Joint action by all parties urged to meet challenge

KARACHI: President Asif Ali Zardari assured leaders of the business community on Friday that the country was in safe hands and the government was capable of handling pressures and challenges.

At a meeting with the president, the business leaders had expressed concern over the increasing US pressure on the government on a number of issues, including the Haqqani network.

According to sources, Mr Zardari said such pressures in relations with the international community could only be overcome through national unity and expressed the hope that all political parties would join hands to scuttle these.

He recalled the sacrifices rendered by the nation in the US-led war on terror and said that without Pakistan its objectives could not be achieved. The international community was not oblivious of this fact, he added.

According to the sources, the president reiterated Pakistan’s commitment to peace and stability in Afghanistan and the region and said the people, the armed forces and the government of Pakistan were on the same page on the issue.

Also on Friday, Prime Minister Yousuf Raza Gilani said the United States was an important country, but Pakistan wanted to maintain relations with it on the basis of mutual respect as a sovereign country.

Talking to reporters after inaugurating new berths at the Karachi Port, the prime minister said the US should refrain from sending wrong messages such as taking operational steps against the Haqqani network which were not acceptable to the people of Pakistan. “The sovereignty of the country cannot be compromised and it will be protected at all cost. The US should avoid threatening 180 million people of Pakistan because this will further deteriorate our mutual relations.”

Mr Gilani said the US should realise that “we need political space particularly when Pakistan is not part of issue but part of solution”. Both countries, he said, needed each other and, therefore, should try to avoid sending threatening messages.

Responding to a question, the prime minister said Pakistan would support any effort for stability and peace in Afghanistan based on aspirations of the Afghan people.

He said Pakistan always sought trade, and not aid, to achieve economic stability, but there had been unnecessary pressure on Pakistan to “do more in the war on terrorism”.

The prime minister said Pakistan was not isolated in the world and had peaceful relations with its neighbours and countries in the region.

Later, talking to a delegation of business leaders at the Governor’s House, Prime Minister Gilani said he would soon convene a meeting of leaders of all political parties to apprise them of the security situation in the country and changing environment in the region.

“The political and economic stability of the country is interlinked,” he said.

Mr Gilani said that Pakistan had good relations with most countries, but would now concentrate on improving ties with countries in its vicinity. He said the country’s defence was strong and the nation would not allow anyone to fiddle with its frontiers.

Foreign Minister Hina Rabbani Khar, who earlier in the day met US President Barack Obama in New York, said the United States risked losing an ally if it continued to publicly criticise Pakistan’s performance in the war against militancy.

They would lose an ally, Ms Khar told Geo TV in response to a question about US allegations against Pakistan army and ISI and threats of direct action. “You cannot afford to alienate Pakistan; you cannot afford to alienate the Pakistani people. If you are choosing to do so and if they are choosing to do so, it will be at their (the United States’) own cost,” she added.

“At the operational level it will be appropriate to say that there are serious difficulties (between the two countries).”

In a separate interview to India’s NDTV, Ms Khar added: “Pointing fingers at each other will not help. Finding scapegoats will not help … We want to be a mature, responsible country that is fighting terrorism with a lot of maturity.”

MoU signed between the Punjab Government and NORINCO

LAHORE: A Memorandum of Understanding (MoU) was signed between Punjab government and Chinese international company NORINCO regarding Lahore mass transit project.

Under the agreement, a 27km long railway track will be laid from Gaju Matta on Ferozpur Road to Shahdara of which 7km long portion will be underground.Chairman Lahore Transport Company Khawaja Ahmad Hasaan and Vice President NORINCO Zhang Shipping signed the document on behalf of Punjab government and China respectively.

Punjab Chief Minister Muhammad Shahbaz Sharif, Member Provincial Assembly Mehr Ishtiaq Ahmad, high-ups of Lahore Transport Company and representatives of NORINCO were also present on the occasion.Talking to media on the occasion, the Chief Minister welcomed the agreement for Lahore mass transit project with Chinese state company NORINCO and said that soft opening of the project will be made on 14th August 2011.

He said that it is a unique project as the Chinese company by announcing that it will not take even a single penny as profit proved that China is a true and sincere friend of Pakistan. Moreover, the project will be an invaluable gift by the Chinese government for the people of Lahore, the Punjab as well as the whole country.

Furthermore, he said that there are deep-rooted relations between China and Pakistan and Pak-China friendship is higher than Himalayas, deeper than oceans and sweeter than honey. Also, China has stood by Pakistan in every hour of need and helped Pakistan wholeheartedly. Moving on, he said that friendship between the two countries is also reflected in the agreement signed with Chinese company NORINCO regarding Lahore mass transit project.

He also informed them that NORINCO is a renowned Chinese company which has executed numerous projects of human development and prosperity and also set up metro systems. Besides this, thousands of people are benefiting from the mass transit projects executed by the company in Beijing, Shanghai and Tehran.

The completion of Lahore mass transit project will not only provide modern transport facilities to the people of provincial metropolis but of the whole country and the project will be completed by working round-the-clock. In addition to that, a number of agreements were signed between Punjab government and China for cooperation in various sectors during his visit to China which include the glorious project of Lahore mass transit.

Replying to the questions of media, he said that politicians and rulers have not come up to the expectations of the masses during the 63 years history of the country. While the elite have all the facilities at their doorstep, the poor and the common man are deprived of even basic amenities. Also, the Punjab government has diverted resources to the welfare of the people and all available funds are being utilized in a transparent manner on the provision of basic facilities to the people.

Mr. Sharif stated that people have elected us and we are their servants and not the rulers and every penny of public money is being spent on the betterment and uplift of the masses in a highly transparent manner.

He said that the country is facing terrorism and a number of other problems but the nation will come out of these crises and achieve the goal of national progress and prosperity.

Replying to a question about the possibility of rollback of welfare projects by the future governments, the Chief Minister said that Daanish schools, Aashiayna housing project, supply of free medicines and mobile health units are such welfare-oriented projects of Punjab government which no one can rollback and if anyone tried to do so he will taken to task by the masses.

Vice President NORINCO, Zhang Shipping while speaking on the occasion, said that Pakistan and China are bound together in unswerving ties of friendship and Lahore mass transit project will usher in a new era of bilateral cooperation between the two countries.

Also, the project will reflect Pak-China friendship and NORINCO will not take any profit from the project. The Chinese bank Exim will provide loan for the project. He said that he had held talks with Lahore Transport Company and other departments during last two weeks and has excellent working relationship with them.

He said that Mr. Sharif has taken personal interest in the project which will result in provision of modern transport facilities to the masses and that the Lahore mass transit project will be completed in four years and Chinese company will also provide technology to Punjab in this regard.

In addition to this, the Lahore mass transit project is a precious gift by China for the people of Punjab which is being initiated as a result of lengthy negotiations with the dynamic and dignified leadership of Punjab.Earlier, Vice President NORINCO and his delegation gave a briefing regarding Lahore mass transit project and highlighted its various aspects.

$10bn of US financial support unaccounted for

ISLAMABAD: Around $10 billion of US financial support provided over the past 10 years is missing in Pakistani official calculations.

According to the US Congressional Research Service, $18.76 billion was disbursed to Pakistan for losses incurred in the war against terrorism, but Pakistani officials claim to have received only $8.76 billion, including the military`s share of $1.63 billion.

The records in Islamabad show that the country has filed claims of only $13.3 billion, speakers at a discussion on `The US assistance to Pakistan: A critical appraisal` held on Friday at the South Asian Strategic Stability Institute (Sassi) said.

They said there was a discrepancy of about $6 billion in claims by both governments because the US reimbursed to Pakistan amounts that had not been claimed.

“This money cannot be accounted for and perhaps the US can best explain where it was spent when Pakistan never asked for it,” the institute`s Director General Dr Maria Sultan said.

The brief prepared against the background of the recent suspension of $800 million US military aid to Pakistan was based on comparative analysis of US congressional reports and Defence authorisation bills and Pakistani economic surveys and annual reports.

Sassi Research Fellow Majid Mehmood said US assistance covered both military and civil areas.

The military assistance comprises the Coalition Support Fund (CSF), Foreign Military Financing (FMF), Pakistan Counter-Insurgency Capability Fund (PCCF) and direct funding.

Mr Mehmood said that while the US claimed to have given $12.5 billion, Pakistan`s military had received only $1.63 billion from the CSF and hardware worth $1 billion. He said the FMF helped to buy obsolete US defence equipment and $3.7 billion would be spent for the purpose.

In the civilian sector, the country did not receive more than a few million of the $750 million and $49 million set aside under International Migration and Refugee Assistance and the Fata development plan.

He said $179 million had been disbursed under the Kerry Lugar Bill in 2010 against the US claim of $186 million.

Dr Sultan said that under the bill the country would receive $750 million in the first instalment and $750 million after the presentation of a report by the US representative for Afghanistan-Pakistan.

“According to the text of the KLB, $200 million is administrative charges and most of the aid will go to NGOs or US-based contractors. The actual amount disbursed will be less than $500 million per year — approximately $2.7 per Pakistani.”

Of the $1.28 trillion US expense in the war against terrorism, Pakistan has received $8.76 billion and will receive $1.5 billion per year under the KLB, “out which only five per cent per year is disbursed”, she said.

The estimated loss suffered by Pakistan in the war is about $68 billion.

Pakistan may buy 180,000 T palm oil for July: industry official

Pakistan may import as much as 180,000 tonnes of palm oil for July and has covered a lot of its requirement of the vegetable oil ahead of the Muslim holy month of Ramadan, a top industry official said on Wednesday.

Ramadan, when fasts during the day are followed by feasts and dinner gatherings at night, will start in the first week of August, boosting edible oil consumption in the Muslim-dominated country of nearly 180 million people.

“Pakistan has already covered a lot for the Ramadan requirement by buying huge volumes for June and July shipment,” Rasheed Jan Mohammad, vice chairman of the Pakistan Edible Oil Refiners’ Association, told Reuters.

“It is expected that Pakistan’s June volume would be around 150,000 tonnes and for July, it could be between 175,000 and 180,000 tonnes.”

Pakistan, the world’s fourth-largest buyer of vegetable oils, imports 80 per cent of its palm oil, with Malaysia providing roughly 90 per cent of that and the rest coming from Indonesia.

Jan Mohammad, however, pointed out that Pakistani importers, who stocked up for Ramadan at high rates, had taken a hit as global palm oil prices dipped in the past 10 days.

Malaysian palm oil futures rose 1.5 per cent on Wednesday as traders continued to adjust their positions and eye strong export data after the market fell to an eight-month low earlier this week. It has dropped about five per cent in 10 trading sessions.

Malaysia — the world’s No.2 palm oil producer – shipped 109,885 tonnes of palm oil products between June 1-25 to Pakistan, according to the Malaysian cargo surveyor Societe Generale de Surveillance. Jan Mohammad said about 15,000 tonnes was likely to come from Indonesia.

Pakistan charges 15 per cent less duty than the standard rate on Malaysian crude palm oil import under a 2007 tariff agreement. Indonesia had been pushing Pakistan for the same terms, but talks between the two countries on a preferential trade agreement have hit a deadlock.

Pakistan imported 1.79 million tonnes of palm oil products and crude palm oil in the first eleven months of the 2010/11 (July-June) fiscal year, up more than 16 per cent from the same period a year ago, according to official estimates.

Pakistan’s annual edible oil consumption is more than three million tonnes.

Lagarde, Carstens on IMF shortlist

WASHINGTON The International Monetary Fund’s board on Monday blocked Bank of Israel governor Stanley Fischer from the race for the top IMF job, further boosting the chances of French Finance Minister Christine Lagarde.

In a surprise move, the 24-member IMF board rejected changing the IMF’s rules that would have allowed 67-year-old Fischer to run, two board official told Reuters. IMF rules stipulate an age limit of 65 for an incoming managing director.

The officials said changing the rules for Fischer, who is highly respected by both advanced and emerging economies, would have required a reopening of the selection process to allow other candidates older than 65 to participate in the race.

An IMF board statement later confirmed it had shortlisted Lagarde and Mexico’s central bank chief Agustin Carstens and would consider their nominations, although made no mention of Fischer.

“The executive board will meet with the candidates in Washington and, thereafter, meet to discuss the strengths of the candidates and make a selection,” the board said.

It reiterated that it planned to complete the selection by June 30.

Front-runner Lagarde is backed by Europe, which holds one-third of the votes, and a handful of other countries including Indonesia, whose Finance Minister Angus Martowardojo said he personally supports her candidacy.

If she wins, Lagarde would become the first woman to head the IMF, which has been central in providing rescue loans to countries in crisis including Greece, Ireland and Portugal.

Carstens has the support of a dozen Latin American countries, including Colombia, in a race which, despite being one of the most hotly contested in IMF history, is widely expected to result in Europe maintaining its 65-year grip on the job.

Brazil, the region’s largest economy, has not yet said whether it will back Carstens.

Carstens acknowledged on Monday that he was a long-shot candidate and he knew chances were “quite high” that Lagarde would get the job left vacant by Dominique Strauss-Kahn, who was arrested in New York in May on sexual assault charges. He has denied the charges.

EUROZONE CRISIS

The European debt crisis made it hard to break the tradition of Europe’s grip on the fund, even though members agreed some time ago the next managing director should be selected on the basis of merit, Carstens told the Peterson Institute, a policy think tank in Washington.

“That makes it more difficult. I’m not fooling myself. It’s like starting a soccer game with a 5-0 score,” Carstens said after a meeting with US Treasury Secretary Timothy Geithner.

In a statement, the US Treasury Department said it had not yet endorsed a candidate, although it is widely expected that Washington will back Lagarde to head the global financial institution.

Fischer, who was born in what is now Zambia and carries both an American and Israeli passport, announced his last-minute candidacy over the weekend, saying he had been encouraged to enter by a number of governments. Applications were due by Friday.

Board officials told Reuters previously the IMF rules could easily be changed if there was enough support for Fischer.

With 17 per cent of the vote, the United States is the key to who becomes the next IMF managing director. Fischer’s late entry into the race on Friday complicated its decision because it would be hard-pressed not to vote for an American passport holder, according to financial diplomats.

By tradition, the United States has always supported Europe’s candidate under a gentlemen’s agreement that has seen a European head the IMF and an American lead its sister institution, the World Bank, since the end of World War Two.

Lagarde still faces tough questioning from emerging market economies when she is interviewed by the 24-member board, which is heavily represented by European countries.

Developing nations want their growing economic prowess reflected more in their clout at the IMF, which means she will need to undertake more ambitious reforms that boost the voting power of emerging economies.

In his appearance at the Peterson Institute, a Washington policy think tank, Carstens took a swipe at his French competitor saying as a European she may not be objective enough to deal with the unfolding European debt crisis.

He argued that his distance from the European crisis, as well as his experience in dealing with Latin American debt problems while working for the Mexican government and as an IMF deputy director, gave him an advantage over Lagarde.

“I think in the case of Europe what would help me is to have a fresher pair of eyes … I think also someone coming from the outside would speak their mind more frankly and I think that would be an advantage,” Carstens added.

Rs3bn secret funds for one ministry

ISLAMABAD: While calls for disclosing details of budgetary allocations in parliament and its standing committees are getting louder, the ministry of information and broadcasting will spend nearly Rs3 billion under the head of ‘other expenditures’ without explaining the purpose for which such a huge amount has been allocated.

Details of a secret fund which the ministry keeps for its hitherto unknown operations and officially admits having spent are also missing from the budget documents.

According to the demands for grants and appropriations presented before the National Assembly on Friday, the government has earmarked Rs4.197 billion for the ministry’s annual expenditures — a 15 per cent increase from the current year spending of Rs3.641 billion.

Of the amount, Rs325.662 million has been set aside for the information and broadcasting division; Rs117.314 million for the directorate of publications, newsreels and documentaries and Rs456.031 million for information services abroad. These expenses have been explained in detail, including pay, allowances, operating expenses, employees’ retirement benefits, repair and maintenance.

The Rs2.972 billion head of other expenditures of information and broadcasting division only mentions Rs39.69 million for other industries, Rs199.804 million for cultural services and Rs2.7 billion for broadcasting and publishing.

According to an officer of the ministry, funds parked under this head include the annual expenditure on the Associated Press of Pakistan and Radio Pakistan, but this is not mentioned in the budget document.

The officer said secret spending was also made from this portion and that was the purpose for not mentioning its details. He said it was written in the cashbook of the ministry that details of the money spent from the secret fund would not be disclosed to the public.

The secret fund maintained by the ministry has been a subject for discussion at various forums.

Responding to audit objections at a Public Accounts Committee meeting this year, the then information secretary, Sohail Mansoor, admitted that the ministry had doled out Rs570 million from the fund in 2007-08. Refusing to disclose the purpose behind the spending, he said the practice had been there for four decades and every government had used the fund.

However, Auditor General Tanvir Ali Agha said only the president had the authority to declare any fund secret. “As far as my office’s information is concerned, the information ministry has not provided us with any such certification from the Presidency, therefore, these funds are auditable.”

On directives of the PAC, the auditor general is carrying out a special audit of all ministries which keep secret funds and the report is likely to be presented to the committee.

FBR hopes to net 700,000 taxpayers, collect Rs70bn

ISLAMABAD: The tax machinery has prepared a plan for collecting at least Rs70 billion next year from 700,000 wealthy people who contribute nothing to the national exchequer, according to Federal Board of Revenue’s Chairman Salman Siddique.

Answering questions at the post-budget press conference on Saturday, he said that implementation of the plan coupled with some administrative measures would enable the tax machinery to achieve the ambitious target of collecting Rs1,952 billion.

The government has identified 2.3 million people living in posh areas who don’t have national tax numbers. Federal Finance Minister Hafeez Shaikh has said these people live in posh areas, have more than two foreign currency accounts and travel abroad every year but don’t pay any tax.

The FBR chief said notices would be issued to all such people and efforts would be made to collect income tax from them. “I can even go to the extent of filing cases with the National Accountability Bureau against those not prepared to pay their taxes,” he said.

The revenue target for next year is 23 per cent higher than the revised target of Rs1,588 billion for 2010-11.

Mr Siddique said the government would get a windfall of Rs260 billion on account of 16.5 per cent increase in GDP (12 per cent inflation and 4.5 per cent growth) next year.

He said the GST measures announced in March for four months would remain imposed for the entire year, yielding an additional Rs104 billion. This does not include new GST taxation measures worth over Rs31 billion.

The chairman said the FBR would raise more than Rs50 billion through administrative measures. There will be a centralised audit system from July to identify potential taxpayers.

Mr Siddique said a demand of Rs25 billion had been made from withholding agents who had collected under-declared income tax from taxpayers. Wrong input tax adjustment of Rs26 billion has been detected. “We have collected only Rs1 billion of

this.”

He said Rs131 billion was stuck in appeals in various courts. “We also hope to collect a substantial amount from the settlement of these cases next year.”

Mr Siddique said the revenue target was likely to be surpassed easily. He said the Rs1,588 billion target for the current year would be met by the end of the month.

The finance minister announced that the Federal Excise Duty would be eliminated over the next two years and there would be only two types of taxes: income tax and sales tax under the inland revenue tax and customs duty.

Govt finalises budget with size estimated at Rs3.8trn

ISLAMABAD: The government has finalised a consolidated budget of Rs3.854 trillion for the next financial year, envisaging a revenue of Rs2.787 trillion, fiscal deficit of Rs912 billion and provincial transfers of Rs1.224 trillion.

The budgetary allocations indicate that current expenditures of most of the federal ministries will be frozen at the level of the current year because of tight fiscal position.

Official documents available with Dawn show the government has set a tax revenue target of Rs2.1 trillion, 2.3 per cent above the current year’s revised target of Rs1.71 trillion. This includes a Rs1.952 trillion tax target of the Federal Board of Revenue (FBR) against current year’s revised estimate of Rs1.588 trillion. The non-tax revenue is estimated at Rs687 billion, up 30 per cent from this year’s revised estimate of Rs526 billion.

Of the total revenue of Rs2.787 trillion, the provinces would get Rs1.224 trillion and Rs1.513 trillion would be for the federal government.

The government had set a revenue target of Rs2.410 trillion for the current year, but it has now been revised to Rs2.235 trillion, because of a shortfall in FBR collection, non-introduction of RGST and slow economic growth.

The centre’s total expenditure has been estimated at Rs2.549 trillion, up from current year’s revised estimate of Rs2.314 trillion. The centre would extend Rs55 billion subsidies to the provinces.

The size of the federal Public Sector Development Programme has been estimated at Rs280 billion against current year’s original estimate of Rs270 billion which was brought down to Rs180 billion.

Another Rs35 billion would be spent for flood relief assistance, slightly less than current year’s Rs40 billion.

Pensions would require Rs118 billion against Rs107 billion this year. Likewise, federal government’s service delivery cost has been estimated at Rs200 billion, which is about Rs20 billion more than current year’s revised estimate of Rs180 billion – brought down from budgeted Rs221 billion.

SECURITY AND INTEREST: The government would earmark Rs495 billion for defence, about 12 per cent more than current year’s allocation of Rs442 billion. Another Rs340 billion would be made available through grants for security expenditure, up 19.3 per cent from current year’s Rs285 billion. Put together, security-related expenditures would amount to Rs835 billion against this year’s Rs727 billion, up by 15 per cent.

An almost equally a large amount of Rs786 billion would be paid as interest cost, which is about Rs60 billion or 8.3 per cent more than current year’s revised debt servicing of Rs726 billion. The government had earmarked Rs699 billion in the 2010-11 budget for debt servicing which has been revised to Rs726 billion.

About Rs50 billion would be allocated for the ministry of interior, up from current year’s Rs44 billion.

BUDGET DEFICIT: The federal government’s fiscal deficit has been estimated at Rs1.036 trillion that is expected to be reduced to Rs912 billion because of a Rs124 billion cash surplus to be provided by the provincial governments. For the current year, the government had envisaged an overall deficit of Rs685 billion (4.5 per cent of GDP) that has now been revised to Rs960 billion or 5.5 per cent of GDP. The provinces were expected to generate a cash surplus of Rs167 billion but it was revised to Rs112 billion.

The budget deficit would be met through Rs95 billion worth of grants, net domestic bank borrowing of Rs807 billion and net external borrowing of Rs10 billion.

PROVINCIAL FINANCES: The provinces would get Rs1.224 trillion, up 23 per cent from the revised estimate of Rs993 billion during the current year. At the time of budget announcement last year, the centre had promised net transfers of Rs1.034 trillion to the provinces, which has been revised to Rs993 billion, a reduction of about Rs40 billion.

The provincial governments are expected to generate a tax revenue of Rs78 billion next year, slightly higher than current year’s revised estimate of Rs67 billion. Provincial non-tax revenue is expected at Rs69 billion against Rs66 billion revised estimate of this year.

The total expenditure of the provinces has been estimated at Rs1.305 trillion against current year’s estimate of Rs1.056 trillion.

FEDERAL MINISTRIES: A total of 17 ministries have been devolved to the provinces and, therefore, there would be no allocation for them for current expenditure in the budget. The remaining 31 ministries have been given the ceiling of about Rs155 billion for their current expenditure.

Some of the key ministries that have been given major allocations include the interior ministry, Rs50 billion; cabinet division, Rs5 billion; establishment division, Rs1.4 billion; commerce, Rs4.8 billion; defence ministry, Rs6.8 billion; finance and revenue, Rs22 billion; foreign affairs, Rs12 billion; housing and works, Rs2.4 billion; Kashmir and Gilgit-Baltistan, Rs8 billion; and States and Frontier Regions along with Fata, Rs16 billion.

Cotton Arrivals in Factories of Pakistan As On 1st May 2011>>Cotton Facts and Figures

Nepra allows KESC to increase per unit price

KARACHI: The National Electric Power Regulatory Authority (Nepra), under the fuel price adjustment, has allowed KESC to increase the per unit price by 53 paisas,on Friday.

KESC had requested Nepra to increase the power tariff due to the hike in the price of fuel and gas.

Power shortage to hit new peak

ISLAMABAD: The electricity shortage, now standing at about 3,500 megawatt, is feared to grow in the coming days because low river flows will continue till May 15, followed by disconnection of gas supplies to four independent power plants (IPPs) beyond June.

Sources in the water and power ministry told south on Thursday that overall the shortfall would hover between 4,000 and 4,500MW this season, starting later this month when temperatures rise and push up electricity demand.

That would mean power disruption of nine to 10 hours a day because a shortage of 450MW translates into an average loadshedding of one hour.

The sources said the IPPs had written to the government expressing suspicion that the recent bomb attacks on gas pipelines near Guddu were used as a pretext to divert gas supplies from IPPs to the textile industry after a recent meeting of a delegation of textile industry with the president.

The diversion resulted in disruption of gas supplies to Punjab’s five power plants—Saif, Orient, Saphire, Fauji Kabirwala and Rousch—leading to an additional loadshedding of 1,000MW.

The sources said the gas supply agreements with four IPPs—Saif, Orient, Halmore and Saphire—with a total generation capacity of more than 800MW were to expire on June 30, 2011 and the petroleum ministry had expressed its inability to provide them with gas beyond June.

Three of these projects have been in operation for a year and another is in testing phase.

If they shift to alternative fuel—furnace oil or diesel—the power tariff for 800MW will more than double.

The sources said Minister for Water and Power Syed Naveed Qamar who presided over a meeting of the Private Power and Infrastructure Board (PPIB) on Thursday was also informed about the growing power shortage.

The meeting was told by the chairman of the Federal Flood Commission that prevailing low river flows would continue till May 15 when snow would start melting in Skardu and other catchment areas in the northern region.

Before that there will be more rainfall which would slightly improve the flows but delay snow melting—the main source of flows in the Indus.

Wapda Chairman Shakil Durrani is reported to have informed the meeting that distribution companies of Pakistan Electric Power Company—formerly a wing of Wapda—are not paying about Rs57 billion dues to Wapda, limiting its capacity to keep the pace of hydropower and irrigation development projects.

He sought the ministry’s help to persuade the companies to clear the dues.

The representatives of the companies said they faced serious problems because of non-payment of dues by public sector consumers, including the federal government and could not make payments to Wapda unless their cash flows improved.

They also requested the minister to persuade the provincial governments to clear the dues, particularly Sindh government which alone had not paid more than Rs35 billion to Pepco.

The meeting was informed that the composition of the Private Power and Infrastructure Board (PPIB) was in the process of being changed from a totally bureaucratic forum comprising federal secretaries to a representative body of the provinces.

In the board, each province will get one member and there will also be presence of Azad Kashmir and Gilgit-Baltistan.

A summary to this effect has already been forwarded to the Council of Common Interests for approval.An official statement said the minister assured the participants that new IPPs would get maximum government support.

The minister was informed that nine IPPs generating 1,800MW had been commissioned since March 2009 and another three of 600MW were expected to start production next month.

The meeting decided to extend the financial closing date of the 375MW Uch Power Project-II to May 15 to help it make financial arrangements with banks.

The meeting approved the implementation and power purchase agreements of Star Hydro and Patrind Hydropower Project in Azad Kashmir.

21Banks would financing Punjab Govt Rs 204b for procuring wheat

LAHORE : A consortium of around 21 banks would arrange financing of over Rs204 billion out of Rs205 billion for the Punjab government to procure 4 million tons wheat in the province. The Bank of Punjab will lead the consortium.This said Naeemuddin Khan, President The Bank of Punjab Addressing the audience in a ceremony arranged by the BOP at Royal Palm Club in Lahore on Tuesday which was attended by the officials of Punjab Food Department as well as senior executives of other banks.
This year, the Punjab Food Department has set a target of procuring of 4 million metric tons of wheat in the province while the Bank of Punjab has been assigned to lead for arranging finance for the purpose. , , recapped the gleaming role of BOP in arranging financing for wheat procurement on behalf of Government of the Punjab. He said that this year out of total financing requirement of Rs205 billion, a sum of Rs132.8b will be arranged by five leading banks whereas Rs71.3 billion will be arranged through BOP-lead consortium including Askari Commercial Bank, Bank Alfalah, First Women Bank, Habib Metropolitan bank, KASB Bank, Faysal Bank, Meezan Bank, Bank Albaraka, Dubai Islamic Bank, Soneri Bank, Bank Islami, Bank Al Habib, Habib Metro, Dawood Islamic Bank and My Bank, which is Rs20 billion higher than the last year.
He pledged that BOP through its country wide network of 273 branches and fully trained staff is determined to provide full support to Food Department, Government of the Punjab to make the campaign for procurement of wheat crop in the province a success.

Remittances cross $one billion, make new record

KARACHI: Overseas Pakistani workers remitted a historic amount of $1,052.88 million in March, 2011 as against $763.72 million in the same month of the last fiscal year (March 2010), showing a tremendous jump of $289.16 million or almost 38%.

This is the first time in the country’s history when worker’s remittances have crossed the $1 billion figure in a single month.

The previous highest amount remitted in a single month by Pakistani workers was recorded in August 2010, when they sent home an amount of $ 933.06 million.

The remittances received from all countries of the world showed an impressive growth during last month.

In March 2011, remittances from Saudi Arabia, UAE, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $259.00 million, $232.19 million, $192.79 million, $128.10 million, $108.62 million and $35.49 million respectively as compared to $193.91 million, $178.86 million, $144.50 million, $105.89 million, $64.71 million and $18.15 million in March 2010.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during March 2011 amounted to $96.69million compared with $57.68 million in the same month last year.

Pakistani workers remitted an amount of $8,016.16 million in the first nine months (July-March) of the current fiscal year 2010-11, showing an increase of $1465.33 million or 22.37 per cent when compared with $6,550.83 million received over the same period of the last fiscal year.

The amount of $8,016.16 million remitted in country in July-March 2011 includes $0.03 million received through encashment and profit earned on Foreign Exchange Bearer Certificates (FEBCs) and Foreign Currency Bearer Certificates (FCBCs).

The inflow of remittances in the July-March, 2011 period from UAE, Saudi Arabia, USA, GCC countries (including Bahrain, Kuwait, Qatar and Oman), UK and EU countries amounted to $1,859.28 million, $1,822.00 million, $1,491.05 million, $948.12 million, $879.53 million and $255.73 million respectively as compared to $1,497.19 million, $1,342.77 million, $1,317.71 million, $932.83 million, $660.97 million and $189.57 million respectively in the July-March, 2010 period.

Remittances received from Norway, Switzerland, Australia, Canada, Japan and other countries during the first nine months of the current fiscal year amounted to $760.42 million as against $608.78 million in the same period last year.

The monthly average remittances for the July-March 2011 period comes out to $890.68 million as compared to $727.87 million during the same corresponding period of the last fiscal year, registering an increase of 22.37 per cent .

It may be added here that the target of worker’s remittances in the Annual Plan for FY11 was around $9 billion, the remittances sent home by overseas Pakistanis during the first nine months of the current fiscal year have crossed the $8 billion mark.

It may also be pointed out that the State Bank, Ministry of Finance and Ministry of Overseas Pakistanis had undertaken a joint initiative called ‘Pakistan Remittance Initiative (PRI)’ with a view to facilitating the flow of remittances through formal channels.

This initiative has started to materialize and remittances through formal channels are showing considerable growth

Govt accepts advice to tax farm income

ISLAMABAD: The government concurred with leading economic advisers in the country on Thursday to tax supply chain of the agriculture sector and to ask the provinces to immediately send notices to landholders of more than 50 acres to file tax returns for additional revenue mobilisation.

This was the outcome of the first meeting of the Economic Advisory Council (EAC), headed by Dr Hafeez Pasha and comprising former finance minister Shaukat Tarin, former industries minister Jehangir Khan Tarin, former State Bank governor Salim Raza, Dr Ijaz Nabi, Nasim Beg, Farooq Rahmatullah, Ali Habib, Shahnaz Wazir Ali and others.

Finance Minister Dr Abdul Hafeez Shaikh presided over the meeting. It was also attended by State Bank Governor Shahid Kardar and Deputy Chairman of the Planning Commission, Dr Nadeemul Haq.

According to a statement issued by the finance ministry, the council discussed the idea of taxing all incomes irrespective of the source of origin, including agriculture and services sectors.

A participant told  that almost all members were of the view that agriculture was a provincial subject and, therefore, all provincial finance ministers should be invited to the next EAC meeting. But before that, they suggested, notices should be issued to big landholders to file tax returns to show the government’s resolve for introducing an equitable tax system.

The meeting decided to hold consultations at the provincial level to also engage the chief ministers in the proposed plan because the provinces had a major role in public finances after the 18th Amendment and the 7th National Finance Commission.

At the same time, the participants were of the opinion that agricultural value chain like wholesalers and middlemen was very much in the federal domain and it should be taxed by the centre.

The meeting also noted that already there were provincial taxes on agricultural incomes and the government would have to tax this sector if it wanted to ward off other pressure groups which had created an impression that urban populations were being penalized through the reformed general sales tax without bringing rural incomes into the tax net.

The meeting was informed that all provincial governments had introduced the land revenue act in 2000 to tax agricultural income through verification of growers’ incomes, but had done nothing to collect such taxes.

Under the act, an income of Rs80,000 per crop has been exempted from the tax, while five per cent tax is applicable on an income of Rs100,000, 10 per cent on income up to Rs200,000 and 15 per cent on all agricultural incomes exceeding Rs200,000.

The EAC members warned the government that they would stay away from future consultations if their recommendations were not made part of the next budget because they were contributing their time and expertise in the larger economic interests of the country.

“We have come together to try to sort out economic difficulties and will defend the budget if our consensus recommendations are adopted,” one participant told the finance minister.

Dr Hafeez agreed to oblige.

There was a broad consensus among participants that the next budget should be “growth-oriented” and aim at increasing revenues, and not only concern itself about meeting the requirements of the International Monetary Fund.

A council member said the EAC had expressed concern over an ambitious revenue target of Rs1,604 billion recently set by the government. The council was of the opinion that the tax machinery would at best be able to collect Rs1,530 billion.

It advised the government to avoid imposing new taxes before June if there was a shortfall in revenue and instead focus on audit recoveries and other administrative measures.

The PC deputy chairman said the country needed to achieve a growth rate of at least eight per cent of GDP to provide jobs to the increasing number of young people joining the market.

US pledges $500m for Bhasha dam

ISLAMABAD: The United States has agreed to provide more than $500 million for the construction of Diamer-Bhasha dam to encourage multilateral institutions like the World Bank to become part of the lenders’ consortium taking up the multi-billion-dollar project.

A senior Wapda official said the discussions between the US and Pakistani authorities had already begun to finalise the size of the financing and the mode of US participation in project development.He said the US assistance for the project would be a combination of investment and grant financing it had committed to under the Kerry-Lugar-Berman Act.The Diamer-Bhasha dam has already been delayed by more than five years and its cost has more than doubled.The project was taken in hand as part of the five mega dams proposed by former president Pervez Musharraf and it was to be completed in 2016. The dam’s cost was put at $6.4 billion (Rs400 billion) at the time.The cost has now been revised to $11.2 billion (Rs953 billion) and its completion date extended to 2021, which may be extended further as economic indicators change during the course of project implementation.An official of the USAID confirmed to Dawn that the US authorities were currently studying the Diamer-Bhasha dam documents provided by Wapda chairman Shakil Durrani and an exchange of additional information was taking place with the economic affairs division.“We have been told that the US would support the Bhasha dam project in a big way,” the USAID official said.The official did not agree with the contention that Wapda had sought about $1 billion for the project, saying Wapda chairman had been reasonable in expecting US funding which could be anywhere between $400 million and $750 million. Normally, a US contractor has to become part of any project in Pakistan to provide funding, he said.

But more than the size of the funding, the US participation and support for the project would be crucial because it would send a positive signal to other multilaterals, most importantly the World Bank, to open a financing line to a project critical for Pakistan’s energy and water needs.The World Bank had earlier declined to fund the project because of its location and some unresolved constitutional interpretations.“When the US is funding a development project, the World Bank can hardly stay away,” an official said, adding the US energy department and other relevant quarters had given a go-ahead.Pakistan has been seeking US support and investment for the $11.2 billion dam in order to encourage international lenders to finance the mega project.

A part of the financing could be channelled through energy development fund (EDF) that the US has been trying to create with the cooperation of bilateral and multilateral lenders as part of the Friends of Democratic Pakistan initiative.The Diamer-Bhasha dam will have a designed live water storage capacity of about 5.8 million acre feet (MAF) and power generation capacity of 4,500MW. The government wants an investment of about $3.7 billion in foreign exchange for the project.With Pakistan reaching the threshold of water-scarce countries, the government has already finalised a Rs40 billion out-of-court agreement with 30,000 families to be affected by the proposed dam.Pakistan’s per capita water availability, which was more than 5,000 cusecs in 1950, has come down to 1,000 cusecs per day because the nation has not been able to build a dam in almost four decades, according to a senior Wapda official.In January this year, the Economic Coordination Committee of the cabinet allowed Wapda to raise Rs20 billion through term-finance certificates (TFCs) and Islamic Sukuk bonds for the dam to establish housing colonies and access roads to the project site and related infrastructure.The Asian Development Bank had already agreed to provide long-term loan to help the government meet the foreign exchange component of the project but exact size of the funding is yet to be finalised.The project seems to be viable and could offer up to 18 per cent return on investment, which means that all the investors and lenders could recover their investments within five years after completion.

LPG price hiked by Rs. 5 per kg

ISLAMABAD: The price of Liquefied Petroleum Gas (LPG) has been raised by Rs5 per kg,  reported on Thursday.President LPG Distribution Association Irfan Khokhar told the channel that with new hike, the price of LPG domestic cylinder has been increased by Rs59 while that of commercial cylinder by Rs227.He defended the latest price hike in the LPG, saying that it was result of hike in its price in international market.With the current raise, LPG price in Karachi and Lahore has come to Rs100 from Rs95 per kg, Rs115 from Rs110 per kg in Peshawar, Islamabad, Rawalpindi, Rahimyar Khan, Bahawalpur, Kohat and Marri and in Muzaffarabad to Rs120 from Rs115 per kg.

Hafeez briefs President on POL prices

ISLAMABAD: Federal Minister for Finance, Dr. Abdul Hafeez Shaikh Thursday called on President Asif Ali Zardari and briefed the latter on rising international price of crude oil and revision of local prices of the petroleum products accordingly,  reported .According to sources, Dr. Shaikh discussed the summary sent to the President in connection with increasing the prices of POL products.The summary states that the international crude oil prices had surged to 111 dollars per barrel and if local prices were increased the government would have to bear the burden of Rs9 billion in petroleum subsidy.The sources added that 10 to 12 per cent rise in POL prices has been proposed in the summary and now it is up to the petroleum ministry to make a decision in this regard.

ISLAMABAD: National Electric Power Regulatory Authority (NEPRA) has issued approval to cut tariff of Power Distribution Companies (PDC) by 9 paisa per unit on Wednesday, a private tv  reported.The reduction has been approved against fuel adjustment surcharge for the month of February only. As per media reports the reduction has been allowed to power distribution companies. The decision was taken during hearing held here under NEPRA chairman Khalid Saeed. WCB took the plea during the hearing 42 percent electricity was generated through thermosize during February which was recorded low by 6 percent as compared to the corresponding period of last year. The reduction in tariff will be applicable to all consumers except lifeline consumers.

Petrol and diesel prices may go up again

ADISLAMAB: Petrol and diesel prices are estimated to increase by Rs7 and 10 per litre respectively if the government decides to pass on the full impact of international oil prices to consumers on March 31.

Sources close to the chairman of Oil and Gas Regulatory Authority (Ogra) told on Monday that a report on the international oil price situation had been submitted to the ministry of finance but had not been deliberated upon because Finance Minister Dr Abdul Hafeez Shaikh and Secretary Finance Dr Waqar Masood Khan were not in town.The report said the prices of petrol and diesel have increased by 10 per cent and 12.2 per cent respectively in the first 25 days of the current month as the benchmark crude prices hovered around $111.2 per barrel in the Gulf market.The sources said the government would have to absorb an additional burden of Rs8 billion in case the prices were maintained at the present level but it was left with limited options to do so because of difficult financial position, although political pressure playing a role could not be ruled out.The sources said the government was required under the finance bill 2010-11 to collect Rs10 and Rs8 per litre as petroleum levy on petrol and diesel respectively but it was charging only Rs3.16 and 44 paisa per litre respectively, following an agreement with the Muttahida Qaumi Movement.

Over the last five months, international oil prices have increased by up to 26 per cent but only 5 per cent impact was passed on to consumers.The government is reported to have suffered a revenue loss of Rs25 billion during four months — December to March.Prime Minister Yousuf Raza Gilani who is holding the petroleum minister’s portfolio after the restructured federal cabinet, said these officials would take a decision about the price increase on Thursday, most probably after consulting the coalition partners and other political parties.The sources said the government foresaw further rises in the international market because of expectations of fresh oil purchases by Japan and continued unrest in Libya and Bahrain.

Last month, the government initially increased petroleum prices by 9.9 per cent but had to reduce it to 5 per cent in line with the agreement with MQM.

Corporate sector to pay 40.25pc tax

LAHORE : The corporate sector will have to pay 36.5 per cent tax on average during the remaining period of the fiscal year 2010-11, while the annual payment ratio will be 40.25 per cent, as the FBR has issued complete procedure for the payment of the recently announced flood surcharge of 15 percent following the promulgation of the Presidential Ordinance, it was learnt.As per sources, the Federal Bureau of Revenue (FBR) has finally released the detailed procedure for the imposition of the flood surcharge in Pakistan. According to which the additional tax will be charged on the existing 35 percent tax liability, cumulating in an effective tax rate of 40.25 percent on an annualized basis, they added. They said that the new measure will be effective for the period March 15-June 30, 2011 (3.5 months), resulting in corporates paying an average 36.5 percent tax rate for FY11. Economists expect the new tax to curb FY11E earnings growth by 1.5 percent to 19.5 percent (from 21 percent earlier). On individual companies, this would erode profits on an average by 2 percent in FY11. Further, if the flood surcharge is carried forward to FY12, there will be a major hit on the corporate profitability growth as earnings growth is likely to reduce to 8 percent from base case of 12 percent.Experts are of the view that after the imposition of the additional surcharge on the existing tax Pakistan now would rank amongst the higher corporate tax regimes of the world. They said that Japan tops the list with 39.5 percent tax rate followed by the US (39.2 percent) and France (34.4 percent). Amongst the prominent lowest corporate tax charging countries, Singapore (17 percent), Saudi Arabia (20 percent) and Iran (25 percent) head the list, they added.