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Khanpur Dam Water Supply Project faces delay

* ECNEC approved project in 2006
* Acute water shortage feared in many Pindi areas​

RAWALPINDI: The third phase of Rs 700 million Khanpur Dam Water Supply Project (KDWSP) could not be launched almost two years after its approval by the Executive Committee of National Economic Council (ECNEC).The project approved on April 8, 2006, was not included in the Public Sector Development Programme (PSDP) for the fiscal year 2007-8.

A senior official of the Rawalpindi Cantonment Board (RCB) on condition of anonymity said the project’s cost would increase if the Ministry of Finance did not release the approved amount for the third phase of the KDWSP. He said the RCB had requested the federal government to release at least Rs 150 million from the allocated amount for the phase-III of the project before the federal budget for 2008-09, as the KDWSP was an important project aimed at meeting the future water requirements of the cantonment areas.

Water shortage: Several cantonment areas including Saddar, Gowalmandi, Marir Hassan, Jhanda Chichi, Dhoke Chiragh Din, Tipu Road, Chaklala Scheme-II, Dhoke Kashmirian, Adiala Road, Qalma Chowk, Shelley Valley and adjoining areas were facing acute water shortage, which would be increased in the coming days, he added. “These areas are being provided water through tube wells, which is not sufficient to meet the increasing demand of water. The underground water is receding with an estimated rate of one to two metres annually,” he said.

He said on completion of the project’s phase-III, several areas of Rawalpindi city, Chaklala and cantonment, except some areas, would get 19.6 million gallon of water daily. Besides, the storage capacity of the existing water reservoirs in Rawalpindi would increase from 2.13 million to 7.33 million gallons, which would be enough to meet water demand of 900,000 residents of the cantonment areas. According to the plan, 20,942-metre long water supply lines would be installed in Rawalpindi cantonment areas.

Daily Times - Leading News Resource of Pakistan
 
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FBR to surpass psychological barrier of Rs one trillion in fiscal year 2008

ISLAMABAD (March 20 2008): The Federal Board of Revenue will cross the psychological barrier of Rs one trillion mark in 2007-2008, expecting that economy would remain stable in the country.

Explaining board-in-council decisions, FBR official spokesperson and Member Facilitation and Taxpayer Education Khawar Khurshid Butt informed a press conference on Wednesday that the council is hopeful to cross Rs 1 trillion by the end of current fiscal year. However, due to current political situation and other difficulties, annual budgetary tax collection target of Rs 1.025 trillion seems unachievable.

Referring to the revenue collection for the current financial year, the FBR Chairman informed the council that despite all odds FBR was still in a position to cross Rs one trillion mark by June 30, 2008, provided we all work hard and feel our national obligations.

FBR Member Fiscal Research and Statistics informed that revenue loss of Rs 35 billion was estimated due to the political and other reasons. However, during the last two months the improved revenue collection has helped bridge this gap by Rs 10 billion and now the estimated revenue loss stands at Rs 25 billion in 2007-2008.

He said that if there is further improvement in economic activity, the revenue collection could be over and above Rs 1 trillion in 2007-2008. He said that oil and gas sector has contributed Rs 24.6 billion in total revenue collection in 2007-2008 against Rs 18.2 billion in the same period last fiscal, indicating an increase of 35 percent.

Federal excise duty collection from oil sector witnessed a decline during current fiscal, as FED collection amounted to Rs 1.7 billion during July-February (2007-2008) against Rs 2.7 billion during the same period of last fiscal.

The customs duty collection on the petroleum products was Rs 11.6 billion during July-February against Rs 8.9 billion in the same period last fiscal, reflecting growth of 31 percent. Member FRS said that the recent increases announced in POL prices are expected bring around Rs 3 billion additional revenue for the FBR in next four months.

Due to the sales tax zero-rating announced on import of crude oil on November 30, 2007 the FBR has suffered a revenue loss of Rs 3.5 billion which would be recovered during next three months on sales of POL products produced from such crude oil, he explained.

Secretary General, Revenue Division/Chairman, FBR Abdullah Yusuf has directed the Member (IMS)/CEO PRAL to co-ordinate with technical wings of the Board to clearly identify problems being faced by the taxpayers in e-filing of returns, Tax Management System and computerised system of payment of taxes and all possible efforts be made in collaboration with NBP to resolve them at the earliest.

He was addressing the members of the Board-in-Council, which met here yesterday. FBR Chairman presided over the meeting, which lasted for about nine hours. While reviewing the progress of various ongoing reforms projects, the Chairman directed Member (TARP) and the line members to observe time line and expedite completion of refurbishment of the RTOs/MCCs. He also directed the Member (TARP) and Member (IMS) to make necessary arrangements to provide computer hardware to field formations - LTUs & RTOs on priority basis.

The Chairman directed the Sales Tax Wing to ask collectors to conduct selective taxpayers' audit wherever they have any doubt. He also directed Member (Audit) to evaluate the audits, conducted by Large Taxpayer Unit (LTU), Lahore, and inform the Council about its results.

Board-in-Council also dilated upon the security arrangements currently in place at FBR Headquarters and its field formations, particularly in major cities of the country. The Council asked Member (Admn) to ensure foolproof security arrangements at all FBR buildings.

Shortage of staff at FATE/Audit Wings also came under review and the Council decided to ask Member (Admn) to meet their staff requirements. The purchase of buses for pick and drop of staff from the offices will be examined by Member (TP&R) and the issue will be discussed in the next Board meeting.

Member FATE informed the Board that all representations u/s 7 of FBR, Act: 2008 to the Chairman FBR will be received in the FATE Wing and then sent to respective members for their comments. The meeting was informed that a window was being opened in the FBR website where such representations could be submitted on line for redressal of grievances which are simple in nature, Khawar Khurshid Butt added.

Business Recorder [Pakistan's First Financial Daily]
 
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New government must sustain economic growth, says Musharraf

ISLAMABAD (March 20 2008): President Pervez Musharraf Wednesday said the new government can meet the challenges of terrorism, energy crisis, rising fuel and food prices through good governance and by always keeping "Pakistan First".

Addressing a farewell dinner in honour of the outgoing caretaker government headed by Prime Minister Mohammadmian Soomro and his 28-member cabinet at the Aiwan-e-Sadr, the President said Pakistan now needs to look forward and progress on path of democracy.

"Politicking has to give way to good governance," the President said and added "I am confident that the new government will consider Pakistan always first and face the challenges it faces."

He said the economy was on the upsurge and all macro-economic indicators were strong. He cited a recent report by Merrill Lynch that attributed these to healthy economic policies over the past several years. The President said the country in the past few months has been through a "turmoil", however stressed that the new government must sustain the economic growth to meet the difficulties it faces.

President Musharraf also pointed at the rising prices of international fuel, edible oil and wheat and said the days of cheap food are now over. He said the current energy shortage was the fallout of rapid industrialisation and said the growth in the energy sector must match the growth in the national economy.

However he pointed that maintenance of law and order was an important prerequisite to achieve this balance. "I hope the new government will meet and understand these challenges and move Pakistan forward on the path of progress, peace and prosperity," he added.

The President also lauded the role of the caretaker government for successfully fulfilling the constitutional obligations in a befitting manner. "You deserve commendation from the whole nation," the President said while noting the role of the caretaker governments in the centre and the provinces. He said the caretaker set-up was announced with "noble intentions" to ensure fair play and for transitioning of one government to another.

He expressed his gratitude to the caretaker government, the election commission and all those related for holding free, fair, transparent election in a peaceful manner. Prime Minister Mohammadmian Soomro said he felt satisfied on accomplishing the task assigned to it, despite all the challenges that cropped up.

He said under the President's guidance, his government ensured that development and economic activity remains on target. He said the electoral process was acknowledged globally and high standards were introduced to bring impartiality and fairness to the process.

"We thank the Almighty Allah that helped us come up to the expectations of the nation," he said and added that without the teamwork, this task would not have been achieved. The dinner was attended by Chief Justice, governors and chief ministers, the Services Chiefs and federal secretaries.

Business Recorder [Pakistan's First Financial Daily]
 
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CPI-based inflation declined marginally in February: Finance

LAHORE (March 20 2008): The Federal Finance Ministry has claimed that overall CPI-based inflation had registered a marginal decline in February 2008 compared with January 2008 on year-on-year basis.

In its monthly investors advisory, the Ministry said that the headline inflation was 11.2 percent in February 2008 as against 11.8 percent in January 2008 and 7.4 percent in the corresponding month of last year (February 2007).

The decrease in headline inflation in February 2008 as compared with last month is attributable to a meaningful decline in food inflation which moved downward to 16.0 percent from 18.2 percent in January 2008 and 10.0 percent in the corresponding month of last year (February 2007).

The Ministry said that these figures point towards easing of demand pressures on the one side and some improvement on the supply side of food items. However, it added that food inflation has emerged as a major source of concern for policy makers around the world, including Pakistan. The global food price index has been up by 54.1 percent.

It said that food inflation in Pakistan had been fuelled by a combination of domestic demand-driven factors (rise in per capita income), local supply shortage and global trends in the prices of several commodities. Higher prices of edible oil (palm oil and soybean oil) and dependency on their imports transmitted higher international prices to domestic prices.

Pakistan has also witnessed sharp pick-up in wheat and flour prices (despite bumper wheat crop of 23.3 million tons), totally driven by 'extra-market forces'. The Ministry said that there are seven essential food items--wheat and flour; rice, pulses, meat, milk, ghee/cooking oil, and vegetables--accounting for almost 70 percent of total weight of food group, responsible for the sharp pick-up in food inflation in Pakistan.

Like last year, this year's inflation will also be driven by food inflation. During the first eight months (July-February) of the FY08, the average CPI-based inflation stood at 8.9 percent as compared to 8.0 percent of last year. Food inflation increased to 12.9 percent in the first eight months of the current fiscal year as against 10.3 percent in the same period of last year.

However, non-food inflation continued to remain on the declining trend. In the month of February 2008, non-food inflation stood at 7.7 percent as against the figure of 5.6 percent last year. For July-February 2008, non-food inflation witnessed a decline to 5.9 percent as against 6.4 percent in the corresponding period of last year.

Non-food non-energy inflation moved a bit higher in February 2008 (8.0 percent) on account of rising house rent and medicare sub-indices. It is, however, almost at the same level in the first eight months (July-February) of the current fiscal year compared with the corresponding period of last year.

Business Recorder [Pakistan's First Financial Daily]
 
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44 percent decline in foreign investment

KARACHI (March 20 2008): Political uncertainty and poor law and order situation have reduced foreign investment by about $2 billion, or 44 percent, from $4.62 billion, during eight months of the current fiscal year. However, during February 2008 foreign investment had gone up by 15 percent as compared to January 2008.

The State Bank on Wednesday said that overall foreign investment (including foreign direct and portfolio investment) decreased by $2.1047 billion to $2.612 billion during July-February of current fiscal year 2008 from $4.62 billion during the corresponding period of last fiscal year.

"Major share in this dip has been contributed by record decline in the portfolio inflows, as the foreign investors are reluctant to invest in the equity market due to political uncertainty," an economist said.

Statistics show that foreign direct investment (FDI) registered a dip of 15 percent to $2.52 billion during July-February against $2.97 billion during the same period of last fiscal year. Portfolio investment declined by 94.9 percent to $84.5 million as compared to $1.656 billion during the same period of last fiscal year.

However, analyst said that despite the political crisis $84.5 million inflow in portfolio was a positive sign. Without privatisation proceeds total private investment showed a decline of 33.2 percent to $2.50 billion during July-February of fiscal year 2008 as previously stood at 3.818 billion dollars.

Business Recorder [Pakistan's First Financial Daily]
 
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IT ministry planning to provide broadband subsidy under USF

ISLAMAABD (March 20 2008): Ministry of Information and Technology is seriously considering to provide broadband subsidy under Universal Services Framework (USF) to enhance its very poor penetration, it was learnt.

Sources said that a study on Broadband penetration conducted by the IT Ministry exposed poor broadband penetration particularly, when the USF Company is targeting one per cent penetration by 2010. Presently there are only 0.1 million users in Pakistan and 1.5 million new connections are required by 2010 to meet the set target.

To realise the broadband penetration, the Ministry has conducted three subsidy options including no broadband subsidy and everything should be left to the market mechanism, broadband subsidy should be handled as part of basic telecom USFC lots and the last that there should be separate broadband subsidy lots.

The Ministry has opted for third option of separate broadband subsidy under improved USF Company Lot framework as this seems the best effort to kick off and proliferate broadband penetration in the country with optimal choice.

The Ministry realising the benefits and importance of broadband penetration proposed five year programme with 4 to 5 per cent penetration targets by end of 2013.

To achieve the above targets an auction process similar to that of the Rural Telephony model would be adopted. The auction process would start with bidding for a region followed by contract signing within 6 weeks of the bidding date. It has been realised that larger number of target broadband connections would require longer time, as such the following target time lines have been proposed.

Pakistan is far behind in broadband penetration, despite the fact that government issued an aggressive Broadband Policy back in 2004 with a modest target of 200K till 2007 (at the end of 2007 there are around 115,000 Broadband connections). Although Pakistan has made big stride in the field of telecom, it has been left behind in the field of Broadband Internet.

Business Recorder [Pakistan's First Financial Daily]
 
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Farm sector credit soars to Rs120.4bn

Friday, March 21, 2008

KARACHI: The disbursement of credit to the agriculture sector by commercial and specialised banks showed a growth of 30.46 per cent year-on-year during the first eight months (July 07-February 08) of the current fiscal year.

According to the State Bank of Pakistan, banks disbursed Rs120.442 billion to the agriculture sector during July to February as compared to Rs92.319 billion in the same period last year, showing an absolute increase of Rs28.123 billion.

Overall credit disbursement by five major commercial banks including Allied Bank Ltd (ABL), Habib Bank Ltd (HBL), MCB Bank, National Bank of Pakistan (NBP) and United Bank Ltd (UBL) stood at Rs58.026 billion during July-February 2007-08, compared with Rs43.424 billion during the corresponding period of last year, depicting an increase of Rs14.602 billion or 33.62 per cent. Zarai Taraqiati Bank Ltd (ZTBL), the largest specialized bank, disbursed Rs33.012 billion in July-February period, compared with Rs30.745 billion in corresponding period of last year, while disbursement by Punjab Provincial Co-operative Bank Ltd (PPCBL) recorded at Rs3.873 billion, compared with Rs4.824 billion last year.

Besides, 14 domestic private banks (DPBs) also loaned a combined Rs25.530 billion during July-February period, up 91.60 per cent against Rs13.324 billion disbursed the last year. SBP had set an indicative target of Rs200 billion for the current fiscal year, up from Rs160 billion in the last fiscal year, showing an increase of Rs40 billion. During the last fiscal year, commercial and specialized banks had disbursed a total Rs168.3 billion to the agriculture sector.

Farm sector credit soars to Rs120.4bn
 
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Wind-power projects look doubtful

Friday, March 21, 2008

KARACHI: The energy crisis will only worsen if measures to overcome it are not taken immediately. There has been negligence on the part of the state in developing generation capacity with the growing demand for electric power and diverting the major part of country’s resources in non-productive and defence sectors.

Experts say that upgrading and maintenance of the available power generating means is necessary to curtail power shortage till alternative solutions are introduced. The state of affairs at the KESC is such that at present only 60 per cent of the generators are working and the rest 40 per cent are out of order. These 60 per cent of the generators are producing well below their capacity. The well publicised overhauling of Korangi and Bin Qasim thermal power stations and the claim of rehabilitation of their original capacities never materialised. The frequent breakdowns of various units of these power plants have exposed the incompetence of the privatised KESC management.

Professor Muhammad Nauman of NED University says: “The worst part is that the General Musharraf-led government was fully aware of the situation from day one and yet it failed to add even one megawatt of capacity in the KESC system. Instead of investing in thermal and wind power plants, it preferred to privatise the KESC and that too without taking guarantees from the incumbent operator for the immediate addition of adequate generation capacity.”

Power generation through alternative energy resources like wind, solar and hydel is an economical and sustainable solution for Pakistan. Solar and wind energy is being increasingly used in the developed world. In Pakistan, the average mean sunshine is 8.3 hours per day, making solar energy a reliable option. However, the high initial capital cost is a major constraint in utilising it for feeding in the grid.

The most viable option is wind energy which is used in various parts of the world; Holland is known as the “land of windmills.” Wind energy production requires a minimum wind velocity for the major part of the day. Much higher wind speeds are available on the entire coastal belt of Pakistan that stretches more than 1000 kilometers. The developed world is moving fast towards wind energy. Europe is leaving everyone behind in developing this energy and plans to generate 25 per cent to 30 per cent of its power from wind energy before 2025.

The Alternative Energy Development Board (AEDB) was set up more than 6 years back by the military regime. The ground progress is, however, not satisfactory at all. The government has also provided land to the companies interested in setting Wind Power Projects at very low prices, without tight control and strict conditions on cancellation of such projects that remain stagnant for years.

It could potentially trigger land speculation and prevent serious parties from getting land at the appropriate location. Pakistan has failed to make use of small wind technology, also known as intermediate technology, which only requires the utilisation of local material and is available at nominal cost from the developed world.

There are many areas where grid station and power transmission lines are not available. These remote areas can utilise small wind mills for lifting water up to the depth of 33 feet. By using small wind mills for power generation, we can cater to the need of a small community or install submersible pumps to lift water from any depth. Similarly, small water turbines may be used at springs flowing in Northern Areas to generate electricity for domestic use. The mind-set of our rulers, planners and implementers, however, does not take this kind of development, for the down trodden masses, seriously. Their obsession remains firm for mega projects, especially mega dams, since huge chunks of money can be quickly skimmed from such projects.

The government of NWFP has laid down a policy for the installation of micro-hydel projects for the last two decades without any noticeable progress.

The Metrological Department of Pakistan had carried out a detailed survey for collecting wind data on the entire coast line of Pakistan some 10 years back. It includes the Mekran coast, Gharo and Gadap areas of Karachi, Keti Bandar and Shah Bandar. Gharo and Gadap areas are fortunate because transmission lines pass through them, which make it easy to take equipment and material to the site.

Unfortunately, our government experts selected a height of 30 meters for obtaining wind data. The recommended height useful for medium capacity wind turbines is 90 meters. Thus, accurate data is not available for designing or choosing appropriate turbines.

One wonders why the AEDB has been sitting on this data for years and hasn’t been able to take an initiative in arranging for a fresh survey to be conducted at multiple heights utilised by the current turbines.

One highly publicised tidal energy project in the Gharo creek, near Thatta has also gone to cold storage. This was perhaps the most appropriate project of its kind in Pakistan that could have opened avenues and provided expertise to carry out such projects at various places in the Indus delta.

On March 14, 2007, one public hearing was conducted by NEPRA at Karachi. The purpose of the hearing was to enhance the tariff for M/s Win Power (pvt) Ltd that had been mutually accepted by the parties.

The reason cited by the Win Power Company at the hearing was that the agencies had advised the company that the prevailing Pakistan-India relations would not allow the import of wind turbines from India.

Therefore the company had been forced to look for alternative sources and had selected a Canadian company for the purchase and installation of turbines. The then NEPRA chairman, who was presiding the public hearing, was not only convinced of this absurd argument, but allowed the escalated cost, which was based on the highest plant and machinery cost, highest bank charges and highest risk charges.

This was done despite raising of objections by all relevant government departments against the proposed raise in tariff.

The proponents of the projects were not ready even to guarantee that they would not demand further increase in tariff. During the tea time, some staff members of NEPRA shared their resentment with this correspondent, on the dictates of their chairman.

It is worth mentioning that representatives of the KESC were not ready to sign any agreement for the purchase of electricity from Wind Power.

However, S J Raza, CEO of Win Power, told this correspondent that Win Power had been unable to get a firm commitment for the provision of wind turbines from any supplier around the world due to shortage of equipment, rising demand, especially on account of soaring oil prices, and because of the prevailing uncertainty in Pakistan. He informed us that an agreement has finally been signed with China, and China would provide the equipment in the first quarter of 2009.

According to him, this project will be completed within two years, in two phases. The installed capacity would be 100MW. However, it was learnt that there have not been any financial closures in this regard and no quotations have yet been decided.

The completion of the wind power project looks highly doubtful at this point in time. The dilemma at hand remains that the government has no serious intentions of opting for alternative sources of energy that, indisputably, is the future of this country.

Instead of diverting massive resources towards the setting up of fuel- efficient, environmentally-friendly and modern technology plants, the government is shifting its burden on to private companies and shrinking from its responsibilities towards the nation.

If steps are not taken to immediately to control this crisis, the country will have no choice but to acquire used, inefficient and expensive plants and technologies to produce power at a cost that might not be affordable for the common man. It is bound to have a severe impact on our exports, which will no longer be cost competent in the world market.

Wind-power projects look doubtful
 
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Conservation is the only way out of energy crisis: experts

Friday, March 21, 2008

KARACHI: Energy conservation is the only solution to deal with looming energy crisis as industries, the largest consumers of power and fuel in the country, are also the one to waste energy the most, say experts and businesspeople.

“If industries follow simple low-cost conservation methods with immediate returns on their investments, then they can save up to 25 per cent of the total energy that is wasted which in real terms is a very significant amount,” said chief of Enercon K M Zubair.

“There are three different methods for this all varying in cost and time yet very efficient over the long run,” he continued. “The deal is to persuade industrialists and businessmen to implement these methods and convince them that the returns on their investment would not only be quick but fruitful for their entity and the country at the same time.” Zubair further explained that these included methods which cost less than Rs5,000 for which the pay back was also less than six months and which led to 5-10 per cent of energy conservation.

He added that the second step included methods which cost slightly higher and for which the implementation and returns period was six months to one year, saving up to 5-12 per cent while a more capital-intensive method cost much higher and provided returns over the long term but, nevertheless, was highly effective.

The Enercon chief informed that the government was working on implementing rules and regulations for industries to save energy resources and therefore tackle the inevitable energy crises; however the government was not giving energy conservation high the priority it deserved.

He said that the basic institutions looking after the sector were in need of a boost and capacity building to create awareness for general public and for the business community alike.

Zubair commented: “Conservation is not rationing of energy. There is no use in switching off lights or implementing useless laws such as ordering early closure of shops. Energy conservation is grossly misunderstood. Conservation doesn’t come at the cost of the consumers as it is efficient use of resources available which means same level of output at a lesser level of input. According to Ainul Abedin, a private energy consultant, the most wasteful processes amongst the industrial and business community are those that can easily be dealt with. He informed that power generation tops the list as “even large corporate companies do not really care at what efficiency power is being generated on their premises.”

He said that most industrialists are quite happy with gas generators operating at 1/3rd efficiency which means that they are wasting 2/3rd energy full time.

“In spite of low efficiencies, their ‘costs’ are very low since they do not particularly care for the environment and our gas supply to them is heavily subsidized,” he added. He suggested that “by just making the on-site power generation in our industries and large commercial buildings truly efficient with known and well-tried technologies would make all the difference and large share of gas load-shedding could be avoided.”

Abedin informed that Steam/Hot Water Production is a process where most industries and large commercial buildings use conventional boilers to produce steam/hot water for their process requirements which is now considered totally unacceptable due to enormous energy wastage as well as serious pollution levels.

He said that both steam and hot water can be efficiently produced through cogeneration technology but this is not followed by most industries or hospitals, hotels, airport terminals, etc. Just by tuning up the air and fuel ratio and optimising them can save great amounts of energy while steam leaks can be plugged to avoid their wastage,” he added.

Both Zubair and Abedin were of the opinion that alternative resources are not viable in Pakistan as we cannot afford the very high costs. They said that wind power is only economical in the long run if it is off-shore, with very good wind velocities but these are very expensive. Similarly, solar energy is being implemented in small applications in the country but in mass application, it is not cost effective.

The experts said that energy costs will continue to rise with fossil fuels becoming more and more expensive and with alternative resources being a bleak second, the only hope is to conserve energy, they concluded.

Conservation is the only way out of energy crisis: experts
 
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Coal as cheap source of energy: experience of cement industry

Friday, March 21, 2008

KARACHI: The sky-rocketing fuel prices have potential to change the very nature of the energy mix of Pakistan. The cement industry being dependent on coal is going through a tough time due to the rising international coal prices.

Pakistan has considerable coal reserves: tidal, solar and hydel potential. It is ironic that Pakistan has fourth-largest coal reserves in the world but it is importing 2.5 million tonnes of coal per annum for the cement industry. At the same time, due to high cost of energy, the government has also decided to enhance the share of coal in the overall energy mix from 5 to 18 per cent up to 2018.

Among the other alternative sources, coal is the main source for producing cheaper electricity and its availability is much higher. In view of predictable shortfall of electricity and other energy resources during the next 10 years, demand for indigenous coal would grow in power generation considerably.

Coal is found in all the four provinces of Pakistan. The country has huge coal resources, about 185 billion tonnes, out of which 3.3 billion tonnes are in proven/measured category and about 11 billions are indicated reserves, the bulk of it is found in Sindh.

At present most of the cement companies have switch to coal or gas as their basic fuel; the process has been completed in the last 6 to 7 years. According to the data of the All Pakistan Cement Manufacturing Association of mid-2007, the cost of cement production per tonne by furnace oil was around Rs2,083 whereas the cost of production per tonne by coal was Rs8,68, saving Rs1,215 per tonne. Similarly, the saving per bag was Rs60.75, which is a huge difference.

During the last 6 months, the prices of coal and furnace oil have doubled and it is increasing with the rising international oil prices generating a direct burden on the 0cement industry as they use coal as the basic fuel.

Coal consumption during 2005-06 was: brick kilns (54.7 per cent), cement and other industry (36.0pc), power (1.9pc), coke use (7.3pc). At present the brick industry is the biggest user of coal, consuming about 4.2 million tonnes annually, said the Ministry of Petroleum and Natural Resources.

The cement industry of Pakistan is achieving well as it has enhanced its production capacity to historic peak to 17,112 thousand tonnes from 9,876 thousand tonnes in just 5 years from 2001-2005.

The cement industry being the second biggest coal user in the country is important to the country. But unfortunately the industry is using imported coal as a fuel instead of local coal due to the high percentage of sulphur in it. This dependence can be diminished by processing, that is, washing out the sulphur from the local coal and then utilising it in the cement industry.

Javed Ali Khan, CEO of Pioneer Cement, said local coal contains 6pc of sulphur which is not suitable for cement industry; however, the imported coal contains 1pc of sulphur.

The cement industry has still some energy alternatives except coal, even if the prices of coal go up from the present high prices. The cement industry may go in for used tyres and this can be done to meet the 40pc of fuel requirements of the industry, and the other is recycling of the waste by making it in bundle shape and then these bundles would burn in the kiln.

These processes will not contribute to pollution or environmental problems, said Badruddin Fakhri, Managing Director of Galadari Cement.

According to a cement company’s official, the rising coal prices have already increased the manufacturing cost of cement up to Rs15-20 per bag and they say that there is a need to pass on this burden otherwise the cement industry would suffer considerably.

If Pakistan imports sulphur washing plants preferably from European countries, then we will be able to utilise our local coal in the cement industry by washing out the sulphur content from it, an industry official suggested this as an alternative to the rising international coal prices.

The rising coal prices has cut into the profits of the cement industry which is comfortably balanced in southern region of the country, but the northern region is still behind due to high competition in the region.

Coal as cheap source of energy: experience of cement industry
 
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Pakistan’s exports and energy crisis

Friday, March 21, 2008

KARACHI: The present energy crisis in the country may have a serious impact on our exports, but the decline in the country’s exports could be averted if the newly-elected government put the economy on its prime agenda.

Big industries are aggressively going for their own power production, that is, captive power plants according to their requirements, and now most of them have their own stand-by generators. But the rising diesel prices is likely to cast a negative effect on those who use diesel generators, and which is a big problem, said Masood Naqi, former chairman of the Korangi Association of Trade and Industry.

The other problem is power breakdowns in residential areas where most industrial workers live. Power breakdowns or load-shedding would seriously affect workers’ energies and ultimately industrial production. Power cost has become a serious problem for industries along with law and order; both are now causing problems for industrialists and our exports are already low this year.

Small industries would close due to the rising cost of production, he said. But if the government puts economy at the top of its agenda and starts facilitating industry, then it can be safely said that our exports would see a positive change the next year.

We are already reaching the last quarter of this fiscal year and the next year is ahead to us. If the new government formulated long-term economic policies, it would help increase exports in the coming years. “If the new government gave top priority to economy, then the next fiscal year would be better than this year,” he added.

On the one hand, our energy demand has been increasing rapidly and, on the other, our energy production targets to meet the growing demand are limited and short sighted. This is a serious problem. The growing demand for energy has made it imperative to look for alternative and renewable sources of energy in order to bridge the big demand and supply gap, said Nisar Shekhani, chairman of the SITE Association of Industry.

Industry would be in serious trouble in the next fiscal year due to the present energy crisis and these conditions are not favourable for industry. We need emergency energy saving measures to tackle the energy crisis, particularly industries need to carve out ways of energy saving.

There are speculations that gas rates would also be raised in coming days. This is causing jitters among the industrialists who are already facing serious problems in terms of cost of energy. We need to take steps at the micro level like India did for energy-saving measures, he said.

Industrialists are facing difficult times. The government heavily subsidises gas for domestic consumers and fertiliser companies. Now it is time to shift some burden on to domestic consumers and fertiliser producers as industry has already been overburdened, he demanded.

Domestic consumers use about 60 per cent of the total energy production of the country, an expert said. Power rates are likely to be further increased by 40 paisa a unit. Industries will close when they cannot meet the rising cost of production. It is needless to say how industries will suffer if the energy crisis worsens, said Noor Ahmed Khan, chairman of the North Karachi Association of Trade and Industry. Gas is the other alternative for power generation but this is not a viable source in the long run. Industrialists are, however, going for gas power generation, he said. —FZ

Pakistan’s exports and energy crisis
 
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Second Sukuk coming up to raise $1.5 billion

ISLAMABAD (March 21 2008): Amid turmoil in the global market following serious US recession, Pakistan has opted to float Sukuk bond to raise $1.5 billion as a support for its ailing economy.

Sources told Business Recorder that a meeting held in the Ministry of Finance on Wednesday, March 19 took stock of the liquidity position in the global market with particular reference to the US economic crisis and decided to focus on Islamic mode for raising money for its financial requirements. The meeting studied all the available channels for floating the bond and decided to work out a plan to float Sukuk in the third quarter of the current fiscal year.

For Sukuk bond, the government would be required to pledge some national strategic assets as a collateral to investors to raise money. It would be Pakistan's second Sukuk bond coming up in last few years. Since 2004 Pakistan is floating bonds in the global market.

Considering that the US crisis has jolted the world economy, the government economic managers have reached the conclusion that any dollar or euro bond may not deliver the goods.

The MoF had invited international banks/financial institutions to take their advice on the possible bond issue and held a series of meetings with each of their representatives during last couple of weeks. As a follow-up to these meetings, the government will probably pick up more than one bank or a consortium of banks to appoint as lead manager for the issue.

The government is also considering floating the bond in the domestic market through some local banks or a consortium of banks to raise money equal to the Sukuk offering. The rate of return on the domestic and the international bond will be similar to that of the Sukuk bond.

Since the economic growth is showing negative trend, the government has to go for some non-traditional means such as bond issue to get at least 4 to 5 billion dollars to close its current account at the end of the current fiscal year on positive note.

Business Recorder [Pakistan's First Financial Daily]
 
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Agriculture credit increases by 30 percent in eight months

KARACHI (March 21 2008): Disbursement of credit to the agriculture sector by commercial and specialised banks has shown an impressive growth of 30.46 percent year-on-year basis during the first eight months (July-February) of the current 2007-08 fiscal year.

Banks have disbursed Rs 120.442 billion to the agriculture sector during July-February period as compared to Rs 92.319 billion in the same period last year, showing an absolute increase of Rs 28.123 billion.

Over all credit disbursement by five major commercial banks, including Allied Bank Limited (ABL), Habib Bank Limited (HBL), MCB Bank, National Bank of Pakistan (NBP) and United Bank Limited (UBL) stood at Rs 58.026 billion during the first eight months of the current fiscal year, compared with Rs 43.424 billion during the corresponding period last year, depicting an increase of Rs 14.602 billion in absolute terms or 33.62 per cent.

Zarai Taraqiati Bank Limited (ZTBL), the largest specialised bank, has disbursed Rs 33.012 billion in July-February period, compared with Rs 30.745 billion last year, while disbursement by Punjab Provincial Co-operative Bank Limited (PPCBL) stood at Rs 3.873 billion, compared with Rs 4.824 billion last year. Besides, 14 domestic private banks (DPBs) also loaned a combined Rs 25.530 billion during July-February period, up 91.60 percent when compared with Rs 13.324 billion disbursed last year.

It may be recalled that the State Bank of Pakistan has set an indicative target of Rs 200 billion for the current fiscal year, up from Rs 160 billion in the last fiscal year, showing an increase of Rs 40 billion. During the last fiscal year, commercial and specialised banks had disbursed a total of Rs 168.3 billion to the agriculture sector.

Business Recorder [Pakistan's First Financial Daily]
 
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AEDB fails to set up 18 megawatts wind farm power project

KARACHI (March 21 2008): The Alternate Energy Development Board (AEDB) of Sindh has failed to implement its project costing $14.18 million to set up 18 MW wind farm for power generation near Karachi.

Official sources in the Sindh government informed Business Recorder that the work on the project could not be initiated so far even though the upfront tariff for the plant's generated energy had been finalised by the National Electric Power Regulatory Authority (Nepra) few months back.

They claimed that the payback period time of the total investment made on the project was estimated at around 7-8 years. But, the unnecessary delay in the process might harm the whole investment and the preparations made for the project till date, they said.

It is worth mentioning here that the power generation through wind turbines would cost Rs 2.5 to Rs 3.00 per kWh, sources said and termed it very cheap and first step towards generating electricity through alternative ways.

Sources said the Pakistan Meteorological Department (PMD) had prepared the feasibility report for the installation of wind power plant some eight months back and Gharo was suggested the best place for setting up the plant.

The feasibility report of the project was based upon the Wind Power Potential Survey that was conducted last year by the PMD along the coastal areas of the country in collaboration with the Ministry of Science and Technology, the sources added.

The study enabled the experts of AEDB to identify the potential areas where economically feasible wind farms could be established to generate power, they said, adding that Gharo town and its vicinities were found to be one of the most suitable places for the purpose.

The 18 MW wind farm that had to comprise thirty 600-k turbines was stated to have net power generation capacity of 31 million kWh per year, officials maintained. They lamented that the financial benefits of the project, after its payback period, could be extended to the government, besides saving huge amount on spending electricity generated through furnace oil and other natural resources.

Business Recorder [Pakistan's First Financial Daily]
 
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Pakistan's foreign exchange reserves dip by $297 million

KARACHI (March 21 2008): The foreign exchange reserves of the country declined by $297 million last week, mainly owing to rising oil import bill in the wake of soaring oil prices in the world market. According to State Bank of Pakistan (SBP), country's overall foreign exchange reserves declined from $14.142 billion to $13.844 billion during the week ended March 15, 2008.

The major fall was witnessed in the foreign reserves held by the SBP, declined by about $306 million to $11.723 billion, previously stood at $12.029 billion a week ago.

Business Recorder [Pakistan's First Financial Daily]
 
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