive board of the United Nations Children's Fund (Unicef) on Tuesday that it was well on the way to achieving the child health and education-related Millennium Development Goals (MDGs)- a set of global anti-poverty targets to be accomplished by 2015.

"Pakistan recognises and acknowledges the access to essential healthcare as a basic human right," Unicef's acting permanent representative Farukh Amil said, while reiterating Islamabad's full commitment to implementing the MDGs. The board, which began its annual four-day meeting, will review the organisation's 2006 Annual Report, discuss country programmes and reviewed the results achieved in education, gender equality, health and other areas.

Noting that Unicef Pakistan worked in co-ordination with the Pakistani government, Amil said the organisation's country programme (2004-2008) reflected Pakistan's poverty reduction strategy and its pursuit of a world fit for child.

Pakistan, he said, has a vast network of healthcare facilities - 946 hospitals, 4,554 dispensaries, 5,290 basic health units and sub-health centres, 907 mother and child health centres, 552 rural health centres and 289 TB centres - to treat the menace of disease.

Amil said the board was meeting at a time when the UN was in the process of inter-governmentally reviewing the recommendations of the Secretary General's High Level Panel Report on System Wide Coherence.

"We do hope that our work here and the outcome of other processes would make the system more responsive to the needs and priorities of the programme countries," he said, noting that Pakistan, as one of the pilots for the "One UN" at country level. Pakistan would do its best to make a modest contribution in ensuring its success.

The Board President, Javier Loayza Barea, in his opening remarks, said, "we will have the opportunity to review the progress done to achieve the Millennium Development Goals."

http://www.brecorder.com/index.php?id=573594&currPageNo=1&query=&search=&term=&supDate=

 

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AUDI launches Q7 in Pakistan



KARACHI (June 06 2007): AUDI has launched the Q7 in Pakistan. To be available in several engine models; 4.2 litres FSI, 3.6 FSI-litre, 3.0 litre TDi engine options, the 2-ton Q7 is priced in the region of Rs 61-80 lakh, rivalling the likes of the BMW X5, Porsche Cayenne, Mercedes M-Class, Volkswagen Touareg and Range Rover.

Launched world-wide in September last year, the right-hand drive version hit markets only in January.

Longer than the cayenne and touareg but based on the same platform, it seats even unlike the other two German SUVs. While the 4.2 FSI produces 355 bhp of peak power and 440 Nm of peak torque, the 3.0 litre TDi-has 500 Nm of max twist to boast of along with a decent 235PS of peak power. Both engines are combined to a six-speed tiptronic as standard while a torque sensing (torsen) differential split torque in a 40:60 ratio.

AUDI believes that with the market growing at 12 percent, the luxury cars segment which is at 2,500 units presently will grow to 30,000 units by 2,015 and hopes that the average young Pakistani with his/her better economic status will shift up to their range of cars and SUVs.

"The Audi Q7 has become extremely popular in Pakistan, since January we have already sold 20 units, and we have a long waiting list already for the other customers," says Zane Dubash of Audi Centre Karachi.

Head of Sales for Audi Shadman Siddiqui adds "with the current growth in the SUV segment, we believe the Q7 is ideally placed due to price and technology that AUDI offers.

http://www.brecorder.com/index.php?id=573682&currPageNo=2&query=&search=&term=&supDate=

 

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US won't derail India and Pakistan gas deal: Iran

TEHRAN (June 06 2007): Iran, India and Pakistan are making progress in talks on a planned $7 billion gas pipeline and the United States will not derail the project, Iranian President Mahmoud Ahmadinejad said on Tuesday.

Washington, which accuses Tehran of developing a covert nuclear weapons programme, has repeatedly sought to discourage India from the project. Tehran denies the charge.

The plan has also been hampered by differences over pricing the gas and political tensions between India and Pakistan. "Fortunately the negotiations are making progress. Principles have been agreed and we hope that in the current year we will be able to finalise the deal," Ahmadinejad told a news conference with visiting foreign journalists The Iranian year ends in March. Iranian officials have previously said they hoped to sign a final deal in Islamabad on June 30.

http://www.brecorder.com/index.php?id=573643&currPageNo=1&query=&search=&term=&supDate=

 

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June 06, 2007
PSO bidding by end of this month

KARACHI, June 5: The bidding for sale of 51 per cent shares in Pakistan State Oil (PSO) would be held as scheduled by the end of current fiscal year, Zahid Hamid, Minister for Privatisation and Investment, told Dawn on Tuesday.

He was discussing the issue in the afternoon following the news that the Sindh High Court had upheld decision of Privatisation Commission to disqualify one of the intending bidders, the Attock Group.

The court, while dismissing the group’s application had lifted the stay order, paving way for the process of privatisation to go ahead.

Minister Hamid stated that seven consortiums of bidders had completed their due diligence and site visit.

“We are currently in the process of holding discussions with the bidders, following which pre-bid meeting will be held,” Hamid said.

He reiterated government’s commitment to sell-off PSO by the end of June this year.

“We are sticking to the deadline,” the minister said.

Prime Minister Shaukat Aziz had also on several occasions told investors that PSO would be privatised during the current fiscal year.

The Privatisation Minister said that the government would be able to raise a total of Rs2 billion from the privatisation this fiscal year, which include those of PSO, HBL IPO and UBL GDRs.

The government expects to fetch US$500 million or more from the sale of controlling interest in Pakistan’s biggest Oil marketing Company (OMC).

Currently seven parties are in the run to offer bids for PSO. British oil and gas group would join hands with the country’s Kohinoor Group and Petronas of Malaysia with the MCB Bank. Others in the run include Saudi-based Aljomaih Holding Company with Kuwait’s Noor Financial Investment Company and Fauji Foundation; Saudi Dabbagh Group Holding with Savola Group and Goldman Sachs (Asia); and Bakri International Energy Systems with Salsal Petroleum. There was the possibility of Vitol SA of Switzerland to rally with Fauji Foundation.

http://www.dawn.com/2007/06/06/ebr2.htm

 

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June 06, 2007
Govt to borrow Rs70bn for new budget: Financing gap

ISLAMABAD, June 5: The government will borrow roughly Rs70 billion foreign funding to meet the gap of financing its 2007-08 budget, a senior official of the ministry of finance told Dawn.

"Since the budget deficit target for next fiscal year is being kept at 4 per cent of the GDP, about Rs60-70 billion funding is needed to be arranged from foreign sources," he said.

The fiscal deficit in 2006-07, he said, was likely to be ended up at 4.2 per cent by June 30 this year. He did not believe that Rs272 billion fiscal deficit recorded in the first nine months of the current financial year could pose any threat to the government.

"The possible negative effects on the economy will be neutralised through improved revenue collection position, regular foreign inflows and more foreign direct investment (FDI), which is likely to be over $6 billion by the end of the current fiscal year," the official said.

Asked about the rising trade deficit, estimated to reach $14 billion during the next financial year against the projected target of $9.4 billion for 2006-07, he agreed that it needed to be brought down. "But this is not a matter of any serious worry for us," he said adding that foreign inflows and increased remittances were helping the government to achieve its objectives.

In reply to a question, the official said that foreign exchange reserves were expected to touch an all time high $15 billion by June 30 this year.

However, he conceded that some of the major targets relating to trade deficit, current account deficit, imports, exports, inflation, industrial production and large scale manufacturing will be missed during the current financial year.

"But we should look at the positive side, which is the better GDP growth, good agriculture growth and the improved performance of the services sector," he said.

He said the highest ever Rs2 trillion consolidated budget has been finalised that sought to improve governance, remove economic inequality and alleviating rural poverty in 2007-08. Responding to a question, he said that energy crisis was a serious challenge and the likely demand supply gap of 2500MW in next year, will be narrowed by helping to have more power projects. In this regard, he referred to the decision of the Qatari government to set up a power project worth $500 million in Sheikupura, Punjab.

He defended the government's decision to have separate Rs204 billion budget for corporations, especially Water and Power Development Authority (Wapda), Oil and Gas Development Company Limited (OGDCL) and National Highway Authority (NHA). "This is how the total development budget would reach to record level of Rs724 billion in 2007-08," he said.

He assured that leakages and element of corruption in the development projects will be minimised in the next budget by shortly having a "strict monitoring system” in place.

Another official said that a decision has been taken to substantially increase direct taxes by reducing customs and excise duties in the next budget. He said the CBR had started collecting sizable taxes and would certainly achieve its Rs835 billion revenue collection target set for outgoing financial year.

"The government has no plans to introduce new taxes in the next budget," he said adding that the government has stopped introducing new taxes as the whole emphasis now is on universal assessment scheme through which people were paying taxes on their own. He said that the voluntary tax compliance has increased by 100 per cent, which was helping the CBR to collect the required taxes.

"People are filing their income tax returns by increasing the amount of their taxes and this is good for them and good for us," he said.

There was a time, he pointed out, when the CBR used to collect 70 per cent taxes through withholding tax, which was first lowered to 54 per cent and then to 40 per cent last year.

"We have proved through our conduct that we pay respect to the tax payers and accept their income tax returns without any objection," he said adding that the number of income tax returns has increased from 24,000 in 2003 to over 110,000 last year.

Responding to a question, he said that the CBR was discouraging litigation as it often proved to be a setback for everyone. "Now we sit across the table with the taxpayer and dispose of his case by even reducing 50 per cent of taxes."

He said the number of industrial, commercial and domestic power consumers have increased significantly due to which the number of taxpayers were also increasing throughout Pakistan.

http://www.dawn.com/2007/06/06/ebr3.htm