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CONTENTS

09 Welcome Bill jee - this week in Pakistan's business and economics twitterverse 13 Barrick Gold is coming back to Reko Diq 16 Is the PSL good business? For the PCB, yes. For the teams, not so much

22 Where is femininity in the corporate world? Ariba Shahid 24 There’s a right way to develop Gwadar Uzair Younas 26 The what-ifs of Pakistan’s oil and gas segment Haroon Rashid

28 Is the Cloud First Policy a step towards digitising the country? 31 A timely analysis of Karachi’s public transit woes

Profit

33 A fund of one’s own

Publishing Editor: Babar Nizami l Editor: Khurram Husain lJoint Editor: Yousaf Nizami l Assistant Editor: Abdullah Niazi Reporters: Ariba Shahid l Babar Khan Javed l Taimoor Hassan l Meiryum Ali l Shahab Omer Chief of Staff & Product Manager: Muhammad Faran Bukhari Regional Heads of Marketing: Muddasir Alam (Khi) l Zulfiqar Butt (Lhr) l Malik Israr (Isl) Layout: Ahmad Salahuddin l Photographers: Zubair Mehfooz & Imran Gillani l Business, Economic & Financial news by 'Pakistan Today' Contact: profit@pakistantoday.com.pk

Readers Say I just read your article titled ‘Is a third LNG Terminal just a pipe dream?’. I found the article to be very insightful, and being an Energy Chain Analyst myself, I found it very relevant to my work. Keep up the good work and best of luck Apropos: Is a third LNG terminal just a pipe dream? Asil Jalal, Email Its amazing. Love it. Well written very informative. Apropos:Hyundai Pakistan’s Kashmir day saga Zee, Website As per a recent notification posted on the PSX, Waves Singer Pakistan has demerged its home appliances manufacturing division and merged it into Samin Textile Apropos: How Samin Textiles became Waves Home Appliances Vidmate 2014, Website As far as your concern of Ghost patients and ghost hospitals is considered it seems impossible to happen as State life has a designated staff member in every hospital on the panel of state life. And he or she tries their best to cross check every piece of paper along with the presence of the patient. And they are tasked to make the treatment cost to be minimum. Apropos:The risky math underlying Sehat Sahulat Program Dr Ahmed, Website 1)you can't extrapolate that without taking into account existing govt subsidized healthcare in KP and Punjab 2) get your hands on recent actuarial assessment (last one is seriously dated) 3) it's not good business for Pvt insurers or hospitals..check the rates Apropos: The risky math underlying Sehat Sahulat Program In Pursuit of Endorphins (@Sehban) , twitter The scheme in its current form does not cover OPD expenses, medical tests and medicines. It is only for hospitalisation. As such it is of little use to 99.9% Pakistanis that do not get hospitalised in a particular year. Apropos: The risky math underlying Sehat Sahulat Program Moazzam Husain, Facebook

facebook.com/Profitpk twitter.com/Profitpk linkedin.com/showcase/13251020 profit.com.pk profit@pakistantoday.com.pk

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I think the author lacks basic insurance understanding and has relied on hearsay more than anything else. If we look at the Sehat Sahulat previous Loss ratios it was not more than 70%. Program is intended to help people get quality health care at both autonomous public and private hospitals. It's hospitalization and critical.illness which breaks the back of a middle class and lower middle class family so the in-

tention of the program is rightly to address severity ( hospitalizations)and not frequency (OPD). Program was given to Statelife after competitive bidding; private consortiums participated but couldn't compete. For a country of 220 million this Program can become a game changer of the health ecosystem if rightly implemented. IT systems deployed by a state life are quite impressive and you can get updated data of hospitalizations thus ensuring transparency.. Insurance premium has been gradually improved from 1800 to present level. It's absurd that the program will make Statelife Insolvent.. just go and look at Balance sheet and assets of State Life ..In Summary social protection programs cannot be compared to private insurance plans and present program is well designed has been piloted well at KPK level and needs only to be strengthened..Don't forget that we have over 60 million people living below the line of poverty and 75% of Pakistanis earn below Rs 30,000 per month so its beneficial for them.. Apropos: The risky math underlying Sehat Sahulat Program Muhammad Hisham, Facebook Say to the pta chairman that first focus on improving existing structures, mostly service of cellular companies suck and both companies and pta keep on saying this isn't our job. Apropos:Govt intends to launch 5G by 2023, says PTA chairman @mr__kahlon, twitter

Everyone is the wiser - none can get down and solve problems caused by humans being ignorant and corrupt - Apropos: WACOG Bill passed by Senate, RLNG future secured but at what cost? Ali Khawaja, Facebook Sukkar Hyderabad, M6, will NOT complete Karachi to Peshawar motorway. Only the morons will not know that karachi hyderabad road is in bad shape and definitely not worth calling a highway, let alone motorway. Apropos: P3A board approves Sukkur-Hyderabad, KharianRawalpindi Motorway projects Fuzail Zubaid Ahmad, Facebook The international prices have risen. What can one do? Can't buy cheaper oil from Iran also. Apropos: Transporters, chambers reject hike in oil prices Saleha Ali, Facebook Appears to be ignorant to positions of national importance on Pakistan made by commendations and not merit. Apropos: FBR suffers revenue loss of Rs45mn due to negligence Razi Jan, Facebook

COMMENTS

IN BRIEF

FBR revenue loss The Federal Board of Revenue (FBR) has reportedly lost Rs45 million in expired bank guarantees due to the negligence of customs officials to encash mature bank guarantees within their validity period. In addition sources said that a revenue loss of Rs45 million due to expired bank guarantees at Lahore customs alone points at the huge magnitude of countrywide revenue losses due to expired bank guarantees which can be ascertained if properly investigated.

Price hike in petrol The government on Tuesday jacked up the price of petrol by Rs12.03 per litre with immediate effect. After the decision of hike, petrol will be available at Rs159.86 per litre, high-speed diesel (HSD) at Rs154.15 per litre, kerosene oil at Rs126.56 per litre and LDO at Rs123.97 per litre in the open market of the country. The finance division stated that the government had also levied 0% sales tax and reduced the levy to provide “relief” to the consumers. According to them, the “relief” had led the government to bear a revenue loss of around Rs35 billion fortnightly.

Raast launch

On Tuesday, Prime Minister Imran Khan launched Raast, a person-to-person instant digital transactions system. He stated that Raast would reduce the burden for physically going to banks as anyone will be able to make payments through their mobile phone. The introduction of this system is an attempt at including all individuals’ economic transactions as part of the formal economy and encouraging tax to GDP ratio.

WACOG

The Senate has passed a bill to adopt the Weighted Average Cost of Gas (WACOG) to price the gas. Although it is being hailed as a remarkable achievement, for the consumers the bottom line is increased gas prices. Although the new bill means higher prices in the future, it is also necessary to sustain a stable supply and reduce the burden on the government to recover the costs of pricey RLNG (Regasified Liquid Natural Gas).

Tarin says negotiations with IMF will be held

Finance Minister Shaukat Tarin has hinted at holding fresh negotiations with the IMF on Personal Income Tax (PIT). The minister said that it is not true that the government agrees with all the demands of the IMF referring to its demand of raising PIT to Rs160 billion by increasing tax rates and reducing the number of slabs.

Reduced power tariff for agriculture National Food Security and Research Minister Syed Fakhr Imam told a meeting in Islamabad on Friday that the ministry of power is in the process of moving a summary to the Economic Coordination Committee (ECC) of the cabinet proposing new power tariffs for the agriculture sector. The farming community has been voicing their concerns over the rising cost of electricity as the major input, and demanding the government to introduce concessions that would help increase yield per acre of various crops.

5G to be launched by 2023 Pakistan Telecommunication Authority (PTA) Chairman on Tuesday informed the Senate Standing Committee on Information Technology and Telecommunication that the government intends to launch 5G in the country by 2023. He also informed that talks are underway with StarLink - Elon Musk’s ambitious initiative to deliver high-speed internet across the globe through satellite. He added that StarLink has registered a company in the country with the Securities & Exchange Commission of Pakistan (SECP).

Welcome Bill jee

this week in Pakistan’s business and economics twitterverse

ill Gates in Pakistan caused quite the fuss. After all, he made Windows which we haven’t always paid for bit greatly appreciate. Speaking of haven’t paid for, whatsapp has taken over the workplace - and its free. No key required. This week we also witnessed Parody accounts being treated as the real deal. All this and more from Pakistan’s Twitterverse.

Name a better asset class than a 2017 corolla. We dare you.

Excuse the profanity but a picture is not a form of endorsement, or at least shouldn’t be taken as such

SOCIAL MEDIA ROUNDUP

If only Bill gates was here on a legit visit to invest/ develop instead of a philanthropic trip

In a world of virtual meetings, please just avoid Microsoft teams. Thanks.

Sometimes we have to do a double take to see which is the real and parody account. This is the parody account. I know we’re just as confused as you guys.

You can’t kill the real estate market. The real estate market kills you.

Poor Muzzammil got owned over something he didn’t say but had the tendency to say.

SOCIAL MEDIA ROUNDUP

Daraz awards Blue-Ex best 3PL partner third time in a row

niversal Network Systems Limited (BlueEx) has once again achieved best Partner Awards with one of the leading ecommerce platform of Pakistan, Daraz. In a recent event held at its head office, Daraz declared Blue-Ex as the winner of the “Partner of the Quarter Award (POQ)” These awards were presented to BlueEX in acknowledgement of the tremendous performance by the Blue-Ex team during the last quarter of 2021 from October to December, including for the best portfolio and delivery management in the mega events of Daraz i.e., 11-11 Mega Sale and the Grand Year End Sale 12-12 during the year 2021. BlueEx is no stranger to such awards having previously won “Partner of the Month” Awards in both 2019 and 2020. Managing Director-Daraz, Mr. Ehsan Saya presented the awards to Mr. Imran Baxamoosa, the Chief Executive Officer at BlueEx. The ceremony was also attended by Ahmed Tanveer (Chief Operating Officer –

Daraz), Mr. Ali Aamer Baxamoosa (Managing Director) and Mr. Asif Hanif (Chief Operating Officer) from the BlueEX team. UNSL (BlueEx) is the first company in the courier & logistics sector to be listed on the Pakistan Stock Exchange. The Company, more popularly known by its brand name, ‘Blue-Ex’, was established in 2005 as a domestic cargo consolidator and later shifted its focus towards E-Commerce courier & logistics business in 2011. The Company was the first company in Pakistan to introduce the ‘Cash –on-Delivery’ concept for e-Commerce parcels. Daraz is the leading e-commerce marketplace across South Asia. Its business covers four key areas – e-commerce, logistics, payment infrastructure and financial services – providing sellers and customers with an end-to-end solution with access to over 500 million consumers across the countries it operates in. BlueEx has been doing logistics and last mile delivery for Daraz since 2016 and has remained a close associate for the marketplace,

helping accelerate the country wide expansion of the Daraz delivery. The company regularly features as the top logistics’ partner for Daraz, by constantly increasing the volume of shipments that it delivers, as well as increasing outreach by adding new stations catering to the prime partner serving areas. Daraz has extensive performance measurement mechanics where it evaluates courier & logistics partners with certain KPIs relating to Last Mile delivery, delivery success rates, customer satisfaction levels, timely payment cycles, and an efficient claim process. To achieve these milestone awards of “POQ” and “POM”, Blue-Ex representatives have been constantly engaged with Daraz technical teams to help understand and absorb the required performance management metrics and mechanics and subsequently impart that knowledge via training and assessment activities for last mile delivery teams. Online and live training sessions by Daraz, prior to and post sales events, amalgamated with in-house training sessions helped raise the bar and achieve the required service standards. n

SPONSORED

Barrick Gold is coming back to Reko Diq To understand why we’re 30 years behind schedule we have to turn back the clock By Asadullah Kamran

arrick Gold, one of the two companies that had previously been working on the Reko Diq project as part of a joint-venture under the name of the Tethyan Copper Company (TCC), has once again stepped into the fray and will take on the development of the project itself. Antofagasta on the other hand has decided to get out and try its luck elsewhere. As per information received by Profit, the company has opted for a monetary compensation from the profits and revenues generated by the project that has yet to commence. The exact details of the agreement have not yet been made public, it is expected to be signed soon. The TCC had originally been formed as a consortium between the Canadian based mining company Barrick Gold and Chile’s Antofagasta to work specifically on the Reko Diq project. However, as the dispute over the mining project heads towards a settlement, sources familiar with the matter have confirmed to Profit that Barrick will itself be taking on the project without Antofagasta. Although it was originally claimed that the NRL (National Resource Limited) was in the lead, Profit has confirmed from sources

NATURAL RESOURCES

within the NRL that they are currently out of the race. However, the firm stated that it will seek leases for other blocks in the Chagai district, including those near Reko Diq. The company also highlighted the potential of Afghanistan as a mineral rich area that can be an opportunity for Pakistan. Meanwhile, this also means that the Tethyan Copper Company is likely to be dissolved. The development is the latest in a long series of events that has shaped the entire Reqo Diq saga. The fifth largest gold mine in the world, the deposits are buried at the foot of an extinct volcano in Chaghai district near the Iran and Afghanistan borders. These deposits have not seen the light of day, however, because of a long-drawn out dispute between the government of Pakistan and the project’s partners, Canada’s Barrick Gold and Chile’s Antofagasta - which were working together as the now defunct TCC. With one of the world’s biggest copper and gold deposits, Reqo Diq has estimated resources of 12.3 million tonnes of copper and 20.9 million ounces of gold. A total of 14 mineralised porphyry bodies have additionally been discovered, making Reko Diq one of the world’s significant undeveloped copper prospects. Therefore the importance of such a huge

national asset can have a monumental impact on the overall economic outlook of Balochistan as well as Pakistan. The momentous development in the case can be viewed as an end to the Reko Diq saga. Barrick has gold and copper mining operations and projects in 13 countries in North and South America, Africa, Papua New Guinea and Saudi Arabia. The company has a diversified portfolio spanning many of the world’s prolific gold districts and is focused on high-margin, long-life assets.

How did we get here?

o understand why we’re 30 years behind schedule we have to turn back the clock. The history of Reko Diq has been turbulent to say the least, since its discovery in the 90’s it has been mired in controversy. These delays can partly be attributed to the remote and rugged location of these minerals in the remote hills of Chagai wedged between the borders of Afghanistan to the North and the Iranian border to the South. The main reasons that has caused these colossal delays is a combination of facts that are nobody’s fault but our own for the most part. Firstly as is apparent and indicated by the fact that Pakistan globally has one of the

highest Corruption Perception Index, which means most of us believe that the people in power are corrupt in some way or another. It’s not hard to look up examples of this either, this is one of the reasons that greatly concerns international investors. After signing an agreement with Balochistan’s then-caretaker administration, led by chief minister Naseer Mengal, the resources were initially discovered in 1993 by the Australian corporation, BHP Billiton. The ‘Chagai Hills Exploration Joint Venture Agreement’ (CHEJVA) gave BHP a 75 percent stake in the venture, while the government got a 25 percent share on a joint-investment basis with a 2 percent royalty. In 1996, the Joint Venture received ten Prospecting Licences (PLs) for a total area of 1000 square kilometres. Up until 1999, BHP conducted reconnaissance and extensive studies in these areas, reporting substantial quantities of copper, gold, and other metals at Reko-Diq. The Joint Venture then surrendered eight PLs while keeping two PLs from Reko-Diq. To get a better picture of what the situation was, we need to understand what was happening in Pakistan and the region at the time. To put it bluntly at the time the military and political establishment was at each other’s throats. These uncertainties were a cause of concern for all international businessmen as there’s no way to be sure of what can happen. Pakistan’s nuclear ambitions during the 90s were at their peak, pressured by the Indian tests in the 70’s. Pakistan focused on going nuclear to maintain deterrence towards its Eastern front with India. This brought with it sanctions and condemnations from the US and other global powers, this had a huge impact on the overall economic position of Pakistan during that period. BHP stopped exploratory activities in April 2000 immediately after Pakistan’s nuclear tests. The operations were then transferred to Mincor Resources, an Australian business. The company didn’t make any progress up till 2006. Mincor was purchased by TCC in the same year (2006), which is a subsidiary of a joint venture between Barrick Gold, based in Canada, and Antofagasta, based in Chile. In the same year (2006), former MNA of Jammat e Islami Maulana Abdul Haq Baloch challenged the legality of CHEJVA in the Balochistan High Court. He claimed that CHEJVA was carried out in violation of applicable Pakistani laws, that the parties failed to properly register the agreement, and that the Balochistan government unlawfully loosened local legislation in order to carry it out. The high court, on the other hand, overruled the case and declared CHEJVA to be lawful. It took the government 11 years to realise

that something was amiss with the CHEJVA agreement that raised questions regarding its legality. It is highly unlikely that the issue was raised because our politicians “cared” about the adverse effect such a deal would have on the people of Balochistan. In 2006, Pakistan ranked 142nd out of the 163 countries as per data analysed by Transparency international. To put that into perspective our Corruption Perception Index score was comparable to the likes of Sierra Leone and Republic of Congo. The TCC performed a bankable feasibility assessment in 2010 that laid the groundwork for excavation and construction at Reko Diq. The TCC feasibility study estimated that 12.3 million tons of pure copper and 20.9 million ounces of pure gold would be extracted during a 56-year timeframe. Roughly 2.2 billion tonnes of the minerals are commercially extractable out of a total of 5.9 billion tonnes. The Reko Diq mines are said to cover an area of 13,000 square kilometres. The petitioners, dissatisfied by the Balochistan High Court’s orders in 2007, filed petitions with the Supreme Court, challenging the licences granted to TCC on the grounds of lack of fairness, non-transparency, violations of laws, and concerns to Balochistan’s and Pakistan’s vital interests. In a detailed order issued in 2011, the Supreme Court’s three-member bench, held that the 1993 agreement was contrary to law and public policy, and that the agreement, as well as the consequent adjustments made to it, were void. By the time the provincial government suddenly declined to award them the mining lease an investment of more than $220 million (Rs35 billion) had already been made, according to TCC. Before any mining project is carried out, there are a lot of studies and surveys involved. This part of the project is extremely important to conclude whether the minerals are present or not and if it is economically possible to extract said minerals. TCC claimed that it had done all necessary to earn a legal entitlement to a mining lease for Reko Diq through 10 years of research and feasibility work that cost hundreds of millions of dollars. However, the Supreme Court ruled that the CHEJVA was null and unconstitutional, and that TCC no longer had the right to Reko Diq. The company then filed a complaint with the International Centre for Settlement of Investment Disputes (ICSID) in 2012, claiming $11.43 billion in damages after the Balochistan government denied the company’s request for a lease. In January 2013, when the case was heard at ICSID, the Supreme Court of Paki-

stan had already declared CHEJVA illegal and ruled that the TCC had no statutory rights to develop and mine in Reko Diq. Based on allegations of corruption and a violation of mining regulations.The government actually wanted a higher royalty rate, increased involvement of the local populace and a revision of the overall financial model. A major setback was the fact that as per CHEJVA, ICSID had the ultimate authority to rule on this matter. And in July 2017, the ICSID ruled against Pakistan, saying that there had been no wrongdoing in CHEJVA, the premise on which Pakistan’s Supreme Court had terminated the agreement. Consequently, TCC was granted a whopping $5.976 billion (Rs950 billion) in damages by an arbitration tribunal of the World Bank’s ICSID on July 12th, 2019.

Role of the NRL

he idea behind the creation of the NRL was to develop the Reko Diq project. With Barrick coming back to Pakistan, NRL would have to start its work all over again to secure mining leases. That wouldn’t stop the company from going ahead given the experts it has in its ranks and with the help of its backers it’ll continue to exist and work towards getting the leases. National Resource Limited is a consortium of local companies namely, Arif Habib Equity (Private) Limited, Mari Petroleum Company Limited, Liberty Mills Limited, Reliance Commodities (Private) Limited (Fatima group), Y.B. Pakistan Limited (Lucky group) and South Western Mining (Private) Limited. The most prominent company that had been working to get the Reko Diq project resolved has been NRL. Backed by these huge conglomerates it had the financial capability to execute such a project. The company had been actively involved in the negotiations regarding an out of court settlement. “The consortium (had) proposed (to the) government to develop and implement the Tanjeel reserves as a starter project, followed by development of the vast Reko Diq area reserves,” NRL said in an article published by Reuters in May of 2021. Sources from within NRL have confirmed that Barrick would be coming back to take over the mining project.

What’s next

he government has a record of poorly negotiated deals, therefore it is important to understand how the new agreement will have an impact on Pakistan. However, there are currently very little details available in the public domain. n

NATURAL RESOURCES

COVER STORY

By Abdullah Niazi

he Pakistan Super League (PSL) is perhaps one of the best business decisions that the Pakistan Cricket Board (PCB) has made in its history. The league provides the board with a steady revenue stream each year, it has reopened the doors of international cricket in Pakistan, and has allowed the PCB to form connections with and sign major deals with international broadcasters. The PSL is also perhaps one of the worst business decisions some of the franchise owners have made. Over the course of the past 6 years, the PCB has made a neat profit from every edition of the tournament in addition to collecting hefty “franchise fees” from all of the team owners. In comparison, only one or two teams have managed to break even, with the others facing consistent losses. Stung by the losses, the franchises have for years been complaining about what they claimed was an unfair revenue sharing model which has finally been changed this year. Under the auspices of the new model, the teams will get 95% of the profits that the tournament makes and the PCB will take the rest of the 5%. In previous years, this model was closer to an 80-20 split so the change is significant. However, because of the high franchise fees and a lack of will in commercialising the franchises better, many of the teams will continue to face losses. Yet the team owners neither seem to be going anywhere nor are they in any sort of a hurry to put their franchises up for rebidding. A big reason is the screen time that the PSL gets the owners of these leagues. In a country where influence is currency and fame is an asset, team owners like Javed Afridi, Fawad Rana, and Salman Iqbal have become household names through the PSL. Being part of the ‘owners club’ is not just a status symbol, but also a way to influence the league and tap into a large marketing audience. Profit spoke to Sami Ul Hasan, the media and comms director of the PCB, franchise insiders, and cricket journalist Osman Samiuddin to get an insight into how a tournament like the PSL makes money, how much money it makes, and the unique set of conditions that have brought the franchises and the PCB to where they are today.

How the PSL makes money

et’s get some things out of the way. The PSL is worth some serious money. Every year the tournament makes money by selling tickets, selling sponsorships, and selling the broadcasting rights to the

matches. This year alone, the PCB sold the local broadcasting rights for the tournament to a consortium of ARY and PTV for the hefty price of $25 million for a two year period. Similarly, the title sponsorship, which has belonged to HBL since the beginning of the tournament, was sold to them again until 2025 for nearly $22.5 million (and this is only the title sponsorship, which means the revenue from other sponsors has not been factored in.) And while the PCB does not have its earnings from this year’s ticket sales, they managed to rake in upwards of $2 million back in 2020. This is how things stand today. The first time that it became apparent that the PSL could be worth the big bucks was back in 2015, when the PCB sold the rights to five franchise teams that would play the tournament for $93 million for a 10 year period. The most expensive team to be sold was Karachi Kings for $26 million, followed by Lahore Qalandars for $25 million, Peshawar Zalmi for $16 million, Islamabad United for $15 million, and the Quetta Gladiators for $11 million. Since the teams were sold for a 10-year period, the total cost was payable over 10 years in the form of a yearly franchise fee equivalent to 10% of the team’s value. Essentially, each franchise owner would rent out the use of the franchise for the year for a fixed price. Back then, betting on the PSL growing and turning into a successful cricket franchise league was risky. Pakistan was still not regularly hosting international cricket because of security concerns, and the PCB was suggesting hosting the entire league in the UAE to make sure that foreign players would come and play in Pakistan. It was thus a little surprising that the PCB managed to get the amount of money that they did for the franchises. Especially since the franchises would not just pay their franchise fees each year, but also have to spend money on paying players, coaches, and other support staff as well as marketing. The money was not paid upfront because none of the teams could really afford to pay up like that, and because there was no knowing where the teams would be in 10 years. For that first tournament held in the UAE in 2016, despite all odds, the PSL managed to turn a profit.

Back when the teams had first been sold by the PCB, it had been agreed that at least 80 percent of the revenue from the broadcast rights would be split equally among the five PSL franchises. The remaining 20 percent will go to the PCB. Similarly at least 50 percent of the revenue from the sponsorship rights will be shared among the franchises and the PCB will utilise the other 50 percent. Eventually, when the central revenue pool was calculated, it turned out that the PSL had turned a profit of $2.6 million. Out of this, the PCB pocketed $0.6 million while the rest of the $2 million were divided equally among the five sides - leaving each side with a mere $0.4 million. The sides all ended up making a significant loss in the first year. And how could they expect not to? In the first edition of the PSL only, the Karachi Kings for example had paid $2.6 million as their franchise fee. This was the same amount as the entirety of the PSL made. Not only did the Karachi Kings only recover $0.6 million of their initial investment for the first year, they also had to spend more on top of that. There is no auction in the PSL unlike the IPL, but instead a players draft where each team can spend up to $1.2 million on buying players for their teams. Money spent on coaches and marketing is seperate. This meant that Karachi alone was spending somewhere around the $5-6 million mark on the first edition of the PSL alone. The tournament was bringing in more revenue than it was spending money, but the franchise fees were too high for any of the teams to even come close to breaking even. While moving the tournament to Pakistan would bring in more sponsorship revenue as well as reduce costs by no longer needing to rent a venue to play, these changes would not have the sort of impact that would bring these teams out of their losses. The problem was also becoming particularly stark because all of the local owners of the teams in Pakistan were making money in the Pakistani rupee - which was fast plummeting in value - while the PCB demanded that franchise fees be paid in dollars. Effectively this meant that their fixed yearly fee was also rising. And because some of the teams have

Franchise fee

Lahore Qalandars - $2.5m per year for 10 years

Karachi Kings - $2.6m per year for 10 years

Peshawar Zalmi – $1.6m per year for 10 years

Islamabad United - $1.5m per year for 10 years

Quetta Gladiators - $1.1m per year for 10 years

Multan Sultans - $6.35m per year for 7 years

They’ve been operating in this sort of unhappy state for a while now. A few years ago a doc was leaked accidentally and it broke down what everyone had earned up until that point. What we can gather is that they are still invested, but not necessarily in a financial sense. “It is a bit about influence and not just money Osman Samiuddin, author and cricket journalist

larger fees than others, bigger teams like Karachi Kings and Lahore Qalandars were making bigger losses than teams like Quetta and Peshawar, which had significantly smaller yearly fees to pay. This revenue sharing model immediately became a bone of contention and the issue continued over the next few editions of the league.

The financial model struggle heats up

n January 2019, the extent to which the teams were making losses became apparent when the PCB accidentally leaked a document revealing just how much money the teams had lost in the first two editions of the tournament. Cricinfo reported that the PSL franchises incurred losses ranging from $1.4 million to $5 million each in the first two seasons of the league - leading them to demand financial restructuring of the league as well as tax exemptions from the Pakistan government. This meant the PCB had some serious egg on their face. The report was leaked because a copy of a letter that was sent by the PCB to the finance minister of Punjab, which includes consolidated financial details of the five franchises from the 2016 and 2017 seasons, was erroneously sent to all franchises, inadvertently revealing the financial details of each franchise to the others, a slip-up that the PCB chairman Ehsan Mani had to apologise for. The knowledge of the losses suddenly became apparent not just to the public, but also that the teams knew just how deep the others

were in it as well. While it was embarrassing in the moment, it also helped all of the owners realise that they could work together towards revising the existing business model. Within a year, in September 2020, all six of the teams banded together and sued the PCB. “While the Franchisees have been dedicated towards realising the vision and goal of the promotion and development of the sport of cricket and at the same time building a positive image of Pakistan, unfortunately, we have serious reservations with the existing financial arrangement and model of PSL,” the statement said. “PCB has demonstrated an unwillingness to discuss, deliberate or revise the arrangement in a serious manner forcing the hand of the Franchisees time and again…” The franchises reiterated that the PSL has been profitable for PCB at a time when they were suffering heavy losses. “Since the inception of the league, the Franchisees have collectively suffered losses in billions of rupees while the PCB has made billions…In light of the losses suffered by us over the past five seasons and PCB’s constant unwillingness to consider our grievances seriously, all six Franchisees have been constrained to approach the Honourable Lahore High Court against PCB…,” the statement added.

Ramiz brings in a new model

learly at this point the teams were upset not just because they were making losses, but also because the PCB was making serious profits.

“The issue isn’t how much money the business of basketball makes. The issue is that basketball isn’t a business in the first place — and for things that aren’t businesses how much money is, or isn’t, made is largely irrelevant….” Malcolm Gladwell, journalist

Not only did the PCB have the franchise fees coming in every year, they were also taking a sizable chunk from the central revenue pool. As pressure mounted with the court case the teams also began to dilly dally. They began making payments late, blaming the dividends they got from the league. Karachi and Lahore in particular became serial offenders, and the PCB ended up having to pay a lot of expenses out of pocket that they should have been paying from the money they were getting from the teams. Even when it comes to paying the players, when the PSL draft happens, the PCB pays the players and then collects the money from the franchises later or cuts it from the revenue pool before declaring its final profits. As the PCB found itself a little weary from carrying the weight, new Chairman Ramiz Raja stepped in. A former cricket player with a stronger resolve than the more meek Ehsan Mani, Raja sat the franchises down. This was the first thing that was different - under the Mani negotiations were done half-heartedly at times not because of the Chairman but because it was not a big priority. Ramiz on the other hand sat the teams down and gave them many of the things they wanted. He also told them to take it or leave it, and reportedly when one of the team owners seemed to be showing some resistance, Ramiz said he would not hesitate to put that franchise up for rebidding if they did not join the PCB and the rest of the teams on the same page. The first was that the teams would now get a 95 percent share of the central revenue pool rather than the 5% they used to get. As reported by Cricinfo, in the new model, all franchises will get 95% of revenue generated from all revenue streams including broadcasting rights, sponsorship rights and gate receipts from the seventh edition onward. For PSL 5 and 6, the PCB will share 98% of the central pool revenue as an additional relief in view of the Covid-19 pandemic that disrupted both seasons. In previous years, the revenue shared varied between 85% and 90%. The franchises wanted the PCB to give

COVER STORY

“Whether the teams will become profitable or not is a question for the teams as the PCB cannot reveal these financial details, however, due to the unprecedented values achieved in commercial deals recently locked for PSL and the revised share percentage, it is fair to say that the franchises will receive substantially more revenue than any previous edition Sami Ul Hasan, director media and communications PCB

them rights in perpetuity but that is not part of the new model. As per the original contract franchises will have to pay an increased franchise fee [existing fee + 25% or 25% of market value of the franchise, whichever is higher]. The most important concession, however, has been that the price of the dollar exchange rate has been fixed. The price of franchises when they were auctioned was set in US dollars. In 2015, when the first five franchises came on board, the rate was PKR 105 to a dollar. Currently, the rate of a US dollar hovers above PKR 170. The agreed offer means the PCB will peg the US dollar to the day the new agreement is signed. International players will continue to be paid in USD, however. To their credit, the PCB seems to have wrangled the franchises for now. “Whether the teams will become profitable or not is a question for the teams as the PCB cannot reveal these financial details, however, due to the unprecedented values achieved in commercial deals recently locked for PSL and the revised share percentage, it is fair to say that the franchises will receive substantially more revenue than any previous edition,” says Sami Ul Hasan, the board’s media director. “The PCB makes money each year, and the franchises have consistently been making losses. This naturally caused a lot of grumbling regarding the financial model,” says Osman Samiudding, an author and cricket journalist. “They’ve been operating in this sort of unhappy state for a while now. A few years ago a doc was leaked accidentally and it broke down what everyone had earned up until that point. What we can gather is that they are

still invested, but not necessarily in a financial sense,” he adds. “It is a bit about influence and not just money.” This is where another explanation comes in - about why the teams would want to stay on board even if they aren’t making money.

So why are the teams staying?

akistan needs the PSL. In the seven years that it has been around the tournament has not just brought in an influx of money and players to Pakistan, but the tournament has managed to maintain a high standard of cricket that has provided local talent a star-studded stage to showcase their talent. (Shaheen Afridi first played in the PSL in 2018 when he was picked in the ‘emerging’ category. In the four years since, he has risen to spearhead Pakistan’s pace attack, demolished the Indian batting line-up in the T20 World Cup, become the youngest player to win the Sir Garfield Sobers award for cricketer of the year, and is now leading the Lahore Qalandars as Captain in the ongoing tournament). The question is, however, why these team owners need the PSL. Clearly the pull is not money here. Let us, for instance, talk about the relatively newer team in the League, the Multan Sultans. Late by just two years, the franchise was auctioned off for a whopping $44.5 million - and that too only for a seven year period. That means that the Tareen pay an astonishing $6.35 million each year to keep

PSL 2022 revenue streams Broadcasting (local) - $25 million for two years Sponsorship (Title) - $22 million for three years Ticket sales (projected figures) - $4 million

ownership of their team. “The amount that Multan paid was a very high one. The PCB will say that this is the value of their league, but Multan cannot break even for a while and this much money is only sustainable because they have it,” says Samiuddin. So why did the owners fall into this trap? Well, maybe it isn’t a trap, but a toy. In a cricket crazy country like Pakistan, having a cricket team, which includes individuals who have worn the iconic Green blazer and others who have represented their own countries, is a vanity project like no other. A surprisingly large number of public figures (Nawaz Sharif, Atif Aslam, Faiz Ahmed Faiz to name just a few) think they could have played cricket professionally had they wanted to. A large number of businessmen also indulge this schoolboy delusion in their minds. The next best thing: basking in the high of packed stadiums chanting out the name of the team they own. Just think about it. Of the six teams, at least three have very prominent owners that have made their own brand synonymous with the team’s brand. Fawad Rana has become the iconically loveable face of the Lahore Qalandars, Javed Afridi has found his fame through his ownership of the Peshawar Zalmi, while Salman Iqbal has ventured beyond just the team to also buy the broadcasting rights for the league with his A Sports channel - something that gives him a large amount of influence over the league. “Javed Afridi Yellow Stone Army; at the end of the day, we are all Pakistanis,” went a line, immediately before the chorus in Peshawar Zalmi’s rather catchy official rap anthem from last year. One can’t put a price on that ego boost. Well, one can. And Afridi did. As Malcolm Gladwell writes on the motivation behind owning teams in the US’s National Basketball Association (NBA): “The issue isn’t how much money the business of basketball makes. The issue is that basketball isn’t a business in the first place — and for things that aren’t businesses how much money is, or isn’t, made is largely irrelevant….” n

COVER STORY

OPINION

Ariba Shahid

Where is femininity in the corporate world? Why must a woman forgo her femininity to be taken seriously in the world of big business?

most corporate environments - the more the better they say. A little disclaimer here is that I believe every individual has the right to make choices for themselves and this is in no way me saying all women should be a certain way at work. Instead, this piece is me questioning the very system we operate in that makes one make changes in a personality subconsciously in order to excel and move ahead in a career.

Social conditioning

efore I move onto the corporate world, I’m going to take an example from the public sphere instead to make a point about how rhetoric and conversations impact one’s he corporate world is brutal. It is also probably ten decisions about their personality. times worse for women. Hina Rabbani Khar served as the Foreign Minister for PaNot only do women have to deal with gender kistan in the Zardari administration during the early 2010s. She discrimination at the workplace during the hiring was also the youngest person to serve in the post, as well as the process, everything from compensation decisions to only woman to ever hold the office. She is also the first woman to career acceleration is impacted by either conscious or present the national budget, an event that happened more than unconscious systemic gender discrimination. And as if that weren’t six decades after partition. enough, they also have to go through somewhat of an identity crisis. A graduate of the LUMS and U Mass – Amherst, Khar was Because corporate environments are often so hostile to women and a qualified and in many ways empowered foreign minister that traditionally feminine traits, to fit in women end up having to lose possessed both poise and elegance that is required in a position bits of themselves to appease to the standard. that is as representative and embelic as it is technical and importWhile this is not a Pakistan specific problem and is a global ant. Yet despite this, her entire tenure as foreign minister was issue as well, it is still important to discuss it in our context. As a dominated by media discourse about her fashion and style sense. woman, I often wonder why I have to forgo my femininity to make For context, Khar’s style oozed sophistication and profesit big in the corporate world. It makes very little sense, especially sionalism. However, it was also feminine. You knew she cared considering men do not have to tone down their masculinity in the about how she looked and was not shy to show that she was a corporate world. In fact, masculinity and aggressiveness are lauded in woman. I don’t think I remember many or any TV packages for that matter discussing what shows, ties, cufflinks male politicians were wearing. That double standard made it seem like Khar was in the wrong. As a young impressionable teen, it embedded into my mind that it would’ve been easier for her had she been a plane Jane. That is how the media made me feel that I could not truly be myself if I wanted to be taken Ariba Shahid seriously. is a business journalist at {Note from editorial staff: The double standard is even more stark when you consider the Profit. She can be reached at variety of fashion choices male politicians have made. From as far back as Nawabzada Nasrullah’s ariba.shahid@pakistantoday. Fez with a tassel to more recent times when Mian Shehbaz Sharif has sported a fedora and cowcom.pk or at twitter.com/ boy boots - very little has been made of some of the sillier choices made by these powerful men} AribaShahid Similarly, flash forward to the 2020s. Maryam Nawaz has risen in prominence. The very fact that her style is always up for discussion is proof of the dual standards. Moreover, some even went on to say she shouldn’t have looked so glamorous at her son’s wedding if she wants to be taken seriously as a politician. Despite being an adult, I still feel that subliminally it made me believe that once my career

progresses towards prominence, I too will have to go down the sober and plain route, something that doesn’t sit well with me.

There is nothing wrong with being feminine

ere’s a little anecdote. One day at work, I was browsing the internet and looking up Pakistani women that had climbed the corporate ladder and made it to the top. My colleague and I joked, “Apparently, if we want to make it up there, we’ve got to get haircuts, preferably a boy cut.” While correlation and causation are two different things, and everyone has their own personal style, preference, reasons; the thought dawned on the both of us – did these women kill a certain part of themselves for the world to take them seriously? Look at the small puddle (intentionally not pool or pond) of women that have made it to the top ranks and C-suites in corporate Pakistan. Do you not feel that at some point early on in their career they faced a realization that they need to act more like a man or try to make themselves seem less feminine? If that is the case, then it is a sad one. There is nothing wrong with being feminine. There is nothing weak, passive, or incapable

in being feminine. Being feminine should not result in being infantilized, seen as a target, an attention seeker or unprofessional. You can still be professional and true to your gender and to yourself. You should not have to hid the true you at a place you spend most of your time at. That not only brings about a form of imposter syndrome, copycat mechanisms, and further judgment – but adds to the echo chamber already existent. Moreover, encouraging women to no longer act on their instincts results in the generation of ideas that most likely lack genuine gendered perspective.

Is there a solution?

his isn’t something you can fix overnight, especially considering the fact that this isn’t just restricted to Pakistan. For starters, better workplace safety and gender sensitivity training. The very fact that women that express their femininity at work or in how they carry themselves are seen as “asking for it”, is testament that the system is actively discouraging people to be themselves. Moreover, women would largely feel more comfortable being themselves if there were more women in the workforce, especially the corporate world. However, if women feel the same way as me, they also need to realize the solution starts

from them too. Next time you see a woman expressing her femininity in any way – be it her ideas, demeanor, style, etc; don’t judge and be a Mean Girl. Don’t discredit her. There are countless anecdotes I’ve heard from women where they say their female boss and colleagues make the workplace difficult for them despite understanding and going through what they’re going through. Rise above that, women. Stand up for one another. While reversing social conditioning is a long process, this is a message to all the readers, please stop thinking that the manly way is the only way. The world is diverse and our different perspectives, quirks, personalities, and demeanors are what make it interesting. As someone that is still learning and growing, it took a while for me to realize that I no longer have to hide a significant side of me. There are times I’m treated like I’m weak, unknowledgeable. There are also times where I’m discredited and told off that the only reason I’m moving along in my career is because I’m a woman. In response to that, I just be myself. There is certain bliss when you realize you don’t have to let go of a part of you to be taken seriously, you can do that with your work or actions. Besides, you don’t have to please everyone. After feeling that bliss, I genuinely wish other women in the workforce are able to feel the same way someday. n

COMMENT

OPINION

Uzair Younus There’s a right way to develop Gwadar

shows that if the geoeconomics pivot is successful, Pakistan’s exports would dramatically rise, creating millions of well-paying jobs, eliminating chronic external sector crises that Pakistan faces, and accelerating the achievement of key human development goals. Digging a little deeper into this World Bank analysis highlights that the real potential for the geoeconomics pivot lies through the Pakistan’s geoeconomic pivot must weigh oceans, not the heartland of Central Asia. Almost $25 billion of the heavily towards the oceans potential can be realized through three key markets: China ($13.3 billion), the United States ($5.8 billion), and Japan ($4.2 billion). Other f the China-Pakistan Economic Corridor (CPEC) is the crown key markets with untapped potential are Italy ($1.3 billion), Indonesia jewel of China’s Belt and Road Initiative, then Gwadar can be ($1.3 billion), and France ($1.3 billion). It is also worth pointing out described as the holy grail of CPEC. Given the economic and that India has a potential of $12.7 billion and overland trade with India strategic importance associated with Gwadar, one could argue would deliver immense benefits; however, realizing this potential in that a transformation of the city and its economy would, by exthe near-term is an unlikely scenario given Pakistan-India relations. tension, signal the realization of the promise and potential of CPEC. In comparison, Central Asian heartland represents a tiny opporAnd if the promise and potential of CPEC is realized, then Pakistan’s tunity, with Uzbekistan and Kazakhstan combined offering a potential economy would be transformed for the better, leading to sustainable of under $1 billion. That opportunity can only be unlocked through and inclusive growth coupled with integration with the broader peace and stability in Afghanistan, and as recent weeks have shown, region and the global economy. rising violence on the border with Afghanistan makes the realization However, the pursuit of this strategy has led successive governof this potential an unlikely scenario in the immediate future. The ments, civilian and military, to focus on a top-down developmental security challenge from Afghanistan and beyond is nothing new: for model that is exposing and exacerbating the shortcomings of the Pacenturies armies, not wealth, have flowed from west of the Khyber Pass kistani state. These capacity gaps, when paired with a developmental into the subcontinent. And this security issue has plagued Pakistan strategy that is disconnected from local realities, is the reason why from its very early days. It is worth noting that the first Memorandum Gwadar has a lush green cricket outfield but limited to no access to of Understanding (MoU) between Pakistan and Turkmenistan to declean drinking water for the citizens of the city. While celebrities, invelop a natural gas and oil pipeline was signed in March 1995. Almost fluencers, and political elite post pictures of pristine beaches, life for thirty years later, this pipeline remains a pipedream. It is also worth those on the ground in Gwadar remains challenging at best. Which pointing out that the terms of trade from Central Asia are likely to be is why there was a weeks’ long protest in the city, with citizens skewed against Pakistan, primarily because Pakistan would be importdemanding access to clean water and protection of their livelihoods, ing dollar-denominated energy and selling agricultural and manufacespecially those related to the fishing industry. tured goods like textiles in return. This means that the country would It goes without saying that the geoeconomics pivot is an eventually need additional inflows of dollars from other markets to pay important and much-needed pivot. However, we must scrutinize this for its energy imports. pivot for its alignments with the economic realities and potential of China is a strategic ally and a key market for Pakistan. However, Pakistan, and then assess Gwadar’s role in meeting this potential. the purchasing power of the country is based on its eastern seaboard, Take for example the World Bank’s research suggesting that the total not Xinjiang; fulfilling the $13 billion export potential would require export gap for Pakistan is over $60 billion. This, on surface value, Pakistan to send its goods through the oceans to ports in eastern China. Additionally, realizing the strategic economic opportunity on offer through CPEC requires Pakistan to address its own internal shortcomings. These shortcomings are forcing China to hedge against Gwadar, as evidenced by its engagement with Iran, including on the port of Chabahar. The writer is Director of The country’s current major trading partners are currently accessed through the seas and there is trethe Pakistan Initiative mendous upside on offer by investing in realizing the missing potential. This is a sentiment shared by others, at the Atlantic Council, a including leading corporate executives, who believe that a robust maritime strategy is sorely needed. Gwadar Washington D.C.-based will be a core part of this strategy, but the port must be reimagined as a transshipment hub that complements think tank, and host of Karachi. In addition, investments in modernizing the existing economy in Gwadar by building relevant infrathe podcast Pakistonomy. structure, starting with fishing, should be the priority. This can increase incomes for local fishermen by exportHe tweets @uzairyounus. ing value-added seafood to the world, starting with the Gulf, and generate increased economic activity that can justify further investments in the future. Pakistan’s geoeconomic pivot must weigh heavily towards the oceans, and investments must be made in core infrastructure necessary to meet the country’s export potential. n

COMMENT

OPINION

Haroon Rashid

The what-ifs of Pakistan’s oil and gas segment There is no single person to blame – everyone has had a subpar showing

his is not meant to be an effort in polemics – which means this article is neither meant to criticise or make anyone feel bad. Instead, it is an attempt to present an in-depth analysis of what could have gone gone better in the downstream oil and gas segment in Pakistan over the last ten years, and what it would take for the next few years to go better than the past decade. Because on thing is a fact – things could have gone better. What would that have looked like? Fuel prices could be closer to PKR 100 per litre, our currency would not be under so much pressure and perhaps would have done slightly better against the US dollar, there would be more strategic storage, our refineries would have stood a better chance at being upgraded, as a country we would have had fewer but better operated petrol pumps, and our environment would have been better protected against carbon emmisions and spills that damage our environment. Where we are today is a fair bit away from what good could have looked like and to say only one person or party is accountable is naïve. No one alone, neither the government, nor the bureaucracy, private players, media or law enforcement agencies, is solely responsible for this failure. It has been a sub-optimal performance as a whole. So what could have gone better and what would it take to do better in future?

The writer is the ex CEO of Shell Pakistan Limited. Haroon has spent some 27 years in the oil and gas industry. He has held a variety of assignments in Pakistan, Singapore and the UK.

What we need is simplification of rules, those who break these rules should be held accountable and those who demonstrate the ability to follow the rules should be encouraged. This will make it a much more compliant, safer and environmentally friendly industry Fuel

ince fuel price is close to every one’s heart let me talk about this first. Due to different reasons oil and gas prices crashed at-least three times during the last ten years, we were unable to take advantage of any of these crashes. If we had taken advantage of these crashes, even with all our challenges, today prices at pumps would be lower and our currency could have been under less pressure as oil and gas are Pakistan’s largest imports. The reason we were unable to take advantage of these low prices was because our available storage could not be filled as it should have been filled when prices were low and we were unable to lock in part of our country’s future demand at a price that we could afford when the opportunity existed to buy such paper products in the global market. The main limiting factor is that the pricing rules that govern our oil industry have too much exposure for the private sector for doing anything other than buying at prevailing prices. In addition, there is no government body that has the competence plus the mandate to take the needed risks via taking price exposure to fill up empty storages or to buy paper products in the international market when prices reach a level that we can sustainably afford. If the current environment continues to prevail, we will not be able to take advantage of the next global fuel price crash, whenever it happens. For these pricing rules to change, someone in our bureaucracy needs to have the competence to analyze what needs to change in the pricing rules, they should already be working on a proposal for the cabinet that includes the risks we will have to take to secure part of our demand at affordable prices, what would the pricing trigger point be, what are the pros and cons of working with the different sellers of these paper products, what would it take for the industry to fill up the available storages, how will the risk be managed, how would media be engaged so that they do not start crying foul the second risks taken do not work for us etc. None of this is happening, hence my conclusion, under status quo there is very limited chance of taking advantage of the next fuel price crash to lock in fuel imports at more sustainable prices.

Regulation

he number of laws governing oil and gas downstream business are numerous but I dare say these laws and acts are hardly understood by those whose job it is to implement these laws on the Govt. side or on the benches of private players who are supposed to run their enterprises whilst following these laws. As a result, we have a somewhat deregulated industry with all sorts of rules being broken. End result is sub optimal rules, low quality pumps, environmental damage, leaks, spills, accidents, all kinds of blame games, hap hazard and sporadic implementation of laws, an industry that is more run on experience than the required operating standards, an industry where those who endeavor to understand and follow the rules are nearly always disadvantaged. What we need is simplification of rules, those who break these rules should be held accountable and those who demonstrate the ability to follow the rules should be encouraged. This will make it a much more compliant, safer and environmentally friendly industry. This will

What we need to face these challenges 1) Build capacity in Govt institutions. Government employees need to be provided a fear free environment. Competence building is key. Good intentions should be rewarded. People need to be backed up when they take risks for the benefit of the country. Cabinet support, as relevant, should be provided to enable decision making. 2) Simplify the rules, take out contradicting rules and hold refineries and oil and gas marketing companies accountable for implementing rules. 3) Government sector needs to engage private sector in much more meaningful ways to both make effective regulatory changes as well as implement current rules.

also result in more environmentally friendly petrol pumps, better quality of storages etc. We have been unable to change our refining policy or to introduce a trading policy to encourage refiners, local or international, to invest in refining or to encourage international trading of fuels from Pakistan. As a result, we could never find a way to upgrade our refineries or to create a fuel trading hub in Karachi

or Gawadar. We need a refining policy that encourages current players to invest, penalizes them when rules are not followed and creates a long-term sustainable refining sector in Pakistan. We also need to change customs and tax rules to enable international trading of oil and gas products from Pakistan. Such changes will build a much more sustainable refining and trading sector in Pakistan. n

COMMENT

Is the

Cloud First Policy a step towards digitising the country? The policy has made many tall claims, but will it be able to come through on any of them? By Ahtasam Ahmad

here has for the longest time been a lot of noise around ‘Digital Pakistan.’ The idea that a big part of Pakistan turning into a developed nation is making sure that we adopt technology early and choose digitisation both in governance and everyday life. A ‘Digital Pakistan’ is supposed to create a digital ecosystem with infrastructure and institutional frameworks for the rapid delivery of innovative digital services, applications and content. Essentially, making sure everything is online, accessible, operable, and convenient. To this end, one of the most recent developments

has been a draft of Pakistan’s first ever cloud policy on 15 February, 2022. The IT ministry’s draft has already been approved by the cabinet, and is being claimed by the government as a game changer in digitising the country’s economic as well as administrative infrastructure. Essentially, it is exactly what it sounds like. The government is preparing to shift all of its data from hard memory disks to a cloud based system - much like you might have on your phone with iCloud or Google Storage. However, when data is being put up onto a cloud in such large quantities, matters are a little more complicated. The most essential part of this effort will be pushing to make sure that all new data entries are made directly to the cloud after it

is thoroughly tested to make sure there are no glitches or mishaps, and then forming a team dedicated to categorising and uploading old data to this cloud as well. And of course, before all of those making sure this cloud is encrypted from multiple ends and completely safe will be of the utmost importance given how sensitive the information being uploaded will be. The only question is, how convincing is this Cloud First Policy?

What’s a cloud?

t’s pretty obvious by now we’re not talking about the fluffy white things in the sky that sometimes turn grey and shower rain upon us. What we’re referring to is a wireless ‘cloud’ system of data storage. Cloud

Computing is based on the infrastructure that facilitates the delivery of multiple services and applications directly through the internet. These services include networking, database, softwares and data storage. Basically, it provides an infrastructure that can replace local storage (computer hard drives in most cases). But, why can’t we just carry on with the local storage? Well, local storage has served us well over the years, but cloud changes the game. It is more efficient, offers huge cost savings, arguably better data management and protection and the processing capacity is higher than that what most local storage systems can offer. Furthermore, it facilitates user mobility as data is accessible from anywhere in the world.

What progress has been made?

akistan, as per World Bank, is the fifth largest country around the globe in terms of population. Furthermore, with 40 divisions and more than 600 affiliated departments of its Federal government, Pakistan has a massive utility of cloud computing both in Public as well as Private sector. Unfortunately, as of now, the country has not been able to fully tap into the potential of this technology. Apparent from the fact that Pakistan failed to make into Association of Cloud Computing Asia’s cloud readiness index while countries like India, Indonesia and Vietnam all were present in the rankings. The use of cloud services in the public sector is comparatively low, and the bulk of data centres are designed to serve the needs of a single enterprise. The lack of centralised cloud infrastructure remains a major impediment for the country in tapping into the perks of cloud computing. Furthermore, Telecommunications Advisory Assistance, 5G Readiness Plan for Pakistan, a report issued by the World Bank also emphasised on the need for the country to build the local Cloud infrastructure to facilitate domestic entities and deployment of related services like IoT.

Moreover, it will prove to be a step towards removing administrative and legal barriers in data exchange between government departments. This is important for departments like Nadra and FBR that possess valuable data which can be of utility to other government departments and agencies. As per the Principles for Adopting Cloud Computing in the Public Sector, issued by Association of Cloud Computing Asia, “The protections offered by the technical architecture of the cloud and the efficiencies associated with cloud services are only the beginning of the benefits that governments and society can realise by deploying cloud-based technologies.” The report further added, “The transformational technologies of today are largely powered by cloud solutions. Policymakers and procurement officers should not limit themselves to thinking about the change cloud computing enables within IT departments or the budgetary savings that can result from migrating to the cloud, but should expect cloud-based technologies to offer solutions that enable governments to achieve their broader objectives as well. Agencies that focus only on migrating existing workloads to the cloud or take too narrow a view of cost savings will miss these transformational benefits.”

Public sector data needs to be on the cloud

Will the policy achieve its goals?

ntegration of all government databases to cloud platforms will enable the government to better analyse the data which will ultimately lead to quality enhancement of E-Government services. Additionally, a cloud infrastructure will help reduce the burden on the national treasury of operating separate data centres for federal entities and departments.

ne of the IT ministry’s biggest talking points has been their goals towards achieving digitisation in three things - E-Governance, E-Commerce and E-Banking. These are also the three elements the government is hoping to achieve “It aims to contribute to the Government of Pakistan’s (GoP) goal to promote E-Governance through IT enablement at all levels.

MoITT also aims to reduce the burden of import bills of Pakistan by discouraging investments in organisation specific data centres in Public Sector Entities (PSE) and taking advantage of the economies of scale offered by the cloud,” reads one section of the policy draft. One can thus see that the primary aim seems to be increasing efficiency of the government and its department’s digital activities and enhancing data security while simultaneously reducing costs of establishing and maintaining data centres separately for departments. In an ideal world, PSEs will benefit from consolidated cloud services. But the two most important factors with this will be implementation and trust. The policy and its goals are all well and good. The problem is no government policy claims that it will not be able to solve the problems it has identified and is suggesting solutions to. However, most policies go unnoticed. It is imperative to wait and see what sort of attention the government gives to this policy and whether it is followed through on or not. The second important factor will be how secure this entire operation is. The MoITT has claimed that it will actually enhance the security of the government’s data, which over the years has been vulnerable to cyber attacks. This has even been admitted by the government recently in the National Security Policy, which made it a point to mention that the government needs to invest in technology to build its Cyber Security Framework as it stands at risk of cyber attacks from internal and external sources. As per the report, Security guidelines for big data infrastructure and platform by International Telecommunication Union, “Technical defects of system virtualization could cause several security risks; in addition, immature operation and maintenance technology could result in risks being more serious. Additionally,

ANALYSIS - TECHNOLOGY

large-scale distributed storage and computing models of big data infrastructure and platforms cause higher risks of security configuration parameters to the software used in big data management.” Therefore, to tackle the issue of data security, the FPCP has laid out five data classifications and the level of security required for them.

Scope, applicability and policy objectives

he policy, after coming into effect, will be applicable on every PSE under the federal government. Additionally, as per the policy “ It will serve as a guiding framework to regulated sectors and private sector organisations as they continue to undertake digital transformation. PCFP is issued to support the digital transformation of the ICT landscape in Pakistan, improve efficiency, provide quality service delivery, and encourage investments in ICT.” As stated in the Policy, by the introduction of a Cloud system, GoP aims to; (1) Reduce time to procure and time to launch by maintaining a pre-accredited list of Cloud Service Providers (CSP). The accreditation will be done by benchmarking against international quality standards. (2) Reduce the cost of ICT infrastructure by paying only for the services that are utilised rather than incurring high capital expenditure for dedicated infrastructure. (3) To encourage investment in cloud services by local and International CSP in Pakistan. This will be done by making it mandatory for all PSEs and Public sector projects to prioritise Cloud based solutions when investing in IT in-

frastructure which will raise demand for CSP’s services. As per the policy, After 1st July 2022, all new ICT investments should adhere to the directions of Cloud Office. (4) Facilitate CSP to achieve economies of scale. As demand grows for their service, the providers will need to scale up their bandwidth and ancillary infrastructure which will lead to lower per unit costs. (5) Provide enhanced information security to end-users via cloud offerings. The policy will establish the basis for data classification and respective security criteria for each classification. This will assist in benchmarking against international security standards. (6) Provide transparency to citizens with digital government solutions. The Open data category will consist of structured and readily available data for the public. (7) Increase utilization of cloud solutions by transitioning from local hosting to cloud hosting (8) Foster a digital entrepreneurship ecosystem by providing readily available cloud services. (9) Attain optimization via aggregation of resources. (10) Develop a cloud enabled workforce by upskilling the existing workforce of PSEs.(11) Obtain environmental benefits achieved by optimized use of resources. (12)Put forward a synchronized approach to ICT procurement across the governments/provinces.

Road map for enabling Cloud Computing

he implementation of the proposed policy will be carried out through Cloud Office. As per the policy, “Planned governance structure will enable the roadmap for establishing a struc-

tured and formal organisational setup for cloud governance in Pakistan.” Furthermore, to ensure smooth implementation of the policy, the Cloud office(s) will be reportable to a Cloud board.The structure of the Board will consist of Secretary MoITT as the head, alongwith provincial Chief secretaries or their representatives along with two experts from the industry. The involvement of Chief secretaries will be contingent on the adoption of the policy by respective provincial governments.The Operational Hierarchy of the Cloud office(s) is illustrated by the chart below. As per the policy framework, key operational steps will be implemented by cloud offices, these include; Accreditation of Cloud Service Providers for Government Data, Registration of Cloud Service Providers, ICT Audits, Restrictions on Investments in Fragmented ICT infrastructure, Data Classification, Security Framework and PSE ICT procurement checks.

The timeline

he drafting of the Policy started after the GoP in its digital Pakistan Policy assigned the task of creating a government cloud for integrated public sector data to the Ministry of Information Technology and Telecommunication. As per sources, before presenting it to the cabinet, the policy draft was amended three times, taking into consideration the input of all stakeholders. As of now, the cabinet has approved the policy and it will come into effect once the notification process is completed. The process of implementation will start with the establishment of Cloud Office. n

ANALYSIS - TECHNOLOGY

A timely analysis of Karachi’s public transit woes Hasan and Raza pay attention to the finer details in ‘Karachi’s Public Transport: Origins, Evolution and Future Planning By Zunairah Qureshi

he state of Karachi’s public transport system, or the lack thereof, has been a topic of national conversation for decades now. Every year there is some new solution proposed and every year some other solution of equally grand proportions is scrapped. The lamentable absence of any real public transport system in the country’s largest metropolis, let alone the absence of a robust one, is the topic of Asif Hasan and Mansoor Raza’s titled ‘Karachi’s Public Transport: Origins, Evolution and Future Planning.’ Despite its deceptively simple title, the book takes on the Herculean task of picking up the history of public transport in Karachi, and identifying a number of factors that have contributed to the failing of a complex system meant to pull together a sprawling city of 20 million strong.

BOOK REVIEW

Together, the two writers bring a vast range of expertise that allows them to analyse the city in what can only be described as an exercise in urban-transit cartography. Arif Hasan, an architect, planner, activist, researcher, and teacher, has to his name multiple publications on urban and rural development. Among other contributions to eminent projects like Orangi Pilot Project and Asian Coalition for Housing Rights, Bangkok, he is the founding Chairperson of Urban Resource Centre, a non-profit organisation which focuses on highlighting public issues. Meanwhile Mansoor Raza, an electrical engineer, environmentalist and urban planner that is currently a lecturer at the Department of Architecture and Planning, NED University of Engineering and Technology, brings to the book years of experience serving as a research supervisor on the Green Line (BRT), Lyari expressway, and other transportation projects. With their unique set of skills and

different perspectives, the two authors manage to construct a narrative that includes all stakeholders, from the government officials who are responsible for maintaining public transport to civilians who are reluctant to use the city’s overhead bridges. The authors discuss Karachi’s evolving demographic, it’s growth in population, changes in family structure, and consequent changes in lifestyle habits, as factors that affect the city’s demand for public transport. There were many interventions proposed and even taken, that end up falling short of this demand either because of political tensions, beaureucratic incompetency, and a number of reasons that are presented in this book. The book begins with a discussion on Karachi’s public transport’s history, touching upon the fate of the tramway line that connected the city and Karachi Circular Railway (KCR) which ran a full circumference of 44 km until the city outgrew it. Then, there was

the introduction of the minivans, the buses that fell out of order, the qingci that was outlawed, followed by the birth of app-operated ride-hailing services like Uber and Careem, and the pending BRT plans that have been delayed over a decade. The authors go into an analysis of each development in the public transport sphere and every intervention that came along, giving reasons for its success or failure. They also give us behind the scene glimpses into entities like the transport mafia that are also responsible for how Karachi’s public transport operates. The book brings together some illuminating statistics regarding Karachi’s growth in terms of demographic as well as vehicular network. For instance, out of Karachi’s population of 16 million (the book highlights that this figure is contested by experts who claim that the true estimate is above 20 million) 68 per cent belong to the low-income group and 62 per cent live in informally developed settlements. This is also the populace that is largely dependent on the public transport for their livelihoods but at the same time, they are among the most disadvantaged when it comes to accessibility. The authors describe how with time Karachi’s peripheral areas have expanded outwards and moved away from city centres where work, commercial, and educational facilities are concentrated. This results in the city’s less privileged having to travel longer distances and spending a larger chunk of their income on commuting. Another figure that stood out was that in July 2018, 61% of all registered vehicles in Karachi were motorbikes. This percentage continues to increase. Motorbikes have been identified as one of the biggest reasons for road congestion and accidents. Weak law enforcement and corrupt police practices mean that safety regulations like wearing helmets are not enforced, increasing risks for bikers and their passengers.

The book is sectioned into specific, detailed overviews of the different transport projects that were attempted again and again but were largely unsuccessful. This includes government projects, public-private partnership coalitions, and private company interventions like the present-day implementation of app-based ride hailing services. What is interesting is how the authors chose to study each project through a consideration of contextually grounded realities. This means that the book brings forth issues of rapid population growth, an evolving demographic with changing travel patterns and preferences, widening economic inequalities, Karachi’s complex political landscape, ethnic tensions, the lack of civic sense, environmental hazards posed from the rotting transport system, among other factors. For instance, the book presents the inefficient performance of public buses as not only a problem of weak governance but associates it to the wider issue of gender inequality. Women reported being more vulnerable to safety hazards and harassment within buses, and finding the walk to and from bus stops and inconvenience. Similarly, when describing the gap in the market that more recent ride-hailing services such as Uber, Careem, Paxi etc. managed to close, the authors do not miss pointing out that this may pose a larger issue of excluding the low-income groups. This will not only come to be through the naturally manifesting class-driven, lifestyle differences but also appear as a practical issue when the more privileged civilians’ income will be directed towards the private companies instead of public transport services. The book includes real stories extracted from interviews of members from each stakeholder’s group. This includes the experiences, knowledge, and opinions of a car mechanic, a traffic police officer, rickshaw driver, female passengers and the like. It is through these

stories that we learn about the struggles most people face in their daily lives, where transport issues threaten people’s livelihoods and literal lives as well. We also learn about specific issues that may not be commonly known to everyone like the troubles of facing extortion just for running a taxi service and the ‘cutting’ business of selling stolen scars to scrapyards. A separate chapter is assigned just for women’s issues and their stories that highlights them as one of the most disadvantaged groups in terms of accessibility to transport. The final chapter then gives recommendations based on the results of a plethora of existing research and the study conducted for the development of this book. It proposes solutions for better governance of the transport system, possible interventions to address the worsening environmental pollution hazards and commentary on existing structures such as the disused pedestrian bridges and ongoing BRT plans. The book deserves attention because of its evaluation of the seemingly unsolvable problem in an appreciably holistic manner. Any solution to the transport issue will not work unless we are thinking about the women who need safety throughout the day, or the police officers that are resorting to bribery and extortion owing to less pay, or the public transport owners who are failing to provide quality services at lower set fares.The book also proposes, and rightly so, that the civilians and private parties that have been involved in running Karachi’s existing public transport system like rickshaw drivers, bus operators, and transport lenders, have valuable knowledge regarding the city’s transportation set-up and should be included in administrative decisions. One hopes that an awareness of the multiple complexities that intertwine with Karachi’s haphazard roads can help reach effective solutions. n

BOOK REVIEW

A fund of one’s own Worried about how to save for an emergency? Don’t worry, we have a plan

By Ahtasam Ahmad

ne imagines many emergencies that might happen to them in their personal lives. A car crash, a roof collapse, a stampede, a wild tornado - anything could happen at any moment that could result in a person’s life or livelihood crashing down. After all, how many of us could predict that the coronavirus would wreak havoc on the world as it did and cause colossal economic damage as well as the huge impact it had on global public health? The hospitality sector and the transport industry, two businesses considered ‘safe’ were suddenly humbled and brought to their knees by the force of the pandemic. The disruption sent shockwaves into economies across the world and ours was no different. From large corporations to individual households - everyone was impacted. In Pakistan alone, more than 50% of working people reported that they were either fired or that their salaries were cut. At times like these, when the unexpected happens, what comes in handy are emergency funds. The idea of an emergency fund elicits many kinds of responses. The first is an overly simplistic one. No, an emergency fund is not a piggy bank you’ve been putting money in or a drawer you’ve been setting aside a certain portion of your salary in each month. The second

PERSONAL FINANCE

response to the idea of an emergency fund is intimidation - because there is very little understanding of what these funds are and what they do. Profit brings you a detailed guide on how to create a personal emergency fund and where to place it.

What is an emergency fund?

n emergency fund is the money you set aside to meet unexpected expenses that result from financial emergencies. This fund is not to be used for leisure, like buying a new phone or a playstation rather it is there to meet expenses that are unavoidable. e.g. If you lose your job or there is a medical emergency then you can draw onto your emergency fund for help. Getting health insurance or life insurance can serve as an emergency fund for a health scare. However, not everything can be insured and that is where one needs immediate cash to bail themselves out. It is critical to understand that having an emergency fund is extremely important as it will help you float the downs in your life and save you from decisions made in desperation e.g. going to a loan shark for money as banks won’t lend you because you are jobless. A fund should be equivalent to at least six months of your needs, and no, getting

that pair of sneakers is not a need. To better understand the situation let’s take an example of my friend Talha who has a monthly salary of Rs 60,000. The monthly expense of Talha is classified into 3 categories; Needs, Wants and Investments. As mentioned earlier, we will only be looking at needs to include in the emergency fund. Rent, Utilities, Groceries and Insurance Premium all are categorized as needs as these payments are unavoidable, probably can be reduced a bit, but for sure cannot be eliminated. Combining all these, we have an amount of Rs 240,000 that Talah needs to raise to create an emergency fund. But the next question is how? Like at the end of the month there is no spare money left, all of it is exhausted. This is probably the reason why most people don’t create an emergency fund. They don’t see any utility in tightening their budget for something that is unforeseen, but you are not totally to blame for it. As per studies, When you think about your future self, your brain can not relate to that person and as a result couldn’t care less about it. Coming back to Talha’s example, you can see that out of his total monthly salary, Talha expends around Rs 20,000 on personal expenses and investments. Now the dilemma here is that talha wants to invest and it is a good thing but the investments are of no use if you can’t use them to meet your emergency.

So the way to approach this is that one needs to prioritize the fund over everything else. Don’t invest in anything until you meet your personal financial security target (through the fund). Yes, you will have a fear of missing out (FOMO) but bear with it, your future well being is more important. Furthermore, reduce your personal expenses, like don’t dine out as often as you do or manage your spending patterns, All this will help you to mitigate your future risk. Lastly, any windfall income like a bonus or Eidi should directly go into your emergency fund. This will

add to the speed of creating the fund. Coming back to Talha’s example, Congratulations!, He agreed on creating an emergency fund of Rs 240,000. His approach is explained through the illustration below. So by cutting down on personal expenses, diverting investment funds and adding up the windfall gains, Talha will be able to create his emergency fund in 10 months. That is relatively a short time period compared to the peace of mind it will bring to Talha. Where to keep the fund? The first thing to remember is that your

fund should be separated from your other finances. Don’t just keep the money in your salary account, you will likely be tempted to spend it. Instead, open another dedicated account for your fund. Now that we have established how to create a fund, the logical next step is to decide where to keep your money. Going back to Talha’s example, he is now saving Rs 15,000 a month. But now he is wondering where to keep that money, all in Cash or all in the Bank account he just opened for the fund? What can be done with this is that the amount can be segregated into three components; Cash, savings account and open-end mutual funds. Cash ideally should be around 10% of your fund. This will be the amount that will be the most liquid amongst your fund placements. However, if you are in close proximity to an ATM network, which most people living in urban centers are, then a debit card will serve the same purpose. The second category is money deposited in the bank account which should comprise 20% of the fund. Here we are talking about normal savings accounts and not fixed deposits. Basically, what happens with Fixed Deposit is that when there is a premature withdrawal, you will be charged a fee from the bank and also the funds are not readily available as it would take some time to deposit the amount into your account. The third and the bulk category is mutual funds. 70% of fund value should be kept as an investment in an open-ended mutual fund. Why an open-ended fund, because when you withdraw money from these funds, there are no fees or charges which in financial terminology is known as exit load. Furthermore, the return on these funds, over the last 5 years have been around the inflation level which is a decent return given that the purpose here is not to create wealth rather create a basic money pool for financial security. However, the catch with Mutual funds is that on redemption it takes around 1-3 days for the money to be deposited into your account. However, that is why 30% on the fund is made of highly liquid asset classes. Regardless, if you need more funds and the mutual fund money is taking time to come through, you can use a credit card in the meanwhile. Once the redemption money from the funds is received, the credit card bill, which comes at the end of the month can be paid off. If you need to know more about credit cards, read our article: https://profit. pakistantoday.com.pk/2022/02/07/so-you-wantto-have-a-credit-card-in-pakistan-heres-all-youneed-to-know/ Lastly, it cannot be emphasised enough that this fund is only to be used in an emergency. Don’t end up using the money for trading or any other type of investment, This is the money you owe your futureself. n

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