Wednesday July 01, 2009

BAGHDAD: A BP-led group won a deal to develop Iraq's biggest oilfield but had to slash its fee as Baghdad's tough terms put off other investors in the country's first major energy auction since the US-led invasion in 2003. Other companies, including firms from resource-hungry China and India that are eager to get a share of the world's third largest oil reserves, balked at the fees and Iraq failed to strike deals on the remaining seven oil and gas fields on offer.

Tuesday's controversial auction of Iraq's prized assets took place on the same day that the US troops who toppled Saddam Hussein quit Iraq's cities and left security chiefly to the country's own forces. The sale aims to raise funds for reconstruction as Iraq also takes greater charge of its economy. "Today we have seen that the Iraqi Oil Ministry and international oil companies are living on different planets," oil analyst Ruba Husari said.

The results of the auction were not a disappointment, said Oil Ministry spokesman Asim Jihad. "The participation of these well-known, major companies is a good sign and it reflects the desire of these firms to invest in the Iraqi oil sector," Jihad said.

Iraq's Oil Ministry asked companies to submit revised bids at the end of the auction. Seven did, but they were not made public. The bids would be handed to the Iraqi cabinet for a decision, an official close to the process said. The sale was billed as the first chance since Iraq nationalised its oil in 1972 for major foreign companies to get a run at the country's hydrocarbon reserves, much of which are untapped. But many Iraqi critics said it was a bad bargain. Foreign companies servicing the fields will be paid per barrel of oil produced above a certain amount.

(Reuters)

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Wednesday July 01, 2009

ISLAMABAD: The National Electric Power Regulatory Authority (Nepra) is expected, by the end of July, to recommend 28 percent increase in power tariff for the consumers of discos, sources told Business Recorder. "We were in a position to finalise discos' tariff determinations by the end of June, 2009, but the hearing of 2008's petitions in the light of Supreme Court directives caused some delay. We hope the process will be completed by the end of July," sources said.

The government had agreed to pass on the raise to the consumers in two phases-17 percent in first phase, and 11 percent in the second. An agreement to this effect was contained in the second Letter of Intent (LoI) submitted by the government to the International Monetary Fund (IMF) prior to the release of subsequent tranches of the $7.6 billion standby arrangement dated 16 March 2009 where it stated that "in collaboration with the World Bank, the government has finalised a schedule for electricity tariff adjustments to eliminate tariff differential subsidies by end-June...tariffs will be raised further to result in a cumulative of 4 percent by end-June".

Prime Minister Yousaf Raza Gilani recently expressed disapproval of the proposal to end electricity subsidies by pointing out that "there is no justification to increase tariff until people are provided electricity". His comments are expected to have a negative impact on the negotiations between Pakistan's economic team and IMF staff scheduled in Istanbul on July 3.

The Ministry of Water and Power basically took the lead in suggesting deferment of the proposed increase in power tariff till such time as load shedding can be controlled. It is unclear what rationale would be provided to the IMF team to justify keeping power tariff frozen till, at least, December 2009--a deadline given by Minister of Water and Power Parvez Ashraf, claiming that load shedding would end by then.

"We are just a recommending Authority; it is the government which has to implement the decision," said an official of Nepra. According to analysts, this will be a major violation of the Letter of Intent submitted under the Stand By Arrangement (SBL) by the Government of Pakistan.

The inter-circular debt also remains an issue whose elimination was also committed by the government, as reflected in the Letter of Intent. The March 16 LoI stipulated that "we are preparing a plan to address ongoing losses on account of operational and collection losses of distribution companies, Pepco and IPPs."

TFCs were issued, but the problem was not resolved. More recently, the government has established a 'Power Holding Company', wherein the liability of the amount of Rs 216 billion, borrowed by Pepco, would be parked, and this company would directly handle the issue with banks.

(BRecorder)

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Wednesday July 01, 2009

ISLAMABAD: The profit rates on National Saving Certificates (NSSs) have been revised downwards from July 1, 2009. According to the Central Directorate of National Saving, the profit rate on Special Saving Certificate would now be 11.62 percent and the profit rate on Revenue Income Certificate would be 12 percent.

The profit rate on Pension and Behbood Certificate has been brought down from 16.10 to 14.16 percent. The profit rate on Saving Certificate has been reduced from 9 percent to 8.5 percent. However, the profit rates on Defence Saving Certificate have been kept unchanged.

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Wednesday July 01, 2009

TOKYO: The yen fell in Asian trade on Wednesday as a smaller-than-expected improvement in Japanese business confidence disappointed the market, dealers said.

The dollar rose to 96.75 yen in Tokyo morning trade from 96.30 in New York late Tuesday. The euro edged down to 1.4015 dollars from 1.4032 but firmed to 135.59 yen from 135.17.

The Bank of Japan said in its quarterly Tankan survey that business confidence among major Japanese manufacturers had improved for the first time in two-and-a-half years.

But many investors were disappointed because they had hoped for a better reading, dealers said. "The market had thought the confidence index would go up a bit higher," said Masaki Fukui, senior market economist at Mizuho Corporate Bank.

"The survey showed the business sentiment still remained cautious." The sentiment index rose to minus 48 in June from a record low of minus 58 in March. Market forecasts had been for a figure of about minus 43.

Overnight in US trade, investors had bought the dollar -- seen as a relatively safe investment -- amid jitters over the health of the economy.

The Conference Board, a business research group, said US consumer confidence fell in June as households worried about the recession and job losses.

Investors were awaiting new leads from a European Central Bank monetary policy meeting on Thursday and the release of US monthly employment data the same day.

The ECB is expected to keep interest rates at a record low of 1.0 percent despite an appeal from the Organisation for Economic Cooperation and Development to lower the main rate even further to nearly zero.

(AFP)

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Wednesday July 01, 2009

WASHINGTON: The World Bank has approved a US $50 million IDA credit to Pakistan, designed to improve water resource management and enhance agricultural productivity in Sindh Province.

The additional financing for the Sindh On-Farm Water Management Project aims to improve the efficiency, reliability, and equity of irrigation water distribution at watercourse levels and enhance agricultural productivity. Under the additional financing around 3,000 watercourses will be improved, which comprises earthen improvements, lining, installation of concrete turnouts (pucca nuccas), and culverts in watercourses.

About half of Sindh’s 35 million people live in rural areas, and one-third of them live below the poverty line. Rural people, 70 percent who are landless, derive almost 60 percent of their income from agriculture.

“Irrigation and drainage are critically important to Sindh’s irrigated agriculture, which is the backbone of the economy,” said Yusupha Crookes, World Bank Country Director for Pakistan. “The improved watercourses under the original Sindh On-Farm Water Management Project have made positive impacts in terms of enhanced and more equitable water supply and increased incomes by farmers. This additional financing will help extend these benefits to broader sections of the farming community in Sindh.”

The Province has about 42, 000 watercourses and so far 17,000 watercourses have been improved/lined under various on-farm water management programs, including the Sindh On-Farm Water Management Project.

The additional financing will also support efforts to boost agricultural productivity through demonstration on tunnel farming for high value crops, and training of farmers in improved water management, agricultural practices, and new technology and information dissemination.

“Participation of the farmers themselves in irrigation management is vital for the long-term sustainability of the irrigation system,” said Tumurdavaa Bayarsaihan World Bank Senior Rural Development Specialist and project task team leader.

“This project supports capacity building and social mobilization of farmers in order to develop and strengthen sustainable Watercourse Associations which will participate in planning, designing, and implementing the rehabilitation works and will also operate and maintain the improved watercourses.”

The credit from the International Development Association (IDA), the World Bank’s concessionary lending arm, carries a 0.75 percent service fee, a 10-year grace period, and a maturity of 35 years.


(APP)

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Wednesday July 01, 2009

NEW YORK: US stocks fell on Tuesday as an unexpected drop in consumer confidence cooled recent optimism about an economic recovery, but Wall Street still closed out its best quarter in a decade.

The drop in the Conference Board's measure of consumer confidence in June suggested that the 18-month-long recession had yet to loosen its grip on the US economy.

Gloom among consumers is a major obstacle as their spending is a major driver of corporate profits and accounts for roughly two-thirds of US economic activity.

Tuesday's standout decliners included industrials, energy and material stocks, some of the very same sectors that helped underpin the market's push to recover from the 12-year lows of early March as investors bet on economic stabilization.

"Consumer confidence is the excuse du jour for the latest market move," said Tom Alexander, head of Alexander Trading, in Savannah, Georgia.

"For the market to go much higher, you are going to have to see some real hard evidence of some of these things that are being anticipated by the market, start to come to fruition. Pick one. Are the bank balance sheets really cleaned up? Nobody knows. The market has gone up on a lot of faith here."

The Dow Jones industrial average slipped 82.38 points, or 0.97 percent, to 8,447.00. The Standard & Poor's 500 Index dropped 7.91 points, or 0.85 percent, to 919.32. The Nasdaq Composite Index shed 9.02 points, or 0.49 percent, to 1,835.04.

Even so, the S&P 500 posted its best quarterly performance since the fourth quarter of 1998. For the month of June, the Dow shed 0.6 percent, while the S&P 500 inched up 0.02 percent, and the Nasdaq climbed 3.4 percent.

Since its 12-year closing low on March 9, the S&P 500 is up 35.9 percent.

Among industrial stocks, shares of Caterpillar Inc, a maker of bulldozers and excavators, slumped 4.9 percent to $33.04, while on the technology front, International Business Machines Corp tumbled 1.3 percent to $104.42.

On Nasdaq, chip maker Qualcomm, off 1.9 percent at $45.20, was the worst drag.

Sliding oil prices gave investors a reason to sell some energy shares, with Exxon Mobil down almost 1 percent at $69.91.

Crude oil futures fell $1.60, or 2.2 percent, to settle at $69.89 a barrel.

Shares of US oil refiners such as Sunoco Inc and Tesoro Corp dropped after Goldman Sachs cut them to "sell" from "neutral."

Sunoco dipped 0.4 percent to $23.20, while Tesoro declined 1.2 percent to $12.73.

On the final day of the second quarter, money managers set out to burnish their portfolios by selling losing stocks and scooping up winners in a move that helped the market end sharply off its lows.

Volume was on the lighter side due to a holiday- shortened week. US markets will be shut for the US Independence Day holiday on Friday.

Tuesday's other economic news were separate reports that showed US single-family home prices fell in April but the pace of decline moderated, and business activity in the Midwest contracted again in June, but at a less severe rate than expected.

(Reuters)

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Wednesday July 01, 2009

ISLAMABAD: The government has increased the price of petrol by Rs 5.92 per litre, light diesel Rs 6.94, kerosene oil Rs 7.48 and HOBC Rs 8.50 per litre. With this increase, the price of per litre petrol has surged to Rs 62.13, HOBC Rs 78.78, light diesel oil Rs 54.94 and kerosene oil to Rs 59.35 per litre.

Prime Minister Syed Yousuf Raza Gilani is reported to have approved the summary of the petroleum ministry in line with the decision taken in the budget as well as due to rise in world oil prices. However, the Minister for Information denied that approval for increase in POL prices was given by the Prime Minister saying that he has no role in this increase as the oil pricing mechanism was tied with the international market.

The increase in POL products prices from July 1 was because of rise in the oil prices in the international market. Advisor to the Prime Minister on Petroleum, Dr Asim Hussain earlier during the day told media the prices of petroleum products have been increased whereas gas prices were reduced for household and industrial use.

The new gas rates, he said would be applicable from July with the 2 percent reduction in the gas price for all the five slabs of domestic consumers and 4.46 percent for Independent Power Producers, captive power and the industries. The advisor said that gas price was slightly increased for fertiliser sector and there would be no reduction in the price of CNG for the next six months.

Dr Asim said that PDL was replaced with the carbon surcharge to introduce transparency in the oil pricing mechanism. The revenue target was projected at Rs 122 billion in 2009-10 from the levy of carbon surcharge that is applicable on petroleum products from today (Wednesday) at the rate of Rs 10 per litre on petrol, Rs 6 on kerosene oil, Rs 3 on Light Diesel Oil (LDO), Rs 14 on HOBC and for high speed diesel (HSD) it is Rs 8 per litre.

(BRecorder)

APP adds: Minister for Information and Broadcasting, Qamar Zaman Kaira has clarified a news item being aired on different private TV channels regarding approval of increase in petroleum prices by the Prime Minister. The minister said according to new policy, which has been formally approved in budget 2009-10, the Prime Minister need not to increase the prices on his own.

According to new formula, he said, the prices will be adjusted automatically according to international market price trends. "The current increase in prices is according to this formula," he further clarified the reports that the Prime Minister had approved the summary for increase in petroleum prices.

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Wednesday July 01, 2009

SINGAPORE: Oil rebounded in Asian trade Wednesday after falling overnight on figures showing declining consumer confidence in the United States, the world's biggest energy user, analysts said.

New York's main contract, light sweet crude for August delivery rose 66 cents to 70.55 dollars.

Brent North Sea crude for August delivery advanced 75 cents to 70.05 dollars.

Analysts expect the rebound in crude prices, coming mainly on the back of investors looking for an alternative to equities, to be temporary amid fresh worries about US energy demand.

"Markets have paused for breath over the past month as risk appetite has begun to show signs of waning," analysts from London-based Capital Economics research house said in a report.

"We had not expected investors to lose their enthusiasm quite so soon.... We suspect that investors will be ultimately disappointed by the strength of the economic recovery, which is likely to feed back into greater risk aversion later in the year."

It said commodities including oil "have generally continued to do well, although the rally is now running out of steam."

Figures released Tuesday by the Conference Board, a business research group, showed that US consumer confidence sank in June as Americans fretted about the recession and vanishing jobs.

The Conference Board's consumer confidence index retreated to 49.3 points in June from a revised 54.8 in May, an eight-month high. Most analysts expected a much stronger reading of 55.3 points.

"The decline in the present situation index, caused by a less favourable assessment of business conditions and employment, continues to imply that economic conditions, while not as weak as earlier this year, are nonetheless weak," said Lynn Franco, research director of the Conference Board.

Oil prices have increased dramatically -- by 40 percent, or more than 20 dollars -- in the second quarter on rising confidence that the global slump is easing.

It closed at 49.66 dollars on March 31, which was the last day of the first quarter.



(AFP)

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