Wednesday, August 5, 2009
Oil needs to Govt to give Rs 1b subsidy in Ramazan
soar on new
power plants
35,000 tonnes of oil a day needed
QQReuters
ISLAMABAD:
Oil needs for the power sector will
likely shoot up by 29 per cent by
the end of 2009 as new oil-burning
plants are installed to overcome
a severe electricity shortage, the
water and power ministry said on
Tuesday.
Pakistan requires 35,000 tonnes
of oil a day to feed its thermal power
plants, but it is only getting supplies
of 24,000 tonnes per day on aver-
age, cutting into electricity output,
according to official figures.
Faced with a power generation
shortfall of roughly 4,000 MW that
is crippling manufacturers, the gov-
ernment is pushing to bring around
3,782 MW of capacity online by
the end of the year, mostly through
building and leasing oil-burning
plants.
That will drive the oil needs of the
power sector up to 45,000 tonnes
a day, the ministry said in a state-
ment.
“We will be needing an additional
10,000 tonnes of oil per day for
the upcoming plants,” said a senior
power ministry official.
Pakistan imports about 80 percent
of its oil. It spent $9.5 billion on the
import of 10.6 million tonnes of
petroleum products and 7.8 million
tonnes of crude oil in the 2008/09
(July-June) financial year.
BMW, Toyota
return to profit
QQAFP
FRANKFURT:
German luxury car manufac-
turer BMW returned to profit and
the world’s largest automaker Toyota
posted better-than-expected results
on Tuesday, further signs that the
troubled industry has turned a cor-
ner.
The day after US giant Ford
recorded its first increase in sales
for almost two years, BMW said it
had made a net profit of 121 million
euros (174 million dollars) in the
three months from April to June, well
above forecasts.
Japan’s Toyota Motor also con-
founded predictions by logging a net
loss of 77.8 billion yen (817 million
dollars) for the April-June quarter—
leaving it still deep in the red but
much better than forecasts of a 200
billion yen loss.
Neither company said that the
results indicated the auto industry
was out of the woods, but sounded
cautiously optimistic.
“Even though some indicators
suggest that the economic situation
might improve in the second half of
the year—we remain cautious,” BMW
chairman Norbert Reithofer said in a
statement.
In the first three months of the year,
BMW had posted a net loss of 152
million euros. The new figure, while
back in the black, was 76 percent less
than the 507 million euros profit it
posted in the same period in 2008.
An average analyst forecast, com-
piled by Dow Jones Newswires, had
predicted BMW was on course for a
loss of 25 million euros.
Standard Chartered Bank plans to raise extra cash
QQAFP
LONDON:
Emerging markets bank Standard
Chartered posted record first-half
profits on Tuesday and launched plans
to raise extra cash from shareholders to
fund ambitious growth in Asia, Africa
and the Middle East.
Pre-tax profits surged 9.7 percent to
a record 2.838 billion dollars (1.971 bil-
lion euros) in the six months to the end
of June, compared with 2.586 billion
dollars in the same part of last year.
Net profits advanced 5.5 percent to
Chronic power shortages have
prompted hefty fuel purchases as
the country grapples with brown-
outs and was forced to implement
daylight-saving measures last year
to save electricity.
Still, the power ministry said in its
statement that it had requested that
the Ministry of Petroleum increase
oil supplies to make up for the
shortfall.
The government hopes that the
new power plants could alleviate the
problem of power shortages in the
short term, while it works on longer-
term plans of building hydro-power
plants.
The power plants being hired
would add about 1,988 MW of capac-
ity while construction of new plants
by the private sector would generate
another 1,794 MW by the end of the
year, the ministry estimates.
Analysts said on Tuesday that the
growing fuel oil import bill, together
with policy changes that mean the
central bank is phasing out use of
its foreign exchange reserves for
fuel imports, will continue to put
downward pressure on Pakistan’s
currency.
Sayem Ali with Standard Char-
tered in Karachi expects the rupee
to fall to 86 per dollar by June 2010,
from about 83.2 now, because of
oil demand and the exchange rate
reforms. [ID:nSIN94736] (Editing
by Jason Subler)
Citing “an increasingly competitive
environment” and “high volatility of
international financial and raw ma-
terials markets,” BMW did not give a
detailed outlook for this year.
However it repeated that it ex-
pected 2009 sales to be lower than in
the previous year, before picking up
in 2010 following the roll out of new
models.
Toyota managing director Takahiko
Ijichi meanwhile said that government
subsidies and tax cuts had helped an
improvement in domestic sales.
Toyota, which last year suffered its
first annual loss, now expects to sell
6.6 million vehicles in the year, up
from a previous goal of 6.5 million.
It narrowed its annual net loss
forecast to 450 billion yen from 550
billion and trimmed its operating loss
projection to 750 billion yen from
850 billion.
“The current situation is still very
severe. We can’t be sure whether
(the market) will enter a sustainable
recovery,” Ijichi added to reporters.
Government incentives helped
Toyota’s revamped Prius hybrid be-
come the top-selling car in Japan in
May and June.
The Japanese maker has idled
plants and slashed thousands of tem-
porary jobs as it tries to weather the
worst global downturn in decades,
but has so far avoided closing plants
or firing regular employees.
The glimmers of hope at Toyota
contrasted sharply with its fellow
Japanese firm Yamaha Motor Co.
which said its loss in 2009 would be
more than four times bigger than ex-
pected because of sluggish motorcycle
sales and a strong yen.
1.883 billion dollars, the British-based
group said, adding that it would launch
a 1.0-billion-pound (1.17-billion-euro,
1.69-billion-dollar) rights issue.
“We have achieved record results
through our disciplined management
approach and the diversity of our busi-
ness and markets in Asia, Africa and
the Middle East,” chairman John Peace
said in the earnings release.
“I believe that the bank has a very
clear and focused strategy and we have
no intention of deviating from this.
“Our strong levels of capital and
liquidity have given us a competitive
QQOnline
ISLAMABAD:
Federal Minister for Industries and
Production Mian Manzoor Watto
has warned officers of Utility Stores
of Corporation of removal of their
services, if they were found indulged
in corruption, saying subsidy of Rs.
1 billion would be given through a
special package in the holy month of
Ramzan.
The minister was speaking in the
National Assembly on Tuesday on a
call attention notice regarding loss of
LAMONGAN, EAST JAVA: A villager collects water to take to crops in a field affected by the recent lack of rain on August 4. The area has been without
rain for three months now as a result of El Nino bringing the annual rains late this year, causing drought in affected areas. Indonesian President Susilo
Bambang Yudhoyono announced measures to minimise the drought’s effects last week. | AFP
Oil falls
below $71
after big rally
QQAP
NEW YORK:
Oil prices fell below $71 a barrel
Tuesday, as investors booked profits
after a big rally fueled by signs of
economic recovery in the U.S.
By midday in Europe, benchmark
crude for September delivery was
down 92 cents to $70.66 a barrel in
electronic trading on the New York
Mercantile Exchange. Earlier in the
session, the contract fell as low as
$70.28. On Monday, the contract
rose $2.13 to settle at $71.58.
“Oil has rallied to levels seen in
June, before the sharp decline of
nearly 16 percent,” said analysts
at Sucden Financial in London.
“Given continuing poor oil funda-
mentals, current high prices seem
difficult to sustain.”
A report Monday from the
Institute for Supply Management,
a trade group of purchasing ex-
ecutives, said U.S. manufacturing
activity should increase next month
for the first time since January
2008. Also, the Commerce Depart-
ment said construction spending
rose in June.
The positive economic news
has emboldened investors to bid
up stocks and oil. The Dow Jones
industrial average rose 1.3 percent
Monday and most Asian indexes
gained Tuesday.
advantage and our decision to raise
further capital today will reinforce this
and support our future growth.”
The news comes one day after Brit-
ish banking peers Barclays and HSBC
posted combined first-half net profits
of 6.55 billion dollars but also revealed
rocketing bad debts in the first six
months of the year.
All three banks have avoided state
control unlike rivals which fell victim
to the global financial crisis and subse-
quent international lending squeeze.
Lloyds Banking Group and Royal
Bank of Scotland—which are both now
Rs. 550 million faced in the month of
May and June due to illegal selling of
sugar from godowns of USC.
Talking on government steps to
control prices during Ramzan, the
minister said that the government has
decided to provide a special package
in the holy month and work in this
regard is underway. He said that
under the package, subsidy would be
given on ghee, oil, tea and other daily
commodities.
Mian Manzoor Wattoo said that
Trading Corporation had been asked
to provide sugar to Utility Stores on
Lucky Cement plans to
start production in Africa
Aims to export cement to Europe
QQBusiness Desk
LAHORE:
Lucky Cement Ltd., Pakistan’s biggest
producer, plans to start its first over-
seas factory in Africa by 2011 to take
advantage of a construction boom.
“The African market is where the
future growth for Pakistan lies,” Chief
Executive Officer Muhammad Ali
Tabba said yesterday in an interview
in Karachi. “Demand is growing and
there are not many plants in the re-
gion.” He declined to give investment,
capacity or location details of the
planned factory.
Lucky, which exports to South
Africa, aims to use the African fac-
tory to export to Europe, Tabba said,
without elaborating. Africa, with a
combined gross domestic product of
$2.68 trillion and 987 million people,
is forecast to expand 4.5 percent next
year, compared with 2.8 percent in
2009.
“Lucky has the first-mover advan-
tage in capacity building, exploring
export markets and providing better
quality with competitive prices,” said
Rehan Khan, who has a “buy” rating
on the stock at First Capital Equities
majority state-owned after receiving
enormous government bailouts—
will post their first-half numbers on
Wednesday and Friday respectively.
Northern Rock bank, nationalised
last year after it was also ravaged by the
credit crunch, admitted Tuesday that
pre-tax losses deepened in the first half
as bad debts tripled amid a worsening
recession in Britain.
Standard Chartered said it remained
cautious about the global outlook
amid “testing times” for the banking
industry.
“These remain testing times for banks
the decision of ECC aimed to control
sugar crisis by providing cheap sugar
to masses.
He informed the Lower House that
the Trading Corporation provided
sugar to stores at Rs. 34 per kilogram
but the Utility Stores were selling it
at Rs. 38 and the impression that the
loss of Rs. 550 million was occurred
only in months of May and June was
wrong.
The minister said that the Regional
Manager of Utility Stores Corporation
in Bhawalnagar has been suspended
from his services and categorically
Ltd. in Karachi.
Lucky Cement’s shares, which more
than doubled this year, rose as much
as 3.7 percent to 77.38 rupees before
closing at 74.15 rupees, 0.7 percent
lower.
Africa Demand
Africa’s cement demand exceeds
supply by as much as 7 million tons a
year, Tabba said. The construction in-
dustry there is growing at an average
annual rate of 25 percent, he said.
Lucky Cement may also acquire
some local rivals to expand capacity at
home, Tabba said.
“We are evaluating good plants
which are distressed,” Tabba said,
without naming the companies. “By
next year, we may go and acquire
some of them.”
Of the 20 cement makers on the
Karachi Stock Exchange, Flying Ce-
ment Co., Gharibwal Cement Co. and
Dandot Cement Co. are financially
distressed, according to First Capital’s
Khan.
Flying Cement’s nine-month net
loss widened to 140.5 million rupees
in the period ended March 31 from
99.7 million rupees a year ago, accord-
ing to its financial report. Gharibwal’s
and we remain cautious about the near
term global economic outlook,” Peace
added.
The bank also revealed that revenues
soared 13.9 percent to 7.96 billion dol-
lars in the first half—but its bad debts
more than doubled to 1.088 billion
dollars.
“The group has continued to deliver
record profits in the face of a difficult
environment... We expect the take-up
of the placing to be strong,” said NCB
equities analyst Simon Willis.
Meanwhile, recent press reports sug-
gested that Standard Chartered was
TN
stated that corruption would not be
tolerated at any cost, adding Utility
Stores were setup to facilitate com-
mon people.
He said that any officer creating
hurdles against objectives of the stores
would be dealt strictly, adding in the
market, sugar was being sold at Rs. 46
to Rs. 48 and there was no flaw in the
distribution of sugar.
Mian Manzoor Watto said that
the experience of selling of fertilizer
through Utility Stores was successful
and a record production of wheat was
achieved.
loss for the period widened to 168.7
million rupees from 124.8 million
rupees a year ago.
Pakistan’s cement exports rose 47
percent in financial year ended June
30 to a record 11.38 million metric
tons, according to First Capital.
India, Sri Lanka
Lucky, which accounts for a third
of Pakistan’s overseas cement sales,
exported 57 percent of its produc-
tion to the Middle East, Africa, Sri
Lanka, India and Afghanistan in the
nine months ended March 31. Sales
to India, Sri Lanka and Egypt will
continue to grow, as demand from the
Middle East slows, Tabba said.
“Africa is a good focal point since the
Middle East, which has been a strong
market for us, is seeing an increase
in its own production capacities,” he
said.
Lucky Cement raised $109.3 million
selling shares overseas last year and
said it would use the funds to increase
production capacity to 9 million tons
in three years from 6.55 million tons.
Lucky Cement’s net income rose 58
percent to 1.13 billion rupees ($14
million) in the three months ended
March 31.
The cement maker’s full-year profit
may rise 60 percent, First Capital’s
Khan estimated. The company is ex-
pected to announce full-year earnings
tomorrow.
mulling the purchase of some Asian
assets from Royal Bank of Scotland.
RBS, which is now 70-percent
owned by the state, said Tuesday that
it will sell part of its Asian operations
to Australia and New Zealand Banking
Group for 418 million dollars (294 mil-
lion euros).
The embattled group added that it
was in “advanced” talks over the sale of
its remaining Asian assets.
However, an RBS spokesman
declined to comment on reports that
Standard Chartered was in the run-
ning.