Wednesday, 11 September 2013

IMF Loan | 50MW Energy Project | D.G Khan Expansion Plans and T-Bills auction

IMF approves $6.68bn loan for Pakistan
The  Executive  Board  of  the  International  Monetary  Fund  (IMF)  approved today a 3-year arrangement under the Extended Fund Facility (EFF) for Pakistan  in an amount equivalent  to SDR 4.393 billion (US$6.64  billion1, or 425 percent of Pakistan’s quota) to support the country’s economic reform program to promote inclusive growth. The Executive Board’s approval enables an initial disbursement by the IMF of an amount equivalent to SDR 360 million (about US$544.5 million), and the remaining amount will be evenly disbursed over the duration of the program, subject to the completion of quarterly reviews.

US ambassador signs agreement for 50MW energy project
United States Ambassador  Richard Olson, signed on Wednesday a $95 million,  ten-year  loan  on  behalf  of  the  Overseas  Private  Investment  Corporation (OPIC) to Sapphire Wind Power Company to build a 50MW wind power plant  in  Sindh. Situated  in  the  Ghoro-Keti  Bandar wind corridor  near  Jhimpir, the plant will be designed to generate 133-gigawatt hours of emissionfree  electricity  annually  using  33  General  Electric  (GE)  turbines.  OPIC  has invested in 123 projects in Pakistan since 1975. Its current Pakistan portfolio includes  14  active  projects  worth  nearly  $300  million  in  key  industries  including  energy,  health  care,  financial  services  for  small  and  medium-sized enterprises, and telecommunications.

D.G Khan Expansion Plans
The DGKC directors also approved plans of setting up a green field cement production line of up to 2.6m tonnes a year at Hub, district Lasbela, on the land already acquired. The board also noted: “On the basis of due diligence we have  decided  to  abandon  the  idea  of  establishing  a  plant  in  Mozam-bique  due  to  lack  of  major  infrastructure  required  to  set  up  a  cement plant.”  Although  several cement manufacturers admitted  that  the  plans of D.G.  Khan  to  go  ahead  with  its  expansion  could  widen  the  rift  among cement producers, no one thought that a price war among producers was imminent.

T-bills auction: banks reluctant to invest

Banks are reluctant to invest in the long-term government securities mainly  due  to  expected  hike  in  the  key  policy  rate.  A  very  thin  participation was witnessed  in  the  auction  of  the  Market  Treasury  Bills  held  on Wednesday and not a single bid was received for the sale of 6-month and 12-month T-bills as banks are expecting some increase in discount rate in the upcoming monetary  policy  to  be  announced  on  September  14, 2013. The State  Bank of Pakistan (SBP) on Wednesday conducted auction of Market Treasury Bills (MTBs) and received bids only for 3-month T-bills, while not a single bid was received  for  6-month  and  12-month  bills.  As  per expectations  high  participation  was witnessed in the 3-month MTBs and bids worth Rs  87.925 billion (realized amount) were received. The  cut-off yield  for  the  three  months  T-bills  continues  to  stay  unchanged  at  8.9583 percent  with  accepted  amount of  Rs  82.145  billion. As per auction calendar a target of Rs 250 billion was set for the 5th auction of MTBs, however against the target only Rs 82.145 billion was borrowed. Overall target for this quarter was Rs 1.6 trillion, while so far government has borrowed Rs 781 billion through five auctions in first quarter of FY14. Economists said the realized amount remained far below the targeted amount as the SBP seems unwilling to increase cut-off yield significantly.

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