PIA inducts two B737-800

Two more narrow-body aircraft will enter the fleet in a month.

KARACHI: 

Pakistan International Airlines (PIA) has inducted two Boeing 737-800 aircraft on wet lease into its fleet, giving its capacity on shorter routes within the country and to the Middle East region a much-need boost, the carrier said on Thursday.  

Two more of these narrow-body aircraft will join PIA’s ageing fleet by end of the month. The aircraft have been inducted on a lease of three months, buying the airline enough time before it leases a further 10 aircraft on a longer dry lease.

“Someone should have thought about inducting narrow body aircraft 2-3 years back,” said Junaid Yunus, PIA’s Managing Director (MD). “Fifty percent of our existing fleet is not fuel efficient. The result is that we are operating 777s on shorter routes.”

PIA’s management has struggled for months to convince the government, which owns a majority stake in the national carrier, to let it lease planes. Out of a fleet of 30 aircraft, the airline is only using 24 due to lack of funds for the repairs.

The cost difference between new-generation B-737s and PIA’s existing planes is large. “An A-310 consumes 5,300 kilogrammes (kg) of fuel during a flight between Karachi and Islamabad. A B 737-800 consumes just 2,400kg. Even if lease payment is factored in, there are still savings of 30% to 35%.”

The planes have been leased from Corendon Airlines, of Turkey. The two other planes on damp Lease will come from Travel Services, of the Czech Republic.

A PIA statement quoted Chairman PIA, Muhammad Ali Gardezi, these fuel-efficient aircraft will be deployed on Gulf routes and major domestic routes, he said.

The Boeing 737-800 has a capacity of 189 seats and will be operated with an all-economy configuration. With the increased fleet size, the airline will offer flights to new destinations while increasing frequencies of flights on its profitable routes.

The Civil Aviation Authority (CAA) allows airlines to induct aircraft on wet or damp leases. In a wet lease, the aircraft’s cockpit and cabin crew is arranged by the lessor who also pays for the insurance and maintenance of the plane.

Share offer: Engro conducts first phase of IPO successfully

The shareholding structure is expected to be Engro Corporation (91.9%), book-building participants (4.3%), general public (1.4%) and divestment to local and international investors and HNWI (2.3%). PHOTO: FILE

KARACHI: 

The first phase of the initial public offering (IPO) of Engro Fertilizers concluded on Thursday, with as many as 410 bidders taking part in the book-building portion of what may arguably be the most anticipated public listing in the country’s recent history.

Engro Fertilizers is issuing 75 million ordinary shares at a floor price of Rs20 per share, which includes a premium of Rs10.

The money raised through the IPO will be utilised to fund development capital expenditures for securing additional gas supplies along of the balance sheet restructuring to optimise the company’s capital structure.

Only institutional investors and high net worth individuals (HNWI) were allowed to take part in the three-day book-building portion of the IPO, which involves 75% of the total issue size, or 56.25 million ordinary shares.

Speaking to The Express Tribune, AKD Securities Vice President for Investment Banking, Syed Khurram Shahid, said the offer’s book runners have determined the cut-off/strike price of Rs28.25 per share through the Dutch Auction Method, an auction structure in which the price of the offering is set after taking all bids and determining the highest price at which the total offering can be sold.

AKD Securities, along with Next Capital, is the joint book-runner for the issue. Habib Bank and Allied Bank are serving as financial advisers, lead managers and arrangers for the IPO.

“We expect the public subscription to be held by the middle of next month,” Shahid said, referring to the general public portion, which will consist of the remaining 25% of the total offer size. This means roughly 28.25 million ordinary shares will be issued to the general public at the rate of Rs28.25 per share, a price that has been determined through the book-building exercise.

The issue of 75 million ordinary shares constitutes 5.8% of the total post-IPO paid-up capital of the company. The book-building portion of the IPO has been oversubscribed by 3.9 times, according to Shahid. “The response from institutional investors and HNWIs has been overwhelming, even though the issue size was huge,” he said, adding that he expects the general public portion to be oversubscribed by many times as well.

With the establishment of a 1.3 million tons, state-of-the-art fertiliser complex in 2011, the company’s annual urea production capacity stands at 2.3 million tons, which is equal to one-third of the country’s total urea production capacity.

Engro Fertilizers has consistently faced gas supply shortages in recent years, which resulted in a net loss of Rs2.9 billion at the end of 2012. However, the company regained stability in the first half of 2013, as it posted a profit after tax of Rs1.4 billion at the end of the six-month period.

Apart from issuing 75 million new shares its parent company, Engro Corporation, will also divest up to 30 million shares− or 2.3% of post-IPO paid-up capital− out of its current holding at the strike price of Rs28.25.

Therefore, subsequent to the IPO and the divestment, Engro Fertilizers’ shareholding structure is expected to be Engro Corporation (91.9%), book-building participants (4.3%), general public (1.4%) and divestment to local and international investors and HNWI (2.3%

Delay in price revision impedes investment, say pharma firms

The drug manufacturers are seeking an increase of at least 18% in prices of all registered drugs whereas the government is said to have agreed to a 15% increase. PHOTO: FILE

KARACHI: Pharmaceutical manufacturers – both national and multinational – have pressed the government to allow an increase in drug prices according to the rise in cost of production, fearing that in case of delay, shortage of medicines will aggravate in coming weeks.

The ongoing dispute between the pharmaceutical industry and the government over drug prices has badly affected consumers, who are facing acute shortage of some medicines. The situation is worrisome, particularly relating to life-saving drugs, as it has provided a room to substandard drug producers to cash in on the shortage in the market.

“We are investors and no investor invests in a business where there is no clear policy,” Novartis Pharma Chief Executive Shahab Rizvi told the media here on Thursday while commenting on the pricing issue. “We want the government to come up with clear policies, especially on the pricing mechanism, so that investors in the pharmaceutical sector can plan for future investments.”

Rizvi said the government needed to listen to the reservations of the pharmaceutical industry to address the shortage of drugs, otherwise the situation could get worse.

Pharmaceutical manufacturers argue that persistent differences between the drug makers and the government are not only creating medicine shortage, but are also discouraging future investment in the industry. According to rough estimates, the size of Pakistan’s pharmaceutical industry is around Rs220 billion.

On the other hand, the government insists that it has to consider both the interests of consumers and concerns of investors.

The drug manufacturers are seeking an increase of at least 18% in prices of all registered drugs whereas the government is said to have agreed to a 15% increase.

The government does not want to annoy consumers by taking an unpopular decision.

Managing Director of local drug producer Indus Pharma Zahid Saeed said the government had been dragging the pricing issue for a long time that had provided a chance to the counterfeit drug producers because of a phenomenal rise in the demand for major drugs.

To give weight to his argument, Saeed said, continuous shrinking of profit margins of the pharmaceutical industry was leading to the closure of national and multinational companies in the country.

The industry argues that Pakistani companies cannot export their products to industrialised countries because of absence of international certifications and for that, they need major investments, which are difficult to make in present conditions.

“The government has its focus on determining the prices of medicines while it is failing to control the quality of medicines, which is a major problem at large,” Ayesha T Haq, Executive Director of Pharma Bureau, a representative association of pharmaceutical manufacturers operating in Pakistan.

Published

Etisalat ‘top bidder’ for Transworld Associates

PTCL, which has 60% market share, connects Islamabad with the cyber world through South East Asia-Middle East-Western Europe-3 (SMW-3), SMW-4 and India-Middle East-Western Europe (I-ME-WE). PHOTO: FILE

KARACHI: 

Etisalat, the UAE-based parent company of Pakistan Telecommunication Company Ltd. (PTCL), is in final talks with the management at Transworld Associates (TWA) to acquire 100% stakes in the latter, it has been learnt by The Express Tribune.

Sources, on condition of anonymity, confirmed that Etisalat is in the final round of negotiations with TWA but did not disclose the transaction value, while also refraining from giving a timeline for the possible takeover.

Meanwhile, discussions on the matter have been going on for a while in the UK, an official said, adding that the management was likely to change after the takeover.

While the official was unable to confirm the status of merger talks with Etisalat, it was added that Russia’s VimpelCom and Abu Dhabi Group also submitted their bids for the acquisition.

The TWA is a joint venture of Egypt’s Orascom Telecom Holding (52%), Pakistan’s Saif Group (32%) and Omzest Group of Oman (16%). PTCL and TWA are the only two operators that bring international bandwidth and internet connectivity to Pakistan through four submarine cables.

PTCL, which has 60% market share, connects Islamabad with the cyber world through South East Asia-Middle East-Western Europe-3 (SMW-3), SMW-4 and India-Middle East-Western Europe (I-ME-WE). TWA, with its 40% market share, provides internet bandwidth to the country’s internet service providers (ISPs) through Transworld-1 (TW-1).

TWA exclusively sells bandwidth to corporate clients, ISPs, while PTCL is mainly on the consumer side, according to sources. Although the two already serve different market segments, observers say, TWA’s acquisition by Etisalat will create a monopoly at a larger level.

Meanwhile, the acquisition by Etisalat, if it goes ahead, will also have an adverse effect on the existing broadband operators as well as on the upcoming 3G operators, said a telecom official. Creation of a monopoly of PTCL over international bandwidth would defy the Competition Act, 2010 and the Telecommunication De-regulation Policy approved by the Federal Cabinet in 2003, he said.

Although the deal has not been finalised and officials, The Express Tribune spoke to, could not confirm the successful bidder but Etisalat, being a dominant player in the region, is said to be the favourite.

Even if TWA is acquired by Etisalat, both PTCL and TWA will work as separate independent entities with separate board of directors, added an official.

Electro Flow – a new product to ease power shortages

US company plans to market the product that will save energy up to 34%. PHOTO: FILE.

LAHORE: 

Energy shortages in Pakistan trouble practically every consumer, whether it is domestic, commercial or industrial user, who faces power outages coupled with drop in voltage, tripping, etc due to dilapidated transmission and distribution infrastructure.

Though these hitches are threatening the national economy, at the same time they are providing opportunities for the companies interested in coming up with solutions.

Electenergy Technologies Inc (ETI), headquartered in Columbia, US, with distribution networks in 112 countries, is now targeting to enter Pakistan’s market, believing this is the right time to provide the commercial and industrial sectors with equipment which can not only optimise power utilisation, but also guarantee energy savings of up to 34%.

“Pakistan needs solutions which can minimise the energy cost and provide optimised power quality, even at unequalled level of efficiency,” said Dr Mike Mehrdad, chief designer and analyst at ETI, in an interview with The Express Tribune. “For all such problems, our product Electro Flow provides excellent solutions.”

Electro Flow is a state-of-the-art energy saving and power conditioning system which ensures power quality and energy savings for industrial and commercial facilities regardless of size, voltage or frequency. This product is installed and used by multinationals across the world to monitor electrical parametres like voltage, current, harmonics, power factors, tripping, etc.

Industries and commercial centres in Pakistan face such issues quite often when voltage suddenly drops, resulting in temporarily halt to power supply. This problem many a time proves costly to factory owners as their machinery gets out of order due to technical fault. The situation gets even worse for some industries like steel and they have to wait for hours before the restart of production.

According to Mehrdad, Electro Flow protects, monitors and activates each stage independently and addresses multiple problems and functions simultaneously. This eliminates the need for purchase of different devices to address each anomaly, which may adversely interact with each other or the load.

To date, the company has installed over 15 million devices in 112 countries. In Pakistan, the company terms the response to Electro Flow “awesome”. Mehrdad said businessmen and industrialists were showing keen interest and hoped that the company would soon start assembling the product in Pakistan.

Since ETI is a private limited company, Mehrdad avoids sharing financials and the amount of investment it is going to make in Pakistan. “Investment is not an issue, we need an excellent response, which we are getting before investment,” he said.

To introduce Electro Flow in Pakistan, ETI is partnering with Industrial Solutions, a local engineering firm operating for the last 25 years. In the beginning, ETI will export complete units on order and, later, when the demand increases, the company will set up an assembly plant in Pakistan.

The product accommodates power load from 200 kilowatts to 5,000 kilowatts (five megawatts), costing in the range of $2,000 to $30,000 depending on power load of a unit.

The company has also made the product for domestic consumers, but it is currently going through the testing phase.

Fuel mix: KESC initiates $300m coal-conversion project

One unit of power generated using coal costs Rs10, compared to furnace oil costs of Rs18 to Rs20. PHOTO: FILE

KARACHI: 

Foreign investors will put in $300 million over the coming months to convert some of Karachi Electric Supply Company’s (KESC) oil-fired power plants into relatively cheaper coal-fired ones, KESC Chairman Tabish Gauhar told The Express Tribune.

Work on the conversion project, which involves building coal-run boilers and auxiliary equipment, begins as soon as the government offers an electricity tariff, he said.

“We stand ready to start work. Everything is in place. We are only waiting for the National Electric Power Regulatory Authority (Nepra) to give us a tariff now,” he said. “Environmental studies are done and contracts have been signed with two Indonesian companies for coal supplies.”

KESC also inked an engineering, procurement and construction (EPC) contract with China’s Harbin Electric International earlier this month.

Dubai-based Abraaj Capital, the sponsors of KESC, has wooed investment from South Africa, China and other countries that will come to the project through a special purpose vehicle by the name of ‘K-Energy’.

Gauhar said KESC will lease two of its units from its massive Bin Qasim power plant to K-Energy for 20 years. “This means around 400 megawatts (MW) of power generation will be switched to coal.” The project involves units 3 and 4 of Bin Qasim Power Station-1.

KESC has been pursuing Nepra to offer a separate tariff that offers a reasonable return to investors.

The project will help improve KESC’s financial position as it will receive fixed payments under the lease while relieving it from worries of keeping up efficiency levels at the old plants.

Soon after coming to power, the current government was faced with resolving the energy crisis, which had crippled economic growth and daily life.

A vicious cycle of debt bogged down the entire energy supply chain as power distributors delayed payments to generators who in turn faced difficulty in clearing dues to fuel suppliers like Pakistan State Oil (PSO), Sui Southern Gas Company (SSGC) and refineries.

The government cleared Rs500 billion of the circular debt along with an understanding that some of the independent power producers (IPPs) will switch to coal in a bid to cut costs.

But unlike IPPs, which operate under air-tight agreements offering internal rate of returns of up to 17%, KESC’s power plants have efficiency-based tariff.  “We don’t get the returns on this  cost-plus formula,” said Gauhar.

Hub Power Company, an IPP with over 1,400MW of capacity, is also in the forefront of switching oil-run plants to coal. But its CEO, Khalid Mansoor, recently complained that the government has yet to come out with a tariff policy for the purpose.

A move to coal is particularly important for KESC, which has faced gas supply disruptions as the government diverts depleting reserves to households and factories.

“Our primary benefit from this conversion would be the reduction in power tariff,” said Gauhar, explaining that if one unit of power generated using coal costs Rs10, compared to Rs18 to Rs20 it costs on furnace oil.

Coal imports

KESC is the only company in the advance stage of undertaking coal conversion, said Aasim Siddiqui of Marine Group of Companies, which is building a dirty terminal at Port Qasim with an annual capacity to handle 15 million tons of coal, cement and clinker.

“We have signed an agreement with KESC to handle 5 million tons of coal for them,” he said.

Goliyon Ki Raasleela - Ram Leela" banned in Uttar Pradesh

Sanjay Leela Bhansali's latest flick "Goliyon Ki Raasleela - Ram Leela" was banned in Uttar Pradesh by the Lucknow bench of the Allahabad High Court on Thursday.
A bench of Justice Ashok Pal Singh and Justice Devi Prasad Singh passed the ban order while hearing a petition filed by Maryada Purshottam Bhagwan Ramleela Samiti from Bahraich.
In their petition, the Samiti claimed that the film, starring Ranveer Singh and Deepika Padukone and released on November 15, had controversial and objectionable dialogues and had sought the cancellation of the Censor Board certificate to the film.
The petitioners also pleaded that since the film also hurt the sentiments of the Hindus by its name and other things portrayed in the film, it should be banned from exhibition.
The union and state governments as well as the state chief secretary, the Central Board of Film Certification (CBFC), Eros International and Bhansali had been made parties in the petition