UPDATE----------------FEBRUARY 17, 2009 WEDNESDAY
BANGLADESH NEWS
PDB, NTPC may sign MoU on 2,600MW
coal-fired plants, JV
The Power Development Board is likely to sign a memorandum of understanding with NTPC, the state-run Indian thermal power corporation, to carry out a feasibility study for installation of two 1,300MW coal-based power plants in the country.
Officials said the PDB might ultimately form a joint venture company with NTPC, which specialises in thermal power plants, to set up one of the proposed coal-fired plants after the feasibility study.
The MoU is expected to be signed when an Indian delegation, led by Indian power secretary HS Brahma, visits Bangladesh on February 18-20 to hold meetings with officials here, especially on inter-connection of power grids between the two countries, said officials of PDB and Power Division.
The NTPC, formerly known as the National Thermal Power Corporation, recently submitted a proposal to PDB for carrying out a feasibility study for installation of two coal-fired plants at Chittagong and Mongla with a total capacity of generating 2,600MW electricity.
It also proposed a joint venture company between NTPC and PDB, the latter having 51 per cent stake, to set up a 1,300MW power plant in Bangladesh, the sources said.
The NTPC put forward the proposal after Prime Minister Sheikh Hasina’s visit to India last month when the Bangladesh side sought cooperation in power sector.
The state-owned NTPC is the largest power producers in India with more than 30,000MW generation capacity, having wide-ranging expertise in installing and operating coal-fired power plants.
Officials said that PDB is now finalising the draft of the proposed MoU.
‘The draft MoU will further discussed between the two sides when the Indian delegation comes… Even if the MoU is not signed this time, a platform will be made so that it can be signed sometime soon,’ said an official.
He, however, said that ‘a lot of issues’ including terms and conditions of the MoU were yet to be decided.
‘Although initially, officials will agree on feasibility study for the coal based plants, the ultimate goal will be to form a joint venture company to install the plants,’ he said.
The government recently held three road-shows in London, Singapore and New York spending more than Tk 1 crore for attracting investments in power generation plants with a total capacity of 4,000MW, including two 1,300MW coal-fired plants.
When asked what was the use of such road-shows when the government was going for installation of the plants by forming joint ventures and without calling any tenders, a high official of the Power Division said, ‘We are yet to get the draft MoU from PDB. However, if we get Indian investment with suitable terms and conditions, we will welcome it.’
He said that PDB might seek investment for one 1,300MW plant from NTPC. ‘We may keep another plant open. The details of the terms and conditions will be worked out through negotiations.’
The official said that they wanted to engage NTPC as the company has experience in handling coal-based power plants. ‘We want that our power sector engineers also get some experience from NTPC through working for the joint venture company.’
Apart from Indian investment in power sector, the Indian delegation will hold two-step meetings with Bangladesh officials on inter-connection and human resource development during their visit to Bangladesh, which is a follow-up of a meeting held in New Delhi in January.
The joint steering committee on inter-connection of power grids, headed by Bangladesh and Indian power secretaries, will try to finalise terms and conditions for setting up a power transmission line connecting Bangladesh with India to enable Dhaka to purchase 250MW electricity from India.
Bangladesh officials expect to invite tenders for installation of a transmission line from Berhampore in India to Bheramara in Bangladesh at a cost of around Tk 800 crore.
The steering committee held the first meeting in Delhi on January 10, a day before Bangladesh and India signed a Memorandum of Understanding for supply of 250MW electricity to Bangladesh from India, along with three other agreements and another MoU.
A working committee meeting headed by joint secretaries of power ministries of the two countries will also be held on the issues.
Dhaka expects to purchase 250MW of electricity initially within two years, but will try to import some additional electricity from India, officials said.
Bangladesh currently faces a shortage of around 1,500MW to 2,000MW of electricity during the peak season as the PDB—the state electricity generation agency—can supply only around 3,600-3,800MW against the demand for 5,500-6,000MW.
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UPDATE
US Trade Show begins tomorrow
Bangladesh’s trade with the US will increase again in the current year as the latter’s importers are showing renewed interests to source more products from Bangladesh with the receding of recession, a US diplomat said.
Heather Variava, the first secretary for economic and political affairs at the US embassy in Dhaka, told reporters that due to recession Bangladesh-US trade had suffered a negative growth in 2009.
‘US imports had declined much in 2009 due to recession and in case of US-Bangladesh trade, the decline is smaller compared to that of other partners,’ she said at a press briefing on the 19th US Trade Show in Bangladesh.
The three-day annul trade show will be inaugurated by foreign minister, Dipu Moni, at Dhaka Sheraton Hotel tomorrow.
‘Top US retailers are planning to import more from Bangladesh as their businesses are peaking up again,’ she said, referring recent Dhaka visit of the Wal-Mart chief executive officer and top executives of some other big US retailers.
The American Chamber of Commerce in Bangladesh president, Aftab Ul Islam and executive director, A Gafur, also spoke on the occasion.
Aftab said that the annual event would see 45 per cent increase in participants as more US companies are in the queue to source from Bangladesh and many companies sale their products here.
A Gafur said a total of 72 US and Bangladeshi companies will showcase products and services in the fair.
The Boeing, Ford Motors, Caterpillar, IBM, Exxon Mobil Corporation, Dell and Cisco are among the exhibitors.
The fair will remain open for visitors between 10am and 8 pm. Entry fee has been fixed at Tk 20. School students will enjoy free entry.
The US-Bangladesh trade totaled some $ 4,135 million in 2009, $ 81 million less than the figure in the previous year.
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FOCUS
Simplification of procedures
stressed to attract more FDI
Top officials of regulatory bodies at a discussion meeting on Tuesday underlined the need for simplification of the investment procedures for attracting more foreign direct investment in the country.
The Board of Investment and Foreign Investors’ Chamber of Commerce and Industry jointly organised the meeting on ‘Foreign Investment in Bangladesh: Prospects and Challenges’ at a city hotel.
Chaired by BOI executive chairman Syed A Samad, the meeting was addressed, among others by the National Board of Revenue chairman Nasiruddin Ahmed, Bangladesh Energy Regulatory Commission chairman Syed M Yusuf Hossain and FICCI representative A Qayyum Khan.
The BOI executive member made a power point presentation on the prospects and challenges of FDI, said a BOI release.
The meeting observed that attraction of FDI in the areas like infrastructure, power, energy, ICT, agro-processing and labour intensive industries are crucial.
The participants laid emphasis on simplification of the investment procedure, streamlining payment of tax and VAT, realisation of the benefits of double tax avoidance treaties, simplification of royalty remittance procedure, enforcement of contracts and consistency of the policy regime.
Nasiruddin Ahmed informed the meeting that the Custom Act, VAT Act 1991 and income tax ordinance are now under review.
He assured that taxation system will be made simpler, automated and taxpayers friendly. A consultation meeting in this regard will be held soon.
Syed A Samad assured all necessary supports in facilitating local and foreign investments.
There is no single instance that a foreign investor made loss because of the prevailing investment climate in Bangladesh, he said adding that the BOI will strengthen its facilitating and advocacy role for policy reforms and others areas.
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SOUTH ASIAN NEWS
EU-India FTA likely by Dec
Free Trade Agreement between India and the European Union is likely to be finalised by December 2010, with the final round of talks to be held in March, a top official said on Monday.
‘India and the EU are negotiating a FTA that has the capacity to advance the relationship and increase bilateral trade. After seven rounds of negotiations, the final talks would be held in March. After the next round, the agreement is likely to be finalised by this December,’ ambassador, head of European Commission delegation to India Daniele Smadja told reporters here.
She said negotiations would lead to the establishment of a well-developed FTA, which will provide mutual benefits to both parties, adding that Indian prime minister Manmohan Singh and the EU commission president Jose Manuel Barroso would try to achieve finalising the FTA soon.
Stating that India has moved up to the first ten in the list of the EU’s major trading partners, she said once the FTA is finalised, business between the two would rise.
Smadja, who was in the city to inspect EU-sponsored projects in Chennai, said, ‘In recent years, trade with India has been growing at 16 per cent a year compared with the EU’s overall growth rate of trade of ten per cent on account of the growth performance of the Indian economy.’
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BANGLADESH SPECIAL NEWS
Bhutan offers Bangladesh
zero-tariff entry
All Bangladeshi products will get zero- tariff entry to Bhutan, a preferential trade facility which is expected to help increase trade and business relations between the two countries.
Khandu Wangchuk, minister for economic and trade affairs of Bhutan made the offer on Tuesday at a meeting here with some local businessmen.
International Business Forum of Bangladesh organised the meeting at its office in the city. Members of the trade organisation participated in discussions on exploring new avenues of trade and business between the two countries. The businessmen identified some sectors including housing, energy and power, cement, garments, packaging and tea where Bangladesh and Bhutan could strengthen their relation for mutual benefit.
Khandu Wangchuk said that his government would consider the proposals and offered Bangladeshi expor-ters zero-tariff entry facility to Bhutan. Welcoming the offer, IBFB president, Mahmudul Islam Chowdhury, hoped that the trade relations between the two countries would grow further.
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UPDATE
Zoom Chittagong ICT Fair begins
The three-day Zoom Chittagong ICT Fair-2010 began at Woodland Community Centre in the city’s Muradpur area on Tuesday.
The Chittagong city mayor, ABM Mohiuddin Chowdhury, inaugurated the fair as chief guest at a function.
The Premier University vice-chancellor, Anupom Sen, and the Bangladesh Computer Samity president, Mostofa Jabbar, were present as special guests.
Different information technology companies have set up 33 stalls at the fair, organised by the INPACE. The fair will remain open for visitors from 10:00am to 8:00pm.
The organisers fixed Tk 10 as entry fee for the fair. School students, however, will get free access.
Jahirul Islam, Chittagong branch in charge of Rishit Computer, said they got good response from visitors on the first day of the fair. ‘We hope the fair will draw more crowds in the remaining two days,’ he added.
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CITF 2010 begins Friday
The moth-long Chittagong International Trade Fair-2010 will begin at the polo-ground in the city on Friday.
The Chittagong Chamber of Commerce and Industry has organised the 18th version of the fair.
Thailand will take part in the fair as the partner country this year. Companies from different countries including India, Pakistan, Turkey, Iran and China will set up stalls and pavilions to display their products.
The jute minister Abdul Latif Siddiqui will be chief guest at the inaugural session and chairman of the parliamentary standing committee on commerce ministry Lutful Hai will be special guest.
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IN FOUCS
Rakub to disburse Tk 65cr
in agriculture loans
Rajshahi Krishi Unnayan Bank has set a target of disbursing Tk 65 crore as joint supervising agricultural loan by Rakub and Barind Multipurpose Development Authority in different north-western districts of the country during the current 2009-2010 fiscal.
The Rakub authorities revealed this while launching the farmers’ level loan disbursement activities of the programme at Prosadpur Dayingpara under Gomostapur upazila of Chapainawabganj district on Tuesday.
Managing director of the bank Muhammad Fazlul Haque and executive director of BMDA Abdul Mannan attended and addressed the ceremony as the chief and special guests respectively with Rakub zonal manager Abdus Samad in the chair.
Marking the occasion, loan of Tk 31.31 lakh were disbursed among 176 farmers under 11 deep tube-wells for the purchasing purposes of irrigation, seed, insecticides and fertilizer in due time.
Fazlul Haque viewed that best and optimum uses of the farming loan and inputs along with the modern technology has become indispensable for boosting agricultural yield to ensure food security of the nation.
Besides, he said substantial increasing of domestic food grain yield could be the effective means of bolstering the foreign currency reserve along with making the nation free from poverty and hunger.
‘We have no alternative to wide-ranging promotion of the farmers-level modern technologies to meet up the gradually increasing food demand,’ he said adding that the present government is committed to maintaining the farmers’ interest for the sake of making the nation self-sufficient in food production.
He said the Rakub-BMDA joint effort would contribute a lot to supplement the government endeavour and asked the field level bankers to discharge their duties with utmost sincerity and honesty so that the farmers could derive the total benefits of the programme.
He reminded that transparency and accountability must be ensured through disbursing the loan in public places instead of the bank counter.
‘By virtue of expansion of irrigation facilities the rain-fed single cropping Barind area has been transformed into three cropping in many areas,’ Abdul Mannan said adding that importance should be given on proper uses of the irrigation water.
In his address of welcome, assistant general manager of the bank Golam Mostofa gave an overview of the special credit programme and its ultimate goal.
He said around six lakh farmers have so far been brought under the BMDA’s irrigation facilities through around 12,000 deep tube-wells in 125 upazilas of the region.
But, he said, most of the farmers face financial constraints as they are landless, small and marginal and share-croppers.
In this context, he said the newly launched credit programme would help removing the constraints side by side with accelerating the agricultural yield.
In the preliminary stage, he mentioned that the farmers of Rajshahi, Chapainawabganj, Naogaon, Jaipurhat, Dinajpur, Thakurgaon and Panchagarh would be brought under the credit facilities and the programme would be expanded to all other districts of the region.
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SOUTH ASIA
India allows sugar export to EU
The Indian government on Monday allowed export of 10,000 tonnes of sugar to the European Union, at a time when the United Progressive Alliance regime is desperately trying to bring down prices of the sweetener in the domestic market.
The Directorate general of Foreign Trade has allocated a quantity of 10,000 tonnes of white or refined sugar for export to the EU for the fiscal 2009-10 (sugar season October 2009 — September 2010) through state-run trading firm Indian Sugar Exim Corporation.
Indian Sugar Exim Corporation, which is the designated agency for export of sugar to the EU, will export the commodity under a preferential quota agreement, a DGFT notice said.
Although, officially there in no ban on export of sugar, prior approval from authorities is required, which the Indian Food Ministry is not granting since January 2009.
Sugar prices in India have been on a rise due to supply shortage. Sugar prices rose by 58.96 per cent in January year-on-year.
The exported sugar will be received by the EU duty free, under a special concessions provided for after conclusion of the General Agreement on Trade and Tariff.
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WORLD NEWS
British inflation hits
14-month high
Twelve-month inflation in Britain surged to 3.5 per cent in January - the highest level for 14 months - owing to a higher rate of tax on goods and services, official data showed on Tuesday.
Inflation in January on a 12-month basis compared with a level of 2.9 per cent in December, the Office for National Statistics said in a statement.
Monthly prices fell by 0.2 per cent, the figures showed.
The data means that the head of the Bank of England, Mervyn King, must write to Finance Minister Alistair Darling explaining why 12-month inflation is one per cent-point higher than the government's 2.0-per cent target.
The BoE last week said that it expected annual British inflation to peak at about 3.5 per cent this year, before falling back underneath the target level.
Keeping annual inflation at around 2.0 per cent is the BoE's key task and it attempts to achieve this my changing the level of interest rates.
Market expectations had been for a 12-month increase of 3.7 per cent, according to analysts polled by Dow Jones Newswires.
January's figure was meanwhile skewed by lower inflation last year after the government had cut taxation on goods and services to help revive the economy as Britain struggled with a deep recession.
The British government had slashed VAT, or value added tax, to 15.0 per cent in a bid to boost consumer spending.
However, VAT reverted back to its pre-recession level of 17.5 per cent on January 1 after British returned to growth in the fourth quarter of 2009.
'Inflation could rise further in February as more retailers pass on January's VAT hike,' said IHS Global Insight economist Howard Archer. 'However, that may well mark the peak and inflation should start to fall back in the second quarter.'
In a bid to help Britain out of recession, the Bank of England last March slashed its key lending rate to a record-low 0.50 per cent - a level which still stands.
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Barclays Q4 profit soars
Barclays PLC on Tuesday reported a fourth quarter profit of 6.9 billion pounds ($10.8b), more than eight times larger than a year earlier, due to gains on the sale of its Global Investors unit to a private equity company.
The result compared to a net profit of 824 million pounds a year earlier and boosted the full-year profit to 9.4 billion pounds, more than double the previous year’s 4.4 billion pounds.
The fourth-quarter surge reflected a pretax gain of 5.3 billion pounds from the sale of Barclays Global Investors to BlackRock Inc.
The sale and a revenue boost from the acquisition of Lehman Brothers US operations in September 2008 compensated for a difficult year in the bank’s traditional retail operations.
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ASIAN TRADE NEWS
Euro rebounds in Asian trade
The euro recouped some of its recent losses in Asian trade Tuesday on hopes that European finance ministers would spell out measures to help Greece through its debt crisis.
The euro gained to 1.3640 dollars in Tokyo afternoon trade from 1.3607 in late London trading on Monday, and to 122.47 yen from 122.45. The dollar fell to 89.79 yen from 89.98.
With no lead from the United States following Monday's Presidents' Day national holiday, investors had their eyes turned to Europe, where regional finance ministers gathered Monday to discuss Greece's fiscal troubles.
The euro was weighed down earlier by 'speculation (there will be) no concrete details on how Greece is going to be rescued in an emergency or pledge of public funds for the purpose,' NAB Capital strategists wrote in a note.
Greece agreed at a late-night meeting of eurozone finance ministers Monday to present new cost-cutting proposals if Brussels remains unconvinced, by March 16, that it can meet its deficit reduction target for 2010.
Athens has committed itself to reducing a 2009 deficit running to 12.7 per cent of gross domestic product by four percentage points over the course of this year.
But European officials appear to be holding back from spelling out bailout measures that would help soothe market jitters over a Greek default.
Greek finance minister George Papaconstantinou said: 'What will stop markets attacking Greece is a further, more explicit step that makes operational what was decided on Thursday at the European Council.'
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DEVELOPING NEWS
Europe turns debt screw on Greece
Europe turned the screw on Greece on Tuesday in a bid to regain market confidence, after giving Athens just 30 days to burst its bulging deficit and debts.
Non-eurozone Sweden led the charge going into a full meeting of European Union finance ministers in Brussels, warning that Athens must ‘surpass’ financiers’ expectations if it is to fight off market attack dogs.
A decision by the 16 euro countries late on Monday to impose ‘additional measures’ on Greece by March 16, further cutting costs and raising taxes should progress be deemed insufficient, was to be rubber-stamped on Tuesday.
And Swedish finance minister Anders Borg warned that the Greek government must go much further than it already has if it is to deliver on a stated target of reducing its 2009 deficit-to-output ratio by almost one third this year alone.
‘What we’ve seen so far is not enough,’ Borg warned. ‘We need more concrete steps when it comes to taxes, otherwise they can’t keep their social cohesion. (And) we need concrete steps when it comes to expenditure...
‘We are far from there yet. If they want to build credibility in the markets, they must surpass expectations. And they haven’t done that so far.’
Borg maintained that without a more ambitious programme in Athens, a months-long onslaught by international fund managers and investors on Greece which has pulled the euro down against the dollar will only ‘drag out.’
Greece, whose prime minister George Papandreou held talks on Tuesday with Russian leaders in Moscow, is committed to reducing a deficit running to 12.7 per cent of gross domestic product by four percentage points over the course of 2010. The eurozone has a three per cent limit for deficits.
However, the country’s euro partners have now effectively seized control of its budgetary sovereignty, with radical new constraints set to be imposed after finance ministers cut Athens out of the decision-making process.
‘If we observe a certain number of risks materialising, the Greek government has agreed to take additional measures’ to prevent a worsening fiscal haemorrhaging, said Eurogroup chief Jean-Claude Juncker.
Juncker, who also said after Monday’s talks that contingency bailout plans are being prepared to shore up the euro, meanwhile insisted that ‘the financial markets are completely wrong if they think they can destroy Greece.’
On Tuesday, the Luxembourg premier declared the additional call by Borg for greater International Monetary Fund surveillance and monitoring to be an ‘absurd’ irrelevance ‘fuelled by Anglo-Saxon voices’ seen as hostile to the shared currency.
‘If California had a refinancing problem, the United States wouldn’t go to the IMF,’ Juncker said.
Drastic action by the Greek government has already sparked strikes and protests at home.
But Greek finance minister George Papaconstantinou failed on Monday to elicit publicly the ‘explicit message’ he wanted from his euro peers detailing concrete, financial help from Brussels.
The additional measures, to be administered under the beady eyes of European Commission inspectors and focused on expenditure cuts, should also encompass a VAT increase and extra duties on luxury goods including private cars, Juncker spelled out.
While market analysts have been calling for numbers to be revealed to show how far the eurozone will go to rescue Greece, Spanish Finance Minister Elena Salgado said on Tuesday that no details of bailout planning would be released to speculators.
France’s finance minister Christine Lagarde said on Monday that ‘several avenues can be envisaged’ after EU leaders last week vowed then to implement ‘determined and coordinated measures’ to ‘safeguard financial stability.’
Greece’s ballooning public deficit has seen its total debt shoot up to about 300 billion euros, or 113 per cent of GDP, nearly double the 60 per cent eurozone limit.
Moody’s credit rating agency calculates that Greece must allocate 15.1 per cent of all its revenues just to service its debts this year.
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WORLD NEWS SPECIAL
Nurseries struggle with
lagging economy
Like his father, grandfather and great-grandfather, David Niklas feels the quickening of spring as the season ramps up at his wholesale nursery in a farming community south of Portland. Niklas and his workers busily package plants for shipment.
These days, his flowers and vegetable seedlings have fewer places to go, as the housing bubble burst and the state and national economies flatlined.
Just three years after reaching a record high of almost $1 billion in sales, Oregon’s nursery industry has plummeted into an historic slump. Nurseries are laying off employees, cutting costs and foregoing new buildings and equipment.
A few, like Niklas’ Clackamas Greenhouses, have gone bankrupt.
‘The family has poured money into it as we tried to restructure it and make new markets,’ said Niklas, who had to file bankruptcy after losing almost half his sales when his primary retailer was bought out. ‘Commercial lenders aren’t talking to me because I’m coming out of bankruptcy.
‘They aren’t even talking to GM, so why would they talk to a little nursery?’
Across the country, the nursery and landscaping trades are also facing tough times.
‘You have to eat, but you don’t have to plant ornamentals,’ said Terry McElroy, a spokesman at the Florida Department of Agriculture.
Florida, which produces 80 per cent of the house plants grown in the United States, had about $844 million in sales of nursery stock in 2007 — the last year figures were available. California, the second-largest producer, reported $1.6 billion in nursery stock sales in 2007.
Both states did not have more recent figures, but officials said they had seen a decline in business. They expect the industry to slowly recover — but they also expect the belt-tightening will remain, with fewer purchases, less expansion and fewer employees.
‘We know, just by tracking sales in general, that it’s down but we don’t know how down,’ said Jennifer Nelis, spokeswoman for the Florida Nursery Growers Association. ‘It’s the life cycle of home construction. Plants are some of the last to go in, so the industry is the last to bounce back.
‘Things are starting to get a little better, but it will always lag.’
In Oregon, the third-ranked producer, the downturn was swift and stunning.
The rich soil and mild climate of Oregon’s Willamette Valley is ideal for growing plants. And for 18 years, starting in 1990, the nursery industry steadily grew, reaching $988 million in sales in 2007. The nursery commodity outpaced cattle, then ranked second, by as much as $500 million that year.
Then the industry slammed into a swarm of trouble: the halt of home and business construction, high transportation costs, financial lending woes and a depressed national economy. Sales plunged 17 per cent, to $820 million, in 2008. State leaders expect a similar drop for 2009.
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SOUTH ASIA
India ministry pushing for
fuel price deregulation
Unmindful of opposition within the ruling coalition, the Indian petroleum ministry is pushing for freeing of petrol and diesel prices from government control along with a marginal hike in domestic LPG and kerosene rates.
Indian finance minister Pranab Mukherjee, is also believed to be in favour of decontrolling auto fuel prices to limit the government’s subsidy outgo but a decision is unlikely in the next 7-10 days as the ruling United Progressive Alliance managers build political consensus on the issue, an oil ministry official said.
The Indian Budget for 2010-11, to be presented by Mukherjee in Parliament on February 26, may provide pointers towards deregulation of prices as petrol and diesel rates would be revised every month based on average international price of the last 30 days.
The official said Mukherjee and Indian petroleum minister Murli Deora feel that the current low international crude oil prices, possibly provide the last window to usher in reforms in the sector without consumers feeling the pinch.
Deregulation, at current rates would result in petrol prices going up by less than Rs 4 a litre and diesel by a shade lower than Rs 2 per litre.
Besides, the Indian ministry wants LPG rates to be raised by Rs 20-25 per 14.2 kg cylinder and kerosene by at least Re one per litre, he said.
These measures would help cut Rs 45,571-crore revenue loss that state-owned fuel retailers would incur on selling petrol, diesel, domestic LPG and kerosene below cost during the current fiscal.
Of this, the Indian government would bear Rs 31,574 crore loss arising on LPG and kerosene and give the three firms — Indian Oil, Bharat Petroleum and Hindustan Petroleum — the promised Rs 12,000-crore.
Last week, Deora did not take the proposal to free auto fuel prices, along with hikes in cooking gas and kerosene rates, to the Cabinet due to opposition from the Trinamool Congress and the Dravida Munnettra Kazhagam.
The proposal was formulated after tweaking the report of the Indian prime minister-appointed expert group on fuel pricing reforms, headed by Kirit Parikh that called for freeing petrol and diesel prices along with a steep Rs 100 per cylinder hike in LPG rates and Rs 6 a litre raise in kerosene prices.
Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hinduatan Petroleum Corporation Limited currently sell kerosene at a loss of Rs 18.06 per litre and domestic LPG at Rs 287.59 per cylinder.
Petrol and diesel prices were freed by the National
Democratic Alliance government led by the Bharatiya Janata Party in April 2002 and revised on 1st and 16th of every month based on fortnightly average of international rates. But this was reversed when the Congress-led government assumed charge in 2004.
Since then, fuel pricing and compensation to state firms has been ad-hoc. In July last year, it was decided that the Indian government will meet all the revenue retailers’ loss on LPG and kerosene and the same on petrol and diesel would be made good by upstream firms like Oil and Natural gas Corporation.
The Rs 13,997-crore revenue loss on auto fuels was met but issues remained with the losses on LPG and kerosene.
Deora, on February 11, submitted a memorandum to the Indian prime minister asking the government to cover the unmet Rs 19,574 crore revenue loss on LPG and kerosene sale. He, Sunday, met Mukherjee to take forward this but the meeting was inconclusive.
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MIDDLE EAST: DEVELOPING NEWS
Zain expects return up to
$5b from Bharti deal
Shares in Kuwaiti telecoms firm Zain surge 9 per cent after said it expects up to $5 billion in returns from its $10.7 billion deal with Bharti Airtel, after it pays off obligations.
‘This (deal) will result in shareholders equity of around $9 billion. And after paying specific obligations, the company expects returns of a maximum of $5 billion,’ Zain said in statement on the Kuwaiti bourse website on Tuesday.
Zain shares surged to a 14-week high on the news after the Kuwait bourse lifted a 2-day trading halt, climbing 9.3 per cent to 1.18 dinars, as Kuwait’s index rose 0.8 per cent to its highest level since October 28.
The expected returns from the deal will enter the firm’s books in the second quarter of 2010, Zain said.
Bharti is likely to finance nearly all the deal’s purchase price with foreign currency loans, a person familiar with the matter said on Tuesday.
Distribution of any special dividend from the sale will be a decision for Zain’s board and shareholders, Zain added.
The deal marks one of the biggest cross-border transactions ever in the Middle East and a turning point in the long running saga around the third-biggest telecoms operator in the region.
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SHORT NEWS
Crisis-hit Toyota to idle
2 US factories
Toyota Motor will temporarily halt production at two US factories after sales were hit hard by a string of safety problems behind the recalls of millions of vehicles, a report said on Tuesday.
Toyota will suspend output at its Kentucky plant producing Camry and Avalon sedans for four days, the Tokyo Shimbun reported, citing unnamed sources.
It will also suspend production of Tundra pickup trucks at its Texas plant for a total of 10 days in March and April, the newspaper said.
The decision is part of Toyota’s effort to cut stockpiles of its vehicles after a drop in its US sales owing to high-profile problems linked to accelerator and brake systems that have tarnished the company’s reputation.
Immediate confirmation of the report was not available.
Toyota, which in 2008 dethroned General Motors as the world’s biggest car maker, has pledged to fix more than eight million vehicles worldwide, more than its entire 2009 global sales, due to safety problems.
Toyota’s president Akio Toyoda is due to provide an update on the progress of the massive recalls at a news conference on Wednesday.
Toyoda, the grandson of the Toyota founder, plans soon to fly to the United States, where the company faces a congressional grilling and a host of lawsuits.
Last week, Toyota expanded its global recall to include more than 4,00,000 of its newest petrol-electric Prius models as well as the plug-in Prius, the Sai and the Lexus HS250h, which use the same braking system.
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BANGLADESH NEWS
PDB, NTPC may sign MoU on 2,600MW
coal-fired plants, JV
The Power Development Board is likely to sign a memorandum of understanding with NTPC, the state-run Indian thermal power corporation, to carry out a feasibility study for installation of two 1,300MW coal-based power plants in the country.
Officials said the PDB might ultimately form a joint venture company with NTPC, which specialises in thermal power plants, to set up one of the proposed coal-fired plants after the feasibility study.
The MoU is expected to be signed when an Indian delegation, led by Indian power secretary HS Brahma, visits Bangladesh on February 18-20 to hold meetings with officials here, especially on inter-connection of power grids between the two countries, said officials of PDB and Power Division.
The NTPC, formerly known as the National Thermal Power Corporation, recently submitted a proposal to PDB for carrying out a feasibility study for installation of two coal-fired plants at Chittagong and Mongla with a total capacity of generating 2,600MW electricity.
It also proposed a joint venture company between NTPC and PDB, the latter having 51 per cent stake, to set up a 1,300MW power plant in Bangladesh, the sources said.
The NTPC put forward the proposal after Prime Minister Sheikh Hasina’s visit to India last month when the Bangladesh side sought cooperation in power sector.
The state-owned NTPC is the largest power producers in India with more than 30,000MW generation capacity, having wide-ranging expertise in installing and operating coal-fired power plants.
Officials said that PDB is now finalising the draft of the proposed MoU.
‘The draft MoU will further discussed between the two sides when the Indian delegation comes… Even if the MoU is not signed this time, a platform will be made so that it can be signed sometime soon,’ said an official.
He, however, said that ‘a lot of issues’ including terms and conditions of the MoU were yet to be decided.
‘Although initially, officials will agree on feasibility study for the coal based plants, the ultimate goal will be to form a joint venture company to install the plants,’ he said.
The government recently held three road-shows in London, Singapore and New York spending more than Tk 1 crore for attracting investments in power generation plants with a total capacity of 4,000MW, including two 1,300MW coal-fired plants.
When asked what was the use of such road-shows when the government was going for installation of the plants by forming joint ventures and without calling any tenders, a high official of the Power Division said, ‘We are yet to get the draft MoU from PDB. However, if we get Indian investment with suitable terms and conditions, we will welcome it.’
He said that PDB might seek investment for one 1,300MW plant from NTPC. ‘We may keep another plant open. The details of the terms and conditions will be worked out through negotiations.’
The official said that they wanted to engage NTPC as the company has experience in handling coal-based power plants. ‘We want that our power sector engineers also get some experience from NTPC through working for the joint venture company.’
Apart from Indian investment in power sector, the Indian delegation will hold two-step meetings with Bangladesh officials on inter-connection and human resource development during their visit to Bangladesh, which is a follow-up of a meeting held in New Delhi in January.
The joint steering committee on inter-connection of power grids, headed by Bangladesh and Indian power secretaries, will try to finalise terms and conditions for setting up a power transmission line connecting Bangladesh with India to enable Dhaka to purchase 250MW electricity from India.
Bangladesh officials expect to invite tenders for installation of a transmission line from Berhampore in India to Bheramara in Bangladesh at a cost of around Tk 800 crore.
The steering committee held the first meeting in Delhi on January 10, a day before Bangladesh and India signed a Memorandum of Understanding for supply of 250MW electricity to Bangladesh from India, along with three other agreements and another MoU.
A working committee meeting headed by joint secretaries of power ministries of the two countries will also be held on the issues.
Dhaka expects to purchase 250MW of electricity initially within two years, but will try to import some additional electricity from India, officials said.
Bangladesh currently faces a shortage of around 1,500MW to 2,000MW of electricity during the peak season as the PDB—the state electricity generation agency—can supply only around 3,600-3,800MW against the demand for 5,500-6,000MW.
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UPDATE
US Trade Show begins tomorrow
Bangladesh’s trade with the US will increase again in the current year as the latter’s importers are showing renewed interests to source more products from Bangladesh with the receding of recession, a US diplomat said.
Heather Variava, the first secretary for economic and political affairs at the US embassy in Dhaka, told reporters that due to recession Bangladesh-US trade had suffered a negative growth in 2009.
‘US imports had declined much in 2009 due to recession and in case of US-Bangladesh trade, the decline is smaller compared to that of other partners,’ she said at a press briefing on the 19th US Trade Show in Bangladesh.
The three-day annul trade show will be inaugurated by foreign minister, Dipu Moni, at Dhaka Sheraton Hotel tomorrow.
‘Top US retailers are planning to import more from Bangladesh as their businesses are peaking up again,’ she said, referring recent Dhaka visit of the Wal-Mart chief executive officer and top executives of some other big US retailers.
The American Chamber of Commerce in Bangladesh president, Aftab Ul Islam and executive director, A Gafur, also spoke on the occasion.
Aftab said that the annual event would see 45 per cent increase in participants as more US companies are in the queue to source from Bangladesh and many companies sale their products here.
A Gafur said a total of 72 US and Bangladeshi companies will showcase products and services in the fair.
The Boeing, Ford Motors, Caterpillar, IBM, Exxon Mobil Corporation, Dell and Cisco are among the exhibitors.
The fair will remain open for visitors between 10am and 8 pm. Entry fee has been fixed at Tk 20. School students will enjoy free entry.
The US-Bangladesh trade totaled some $ 4,135 million in 2009, $ 81 million less than the figure in the previous year.
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FOCUS
Simplification of procedures
stressed to attract more FDI
Top officials of regulatory bodies at a discussion meeting on Tuesday underlined the need for simplification of the investment procedures for attracting more foreign direct investment in the country.
The Board of Investment and Foreign Investors’ Chamber of Commerce and Industry jointly organised the meeting on ‘Foreign Investment in Bangladesh: Prospects and Challenges’ at a city hotel.
Chaired by BOI executive chairman Syed A Samad, the meeting was addressed, among others by the National Board of Revenue chairman Nasiruddin Ahmed, Bangladesh Energy Regulatory Commission chairman Syed M Yusuf Hossain and FICCI representative A Qayyum Khan.
The BOI executive member made a power point presentation on the prospects and challenges of FDI, said a BOI release.
The meeting observed that attraction of FDI in the areas like infrastructure, power, energy, ICT, agro-processing and labour intensive industries are crucial.
The participants laid emphasis on simplification of the investment procedure, streamlining payment of tax and VAT, realisation of the benefits of double tax avoidance treaties, simplification of royalty remittance procedure, enforcement of contracts and consistency of the policy regime.
Nasiruddin Ahmed informed the meeting that the Custom Act, VAT Act 1991 and income tax ordinance are now under review.
He assured that taxation system will be made simpler, automated and taxpayers friendly. A consultation meeting in this regard will be held soon.
Syed A Samad assured all necessary supports in facilitating local and foreign investments.
There is no single instance that a foreign investor made loss because of the prevailing investment climate in Bangladesh, he said adding that the BOI will strengthen its facilitating and advocacy role for policy reforms and others areas.
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SOUTH ASIAN NEWS
EU-India FTA likely by Dec
Free Trade Agreement between India and the European Union is likely to be finalised by December 2010, with the final round of talks to be held in March, a top official said on Monday.
‘India and the EU are negotiating a FTA that has the capacity to advance the relationship and increase bilateral trade. After seven rounds of negotiations, the final talks would be held in March. After the next round, the agreement is likely to be finalised by this December,’ ambassador, head of European Commission delegation to India Daniele Smadja told reporters here.
She said negotiations would lead to the establishment of a well-developed FTA, which will provide mutual benefits to both parties, adding that Indian prime minister Manmohan Singh and the EU commission president Jose Manuel Barroso would try to achieve finalising the FTA soon.
Stating that India has moved up to the first ten in the list of the EU’s major trading partners, she said once the FTA is finalised, business between the two would rise.
Smadja, who was in the city to inspect EU-sponsored projects in Chennai, said, ‘In recent years, trade with India has been growing at 16 per cent a year compared with the EU’s overall growth rate of trade of ten per cent on account of the growth performance of the Indian economy.’
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BANGLADESH SPECIAL NEWS
Bhutan offers Bangladesh
zero-tariff entry
All Bangladeshi products will get zero- tariff entry to Bhutan, a preferential trade facility which is expected to help increase trade and business relations between the two countries.
Khandu Wangchuk, minister for economic and trade affairs of Bhutan made the offer on Tuesday at a meeting here with some local businessmen.
International Business Forum of Bangladesh organised the meeting at its office in the city. Members of the trade organisation participated in discussions on exploring new avenues of trade and business between the two countries. The businessmen identified some sectors including housing, energy and power, cement, garments, packaging and tea where Bangladesh and Bhutan could strengthen their relation for mutual benefit.
Khandu Wangchuk said that his government would consider the proposals and offered Bangladeshi expor-ters zero-tariff entry facility to Bhutan. Welcoming the offer, IBFB president, Mahmudul Islam Chowdhury, hoped that the trade relations between the two countries would grow further.
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UPDATE
Zoom Chittagong ICT Fair begins
The three-day Zoom Chittagong ICT Fair-2010 began at Woodland Community Centre in the city’s Muradpur area on Tuesday.
The Chittagong city mayor, ABM Mohiuddin Chowdhury, inaugurated the fair as chief guest at a function.
The Premier University vice-chancellor, Anupom Sen, and the Bangladesh Computer Samity president, Mostofa Jabbar, were present as special guests.
Different information technology companies have set up 33 stalls at the fair, organised by the INPACE. The fair will remain open for visitors from 10:00am to 8:00pm.
The organisers fixed Tk 10 as entry fee for the fair. School students, however, will get free access.
Jahirul Islam, Chittagong branch in charge of Rishit Computer, said they got good response from visitors on the first day of the fair. ‘We hope the fair will draw more crowds in the remaining two days,’ he added.
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CITF 2010 begins Friday
The moth-long Chittagong International Trade Fair-2010 will begin at the polo-ground in the city on Friday.
The Chittagong Chamber of Commerce and Industry has organised the 18th version of the fair.
Thailand will take part in the fair as the partner country this year. Companies from different countries including India, Pakistan, Turkey, Iran and China will set up stalls and pavilions to display their products.
The jute minister Abdul Latif Siddiqui will be chief guest at the inaugural session and chairman of the parliamentary standing committee on commerce ministry Lutful Hai will be special guest.
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IN FOUCS
Rakub to disburse Tk 65cr
in agriculture loans
Rajshahi Krishi Unnayan Bank has set a target of disbursing Tk 65 crore as joint supervising agricultural loan by Rakub and Barind Multipurpose Development Authority in different north-western districts of the country during the current 2009-2010 fiscal.
The Rakub authorities revealed this while launching the farmers’ level loan disbursement activities of the programme at Prosadpur Dayingpara under Gomostapur upazila of Chapainawabganj district on Tuesday.
Managing director of the bank Muhammad Fazlul Haque and executive director of BMDA Abdul Mannan attended and addressed the ceremony as the chief and special guests respectively with Rakub zonal manager Abdus Samad in the chair.
Marking the occasion, loan of Tk 31.31 lakh were disbursed among 176 farmers under 11 deep tube-wells for the purchasing purposes of irrigation, seed, insecticides and fertilizer in due time.
Fazlul Haque viewed that best and optimum uses of the farming loan and inputs along with the modern technology has become indispensable for boosting agricultural yield to ensure food security of the nation.
Besides, he said substantial increasing of domestic food grain yield could be the effective means of bolstering the foreign currency reserve along with making the nation free from poverty and hunger.
‘We have no alternative to wide-ranging promotion of the farmers-level modern technologies to meet up the gradually increasing food demand,’ he said adding that the present government is committed to maintaining the farmers’ interest for the sake of making the nation self-sufficient in food production.
He said the Rakub-BMDA joint effort would contribute a lot to supplement the government endeavour and asked the field level bankers to discharge their duties with utmost sincerity and honesty so that the farmers could derive the total benefits of the programme.
He reminded that transparency and accountability must be ensured through disbursing the loan in public places instead of the bank counter.
‘By virtue of expansion of irrigation facilities the rain-fed single cropping Barind area has been transformed into three cropping in many areas,’ Abdul Mannan said adding that importance should be given on proper uses of the irrigation water.
In his address of welcome, assistant general manager of the bank Golam Mostofa gave an overview of the special credit programme and its ultimate goal.
He said around six lakh farmers have so far been brought under the BMDA’s irrigation facilities through around 12,000 deep tube-wells in 125 upazilas of the region.
But, he said, most of the farmers face financial constraints as they are landless, small and marginal and share-croppers.
In this context, he said the newly launched credit programme would help removing the constraints side by side with accelerating the agricultural yield.
In the preliminary stage, he mentioned that the farmers of Rajshahi, Chapainawabganj, Naogaon, Jaipurhat, Dinajpur, Thakurgaon and Panchagarh would be brought under the credit facilities and the programme would be expanded to all other districts of the region.
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SOUTH ASIA
India allows sugar export to EU
The Indian government on Monday allowed export of 10,000 tonnes of sugar to the European Union, at a time when the United Progressive Alliance regime is desperately trying to bring down prices of the sweetener in the domestic market.
The Directorate general of Foreign Trade has allocated a quantity of 10,000 tonnes of white or refined sugar for export to the EU for the fiscal 2009-10 (sugar season October 2009 — September 2010) through state-run trading firm Indian Sugar Exim Corporation.
Indian Sugar Exim Corporation, which is the designated agency for export of sugar to the EU, will export the commodity under a preferential quota agreement, a DGFT notice said.
Although, officially there in no ban on export of sugar, prior approval from authorities is required, which the Indian Food Ministry is not granting since January 2009.
Sugar prices in India have been on a rise due to supply shortage. Sugar prices rose by 58.96 per cent in January year-on-year.
The exported sugar will be received by the EU duty free, under a special concessions provided for after conclusion of the General Agreement on Trade and Tariff.
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WORLD NEWS
British inflation hits
14-month high
Twelve-month inflation in Britain surged to 3.5 per cent in January - the highest level for 14 months - owing to a higher rate of tax on goods and services, official data showed on Tuesday.
Inflation in January on a 12-month basis compared with a level of 2.9 per cent in December, the Office for National Statistics said in a statement.
Monthly prices fell by 0.2 per cent, the figures showed.
The data means that the head of the Bank of England, Mervyn King, must write to Finance Minister Alistair Darling explaining why 12-month inflation is one per cent-point higher than the government's 2.0-per cent target.
The BoE last week said that it expected annual British inflation to peak at about 3.5 per cent this year, before falling back underneath the target level.
Keeping annual inflation at around 2.0 per cent is the BoE's key task and it attempts to achieve this my changing the level of interest rates.
Market expectations had been for a 12-month increase of 3.7 per cent, according to analysts polled by Dow Jones Newswires.
January's figure was meanwhile skewed by lower inflation last year after the government had cut taxation on goods and services to help revive the economy as Britain struggled with a deep recession.
The British government had slashed VAT, or value added tax, to 15.0 per cent in a bid to boost consumer spending.
However, VAT reverted back to its pre-recession level of 17.5 per cent on January 1 after British returned to growth in the fourth quarter of 2009.
'Inflation could rise further in February as more retailers pass on January's VAT hike,' said IHS Global Insight economist Howard Archer. 'However, that may well mark the peak and inflation should start to fall back in the second quarter.'
In a bid to help Britain out of recession, the Bank of England last March slashed its key lending rate to a record-low 0.50 per cent - a level which still stands.
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Barclays Q4 profit soars
Barclays PLC on Tuesday reported a fourth quarter profit of 6.9 billion pounds ($10.8b), more than eight times larger than a year earlier, due to gains on the sale of its Global Investors unit to a private equity company.
The result compared to a net profit of 824 million pounds a year earlier and boosted the full-year profit to 9.4 billion pounds, more than double the previous year’s 4.4 billion pounds.
The fourth-quarter surge reflected a pretax gain of 5.3 billion pounds from the sale of Barclays Global Investors to BlackRock Inc.
The sale and a revenue boost from the acquisition of Lehman Brothers US operations in September 2008 compensated for a difficult year in the bank’s traditional retail operations.
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ASIAN TRADE NEWS
Euro rebounds in Asian trade
The euro recouped some of its recent losses in Asian trade Tuesday on hopes that European finance ministers would spell out measures to help Greece through its debt crisis.
The euro gained to 1.3640 dollars in Tokyo afternoon trade from 1.3607 in late London trading on Monday, and to 122.47 yen from 122.45. The dollar fell to 89.79 yen from 89.98.
With no lead from the United States following Monday's Presidents' Day national holiday, investors had their eyes turned to Europe, where regional finance ministers gathered Monday to discuss Greece's fiscal troubles.
The euro was weighed down earlier by 'speculation (there will be) no concrete details on how Greece is going to be rescued in an emergency or pledge of public funds for the purpose,' NAB Capital strategists wrote in a note.
Greece agreed at a late-night meeting of eurozone finance ministers Monday to present new cost-cutting proposals if Brussels remains unconvinced, by March 16, that it can meet its deficit reduction target for 2010.
Athens has committed itself to reducing a 2009 deficit running to 12.7 per cent of gross domestic product by four percentage points over the course of this year.
But European officials appear to be holding back from spelling out bailout measures that would help soothe market jitters over a Greek default.
Greek finance minister George Papaconstantinou said: 'What will stop markets attacking Greece is a further, more explicit step that makes operational what was decided on Thursday at the European Council.'
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DEVELOPING NEWS
Europe turns debt screw on Greece
Europe turned the screw on Greece on Tuesday in a bid to regain market confidence, after giving Athens just 30 days to burst its bulging deficit and debts.
Non-eurozone Sweden led the charge going into a full meeting of European Union finance ministers in Brussels, warning that Athens must ‘surpass’ financiers’ expectations if it is to fight off market attack dogs.
A decision by the 16 euro countries late on Monday to impose ‘additional measures’ on Greece by March 16, further cutting costs and raising taxes should progress be deemed insufficient, was to be rubber-stamped on Tuesday.
And Swedish finance minister Anders Borg warned that the Greek government must go much further than it already has if it is to deliver on a stated target of reducing its 2009 deficit-to-output ratio by almost one third this year alone.
‘What we’ve seen so far is not enough,’ Borg warned. ‘We need more concrete steps when it comes to taxes, otherwise they can’t keep their social cohesion. (And) we need concrete steps when it comes to expenditure...
‘We are far from there yet. If they want to build credibility in the markets, they must surpass expectations. And they haven’t done that so far.’
Borg maintained that without a more ambitious programme in Athens, a months-long onslaught by international fund managers and investors on Greece which has pulled the euro down against the dollar will only ‘drag out.’
Greece, whose prime minister George Papandreou held talks on Tuesday with Russian leaders in Moscow, is committed to reducing a deficit running to 12.7 per cent of gross domestic product by four percentage points over the course of 2010. The eurozone has a three per cent limit for deficits.
However, the country’s euro partners have now effectively seized control of its budgetary sovereignty, with radical new constraints set to be imposed after finance ministers cut Athens out of the decision-making process.
‘If we observe a certain number of risks materialising, the Greek government has agreed to take additional measures’ to prevent a worsening fiscal haemorrhaging, said Eurogroup chief Jean-Claude Juncker.
Juncker, who also said after Monday’s talks that contingency bailout plans are being prepared to shore up the euro, meanwhile insisted that ‘the financial markets are completely wrong if they think they can destroy Greece.’
On Tuesday, the Luxembourg premier declared the additional call by Borg for greater International Monetary Fund surveillance and monitoring to be an ‘absurd’ irrelevance ‘fuelled by Anglo-Saxon voices’ seen as hostile to the shared currency.
‘If California had a refinancing problem, the United States wouldn’t go to the IMF,’ Juncker said.
Drastic action by the Greek government has already sparked strikes and protests at home.
But Greek finance minister George Papaconstantinou failed on Monday to elicit publicly the ‘explicit message’ he wanted from his euro peers detailing concrete, financial help from Brussels.
The additional measures, to be administered under the beady eyes of European Commission inspectors and focused on expenditure cuts, should also encompass a VAT increase and extra duties on luxury goods including private cars, Juncker spelled out.
While market analysts have been calling for numbers to be revealed to show how far the eurozone will go to rescue Greece, Spanish Finance Minister Elena Salgado said on Tuesday that no details of bailout planning would be released to speculators.
France’s finance minister Christine Lagarde said on Monday that ‘several avenues can be envisaged’ after EU leaders last week vowed then to implement ‘determined and coordinated measures’ to ‘safeguard financial stability.’
Greece’s ballooning public deficit has seen its total debt shoot up to about 300 billion euros, or 113 per cent of GDP, nearly double the 60 per cent eurozone limit.
Moody’s credit rating agency calculates that Greece must allocate 15.1 per cent of all its revenues just to service its debts this year.
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WORLD NEWS SPECIAL
Nurseries struggle with
lagging economy
Like his father, grandfather and great-grandfather, David Niklas feels the quickening of spring as the season ramps up at his wholesale nursery in a farming community south of Portland. Niklas and his workers busily package plants for shipment.
These days, his flowers and vegetable seedlings have fewer places to go, as the housing bubble burst and the state and national economies flatlined.
Just three years after reaching a record high of almost $1 billion in sales, Oregon’s nursery industry has plummeted into an historic slump. Nurseries are laying off employees, cutting costs and foregoing new buildings and equipment.
A few, like Niklas’ Clackamas Greenhouses, have gone bankrupt.
‘The family has poured money into it as we tried to restructure it and make new markets,’ said Niklas, who had to file bankruptcy after losing almost half his sales when his primary retailer was bought out. ‘Commercial lenders aren’t talking to me because I’m coming out of bankruptcy.
‘They aren’t even talking to GM, so why would they talk to a little nursery?’
Across the country, the nursery and landscaping trades are also facing tough times.
‘You have to eat, but you don’t have to plant ornamentals,’ said Terry McElroy, a spokesman at the Florida Department of Agriculture.
Florida, which produces 80 per cent of the house plants grown in the United States, had about $844 million in sales of nursery stock in 2007 — the last year figures were available. California, the second-largest producer, reported $1.6 billion in nursery stock sales in 2007.
Both states did not have more recent figures, but officials said they had seen a decline in business. They expect the industry to slowly recover — but they also expect the belt-tightening will remain, with fewer purchases, less expansion and fewer employees.
‘We know, just by tracking sales in general, that it’s down but we don’t know how down,’ said Jennifer Nelis, spokeswoman for the Florida Nursery Growers Association. ‘It’s the life cycle of home construction. Plants are some of the last to go in, so the industry is the last to bounce back.
‘Things are starting to get a little better, but it will always lag.’
In Oregon, the third-ranked producer, the downturn was swift and stunning.
The rich soil and mild climate of Oregon’s Willamette Valley is ideal for growing plants. And for 18 years, starting in 1990, the nursery industry steadily grew, reaching $988 million in sales in 2007. The nursery commodity outpaced cattle, then ranked second, by as much as $500 million that year.
Then the industry slammed into a swarm of trouble: the halt of home and business construction, high transportation costs, financial lending woes and a depressed national economy. Sales plunged 17 per cent, to $820 million, in 2008. State leaders expect a similar drop for 2009.
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SOUTH ASIA
India ministry pushing for
fuel price deregulation
Unmindful of opposition within the ruling coalition, the Indian petroleum ministry is pushing for freeing of petrol and diesel prices from government control along with a marginal hike in domestic LPG and kerosene rates.
Indian finance minister Pranab Mukherjee, is also believed to be in favour of decontrolling auto fuel prices to limit the government’s subsidy outgo but a decision is unlikely in the next 7-10 days as the ruling United Progressive Alliance managers build political consensus on the issue, an oil ministry official said.
The Indian Budget for 2010-11, to be presented by Mukherjee in Parliament on February 26, may provide pointers towards deregulation of prices as petrol and diesel rates would be revised every month based on average international price of the last 30 days.
The official said Mukherjee and Indian petroleum minister Murli Deora feel that the current low international crude oil prices, possibly provide the last window to usher in reforms in the sector without consumers feeling the pinch.
Deregulation, at current rates would result in petrol prices going up by less than Rs 4 a litre and diesel by a shade lower than Rs 2 per litre.
Besides, the Indian ministry wants LPG rates to be raised by Rs 20-25 per 14.2 kg cylinder and kerosene by at least Re one per litre, he said.
These measures would help cut Rs 45,571-crore revenue loss that state-owned fuel retailers would incur on selling petrol, diesel, domestic LPG and kerosene below cost during the current fiscal.
Of this, the Indian government would bear Rs 31,574 crore loss arising on LPG and kerosene and give the three firms — Indian Oil, Bharat Petroleum and Hindustan Petroleum — the promised Rs 12,000-crore.
Last week, Deora did not take the proposal to free auto fuel prices, along with hikes in cooking gas and kerosene rates, to the Cabinet due to opposition from the Trinamool Congress and the Dravida Munnettra Kazhagam.
The proposal was formulated after tweaking the report of the Indian prime minister-appointed expert group on fuel pricing reforms, headed by Kirit Parikh that called for freeing petrol and diesel prices along with a steep Rs 100 per cylinder hike in LPG rates and Rs 6 a litre raise in kerosene prices.
Indian Oil Corporation, Bharat Petroleum Corporation Limited and Hinduatan Petroleum Corporation Limited currently sell kerosene at a loss of Rs 18.06 per litre and domestic LPG at Rs 287.59 per cylinder.
Petrol and diesel prices were freed by the National
Democratic Alliance government led by the Bharatiya Janata Party in April 2002 and revised on 1st and 16th of every month based on fortnightly average of international rates. But this was reversed when the Congress-led government assumed charge in 2004.
Since then, fuel pricing and compensation to state firms has been ad-hoc. In July last year, it was decided that the Indian government will meet all the revenue retailers’ loss on LPG and kerosene and the same on petrol and diesel would be made good by upstream firms like Oil and Natural gas Corporation.
The Rs 13,997-crore revenue loss on auto fuels was met but issues remained with the losses on LPG and kerosene.
Deora, on February 11, submitted a memorandum to the Indian prime minister asking the government to cover the unmet Rs 19,574 crore revenue loss on LPG and kerosene sale. He, Sunday, met Mukherjee to take forward this but the meeting was inconclusive.
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MIDDLE EAST: DEVELOPING NEWS
Zain expects return up to
$5b from Bharti deal
Shares in Kuwaiti telecoms firm Zain surge 9 per cent after said it expects up to $5 billion in returns from its $10.7 billion deal with Bharti Airtel, after it pays off obligations.
‘This (deal) will result in shareholders equity of around $9 billion. And after paying specific obligations, the company expects returns of a maximum of $5 billion,’ Zain said in statement on the Kuwaiti bourse website on Tuesday.
Zain shares surged to a 14-week high on the news after the Kuwait bourse lifted a 2-day trading halt, climbing 9.3 per cent to 1.18 dinars, as Kuwait’s index rose 0.8 per cent to its highest level since October 28.
The expected returns from the deal will enter the firm’s books in the second quarter of 2010, Zain said.
Bharti is likely to finance nearly all the deal’s purchase price with foreign currency loans, a person familiar with the matter said on Tuesday.
Distribution of any special dividend from the sale will be a decision for Zain’s board and shareholders, Zain added.
The deal marks one of the biggest cross-border transactions ever in the Middle East and a turning point in the long running saga around the third-biggest telecoms operator in the region.
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SHORT NEWS
Crisis-hit Toyota to idle
2 US factories
Toyota Motor will temporarily halt production at two US factories after sales were hit hard by a string of safety problems behind the recalls of millions of vehicles, a report said on Tuesday.
Toyota will suspend output at its Kentucky plant producing Camry and Avalon sedans for four days, the Tokyo Shimbun reported, citing unnamed sources.
It will also suspend production of Tundra pickup trucks at its Texas plant for a total of 10 days in March and April, the newspaper said.
The decision is part of Toyota’s effort to cut stockpiles of its vehicles after a drop in its US sales owing to high-profile problems linked to accelerator and brake systems that have tarnished the company’s reputation.
Immediate confirmation of the report was not available.
Toyota, which in 2008 dethroned General Motors as the world’s biggest car maker, has pledged to fix more than eight million vehicles worldwide, more than its entire 2009 global sales, due to safety problems.
Toyota’s president Akio Toyoda is due to provide an update on the progress of the massive recalls at a news conference on Wednesday.
Toyoda, the grandson of the Toyota founder, plans soon to fly to the United States, where the company faces a congressional grilling and a host of lawsuits.
Last week, Toyota expanded its global recall to include more than 4,00,000 of its newest petrol-electric Prius models as well as the plug-in Prius, the Sai and the Lexus HS250h, which use the same braking system.
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