Morning Briefing for December 27, 2011 – Standard Capital

Karachi: PSO receivables increase to Rs 180 billion

financial valuations of PSO is futile
Pakistan’s biggest petroleum handler, Pakistan State Oil (PSO) is on the verge of financial collapse since its outstanding dues from various ‘energy sector’ entities has reached to the extent of Rs 180bn (which is highest in 4‐years).

According to Standard Capital, it seems that no bailing out is forth coming from ministry of finance (MoF). Actual cash flows of the entity have gone negative due to incidence of more short term loans to keep the daily operations afloat. It is imperative that the calculation of DCF value of such an entity may be a futile exercise and thus tantamount to mislead investors.

Liabilities swelling
When PSO is not receiving due payments, it is hard for their treasury to arrange payments for refineries. Right now PSO has to pay Rs172bn of many companies that also include international principals thus painting a negative image outside.

PSOs’ total payables to local refineries have reached Rs 75bn of which it has to pay Rs 35.7 to unlisted Pak‐Arab Refinery Limited (PARCO),Rs 10 bn to Pakistan Refinery Limited (PRL), Rs 8bn to National Refinery Limited (NRL) , Rs 18 billion to Attock Refinery (ATRL), Rs 2 bn BYCO petroleum etc.

List of defaulters
The power sector is a major defaulter of PSO, which owes Rs 153bn such as poorly managed state run WAPDA that owes Rs 39bn and independent power producers such as HUBCO that owes Rs 79bn & KAPCO that owes Rs 35bn. Public utility KESC also owes 4.55bn. Among all these companies that owe, it is WAPDA which is responsible for this awful crisis since it is the main culprit behind whole crisis. Had WAPDA being managed properly and paid to power entities, this crisis of huge proportions could not have happened.

Some of the other receivables include Rs 1.3bn over price differential claim (PDC) on HSD & Rs 3bn on HSFO.

Some likely repercussions
Standard Capital sees this receivable to be ballooned since government is entangled in multiple crises ranging from fiscal constraints to political fallout. It is imperative that investors should see real worth of such companies that used to be cash rich till 2007‐8 but since trapped into vicious cycle of ‘circular debt’.

The non resolution of issues means that investors should wait while making an entry into the script. Couple of months back there was some resolution coming wherein banks were about to bailout energy companies from this ‘circular debt’; however, no solution is inside.

Here Standard Capital prefers Attock Petroleum (APL), a small Attock Group oil handler, over PSO. Wherein Standard Capital considers SHEL as a weak business model owing to their exposure in depleting CNG business.

Message from Mr. Asif Ali Zardari President Islamic Republic of Pakistan On the fourth Martyrdom Anniversary of Shaheed Mohtarma Benazir Bhutto

Islamabad: On the eve of the fourth martyrdom anniversary of Shaheed Mohtarma Benazir Bhutto today, while we pay tribute to her courage and leadership we also reiterate our resolve to continue to fight for the values she upheld and laid down her life for.

The twice elected Prime Minister of the country Shaheed Mohtarma Benazir Bhutto was the first elected female Prime Minister anywhere in the Muslim World. The daughter of the country’s first directly Prime Minister she was the undaunted champion of democracy and a great fighter for the cause of women, underprivileged and marginalized sections of society. She believed in the power of the ballot and rejected violent and militant extremism as an instrument of change.

She not only believed in these values but also led the fight for democracy and against militancy from the front. In doing so she laid down her life and illumined the path for future generations to traverse. Today therefore our thoughts go to her and to all the martyrs who laid down their lives and many hundreds more who were maimed and wounded while protecting the life of their leader. Today also we pledge that we will continue to tread the path she illumined with her blood.

Her assassination was a conspiracy to rid the world of its best weapon to combat international violent extremism. It was a conspiracy to rob Pakistan of its best hope to establish a fully functional democracy. The government is determined to expose and punish in accordance with the law the conspirators and perpetrators of the crime. They cannot and will not go unpunished.

On this occasion I wish to emphasize that those who assassinated her may have succeeded in eliminating her physically but the ideas and ideals of Shaheed Mohtarma Benazir Bhutto shall never be killed. Let there be no doubt or mistake about it.

Today we pay tributes to her. The best way to do it is to defend and protect democracy and democratic institutions in the country and foil all conspiracies against it.

Let us on this day rededicate ourselves to the democratic mission of Shaheed Mohtarma Benazir Bhutto whose life was dedicated to fighting dictatorship and those seeking to defame and dismantle democratic institutions. I therefore urge all the democratic forces and the patriotic Pakistanis to foil all conspiracies against democracy and democratic institutions.

May the soul of Shaheed Mohtarma Benazir Bhutto and that of all martyrs who laid down their lives for the cause, rest in eternal peace.

For more information, contact:
Haji Ahmed Malik
Principal Information Officer
Press Information Department (PID)
Tel: +9251 925 2323 and +9251 925 2324
Fax: +9251 925 2325 and +9251 925 2326
Email: piopid@gmail.com

Message of Fiza Batool Gilani, Honorary Goodwill Ambassador for Women Empowerment, on Fourth Death Anniversary of Shaheed Mohtarma Benazir Bhutto

Islamabad: The day marks the physical end of an iconic lady who, through sheer perseverance and sincerity of commitment to the people, has proved that her ideas and ideals have the enough force to be cherished beyond her physical existence.

Today, Pakistan is poorer without Ms. Bhutto, but richer due to her vision of democracy, women empowerment, egalitarian society and welfare state. Her struggle, through thick and thin, for the cause of people has won her a special place in the hearts and minds of people of Pakistan. We, her posterity, need to take lessons from her life and death and vow to continue the march toward liberation of women she spearheaded.

On this occasion, I want to acknowledge Benazir Bhutto’s role for not only being a staunch believer in the emancipation of oppressed and manipulated women of Pakistan but also for taking measures for their economic empowerment. Her initiatives— the First Women Bank, Women Police Stations, Lady Health Workers and Social Action Program—- have gone a long way in reducing gender disparities and in giving initiative in Pakistani women’s own hands.

On this day, I want to reiterate my government’s commitment towards the cause of women. Recent Parliamentary enactments, spearheaded by PPP government, will be followed up and strictest possible implementation will be ensured to save women from brutal social customs and human rights violations.

As someone who derives personal inspiration from Shaheed leader, I can recall her saying, “There is no right more fundamental, and more universal, than equal rights for women in the new century.”

And let me assure you that the days are gone when women used to be considered weaker sex; in today’s world women stand equal to men. Pakistan’s progress is also linked with women’s active participation in all spheres of national activity. Every one of us will have to follow in Benazir Bhutto’s footsteps for building a better society and nation.

Today, as we remember our late leader as a symbol of women empowerment, I want you to make a pledge of not tiring and not stopping until we shape Pakistan according to her vision on women, in which they are really empowered in social, economic and political arenas.

For more information, contact:
Haji Ahmed Malik
Principal Information Officer
Press Information Department (PID)
Tel: +9251 925 2323 and +9251 925 2324
Fax: +9251 925 2325 and +9251 925 2326
Email: piopid@gmail.com

Message of Syed Yusuf Raza Gilani prime minister of Pakistan on martyrdom day of Shaheed Mohtarma Benazir Bhutto

Islamabad: Today is December 27, which revives the scars caused by a gruesome incident in the country’s history when Pakistan was deprived of a leader of international stature, Shaheed Mohtarma Benazir Bhutto.

Following in the footprints of her illustrious father Shaheed Zulfiqar Ali Bhutto and as an inheritor of his legacy, Mohtarma Benazir Bhutto joined politics for restoration and strengthening of democracy in the country.

She was a brave woman who regarded the restoration and protection of people’s rights as her foremost responsibility despite dangers posed to her life. She devoted her energies, God-given qualities of head and heart and even her life for the cause of the people. History would remember Shaheed Mohtarma Benazir Bhutto as a statesperson, political leader of the highest order and an intellectual who made the ultimate sacrifice for safeguarding the rights of the people.

Shaheed Mohtarma Benazir Bhutto faced the rigours of imprisonment and exile during her worth- living life. But these formidable difficulties could not sway her iron-like determination. She was a living embodiment of courage and determination, who continued to serve as a shining example of struggle against oppression and injustice. She was firm in her resolve. She had full faith in the people of Pakistan.

Mohtarma’s personality was captivating and her way of speech could allure the listeners for hours. The entire world including both friends and foes acknowledge her wisdom, intellect, statesmanship and generosity and hold her in high esteem.

Shaheed Mohtarma Benazir Bhutto had a grave concern on political, civilizational and economic conflicts among the countries of the world. She wanted to eliminate those differences which threatened global harmony and endeavoured to build bridges between civilizations, Islam, democracy and western traditions so that the global peace could be established on the principles of co-existence.

It led her to propound the theory of reconciliation both at home and abroad. She was a great torch bearer of forbearance, tolerance and human brotherhood which is the essence of Islam in the real sense.

Unwavering optimism in future, belief in the strength of dialogue, and commitment to democracy were the distinct way of Shaheed Mohtarma Benazir Bhutto, which defined her life. Reconciliation, she believed, is a perfect recipe for avoidance of clash of civilizations and democracy, economic development, moderation and modernity are the effective tools against international terrorism. She was a firm believer that Islam and democracy are compatible to each other.

The present democratic government has launched a number of development projects in diverse areas of national life in the light of her vision. Such initiatives as the passage of the 18th Constitutional Amendment, Aagz-e-Haqooq-e-Balochistan Initiative, the adoption of 7th NFC Award, Gilgit-Baltistan Self-Governance and Empowerment Act, Introduction of Political Parties Act in FATA and Reforms in FCR, Benazir Income Support Programme, enactment of laws for empowerment of women, and successful fight against terrorism and extremism are the contributions of Shaheed Mohtarma Benazir Bhutto.

The country is faced with numerous daunting challenges at different levels at the moment but we are determined to overcome these, come what may. Natural calamities and law and order situation have adversely affected the economic growth. Rather, the more the challenges the firmer our resolve to defeat them and put the country on the trajectory of socio-economic development.

Let us pray to Allah Almighty to serve the nation in accordance with the vision of Quaid-e-Azam Muhammad Ali Jinnah, Shaheed Zulfiqar Ali Bhutto and Shaheed Mohtarma Benazir Bhutto. (Amen)

For more information, contact:
Haji Ahmed Malik
Principal Information Officer
Press Information Department (PID)
Tel: +9251 925 2323 and +9251 925 2324
Fax: +9251 925 2325 and +9251 925 2326
Email: piopid@gmail.com

Board of Directors of the National Information and Communication Technology R and D Fund Approves Transfer of intellectual property rights

Islamabad: The Board of Directors of National ICT R and D Fund approved the policy for transferring of intellectual Property Rights (IPR) of its technical R and D projects to the funded entities in its last meeting. The Board after discussion approved that IP right of all the previous and new projects be transferred to the funded entity. This policy will be reviewed in two years.

This is yet another milestone for the National ICT R and D Fund for responding positively to its stakeholders who had sought clarity on the terms for assignment and transfer of IPR from the Fund.

National ICT R and D Fund, a Ministry of IT Company, is committed to ignorantly enhance the ICT research and development capacity of its stakeholders in most impactful ways.

For more information, contact:
Haji Ahmed Malik
Principal Information Officer
Press Information Department (PID)
Tel: +9251 925 2323 and +9251 925 2324
Fax: +9251 925 2325 and +9251 925 2326
Email: piopid@gmail.com

Lack of interest 39% and lack of time 35% causes non registration of votes. Gilani Poll/Gallup Pakistan

Islamabad: According to a Gilani Research Foundation Survey carried out by Gallup Pakistan 10% of adults in Pakistan perceive themselves to be eligible but not registered to vote. Lack of interest (39%) and lack of time (35%) are seen as major causes for non registration of votes.

A nationally representative sample of men and women from across the four provinces was asked “What is the major reason that your vote is not registered?” Responding to this lack of interest (39%) and lack of time (35%) emerge as the two major reasons.

Other reasons mentioned are: Unfamiliarity with procedure to register (7%); change of residence (6%); staying or working away from permanent home address (5%) and other miscellaneous reasons (4%).

Question: “What is the major reason that your vote is not registered?

The study was released by Gilani foundation and carried out by Gallup Pakistan, the Pakistani affiliate of Gallup International. The recent survey was carried out among a sample of 2726 men and women in rural and urban areas of all four provinces of the country, during December 11 – December 17, 2011. Error margin is estimated to be approximately ± 2-3 per cent at 95% confidence level.

For more information, contact:
Gilani research Foundation
Ms. Fatima Idrees
Group Manager
E-mail: fatima.idrees@gilanifoundation.com
Phone: +92-51-2655630

Morning Shout released by and Economics Research

Karachi: OGDC/PPL: Production from Nashpa II materializes

According to KASB Securities Limited,

• KASB Securities Limited believes production start on Nashpa II from last week represents one of the many positive exploration and development triggers that KASB Securities Limited expects OGDC to announce in the next few months. Re‐iterate Buy on OGDC.

• For PPL, Nashpa II is the second big production addition following 5% volume jump in Sui gas. KASB Securities Limited sees further significant production triggers to unfold in 2H. Reiterate Buy on KASB Securities Limited’s top pick in Oil & Gas space.

• Nashpa II has added 5000bpd of oil and 13mmcfd of gas to existing volumes. Net of JV stake (OGDC stake 56%), this translates into 7% of OGDC’s oil production. For PPL (26% stake), Nashpa II will add 17% to company’s oil.

• KASB Securities Limited estimates PRs0.83/sh (4% of FY12E estimate) impact on OGDC and PRs1.27/sh (4% of FY12E estimate) impact on PPL. KASB Securities Limited highlights successful appraisal drilling in Nashpa III can prove to be a key upside to KASB Securities Limited’s estimates for both OGDC and PPL.

Additional volumes on Nashpa II; +ve newsflow to continue
KASB Securities Limited believes production start on Nashpa II from last week represents one of the many positive exploration and development triggers that KASB Securities Limited expects Oil & Gas Development Company to announce in the next few months.

Near term, KASB Securities Limited expects further newsflow on Nashpa, followed by exploration results on high profile drilling in Zin (results likely in Jan) and production link‐up on important field in KPD. KASB Securities Limited reiterates Buy on OGDC and believe current valuations (FY12E P/E of 7.1x) are undemanding and yet to reflect production and exploration potential.

For Pakistan Petroleum Ltd, Nashpa II is the second big production addition following 5% volume jump in Sui gas. KASB Securities Limited sees further significant production triggers to unfold in 2H. KASB Securities Limited believes street estimates are yet to reflect the full potential of production increase in Sui and volume addition from other fields. KASB Securities Limited maintains KASB Securities Limited’s 10% above consensus earnings estimates for PPL. Among the three E&Ps, PPL trades at the lowest valuation (FY12E P/E of 5.1x, D/Y of 9%). KASB Securities Limited reiterates Buy on PPL, KASB Securities Limited’s top pick in Oil & Gas space.

Nashpa II adds 7% to OGDC production
Nashpa II has added 5000bpd of oil and 13mmcfd of gas to existing volumes. Net of JV stake (OGDC stake 56%), this translates into 7% of OGDC’s oil and ~1% of gas production. For PPL (26% stake), Nashpa II will add 17% to company’s oil production and <1% to gas production. Drilling on Nashpa II was completed in Nov. A fast‐track link‐up of new appraisal well improves management record regarding timely delivery of targeted volumes to meet growing energy shortages in the country. KPD is the next big addition Next big volume addition for OGDC is targeted from KPD field at 100mmcfd of gas and 1100bpd of oil in Jan. While KASB Securities Limited assigns low risk to field development, a potential risk to production start may emerge from legal issues on LPG separation contract. Looking at the current gas supply shortage (over 25%), KASB Securities Limited thinks the govt. may speed up the approval process. Nashpa II‐ earnings impact of PRs0.83/sh KASB Securities Limited estimates PRs0.83/sh (4% of FY12E estimate) impact on OGDC (56% stake) and PRs1.27/sh (4% of FY12E estimate) impact on PPL (26% stake). Production from Nashpa II is already reflected in KASB Securities Limited’s estimates for both the listed JV partners. That said, we highlight successful appraisal drilling in Nashpa III can prove to be a key upside to KASB Securities Limited’s estimates for both OGDC and PPL. As per latest report, the operator OGDC has met 96% of drilling target which implies any result on the drilling is likely within a month.