The Competition Commission of Pakistan (CCP) finally came up with an order on 30 April, regarding the fate of amounts charged on making international telephone calls to Pakistan. In its order, the CCP had the Pakistan Telecommunication Company Limited (PTCL) and 13 other long distance and international telecommunication service operators (LDI operators) in its sights and has now ruled against these LDI operators. In total, LDI operators were fined over Rs 9 billion, with the major share against PTCL (Rs 8.3 billion). This is in addition to the Rs 8.6 billion ordered against urea manufacturers, Engro Fertilizers Limited and Fauji Fertilizers in March. Needless to say, many are questioning the motive behind CCP’s decisions during the tenure of an interim government. The CCP’s order focuses on an agreement entered into by PTCL and the other LDI operators in 2012 known as the ICH Agreement. Strangely the LDI operators were ordered by the Ministry of Information and Technology (MOIT), the federal ministry responsible for telecommunications, and the Pakistan Telecommunication Authority (PTA), the regulatory body for the telecommunication sector, to establish an organisation known as the International Clearing House (ICH). The ICH Agreement provides for the LDI operators to put in place a set of tariffs for all incoming international telephone calls. The tariffs are then passed on to the international telephone companies, through which calls are made to Pakistan. So, in fact, no one in Pakistan was actually a ‘victim’ of the so called ‘cartel’. Subsequently the PTA declared that only PTCL’s infrastructure was to be used for international telephone calls. An important factor to note is that the MOIT and the PTA have always been the ones to set tariffs; and that the LDI operators and PTCL were simply following orders of the federal government and the regulatory body. However, the CCP has overruled such observations and declared itself and the Competition Act, 2010, as an all powerful body with the power to overrule the role of the government. The thrust of the CCP’s order is basically this: “You should not have listened to your bosses and regulator and you should have listened to us as we are more important.” This sounds almost childish but, alas, it is true. Rather than make such declaratory statements, it would have been more prudent to refer the matter to a judge, or the attorney general to determine the issue of legal supremacy. If one was to look at the larger picture, one must ask who actually benefits from the CCP’s order. It surely is not the average Pakistani who the CCP paints as the victim. After all, PTCL’s major shareholder is the Pakistani government. No doubt PTCL is a well performing company, but there is almost no chance it has over Rs 8 billion in its reserves. Therefore, the company will have to ask its shareholders for further capital, and effectively the government would have to bail out PTCL, only then to receive the fine once it has been paid. Of course with any crime, we must consider the motive. The officers of PTCL had nothing to gain personally from entering into the ICH Agreement. They were ordered to do so by the government, having been appointed by the government. In newly privatized companies, there is often a sentiment that the government is still the paymaster. Furthermore, why is the order not directed at the MOIT or the PTA, and why were they not made a party to the CCP’s investigation? After all, these are the parties that ordered the LDI operators to enter into the ICH Agreement, notwithstanding the fact that they ignored the CCP’s earlier requests to desist from insisting on the agreement; and so they would have to be penalised in addition to the LDI operators. Perhaps the MOIT and PTA could have justified their instructions to the LDI operators. It could well be that the CCP did not consider such bodies to be under the remit of the Competition Act, 2010. If this was the case, then the same argument would apply to PTCL. There is much confusion, to date, as to whether PTCL is a public body or a private one, and even the Honourable Supreme Court has not provided a definitive answer on that. Many parts of the CCP order simply do not make sense. Many of the cases relied upon by the CCP are its own former judgments. Technically, this is possible but looking at the holistic picture, it appears that CCP officers are simply justifying previous judgments. However, it is not clear whether these judgments were later approved, or set aside by courts. Further, the order, as a matter of fact, states that international telephone call traffic has been reduced by high tariffs set by the LDI operators and the ICH Agreement. However, it is not clear how the CCP reached such a conclusion. There are a variety of reasons why international call traffic has declined. For instance, the growth in VOIP services, such as Skype, social media and the fact that people simply talk less and prefer to use other mediums such as emails, are major factors. TeleGeography, a telecommunications and market research firm based in the USA reports that overall, since 2004, the growth rates for international calls, globally, has been in steady decline. Is this because of cartels squeezing telephone operators? Of course not. In addition, the CCP often seeks reliance on the decisions of cases in other jurisdictions. Competition law in the European Union and the United States of America (USA) is much more advanced than in Pakistan, with the European Union regarded as being even more advanced than the United States in terms of the scope of its decisions. It is therefore common to find many of the CCP’s orders littered with references to decisions of the European Competition Commission. However, the order seems to rely mainly on American law. To see why this is the case, one must consider the nature of what MOIT and PTA have done. Effectively, they have provided aid, which when given by a governmental body is known as ‘state aid’, to the LDI operators. Generally, European competition law prohibits state aid; but European law does allow such aid in a number of limited circumstances. It is arguable that if reliance was placed on European law, the CCP would have had to apply the exceptions and thus negate its very own enquiry. Another issue that the CCP has ignored is security. This is not the forum for a discussion on the moral justification for eavesdropping telephone conversations, but it is a sad fact that there is a need to monitor a small percentage of telephone traffic. Surely it would be easier for the security agencies to monitor telephone traffic through one network rather than more than two dozen international networks? It seems that the issues that have arisen from the order can now only be resolved in court and thus cause further burden on the public exchequer- so watch this space!
All Pakistan Anjuman-e-Tajiran Central General Secretary Naeem Mir on Friday said the business community wants Shahbaz Sharif as energy minister to resolve the energy crisis. The former Punjab chief minister is very capable of resolving the energy crisis engineered by the former Pakistan People’s Party government, he said. Talking to Dr Murtaza Mughal, President of the Pakistan Economy Watch, Naeem Mir said that Pakistan braved massive mismanagement and corruption for years which triggered inflation, unemployment and economic meltdown. The former governments wasted billions of rupees of taxpayers’ money only to further deteriorate ailing power sector and public sector enterprises. Mir demanded imposition of power emergency and giving control of power distribution companies to provinces. He said that tax amnesty schemes are counterproductive as budget deficit can only be bridged if big evaders are brought to book. Government should initiate legislation to forfeit assets of tax evaders and to bring stolen funds back from the Swiss banks, he demanded.
|US Dollar (USD)||98.43|
|UK Pound Sterling (GBP)||151.89|
|Canadian Dollar (CAD)||97.58|
|Saudi Riyal (SAR)||26.25|
|U.A.E Dirham (AED)||26.8|
|Australian Dollar (AUD)||98.98|
The Pakistan Steel Mills (PSM) has reorganised its maintenance, operational and production strategy as the raw-material-starved steel producer is restlessly awaiting the materialisation of Rs11 billion bailout package the federal government had recently announced. “The PSM management has reorganised its strategies to get maximum benefit of the bailout package within minimum possible period,” said a spokesman of PSM. He said it had also been planned to establish a continuous supply chain of iron ore and coal. The placement of order and shipment of raw materials had also been planned to maintain at least 90 days stock of raw material, specially iron ore and coal, he said. The spokesperson hoped that the package will soon be given to Pakistan Steel. The entire bailout package, he said, will only be used for the procurement and import of raw materials i.e. iron ore and coal to enhance the production to 80pc by the end of this year and in first phase 60% by the end of August 2013. The recent announced bailout package of Rs 11 billion would be given through a single tranche in a shape of soft loan being provided by National Bank of Pakistan under the guarantee of the federal government. The spokesman said a bank consortium is formed to work out the working capital requirement of Pakistan Steel and arrange funding accordingly.
Joining the Iran-Pakistan-India gas pipeline project would give Bangladesh access to Iranian gas and resolve its energy crisis, Bangladeshi Finance Minister Abul Maal Abdul Muhith said on Friday. Bangladesh has a natural gas deficit and at some point the country would have to import gas, Muhith told journalists after a meeting between Bangladeshi and Iranian officials in Dhaka. “If the IPI gas pipeline is expanded up to India we can join it,” said the minister. When the pipeline is built from Iran to India, it will come to West Bengal of India, which is close to Bangladesh, he added. Mehdi Ghazanfari, Iran’s minister for industry, mines and trade, said it would be “quite possible” for Iran to export gas to Bangladesh. The possibilities of importing LNG from Iran was also discussed in the meeting. But that was discounted in the immediate term by Muhith. “It is better to import natural gas through pipeline instead of importing LNG,” Muhith said. Bangladesh will also consider LNG imports from Iran after building necessary import facilities in the next two years. “But, since the IPI gas pipeline is coming to India, we are willing to join the pipeline,” he said. The proposed IPI pipeline would be 2,700 km (1,620 miles) long and would bring gas from Iran’s South Pars fields in the Persian Gulf to Pakistan’s major cities of Karachi and Multan and then to Delhi, India. Its estimated cost is $7 billion. India, which has been boycotting formal talks on the project since 2007 over security concerns, recently has shown interest to re-enter negotiations for the project.
During 9MFY13 the overall revenue base of the government grew by 22%YoY to Rs2.125 trillion. The tax revenue on the other hand improved by a nominal 11%YoY to Rs1.528 trillion and non-tax revenue increased by a massive 62%YoY to Rs597bn. “The massive increase in non-tax revenue is due to the inflow of $1.9bn in the form of Coalition Support Fund (CSF) during the period,” viewed Abdul Azeem, an analyst at InvestCap Research. The government set the initial target for total tax revenue at Rs2.381tn however the same was revised downwards three times during the period having now reached to Rs2.116tn. Moreover, with the initial expenditure target of Rs3.203tn, the fiscal balance was budgeted at a deficit of Rs1.105tn or 4.7pc of the GDP. During the last five years, Azeem said last quarter of the fiscal year remained the worst as compared to other quarters of the years. “The trend reveals that average fiscal deficit hovered around 2.3% of GDP during the last quarter of the fiscal year as compared to 1.4% during the remaining three quarters,” he added. The higher realization of expenditure of 6.8% of GDP as compared to 4.4% during remaining three quarter of the year has been the main concern behind the rise in fiscal deficit, he said. During 9MFY13, the government has repaid the amount of Rs772bn on account of debt servicing, 3.3% of GDP, as compared to Rs624bn or 1.7% of GDP in the same period last year. In addition to this, the government has also provided Rs315bn in the form of subsidy till May, 17 this year. The new government is expected to take oath during May, it is therefore unlikely that the gov’t will be able to bring any abrupt improvement given the prevailing situation on the revenue front for FY13. “However, some constraints are yet to be seen on the expenditure front during the last quarter as the caretaker government has stopped the funds for different ongoing projects,” said Azeem. Incorporating all developments, the deficit figure is still expected to touch 6.8pc of the GDP, higher than the target of 4.7% for FY13, the analyst said.
Experts at a conference underlined the need for taking solid steps to effectively explore and utilize natural resources, especially coal to meet the country’s growing energy needs. Presenting Energy Vision 2030 at a conference titled, “Solutions for Energy Crisis”, organised by Islamabad Policy Research Institute (IPRI) and Hanns Seidel Foundation, Islamabad Dr Shaukat Hameed Khan, Vice Chancellor Sir Syed CASE-Institute of technology said there was grave dichotomy at the policy base which resulted in offering quick and effective solutions to the power shortage problem being faced by the country. “The energy system was not attuned to technology which determined the demand supply equation and there were home grown solutions available and coal above every other resource offered a natural option but planners had been neglecting these for over three decades now,” he said. Unless the new government harmonized its fragmented governance in this respect it would be hard to end power outages anywhere in the near future, he said, adding that the country would need $210 billion in the next 20 years to meet the growing energy needs. He favoured coal-based energy but since mining of Thar coal could take long Pakistan should import coal for immediate use in place of diesel and furnace oil. Amidst this hard and realistic account of the state of energy a very emphatic and bright presentation was made by a young scientist Salman Qaisrani, Director, CWS Technologies, who claimed that the Coal Water Slurry Combustion Technology offered the cheapest, quickest and most workable solution in the short and medium term as it was based on local coal reserves of Thar. The present thermal power units now using expensive imported furnace oil could easily be converted to use this formulated material which would reduce by one third the present cost of power. He claimed the entire changeover could be accomplished in six months to one year, saying it was not a new technology and was in use in Russia and China while India was using it through imported coal. Earlier NA Zuberi, Managing Director, Private Power and Infrastructure Board, said the private sector was producing the bulk of the electricity (46 %) but shortage of fuel and funds was constraining generation growth. He said work was apace on the feasibility of Mega Power Parks based on imported and local coal. If these parks materialized the country’s energy shortage would end, he added. Advocate Ameena Sohail, senior associate at IPS, spoke on impact of 18th Amendment of the constitution on energy generation and called it merely cursory as much remained to be done by the Council of Common Interests (CCI) that needed to be activated in this regard, particularly in respect of the Strategic Plan of 1992. Barrister Aeman Maluka spoke on energy conservation efforts which she said only existed on paper as the policy of self regulation by industries was a failure in the absence of an overseeing mechanism. She said environmental taxes also could not be imposed in a country where tax theft was rampant. Dr Nazir Hussain of QAU spoke on diplomacy and international dimension of energy management.
Dissention amongst the top ranks of economists in the country has led the caretaker government to call for scrapping of the Planning Commission’s Framework for Economic Growth (FEG), in favour of the 10th Five-Year Economic Plan. According to details, The FEG had been prepared by former Planning Commission deputy chairman Dr Nadeemul Haq, who was recently dismissed from his post by the caretaker govt. When Dr Haq became the deputy chairman, the Planning Commission had been preparing the 10th Plan for 2010-15, which he ordered to shelve. In its place, he had provided his own strategies for economic development. The FEG was later approved by the National Economic Council, the country’s highest economic decision-making body. However, the FEG was never implemented and lacked broader acceptance. The 10th Five-Year Plan is a draft document put together by the current finance adviser’s brother, Dr Rashid Amjad, in the latter’s capacity as acting chief economist at that time. Dr Rashid was relieved of his duties when Dr Haq took over as deputy chairman of the Planning Commission. Differences between the Plan and the FEG The main focus of the Five-Year Plan (2010-15) was on increasing investment in education and health and to improve living standards. The Plan had also promised to usher in an era of development in parts of the country that had remained underdeveloped thus far. FEG’s strategy on the other hand was based on sustained reforms that would build an efficient and knowledgeable governance structure, and create markets in desirable and well-connected locations.
Pakistan Agriculture Storage and Services Corporation (PASSCO) purchased more than 600,000 metric tonnes (MT) wheat in the current season. Distribution of `Bardana’ (empty bags) continues at wheat procurement centres of PASSCO in various parts of the country under a fair and transparent policy, managing director Maj Gen Tauqeer Ahmed said on Thursday after visiting various wheat procurement centres. Strict vigilance was being done by our officers nominated for the task, he said. He said during his recent visit wheat growers from various zones had expressed confidence in the transparent procurement policy of PASSCO. He further said he had issued instructions to field officers to strictly follow the criteria laid down under the wheat procurement policy 2013. “We want to ensure that farmers get due return of their produce and avoid all types of discounts they have to face by the hands of middlemen,” he said. “Stability in the price of wheat is our prime object to protect interests of farmers,” he said. He said presence of PASSCO in the market to procure wheat from farmers was a solid reason behind stability of wheat prices.
Pakistan services trade deficit narrowed by 80.99 percent during the first three quarters of the current fiscal year as exports surged by over 36.94 percent with imports showing negative growth of 4.33 percent The overall services’ exports from the country were recorded at $5.336 billion during July-March (2012-13) against exports of $3.896 billion during July-March (2011-12), showing growth of 36.94 percent, according to data of Pakistan Bureau of Statistic (PBS). On the other hand, the imports of services into the country during the first three quarters of the current year decreased by 4.33 percent by going down from last years imports of $ 5.994 billion to $5.735 billion, the data revealed. Based on this data, the overall trade deficit during the period under review was recorded at $ 0.398 billion against the deficit of 2.097 billion during last year, showing a negative growth of 80.99 billion. However on a year-on-year (YoY) basis, services exports from the country decreased by 2.91 percent in March 2013 as against the same month of last year. Exports of services during March 2013 stood at $0.440 billion against exports of $0.454 billion during March 2012. On the other hand, imports of services into the country witnessed nominal increase of 0.28 percent, going up from $0.667 billion during March 2012 to $0.668 billion in March 2013, the PBS data revealed. On a month-on-month (MoM) basis, exports as well as imports of services increased by 33.10 percent and 22.50 percent, respectively, during March 2013 against February 2013. According to the PBS data, exports of services during February 2013 were recorded at $0.331 billion whereas imports stood at $0.546 billion.