Ruling on rental power plants: Turkish firm takes dispute to international court

Rejecting the Supreme Court’s ruling on rental power plants (RPPs), Turkey-based power firm Karkey Karadeniz Elektrik Uretim (KKEU) has instead moved the International Court of Arbitration – seeking compensation from the Government of Pakistan for losses that it says have arisen out of the latter’s alleged breach of contract. The company has sent a legal notice to the Government of Pakistan seeking remuneration for losses arising out of – what it says – is a violation of the Rental Service Contract (RSC).
The firm says that Pakistan has violated the obligations of an investment treaty between Pakistan and Turkey, and that the breach of contracts pertaining to rental power plants is also in violation of international law.
In a legal notice served to the Government of Pakistan on May 19, 2012, KKEU has demanded that the former halt inquiries initiated by the National Accountability Bureau (NAB).
Previously, NAB had sought payment of over $180 million from KKEU during an inquiry initiated after the Supreme Court’s verdict calling for the dissolution of all rental power projects. The company summarily refused to deposit the amount. NAB had also obtained and issued a freezing order against Karkey’s banks accounts in Pakistan.
The Port Qasim Authority had taken action against the firm on April 5, 2012, after the Supreme Court’s verdict calling for the dissolution of all rental power projects. The authority acted by issuing a notification which said that ‘caution’ had been placed on Karkey’s vessels under Section 23 of the Pakistan National Ordinance. The notification further directed that vessels were not to move from their moored position until completion of the NAB inquiry, or before clearance from NAB. Pakistan has refused to lift that caution to date.
The firm has also demanded that the government withdraw a freeze in place on KKEU’s bank accounts in Pakistan. The latter should also ensure the release – and allow unhindered removal – of all vessels and equipment currently located in Pakistani territory without delays, the notice said.
Karkey said that it had suffered – and continued to suffer – substantial losses arising out of the inquiry, for which the Government of Pakistan should reimburse the firm.
The Pakistan government has also been warned to desist from making any demands or taking any action for sums to be paid by Karkey. Pakistan has been urged, instead, to compensate Karkey for losses suffered by the company to date. Pakistan is to remain liable for any further loss suffered by Karkey, the notice said.
“For the avoidance of doubt, Karkey does not accept that the Supreme Court had jurisdiction in relation to this matter,” the firm’s legal council has said; adding that NAB wrongly commenced an inquiry against Karkey.
“In the event that disputes cannot be settled within six months of the date of this written notification, Karkey will commence arbitration proceedings in accordance with the Article V11 of the Treaty,” the firm has said. In the event of Pakistan’s failure to respond promptly to this notification, or to engage in meaningful consultations and negations, KKEU reserves the right to commence arbitration proceedings forthwith, the company clarified.
A senior official of the Ministry of Water and Power confirmed that the ministry had received a legal notice from the Turkish firm, and added that negotiations were being held with the Turkish government to resolve the issue.

Not quite steaming on: Operations disrupted, leaving passengers stranded

It seems that the woes of the cash-strapped Pakistan Railways (PR) are never-ending. Although the entity began 2012 on a positive note compared to last year’s ill-famed operational crisis, the quality of its services is once again on the decline. Express and passenger train operations have recently witnessed massive disruptions, leaving desperate passengers stranded at railway stations.
The year started positively for PR on the financial front: so far, it has managed to fulfil fuel requirements, rehabilitate a few locomotives, pay salaries and pensions on time, enjoyed moderate success in freight operations and has had a measure of success in public-private ventures. Even a bomb blast at its Lahore Cantonment Station nerve centre did little to dent demand, as passengers continue to prefer travelling via rail due to its easy affordability.
“We are in a much better position than last year, as we have successfully overcome a few of our deficiencies which hurt the corporation’s daily operations last year,” PR Public Relations Director Mohsin Yousaf told The Express Tribune.
“[But] we are still struggling: our fleet of locomotives stands at around 110 passenger and 10 freight trains. We were able to achieve 30% punctuality this year, compared to 7% last year – but the percentage again dropped below 20% due to locomotive failures and union strikes.”
Union strikes were a major reason for disruptions in express and passenger train operations, he said.
Besides passenger trains, all express trains operated by Pakistan Railways are also currently off schedule. Even the Shalimar Express – a public-private venture – has witnessed continuous delays of up to six hours. The only train still able to keep the schedule is the Pakistan Business Express.
While talking to The Express Tribune, commuters on express trains – besides the usual complaints about routine delays – also mentioned that power vans used to generate electricity for air conditioned coaches break down periodically during long haul journeys. Instead of replacing the vans, the management usually decides to continue the journey with dysfunctional ones, they complained. Families – irritated at being forced to travel in airtight coaches with bawling infants chafed by heat and suffocation – have taken to protest by blocking train tracks.
Yousaf admitted that it must be tough to travel in an airtight cabin with the onset of summer, but claimed that PR reimburses passengers who have to travel without air conditioning. However, he said the authority cannot do anything if a power van fails during a journey; what it can do is despatch engineers to diagnose the fault – which it has been consistent with.
The railways administration says it has been anxiously awaiting the grant of a loan worth Rs6.1 billion. PR planned to rehabilitate around 98 locomotives using the loan. Delay in the release of funds is one of the primary reasons why the organisation is once again witnessing deterioration in its daily operations.
“We are eagerly waiting for the loan to be approved, in order that we may rehabilitate more locomotives and normalise our operations,” Yousaf said. “It will be difficult for the railways to ease the pressure without this loan,” he added.
Meanwhile, locomotives repaired by the railways using its own resources are once again being relegated to the scrap yards. The number of locomotives in operation crossed 140 at one point this year, but is shrinking again mainly due to the substandard material used in their repairs.

Money and doctors: Private healthcare spending in Pakistan rises to $7.3 billion

KARACHI: Pakistanis are increasingly spending more on health, with spending rising to a total of Rs665 billion in 2011, up 14.5% over the previous year, according a to research report released by Business Monitor International (BMI), a UK-based research and consulting firm.
Within the overall sector, the largest in terms of total spending was that of hospitals and other healthcare facilities, which saw their total revenues rise to Rs456 billion in 2011, up 14.1% from the year before. The fastest growing segment was medical devices, which saw sales rise 18.1% to Rs35.5 billion. Pharmaceuticals grew a little slower, at 13.1%, to reach Rs173 billion in gross sales in Pakistan.
There are also several developments taking place within the sector that are likely to allow for even further expansion, according to BMI analysts.
In August 2011, the Drug Registration Board (DRB) approved the registration of 30 medical devices and 210 medicines after a meeting was held at the request of the Prime Minister Yousaf Raza Gilani, who called for the uninterrupted provision of medicines to patients. Products approved for registration included vaccines, biologicals, cancer therapeutics, drugs for the treatment of blood disorders such as thalassaemia, and devices used in cardiac procedures.
BMI points out that there are many reasons why investors, particularly those outside the country may want to consider investing in this sector. “Pakistan has one of the most liberal foreign investment regimes in South Asia, with a commitment to low tariffs and 100% foreign equity permitted,” said BMI analysts in the report.
The analysts also note that Pakistan’s rapidly growing population – currently closing in on 190 million – should also be considered an asset. “A growing population is feeding increased demand for pharmaceuticals.”
There are, nevertheless, several challenges faced by the healthcare sector in Pakistan, which BMI cautions investors to be aware of. For the pharmaceutical sector, in particular, the analysts warn: “Counterfeit medicines, a lack of transparency in the government’s pricing mechanisms and an approval process that is biased towards domestic manufacturers are all factors depressing the market’s attractiveness.”
The opening up of free trade with India is seen as a bit of a mixed bag. On one hand, it would allow Pakistani firms to export their products to India more easily, allowing them access to a large and rapidly growing market which would help many of these firms scale up their capabilities and reduce overall costs for Pakistani consumers. On the other hand, many pharmaceutical manufacturers claim that they will not be able to compete with Indian companies and will likely be forced out of business by cheap Indian imports.
Pakistan’s overall business environment gets a poor rating from BMI, which ranks the economy 16th out of the 18 economies that it tracks in the Asia-Pacific region. The only two economies behind Pakistan are Sri Lanka and Cambodia. “The business environment still suffers from poor infrastructure and, most problematically, an uncertain security situation that has declined considerably since March 2007,” said BMI analysts.
In addition, there are several structural challenges to the Pakistani healthcare industry itself that have little to do with the external environment of Pakistan that they operate in. “Procurement processes are bureaucratic and often lack transparency, raising the risks of corruption,” said BMI in its report.

School principal, nephew shot dead

QUETTA: The principal of Public School Kharan, said to be devoted to Pakistan, and his eight-year-old nephew were killed when armed men opened fire on their car on Saturday.

Sources said the incident took place when Principal Muzaffar Jamali was going to the school in his car with his nephew and two related girls.

The armed men attacked the car near the PTCL exchange in Kharan town, killing Mr Jamali’s nephew, Abdullah, on the spot.

Mr Jamali, his driver and the two girls — who were injured in the attack — were taken to the Kharan district hospital. Later, they were moved to the Combined Military Hospital in Quetta where Mr Jamali died.

The condition of the driver and the two girls was stated to be serious.

Police said Mr Jamali received multiple bullet injuries because his car was attacked from two sides.

The bodies were handed over to the heirs after completion of legal formalities.

Mr Jamali belonged to Jaffarabad district and had worked at the school for several years.

Jeiand Baloch, a spokesman for the outlawed Baloch Liberation Army, claimed responsibility for the attack on behalf of his group.

He said that Mr Jamali “worked for state agencies” and for that reason he was eliminated.

However, the spokesman regretted the killing of his nephew who was travelling in the same car. He claimed that Mr Jamali was killed in reaction to the ongoing paramilitary operations in Kharan and Nushki.

Four people killed in US drone strike in North Waziristan

At least four people were killed and two others were injured in a U.S. drone strike launched early Saturday morning at North Waziristan Agency (NWA).

According to the media reports, the incident occurred near Miranshah early morning when US drone fired two missiles at a house.

As a result, four persons were killed while two others were injured. The house was completely destroyed in the strike. This is the third U.S. drone strike in North Waziristan within the last four days and it is also the 15th of its kind in Pakistan since the beginning of this year. To date, at least 112 people have reportedly been killed in such strikes in 2012.

Convicted PM not acceptable: Rana Sanaullah

LAHORE: Provincial Minister for Law Rana Sanaullah Khan has said that the convicted prime minister cannot be accepted. He said after the decision of the Supreme Court the prime minister had no legal and moral justification to remain in the office.

Commenting on the statement of Imtiaz Safdar Warraich, he said the convicted PM gave nothing to the nation except price-hike and unemployment. He said the corrupt gang was transferring its wealth abroad. He said the corrupt rulers had made the lives of the people miserable and gave them only disappointments. The Punjab law minister said the tales of the corruption of the government were known to everyone but corrupt rulers were not worried about it. He said Ali Baba and 40 thieves were plundering the national resources ruthlessly. Rana Sanaullah said the people would reject this corrupt gang badly in the next general elections and they would be held accountable for the looted money.

N wants PCNS resolution implemented

LAHORE – PML-N Information Secretary Senator Mushahidullah Khan has said that his party wants implementation in full of Parliamentary Committee on National Security (PCNS) resolution on Nato supplies.
Talking to this scribe, Mushahidullah said that whether what President Asif Ali Zardari said at the Chicago summit was in the spirit of the resolution would be gauged by the practical steps the PPP-led government took.
“The Chicago summit has to ratify what was decided at the Bonn conference on Afghanistan, in which Pakistan did not participate. Bonn was in fact the basis of what Chicago summit aims at taking ahead,” he said.

Shahbaz repeats long march talk

KASUR – Punjab Chief Minister Punjab Shahbaz Sharif on Saturday said unbridled corruption in the country was responsible for loadshedding, poverty and massive unemployment in the country; therefore, people should extend full support to his party in the proposed long march towards Islamabad against the corrupt Pakistan People’s Party (PPP) rulers.
Shahbaz further said people from Khyber to Karachi had lost patience and were not ready to tolerate corrupt and inefficient government even for a moment. “No one can withstand might of the masses,” he remarked.
Addressing a crowd gathered in Kasur to protest against power loadshedding, Shahbaz said the federal government was inflicting serious damage on Punjab by supplying power far less than its due share.
He said Punjab was the worst target of loadshedding which not only suffered the loss of Rs 500 billion, but hundreds of thousands of people had also become jobless because of it. “We will hold the rulers accountable for the injustices being committed to Punjab.”
He criticised the government, blaming President Asif Ali Zardari and Prime Minister Yousuf Gilani of destroying Punjab’s economy with prolonged power outages.
“Businesses and factories in the province are closing down due to the government’s poor and inefficient policies,” said the chief minister, adding that the people were struggling to have a single meal a day.
Shahbaz further told the people that he would accompany the people shoulder-to-shoulder in their protest against the unending power crisis.
“The federal government is trying to ‘take revenge from the province’ through loadshedding as it has taken its toll on Punjab’s villages and cities,” he added.
Highlighting the welfare projects initiated by the Punjab government, he said these ventures were pinching the opponents.
Expressing his hopelessness over the state of economy, Shahbaz said the ruling clique in the Centre was looting the national wealth, adding that the economy could not recover because of short-sighted policies of the federal government.
Earlier, he told media persons in Fatehpur village – where he visited the residence of prominent local politician MNA Rasheed Ahmed – Gilani was violating the Constitution and it did not matter whether a convicted prime minister went into an appeal or not against the apex court’s verdict.
Answering a question whether the PML-N will take part in the forthcoming general elections if Zardari was the President of Pakistan, he reply was, “Who is Zardari?”
The chief minister also ordered an inquiry into the distribution of gunny bags at the wheat procurement centres in Kasur.
Later, he also visited the residence of MNA Waseem Akhtar to condole the death of his father. Leader of Opposition in the National Assembly Chaudhry Nisar Ali Khan, Punjab Assembly Speaker Rana Iqbal Khan and local parliamentarians accompanied him.
On the other hand, Chaudhry Nisar also had a chat with reporters, during which he warned that Imran Khan would destroy Pakistan if he came into power. “God forbid if Imran Khan comes to power, he will destroy Pakistan”.
The PML-N leader said none of those personalities, whose names he had recommended for the slot of chief election commissioner, belonged to his party.

Industries, IPPs urge govt to provide

LAHORE: Textiles, fertiliser and independent power producers have joined hand to press the government planners to provide 500mmcfd natural gas to the CNG filling stations that would save the government around Rs400 billion and kick start the economy.

At a briefing given to the senior bureaucracy currently undergoing training at the Civil Services Academy Lahore; the representatives of the industry said that CNG consumed inefficiently by the vehicles saves the owners a cumulative amount of Rs50 billion per annum, which is the differential between the price of petrol and CNG.

SM Tanveer, chairman of Punjab Industrial Estates, said that it is unfair that the luxury vehicle owners enjoy cheapest car fuel, while millions of motorcyclists belonging to lower-middle class purchase 40 percent more expensive petrol.

Car owners whether driving a luxury vehicle or smaller cars, he said, do not deserve Rs50 billion subsidies, which should be diverted to more deserving segments of the society.

CNG rates should be brought at par with petrol and it should be gradually replaced with liquefied petroleum gas (LPG), which is a better car fuel, he added.

“We should raise our voice against this injustice and create awareness among the masses of the negative impact of CNG on the economy,” he added.

Gohar Ejaz, group leader of All Pakistan Textile Mills Association, said that CNG supplies have crowded out gas availability for textiles, fertiliser and the power sector.

When 600MW gas-fired power plants run on diesel, the government losses Rs200 billion per annum, he said, adding that power produced through gas cost Rs6 per unit, while the cost increases four times in case the power is produced through diesel.

If 200mmcfd gas is assured to the IPPs, the overall power tariff would decline by Rs3 per unit, said Ejaz, adding that this saving could either be passed on to the consumers or spend on new power generation projects.

The fertiliser industry representative said that by denying gas to the fertiliser plants the government is forced to import urea from the global markets that costs twice the price charged by local urea manufacturers.

“This year, the government paid a subsidy of over Rs100 billion on imported urea to bring its price at par with the local urea,” he said, adding that the price differential, in fact, is much higher as 30 percent increase in local urea rates was due to losses industry suffered because of frequent and abrupt suspension of gas supplies.

Additional supply of 100mmcfd gas would assure uninterrupted and adequate supply of local urea, he added.

Ahsan Bashir, chairman of APTMA Punjab, said that the textile industry has been devastated by suspension of 180 days of gas supplies this year in Punjab. It has not accepted export orders worth at least $2 billion because of gas shortages. Moreover 1.5 million workers were rendered jobless due to closure of industries for more than six months a year, he said.

Delay in public auction by Customs causes huge loss to exchequer

KARACHI: The inefficiency of Customs authorities in disposing of auctionable cargo has resulted in huge revenue loss to the exchequer, besides causing port congestion.

The Karachi Port Trust (KPT) has sent a communication to the Customs authorities, saying that the disposal of auctionable cargo through public auction is going on a slow pace. “As a result, auctionable cargo is being increased day-by-day and now the strength has reached 964 lots, consisting of 50,321 packages and the same are still laying uncleared at East Wharf,” according to the letter sent to the Customs authorities.

The port authorities have urged Pakistan Customs for early disposal because both the authorities are spending a lot of money on uncleared auctionable cargo lying in the port area since decades.

“The maximum disposal of auction lots would not only increase revenue for the exchequer, but also eases the congestion at port for accommodation of fresh import cargo,” the letter revealed.

The KPT has sent the progress report from January 2010 to April 2012 to Collector Customs (Appraisement) and advised for inclusion of auction schedule for this month.

The port authorities also said that consignments have been examined several times by the Customs officials, but they did not give examination sheet to the KPT staff for record and reference, resulting in time and again examination of the consignment. The top Customs authorities have been advised to direct the officials to hand over the examination sheet to KPT officials concerned whenever they examined the consignment.

The Customs officials, however, defended the slow progress of auction at ports, saying all the legal formalities and transparency are ensured before accepting bids in auctions.

“There are some groups, who deliberately bid lower prices and this cause delay in the auction,” said an official at Pakistan Customs.

Under Customs Rules, 2001, all goods, the aggregate appraised value or the reserve price of which does not exceed Rs1 million, may be sold by public auction conducted departmentally at the discretion of the collector, and all goods, the aggregate appraised value or the reserve price of which exceeds Rs1 million, would be sold by public auction through an auctioneer.

The rules, however, also said: “Provided that perishable goods may be sold by the collector through public auction or a private offer irrespective of its value.”