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July 26, 1999

  1. International
  2. Finance
  3. Industry
  4. Policy
  5. Trade

No plans to shelve power project

State utility Tenaga Nasional Bhd said that it had no plans to shelve its power project in Pakistan but said that delays in implementation pushed up the project cost of phase I by $200 million.

It was replying to questions raised by the Kuala Lumpur Stock exchange (KLSE).

Tenaga said phase I of the Liberty Power Ltd project located in Daharki in the province of Sindh was originally estimated at $ 250 million.

As a result of the delays, its commercial operation date was rescheduled from August 1997 to December this year. The expected original return of 23 per cent from the project was revised downwards to about 10 per cent, Tenaga said.

KLSE had queried Tenaga on a report in the Hong Kong based Asia Wall Street Journal last week that delays in the construction of the plant would hurt the group's earnings. The article also said Tenaga might make provisions in its accounts for financial year 2000 if the project was shelved due to problems on tariff rate agreement and the supply of gas.

According to Tenaga, the physical construction of the plant commenced in early 1996, has been completed and it will be commissioned once gas is made available and the tariff rate issue resolved. Liberty Power, a 470 mw gross capacity power station is one of the major independent power projects in Pakistan.

The project was approved in July 1995 when the company obtained the letter of support from the then Bhutto government for the implementation of the project in two phases, of 235MW each.

The implementation and the power purchase agreement for phase I, was signed in November 1995. "Current negotiations with the Pakistan government are in respect of phase I of the project, as discussions on phase 2 have not started yet," Tenaga said.

The utility company also said it had increased its interest in Liberty Power from an initial 20 per cent to 62 per cent in April 1998 to 100 per cent in mid-July at the request of the Pakistan government.

Cotton output target set at 9.7m bales

Pakistan has increased its cotton output target to 9.7 million bales from nine million for the current 1999/2000 fiscal year, an official report said. .

"The cotton production target for 1999/2000 has been fixed at 9.7 million bales, which is to be achieved from an area of 2.93 million hectares (7.4 million acres)," said a report of the state Pakistan Central Cotton Committee obtained by Reuters on Thursday.

Pakistan graples with economic fallout

Pakistan's fragile economy has suffered considerable damage from the two-month conflict with India over Kashmir which broke out just when it had started showing signs of a recovery, business sources said on Tuesday.

Businessmen said the crisis which triggered fears of an all-out war between the arch foes hit the stock market, discouraged investors and put the brakes on trade.

The crisis was defused by Prime Minister Nawaz Sharif's decision to call back Islamic fighters from the Indian side of the disputed Himalayan region.

Business sources said a major factor behind Sharif's move was the economy.

Heavily dependent on foreign loans, the economy could hardly have sustained any further escalation in the conflict.

Pakistan's economy posted a low 3.1 per cent growth rate in the fiscal year to June 30 against a target of 5.0 per cent due to international sanctions slapped over nuclear detonations by the country in May 1998.

PARCO's White Oil Pipeline project

Pak-Arab Refinery Limited (PARCO) has said that the performance guarantee of $30 million for White Oil Pipeline project has been arranged and PARCO's bankers have already submitted a draft of the performance guarantee as per the prescribed format.

PARCO was clarifying a news item with Islamabad dateline captioned "White Oil Pipeline project in jeopardy" published on July 17.

The company said that as soon as clarifications are received and the necessary approvals obtained, the Performance Guarantee would be submitted.

In the meantime, the initial project related work such as reconnaissance/detailed survey of the pipeline route, the front end engineering design (FEED) activities and the environmental assessment study are being proactively planned with the objective to commission the WOPP Pipeline by the scheduled dates desired by government of Pakistan, it added.

Wheat support price by Sept

Agricultural Price Commission (APC) is actively framing various proposals regarding increase in wheat support price for the fiscal 1999-2000 to be finalized at a meeting next month.

The summery of the proposals, to be finally shaped at APC meeting in August, will be sent to the cabinet for final approval, in September next, sources at the Agricultural Ministry said on Monday.

BD offers expertise in tea farming

Bangladesh has offered to provide requisite technical and professional assistance in the development and promotion of tea cultivation in Pakistan.

This offer was made here on Monday by the delegation of Bangladesh in course of a meeting with the federal minister for food, agriculture and livestock, Abdul Sattar Lalika.

Ginneries resume operations

More ginneries have resumed operations in the lower Sindh cotton belt as arrivals of phutti from the fields are picking up daily but prices are stable despite no let-up buying from the central Punjab ginners.

According to Karachi Cotton Association (KCA), about a dozen factories have gone into production and more are ready to join them as prevailing prices of phutti and lint cotton suit both the ginner and the spinner.