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01 BUSINESS B Thursday, 9 May, 2013 KARACHI AGENCIES t HE pre-election bullish entered seventh day at Karachi Stock Ex- change on Wednesday as investors opted for buying fresh position in anticipation of free, fair and peaceful elec- tions in the country where continuous buy- ing by foreign investors set the tone for the locals. The benchmark KSE 100-Index jumped by 1.09 percent or 209.81 points to close at 19,472.55 levels -a fresh all- time historic high- as against 19,262.74 levels (the previous all-time high) recorded on Tuesday as uninterrupted for- eign buying helped bulls to take center- stage at the premier bourse in Pakistan. The KSE All Share Index surged by 0.69 percent or 94.75 points to end at 13,906.94 levels on Wednesday as against 13,812.19 levels reported on Tuesday, the KSE 30-Index was bolstered by 1.42 per- cent or 209.86 points to conclude at 15,034.77 levels (for the first time in his- tory) on Wednesday as against 14,824.91 levels posted the other day, whereas the KMI 30-Index augmented by 1.1 percent or 367.49 points to finish trading activities at 33,807.12 levels on Wednesday when compared with 33,439.63 levels wit- nessed in the previous trading session. The Karachi Stock Exchange began Wednesday’s trading session with strong bullish vibes as during the early trade the main index scampered past 19,300 levels and soon hit the never-seen levels of 19,400 before moving in a narrow range during halfway stage.During the second half, the main index registered hefty buy- ing by foreign investors which propelled it past the historic levels of 19,500 and soon it touched the all-time intraday high- est level of 19,515.94 before last-hour profit-taking reduced part of the intraday gains but the key index still managed to close above the 19,400 levels. Market volumes improved by 78.82 million shares to 252.124 million shares on Wednesday as against trading of 173.304 million shares recorded on Tuesday as hec- tic buying by foreign investors also filled the local investors with the required confi- dence to go for a shopping spree. ISLAMABAD AGENCIES With methodological discrepancies in this year’s estimated total national income, wiping at least Rs 600 billion off the econ- omy, the per capita income has grown by an unimpressive 4.3% to $1,380. To arrive at this figure, the Pakistan Bureau of Statistics (PBS) estimated a 2% growth in the country’s population which reached 183 million this year. It then di- vided the total national income with the population and got a per capita income of $1,380, which is $57 or 4.3% higher than last year’s. However, the total national income has raised questions due to double-counting, inflated figures and excluded income from some of the economy’s sub-sectors. This comes amidst claims from government of- ficials that they have calculated the size of the economy according to the latest inter- national concepts. According to the PBS’s estimates, the economy’s overall size has decreased to Rs 22.9 trillion despite new goods and services due to the economy’s rebasing from 1999- 2000 to 2005-2006. Economic growth for the current year is estimated at 3.6%. Though the PBS has applied the latest concepts for calculating the value of goods and services, it has not delivered because of capacity constraints, and delegating work to those unlearned in national ac- counts, commented a PBS official. PBS has used basic prices and aban- doned the factor cost valuation methodol- ogy for the economy, said officials. In factor cost, goods and services are valued according to the prices received by the sell- ers including additional costs while in the basic price concept, initial prices of goods and services without additional charges like taxes and subsidies are considered. “PBS Chief Statistician Asif Bajwa will clarify any distortions on Wednesday,” they said. Distortions: The officials said that the PBS had added production-related taxes such as customs duties to basic prices and did not remove major parts of duties that the producers claimed as input adjust- ment. This has inflated the value of goods and services. PBS has also considered indirect taxes budget estimates for computing the na- tional income, but actual revenue collec- tion is expected to be at least Rs 300 billion short of the target. It has added Rs 1.54 tril- lion in direct taxes, but when revising these estimates, the economy’s size will fall fur- ther. It is also said to have counted customs duties twice for indirect taxes.PBS has ex- cluded tariff differential subsidies while calculating the value addition in electricity generation and distribution. Previously, they were part of the power sector’s value addition, as the government, not the con- sumers were paying the generation cost. This has caused a negative real growth of 3.2%, but the electricity generation and distribution sector grew 9.9% in nominal terms, PBS documents indicated. According to sources, this was for showing a comparatively higher growth this year. Had the government added power subsidies to the cost, much higher growth for last year would have resulted, causing a comparatively low growth this year be- cause of a higher base. Last year, the government gave Rs 536.6 billion in subsidies including roughly Rs 500 billion in power subsidies. For this year, the PBS has used budget estimates of Rs 185 billion for power subsides. Officials added that when these distortions are ad- dressed next year, the country will face cred- ibility issues while seeking financial support from international financial institutions. Per capita income grows just 4.3% this year ISLAMABAD AGENCIES With fuel stocks at power houses down to a critical two-day requirement, the country’s largest fuel supplier, Pakistan State Oil (PSO) has faced a total of 9 de- faults on international payments because of a serious financial crunch. An official said diesel consumption dropped by over 7 percent in the last two months, suggesting a lull in economic ac- tivity, except the agriculture sector, even though a bumper wheat crop was ex- pected this season. A senior official said a furnace oil shipment due on May 5 was cancelled ad hoc because no bank was ready to issue the letter of credit. Another ship-load of furnace oil is scheduled to arrive on May 9 fol- lowing Rs 10 billion disbursed by the federal government on the care- taker prime minister’s orders to en- sure uninterrupted supply for the next four days. “Even though the oil and gas sector receivables against the power sector have exceeded Rs 435 billion we have been strictly instructed to ensure smooth fuel supply for elections,” said a senior petro- leum ministry official. “PSO has techni- cally defaulted on international payments 9 times since August 2012,” he said, adding that the bigger challenge is a fu- ture default leading to serious complica- tions for the country because PSO handles more than 65 percent of Pak- istan’s fuel requirements. Thus, PSO has been forced to increase fuel supply to the power system to 20,000 tonnes per day from 16,000 tonnes per day until Sunday. The power sector owed Rs 135 bil- lion to PSO and another Rs 300 billion to natural gas companies, an official said on Tuesday. The latest Rs 10 billion dis- bursements to PSO were overdue in early April, after which fuel supplies worth the same value had been provided to the power sector. While discussing poor re- cover- ies from the power sector, it was learnt that system losses at Sukkur and Hyderabad Electric Power Companies had exceeded 39 and 32 percent respectively, and nobody could question their chief executives be- cause of their close relationship with for- mer ministers of the Pakistan People’s Party (PPP) government. As of May 7, PSO’s total fuel stocks stood at 10 days of requirement that was expected to slightly improve when a fresh shipment arrived on May 9. However, all power stations have an average of two-day of fuel stocks. PSO Spokesperson Maryam Shah said a furnace oil shipment of 70,000 tonnes was due on May 9 which would be sufficient to meet the country’s power requirements for elections. She said the company also had sufficient stocks of diesel and petrol for retail sales to meet market demand for 10-15 days. She said PSO’s total receivables had exceeded Rs 149.7 billion on May 7, in- cluding Rs 139.5 billion against the power sector. Consequently, PSO’s payables to international supplies have exceeded Rs 83 billion and Rs 29 billion to domestic refineries. She also affirmed that no cargo had been cancelled by PSO. However, due to the letter of credit confirma- tion issue, one furnace oil cargo which had been due on May 5 has been delayed, she said. She confirmed PSO’s international defaults but said, “Technical issues in the letters of credit resulted in delayed pay- ments to international suppliers.” “Despite financial constraints, PSO has always worked hard to meet the en- ergy needs of the country. However, pay- ments from our customers, especially power entities are required regularly so that we may sustain the supply chain and continue imports,” she concluded. PSO confronted with international defaults SECP questions Telenor over support to specific political party NEWS DESK The Securities and Exchange Com- mission of Pakistan (SECP) has sought comments from lead- ing mobile phone com- pany, Telenor on a complaint filed by the chairman of the Central Election Monitoring Cell of the Pakistan Muslim League-Nawaz (PML-N), Senator Ishaq Dar that its funds have been allocated for promoting and funding the poll campaign of a specific political party. The PML-N made the complaint over a song by pop singer Shahzad Roy calling for “change” in the country through vote. Ac- cording to a letter sent to the chief execu- tive of Telenor Pakistan (Private) Limited, the SECP director (Enforcement), Addi- tional Registrar of Companies Bilal Rasul stated that “it has been alleged that com- pany funds have been deployed for promot- ing and funding the election campaign of a political party”. The name of the political party was not mentioned in the SECP letter. The letter said, “Your attention is invited to the provisions of Section 197 of the Com- panies Ordinance, 1984 which prohibits a company to contribute from its funds any amount for political purposes. In this re- gard, you are advised to furnish your com- ments on the above within two (02) days of the date of this letter.” PM approves bailout package for PSM ISLAMABAD NNI Prime Minister Mir Hazar Khan Khoso on Wednesday said the caretaker gov- ernment has taken measures to rehabili- tate Pakistan Steel Mills (PSM) so that it can contribute to the economic devel- opment of the country. These observations were made by the premier during a meeting held at PM House to review a proposal for bailing out PSM. The meeting was attended by Minister for Production Shahzada Ahsan Ashraf Shaikh, Adviser to PM on Finance Dr Shahid Amjad Chaudhry and senior offi- cials of PM’s Secretariat. During the meeting it was decided that the federal government would provide guarantees to scheduled banks for raising Rs 11 billion for PSM to meet its work- ing capital requirement. The meeting was told that PSM is work- ing below its production capacity and with the availability of additional Rs 11 billion; PSM will be able to attain a pro- duction capacity of 50% to 60% within six months and full capacity in due course, which will help reduce its losses. It was also decided that Rs 11 billion will be deposited in a separate escrow ac- count which will be opened for this pur- pose only, and that all revenues generated from the sales would be deposited in the same escrow account. The meeting also decided that Standard Operating Procedures (SOP) will be in- troduced for operation of the account to ensure that salaries and pensions of em- ployees of PSM are not affected. The purpose of opening the escrow account is to ensure that finances being provided to PSM are used for the intended pur- pose of rehabilitating the project. 16-17 Business Pages (09-05-2013)_Layout 1 5/9/2013 6:06 AM Page 1
