| Business News |
| Wednesday, May 25, 2011 11:55 | |
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| - | Electricity, gas commercial tariff hike in offing |
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| - | Oil down in Asian trade |
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| - | Euro falls back amid Greece''s debt woes |
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| - | Trust deficit between taxpayers, IT Deptt. to go |
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| - | Oil rebounds in Asia on higher Chinese demand |
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| - | Euro remains weak on sovereign debt woes |
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| - | Euro sinks on new Greek debt worries |
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| - | CNG stations closed in Multan region |
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| - | Euro sinks further on Greek sovereign debt woes |
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| - | Oil down in Asian trade on US demand concerns |
Budget likely on June 3
The Budget 2011-12 is likely to be presented in the National Assembly on June 3, 2011, it is learnt. According to National Assembly Secretariat, the Budget Session is likely to be held on June 3, 2011. Sources said that Minister for Finance Dr Abdul Hafeez Sheikh would present the Budget 2011-12 on the first day of the sitting of the Lower House of the Parliament.
They said that the National Assembly is likely to pass the Budget on June 24, 2011. The budget session would continue for more than 22 days. At the end of the session, sources said, two bills and audit reports of Auditor General of Pakistan are likely to be presented in the House. Sources said that Senate session is likely to be held on June 1, 2011.
The Budget would also be presented in the Senate on June 3 and the same day discussion would be held. Earlier, the Senate had been discussing the budget for presenting its recommendations within seven days to the Lower House of the Parliament. Now, after the passage of 18th Constitutional Amendment, the Senate would present its recommendations within 14 days to the National Assembly.
They said that the National Assembly is likely to pass the Budget on June 24, 2011. The budget session would continue for more than 22 days. At the end of the session, sources said, two bills and audit reports of Auditor General of Pakistan are likely to be presented in the House. Sources said that Senate session is likely to be held on June 1, 2011.
The Budget would also be presented in the Senate on June 3 and the same day discussion would be held. Earlier, the Senate had been discussing the budget for presenting its recommendations within seven days to the Lower House of the Parliament. Now, after the passage of 18th Constitutional Amendment, the Senate would present its recommendations within 14 days to the National Assembly.
Exchangeable Bonds: National Assembly panel rejects sale of 10 percent OGDCL shares
A parliamentary panel on Tuesday rejected the proposed sale of 10 percent shares of Oil and Gas Development Corporation Limited (OGDCL) through Exchangeable Bonds in international market for raising $500 million. The National Assembly standing committee on privatisation, which met here with Malik Bilal Rehman in the chair, said such transactions come under the purview of the ministry of finance.
The members were of the view that it is not a privatisation of any entity rather it's a drive to raise money for the government and the committee is unable to recommend its approval. Secretary privatisation ministry Imtiaz Kazi briefed the committee about proposed float of 10 percent of the Exchangeable Bonds of OGDCL in international market.
At present, he said the government has 75 percent share in the OGDCL and 10 percent share would be floated in the market. Main purpose of the government move was to generate $500 million for debt retirement and poverty alleviation in the country.
Such amount will be considered a debt for three years and after this period, investor can redeem his capital or the bonds might be converted into shares. The government will pay 5.2 to 7.2 percent interest on it, he added. The committee asked the ministry to first complete the process to check whether it comes under the purview of privatisation process or not. MNAs Khawaja Sohail Mansoor, Muhammad Pervez Malik, Khawaja Muhammad Asif and Abdul Qadir Baloch termed it a fund raising move adding that it doesn't come under the purview of this committee. They said why the government was selling profitable entities for debt retirement?
Khawaja Sohail Mansoor informed the committee that a Dubai-based company was ready to invest in the bond and claimed that it was an opportunity for some people to get black money whitened in such a way. The committee decided that in the next meeting the secretaries of cabinet, petroleum and natural resources, finance and law division should explain to them the transaction process. Approval of the sale of 10 percent OGDCL share was deferred till next meeting.
Minister for Privatisation Rana Tauseef and state minister Ghous Bakhsh Mehr told the committee that the main purpose of the ministry was to proceed with privatisation process of any entity, which is forwarded by the appropriate authority. "We are unable to explain as to why such entities are offered for privatisation," they added.
About actual receipts of privatisation proceeds in 2010-11, the secretary informed the committee that no privatisation was done due to global financial crises and low investor appetite. However, the Privatisation Commission received Rs 213.35 million in November 2010 from Army Welfare Trust as first instalment of interest on account of the privatisation of Wah Cement (now called Askari Cement Limited).
The second instalment of Rs 213.35 million is expected by end of May 2011. He said the PC received Rs 12.43 million from M/s Al Hashim Brothers on account of privatisation of A & B Oil Mills, Karachi. He said actual total receipts of current fiscal year 2010-11 stand at Rs 225.78 million.
The committee expressed astonishment over spending of Rs 227 million on flood-related activities in 2010 and Rs 261 million on media campaign by the ministry of privatisation. Khawaja Asif asked the Supreme Court to take suo motu action. Imtiaz Kazi informed the committee that Roosevelt Hotel New York, Printing Corporation of Pakistan, Republic Motors and Sindh Engineering Corporation were removed from privatisation list.
However, the CCI in its meeting on April 28, 2011 clarified the privatisation of Wapda Power Wing (already approved in 1997 and 2006) by allowing privatisation of three generation companies (Gencos) and nine distribution companies (Discos). Besides, OGDCL Exchangeable Bond, the upcoming transactions are National Power Construction Company (NPCC) and Heavy Electrical Complex (HEC), expected to be privatised by September 2011, the secretary said.
The members were of the view that it is not a privatisation of any entity rather it's a drive to raise money for the government and the committee is unable to recommend its approval. Secretary privatisation ministry Imtiaz Kazi briefed the committee about proposed float of 10 percent of the Exchangeable Bonds of OGDCL in international market.
At present, he said the government has 75 percent share in the OGDCL and 10 percent share would be floated in the market. Main purpose of the government move was to generate $500 million for debt retirement and poverty alleviation in the country.
Such amount will be considered a debt for three years and after this period, investor can redeem his capital or the bonds might be converted into shares. The government will pay 5.2 to 7.2 percent interest on it, he added. The committee asked the ministry to first complete the process to check whether it comes under the purview of privatisation process or not. MNAs Khawaja Sohail Mansoor, Muhammad Pervez Malik, Khawaja Muhammad Asif and Abdul Qadir Baloch termed it a fund raising move adding that it doesn't come under the purview of this committee. They said why the government was selling profitable entities for debt retirement?
Khawaja Sohail Mansoor informed the committee that a Dubai-based company was ready to invest in the bond and claimed that it was an opportunity for some people to get black money whitened in such a way. The committee decided that in the next meeting the secretaries of cabinet, petroleum and natural resources, finance and law division should explain to them the transaction process. Approval of the sale of 10 percent OGDCL share was deferred till next meeting.
Minister for Privatisation Rana Tauseef and state minister Ghous Bakhsh Mehr told the committee that the main purpose of the ministry was to proceed with privatisation process of any entity, which is forwarded by the appropriate authority. "We are unable to explain as to why such entities are offered for privatisation," they added.
About actual receipts of privatisation proceeds in 2010-11, the secretary informed the committee that no privatisation was done due to global financial crises and low investor appetite. However, the Privatisation Commission received Rs 213.35 million in November 2010 from Army Welfare Trust as first instalment of interest on account of the privatisation of Wah Cement (now called Askari Cement Limited).
The second instalment of Rs 213.35 million is expected by end of May 2011. He said the PC received Rs 12.43 million from M/s Al Hashim Brothers on account of privatisation of A & B Oil Mills, Karachi. He said actual total receipts of current fiscal year 2010-11 stand at Rs 225.78 million.
The committee expressed astonishment over spending of Rs 227 million on flood-related activities in 2010 and Rs 261 million on media campaign by the ministry of privatisation. Khawaja Asif asked the Supreme Court to take suo motu action. Imtiaz Kazi informed the committee that Roosevelt Hotel New York, Printing Corporation of Pakistan, Republic Motors and Sindh Engineering Corporation were removed from privatisation list.
However, the CCI in its meeting on April 28, 2011 clarified the privatisation of Wapda Power Wing (already approved in 1997 and 2006) by allowing privatisation of three generation companies (Gencos) and nine distribution companies (Discos). Besides, OGDCL Exchangeable Bond, the upcoming transactions are National Power Construction Company (NPCC) and Heavy Electrical Complex (HEC), expected to be privatised by September 2011, the secretary said.
Budget 2011-12: current account deficit to be financed through FDIs
The government has decided to finance current account deficit in the fiscal year 2011-12 through foreign direct investments (FDIs) ie amounts anticipated from Etisalat -around $800 million--expected by the start of next fiscal year, grants and loans estimated at $2.1 billion and portfolio investment, official sources told Business Recorder.
Gross foreign exchange reserves stand at $17.5 billion which are expected to provide import cover up to 41/2 months, based on the estimated export earnings and foreign exchange reserves available with the State Bank of Pakistan (SBP) and commercial banks, till June 2011. For the year 2011-12, the government plans to retire $1.47 billion of IMF's budgetary support, which is expected to lower external financing, resulting in considerable pressure on the domestic debt market.
For this, the government intends to formulate its medium-term debt policy with three important pillars: (1) reduction of budget (total deficit without interest) to around 'negative' 1 percent over the medium-term, (2) use of debt instruments that are low interest-yielding, including more reliance on national savings instruments, and (3) reduction of SBP borrowing to zero.
The Finance Ministry argues that due to the commencement of repayment of IMF Stand-by-Arrangement as per schedule, public debt is expected to narrow down considerably. However, repayment of IMF loans would result in reduction of gross foreign reserves. The total debt-to-GDP ratio is expected to fall below 50 percent of GDP. Real growth of revenue has been projected higher than the real growth of debt, that would ensure reduction in total public debt over revenue over the medium term.
Sources said that total public debt rose from Rs 4.4 trillion in 2005-06 to Rs 9.1 trillion in 2009-10. Last year, public debt increased to around more than 60 percent of GDP. "This is a dangerous trend for the government, especially when tax revenue to GDP ratio is below 10 percent," sources added.
Pakistan ranks high (three) in terms of total public debt to total revenue in emerging markets. Pakistan's ratio last year was around 400 percent while the average in emerging markets is around 150 percent. High fiscal deficit has led to increased interest repayments. This year, total interest liability is Rs 727 billion, which is 58.5 percent of new revenue available to the federal government.
Gross foreign exchange reserves stand at $17.5 billion which are expected to provide import cover up to 41/2 months, based on the estimated export earnings and foreign exchange reserves available with the State Bank of Pakistan (SBP) and commercial banks, till June 2011. For the year 2011-12, the government plans to retire $1.47 billion of IMF's budgetary support, which is expected to lower external financing, resulting in considerable pressure on the domestic debt market.
For this, the government intends to formulate its medium-term debt policy with three important pillars: (1) reduction of budget (total deficit without interest) to around 'negative' 1 percent over the medium-term, (2) use of debt instruments that are low interest-yielding, including more reliance on national savings instruments, and (3) reduction of SBP borrowing to zero.
The Finance Ministry argues that due to the commencement of repayment of IMF Stand-by-Arrangement as per schedule, public debt is expected to narrow down considerably. However, repayment of IMF loans would result in reduction of gross foreign reserves. The total debt-to-GDP ratio is expected to fall below 50 percent of GDP. Real growth of revenue has been projected higher than the real growth of debt, that would ensure reduction in total public debt over revenue over the medium term.
Sources said that total public debt rose from Rs 4.4 trillion in 2005-06 to Rs 9.1 trillion in 2009-10. Last year, public debt increased to around more than 60 percent of GDP. "This is a dangerous trend for the government, especially when tax revenue to GDP ratio is below 10 percent," sources added.
Pakistan ranks high (three) in terms of total public debt to total revenue in emerging markets. Pakistan's ratio last year was around 400 percent while the average in emerging markets is around 150 percent. High fiscal deficit has led to increased interest repayments. This year, total interest liability is Rs 727 billion, which is 58.5 percent of new revenue available to the federal government.
Suicide bomb kills six at Pakistan police station
PESHAWAR: A Taliban suicide bomber rammed a truck bomb into a Pakistani police station at dawn Wednesday, flattening the three-storey building in a massive explosion and killing six people.
The country's main Taliban faction claimed responsibility for the attack in the protected military zone of the northwestern city of Peshawar, saying it was their fourth reprisal for the US killing of Osama bin Laden in Pakistan.
Five policemen and a soldier died in Wednesday's explosion, a relatively low toll given the enormity of the blast, but officials said the building normally had only a skeleton staff at the time of the attack.An AFP reporter saw flames from the stricken building, shattered glass on the ground, pancaked rubble, burning tyres and the charred remains of at least three vehicles, including a small truck.
Rescuers were trying to reach four or five people believed trapped alive in the rubble, police official Muhammad Ijaz told AFP."It was a huge blast which completely destroyed the three-storey building," Ijaz added, saying there were usually 10 to 15 people present at that time in the police station.Senior police official Shafiullah Khan said six people had died, after one policeman succumbed to his injuries in hospital and the body of another was pulled out of the rubble.
Police said another 23 people, including nine policemen and a child, were wounded in the blast in Peshawar, the gateway to the tribal belt on the Afghan border where US drone strikes target Taliban and al-Qaeda operatives.
The razed building housed the police Criminal Investigation Department and was located in the Peshawar Cantonment area just 150 metres (yards) from the US consulate. The area houses military families and security is normally tight.Police said the attack was carried out with a small truck containing at least 200-250 kilograms (440-550 pounds) of explosives, and that body parts were hurled more than 300 metres (yards) away from the blast.
"We will further step up these attacks to avenge Osama bin Laden's martyrdom," Taliban spokesman Ehsanullah Ehsan told AFP by telephone from an undisclosed location.
"These attacks will continue until the US drone strikes and ongoing Pakistani military operations are stopped in the tribal regions," he added.
The military rushed to seal off the area around the Peshawar police station after the 4:38 am (2338 GMT Tuesday) blast
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