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Bulls throng KSE despite political instability Page 02
Tuesday, 17 January, 2012
Delay in engine procurement causing losses LAHORE
HIle Pakistan railways is facing acute shortage of locomotives, which has stalled the freight sector and resulted in suspension of main line passenger train linkages, causing extensive loss of revenue; the extensive delay in procurement of engines is also causing a recurring financial loss of rs125,000 per day as commitment charges, Profit learnt on Monday. Official documents made available to Profit reveal that Federal Secretary railways Division arif azim has pointed out that in locomotives purchase, deviation from Public Procurement regulatory authority (PPra) rules has not only delayed engines purchase, but also led to a
recurring loss of rs125,000 per day as obligatory payments comprising commitment charges. In a summary prepared for the economic Coordination Committee (eCC) of the Cabinet, railways Division Secretary pointed out that some 50 locomotives were to be assembled at locomotive Factory, rislapur, but delay in finalisation of procurement deal had resulted in idling of the factory, besides creating an acute shortage of engines. Official summary indicates that procurement of 75 diesel electric locomotives was approved by executive Committee of the National economic Council (eCNeC) in its meeting held on December 14, 2005 at a cost of rs12.7 billion, with a foreign exchange component of rs8.4 billion. Contract agreement of $105.143 million duly vetted by the Federal law and Justice Division was signed between the
Government of Pakistan and M/S Dongfang electric Corporation, China on December 31, 2008. It shows that a down payment of $15.771 million, comprising 15 per cent of the contract amount was released to the firm in June 2009. Buyer’s loan agreement was signed with export-Import Bank of China on December 14, 2009 and an amount of $10.801 million was transferred to China exim Bank and Sinosure in March 2010. However, letter of credit (lC) has not yet been established. Official documents further point out that the National assembly Standing Committee (NaSC) on railways referred to certain procedural flaws, like deviations from various clauses of the PPra rules 2004. However, on the advice of the law and Justice Division, PPra was requested by the Ministry of railways to
seek necessary exemption of PPra rules from the competent authority. But, PPra informed that the authority has not been entrusted with the necessary power to condone violations of Public Procurement rules, 2004. PPra Ordinance provides powers to exempt which is ex-ante (before the event) exemption and the power is vested with the Federal Government to grant exemption under Section21 of PPra Ordinance, 2002. Official summary highlights that process of procurement was stalled due to intervention of lahore High Court rawalpindi Bench. On establishment of the Islamabad High Court, the case was transferred to the Islamabad High Court. restraining order of lahore High Court against procurement of locomotives and disbursement of dues dated October 29, 2010, has been dismissed as withdrawn
by virtue of the orders of the Islamabad High Court dated September 19, 2011. It indicates that the Prime Minister constituted a committee headed by the Planning Commission Deputy Chairman and secretaries of the Ministries of Finance, railways and Pakistan railways General Manager to look into the allegations leveled in the media with regard to the procurement of locomotives from China for resolution of the case. Documents show that the Prime Minister has desired that request for exemption from PPra rules may be put up before eCC for consideration. approval of the cabinet is solicited for granting exemption /condonation of non-observance of PPra rules 2004, referred to in paragraph 3 ante to enable Pakistan railways to establish a letter of Credit for expeditious procurement of locomotives.
waPDa hydropower annual accounts get approved LAHORE STAFF REPORT
Govt issues list of directives for urgent implementation by DISCOs ISLAMABAD
fter assessing that the government would be blamed for the poor performance of the board of directors of the power distribution companies (DISCOs), the Ministry of Water and Power (MOWP) has rushed a list of 89 key performance indicators (KPI) for immediate implementations. An official source said KPIs were dispatched to DISCO boards after it was noticed that the boards were not performing their tasks professionally and instead of policy making, in certain cases were involved in micro managing the issues which was the prerogative of the management of the company. the MOWP is not satisfied by the board’s
performance during the last one year, the source said adding that in many cases the boards were not aware of their responsibilities and functions. KPIs were issued, as the government would be blamed for their failure not only by the people, opposition, but also by the international financial institutions. Last year, the government had inducted private sector professionals in DISCO boards to improve their performance but a review of ten months performance found that the boards were not able to perform professionally even though they had complete powers under the companies ordinance 1984. At a recently held meeting to assess performance of the boards, chairmen of different boards complained on interference by the government in transfers and
postings and even in management of the companies. they were informed by the MOWP they were completely autonomous and were empowered to take action against outside interference. they were directed to take action for improving management of DISCOs. the source said MOWP has directed boards to make policy on receivables of three categories of defaulters, including current, permanent and disconnected. It should be handed over to the company management for implementation and should be monitored on a regular basis. “It will at least keep the ministry abreast of the problems and efforts for recovery”. Similarly they were directed to make policy on reducing system losses and resultant theft. At least when there is a policy officials could be
held accountable, as now we don’t have any performance assessment bench marks, the source added. Boards are also directed to collect data about customer complaints, including nature of complaint, magnitude, redressal time and fatal accidents. Intriguingly, these companies have not compiled any data for the last one year. the boards have been directed to draft policy for the composition of board, conflict of interest, debarment process procedures so that the board even itself could assess its performance. the boards are also required to draft policy on hiring of human resource, initiating disciplinary action, strengthening of audit and accounting procedures, selection procedure for doing audit trails, frequency of audit committee meetings and audit format.
ater and Power Development authority (WaPDa) approved the annual accounts of WaPDa Power Wing (Hydroelectric) for the fiscal year 2010-11, in a meeting held at WaPDa house. the meeting presided over by WaPDa Chairman Shakil Durrani, was attended by member water Syed raghib abbas Shah, member power Muhammad Qasim Khan, member finance Syed Nazakat ali Shah, Secretary WaPDa Muhammad Imtiaz tajwar and senior officers concerned. General Manager Finance Power anwar-ul-Haq while briefing the authority said WaPDa generated about 31.5 billion units of hydel electricity during the fiscal year 2010-11; registering an increase of about 4 billion units as compared to 2009-10. this increased hydel generation was made possible due to efficient operation and management of hydropower stations and availability of more water in the reservoirs. It was further briefed that the additional contribution of low-cost hydel electricity by WaPDa to the national grid saved about rs40 billion to the national exchequer, which otherwise would have been incurred on generating equivalent quantum of electricity from thermal resources. WaPDa hydroelectric also managed to achieve average plant availability factor of 90 per cent because of the timely periodic preventive maintenance of its power stations as well as special maintenance works carried out at tarbela, Mangla and Warsak power stations. While elaborating the details pertaining to income statement, the authority was briefed that the additional revenue earned during the fiscal year was injected in to the on-going WaPDa power expansion plan including Khan, allai and Duber Khwars, Jinnah, Jabban and Golen Gol hydropower projects. this will help complete the projects with an accelerated pace and provide relief to the nation in terms of electricity supply at an affordable rate. the performance of WaPDa hydel power relating to operation, maintenance, expansion and finances was also reviewed in the meeting. the authority, expressing satisfaction over the performance, appreciated WaPDa employees concerned about their commendable performance during the year. It is pertinent to mention that WaPDa is operating 13 hydel power stations in the cumulative generation capacity of 6,500 Mega Watt (MW) - about one third of the total installed capacity of power system. With a view to improve the ratio of hydel electricity in the national grid, WaPDa is executing a least-cost energy generation plan on priority basis. It will add 1,500 MW to this capacity through its under construction projects. Besides that it is also executing a number of mega hydropower projects with a cumulative capacity of more than 20,000 MW including 4,500-MW Diamer Basha Dam, 1410-MW tarbela 4th extension, 7,100-MW Bunji, 4,320-MW Dasu and 740-MW Munda hydropower projects, etc.
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Tuesday, 17 January, 2012
news 2nd world expo on halal industry LAHORE
CORPORATE CORNER Madam Farzana holds meeting with Finnish delegation of ex-parliamentarians
LCCI criticises govt for gas shortage to industry LAHORE STAFF REPORT
He lahore Chamber of Commerce and Industry tuesday criticised the government for failing to restore supply of gas to the industry and urged it to fulfill its commitment as both the trade and industry were in bad shape due to suspension of gas. In a statement issued here, the lCCI President Irfan Qaiser Sheikh said that on January 7 a commitment was made with the industrialists, trade leaders and the presidents of all the chambers in the province that the twoday gas supply to the industry in Punjab would be restored on January 11 but it is very unfortunate on the part of the government that it could not honour its commitment. and today is the 23rd day that the entire industry was without gas causing a loss of around rs100 billion and putting at stake the jobs of 15 million people who are attached with the industry directly or indirectly. He asked, who will be responsible
for the 4 million daily wagers who are attached with Industry in Punjab. “If the authorities knew that they would not be able to restore gas, they should have at least taken their own people into confidence.” Irfan Qaiser Sheikh said that now the business community was left with no other option but to evolve future strategy with the consultation of all the stakeholders including all the chambers in Punjab. He said that the continuous gas suspension has already marred industrial activity in the province, rendering thousands of industrial workers jobless and if the situation remains the same for some time to come the economy would suffer irreversible losses. Irfan Qaiser Sheikh said that the imminent industrial closures and massive lay offs would not only create trouble for the economy but would also hit the government reputation hard that is already facing challenges on various fronts. He said that uncertainty is the most lethal thing for any business and the present regime is constantly keeping the
entire business community into darkness about the real gas supply-demand situation. Irfan Qaiser Sheikh said that only because of bad governance the country’s exports have declined by 11 per cent in the month of December and would likely suffer new lows if no heed was paid to solve the ongoing energy crisis. “How trade and industry would be able to pay markup and other liabilities when there would be no productions. Only last year the industry was given gas for 200 days while it had paid markup of 365 days.” the lCCI President said that two different formulas are being applied in Pakistan. as in SNGPl there is total gas suspension to the industry for the last 15 days and for CNG sector it is two and half days only while in SSGPl the gas loadshedding for the industry is only for one day. “It seemed that the government was planning to destroy the entire industrial sector in Punjab and wants to make this country a trading place instead of a manufacturing hub.”
Meezan Bank receives award for best Islamic bank in Pakistan KARACHI: Meezan Bank has been awarded the 'Best Islamic Bank in Pakistan' for 2011 by Islamic Finance News (IFN) of reD money group, Malaysia. IFN awards honour the best in Islamic financial industry and is one of the most prestigious and recognised awards in the global Islamic financial markets. this is Meezan Bank's 7th consecutive award in this category - having won the award of Best Islamic Bank in Pakistan every year since 2005. the award brings to light a highly successful and record breaking year for Meezan Bank. the bank demonstrated robust business growth in 2011, closing the year with a deposit figure of over rs170 billion. STAFF REPORT
uNJaB Minister for agriculture and livestock Malik ahmad ali aulakh has indicated that the demand for livestock and its products are continuing to increase due to population growth, urbanisation and increase in per capita income. addressing the 2nd international conference and expo on halal industry, organised by Punjab agriculture and Meat Company (PaMCO), livestock and Dairy Development Department and Halal research Council, he said livestock sector had a great contribution towards GDP of the country in conjunction with agriculture and was contributing 55 per cent of agriculture value added products and 11.50 per cent national GDP. He said it was pleasing that 19 countries were participating in this international conference by sending their representatives to share their knowledge and experience regarding their states.
Livestock sector has a great contribution towards GDP in conjunction with agriculture and is contributing 55pc of agricultural value added products
ahmad ali aulakh said the conference had focused on exploring the potential of halal industry, introducing Pakistan as emerging leader in this sector and attracting investors and consumers for halal brands. It has also focused on practical approach of halal through practical visits to halal slaughter house, parks, labs and Halal Food Centre. the minister said the essentials of today’s conference are to enhance awareness about importance of the halal industry and to provide the practical approach through field visits. He said the conference highlighted the international standards and procedures of halal certification as well as the importance of consuming halal as taught by Islamic Shariah. He further said that the conference would also provide a platform for discovering successful national and international best practices and explore cross-border trade opportunities in Halal sector. Secretary livestock Hamid Yaqoob Sheikh, Chairman Halal research and Development Cell PaMCO Justice (r) Khalil ur rehman, also spoke on this occasion.
Bulls throng KSE despite political instability
ISLAMABAD: Federal Minister and Chairperson Benazir Income Support Programme (BISP), Madam Farzana raja held a meeting at BISP Secretariat with Finnish delegation of ex-parliamentarians that comprised of Mr Vappu taipale and Mrs Ilkka taipale, experts from social and health sector. Madam Farzana informed the delegation that BISP is advancing the vision of women empowerment through its various initiatives which are basically designed to benefit poor of the society. PRESS RELEASE
Samsung and Verizon launch 4G Galaxy tab 7.7 KARACHI: Samsung electronics Co, ltd, a global leader in digital media and digital convergence technologies, has announced the availability of the Samsung Galaxy tab 7.7™, on the Verizon Wireless 4G lte Mobile Broadband network. Samsung Galaxy tab 7.7 boasts a brilliant Super aMOleD™ plus touch screen display to watch movies, view pictures and play games with a 720p (1280x720) resolution. PRESS RELEASE
nBP and IBa join hands to train nBP employees KARACHI: IBa (Institute of Business administration) has commenced a fifty hour refresher course for the employees of NBP in which the talented IBa faculty will work on developing skills in english and Math to improve the employee skills in business communication and decision making. Dr Mirza abrar Baig, SeVP/Group Chief, training and Organisation Development Group, stated that this training programme for mid-career professionals of NBP is aimed at enriching the knowledge and skills of the participants.PRESS RELEASE
warid oﬀers prepaid numbers of customers’ choice KARACHI: Warid telecom recently launched “Warid ezee Connection”. In order to empower it’s retailers to further enhance the customer experience, Warid has started offering new customers prepaid number of their choice from any designated retail outlet across Pakistan. the company is always a step ahead to best serve the needs of its valued customers by providing them with the opportunity to experience the best in mobile technology. PRESS RELEASE
Standard Chartered inaugurates new Islamic Banking Branch KARACHI: Standard Chartered Bank inaugurated its Islamic Banking (Saadiq) branch at Khayaban-e-Hafiz, DHa, Karachi. this branch provides a comprehensive value added Islamic Banking customer value proposition recently launched for its customers. this branch also offers its unique Islamic Priority Banking offering through a dedicated Priority Banking Centre for its customers. Present at the occasion were bank’s valued customers, Mohsin Nathani, Chief executive, Standard Chartered Pakistan, afaq Khan, Global CeO of Islamic Banking, raheel ahmed, Global Head of Distribution and other senior executives of the Bank. PRESS RELEASE
KARACHI STAFF REPORT
S the political standoff between the ruling regime and the armed forces continued to tone down its aggressive rhetoric, investors returned to the market foray to scoop up their favourite under valued scripts. Despite the subdued volumes of 26m shares, it was a welcoming sign to see the oil industry titan OGDC recover from its recent slump and contribute 68 points to the index’s overall 98 point gain. the volume leader board was dominated by the fertiliser sector as FFBl, FatIMa and FFC occupied the top three spots and accounted for 35 per cent of the daily traded volume. News of a reduction in GSt rate for tractors was a positive trigger for Mtl and aGtl as both scripts recorded strong gains for the day.
PtCl organises fun-filled cricket gala 2012
With the onset of the results season and easing of political tension, the market is showing signs of improvement in investor sentiment, but the glory days are still a far cry at this stage, said ali Hussain at HMFS. KSe-100 index started the week on a positive note with index gaining 0.9 per cent and volumes of 27m shares. Mtl opened the day on its upper circuit as government decided to cut the GSt on tractors
from 16 per cent to 5 per cent. there was continued interest seen in FFC as expectations of high cash payout and bonus continued with full year result. OGDC was the best performer of the day as investors took the opportunity to accumulate on lower levels as rumors of foreign selling in the script subdued. On the political front, there seems to be an outside chance of prime minister’s disqualification as
contempt notice was issued by the Supreme Court. this can lead to further volatility in the coming week as the premier is supposed to appear in court on the 19th of January. KSe 30 index closed at 10272.98 levels with the gain of 96.74 points, while all Share Index closed at 7709.32 levels after gaining 64.21 points. a total of 116 scrips advanced, 86 declined and 104 remain unchanged out of total 306 scrips traded.
ISLAMABAD: Pakistan telecommunication Company limited (PtCl) held a cricket gala 2012 in F-6 cricket ground, which was attended by a large number of PtCl employees and their families. the tournament was inaugurated by PtCl Senior executive Vice President Hr, Mr Syed Mazhar Hussain. PtCl CeO and President, Mr Walid Irshaid, Chairman Pta, Dr Mohammad Yasin, Chairman PeMra Dr abdul Jabbar and member PtCl Board of Directors, Dr Ismail graced the occasion as chief guests. PRESS RELEASE
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Friday, 06 January, 2012
debate ‘naDRa disburses Rs6.2b through watan Cards’ KARACHI STAFF REPORT
MFn with India to adversely impact industry LAHORE
He domestic industry is still not prepared for competition with the Indian industry after 16 years of signing up on the WtO, stated Mehnaz Shiraz, a WtO expert on a seminar conducted by lahore Chamber of Commerce and Industry today. the industry is still trying to shy away from its commitments under the WtO with India. She also stated that the terminology of ‘Most Favoured Nation’ used in the WtO area was a misnomer as the term meant that every trading partner will be given equal treatment and if concessions have been offered to one WtO member, it must be offered to all other members. She added that India had already given Most Favoured Nation status to Pakistan in 1996
but imposed Non tariff Measures such as Product standards, custom procedures, licenses, inspections. If the Government of Pakistan was now going to give the status of MFN, it could make use of the same exception clauses. She also added that the private sector needed to revive its associations and Chambers to come up with a joint strategy for the entire sector. Muhammad anum Saleem, lecturer at luMS and a WtO expert stated that to effectively counter the Indian threat, Pakistan’s industry needs to use trade Defence laws available in Pakistan such as anti Dumping Duties Ordinance, Countervailing Duties Ordinance and Safeguards Ordinance. He also stated that the laws could even be pressed into service if there was a threat of injury to the industry. Saleem lamented the fact that there was no reported case under the Countervailing
Duties Ordinance and Safeguards Ordinance in Pakistan and Pakistan was also slow in going to Dispute Settlement Body of the WtO (“DSB”) in Geneva. He said that India was a frequent user of the DSB and had almost 300 trained lawyers in the trade area while Pakistan had just a few. India had gone to the DSB 16 times as compared to Pakistan which had perhaps gone only a few times. Mr. Saleem added that every businessman in Pakistan could approach the High Court to protect its fundamental rights if it felt threatened from the granting of the MFN status to India provided meaningful consultations with the relevant industry had not been undertaken by the Government of Pakistan. Quite recently, the Islamabad High Court had exercised its jurisdiction in this matter, he added to protect the local industry. While giving specific examples from the industry, Mr.
Saleem informed the audience as to how India was getting ready to dump its products in the local market to drive out competition and give rise to unemployment and poverty. However, he assured the audience that by making use of the relevant laws, the Industry could get five to ten years’ protection even after the giving MFN status to India. the measures could be invoked even if only the threat of serious injury was present, he said as the trade defence laws were enacted under the WtO regime and arose out of exceptions of the Gatt agreement of 1994. at present, the exports of India to Pakistan were approximately rs1.2 Billion compared to a meagre rs200 Million exports from the Pakistan side and a big Indian Manufacturer is seeking to export huge quantities of Pet Coke to the domestic industry as a substitute to Furnace Oil.
atIONal Database & registration authority, NaDra has disbursed rs 6,264,380,379 to 321,336 flood victims in second phase of Watan card project. the Second Phase regarded as Citizen’s Damage Compensation Programme (CDCP) under which second tranche of compensation is being provided to about 1.1 million affectees through Watan cards. this was stated by Deputy Chairman NaDra tariq Malik. the Prime Minister of Pakistan Syed Yusuf raza Gilani inaugurated phase II of Citizen Damage Compensation Programme on 15 September 2011. the Programme is now successfully being executed by Cabinet Division (emergency relief Cell) with the technical support of NaDra and in collaboration with Provincial Disaster Management authorities. In the Second Phase, rs40,000 (in two installments) has to be provided to each of the households identified by the provinces. While elaborating the details of second phase cash disbursement he said that NaDra issued 95,796 Watan Cards in Punjab to disburse around rs1,549,969,390. In Sindh, the number of Watan Cards issued was 8,272 with a disbursed amount of rs40,733,500. In Khyber Pakhtoonkhwa, the number of Watan Cards issued stood at 210,993 with disbursed amount of rs4,560,496,989. In azad Kashmir, 3,075 Watan cards were issued disbursing rs49,690,500 while five NaDra sites were set up in Hattian, Haveli, Mirpur, Neelum and rawalakot I. In Gilgit-Baltistan 3,200 cards were issued disbursing rs63,490,000 and three sites were established in Gilgit, Hunza and Skardu.
CGt not in interest of economy, SECP concedes after two years g
apex regulator moves recommendations to revamp controversial levy KARACHI
eCurItIeS and exchange Commission of Pakistan (SeCP) has come up with various proposals to revamp the controversial Capital Gains tax (CGt) in the country’s capital market where the apex regulator has eventually realised that the traded volumes and tax revenues have plunged to lowest levels during the past two years. the commission has observed that the exemption of CGt for a long period of 36 years, from 1974 to June 2010, had created a situation whereby the investors had earned legitimate, but “undocumented gains”. the apex regulator has recommended that the “unexplained incomes” or assets of the investors be deferred for funds invested in the capital market till June 30, 2014, after which the
highest/peak value of an investor’s portfolio between now till then should be treated as income generated from the capital market and part of investor’s wealth. the commission also recommended a centralised collection mechanism in National Clearing Company of Pakistan to simplify and ensure timely deposit of tax revenue. Freezing of the existing CGt rate has also been suggested by SeCP to simplify calculation and achieve smooth implementation of the levy, dubbed by market observers as ill-thought-out. Further, the commission proposed that the applicability of Section III may be suspended from april 1, 2012 till June 2014. the regulators also recommended the documentation of the gains made outside capital market. “Maintaining status quo on CGt is not in interest of the economy as it has adversely impacted tax revenue collection as well as trading volumes
at capital markets,” SeCP Chairman Muhammad ali observed in a notice notified to the country’s stock exchanges on Friday. Karachi Stock exchange, however, placed the notice on its website on Saturday. “Besides these, CGt has adversely affected investors’ sentiments, capital formation and overall functions of the capital market,” the commission conceded. the apex regulator, however, took more than two years in what it said, “objectively”, analysing the global trends on CGt and eventually found its adverse implications on securities trading after the levy was re-imposed on June 30, 2010 and given effect from July 1, 2010 after a gap of 36 years since 1974. after holding deep deliberations with Federal Board of revenue (FBr), the commission decided to revamp the levy that, the analysts agreed, had made the investors, particularly the
retailers, flee the once most liquid stock market of asia where the daily average trading volumes are currently staggering at a level as low as 30 million shares. “SeCP has objectively analysed the situation by looking at the global trends, impact of CGt on CM and issues with the present CGt regions and is pleased to abort its proposal to revamp CGt regime in a manner which not only addresses issues highlighted above, but also meets overall objectives of FBr, SeCP and capital market,” SeCP said. SeCP said the levy was in place in australia, Canada, Brazil, China, France and Germany, however, it encompassed all asset classes such as securities, immovable properties, collectibles and other personal assets. In developing jurisdictions, it said, tax’s applicability varies from jurisdiction to jurisdiction. “CGt regimes across the globe have evolved differently, as per each country’s political, fiscal and
economic environment,” it added. SeCP said that securities were usually brought under the CGt regime after a country achieved a certain level of capital market depth, investor outreach and adequate capital formation and documentation. In Pakistan, the regulator said, securities trading remained exempted from CGt for 36 years since 1974. “Implication of CGt on securities trading from July 1, 2010, has not only impacted tax revenues, but has also reduced average traded value to the lowest level during the last two years,” it conceded. SeCP noted that CGt had also put adverse impact on the capital market in terms of price discovery, withdrawal of investors, business viability and capital formation and resource allocation. the recommendations, however, would take effect after approval of the key stakeholders that include SeCP, FBr, stock exchanges, intermediaries and investors.