In Kadhimiyah in northern Baghdad, restaurants and shops that sell gold and clothes around the two shrines of Shia imams, Musa Kadhim and Mohammed Jawad, are crowded with visitors.

Ali Mohammed, a 42-year-old who owns a money exchange shop, said the rial’s value has declined sharply.

“This decline has caused losses for us,” he said, seated behind a glass barrier while holding paper money bearing a picture of the late Iranian supreme leader Ayatollah Ruhollah Khomeini.

“A month and a half ago, I was dealing with around 20,000 dollars of Iranian rials every day, but now I am only dealing with 1,000 dollars” a day, the trader said. “I will stop buying (rials) gradually, and if it keeps declining, I will stop dealing with it completely.”

Iran has been hit by sanctions imposed by the United States and Europe over its controversial nuclear programme, and its currency has suffered.

Jassem al-Amli, 55, who also owns a money exchange shop in Kadhimiyah, said that “the value of the rial is now around 18,000 for one dollar,” while “two months ago, the value was 10,000 rials per dollar.”

At the border with Iran, the value of the rial is even lower, with a dollar trading for 20,000 rials at the Zurbatiya border crossing to Iran.

One of the officials at the crossing told AFP that “dozens of Iranian (currency) traders are working on a daily basis to buy dollars.”

“Before the collapse of the Iranian rial, they were … not looking for dollars,” the official said.

Amli, who has worked in money exchange for 10 years, said: “I knew this from the beginning and I stopped dealing with large amounts of (Iranian) money because I knew there would be pressures and more sanctions.

“We feel sorry for the Iranian visitors because they came to Iraq holding a specific amount of money, and then suddenly, they were taken by surprise by the decline of their local currency.”

In the central shrine city of Najaf, visited by two million Iranians a year, the decline of the Iranian currency is frustrating for the money exchange shops and also for hotel owners who depend on Iranian visitors.

Hussein Ikhwan, a 36-year-old who works for an exchange firm in Najaf, said that “the price of exchanging the Iranian (rial) is starting to be a problem for us,” due to a lack of profit in dealing with the currency. Uday Bahash, 35, who owns a shop in Najaf’s main market, said that prices in rials for goods have doubled without any additional profit for shop owners.

Iraqi Tourism Minister Liwaa Smaisim told AFP that: “The decline of the Iranian currency has had only a slight impact on religious tourism, but even so, this has not much changed the number of Iranian visitors.”

Khaled Abu al-Hijaj, 40, who owns a hotel in central Najaf, said: “Travel agencies are starting to lose money and trying to recover these losses by paying us with Iranian (rials), while they used to pay with dollars.”

The shortage of foreign currency in Iran is pushing its traders to try to buy from outside sources, and Iraq, which has billions of dollars in trade with Iran per year, is a potential source.

Iraq’s central bank, since February 1, has enacted measures to identify those who buy dollars, as some are believed to be front men, Mudher Mohammed Saleh, deputy governor of the central bank, told AFP.

Banks that buy dollars from the central bank must now provide the identity of whoever placed the order and “prove that they have an account in the bank and the origin of their income,” Saleh said.

“We are concerned that some people buy dollars on behalf of others,” he said, without elaborating.

When asked if Iranian and Syrian traders were trying to buy dollars, Saleh said: “This increase in demand for dollars, while the region has serious problems, led us to put the new procedures in place

The World Trade Organization (WTO) has approved the EU’s move to waive duties on 75 Pakistani products, including textiles, for two years.

The waiver was granted on humanitarian grounds after Pakistan’s manufacturing was hurt by floods in the country.

The EU is one of Pakistan’s biggest trading partners.

“I’m very happy. It was a long drawn out exercise, and something of a success for diplomacy,” said Shahid Bashir Pakistan’s ambassador to the WTO.

Greece is locked in two sets of talks one with private creditors to have them take losses on their bondholdings and the other with its international bailout rescuers to receive new loans.

“We are at a crucial point in developments. In the coming days, the agreements must be completed” for the bond swap and a second 130 billion euro ($171 billion) bailout package, government spokesman Pantelis Kapsis said.

Debt inspectors from the European Commission, European Central Bank and the International Monetary Fund, known as the troika, are in Athens for talks on the second rescue package, which is tied to an agreement with private creditors to accept losses on Greek bonds they hold. The success of the bond deal, however, also depends on the outcome of the bailout talks.

The bond swap, known as the Private Sector Involvement, or PSI, will see private creditors swap the bonds they hold with new ones worth half their original face value, longer repayment times and lower interest rates. They will also get a 30 billion euro cash sweetener to be taken from the 130 billion euro bailout for accepting the deal. Once secured, the PSI will cut 100 billion euro off Greece s national debt.

Overall, the investors participating in the deal will face a loss on their bondholdings of more than 70 percent, Finance Minister Evangelos Venizelos said in a Parliament committee meeting Tuesday night. The official offering of the new bonds will come by Feb. 13, Venizelos said.

Greece is running out of time, as it faces a 14.5 billion euros bond redemption on March 20 that it cannot afford to pay without additional help. A default would spell disaster for the country and destabilize European and global markets.

Both deals will need the agreement of the heads of the three political parties in Greece s interim coalition, Kapsis said, and Prime Minister Lucas Papademos was to call the party heads to a meeting to sign off on them and required austerity measures.

Chief IMF inspector Poul Thomsen also said a deal was close, but pressed the recession-plagued country to lower employment costs and even slash the minimum wage to make the economy more competitive.

“It s a matter of days,” Thomsen was quoted as saying by the Athens daily Kathimerini. “The discussions for the (new) program will be concluded very soon.”

According to a notification issued here, the government while ignoring the recommendations of the Oil and Gas Regulatory Authority has increased HOBC price by Rs 6.29 per litre, Premium by Rs 5.37 per litre, High Speed Diesel by Rs 4.64 per litre, Light Speed Diesel by Rs 3.43 per litre and kerosene oil by Rs 2.78 per litre.

Abdul Wajid Rana, Secretary EAD represented the Government of Pakistan while Lt. Gen. (R) Muhammad Zubair, CEO represented NJHP in the signing ceremony, said a press statement issued by the Economic Affairs Division on Monday.

A loan agreement amounting to $40 million was signed between Government of Pakistan and Kuwait Fund for Arab Economic Development (KFAED) on 25th November 2010 for the purpose of construction of Neelum Jhelum Hydropower Project. Signing a subsequently Subsidiary Loan Agreement between Economic Affairs Division on behalf of the Government of Pakistan and Neelum Jhelum Hydropower Project Company (NJHPC) a subsidiary of Water & Power Development Authority (Wapda) was a legal requirement to make the loan agreement effective.

The Neelum Jhelum Hydropower Project is located at Muzaffarabad district of AJK. Upon its completion it will generate approximately 1,000 MW of electricity. KFAED is one of the donors of this project. The other donors included Exim Bank China, UAE and Saudi Fund for Development. This project aims at developing the National power Generation System to meet the increasing electricity demand in the country and indigenous renewable energy resources namely the hydro resources.

APP adds: Speaking on the occasion, EAD Secretary said that negotiations with China were also going on for the funding of the project and expressed the hope that with the release of $40 million, the cash flow issue would be resolved to a great extent.

On the occasion, the CEO NJHPC said that 36 percent of the work on the project has been completed. He said that the Tunnel Boring Machine (TBN) has also reached Pakistan. He said that after completion of NJHPP, the machine would be utilized in other projects. He said the cost of the project has been increased due to depreciation in rupee value against dollar and several other market issues. He said that when completed the project would be generate Rs.45 billion.

Speaking on the occasion, Secretary Water and Power, Imtiaz Qazi said that government was focusing on development of hydel and coal power projects.

He said that owing to high energy cost and shortage of gas, the thermal electricity is getting out of reach and that is why the government is paying heed towards developing hydel and coal projects.

He said that with the inclusion of additional power in the national grid system, the power shortage crisis would be overcome within three years.

He said that Pakistan was also engaged in negations with Central Asian countries to import electricity, adding that a Pakistani delegation was in Almaty at present to discuss the import of power from the Central Asian countries

AHMAD AHMADANI

ISLAMABAD – In an unprecedented development, a regulatory body has voiced categorically straight-forwarded reservations over the import of LNG, arguing that the move would make the masses pay through the nose for electricity.

Oil and Gas Regulatory Authority (OGRA), emphatically opposing the LNG import project for electricity generation, has forwarded its serious concerns to the government through a letter. It said that import of LNG will rub more salt on injuries of masses with accordance to the cost comparison of electricity generation with alternative fuels other than LNG.

OGRA in its letter, highlighting the miseries of the masses on the pretext of electricity generation with imported LNG, sent to the Petroleum Ministry and Cabinet Division has recommended the government to generate electricity from coal instead of LNG to meet the burgeoning demand of electricity in the country. The regulatory authority has further recommended the federal government to form a high level committee comprising of officials representing concerned organizations particularly, Petroleum Ministry, Planning Commission, gas companies, Port Qasim Authorities, PPL etc. and this committee, after analysing the cost comparison of imported LNG, should put forward its recommendations to the Economic Coordination Committee (ECC) of the Cabinet for final decision.

OGRA’s letter available with TheNation reveals that OGRA has opposed the LNG import project and termed it more expansive for hard-pressed masses. According to OGRA, cost of electricity generation with imported LNG will stand at Rs20.49 per unit while Rs 26.67 will be the cost of per unit of electricity with Liquefied Petroleum Gas (LPG). However, cost of per unit of electricity with local coal will be at Rs2.90 and with imported coal the cost of per unit of electricity will touch Rs5.36 so the government should take measures to enhance the gas production in the country.

“Power generation cost through LNG is very high and can be detrimental for the people of Pakistan in future being a pass through item”, OGRA’s letter sent to petroleum ministry and cabinet division reads.

It was also learnt from official document that on the said pretext the imported LNG is four times expansive if compared with the cost of local gas. Masses will severely bear the brunt of expansive electricity generation with imported LNG.

Sources had earlier informed that Petroleum Minister Dr Asim Hussain is desperately out to secure hefty kickbacks with the import of LNG in the country. They were of the view that incumbent minister had dreamt some four years earlier to earn heavily through LNG terminal trade. This move of LNG import to the country particularly to generate electricity to meet do away with outages is simple a political gimmick, ahead of general elections and public pressure on streets as in practical nothing concrete has so for done in this regard, sources added.

The 0.1% levy will be introduced in August regardless of whether other European countries follow suit.

The tax is part of a package of measures set out by the president to promote growth and create jobs.

Mr Sarkozy faces a presidential election in April, but is currently trailing in the opinion polls behind his Socialist rival, Francois Hollande.

In an interview with French television, Mr Sarkozy said he hoped the tax would push other countries to take action.

“What we want to do is create a shockwave and set an example that there is absolutely no reason why those who helped bring about the crisis shouldn’t pay to restore the finances,” he said.

“We hope the tax will generate one billion euros ($1.3bn, £0.8bn) of new income and and thus cut our budget deficit.”

Mr Sarkozy gave no further details on the tax, but a government source later told Reuters news agency it would target shares and not bonds.

French and German proposals for an EU-wide financial transaction tax were among the reasons the British Prime Minister David Cameron vetoed EU treaty changes at a summit in Brussels in December.

Mr Cameron argued that such a tax would penalise the City of London where 75% of European financial transactions take place.

Euratex believes the changes will increase the vulnerability threshold of the GSP+ from one percent to two percent, which will have a severe impact on the EU textile and clothing industry.

“This increase in the vulnerability threshold of GSP+ was tailor made in order to include Pakistan among the beneficiary countries,” said Alberto Paccanelli, President, Euratex.

“If this proposal is approved, Pakistan will be allowed to export to the EU without paying any duty.”

Euratex argues that this is not the first time that the EU has decided to grant duty-free access to Pakistan, with a change in the vulnerability threshold of GSP+ already under consideration last year and a waiver proposal, pending at the World Trade Organisation (WTO).

“Pakistan is among the top world exporters in textile and clothing and the fourth EU supplier,” said Paccanelli.

In 2010 its exports to the EU have increased by more than 20 percent in value and six percent in volume. For some products Pakistan had already a dominant position ñ bed-linen and cotton fabrics.

This decision, apart from having a negative impact on the EU industry, will erode the preferences of the countries in need in favour of a stronger and already prevailing market player.

“Euratex recognises that overall the commission proposal makes an effort to concentrate the preferences in the countries that need them. Unfortunately, in our sector this effort was precluded for political reasons as we choose to benefit a country, which does not need any special treatment,” said Paccanelli.

Euratex hopes the negative impact can be offset through a reduction in the vulnerability threshold and an improvement in the existing textile safeguard clause, making it applicable both to textiles and clothing.
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Addressing the annual planning coordination committee meeting here, the finance minister said that funds would first be provided to the projects nearing completion. He said that disbursing more funds with shortage of resources was not easy. However, the planning commission has prepared a roadmap for the economic development and funds would be released on the basis of priority.

Dr. Abdul Hafeez Sheikh further said that as a result of the 7th NFC Award, the provinces have received 300 to 350 billion rupees additionally and with the availability of more resources, the responsibilities on the provinces rest more.

The provinces could spend more of these funds on supply of potable water, law and order and health facilities. Dr. Hafeez Sheikh said that the provinces have more funds than the federation for the development works and he hoped that the provinces would help cut the financial deficit.
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The stock market started this week with positive numbers and at one stage touched the height of 12,100 points level. But the gains were eroded due to the uncertainties regarding the upcoming federal budget and in the wake of Pak-US relations becoming further strained.

The average trade volume stood at 52 million shares with Jehangir Siddiqui topping the list of volume leaders.

The younger KSE-30 Index gained 82 points this week to finish at 11,615.
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