new govt to take tough budgetary decisions to curb power crisis

01

buSIneSS

BWednesday, 22 May, 2013

ISLAMABAD

APP

CHINESE Premier LiKiqiang has said thatChina takes its tradeimbalance with Pak-istan seriously and istaking measures to ad-

dress the issue as there is great potentialto be tapped in their economic coopera-tion.

He said Pakistan’s export to China lastyear increased by nearly 50 percent.China is Pakistan’s second largest tradingpartner and fourth largest export market.Steady progress has been made in theircooperation in energy, infrastructure,telecommunications and financial sectors.

In a written interview to Pakistani

media on the eve of his state visit to Pak-istan, the Chinese premier termed the mu-tual political and economic relations likethe two wheels of a bicycle, which aremutually reinforcing.

“The politicalbond betweenChina and Pak-istan is un-b r e a k a b l eand ourb u s i n e s sties as aw h o l ehave main-t a i n e dgrowth mo-mentum. Pak-istan is the firstSouth Asian coun-

try to sign a free tradeagreement and cur-

rency swap agreementwith China, and it is the

largest destination of Chi-nese investment in South

Asia,” he said.“China will step up consultation with

Pakistan on second phase tax reductionnegotiations under the framework ofChina-Pakistan Free Trade Area,” he said,adding that he had given instruction thata Chinese trade and investment promotiondelegation be sent to Pakistan to pursuevarious cooperation projects.

About his recent visit, Li Kiqiang saidthat he would also talk to Pakistani leadersabout the formulation of a long-term planfor boosting bilateral business coopera-tion.

“Our two sides should focus on carry-ing out priority projects in connectivity,energy development and power genera-tion and promoting the building of aChina-Pakistan economic corridor,” headded.

China concerned about tradeimbalance with Pakistan: Li

Pakistan is the first South Asiancountry to sign a freetrade agreement and

currency swap agreementwith China, and it is the

largest destination ofChinese investment in

South Asia.

CHINESE PREMIER LI KIQIANG

KARACHI

STAFF REPORT

The prevailing gap between demand andsupply of power is estimated at 3,500 to4,000 megawatts. The analysts believe thatthis deficit is expected to further widen to5,000 to 7,000MW during the peak de-mand season.

Such massive power outages wouldtranslate into 18 to 20 hours of load shed-ding, warned the analysts at InvestCap Re-search.

The current power sector generationsituation in the country calls for an urgentplan that is both comprehensive and bal-anced in order to rescue both the sectorand the economy as a whole from the cri-sis currently faced, said the analysts.

They said the “destructive” inter cor-porate circular debt level has swelled toaround Rs400bn in 2013 from Rs144bn in2008 and its resolution is expected to bethe government’s top priority in the up-coming budget.

“We believe a partial settlement islikely to take place to clear off the dues ofthe energy sector chain in the FY14budget,” they said.

This the government would be doingthrough increasing electricity tariff or fur-ther issuance of TFCs that in turn wouldpropel the interest payments of TFCs.

About the IMF program’s pros andcons, the analysts anticipate a likely re-entry of Islamabad into the new IMF pro-gram through Extended Fund Facility asagainst Standby Arrangement.

This, they said, would be better con-sidering the long-term repayment periodof 7yrs-10yrs further supporting the dwin-dling foreign reserves.

“We believe, in order to avail this fa-cility, the government will be required totake tough decisions that are expected tobe i) reduction in power subsidies throughtariff hike and ii) revenue expansionthrough healthier tax collection,” said theanalysts.

Going forward, they said, such a rise

in tariff amplified the cost of productionthrough inflationary pressure and thus animpediment on economic growth.

“However, we expect the upcomingbudget to announce an even-handed in-crease in tariff in order to fulfil the IMFrequirement,” the observers said. “We ex-pect a trade off between increase in elec-tricity prices and its possible negativeimpact on tariff collection,” said they.

The government’s intention of tariffincrease in FY14 and likely TFC issuancecoupled with stable to downward trajec-tory of international oil prices is expectedto improve the cash flows of the IPPswhile easing the intensity of the mountingcircular debt.

This, they said, would help the IPPs toreduce their reliance on short term borrow-ing thus resulting in improvement in thesector’s profitability. The power sector, theanalysts said, was one of our mostfavourites in the current scenario, giventhe sectors importance in achieving the de-sired economic growth and its contribution

in solution of other macro-economic is-sues.

“We expect the IPP’s under our cover-

age to enjoy the due benefits once the (par-tial) resolution of circular debt takesplace,” the analysts said.

NEW DESK

A new, three-minute ad by Coca-Cola,“Small World Machines,” starts with arelatively straightforward premise:India and Pakistan do not get along sowell. It ends with the promise of peace:“Togetherness, humanity, this is whatwe all want, more and more exchange,”a woman, either Indian or Pakistani,narrates as the music swells. Soundsgreat. How do we get there? By buyingCoke, of course.

For the ad, filmed in March, twohigh-tech Coca-Cola vending ma-chines were wheeled into a shop-ping mall in Lahore, Pakistan,and another in New Delhi, India.On the front of each machine wasa giant, touch-activated 3-Dscreen. The two were con-nected, such that the vendingmachine in Lahore lookedlike a giant window rightinto New Delhi, and vice-versa. The machines invitedmall-goers on either end tointeract with one another,for example by touchinghands “through” the screen,by tracing peace signs, evenby sharing a dance.

Coca-Cola’s global cre-ative director told Ad Age thatthe idea behind the campaign,according to Ad Age’s para-phrase, was about “creatingstories around shared expe-riences” in a way that

“goes back to the roots of Coke as abrand that started at a soda fountain —itself a communal experience.” Ad Agealso reports that Coca-Cola asked theresponsible advertising firm, Leo Bur-nett, to find “new, open-hearted waysfor people to come together, whilehighlighting the power of happiness.”

There’s actually more to this thanyou might initially think. Sharing tasksand short-term, low-risk social interac-tions are classic conflict resolution tac-tics, including as a part of thecivilian-to-civilian interactions some-

times termed “track two diplo-macy.”

Still, track two diplomacy is acomplicated, rigorous processmeant to shape public opinionfrom the ground up by targetinginfluential elites and opinion-makers; “the power of happi-ness” is not enough. The Cokevideo is charming, but evenacknowledging that it’s justan advertisement and judg-ing it on those merits, seemsto make some surprisingpromises about the power ofpeace-making by con-sumerism. The ad quotes In-dians and Pakistanis saying,for example, “It’s like, this iswhat we’re supposed to do,right? We are going to takeminor steps so that we aregoing to solve bigger is-sues.”

Indo-Pakistani tensions

could use all the help they can get. Thetwo countries, since breaking apart in1947, have fought three majors wars,including a 1999 incident that almostled to nuclear conflict. Pakistan’s mili-tary intelligence service has been ac-cused of supporting anti-India terrorgroups. Polling in both countries sug-gests Indians and Pakistanis fear andmistrust one another deeply.

Coca-Cola’s “Small World Ma-chines” ad echoes the famous “McDon-ald’s theory of conflict prevention,”which states that two countries with aMcDonalds will never go to war. Thetheory is that the same globalizingforces that usher in the fast food chainalso build enough economic inter-de-pendence between states and politicalliberalism within them to prevent war.Unfortunately, this theory was dis-proven by the 2008 Russia-Georgiaconflict. Alas, this also appears to havebeen true of Pakistan and India as oftheir 1999 Kargil War.

In any case, India and Pakistan mayhave also disproven the much more se-riously studied democratic theory ofwar, which states that two democracieswill not go to war. Academics and his-torians often debate this, though, as it’snot clear whether or not both countriesmet the criteria for democracy at themoment of each of their conflicts. Ei-ther way, the point is that this particularconflict is deeply ingrained enough thatCoca-Cola vending machines are prob-ably not going to put them on the pathto peace.

Farm loan disbursement up 16% to Rs 259bn in 10 months

KARACHI

STAFF REPORT

Agricultural credit disbursement by thebanks increased by 15.74 percent on year-on-year basis to Rs 259.1 billion in thefirst 10 months, July-April FY13) of thecurrent fiscal year (2012-13).In absolute terms, disbursement of creditto the agriculture sector increased by overRs 35.23 billion in the period comparedwith the total disbursement of Rs 223.85billion in the same period of last fiscalyear, the central bank reported Tuesday.Overall, the bank said, the credit disburse-ment by five major commercial banks, in-cluding Allied Bank Limited, Habib BankLimited, MCB Bank Limited, NationalBank of Pakistan and United Bank Lim-ited, stood at Rs 139.07 billion as com-pared with Rs 120.41 billion disbursed inJuly-April, FY 2012 depicting an increaseof 15.49 percent. Zarai Taraqiati BankLimited (ZTBL), the largest specialisedbank, disbursed a total of Rs 44.25 billionin July-April, FY 2013 as compared withRs 43.90 billion disbursed in the same pe-riod of the last fiscal year.Punjab Provincial Co‐operative BankLimited (PPCBL) disbursed Rs 5.66 bil-lion in July-April, FY 2013 when com-pared with Rs 6.35 billion disbursed in thesame period of the last fiscal year.The 14 domestic private banks alsoloaned a combined amount of Rs 56.36billion in July-April, FY 2013 as com-pared to Rs 44.14 billion disbursed duringthe same period last year.The five microfinance banks includingKhushhali Bank Ltd., NRSP MicrofinanceBank Ltd., The First Microfinance BankLtd., Pak Oman Microfinance Bank Ltd.and Tameer Microfinance Bank Ltd. dis-bursed agri. loans amounting to Rs 13.73billion during July-April, FY 2013 ascompared to Rs 9.03 billion during thesame period last year.It may be pointed out that the State Bankhas provisionally set an indicative agricul-tural credit disbursement target of Rs 315billion to banks for the current fiscal year.

Coca-Cola ad says Coke vending machines can soothe Indo-Pak tensions

KSE index crosses record 21,000-point level

KARACHI: The Karachi stock market’sbenchmark index on Tuesday crossed the his-toric 21,000-point level as post-election rallycontinues to push share prices higher. In earlytrade, the Karachi Stock Exchange’s 100-share index was trading at 21,025 points, up210.99 points, or 1.01 percent. By 09:43 am,20.1 million shares changed hands. Dealerssaid that investors’ sentiment is buoyant onhopes that the prime minister-elect NawazSharif’s government would focus its effortstowards reviving the economy. Since May 11general elections in which PML (N) emergedas single-largest party, the market has seenbullish trend. STAFF REPORT

Khalid joins Hubco as CEO

KARACHI: Khalid Mansoor has joined theHub Power Company Limited as Chief Exec-utive. The Board of Directors of the Companyin its meeting held in Karachi on May 20 hasappointed Khalid Mansoor as the Chief Exec-utive of the company with effect immediateeffect. Khalid Mansoor has over 32 years ofexperience and expertise in Energy & Petro-chemical Sectors in leading roles for megasize Projects Development, Execution, Man-agement and Operations. He holds a Degreein Chemical Engineering with Distinction andhonors. He has previously served as the ChiefExecutive Officer of Algeria Oman FertilizerCompany (AOA). AOA has constructed theWorld’s biggest Ammonia & Urea fertilizerComplex including around 120MW CaptivePower Plant with an investment of over US$3.0 billion. Prior to AOA, he held the positionof the President and Chief Executive Officerof Engro Fertilizers Limited and Sindh EngroCoal Mining Company. STAFF REPORT

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buSIneSSWednesday, 22 May, 2013

KARACHI: Pak Suzuki MD Hiro Fumi and other

guests during the launch of their new product,

GD110 on Tuesday. STAFF PhOTO

Tetra Pak honoured with Dupont AwardLAUSANNE: Tetra Pak®, the world’s leading food

processing and packaging solutions company, has

received the first DuPont Silver Anniversary Award

for Excellence in Continuing Innovation. Awarded to

winners of five or more previous DuPont Awards for

Packaging Innovation throughout the programme’s

25-year history, the award honours the consistent

leadership demonstrated by Tetra Pak in packaging

innovation over the last quarter-century. Michael

Grosse, Executive Vice President of Development

and Service Operations at Tetra Pak said “Since the

company’s founding over 60 years ago, Tetra Pak

has constantly driven packaging innovation with a

view to making food safe and available for people

everywhere. We are delighted to receive this award

from DuPont in recognition of our achievements.

We are committed to remaining at the cutting edge

of the industry.” The DuPont Awards for Packaging

Innovation is the industry’s longest-running, global,

independently judged celebration of innovation and

collaboration throughout the value chain. Each year

an esteemed panel awards diamond, gold or silver

honours based on “excellence” in one or all of three

categories: Innovation; Sustainability; and

Cost/Waste Reduction. This year the independent

judges granted one diamond, four gold and 10

silver awards for packaging in a diverse set of

markets. PR

LG’s new mini HiFi audiosystem promises world’smost powerful sound

LAHORE: LG Electronics (LG) today announced

the launch of the latest DJ music device, with

the most powerful sound, the LG CM9730 mini

Hi-Fi system, known as the X-BOOM. This new

LG X-Boom promises to be a huge success

amongst the music community as it is

specifically designed for music lovers interested

in the scratch right jog dial and passion to be a

DJ in their homes. The X-BOOM allows easy

control and automation in mixing music using

sound effects such as flanger, phaser, chorus

and delay while also creating beats with

backspin, crossfade, and beatbox or using

scratch and voice sampling. Music lovers will

enjoy songs on a totally different level as it

boasts six beat-box, five voice samples and

seven smart DJ effects, Latin EQ and dual USB.

Additionally, the X-BOOM’s mini HiFi system

features the world’s most powerful sound with

2300W RMS and 25000W PMPO that allow users

to enjoy a potent sound output. “We believe the

X-BOOM will prove to be an important stepping

stone for young musicians and passionate DJs

who want to make a mark in the vibrant Middle

East music community. At LG, we believe that

music brings people together and the X-BOOM

will do that with its easy to learn controls and

great sound.” said DY Kim, President of LG

Electronics Gulf FZE. PR

CORPORATE CORNER

02

B

Major Gainers

COMPANY OPEN HIGH LOW CLOSE CHANGE TURNOVERRafhan Maize XD 4670.40 4900.00 4579.99 4900.00 229.60 80Island Textile 664.29 697.50 697.00 697.50 33.21 1,200Indus Dyeing XD 495.00 510.00 507.50 508.75 13.75 200Pak Services 265.38 278.64 265.38 278.64 13.26 10,300P.S.O. 256.49 269.31 261.00 269.31 12.82 5,418,400

Major LosersUnilever Food 5150.00 4900.00 4900.00 4900.00 -250.00 20Bata (Pak) 1875.00 1810.00 1810.00 1810.00 -65.00 100Wyeth Pak Ltd 1528.99 1500.00 1452.55 1474.20 -54.79 1,200Nestle Pak. 6650.00 6600.00 6600.00 6600.00 -50.00 20National Foods 370.00 374.00 353.00 359.50 -10.50 5,100

Volume Leaders

Fauji Cement 11.06 12.06 10.88 11.76 0.70 63,910,500P.T.C.L.A 19.77 20.73 19.70 20.67 0.90 35,838,000Lafarge Pak. XD 7.97 8.15 7.66 7.98 0.01 24,127,000Maple Leaf Cement 21.10 21.70 20.60 21.48 0.38 18,183,500Pace (Pak) Ltd. 3.95 4.30 4.00 4.09 0.14 15,091,500

Interbank RatesUSD PKR 98.4387GBP PKR 149.3513JPY PKR 0.9588EURO PKR 126.7103

ForexBUY SELL

US Dollar 99.60 99.85 Euro 126.86 127.12 Great Britain Pound 149.08 149.32 Japanese Yen 0.9553 0.9653 Canadian Dollar 95.11 96.80 Hong Kong Dollar 12.53 12.77 UAE Dirham 26.85 27.10 Saudi Riyal 26.35 26.59

ISLAMABAD

NNI

ECONOMIC ex-perts have calledupon the newlyelected govern-ment to align up-coming budget on

the priority agenda of macroeco-nomic stabilization, developmentand economic growth.

The experts were speaking at apre-budget seminar titled ‘Agendafor Stabilization & EconomicGrowth’ organized by SustainableDevelopment Policy Institute(SDPI) on Tuesday.

Speaking at the occasion, DrAshfaque H. Khan, Dean of the Na-tional University of Science andTechnology (NUST) denounced theconventional way of managing fis-cal crisis such as reduction in budgetdeficit and development programsand added that such measures havebrought pain and sufferings to peo-ple around the world.

He urged the new governmentto devise ‘forward looking macro-economic policies’ which accord-ing to him, strike a balancebetween ‘stabilization’ and ‘devel-opmental priorities’. He said

macroeconomic policies should notfocus narrowly on reducing budgetdeficit and debt stabilization butshould be supportive of growth andemployment generation.

Talking of economic reformagenda, he said that there is greaterneed for resource mobilizationthrough reforming tax system andbringing efficacy in governmentexpenditure particularly by restruc-turing or privatization of publicsector enterprises which are puttingextreme burden on public excheq-uer. He also proposed proper fiscaldecentralization, energy sector re-form, reforms in central bank, im-proving investment climate,promoting inclusive growth and re-moving ‘manufacturing defects’ ofthe new NFC Award.

In his introductory remarks, DrVaqar Ahmed, Deputy Executive Di-rector SDPI suggested the new gov-ernment to increase efficiency ofexisting energy generation and trans-mission system and improve effec-tiveness of public sector developmentprogram in short term. “However, inthe longer term an enabling environ-ment must be provided to private sec-tor to take a lead in the developmentprocess,” he added.

For doing so he suggested priva-tization or increased role of privatesector in public sector enterprises,strengthening institutions that pro-mote competition in markets, bring-ing down the tariff and non-tariffbarriers to trade and long term in-vestment in improving connectivityacross the country.

Economic expert Safiya Aftabdeliberated on social sector chal-lenges in upcoming budget. She wasof the view that Federal Governmenthas put the bulk of resources avail-able for social protection into BISPand this trend would most probablycontinue as the program is likely tocontinue with the change of name.

Comparing the last year devel-opment expenditures after 18thamendment, she said that educationexpenditure has not shown signifi-cant increases in real terms in Pun-jab and Khyber Pakhtunkhwa. Shealso cited that development expen-diture falls in Punjab and Balochis-tan but is consistently rising in KPmainly due to building of infra-structure damaged in war againstextremism such as schools, hospi-tals and roads.

Giving concluding remarks shesaid that drastically raising the ex-penditure on health and educationmay not be the answer butprovinces now needs to startmedium term planning exercisesfor use of additional funds dis-bursed through new NFC. In mostcases, a reappraisal of priorities andimproving the basic services is theneed of the hour rather than highprofile schemes, she added.

LoC trade to figurein talks with newPak govt: IHK govSRINAGAR: Stating that strengtheningthe cross-LoC trade would be one of theagendas during fresh dialogue with the newPakistani government, Indian-held KashmirGovernor NN Vohra said that the furtherexpansion of trade between the two dividedparts of pre-1947 Jammu and Kashmir wasnecessary. The governor, according to alocal news gathering agency KNS, advo-cated the increase in the number of itemsbeing allowed in trans-LoC trade. “This isvery important trade and needs to bestrengthened,” Vohra, according to KNS,told representatives of Salamabad-ChakotiTrade Union during a meeting on Monday.The traders’ delegation led by the presidentof the union, Muhammad Tariq Khan com-plained against ‘impediments’ being put bysome Custom Officials in the cross-LoCtrade. “We told Governor about the undueand unwarranted interferences by somecustoms officials, who create hurdles insmooth functioning of the trade,” GeneralSecretary of the Union, Hilal Ahmad Turkitold KNS after the meeting, which lastedfor nearly an hour. NNI

ISLAMABAD

APP

The textile exports from thecountry posted positive growthof 6.14 percent during the firstten months of the current fiscalyear as compared to the corre-sponding period of last year.

The overall textile exportsduring July-April (2012-13)were recorded at $10.749 billionagainst the exports of $10.127billion during July-April (2011-12), according to the latest dataof Pakistan Bureau of Statistics(PBS). The commodities thatcontributed in enhancing coun-try’s textile exports includedcotton yarn, exports of which in-creased from $1.468 billion lastyear to $1.851 billion during theyear under review, showingsurge of 26.08 percent.

Similarly, the exports of cot-ton cloth increased from $2.004

billion to $2.231 billion, show-ing growth of 11.31 percent. Theother textile products that wit-nessed positive growth in ex-ports included yarn other thancotton yarn, exports of which in-creased by 12.93 percent bygoing up from $29.476 millionto $33.288 million while the ex-ports of knitwear increased from$1.624 billion to $1.663 billion,showing growth of 2.36 percent.

Exports of bed wear in-creased by 1.03 percent, from$1.452 billion to $1.467 billionwhereas the exports of towelsincreased from $554.262 mil-lion to $647.360 million, show-ing expansion of 16.80 percent.

The exports of tents, canvasand tarpaulin during the periodunder review also surged by47.20 percent from $69.353 mil-lion to $102.091 million whilethe exports of readymade gar-ments increased from $1.319

billion to $1.475 billion, show-ing growth of 11.82 percent.

Similarly, the exports ofmade up articles (excludingtowels and beadwear) increasedby 2.45 percent, from $475.837million to $487.506 million,while exports of other textilematerials increased from$250.119 million to $328.001million, showing growth of31.14 percent. The textile com-modities that witnessed negativegrowth in exports included rawcotton, exports of which de-creased by 68.15 percent, byfalling from $433.535 million to$138.077 million.

Exports of cotton carded orcombed decreased from $11.617million to $5.954 million, show-ing negative growth of 48.75 per-cent and the exports of art, silkand synthetic textile also declinedby 26.61 percent from $433.655million to $318.247 million.

Experts urge budget focus onmacroeconomic stabilization

Textile exports grow 6.14%to reach $10.7bn 10 months

APCNGA rejects 6-daygas suspension plan

ISLAMABAD

NNI

The All Pakistan CNG Association (APCNGA) on Tuesday re-jected the Ministry of Petroleum and Natural Resources’s deci-sion to suspend gas supply to CNG outlets for six days underthe garb of maintenance of plants at Qadirpur gas field.The decision to bar CNG outlets from business from May 21 toMay 27 will take toll on masses and businesses therefore thisdecision cannot be accepted, said Ghiyas Abdullah Paracha,Chairman Supreme Council APCNGA. In a statement, Parachasaid that the decision of the caretaker minister petroleum isbased on enmity with masses and corruption. “Why the mainte-nance wasn’t carried out during normal weather and initiatednow when people are dying of heat,” he asked. He said thatclosing supply from the gasfield will result in a shortfall of 400mmcfd which should have been distributed on merit among thegas consuming sectors but CNG and power sectors have beentargeted while the influential sectors including captive powerplants have been spared. He said that the CNG sector which wasalready facing wrath of the policymakers will be unable to bearthe brunt of decision as it has no other alternative like other sec-tors. He said that caretaker government will be responsible forloss to masses and business community as it is behind the con-troversial decision. The leader of the CNG sector said that thePetroleum Ministry has been trespassing on the authority ofOGRA which should be noticed by the incoming government.

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