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Mar 26 - Apr 01, 2001

$373m World Bank loan on soft-terms under study

The World Bank is considering offering a concessional $373 million loan to Pakistan for three development projects.

"Pakistan government's economic revival programme seems to be well on track to produce better results for which the board of directors of the World Bank is expected to approve before July a $373 million loan for three projects on concessional terms," said the WB country director for Pakistan and Afghanistan, John Wall.

He told a news conference here on Wednesday that the proposed $350 million Structural Adjustment Credit (SAC) was likely to be offered on highly concessional terms. The previous IBRD Structural Adjustment Loan (SAL), which was to be agreed on 6/7 per cent interest rate, would be converted into an IDA loan for which Pakistan would have to pay only 0.75pc service charges, he added.

Mr Wall elaborated that beside $350 million SAC, the WB was considering a proposal to offer $20 million for the On Farm Water Management project in the NWFP, and $3 million technical assistance for the Trade and Transport project. An environment project would be undertaken in Balochistan whose funding was yet to be worked out.

In reply to a question, the WB official said that no decision had so far been taken about the $300 million Banking Sector Adjustment Loan, and added that the issue was likely to come up for approval in the next financial year.

He was asked whether the WB would provide $700 million in addition to $600 million from the ADB to help retire some of the Pakistan's most expensive and short-term loan as had been proposed by the Debt Reduction and Management Committee. "It would be difficult for the Bank to offer this much of amount against the present annual funding level of about $200 to $300," he replied.

Nonetheless, he said, his Bank could consider the proposal provided Pakistan was ready to double its exports in four years and manage $3 billion through privatization.

SBP tightens monetary policy

Pakistan on Wednesday further tightened its monetary policy to stabilize the rupee that has so far lost more than 16 per cent of its value against the dollar since its free- float on July 20, 2000.

The State Bank raised the yield treasury bills of three months to one year by 32 to 65 basis points to discourage holding of greenbacks in inter-bank market where the rupee touched a new low of 60.80 to a dollar on Wednesday. This brings its total loss against the greenback to one per cent within a month. On February 20, the rupee had slipped below 60 to a dollar for the first time in inter-bank market and closed at 60.20.

It was on that occasion that the State Bank had hiked up the yield on three-month T-bills by 45 basis points to 10.95 per cent-obviously to keep the rupee stable.

Financial adviser appointed

The financial adviser for the privatization of Government of Pakistan's working interest in nine oil discoveries has been appointed, said Zafar Ali Khan, Secretary, Privatization Commission, on Monday.

Talking to newsmen, he said that the privatization of this share will begin by June 30. This share ranges from 20 per cent to 40 per cent, depending on the size of investment, he added.

Referring to the privatization of PPL, Zafar said that very low gas prices in the country have affected the value of PPL assets which are otherwise very lucrative.

He said PPL is an excellent asset and under the new gas prices agreed with the owners of new gas recoveries at $2 per 1000 cubic feet, its value can be increased to $3 billion.

Financial adviser for PSO sell-off

Privatization Commission on Wednesday signed the Financial Advisory Services Agreement with J P Morgan, for the privatization of Pakistan State Oil Company Limited (PSO).

Ahmad Waqar, Additional Secretary Privatization, signed the FAS Agreement on behalf of the Government of Pakistan, while Philip Jackson, Managing Director and Group Head Energy Infrastructure Asia Pacific of Chase Manhattan Asia Ltd represented J P Morgan.

PC to invite EoI

Privatization Commission plans to invite expression of interest for the sale of United Bank Ltd (UBL) and Pakistan Telecommunication Company Limited (PTCL) by the end of March.

The EoI for UBL will be invited on March 28 and an advertisement inviting EoI for PTCL will appear on March 29, Minister for Privatization Altaf M. Saleem said at a seminar here on Tuesday.

Long-term sugar policy on cards

The federal government has decided to formulate a long-term sugar policy specially by eliminating the old and present zoning systems in the country.

"A development package is being worked out and the purpose is to eliminate both the old and present zoning systems to promote equity and justice in the system", said the Minister for Commerce, Industries and Production, Razak Dawood.

STML plans to raise Rs208.3m

Sapphire Textile Mills Limited proposes to raise Rs208.3 million through a right issue at 35 per cent at a premium of Rs 30 per share.

The company said all of the money, together with the long term loan of Rs100.0 million would be used to finance the expansion plan of the spinning unit.

WAPDA allowed to raise tariff

The National Electric Power Regulatory Authority (Nepra) allowed the Water and Power Development Authority (WAPDA) on Thursday to increase power tariff for domestic consumers only by 12 paisa per unit (kilowatt hour).

The increase was allowed under a mechanism, called the automatic adjustment in consumer end tariff, which was evolved earlier this year. The mechanism provides for a quarterly review of electricity tariff with the fluctuation in fuel prices.

BoI for zero duty

The Board of Investment (BoI) has proposed the government to bring import of machinery and raw material under the zero slab regime in next budget, the BoI Chairman Wasim Haqqi informed the members of the International Chamber of Commerce (ICC) on Thursday.