LNG supplies: SSGC to consider paying Rs10b capacity charges

ISLAMABAD: 

The management of Sui Southern Gas Company (SSGC) may face a hard time in winning the board’s seal of approval for payment of Rs10 billion per annum capacity charges to Elengy Terminal Pakistan Limited (ETPL) for handling liquefied natural gas (LNG) imports, a burden which will eventually be borne by consumers.

The Ministry of Petroleum and Natural Resources is pressing SSGC’s management to get approval of the capacity charges and even the company’s board of directors has come under pressure to give its nod, officials say.

ETPL is constructing an LNG terminal at an estimated cost of $150 million and will receive $100 million per annum as capacity charges even if there is no LNG supply.

ETPL, a wholly owned subsidiary of Engro Corporation, had won the bid for LNG terminal services and quoted a tolling fee of 60 US cents per million British thermal units (mmbtu).

The SSGC’s board of directors is expected to meet on August 23 to consider giving approval to payment of capacity charges.

However, officials said, the management may face resistance as some board members had decided to oppose such high capacity charges. The board will consider providing around $50 million worth of standby letter of credit in favour of ETPL to cover six months of capacity charges.

According to the LNG terminal services agreement between ETPL and SSGC, the latter has to arrange around $50 million to cover capacity charges for six months. However, banks have indicated that the letter of credit will depend on signing of the heads of agreement – a non-binding document outlining main issues relevant to a partnership – between PSO and LNG suppliers before August 28.

According to officials, Pakistan State Oil (PSO) – the state-run oil marketing company –has provided a comfort letter to SSGC against capacity charges, but it is not acceptable without signing a deal with the LNG suppliers.

Talking to The Express Tribune, ETPL Chief Executive Officer Imran Sheikh said SSGC had not yet provided the standby letter of credit and clarified that the $50 million amount was not true as the gas utility would be paying less than that.

SSGC would pay in line with import of 200 million cubic feet of LNG per day (mmcfd) in the first year and 400 mmcfd next year, he said.

However, the capacity charges had sparked concern among economic decision-makers, who asked PSO to carry out due diligence before issuing the letter of comfort for gas import.

The Economic Coordination Committee (ECC), in a meeting on February 28, was upset to know that PSO would issue the letter and pay millions of dollars in capacity charges even it was unable to import LNG from Qatar.

It was of the view that this would put a big burden on taxpayers. “The federal government controls PSO, so the letter of comfort would have a bearing on taxpayer’s money. Therefore, before issuing the letter, PSO should carry out due diligence,” the ECC noted.

However, ECC members stressed that the LNG services agreement was a commercial contract between two entities – SSGC and ETPL – and their boards of directors were fully competent to grant approval in respect of the accord.

They termed the project important keeping in view a significant decline in natural gas production in the country because of fast
depleting reserves.

Misplaced priorities: $23 million Kerry-Lugar funds going to waste

ISLAMABAD: 

Alleged misplaced priorities of Pakistani policymakers are leading to the wastage of $23 million in funds provided by the US under the Kerry-Lugar-Berman Act. Differences over the allocation of resources for research to promote pro-poor economic growth are likely to deny the country any long-term sustainable benefits.

An audit report of the four-year Pakistan Strategy Support Programme, carried out by the Office of the Inspector General (OIG) of the US, and background discussions with policymakers involved in designing the programme revealed how the foreign funds are being wasted.

The audit findings, in this case at least, contradict the belief that the US was forcing its will on Pakistan when it comes to using resources allocated under the five-year $7.5 billion Kerry-Lugar-Berman civilian assistance package.

In 2011, the US Agency for International Development (USAID) awarded a $22.7 million contract to the US-based International Food Policy Research Institute (IFPRI). USAID has already committed $16.2 million and disbursed $12.4 million till the end of April.

The programme was aimed at improving agriculture production, water management and irrigation, macroeconomics, markets, trade and poverty reduction with the core goal of contributing to pro-poor economic growth and enhanced food security in the country.  The project was initiated at request of the then Planning Commission (PC) deputy chairman, Dr Nadeemul Haque, the OIG report said.

However, Dr Haque, who is currently in Abuja, Nigeria, says that he never sought funds for the agriculture sector.

“I had requested funds for supporting the Framework of Economic Growth (FEG),” Dr Haque said, adding that while IFPRI and USAID had asked him to sign the agreement for agriculture purposes, the funds were supposed to be given to support the FEG.”

“IFPRI and USAID deceived me as they did not provide funds to support the FEG,” he toldThe Express Tribune. Dr Haque said he had no role in this and the money was used according to the wish of the Americans. He added that he was against any further research in the agriculture sector.

What Dr Haque said is not supported by the project agreement, however. The former PC deputy chairman, as head of the project’s National Advisory Committee (NAC), did not approve the formulation of provincial subcommittees in the panel, the OIG report said.

Due to differences over the use of resources, funds were provided for agriculture without the involvement of the provinces, which had the ownership of the sector under the 18th constitutional amendment.

The OIG audit did find that the programme was making progress. Through two competitive rounds of applications, USAID awarded 37 research grants to Pakistani researchers – amounting to $808,091 – which helped improve their skills. The programme also financed 33 studies with $3.3 million, which will help formulate educated policies in the agriculture sector, according to the OIG report. As many as 32 workshops, conferences and seminars were held for discussions on policy research.

But insiders say the original idea was to set up a state of the art agriculture research institute. The idea was overturned by former NAC deputy chairman Haque, who supported giving grants to the youth for research.

The programme is still suffering, this time in the hands of Dr Haque’s successor, PC Deputy Chairman and Federal Minister for Planning, Development and Reforms Ahsan Iqbal.

Auditors found out that Iqbal was not giving due time to the NAC meetings. He was not providing the programme the required time as well. As of April 2014, he has not approved the NAC’s work plan. According to the OIG report, although the programme was making progress, implementation weaknesses may threaten its sustainability.

One champion represents another

MUMBAI: Omung Kumar, who is making his directorial debut with Mary Kom, which stars Priyanka Chopra as Olympic bronze medalist boxer MC Mary Kom, says the National Award-winning actor will add “commercial value” to the film.

“This film should work commercially as well. Had I cast any newcomer for it, people would have ignored the posters,” said Kumar. The film’s trailer shows Priyanka in a state of unconditional surrender as the Olympian boxer. The Manipuri accent is not overdone and neither are those pugilistic postures where she boxes like an untamed cat in the ring with her immediate adversaries and other far less definable enemies outside the boxing ring.

“People are talking about the poster and the trailer, which means people like it and it’s all thanks to Priyanka. Priyanka will add commercial value to Mary Kom,” he added. While there were reports that the director and the film’s co-producer Sanjay Leela Bhansali are not on talking terms because of creative differences, Omung said, “These are all rumours. There is absolutely no issue between both of us.”

The only doubt raised by the trailer is that Priyanka does not physically resemble the realMary Kom. Responding to the audience’s concern, Bhansali earlier said he agreed that Priyanka doesn’t resemble the Olympic bronze medallist boxer, but that she captured the star athlete’s “soul” for the role. “I don’t think the physical resemblance is as important as capturing the soul of the person that the actor is portraying.”

He further said, “How much did Robert Downey Jr look like Charlie Chaplin in Chaplin? Did Meryl Steep resemble Nora Ephron in Heartburn? Did Robert De Niro actually look like Al Capone in the The Untouchables or Van Kilmer like Jim Morrison in The Doors? No.”

Bhansali shared how thrilled he is to filming the life of the star. “We wanted to tell Mary Kom’s story. Her life has everything — drama, passion, valour, warmth and humour. Her story was waiting to be told on screen. I am honoured that we are doing it,” he said.

“This is already a historic film. Never earlier has a world champion in one arena (Priyanka Miss World 2000) portrayed world championship (five times world champion) in another arena on screen,” said Ajit Andhare, Chief Operating Officer, Viacom18 Motion Pictures.

Paul Walker’s car wreckage thief jailed

Nine months after Paul Walker died in a fiery one-car accident, a teenager who stole a part of the actor’s wrecked Porsche from the crash site has been dealt a deathblow. Jameson Brooks Witty, 18, was sentenced to six months in jail on Thursday for stealing a rooftop panel of his car, soon after the Fast and Furious star was killed in the accident, reported Reuters.

Witty, who is one of the two people arrested for taking the car part, pleaded guilty this month to grand theft of property, destroying evidence and obstructing a peace officer, a statement from the Los Angeles County District Attorney’s Office said.

A Los Angeles County judge on Thursday sentenced Witty to six months in county jail and three years of probation, said Ricardo Santiago, a spokesman for the District Attorney’s Office. Anthony Edward Janow, 26, who pleaded guilty to the same charges is scheduled to be sentenced in October, prosecutors said. It is expected that he will be given the same sentence.

The untimely death of Walker in Santa Clarita, California, 48 kilometres northwest of Los Angeles, forced a temporary halt to the production of the seventh instalment of the multibillion-dollar Fast and Furious film franchise.

According to IANS, the accused were caught on camera taking out parts of the Porsche Carrera GT on November 30 after the tow truck removing it from the scene stopped at the traffic signal. After witnessing the crime, the tow-truck driver reported it to Santa Clarita Valley Sheriff’s Station.

The statement reads: “A witness saw a male exit a vehicle that was following the tow truck. The male grabbed a piece of the wrecked Porsche off the tow-truck bed. The male drove away with the stolen vehicle part.”

On the day of crash, someone using the Instagram handle ‘jamesonwitty’ posted photographs of a portion of the roof of a red Porsche and wrote, “Piece of Paul walker’s car, took it off a tow truck at a stop light.” Los Angeles County sheriff’s deputies arrested Witty in December after searching his home.

Sweet tooth: Selling ice cream like a hot cake

KARACHI: 

Some business ideas make the news for their innovation. Some do due to their approach and aggressive expansion.

In what may inspire the next generation of entrepreneurs, Alpine Gelato – a Hyderabad-based chain of ice cream parlours – is setting new standards in the ice cream business at a retail level despite the challenging environment that discourages investment.

It may still be a relatively unknown brand for most living in Karachi but the chain is rapidly increasing its footprint in the city. In fact, Alpine Gelato is easily the fastest growing ice cream retail chain in Karachi.

Having already tapped the market in Hyderabad, this local ice cream chain entered the provincial capital only recently. A year into its launch, it is already operating five outlets in the city and plans to open four more by the end of this year. This is, however, just the beginning.

All the five outlets currently get their supply from the Hyderabad factory. However, the owner has already bought a 2,500-yard plot at the National Industrial Park, Korangi Creek for its new manufacturing facility, which is expected to be operational in 2015 – a strong indication of the company’s expansion plan for the country’s largest consumer market.

“There should be at least 25 outlets of Alpine Gelato to cover a market the size of Karachi,” the Managing Director Muhammad Shahzad told The Express Tribune in a recent interview at his Korangi outlet.

Karachi is known for its hostile environment for businesses but Alpine Gelato’s rapid growth and expansion plan show strong resilience to challenges, such as power outages, violence and the worst of all – money extortion threats.

“There is no denying that the business community is facing many challenges but we should look for opportunities even in these difficult times,” the 46-year-old said. “If the situation was better, wouldn’t all the multinationals be here?” he asked.

A 2011-startup, which is looking good to expand across Karachi, has done well in Hyderabad by changing the way ice cream is sold – they raised the quality bar while keeping prices low forcing competition to improve their businesses.

This combination of a high-quality product coupled with affordable prices – Rs40 per scoop of 80 grams – is the sole reason for an overwhelming response the first outlet in Karachi received. It led competitors to even renovate their shops, make workers wear a uniform and improve hygiene to re-attract customers who were lost to Alpine Gelato in a matter of weeks.

With the Korangi outlet drawing a huge response, they opened four more outlets in Landhi, Shah Faisal Colony, Model Town (Malir) and North Nazimabad in a year – they are planning to open one each in Liaquatabad, Nazimabad, Azizabad and Shadman Town this year.

Reasons behind the scoop

So what has been driving this rapid growth for a brand that is selling a scoop for as low as Rs50, which was increased this year after being Rs40 last year.

“It is not viable to run a single outlet by selling a scoop for Rs50,” Shahzad said. “We are using economies of scale.”

This is mainly why all of Alpine Gelato’s outlets are in areas where purchasing power is low but the footfall is very high. In other words, the company chose localities that make most of the city’s population.

The company focuses on quality standards that are followed by leading brands, such as Baskin-Robbins and Mövenpick, said Shahzad, but sells the product at a price that even the labour class can afford.

It offers more than 22 flavours – blueberry, belgian chocolate, mango, crunch, pineapple and pistachio being the hot-selling items – and a customised topping (at Rs10 per cup).

While he looks set to meet the target of 25 outlets in Karachi, Shahzad said he would certainly want to expand to other cities in the future.

“Lahore will be our next destination but that will require a factory in Punjab – which is not part of the current plan,” he said.

Anti-monopoly campaign: BMW’s Chinese dealers fined

BEIJING: 

Four Chinese dealers for German auto maker BMW have been fined about 1.6 million yuan ($260,000), authorities have said, as the government steps up a high-profile anti-monopoly campaign involving a number of foreign brands.

The dealers in Wuhan in the central province of Hubei have been ordered to pay the penalties for “forming a price alliance”, provincial authorities said in a statement.

They agreed to consistently charge a fee for the pre-delivery inspection of cars, which falls under “the obligations and responsibilities” of the auto maker and its dealers, according to the statement.

“This is price swindling behaviour and must be resolutely stopped immediately,” the authorities added.

The dealers were each fined between 150,000 yuan and nearly 940,000 yuan.

China has in recent months launched high-profile probes into alleged violations by a host of foreign firms in a range of different sectors including pharmaceuticals, technology and baby milk, raising fears that overseas companies are being targeted.

China’s Ministry of Commerce on Saturday released a statement emphasising that the country’s six-year-old Anti-Monopoly Law does not discriminate between foreign and domestic companies.

The European Union Chamber of Commerce in China expressed concern in a statement Wednesday that European businesses were “increasingly considering the question of whether foreign companies are being disproportionately targeted”.

Auto firms are the latest to be investigated, and last week the government pledged to sanction Audi, owned by Volkswagen, and Chrysler of the US, now part of Italy’s Fiat group, without stating what penalties they would receive.

On Monday, Audi announced it will accept punishment for breaching Chinese anti-monopoly laws.

The Hubei authorities also said in the statement that they were working on the penalties to be meted out to manufacturers and dealers of other auto brands including Audi.

Several car companies have announced price cuts in response to the inquiries.

Beijing considers using a dominant market position to set prices as a form of monopoly.

Violators’ “illegal gains” can be confiscated, and they can be fined up to 10% of their sales revenues from the previous year.

Karachi-Hyderabad: NHA to begin work on motorway soon

ISLAMABAD: The National Highway Authority (NHA) will begin work on the Karachi-Hyderabad Motorway (M-9) project soon.

An NHA official said the implementation of M-9 project was one of the top priorities of the authority and the Sindh government has been facilitating the NHA in administrative matters to ensure better and qualitative communication services to the people.

He said the 136-kilometre-long Karachi-Hyderabad Motorway was an important project not only for the commuters of both cities, but also for people of the entire country.

“Almost all the work except for 200 acres of land in Jamshoro district has been completed and hopefully construction will start this year,” he said.

To a question, he said at present Super Highway was in a dilapidated condition due to heavy traffic and expiry of its designed period.

He said for the repair and improvement of the highway, the NHA approved periodic maintenance schemes under the Annual Maintenance Plan (AMP) 2013-14 amounting to Rs305.28 million.

In the past few years, the NHA awarded the contract to two firms on Build-Operate-Transfer (BOT) basis but both failed to complete work according to conditions of the contract, hence their services were terminated.

The project will cost Rs6.3 billion and the scope of the work includes the expansion of the road from four to six lanes and provision of service areas.