Payments pending: KESC accuses government of reneging on promises

After taking over, the Abraaj Group has added 1,006 megawatts to the system with an investment of $1 billion. PHOTO: FILE

KARACHI: 

The federal government is not honouring its sovereign commitments given to the Abraaj Group, the Dubai-based firm that manages Karachi Electricity Supply Company, which may hamper future privatisation plans, say senior officials of the company.

The government was reluctant to clear outstanding dues of the Karachi Water and Sewerage Board (KWSB) owed to KESC under the Amendment Agreement of 2009, said the company’s top managers during an interaction with journalists here on Thursday.

In addition to that, the government was not ensuring supplies of gas and delaying the clearance of Tariff Differential Claims (TDCs), they added.

Company’s Chief Executive Officer Syed Nayyer Hussain and his entire team discussed the achievements that they made, the future investment plans and the challenges being faced.

The government owed Rs63.6 billion to KESC including Rs37.8 billion worth of TDCs and Rs25.8 billion of KWSB, which is 43.6% of the total receivables held by KESC.

“To ensure that the privatisation plans are successfully implemented, the federal government should honour its commitments,” said Syed Muhammad Taha, Chief Distribution Officer of KESC.

Syed Moonis Abdullah Alvi, the Chief Financial Officer, said under the Amendment Agreement, if the KWSB does not service its liabilities within three months, these will be the obligation of the federal government.

But the spokesman for the Ministry of Finance, Rana Assad Amin, said the TDC dues were a dispute between the KESC and the National Tariff and Dispatch Company (NTDC). On the issue of KWSB, he said KESC should approach the federal adjustor for the recovery of the dues.

“KESC is the only privatised entity and any future buyer of a public sector power enterprise will surely come to us for consultation before striking a deal,” said Alvi.

The government has announced an ambitious privatisation plan under which it promises to either privatise or offload shares in 32 public entities, including power distribution companies of Islamabad, Faisalabad and Hyderabad.

“In August, I raised the issue of KWSB payments with Ishaq Dar and he responded by telling me to bring an order from the Supreme Court and the federal government will cut the outstanding amount from the National Finance Commission (Sindh’s share) and give it to KESC,” said Alvi.

The company has already served a legal notice on the government three months back. The government had also promised to give 276 million cubic feet of gas per day (mmcfd) to KESC, but was providing far less than the committed volumes, which was affecting power generation, he added.

“We have to sit across the table and sort out things which are hampering the implementation of the agreement,” said CEO Syed Nayyer Hussain.

He said KWSB’s monthly billing was in the range of Rs625 million to Rs650 million. KESC was clearing the monthly bills of Sui Southern Gas Company in addition to paying arrears but KWSB was not paying to KESC, he added.

To a question, Zahidi said under the agreement the NTDC was bound to provide 650 megawatts of electricity until 2015. He said KESC was self-sufficient in power supply but was resorting to load-shedding as a strategic policy to reduce line losses and improve recoveries.

The KESC’s new management can claim some big achievements. After taking over, the Abraaj Group has added 1,006MW to the system with an investment of $1 billion, said Zahidi. The new management improved efficiency from 30% to 40%.

KESC has introduced drastic changes to improve financial and administrative affairs of the company and resultantly line losses have been reduced and recovery has improved a lot, said the CEO.

He said the company was ready to share its success model with other power distribution companies.

Foreign currency: With heavy debt repayment, reserves fall to $3.1b

Pakistan’s foreign exchange reserves have been under pressure because of continuously dwindling reserves held by the SBP. PHOTO: FILE

KARACHI: 

Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased to $3.1 billion on December 20 as opposed to $3.4 billion a week earlier, showed data released by the SBP on Thursday.

The decline of 7.9% in the foreign exchange reserves came as a result of payments amounting to $185 million, according to a spokesman for the central bank.

Out of the payments of $185 million, external debt servicing was $162 million including $58 million repayment to the International Monetary Fund (IMF), and other official payments amounting to $23 million.

There was no major inflow from multilateral and bilateral sources during the week, which caused the drop of $275 million in the period under review.

However, the second tranche of the Extended Fund Facility of $554 million, which was cleared after the successful completion of the first review by the IMF, was received on December 23, and hence will be reported in the next week’s reserve position.

Total liquid foreign reserves in Pakistan amounted to $8 billion on December 20, which was 5.1% less than the preceding week’s figure. Similarly, net foreign reserves held by banks other than the SBP stood at $4.8 billion, which was 3.1% less than the corresponding figure on December 13.

Pakistan’s foreign exchange reserves have been under pressure because of continuously dwindling reserves held by the SBP. They amounted to a little over $6 billion at the end of June, which reflects a decline of almost 47% in roughly six months.

The rupee has appreciated against the dollar in only two of the last 30 years (2002 and 2003) while average annual depreciation of the rupee over the same period has stood at 6.5%. However, the rupee has undergone a sharp 6% depreciation since July this year when it traded around Rs99.

Most analysts believe the recently received IMF tranche of $554 million will stabilise the foreign reserves position, but only in the short term.

Most brokerage houses expect the rupee-dollar parity to hover in the range of Rs108-112 mainly because of few major inflows in the second half of fiscal year 2013-14, despite recent statements by the finance minister claiming a reversal of trends which will see the rupee appreciate in value

Offshore handling: Pakistan’s only single point mooring completes first year

The company has laid a 15km pipeline at the seabed from the SPM to pump crude oil to its refinery. PHOTO: FILE

KARACHI: 

In a major positive development, Pakistan has successfully joined the club of countries with single point mooring (SPM) facilities in the deep sea to transport crude oil through a pipeline to the refineries set up along the coast.

Byco has completed the first year of successful SPM operations, which can save millions of dollars in demurrages due to quick disposal of imported crude oil.

During a visit on Wednesday to the SPM facility set up by Byco refinery, representatives of the company told journalists that the company had laid a 15km pipeline at the seabed from the SPM to pump crude oil to its refinery.

“We celebrate the completion of the first year of successful SPM operations. The first vessel, MT Arietis, was moored to the SPM on December 26, 2012 with a cargo of 67,146 tons,” Imran Farooki, CEO of Byco Terminals Pakistan Limited (BTPL) told the journalists.

“The SPM’s single largest cargo to date came on vessel MT Quetta with a quantity of 79,000 tons. Thanks to the entire Byco Terminals Pakistan team for their untiring efforts in making this project a success,” he said.

Farooki said the SPM was expected to start commercial operations in January as a Turkish-based firm had given certification to tackle the issues arising out of an oil spill. The certificate has been submitted to the Oil and Gas Regulatory Authority (Ogra).

The media people were taken to the Arabian Sea where an oil vessel was anchored about 65 km offshore, with 65,000 tons of crude oil, near the floating buoy.

The oil was being transported from the oil vessel to Byco’s oil refining complex established at the shores in Hub, Balochistan through a 28-inch pipeline, 26 metres under the sea.

Crude oil procurement head Syed Rizwan Ali Gillani gave a comprehensive briefing about this unique technology for import and export of petroleum products without getting huge oil vessels anchored at the port.

He said the SPM was not a new technology as many other countries were using it. However, this is the first such facility in Pakistan.

In reply to a question, he said the location of the SPM would curtail the distance from Middle Eastern ports by 100 nautical miles per trip, leading to further savings in freight cost.

This has been introduced for the first time in Pakistan not by a public sector refinery, but purely by private sector’s refinery Byco without involvement of guarantees.

The pumping capacity of the SPM is more than 2,000 tons per hour. “SPM is an all-weather facility, which is the cheapest entry point for liquid cargo into Pakistan,” he said, adding the SPM is equipped with night navigation facility.

Byco refinery is currently refining 35,000 tons of crude oil a day. When its new refinery starts commercial operation, its refining capacity will increase to 155,000 tons per day, more than the capacity of Parco, which stands at 90,000 tons per day

Performance report: Mari Petroleum and PSO outperform KSE-100 index

Beating others: 129% is the return given by Mari Petroleum. PHOTO: FILE

KARACHI: 

Mari Petroleum and Pakistan State Oil (PSO) have so far outperformed the benchmark Karachi Stock Exchange 100-Share Index and have also led the overall oil and gas sector, which falls slightly short of the returns posted by the benchmark index, according to a report prepared by Topline Securities on Thursday.

Oil and gas is the largest listed sector on the Karachi Stock Exchange with a weight of 29%. It posted an annual return of 47% at the close of market on Thursday, falling slightly short of the 50% return given by the benchmark index in the same period, according to the report.

The sector gained on the back of above-average foreign inflows, clearance of circular debt, smooth government change and the new government’s efforts to promote investment in the energy sector.

The report stated that among 12 listed oil and gas companies, Mari Petroleum and PSO outperformed the broader index by 79% and 24%, respectively. Byco Petroleum, on the other hand, posted a negative return of 40% and remained the worst performing stock.

Within the oil and gas subsectors, energy and power performed almost in line with the benchmark index, refineries lagged behind while oil marketing companies outperformed the index.

Within the energy and power subsector, Mari Petroleum, Pakistan Oilfields (POL), Pakistan Petroleum Limited (PPL) and Oil and Gas Development Company (OGDC) provided an overall return of 49% in 2013, which is almost in line with the benchmark index’s return.

Mari outshined in this sector with 129% total return amid volumetric growth mainly from the Mari gas field.

PPL and OGDC that cumulatively comprise 20% of the KSE-100 index posted returns of 53% and 49%, respectively. PPL’s performance was fuelled by three discoveries in 2013 while OGDC gained on the back of volumetric growth mainly from Nashpa field.

Contrary to energy and power, the oil marketing sector – three listed companies – posted a return of 52% supported by 74% return from PSO. Other two players, Shell and Attock Petroleum Limited posted returns of 40% and 28% respectively.

PSO benefited the most from the resolution of circular debt issue, resulting in improved operational leverage and cash flow. The company’s share in the benchmark index increased from 2.4% to 2.9% in 2013.

The refinery sector, which comprises four listed companies, underperformed the broader index by 51% primarily on account of volatile gross refinery margins and heightened risk environment surrounding the sector.

The report pointed out that with 26% return, Attock Refinery was the biggest gainer among refineries. Being the third largest refinery in terms of market capitalisation, Byco held back the refinery sector performance as other peers offered 15% return on average.

Profit abroad: China a paradise for budding entrepreneurs

Spreading footprints: 25 is the number of countries in which Adil Husain’s group has opened offices with head office in Shanghai. PHOTO: INSTAGRAM/THE SECOND FLOOR

KARACHI: As an aspiring entrepreneur China is the dream country to start a business. Adil Husain, a Pakistani entrepreneur who started his business in China seven years ago, advises budding Pakistani entrepreneurs to enter the Chinese market instead of any other country.

“China has unlimited business opportunities mainly owing to its big population. The country is not only safe and secure for business and investment but also for living and raising your family,” said Husain while delivering a lecture at The Second Floor (T2F) Karachi.

After completing his higher education from a university in the United States, Husain chose China to start his business. “For me, China was an economy that was growing at a fast pace and it was a place where the world’s leading companies were trying to move,” he said.

Husain sold his car to finance his trip and went to China, learned Mandarin with his wife and launched business with whatever money he had in his hand. His wife got a job and he focused on his business.

“Today, the kitchen of my headquarters in Shanghai is bigger than my early offices when I started my business in China,” he said.

With the head office in Shanghai, the group today has offices in 25 countries all around the globe.

He advised young entrepreneurs in Pakistan to start their new business from China due to its fast growing economy. “Choose China to start your first business because this will continue to grow at a fast pace owing to its growing middle and upper middle class,” said Husain.

Pointing towards the importance of better relationships with neighbours, Husain said successive Chinese governments have developed good relations with its neighbours despite the difficulties it faced in the past.

Citing the example of Taiwan and Japan, he said China has always looked ahead while developing economic relations with its neighbouring countries despite political tensions and historic rivalries.

Husain is the president and founder of the Emerging Asia Group which provides primary research-based business-to-business (B2B) market intelligence in Asia. The company provides product information and consulting services that address the needs of clients which include strategy-consulting firms, business research firms, cross-border investors and Fortune 500 companies from all sectors.

New trend: Islamic banking gaining ground globally

Khan said the Islamic banking system was getting popular in European countries. ILLUSTRATION: JAMAL KHURSHID

FAISALABAD: 

University of Agriculture Faisalabad (UAF) Vice Chancellor Dr Iqrar Ahmad Khan has said Islamic banking is gaining popularity across the globe as the volume of Islamic banking has touched $1.4 trillion.

He was speaking at an international symposium on Islamic banking in emerging economies arranged by the Institute of Business Management Sciences, University of Agriculture Faisalabad in collaboration with Meezan Bank and Dubai Islamic Bank.

Khan said the Islamic banking system was getting popular in European countries, stressing “Islam is a religion of peace and provides solutions to all problems facing the globe.”

He underscored the need of polishing the entrepreneurship skills of students as part of efforts to fight unemployment.

Speaking on the occasion, Faisalabad Chamber of Commerce and Industry President Suhail Bin Rashid said Faisalabad was the “second largest economic hub” of the country and it was necessary to increase awareness of Islamic banking.

Illegal trade: Smuggled goods worth Rs15.7b seized in three years

The Customs department has reinvigorated its enforcement measures which include intelligence sharing with other agencies. PHOTO: PPI/FILE

ISLAMABAD: Customs authorities, as part of their anti-smuggling drive, have seized goods worth Rs15.736 billion in the last three fiscal years.

During fiscal year 2010-11, the authorities seized goods worth Rs5.502 billion, in 2011-12 they confiscated goods worth Rs4.905 billion and in 2012-13 goods valuing Rs5.329 billion were taken into custody.

According to officials, the main source of smuggling goods into Pakistan is the long porous border with Afghanistan. However, there is no mechanism to gauge the real quantum of smuggling. In its absence, the loss to the national economy cannot be determined with certainty.

In an effort to curb the smuggling, the customs department has reinvigorated its enforcement measures which include intelligence sharing, launching joint operations and support and facilitation from law enforcement agencies (LEAs) to the customs authorities.

Highlighting the significance of these steps, the officials said the Frontier Constabulary Balochistan and Khyber-Pakhtunkhwa had been entrusted with the task to take anti-smuggling measures within 20 km of the international border. Joint efforts are also being undertaken by the customs department and other law enforcement agencies.

Additional steps taken by the authorities include constant vigilance at major entry points or smuggling routes by the customs department with the assistance of LEAs.

Anti-smuggling powers are being given to the Pakistan Coastguards and the Pakistan Maritime Security Agency to curb illegal flow of goods in the coastal areas and high seas. Scanners have also been installed at airports for scanning of the baggage of incoming passengers.