OIL SALES INCREASE IN JULY AS DEMAND PICKS UP PACE
Sales of petroleum products rose to 2.31 million tons in July 2017, up 9percent month-on-month and 8percent year-on-year, showed data released by the Oil Companies Advisory Council, as demand picked up in the wake of resumption of smooth transport activities after Ramazan and Eid holidays. In June 2017, oil sales stood at 2.12 million tons whereas in July last year the figure was 2.14 million tons. According to a report prepared by research house Shajar Capital, product-wise data depicted that motor spirit (petrol) sales increased from 566,000 tons in June to 617,000 tons in July, up 9percent. Year-on-year, petrol demand rose around 14percent. High-speed diesel demand surged from 641,000 tons to 755,000 tons, up 18percent month-on-month. On a year-on-year basis, diesel sales grew 36percent. “The substantial growth in motor spirit and diesel sales is attributed to a significant growth in auto and agricultural space,” said analyst Ayesha Fayyaz of Shajar Capital. Furnace oil sales inched up to 856,000 tons from 838,000 tons, an increase of 2percent month-on-month. Among oil marketing companies (OMCs), Hascol outperformed in the sector in July sales, achieving a tremendous 69percent growth year-on-year. Its petrol and diesel volumes rose 107percent and 161percent year-on-year, respectively. Consequently, the company’s market share widened 400 basis points to 11percent in July 2017 compared to 7percent in July last year, Fayyaz said in her report. Pakistan State Oil (PSO), on the other hand, lost its market share by 200 basis points to 55percent in July 2017. Shell Pakistan remained a major underperformer with a decline of 28.1percent year-on-year and 26.4percent month-on-month in sales volumes. According to the PAGE Research analyst, Kamal Hayder, fundamentals of the OMC sector are improving since Pakistan has the potential to improve its vehicle-to-people ratio, which is 16 vehicles per 1,000 people, a level that is quite lower than regional peers. India has a ratio of 22 vehicles per 1,000 people whereas Afghanistan has 49 vehicles per 1,000 people.
CPEC ENERGY PROJECT SPONSORS TO PAY $0.15M EACH IN SECURITY COST
Keeping in view the internal and external security threats to the multibillion-dollar China-Pakistan Economic Corridor (CPEC) projects, the government has issued a policy note instructing power project operators to pay protection cost so that they could be ensured sustainable security by special forces. Project sponsors have been asked to pay $150,000 each in protection cost in the very first year. The cost will continue to increase 3percent per annum for the remaining project life. The power sector regulator has issued the directive despite fierce opposition from the project operators with the argument that it is the duty of the government to ensure sustainable security of the projects. The National Electric Power Regulatory Authority (Nepra), in a decision, announced on Thursday “independent power producers of China-Pakistan Economic Corridor projects shall pay $150,000 per annum subject to 3percent indexation for each year after the first year from the commercial operation date, as required under the security protection clause of the Implementation Agreement (of the projects), directly to the relevant ministry/agency designated for the purpose during the construction period as well as during the operation period.” Nepra has issued the policy directive in compliance with a summary sent by the Economic Coordination Committee to the regulator late last year. Earlier, the project operators were required to pay the security cost only if they demanded additional protection from the government. The cost varied in line with the scale of the demand, but it would not exceed $150,000 per year and a 3percent increase per year. Nepra has notified a total of 19 power projects that will be developed under the CPEC programme. These will have a cumulative capacity of 9,887 megawatts and coupled with a gigantic project for the transmission of 4,000 megawatts of electricity, the total cost stands at $15.56 billion. Accordingly, the total security cost to be paid by the project sponsors in the first year comes in at around $2.85 million.
GOVT FLOUTS LAW IN PKR 350MN CAPACITY ENHANCING PROJECT
In desperate efforts to accommodate retired bureaucrats, the government has committed violation of rules while approving third phase of the Rs350-million institutional strengthening project. The Planning Commission, which is responsible to ensure effective utilisation of public funds by all government departments, has itself ignored the laid-down procedures and rules to approve the project. About two weeks ago, the Central Development Working Party (CDWP) approved the third phase of the institutional strengthening and efficiency project without seeking completion reports of the first two phases, said sources. The CDWP also did not seek evaluation reports of the first two phases and cleared the scheme in haste, they added. Apparently, the primary objective of approving the project is to accommodate retired bureaucrats and renovate official accommodations. However, in light of fresh revelations, the government may not be able to sanction funds for the scheme. More than half of the money – 56percent or Rs197 million – will be spent on refurbishing the office space and purchasing furniture. Another Rs105 million, or 30percent, will go to specialists, advisers and others. The laid-down procedures require project authorities to submit the PC-IV document of the previous phase of the project before seeking approval of the fresh phase. The Planning Commission’s record showed that the project director had not submitted any of the two outstanding PC-IV documents. This means the third phase cannot be approved. “Technically, the new phase of an ongoing scheme means that codal formalities have to be met afresh including the hiring of people,” said an official of the Planning Commission. However, the existing staff of the project will continue to work in the third phase, which may invite attention of the accountability watchdog. There are instances where the Public Accounts Committee has ordered the recovery of remuneration in cases where people have been hired in violation of the set procedures. Instead of chief governance of the Planning Commission, Development Budget Adviser Asif Sheikh presented the project for approval in the CDWP meeting.
NAB RETURNS RS43MN TO SHAHEEN FOUNDATION
The National Accountability(NAB) on Monday returned a further Rs43 million in looted money to the Shaheen Foundation. The management of the Al-Hamra (Pvt) Ltd and management of Eden Builders PVT Ltd had deceived Shaheen Foundation and its 700 members to swindle them out of around Rs1.258 billion on the pretext of booking plots in their project. Instead of handing over plots to Shaheen Foundation, the companies sold the land to other parties and deprived the members of the foundation of their hard earned money. On Monday, the foundation’s MD Air Marshal (retired) Jamshaid Khan called on the NAB chief in Islamabad. NAB Chairman Qamar Zaman Chaudhry handed Air Marshal Khan a cheque worth Rs43 million to return the money to the affected people. So far, the bureau has returned Rs630 million to the Shaheen Foundation. NAB Rawalpindi had successfully pursued Al-Hamra (Pvt) Ltd and Eden Builders to recover Rs1.832 billion along with a profit of Rs573.412 million from them. During the anti-corruption watchdog’s inquiry proceedings, the incumbent management of Al-Hamra (Pvt) Ltd, Al-Hamra Avenue Pvt Ltd had shown their willingness to return Rs573 million as a profit in addition to the principal amount of Rs1.258 billion. The foundation’s MD appreciated NAB’s efforts and especially thanked Chaudhry in recovering the looted money.
OGDC DISCOVERS LATEST GAS DEPOSITS IN SINDH
Oil and Gas Development Company Limited (OGDC), the largest exploration and production firm in Pakistan, has announced the discovery of new gas deposits in Sukkur, Sindh, according to a bourse filing on Friday. OGDC Company Secretary Ahmed Hayat Lak said in a notification to the Pakistan Stock Exchange (PSX) that the discovery was made in the exploration well Bhambhra-1, which was located in Sukkur district. “The well has tested 5.73 million standard cubic feet per day of gas,” he said in the notification. The state-owned firm owns 100percent stake in the exploration well. “The discovery of gas in Bhambhra-1 will open new avenues and also add to the hydrocarbon reserves base of OGDC and the country,” he said. Taurus Securities said in a note to its clients the new discovery would win pricing under the latest Petroleum Policy 2012. “Based on our estimate, annualised earnings per share impact of the discovery would add Rs0.12-0.15 per share.” Currently, the government holds 74.98percent stake in OGDC, which is responsible for planning, promoting, organising and implementing programmes for the exploration and development of oil and gas reserves, according to the Oil and Gas Regulatory Authority. The regulator added OGDC’s concession portfolio constituted 63 owned and operated joint venture exploration licences along with working interest in six blocks operated by other exploration and production firms.
SHAHEEN, PIA INDUCT NEW AIRCRAFT INTO THEIR FLEETS
Two Pakistan-based airlines inducted on Friday new aircraft into their respective fleets aimed at expanding operations to new destinations with the industry’s average annual growth of 8-10percent. State-owned Pakistan International Airlines (PIA) has inducted a long-range, wide-body and twin-engine jet Boeing 777-300 into its fleet. The aircraft can accommodate 400 passengers. Meanwhile, Shaheen Air International (SAI), which claims to be the largest private airline in Pakistan, has inducted a short-to medium range, narrow-body and twin-engine jet A319, which can carry 150 passengers.
PAKISTAN, GCC PLAN TO BEGIN THIRD ROUND OF FTA TALKS
Pakistan is committed to finalising a free trade agreement (FTA) with the Gulf Cooperation Council (GCC) in a bid to step up trade volumes between the two sides, a Ministry of Commerce official said on Friday. A text of the initial FTA framework had been agreed with the GCC which comprised Saudi Arabia, Bahrain, Oman, Qatar, Kuwait and the United Arab Emirates, the official said, adding third round of negotiations would start after conclusion of a ministerial-level meeting of the GCC countries to be presided over by Bahrain. Commerce ministers of GCC countries will meet at the end of August 2017 where the FTA between Pakistan and the Gulf bloc will be considered a high priority. Replying to a question, the official said Pakistan and GCC states were committed to liberalising and promoting bilateral trade and business relations. “Promoting private sector for enhancing trade volumes is a priority for both sides,” he added. The official said Pakistan had a comparative advantage in the trade of rice, meat and fruits and investment avenues in agro-processing units in Pakistan were expected to open up as a result of the trade deal.
CAA REJECTS SHAHEEN’S ALLEGATIONS ABOUT NEW ROUTES DELAY
The Civil Aviation Authority (CAA) on Saturday rejected the Shaheen Air International’s (SAI) claim that the former was responsible for a delay in the flight operations on new routes. On May 2, the Sindh High Court had suspended a CAA order asking the SAI to submit fresh documents for the renewal of its licence, according to the private-sector airline. The airline had also said the regulator had not responded to its request for permission to fly on the Multan-Muscat route, blaming the latter for the delay in the issuance of route permits. “[The] CAA strongly sets aside SAI allegations about the recent woes, distress and agony of passengers being caused by the regulator,” the authority said in a statement. “The regulator will take measures that no inconvenience or hardship is caused by SAI’s irresponsible behaviour of selling tickets of unsanctioned new routes despite no permission by Sindh High Court (SHC) in this regard,” it added. “Such allegations [are an attempt to] cover up the airline’s incompetence and inability to work according to the standard operating procedure.” The CAA said under its rules, airlines needed a specific approval of new routes prior to operations. “Starting up a new and unauthorised international route cannot be construed as a routine timetable change,” it said. “The sale of tickets for unauthorised routes is not only a violation but also misleads passengers into buying tickets. It becomes a scam for innocent potential passengers who are unaware of the ground realities,” the authority maintained. The regulator went on to add the airline was “trying to mislead the general public by depicting extreme mismanagement and violation of rules and regulations”. “The SAI has time and again tried to twist the facts to shift the blame of its mismanagement, inefficiency and lawlessness on CAA.” The authority said the airline had failed to meet the codal formalities for the renewal of its license, which it must do within 45 days in the best interest of safety and rights of the travellers. At present, Shaheen Air flies to seven domestic and 13 international destinations.