------------------------------------------------------------------- DAWN WIRE SERVICE ------------------------------------------------------------------- Week Ending : 31 March 2001 Issue : 07/13 -------------------------------------------------------------------
Contents | National News | Business & Economy | Editorials & Features | Sports
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CONTENTS ===================================================================
NATIONAL NEWS + India asked to stop boundary firing + After Chashma another N-plant in 7 years: Ishfaq + Kashmiris decline talks without all leaders + Minimum deterrence essential, says CE + Electricity rate raised by 8 paisa more + Musharraf defends hike in gas, power tariff + Senegal calls for Pakistan, India talks + CE links IT promotion to development + Supreme Court to take up tapes issue on Monday + Cabinet agrees to constitutional changes if needed + Military courts to deal with sectarian cases + Chinese PM's letter to CE delivered + Tarbela touches dead level: IRSA + Azhar elected chief of anti-Nawaz group + Govt withdraws cases against Hubco + Govt to sell 25% stake in PTCL for $3 billion --------------------------------- BUSINESS & ECONOMY + Petrol export from next month + Changes in taxation system decided: Shaukat on CBR revamping + IMF approves $133m tranche + Rise in imports to improve revenue + SAP: call to oust corrupt men + Foreigners shy to make big investment + New export finance scheme launched: Facility in foreign currency + Govt not to expand privatization list + Privatization Commission to sell UBL this year + World Bank for faster execution of reform programme + ADB links soft loans to good governance + SBP offers special TBs to banks: End-March NDA target + SBP buys $1.2bn from kerb --------------------------------------- EDITORIALS & FEATURES + I could be a solution' Ardeshir Cowasjee + A question of horses Ayaz Amir + Partisan politics Irfan Husain ----------- SPORTS + Kiwi openers grind Pakistan + Cricket board snaps relations with India + Ex-stars chide India over refusal to play Pakistan

India asked to stop boundary firing 

ISLAMABAD, March 30: Pakistan on Friday called upon India to 
immediately halt its firing along the Working Boundary, which had 
jeopardised Islamabad's initiative for dialogue for the settlement 
of Kashmir dispute.

"Indian firing and related military activity along the Working 
Boundary seriously jeopardise Pakistan's endeavours and initiatives 
for maximum restraint to promote a dialogue for a settlement of the 
Kashmir dispute," a Foreign Office statement issued here said.

"Indian forces have resorted to unprovoked firing into Pakistan in 
recent weeks from across the Working Boundary" between the 
territory of Pakistan and the territory occupied by India in 
Kashmir, APP news agency quoting the statement said.

Pakistan, therefore "calls upon the government of India to 
immediately put an end to firing and other provocative acts along 
the Working Boundary," it said.

The statement follows a strong Pakistani protest on Thursday 
against Indian efforts to build a fence along the Working Boundary.

Thursday's statement warned that Pakistan "reserves the right to 
take all measures appropriate and necessary to frustrate Indian 
designs to change the character of the Working Boundary."

India has already built a barbed-wire border on its side of East 
Punjab. Pakistan's opposition to New Delhi's moves in the past to 
extend this fence to occupied Jammu region have led to deadly 
clashes between the two countries.

A Pakistan Army source said on Thursday that reports had been 
received recently that India was once again trying to extend the 
fence, adds Reuters news agency.

After Chashma another N-plant in 7 years: Ishfaq
Khaleeq Kiani 

CHASHMA, March 29: Pakistan planned to establish another nuclear 
power plant with 100 per cent indigenous expertize and resources in 
six to seven years, said Dr Ishfaq Ahmed, Chairman of Pakistan 
Atomic Energy Commission and adviser-designate to the Chief 
Executive, on Thursday.

He was speaking at the inauguration ceremony of $600 million 325 
megawatt Chashma Nuclear Power Plant here.

"Pakistan should not wait for another 30 years to have another 
plant. The government is very keen and we hope we will have a third 
nuclear plant very soon," Dr Ishfaq said.

"We have to see the Chashma Power Project stabilizing power 
generation, economic turnaround in the country and then we can go 
for the third plant," he said.

Chief Executive Gen Pervez Musharraf, who was scheduled to 
inaugurate the project, could not reach here due to inclement 
weather in Islamabad. He will formally unveil the plaque sometime 
later, Dr Ashfaq told newsmen.

Chashnupp became operational in September last year and it has 
already started supplying electricity to Wapda's national power 

Dr Ishfaq said that Pakistan established Karachi Nuclear Power 
Plant (Kanupp), the first nuclear plant in the Islamic world, in 
1972 and then it took the country 30 years to complete Chashnupp 
due to sanctions. He said that after the 1974 nuclear explosion by 
India, sanctions were imposed on Pakistan and the supply of fuel, 
spare parts, heavy water and equipment was stopped to Pakistan. 
However, he said, the Pakistani scientists and engineers took up 
the challenge and completed the Chashnupp where they had achieved 
60 per cent capability of operations, maintenance and technical 

He said that Pakistan was committed to peaceful use of nuclear 
technology. He said that Pakistan's new power policy had encouraged 
use of hydel and other indigenous resources for power generation 
and nuclear power was more environment-friendly and reliable.

He said hydel and nuclear power had very close relationship and 
hinted that four more power projects could be developed at Chashma.

In his address, Chinese minister for science and technology and 
national defence Liu Jibin said Chasnupp had received full support 
from both the governments of Pakistan and China, APP adds.

He said the agreement for the project was signed in 1991 and its 
construction started in 1993. "The 1993 turned a new leaf in the 
cooperation between Pakistan and China for the peaceful use of 
nuclear energy based on equality and mutual benefit," the Chinese 
minister said.

Kashmiris decline talks without all leaders

SRINAGAR, March 29: The All Party Hurriyat Conference said on 
Thursday it would not enter into any dialogue with New Delhi until 
their leaders were allowed to visit Pakistan.

The statement by the APHC was a reaction to a news item that a 
senior Indian government official was being nominated for talks 
with the alliance.

"The process of negotiations can only start after Hurriyat's tour 
to Pakistan," the statement said, adding its leaders would then 
"sincerely try to push forward" a dialogue with the Indian 

The Hurriyat had nominated a five-member team in December last year 
for a visit to Pakistan in order to hold talks with Kashmiri 
leaders and government officials.-AFP

Minimum deterrence essential, says CE

KARACHI, March 26: The chief executive, Gen Pervez Musharraf, said 
on Monday that in the prevailing security environment in the region 
it was imperative for the country to always maintain a "minimum 

He was speaking at the PAF's Sonmiani firing range where he 
witnessed a spectacular display of air-to-air and ground-to-air 
missiles and other weapons fired by the frontline fighter aircraft.

The display brought to an end PAF's week-long camp 2001 whose 
objective was to test combat fitness of the aircraft and the 

In an apparent reference to disparity in defence forces viz-a-viz 
India, the CE said: "We are always out-numbered...we maintain a 
minimum deterrence, which we will always maintain."

Spelling out three stages of deterrence, Gen Musharraf emphasized 
that minimum deterrence, which could be quantified in comparison to 
the enemy's strength, should be followed by "ability to threaten 
enemy's such vulnerable targets which go beyond their tolerance 

It would also mean "will and resolve of the force to defend and 
fight by challenging the enemy," said the CE, adding that the PAF 
had always played an important role in strengthening security.

Recalling the PAF's role in 1965 and 1971 wars, Gen Musharraf said 
that the resolve of the force would put fear of God in the heart of 
the enemy.

Durandal or runway penetration bombs were also dropped to 
demonstrate the PAF's capability to make the enemy runways 

The outcome of the firing display was regarded as "highly 

Sindh Governor Mohammedmian Soomro, Balochistan Governor Amirul 
Mulk Mengal, Chief of the Air Staff, Air Chief Marshal Mushif Ali 
Mir, and Chief of Naval Staff, Admiral Abdul Aziz Mirza, witnessed 
the demonstration.

Electricity rate raised by 8 paisa more
Ahmad Fraz Khan

LAHORE, March 29: The National Electric Power Regulatory Authority 
(Nepra) on Thursday allowed the Water and Power Development 
Authority (Wapda) to increase power tariff by 8 paisa per unit.

The Thursday hike came on top of last Friday's increase of 12 paisa 
per unit taking the cumulative increase for domestic consumers to 
36 paisa per unit (kilowatt hour) during the last six months.

Wapda's Acting Member (Finance) Javed Nizam told reporters here 
that the increase was allowed under the mechanism called automatic 
adjustment in the consumer-end tariff and came into effect from 
March 27 with retrospective effect.

The decision would affect domestic, industrial and agricultural 
consumers as well as the KESC.

He said that Thursday's step was only of interim nature as Wapda's 
plea for an increase of 98 paisa per unit was pending with the 
Nepra and its hearing was expected to start soon.

The recent hike in tariff is expected to bring Rs2 billion to Wapda 
during the remaining three-and-a-half months of the current 
financial year.

Mr Javed said the increase had become inevitable because of sky-
rocketing furnace oil prices, devaluation of rupee, increase in gas 
prices and 6 per cent inflation in the country.

The commissioning of new IPPs, he added, had also increased Wapda's 
financial burden as it had to start paying capacity charges to them 
also. All these factors have taken Wapda's deficit to Rs 9 billion 
per annum.

Giving the background of the increase, he said that Nepra had asked 
Wapda to control line-losses and cut development plans by 3 to 4 
per cent but the Wapda authorities on their part argued that these 
steps might increase cash flow but would not improve profitability 
of the organization unless the gap between cost per unit and price 
was bridged. "The State Bank also agreed to our argument and 
recommended to the government increase in tariff."

In its original plea seeking increase in tariff, Wapda had only 
cited fuel prices as the factor for raise in prices and pleaded for 
automatic fuel prices adjustment charges. But, of late, it has 
started including a host of other factors like devaluation and 

Musharraf defends hike in gas, power tariff
Habib Khan Ghori

KARACHI, March 25: The chief executive, Gen Pervez Musharraf, has 
defended the upward revision of gas and power tariff, adding that 
the existing tariff is not high enough to attract investors.

Speaking at a press conference at the Governor House on Sunday, he 
said that as long as power theft continued the government would 
have no alternative but to increase tariff.

Admitting that an increase in fuel prices would have an impact on 
the price of all commodities, the chief executive said the country 
had burnt out its gas resources because of low domestic rates. He 
added that all over the world the domestic rates were higher than 
commercial and industrial rates.

When asked if the masses could endure the increase in gas and power 
tariff, the chief executive said tariff structure adjustment was 
not a popular decision but it was necessary in the national 

He said that when the army had been inducted into the Water and 
Power Development Authority its losses, including 15 per cent 
transmission and distribution losses, had been 42 per cent. The 
remaining losses, he said, had been due to power theft.

Talking about the Karachi Electric Supply Corporation, Gen 
Musharraf said that till July its losses had been 44 per cent. He 
added that the army had brought the losses down to 30 per cent.

When asked why the 1991 Water Accord had not been implemented by 
the Indus River System Authority completely, the chief executive 
said the government was abiding by the accord strictly and every 
province was getting its share. He conceded that like Kalabagh Dam 
the water accord was a contentious issue.

"I personally monitor the water distribution system."

He agreed with a questioner that there was a difference of opinion 
among provinces. "It (water) is a contentious issue which is 
affecting provincial harmony. We need to look at past decisions," 
he added.

He stressed the need for overcoming ethnic animosity in Sindh.

In his opening statement, Gen Musharraf said the government was 
planning to construct smaller and cost-effective dams in all the 

He said these dams included Hingol Dam in Balochistan, Gomal Dam in 
the NWFP, and Sehwan Dam in Sindh. The government also planned to 
increase the capacity of Mangla Dam by 3.5 million acre feet (maf).

"We have started studies on these smaller dams and will soon start 
work on them," he remarked.

These dams could be completed in about four years against 10 years 
required on Kalabagh Dam and 14 years on Bhasha Dam, he added.

Total expenditure on these projects was estimated at Rs200 billion, 
which was much lesser than the cost of big dams like Kalabagh and 
Bhasha Dams, he said.

The chief executive said the government was going to deregulate the 
electronic media and had framed a draft law to set up a Pakistan 
Electronic Media Regulatory Authority.

He said the government had selected four consortiums to privatize 
PTV-3 channel.

"We will privatize PTV-3 purely on merit," he added.

Senegal calls for Pakistan, India talks

ISLAMABAD, March 25: President of Senegal Abdoulaye Wade has called 
for resumption of dialogue between Pakistan and India so that they 
could find a solution to longstanding Kashmir dispute.

He was talking to newsmen at the Chaklala airbase on Sunday before 
his departure at the end of his three-day official visit to 

Mr Wade said he was concerned over tension in South Asia because of 
the Kashmir issue, which could pose a threat to peace in the 
region. He said his country "is willing to play its role for the 
solution of Kashmir problem". He said he was ready to ask OIC and 
African countries to help resolve the 53-year-old dispute, and 
added that it was the duty of the international community to play 
its role for the solution of Kashmir issue. .

Mr Wade described his visit to Pakistan as very fruitful, saying it 
would lead to increased cooperation between the two countries in 
different fields including agriculture, industry and commerce.

He said Senegal was willing to purchase cement and sugar plants 
from Pakistan. He said Senegal would import rice from Pakistan and 
added that his country imported about 0.4 million tons of rice 
every year.

Mr Wade said his visit to Pakistan had enabled him to see the 
development in the country's different fields including 
agriculture. He said: "Thereare bright opportunities for his and 
other African countries to learn from Pakistan's experience".-NNI

CE links IT promotion to development
Habib Khan Ghori

KARACHI, March 24: Chief Executive Gen Pervez Musharraf has said 
government efforts plus the keen interest of the people in the 
information technology field and dynamism of the private sector 
will bring about economic revolution in the country.

He said: "Our efforts are not limited to promoting the IT industry 
in isolation but to develop Pakistan as a business-friendly 
destination for investors. He said this while inaugurating the 
International Information Technology Exhibition Asia -2001 on 
Saturday night at the Expo Centre here in which over 30 countries 
are participating. It was announced on the occasion that the army 
had provided 25 acres in Karachi to develop an IT park, and land 
would be provided for an IT university in Abbottabad.

He said: "Our vision is a translation of our aspirations for 
bringing the benefits of digital revolution to our homeland." The 
CE said this very mega IT event was a clear showcase of how the 
world had responded to "our initiatives and seriousness of our 

Recalling that incentives were being offered to attract local and 
foreign investment in the IT sector, he said he was glad that the 
internationally recognized names like IBM, Sun Microsystems, 
Microsoft, and Motrola had already set foot on Pakistan's soil and 
numerous others were waiting in the wing to capitalizes on the 

He said he had come to know that during the exhibition 2001 MoUs 
worth millions of dollars were to be signed. This would be a big 

He announced that henceforth all software contracts would be given 
to local firms which would help in the transfer of technology from 

He said that with the development of IT in the country jobs would 
be provided to educated urban youths which would help to remove the 
sense of deprivation among them and also help in the poverty 
alleviation programme of the government.

He said the government had increased spending on science technology 
by 1500 per cent in one year and 50,000 personnel had been trained 
in one year only.

The chief executive officer of Commerce net Singapore Lad, Wang Jew 
Chain; president of Pakistan Software Houses Association Syed Hamza 
Main and Sindh Finance Minister and Chairman of Sindh IT Board Dr 
Abdul Hafeez also spoke on the occasion. Telecommunications 
Secretary Abu Shamim Arif presented a vote of thanks.

After the presentation of shields to the organizers and 
participants, a skywriting display was carried out.

Supreme Court to take up tapes issue on Monday
Rafaqat Ali

ISLAMABAD, March 30: Barrister Zahoor, counsel for the Federation, 
read out a statement of Ahmed Sadiq, Principal Secretary to former 
Prime Minister Benazir Bhutto, before the Supreme Court bench on 
Friday, to show that the appellants had wasted time by making 
irrelevant questions during the cross-examination of the defence 

He concluded his arguments in less than two hours and read pages 
after pages of the cross-examination of Ahmad Sadiq.

Justice Munir A. Sheikh observed that the counsel were endeavouring 
to show that the government of Nawaz Sharif was always after the 
appellants who were his political opponents.

The counsel then referred to the documents which were on record of 
the court to show that Jens Schlegelmilch, and Abdur Rehman Al 
Asir, had visited Islamabad at that particular time when the 
negotiations for the award of the contract were continuing and 
stayed in Islamabad's five star hotel at expense of the government 
of Pakistan.

The counsel said the presence of Jens Schlegelmilch and Abdur 
Rehman Al Asir in the federal capital at the time of award of the 
the contract established beyond doubt his connection with the 
appellants. The counsel stated that they were in fact summoned by 
the then prime minister. He said that the documentary evidence 
produced in the court showed that the Prime Minister Secretariat 
had paid the expenses incurred on their stay.

Justice Munir A. Sheikh observed that was there any restriction on 
the coming of foreigners in Pakistan and every foreigner was 
necessarily agent of Asif Zardari? The counsel replied that he was 
presenting circumstantial attempting to show to the court that the 
presence of Jens Schlegelmilch at the time of the award of the pre-
shipment inspection contract was pre-arranged.

The counsel said it was correct that Jens Schlegelmilch was a co-
accused but not on trial as his trial had been separated. He said 
the statement of Jens Schlegelmilch might not have much evidentiary 
value but it was relevant under the Article 23 Q(A) of Qanun-i-

When counsel reverted to the statement of Ms Benazir Bhutto under 
section 342 of CrPC, the counsel for the defendants protested, 
saying that it was not on the record of the court.

Barrister Zahoor said that it was promised by Raja Anwar that he 
would show to the court that the trial court had disallowed Ms 
Benazir Bhutto to make her statement under 340(ii) as witness.

When Raja Anwar showed it from the record that the Ehtesab Bench 
had disallowed Babar Awan, counsel for Ms Bhutto, to submit an 
application along with her statement under section 340(ii), 
Barrister Zahoor withdrew his argument.

The seven-member bench, which started hearing of the appeals on 
February 26, announced that it would continue hearing the case next 
week. The court asked the counsel to adjust the time in such a way 
that the case was concluded next week, which would have three clear 
working days because of two Muharram holidays.

Attorney General Aziz A. Munshi who is on court notice, will start 
his argument on the law on Monday and conclude within two hours. At 
the conclusion of AG's arguments, Abdul Hafeez Pirzada, counsel for 
Asif Ali Zardari, will start arguments.

Cabinet agrees to constitutional changes if needed
Ihtashamul Haque

ISLAMABAD, March 28: The federal cabinet here on Wednesday decided 
to protect "all the decisions and actions of the government" by 
introducing amendments to the constitution, if needed.

Informed sources said that eminent constitutional expert and 
adviser to chief executive, Syed Sharifuddin Pirzada, who was 
specially invited to the meeting, briefed the participants about 
various options to indemnify all the decisions and actions of the 
government in the absence of the National Assembly.

The chief executive said that wherever he went, people asked 
questions from him as to how would the government ensure protection 
to its decisions which, he added, aimed at strengthening political 
and democratic institutions in Pakistan.

Sources said that Mr Pirzada made an extensive presentation on 8th 
Amendment and its merit and demerits. He also touched upon 12th and 
13th amendments and said different options were available to 
protect the government's actions after October 2002.

Minister for Finance Shaukat Aziz raised the issue by saying that 
members of the international donor community were "concerned" about 
the sensitive issues and that how would the government deal with 
them. "We must find a way after October 2002 to protect our 
critical reforms," the finance minister was quoted as having said. 
Later, he thanked the cabinet members for supporting him over the 
issue of protecting the government's reform agenda.

Sources said the chief executive assured the cabinet that 
structural and political reforms which were being introduced would 
have to stay and that nobody would be allowed to undo that.

According to a government handout, the cabinet discussed and 
deliberated a wide range of issues and options for strengthening 
the political institutions of the state and improving the 
functioning of various state organs.

Opening the discussion, Chief Executive Gen Pervez Musharraf, who 
presided over the meeting, reiterated his government's ultimate 
objective of ensuring supremacy of national interest over 
government interest which in Pakistan, he said, has been largely 
the personal political interest of individuals.

He said the country has also suffered in the past from 
concentration of executive power. There was thus, he said, a need 
to strike a healthy balance to eliminate opportunities of misuse of 
power. Definite steps, he said, would also be taken to remove 
disharmony among the provinces and create an atmosphere of trust 
and amity.

Gen Musharraf solicited the views of the cabinet regarding measures 
to ensure sustainability and continuity of the polices being 
implemented now. 

Military courts to deal with sectarian cases

ISLAMABAD, March 28: The government has decided, in principle, to 
set up military courts to fight the menace of sectarian terrorism. 
The ministry of law, justice and human rights has prepared a 
summary to this effect 
and will send it to the cabinet division for approval cabinet's 

Reliable sources told NNI that the government had to take this 
decision to check the growing incidents of sectarian terrorism and 
to improve the deteriorating law and order situation. Military 
courts were likely to be set up immediately after the summary's 
approval, the sources added.

It may be recalled that the cabinet, at its last meeting, had 
deliberated upon sectarian violence in the country and decided to 
take a number of steps to combat it.-NNI

Chinese PM's letter to CE delivered

ISLAMABAD, March 28: Chinese Minister for Science, Technology and 
Industry Liu Jibin delivered a letter of Prime Minister Zhu Ronji 
to Chief Executive Gen Pervez Musharraf here on Wednesday.

Mr Rongji congratulated Pakistan on the inauguration of the Chashma 
Nuclear Power Plant and described it as "a symbol of traditional 
friendly relations between the two countries."

Mr Jibin, who is heading a 22-member Chinese delegation, is on an 
official visit to Pakistan to participate in the inauguration of 
the power plant on Thursday.

Gen Musharraf will inaugurate the power plant built with the help 
of Chinese assistance near district Mianwali.

Chinese leader was quoted to have emphasized China's "resolve to 
further enhance friendly cooperation," said a foreign ministry 
statement. -APP

Tarbela touches dead level: IRSA
Faraz Hashmi

ISLAMABAD, March 26: Main rivers' level remains unchanged and the 
available water is being released to the provinces for irrigation, 
an IRSA official said on Monday.

In the country's main reservoir, Tarbela, which supplies irrigation 
water to Sindh, the level remained at its lowest, technically 
termed dead level (1369 feet), he said.

Water could not be released beyond that level as it could pose a 
serious threat not only to the power plant but also to the dam, he 

The official said that the situation at Mangla was, however, a 
little better as the water level, recorded by IRSA on Monday, was 
five feet higher than the dead level-1,040 feet.

The inflow at Tarbela was 14,200 cusecs and outflow was 16,000 
cusecs. At Mangla, 9,900 cusecs were flowing in the reservoir while 
894 cusecs were being discharged. Flow in Kabul river was recorded 
at 3,900 cusecs, the official said.

The discharge at upstream Marala was 6,914 cusecs and downstream 
1,015 cusecs. At Kalabagh upstream it was 8,903 cusecs and 
downstream 8,853 cusecs.

The level at Chashma was 637 cusecs with an inflow of 19,290 cusecs 
and outflow 16,090 cusecs. The water discharge upstream Taunsa was 
16,462 cusecs and downstream 15,462 cusecs, the official added.

C-J link, T-P link and Muzaffarghar canals remained closed and only 
1,000 cusecs were being released from Dera Ghazi Khan canal and 
that, too, for meeting drinking water requirement of Dera Ghazi 
Khan area, he said.

Upstream Guddu, 11,718 cusecs was the flow, while only 10,098 
cusecs were flowing down. At the Sukkur barrage, 11,650 cusecs were 
reaching, but 2,700 were being released. Kotri was getting 1,745 
cusecs and the flow downstream was nil, the official added.

Azhar elected chief of anti-Nawaz group 
Faraz Hashmi

ISLAMABAD, March 25: Mian Mohammad Azhar was elected the president 
of the Pakistan Muslim League's like-minded group at a general 
council meeting held at a cricket ground on Sunday.

Mr Azhar was elected unopposed at the meeting which was held in 
defiance of a ban on political activities.

Ejazul Haq, who till Saturday night was determined to contest the 
election, presided over the meeting. After the election, Mr Haq 
embraced Mr Azhar, gesturing that differences should be forgotten.

Mr Azhar's name was proposed by Abdul Majeed Malik and seconded by 
the PML provincial presidents, secretaries-general and a number of 
other leaders and general council members.

The like-minded group was also supposed to elect a secretary- 
general, but due to a lack of consensus the party empowered the 
newly elected president to make a nomination.

NWFP PML president Saleem Saifullah Khan told Dawn that there might 
be some disagreement over the question as to who would be the next 
secretary-general. Therefore, he added, the party had empowered the 
new president to make a nomination.

The NWFP Muslim League had been supporting Gohar Ayub but there 
were two or three other candidates, Mr Khan said. Zafarullah Khan 
Jamali and Illahi Buksh Soomro had also been aspirants to the post 
of secretary-general, a source said.

The supporters of Mr Azhar created disorder when they got on to the 
stage after his selection.

In his speech after the election, Mr Azhar hoped that the elected 
institutions would be restored.

Though somewhat cautiously, he also supported the government's 
devolution plan.

Govt withdraws cases against Hubco
Khaleeq Kiani

ISLAMABAD, March 27: The government has withdrawn all civil and 
criminal cases against Hub Power Company (Hubco) to give legal 
status to the December 17 Wapda-Hubco settlement agreement, sources 
close to the finance ministry told Dawn here on Tuesday.

The withdrawal of cases came just three days ahead of March 31 
deadline set forth under the December 17, 2000 settlement agreement 
to wind up all outstanding issues that would have otherwise left 
the agreement null and void.

"The chief executive has been pleased to approve the withdrawal of 
cases against Hubco as per the Settlement Agreement executed 
between the government of Pakistan, Wapda and Hubco on 17 December, 
2000", said these sources quoting a directive from the chief 
executive office.

The Chief Executive General Pervez Musharraf also directed the 
ministries of water and power and finance to initiate necessary 
legal action at their end to finally bury over 40-month old hatchet 
the Hubco-wapda controversy had created.

The decision came following a marathon meeting at the ministry of 
finance where the chairman Wapda Lt Gen Zulfiqar Ali Khan was 
specially called back in a hurry from UAE in the mid of his week-
long official visit.

The general was in UAE to muster financial support for the 
irrigation projects Wapda was planning to take in hand in next 25 

The meeting presided over by the finance minister Shaukat Aziz was 
also attended by secretary water and power Dr Akram Sheikh and 
senior official ofWapda and the two ministries.

The decision of the chief executive to withdraw these cases was 
immediately conveyed to visiting chairman of Hubco Sheikh Mohammed 
Alireza who soon after chaired the Extraordinary General Meeting 
(EGM) of the company shareholders. The EGM then formally approved 
the settlement agreement.

Earlier, the Hubco chairman also held a meeting with the finance 
minister and expressed satisfaction over the latest developments.

In this way, almost all the issues have now been resolved that were 
required to meet the March 31 deadline. Sources close to the 
finance minister confirmed that all cases have been withdrawn and 
an approval letter from the CE has been received and conveyed to 
the Hubco chairman verbally.

The officials of water and power, finance, Wapda and law and 
justice were engaged in hectic consultations till late in the night 
to work out legal technicalities to withdraw pending cases in 
various courts in next three days. Even if the legalities go beyond 
March 31 to finally settle down, these would have no formal ground.

There are some 18 cases, Wapda, Hubco and the government of 
Pakistan have filed against each other in various courts and 
International Court of Arbitration. A civil case is pre-scheduled 
for hearing this week in Lahore High Court while a criminal case is 
coming up for hearing in a Banking Court at Karachi in the first 
week of April. All other cases are based on these two cases and 
could be withdrawn on the request of the contesting parties.

Meanwhile, the Hubco shareholder's Extraordinary General Meeting 
(EGM) on Tuesday approved the settlement agreement (SA) concluded 
between Hubco, the government of Pakistan and Pakistan's Water and 
Power Development Authority (Wapda) on December 17, 2000, said a 
Hubco statement.

The settlement agreement was ratified, approved and confirmed by 
Hubco's Board of Directors on February 7, 2001. On March 13, 
Hubco's lenders accorded their approval. The chief executive and 
the federal cabinet have already approved the agreement a couple of 
months ago. With the ratification of the settlement agreement by 
the shareholders on Tuesday, Hubco has met its obligations under 
the terms of the agreement, said Hubco statement.

The statement said that Hubco chairman was hopeful that the 
government of Pakistan and Wapda will also meet their obligations 
under the agreement by the March 31st deadline. He informed the 
shareholders that relations between Hubco and Wapda have "improved 
dramatically since the signing of the settlement agreement."

Officials from the government of Pakistan, Wapda and Hubco have 
been meeting for the past week to finalise the outstanding issues 
on the part of the government of Pakistan that must be resolved by 
31st March 2001 deadline imposed on the agreement by the parties. 
"The outstanding actions that remain on the part of the government 
and Wapda include: the completion of the investigations of the 
company and its officers; disposal of the civil and criminal cases 
against the company and its officers; and confirmation by Wapda of 
the amount due to Hubco for the payment of arrears", said the 

The list of 18 cases include four in the Supreme court of Pakistan, 
three in International Chamber of Commerce Tribunal London, seven 
in Sindh High Court, two in Special Banking Court Karachi and 
Senior Civil Judge, Lahore.

Following is the list of cases: (i) State vs Khurshid Hussain & 
Others (offence in banks) before Special Court Karachi (ii) Wapda 
vs Hubco & others (1/99) before Senior civil Judge Lahore (iii) 
Wapda vs Hubco & others (CR34399) in Lahore High Court Lahore (iv) 
Wapda vs Hubco & others (HCA-90/99) before Sindh High Court Karachi 
(v) Wapda vs Hubco & others (CPLA 1446/99 in CLA 1399.99) before 
Supreme Court of Pakistan (vi) Wapda vs Hubco & others (CMA 1369/99 
in CA 1399/99) before Supreme Court of Pakistan (vii) GOP vs Hubco 
& Wapda (WP 1304/2000) before Sindh High Court Karachi (viii) Hubco 
vs Wapda & others (CR 1645/99) before Lahore High Court, Lahore 
(xiv) Hubco vs Wapda & others (Suit No. 1417/98) before Sindh High 
Court Karachi (x) Syed Khurshid Hussain vs GOP & others (Const. 
Petition No 1690/98) before Sindh High Court Karachi (xi) Hubco vs 
GOP, Wapda and others (No 1691/98) before Sindh High Court Karachi 
(xii) Hubco vs Wapda & others (HCA 106/99) before Sindh High Court 
Karachi (xiii) Hubco vs Wapda & others (CPLA 1426/99) before the 
Supreme Court of Pakistan (xiv) Hubco vs GOP (ministry of power) 
and others (No. D 997/2000) before Sindh High Court Karachi ad (xv) 
Hubco vs Wapda & others (review petition against Supreme Court 
order dated 14.6.2000) before Supreme Court of Pakistan.

Three arbitration cases include (a) Hubco & Entergey vs Wapda 
(10045/)LG) in ICC Tribunal London (b) Hubco vs Wapda (11057/DB) in 
ICC Tribunal London (c) Hubco vs GOP (11129/ESR) in ICC Tribunal 
London (ICA).

Govt to sell 25% stake in PTCL for $3 billion
By Our Special Correspondent

ISLAMABAD, March 30: The government is all set to sell 25 per cent 
of its stake in the Pakistan Telecommunication Limited (PTCL) along 
with its management for about three billion dollars by the first 
week of April, it is learnt.

A consortium, headed by a Middle East-based company owned by the 
Lebanese prime minister, Rafik Hariri, is said to be on the top of 
the short list of firms of potential buyers.

The government reportedly hopes to finalize the deal quickly in 
order to meet the IMF's performance criteria on privatization under 
the nine-month $600 million Standby Arrangement signed in Nov, 

The company led by the Lebanese prime minister reportedly does not 
have any experience of telecommunication business. In fact, he 
himself is said to have made his money in construction business 
primarily in building royal palaces for oil rich Sheikhs in the 

In its present form, the PTCL controls almost the entire 
telecommunications industry in the country and owns all 
telecommunications assets: from local copper lines to the homes and 
businesses all the way to the international optic fibre and 
satellite links that join Pakistan with the outside world.

There is not a single telephone call or a bit of data in Pakistan 
that does not pass through PTCL's network in some fashion. With 
such a control over the market, the PTCL can keep competition at 
bay even after 2003 when the telecommunication business worldwide 
would be deregulated under the WTO agreement.

If the proposed sale of the PTCL goes through with its management 
going to one single company then the public monopoly of such a long 
reach, ostensibly having its foremost interest in public good, 
would convert itself overnight into a private monopoly which under 
normal circumstances is driven solely by considerations of maximum 

The telecommunication sector analysts say that such a method of 
privatization in other parts of the world had met with disaster for 
the host country. For example, they said, Mexico sold its 
telecommunication company Telemex to Carlos Slim, a prominent 
Mexican businessman of Lebanese descent who had also earned his 
money in construction trade. Even after a lapse of ten years the 
privatized Telemex is said to have made not a single improvement in 
its service or its facilities.

These analysts say that in order to avoid such a situation from 
arising, the government could break up the PTCL into five separate 
components: 1) The national grid - the sum of the fibre, copper and 
microwave links that connect the country's exchanges; 2) Local 
loop/Local service - telephone service within a particular area 
code (051 for Islamabad); 3) Long Distance service - telephone 
service between area codes or internationally; 4) Data service - IP 
connectivity either within the country or internationally to the 
internet backbone or another IP connectivity provider; and 5) 
Wireless - cellular service.

These analysts maintain that five smaller companies in five 
different hands would help protect the mutual interest of the 
organization as well as of the workers, because then each unit will 
have a limited work force to deal with and, therefore, could come 
to terms with the unions on mutually beneficial terms.

In case of a monopoly sale, there is a fear that as many as 25,000 
workers would be declared redundant and shown the door which, it is 
believed, would create many unforeseen problems no matter how the 
issue of overstaffing is resolved. At present, the PTCL has 55,000 
regular employees and 10,000 wage earners.

Also, they say, five small units put on sale would create the room 
for local businessmen as well to participate in the PTCL 
privatization process.

Of the five smaller units proposed above, the only remaining 
natural monopoly, they point out, would be that of Local Loop and 
Local Service provisioning. This situation, it is felt, would allow 
competition to emerge on all fronts which in turn would give the 
customers alternatives and economical choices.

Petrol export from next month
Aamir Shafaat Khan

KARACHI, March 30: Pakistan is likely to commence export of petrol 
from April as the Pak-Arab Refinery (PARCO) is giving final touches 
to the list of intending importers.

Sources in the PARCO told Dawn on Friday that the company had 
received over 10 bids for the oil export in response of the 
international tender, floated three weeks ago. This has now been 
almost short listed to four or five bids.

While the identity of the short listed bidders is expected to be 
disclosed after official approval by next week, oil business 
sources say that possible marketing destinations are in Europe, 
where countries are hard hit by the recent Opec decision to cut 
down on petrol production.

Oil marketing sources expect a price range of $200-220 per ton on 
the deal, which is considered to be sound, when matched with the 
prevailing refineries rates in the region.

 A senior official in PARCO said: "We are evaluating the bids and 
most probably it will be finalized some time next week so that the 
first shipment of 10,000-15,000 tons of petrol could be sent."

With a refining capacity of 100,000 barrels a day, PARCO earlier 
negotiated with Iran for surplus petrol export. But, the lower 
prices, offered by Iran, became the barrier in finalizing the deal.

The names of the participating countries in the bids could not be 
known, but the official said Germany and the United Kingdom also 
floated their offers.

"These countries are offering much higher as compared to Iran," the 
refinery official said, without quoting the actual prices.

Oil experts say Pakistan's export earnings may range between $100-
110 million per annum, if 500,000 tons of petrol is exported at the 
rate of $200-220 per ton (Middle East prices).

Around 500,000 tons of petrol has become surplus since the start of 
the new refinery as the country's annual requirement is one million 
tons against the production of 1.5 million tons.

Sources in PARCO said the refinery, set up at a cost of $886 
million at Mehmoodkot near Muzaffarabad, is actively trying to 
export surplus petrol ranging between 300,000-400,000 tons per 
annum and if the bids are finalized, Pakistan will become motor 
gasoline exporting countries of the world.

Due to lack of storage facilities, PARCO, as per government 
instructions, has cut its throughput to 70 per cent, bringing it to 
1,000 tons per day from 1,500 tons per day.

The PARCO official said the company had made arrangements for 
storage facility and started maintaining the surplus petrol at 
Keamari oil terminals of Pakistan State Oil (PSO). Besides, talks 
with other oil marketing companies (OMCs) for storing the surplus 
petrol are already underway.

With the commissioning of PARCO refinery, the supply of petroleum 
products like liquefied petroleum gas (LPG), diesel, fuel oil and 
petrol has increased and the country's requirement is being met 
through indigenous production. However, the demand of petrol is 
gradually on the decline due to consumers' rising preference to 
compressed natural gas (CNG) in their vehicles.

The PARCO is also looking the possibilities for exporting LPG, 
which the refinery is producing a surplus of 100-150 tons per day 
as against actual production of 450 tons, while the rest is being 
consumed in the country.

According to a World Bank report, presented last year to the 
government, overall consumption of petroleum products had grown by 
about four to five per cent in the recent years. However, this 
average marks wide variations in the consumption pattern for 
different fuels. Consumption of fuel oil (largely for thermal power 
generation) expanded rapidly by almost eight per cent during 1995-
1999, mainly in 1997-99 due to commissioning of about 3,000 MW of 
generating capacity through fuel based IPPs.

Consumption of diesel and petrol was fairly robust (3.5 per cent 
and 2.5 per cent per annum), though petrol demand declined in 1999-

Changes in taxation system decided: Shaukat on CBR revamping
Ihtashamul Haque

ISLAMABAD, March 30: The government has decided to drastically 
curtail the discretionary powers of tax officials and streamline 
the whole process of the Central Board of Revenue (CBR), to enhance 
revenues and plug the leakages.

"Decision has also been taken to promote Self-Assessment Scheme, 
along with computerized assessment", said the minister of finance, 
Shaukat Aziz.

Talking to Dawn on Friday he said, a decision has been taken to 
minimize the emphasis on audit and the frequency of visits of tax 
authorities to their assesses.

"We have further decided to strictly deal with the corrupt element 
and at the same time to promote automation", he said.

The finance minister said, a new system is being introduced in the 
CBR in the light of Task Force on Tax Administration's 

"Top level corruption in the department has already been eliminated 
during the last few months", he claimed adding "efforts are now 
being made to discourage the menace at other levels, too.

"Various policies are being changed and at the same time salaries 
of tax department officials are also being increased so that nobody 
indulges in corrupt practices," the finance minister said.

During the next 10 days, he pointed out, the report of the Task 
Force on Tax Administration will be circulated to government 
agencies. "We are bringing fundamental changes in tax system", he 
said adding, "the major tax laws will be improved."

"Tax to GDP ratio has been lowest during the last 10 years and now 
we have decided to increase our revenues by overhauling the entire 
tax machinery", he said adding, "a number of changes have already 
been made which have resulted in unprecedented 15 per cent increase 
in revenues last year and during the first 8 months of 2000-2001.

Responding to a question the finance minister said latest estimates 
propose, there will be a production of 10.8 million cotton bales 
this year. Similarly, he said there will be over 18 million tons of 
wheat production despite water shortage.

"Moreover, there is going to be an all-time high 7 per cent 
industrial production this year, which will help us to create more 
jobs", Shaukat Aziz added.

He said Agricultural Development Bank of Pakistan (ADBP) has been 
directed to extend 20 per cent additional loans to farmers.

In reply to a question, he said, social sectors received25 per cent 
more funds in 2000-2001 which are further being increased in the 
next budget. "I cannot give you the exact increase because it is a 
budget secret but I can tell you, education will get a fairly good 
allocation in social sectors in the budget for 2001-2002", he said.

Asked about the role of the donors in the revival of the economy, 
the finance minister said the most important thing is the revival 
of confidence of international lending agencies and multilateral 

He referred to his meeting with the visiting vice president and 
senior World Bank Economist Nicholas Stern on Friday and said, he 
acknowledged that the government was implementing structural reform 
agenda to revive the economy.

"Stern admits everything went wrong in Pakistan during 1990 decade 
for which international donors are also responsible as they never 
cared to know what was happening in this part of the world", Aziz 

Nevertheless the finance minister quoted the senior vice president 
of the World Bank as having said, "Pakistan now needs to stay at 
course and the sustainability of reforms is very important to have 
long term positive changes in the economy.

He said, donors are saying that implementation was a key to bring 
changes. "We are hopeful to get $6 billion exceptional assistance 
from the donors which also includes rescheduling of loans by the 
Paris Club", the finance minister said.

IMF approves $133m tranche
Tahir Mirza

WASHINGTON, March 30: The board of directors of the International 
Monetary Fund on Friday approved a second tranche of $133 million 
for Pakistan.

The release is part of the overall standby facility agreed with 
Pakistan last year.

The first tranche under the standby facility was made by the IMF in 
November last year, totalling $192 million.

News of the second tranche's approval came on Friday afternoon at 
the conclusion of the IMF's board meeting.

After the IMF board's approval, Mr Eduardo Aninat, Deputy Managing 
Director and Acting Chairman, issued the following statement:

"Pakistan's achievements to date under the programme supported by 
the Stand-By Arrangement have been encouraging. Inflation, the 
balance of payments, and the budget balance have been better than 
expected, and the build-up of official reserves has been brought in 
line with programme assumptions. Economic activity was lower than 
expected, however, because of adverse weather conditions. The 
implementation of important structural reforms has been on track, 
including those on fiscal transparency and the rationalization of 
energy prices.

"To consolidate these achievements and build a solid foundation for 
sustained high growth over the medium-term, the authorities will 
need to pursue further macroeconomic adjustment and implement the 
structural reform programme. A key challenge will be to achieve the 
targets for foreign exchange reserves, which will require a 
tightening of monetary policy and coordination of monetary and 
exchange rate policies. The authorities' commitment to make further 
progress toward a genuinely market-based exchange rate policy will 
also help.

"Another challenge will be to boost revenue collections, a key pre-
condition for containing the fiscal deficit while increasing social 
and pro-poor spending. This will require resolute action to broaden 
the tax base and strengthen tax administration. The extension of 
the sales tax coverage, and steadfast implementation by the Central 
Board of Revenue of the recently adopted short-term action plan to 
improve tax administration, will be critical.

"Other reform priorities are to further improve governance in the 
management of public resources, develop a transparent and business-
friendly economic and regulatory environment, continue the 
restructuring of public enterprises, accelerate privatization, and 
strengthen financial soundness and efficiency."

Rise in imports to improve revenue
Ihtashamul Haq

ISLAMABAD, March 29: Pakistan's imports increased by 10 per cent in 
February and the first half of March, making the job of the Central 
Board of Revenue (CBR) relatively easy to achieve its revised Rs 
417 billion revenue collection target at the end of the current 
financial year.

"The latest is that our imports have increased by 10 per cent 
against four per cent upto January, which will certainly help us to 
achieve the revised annual target of Rs417 billion," Wakeel said.

 Talking to Dawn on Thursday, he said imports target of 12.7 per 
cent was likely to be achieved soon as the business activities were 
picking up. Also, he said in terms of new inter-bank dollar rate, 
imports were also on the increase.

Wakeel pointed out that 40 per cent direct and indirect taxes were 
linked with imports. "If the imports are not picking up, the job of 
the CBR is becoming difficult to achieve its revenue collection 

Responding to a question, he said CBR had not decided to further 
slash its revenue target from Rs417 billion to Rs386 billion. "In 
fact the Finance Division has not asked us officially to reduce the 
target to Rs417 billion and we are still working on the basis of 
Rs430 billion annual target," the Member Tax Policy said.

Giving the latest details about revenues upto February, he pointed 
out that the CBR had recovered Rs76.2 billion in direct taxes 
against the target of Rs78.8 billion. 

 Similarly, Rs96.7 billion were collected in sales tax against the 
target of Rs106 billion. In central excise, the CBR collected 
Rs31.6 billion against the target of Rs30.1 billion, and Rs39.2 
billion were recovered in customs against the target of Rs39.8 
billion. "As I have told you that we are still working on the basis 
of our Rs430 billion target which shows that we have achieved 56.7 
per cent target during the first eight months of 2000-01", he said.

He regretted that people did not realize that revenue collection 
targets were set on the basis of certain assumptions and that 
whenever there were changes in those assumptions, revenue targets 
were also readjusted. "If your GDP target is reduced it 
automatically hurts other sectors. Therefore, the CBR should not be 
called as being irresponsible or negligent."

Talking about 2/3rd revenue leakages, he said with the 
computerization of system at Karachi Custom House, these leakages 
were greatly being plugged. 

 "Under-invoicing and mis- declarations are being checked very 
thoroughly, which is helping us to increase our revenues," he 

'Under-reporting,' he said, 'is one of the major issues now being 
taken up, as the Central Board of Revenue had received back 1.6 
million tax survey forms against the circulated 1.9 million forms.'

All the information was now being fed into the computers and those 
who had misdeclared their assets would soon be asked to pay their 
taxes according to their income and assets. "But there is no plan 
to fix any penalty against under reporting of tax," he clarified.

In reply to a question, Wakeel said within next 15 days, profiles 
of 100,000 under-declarers would be sent to the five regional 
commissioners (RCs) for actions. 

 "These RCs will only ask the under-declarers to pay their due 
taxes and will not penalize them for concealing facts in their tax 
survey forms or tax returns," he added.

SAP: Call to oust corrupt men
Ihtashamul Haque

ISLAMABAD, March 25: The Debt Reduction Management Committee (DRMC) 
has identified a number of Social Action Programme (SAP-I) projects 
whose "choice was poor".

A report prepared by the DRMC says the government should remove 
corrupt elements from the SAP projects so as to ensure that the 
international donors continue to provide funds.

The report stresses the importance of borrowing judiciously and 
using borrowed funds with utmost efficiency and effectiveness. 
"When this principle is not adhered to, there is an increase in 
debt with meagre economic outcomes in terms of growth, exports and 
revenues and in this way the debt burden increases," it says.

As for the SAP-I projects whose choice was poor, the report says: 
"The SAP-I represents another kind of failure: failure of 

Despite the fact that the annual average growth rate of the economy 
hovered around six per cent over the decade 1980-1990, the fruits 
of growth did not trickle down sufficiently, the report notes.

It was against this background that SAP-I was conceived and 
launched by the government in 1992-93, initially with its own 
resources and subsequently with support from donors in 1993-94. An 
outlay of Rs127 billion for three years was provided by the World 
Bank, the Asian Development Bank, the Netherlands and the UK, with 
the government and donors shares at 75 per cent and 25 per cent 

The programme addressed four important sectors: primary education, 
basic health care, population welfare and rural water supply and 

The report points out two flaws in the SAP-1. Firstly, local 
communities, NGOs and the private sector were not involved in the 
SAP-1 in a meaningful manner. Secondly, bureaucratic procedures and 
delays hampered donor financing.

The government launched a five-and-a-half-year SAP-II in Jan 1997 
at a cost of Rs499 billion out of which Rs101 billion was to come 
from the international community.

Foreigners shy to make big investment
Jawaid Bokhari

KARACHI, March 24: The government has succeeded in improving its 
credibility at international level with financial institutions, 
credit rating agencies and bilateral creditors. But, a major factor 
which is lacking is the business confidence.

Foreigners do not find the future very encouraging and are shy to 
make any big investment.

 The International Monetary Fund (IMF) is on board. The first 
tranche of the stand-by arrangement (SBA) has been disbursed and 
the second is likely in April. The SBA conditionalites have been 
relaxed. Paris Club has rescheduled debts. Hubco dispute has been 
settled and sovereign guarantees have been renewed.

 The profits of the multinationals have improved. The 
profit/dividend payments by multinational corporations and higher 
interest payments on account of the special dollar bond spearheaded 
the larger capital outflows in second quarter of current fiscal. 
MNCs, like Shell and Levers, have improved their performance. The 
number of listed companies paying dividends has increased.

But the over all growth in the large scale manufacturing sector in 
the first half of current fiscal declined to 3.1 per cent from 7.8 
per cent during the corresponding period last year.

Financial analysts at a foreign brokerage house say the foreign 
investors are impressed by the performance of some of the big 
corporates, listed on the Karachi Stock Exchange. It is the macro-
economic policies that is stalling decisions at micro-level. Direct 
foreign investment fell to $143 million in first half of current 
fiscal from $307million in corresponding period last year. 
Portfolio investment is stagnant.

Analysts say the portfolio investment has declined because there 
is no depth in the markets. There is no opportunity for the level 
of investment that foreigners are looking for. It is difficult to 
get shares of good companies and often difficult to sell stakes in 
the market.

The short-term nature and the size of the SBA - $692 million (with 
the daunting conditionalities attached to it) have not removed the 
investors' concerns.

Bankers say that foreign investors do not see the future 
encouraging. Domestic private sector is ploughing back corporate 
savings into small investments but no big investment is taking 
place. These investment are in textiles and cotton-based industry. 
The textile industry is modernizing to face stiff competition in 
the days ahead.

Exports of software are often over-invoiced, say some bankers, by 
some business groups to convert black money into white. The 
remittance is managed through purchase of foreign exchange in kerb 
and the cost of conversion works out to 10 per cent. There is no 
tax on incomes of software exports. Some of these funds are 
ploughed back into investment.

 And investments are not taking place as much in listed companies 
as firms outside the stock markets, whether it be private limited 
company or non-listed public limited companies. According to the 
Annual Report-2000 of the Securities and Exchange Commission of 
Pakistan (SECP), 37 public limited and 1,541 private companies, 
limited by shares, were registered under the Companies Ordinance 
1984. But these public limited companies preferred not to go for 
listing. There were only three initial public offerings.

The SECP efforts to induce payments of dividends did not encourage 
those, who want to build reserves for industrial expansion and 
modernization of their plants, says an industrialist. He says there 
is a need for corporate savings to be channelized into investment. 
Big corporates are also shy of making full disclosures as required 
in case of listed companies.

On the other hand, foreign investors are reluctant to invest. 
Presenting a rosy picture of Pakistan's economy to lure in foreign 
investment before a British banker, the head of a local bank 
concluded his presentation with an optimistic note. He said: "Our 
agriculture has been hit by drought and water shortage. We now see 
the clouds. They will bring rains." The foreigner retorted: "I come 
from London and know better. These clouds will bring no rains." 
This is how the local banker summed up the viewpoint of foreign 

His views were confirmed by a financial analyst, working at a 
foreign security house. He told Dawn that when invited to invest, 
another foreign banker bluntly told his Pakistani hosts that the 
country should not expect any significant investment till such time 
that the democracy is restored.

Investors do acknowledge that the government is sending positive 
signals on a number of issues. These include its efforts to boldly 
control sectarian strife, its distancing from Afghanistan on 
destruction of statues and the retirement of Dr Abdul Qadeer Khan, 
indicating its softening attitude on nuclear issue under global 

Political instability is also haunting foreign investors. National 
elections are about 18 months away. They say the game of politics 
in this country is unpredictable. The political future is 

They also complain that policies and decisions of one government 
are reversed by another. Often ministers with economic portfolios 
are unable to honour their commitments.

Officials complain that the domestic private sector, which 
depended on government patronage, foreign credit lines and 
prospered on bank defaults, tax evasion and non-payment of utility 
bills, has not adjusted itself to the new environment. Defaulters 
are being made to pay. Accountability has become an ongoing 
process. Foreign credits have dried up. Prudential lending by 
financial institutions makes borrowing difficult.

New export finance scheme launched: Facility in foreign currency

KARACHI, March 28: Exporters can get export finance in dollars from 
April 2 under a foreign currency export finance facility created 
out of an Asian Development Bank loan.

The State Bank on Wednesday launched the facility that would help 
domestic manufacturers buy foreign inputs for exportable goods and 
give small and medium size exporters access to export financing.

SBP said in a circular to all banks that effective from April 2 the 
facility would be available to the exporters either for purchase of 
inputs domestically or for financing their imports of inputs and 
raw materials against import letter of credit.

The circular says the facility will be a dollar-based window and 
self-liquidating and will be available for pre and post shipment. 

The term self-liquidating means exporters can sell the dollars 
borrowed under this facility in the inter-bank market to secure 
rupee funds to meet their requirements.

Under the scheme, market based export finance will be available to 
small and medium size direct exporters and their suppliers i.e. 
indirect exporters for inputs linked to an export order. 

 The circular says the facility will run parallel to existing 
export finance scheme. Bankers say the launch of foreign currency 
export finance facility is prelude to elimination of subsidy on 
export finance scheme. They say the central bank may soon link the 
mark-up on export finance to treasury bills yields as per the 
demand of the IMF.

The circular says financing of inputs under foreign currency export 
finance facility would be available for a maximum period of 180 
days for both direct and indirect exporters. It says that any 
export order, export letter of credit or any other customary export 
document which evidence a firm export order will not be eligible 
for grant of any other facility including normal export finance to 
the extent of foreign currency export finance exposure.

Following items are not eligible to be financed under foreign 
currency export finance scheme: (i) arms and ammunition and other 
military material (ii) radioactive and associated material (iii) 
nuclear reactors or parts thereof, fuel (cartridges), non 
irradiated nuclear reactors (iv) luxury items (v) consumer goods 
and (vi) such other goods and materials as may be specified from 
time to time.

Govt not to expand privatization list
Khaleeq Kiani

ISLAMABAD, March 26: The government is targeting to complete at 
least nine major privatization transactions, before the end of 
current calender year, said Minister for Privatization Altaf M. 

These include mega transactions like Pakistan Telecommunication 
Company (PTCL), Pakistan State Oil (PSO), United Bank (UBL), Allied 
Bank (ABL), National Investment Trust (NIT), government's working 
interests in nine oil and gas fields, fertilizer companies, Oil and 
Gas Development Company (OGDCL) and gas meter factory.

In an interview with Dawn on Monday, the privatization minister 
said the commission had not brought new units on the auction block, 
though ultimately everything, which could be termed as business 
would be transferred to the private sector provided it did not 
involve national security or strategic importance. "But we don't 
want to expand the list just for the sake of expansion and put 
public sector units in an uncertain position, which is neither here 
nor there." The initial list of 49 units has the only increase of 
Pakistan International Airlines (PIA).

 He said the intention of the government is to maximize sale 
proceeds in the shortest possible time, so as to address the debt 
problem. He said that J P Morgan, one of the top 10 financial 
institutions of the world, have been appointed financial advisors 
for the sale of Pakistan State Oil (PSO). "Our first target is to 
complete privatization of PSO by the end of this year as one entity 
to maximize its proceeds," said the minister. He said financial 
advisors would start soft marketing of the PSO by mid of this year.

He said that some financial advisors of Privatization Commission 
have reported strong interest from world energy firms in Pakistan, 
when compared with situation around four months ago and they were 
expecting good prices for oil and gas units.

On the directives of the chief executive, he said, the 
Privatization Commission restructured 10 to 12 units to control 
public sector haemorrhage through rightsizing, liquidation and 
other cost cutting measures. The real result of these measures 
would be estimated after six months, when accounts are analyzed in 
June and then in December. Losses of Heavy Mechanical Complex 
(HMC), he said, have been controlled through downsizing while small 
units have been liquidated, the minister said.

Saleem said government has decided to divest 58 per cent government 
shares in National Investment Trust (NIT) in one go, but the 
Privatization Commission will have to look for a bankable and trust 
worthy management to run it in the private sector. The reason, he 
said, was that NIT money belonged mostly to thewidows, retired 
government servants and small investors and its credibility factor 
was more than banks. The Privatization Commission Board, which will 
meet on March 31, will consider this issue to initiate valuation of 
NIT's assets and shares, he added.

He said the government had already declared Pakistan Industrial 
Credit and Investment Corporation (PICIC) as a private sector 
entity and has allowed public sector shareholders like State Life 
Corporation, NIT and others to decide about their shareholding at 
their own.

He said the commission was ready to take PTCL transaction anytime 
to the market and its sale process would hopefully be completed 
before the end of this fiscal year.

Talking about privatization of Karachi Electric Supply Corporation 
(KESC), Saleem revealed that the whole process was in fact being 
done by the Asian Development Bank (ADB), which has acquired around 
five per cent shares in the power utility. The ADB has recently 
released $250 million for the KESC and half of the financial 
advisor's fee would be shared by it. He said the selection of the 
financial advisor will also be made by the ADB by April 5, this 

He said a final decision could be made only after the financial 
advisors completed their job, but two options could be considered 
to privatize the KESC. One option would be to divide the utility 
into a distribution and a generation company and sell them 
separately and the other option is to sell it in a consolidated 
form of one entity.

Privatization Commission to sell UBL this year
Jawaid Bokhari

KARACHI, March 26: The Privatization Commission (PC) is in a hurry 
to sell the United Bank. It does not want to wait for the bank's 
restructuring to fetch a better price.

The PC chairman, Altaf Saleem, has been quoted as saying that the 
date has been forwarded by almost a year, keeping in view the 
appetite of the market.

Expression of Interest (EOI) for selling 26 per cent of the shares 
in the UBL will be invited this month. On the eve of EOI, the PC 
chairman chose to reveal that the government has rejected the UBL's 
request for injection of Rs22 billion. He also added that the bank 
was given Rs21 billion in 1997. His statement indicates that UBL is 
in financial distress and a distress sale will follow. UBL would be 
sold cheap. Perhaps, it is a positive signal for prospective buyer 
or buyers.

The PC's sudden move to reverse its own decision and to sell the 
bank before restructuring has however created suspicion in the 
market that the transaction may be designed to suit the appetite of 
a strategic investor and the deal may have political fallout. 
Transparency would be needed to assure the market.

Addressing a seminar in Islamabad Mr Saleem said that the time had 
come to leave the restructuring process to the new management. 
There is also a proposal that the government should take over the 
unsold bad assets to clean the balance-sheet of the banks and 
financial institutions intended to be privatized. The buyers would 
be handed over long-term bonds in lieu of non-performing assets.

But UBL would not be the first case in which PC has reversed its 
decision. There is a similar situation in case of ABL. The PC first 
decided that the 49 per cent of the ABL shares would be offered for 
public subscription.It retraced its steps. Now it intends to invite 
EOI for sale of 49 per cent of ABL shares to a strategic 
investor.The investor would be required to buy the entire block of 
49 per cent shares. In ABL's case, acquisition of 5-10 per cent 
shares would enable any purchaser to join hands with the Employees 
Group and its associates, unacceptable to the State Bank, to manage 
the bank. PC has, however, explored the market and perhaps 
identified the prospective buyer/buyers who can become strategic 

UBL sources said the bank had asked the government for Rs21 billion 
provisioning requirement for non-performing government-related 
foreign loans and taxes over-charged by CBR and Azad Kashmir 
government. While not conceding to the UBL request, they added that 
the government has given commitment at the highest level to enable 
the bank recover stuck-up funds on these counts. The bank sources 
were confident that given the commitment at the highest level, 
positive results would ensue before the UBL is privatized.

The UBL president, Amar Zafar Khan, refused to comment on the PC 
chairman's disclosure that the bank's request for Rs22 billion has 
been turned down. He, however, added that the bank was doing 
restructuring on its own and a lot of positive changes would be 
demonstrated in the annual accounts for fiscal 2000.

Asked to elaborate, he made the following points:

UBL is reporting record level of operating profit, double the 
previous year's level, despite the earning drag of a non-performing 
portfolio, that proportionate to its total assets, is larger than 
any other bank.

UBL's revenue to expense ratios and intermediation cost is better 
than all other large network banks, including those that are 
already privatized and show better productivity.

The bank has the highest growth in deposits in 2000 in comparison 
to all larger network banks as stated by State Bank governor in a 
press interview.

UBL has a record loan growth of Rs.14billion and an increase of 
Rs10billion in trade volumes in fiscal 2000, with nominal credit 
losses.This indicates that the UBL is succeeding in identifying the 
right borrowers, is improving its credit monitoring and this has 
enhanced the earning base of the bank.

World Bank for faster execution of reform programme
Ihtashamul Haque

ISLAMABAD, March 26: A high-powered group of World Bank's Executive 
Directors (EDs) on Monday called upon the government to speed up 
implementation of its structural reform programme.

"We appreciate the government's structural reform programme which 
we believe needs faster implementation," group head Franco 
Passacantando told a news conference.

"The executive directors feel comfortable with the discussions the 
Bank's management is having with the government to support their 
programme," he said.

He, however, pointed out that the EDs had stressed the need for 
faster implementation and called for building internal as well as 
external support for reforms through more thorough and sustained 
communication both at home and abroad.

Asked whether the EDs had discussed with the government political 
issues such as taking political parties into confidence for 
obtaining support for the reform programme or the CTBT, Mr 
Passacantando said: "This is not our agenda to discuss political 
issues...we concentrated only on economic matters."

Nevertheless, WB country director for Pakistan and Afghanistan John 
Wall said the Bank planned to discuss various issues with political 
leaders and other people from the private sector to ensure 
continuation of the reform programme.

Mr Passacantando said the group was "very concerned" at the ongoing 
drought situation in the country and added that they would make a 
positive report to the Bank's board.

During their five-day stay, he said, they had visited projects, 
including the on far water management programme and the Ghaza 
Barotha dam, besides meeting the chief executive, the finance 
minister, the State Bank governor and chairmen of the Central Board 
of Revenue, the National Reconstruction Bureau and the National 
Accountability Bureau. The main subject of discussions was poverty 
reduction and issues relating to governance and civil service 
reform, said the group leader, adding that tax and financial sector 
reforms, water management, privatization programme, anti-corruption 
campaign and devolution programme had also received importance 
during meetings.

ADB links soft loans to good governance
Ihtashamul Haque

ISLAMABAD, March 27: The Asian Development Bank has linked the 
disbursement of highly concessional loans to good governance in 
Pakistan and consistency in its policies.

"The ADB can consider offering of only soft loans on zero interest 
to Pakistan but then you have to achieve the objectives of good 
governance as we are concerned about poor project implementation in 
the country," ADB's new resident representative in Islamabad, 
Marshuk Ali Shah, told a news conference on Tuesday.

However, he said his bank had decided to offer $450 million during 
2001, and the purpose was to help Pakistan build up its foreign 
exchange reserves and improve balance-of-payment position.

"Within next two to three weeks, the ADB would disburse $160 
million for four projects," Mr Shah stated.

Elaborating, he said the ADB would disburse $50 million for the 
energy sector, $30 million for trade enhancement, $50 million for 
trade and export promotion, and $30 million for the macro-credit 

The ADB representative pointed out that his bank was also 
considering certain assistance for mitigating the severe effects of 
continued drought conditions in Pakistan.

"We want to strike a new ADB role in Pakistan," he said, adding 
that poverty reduction was one of the major problems for which the 
bank could extend additional funding.

Mr Shah told a reporter that currently the ADB was offering 60 per 
cent soft loans and 40pc programme loans, which carried an interest 
rate of 6.5pc. There were only 1.5pc service charges for soft 
loans, he clarified.

He said the ADB would consider the government's request for 
emergency assistance for human resource development and building of 
reserves, "but then the government will have to take some painful 
decisions like making timely decisions about projects while 
ensuring adequate and correct use of funds."

Pakistan could have increased Direct Foreign Investment provided it 
was ready to fully and timely implement its reform agenda, he said.

He cited the examples of Barani area development project and women 
project which could not take off due to the government's inability 
to appointing project directors and accounts officers for them.

"Decision making process is worst in Pakistan," the ADB 
representative observed.

He regretted that the government had slashed the Public Sector 
Development Programme from Rs120 billion to Rs110 billion. He 
advised the government to narrow its budget deficit by increasing 
resources and restricting its spending.

In reply to a question, he said Pakistan repaid roughly $350 
million every year to the ADB.

"Everybody is watching Pakistan and if the government produces 
desired results to impalement its reform agenda then something 
could be done by multilateral agencies," he said.

SBP offers special TBs to banks: End-March NDA target
By Mohiuddin Aazim

KARACHI, March 27: The State Bank has asked banks to buy special 
treasury bills out of the rupee equivalent of their rolled-over 
foreign currency swap deposits. Bankers say SBP has offered the T 
bills not at the normal rates but at a higher rate of interest that 
it is paying on the rupee equivalent of swap deposits.

Sources close to SBP told Dawn the central bank has done this to 
mop up excess liquidity from inter-bank market to meet the IMF 
target of keeping its net domestic assets at Rs8 billion at the end 
of March.

Bankers say the letter written to them on this topic does not 
specify the tenure of the treasury bills, the State Bank wants them 
to buy. But it is very much understood that they have to buy T 
bills of at least one week maturity so that SBP can meet its end-
March target of NDA.

Bankers say since SBP is to pay them a special interest rate - much 
higher than the normal yield on treasury bills - on the bills 
purchased out of the rupee funds of rolled-over foreign currency 
swap deposits, most banks would invest the funds into treasury 
bills at least for one week to help SBP contain its NDA.

Under the $596 million IMF standby credit, the State Bank was 
initially supposed to keep its NDA at minus Rs39.6 billion but 
later on the target was revised to plus Rs8 billion to save the 
banking sector from plunging into a severe liquidity crisis.

Bankers say the SBP officials hope to offload T bills of at least 
Rs25 billion onto inter-bank market if most banks do not show any 
reluctance in buying special bills out of the rupee funds of the 
foreign currency swap deposits. They say the total amount of the 
rupee equivalent of foreign currency swap deposits is about Rs25-30 

No official word is available on how much excess liquidity, SBP 
needs to mop up from the market to keep its NDA at Rs8 billion at 
end of March but bankers close to SBP say it could be anything more 
than Rs30 billion.

If that is the case SBP may also have to suck in at least Rs5 
billion from the inter-bank market at its open market operation due 
next Thursday.

Some bankers say this should not be a problem for SBP, because the 
market is currently surplus by more than Rs5 billion.

Both local as well as foreign banks used to mobilize foreign 
currency swap deposits from abroad before Pakistan went nuclear in 
May 1998 that created a serious foreign exchange crisis here and 
forced the country to ask banks to rollover bulk of these deposits. 

State Bank buys $1.2bn from kerb
Mohiuddin Aazim

KARACHI, March 24: The State Bank has bought about $1.2 billion 
from the open currency market in less than nine months of this 
fiscal year.

Bankers close to SBP say the central bank may end up buying at 
least $1.5 billion at the close of the fiscal year in June. They 
say SBP stepped up dollar buying from kerb in this quarter that 
enhanced volume of its outright purchases from $755 million up to 
December 31, 2000 to about $1.2 billion up to March 22, 2001.

Bankers close to SBP say the State Bank made aggressive buying from 
kerb this month in the wake of rising demand for dollars at the 

Normally SBP spends large amounts of foreign exchange at every 
quarter-end in official and corporate debt servicing as well as in 
footing oil import bills. What made SBP spend still more in this 
quarter was payment of about $100 million to people travelling for 
Hajj and more than $200 million to banks against those foreign 
currency swap deposits that they had not rolled over.

Banks rolled over 75 per cent of over $1 billion swap deposits for 
two years starting mid-December and as such SBP had to return to 
them more than $250 million between December 2000 and March 2001.

Leading currency dealers say SBP dollar buying is one of the 
reasons behind the ongoing fall of the rupee in the open market.

The rupee has lost about six per cent to a US dollar in kerb and 5% 
in inter-bank market so far during this quarter.

"SBP continues to buy dollars and that is one of the factors 
weakening the rupee in kerb," said a leading money changer in 
Karachi who declined to be identified. Senior bankers close to SBP 
also said the central bank was making small purchases from kerb 
almost on daily basis. They said SBP buying from kerb might further 
go up in the remaining days of this month as quarter-end payments 
would mount. They said the central bank might end up buying at 
least $1.5 billion at the end of the fiscal year in June.

In last fiscal year SBP had bought $1.6 billion from the open 
market that had initially invited criticism from the IMF. But later 
on the Fund had realized that in the absence of financial support 
from international financial institutions the country had no option 
but to buy dollars from kerb.

That was why the Fund made little objection on SBP plans for buying 
dollars also in the current fiscal year when Pakistan started 
negotiating a $596 million standby credit. There is no official 
word on whether IMF has put any quantitative restriction on such 
buying for this fiscal year but bankers close to SBP say IMF 
understands that SBP may have to buy at least $1.5 billion.

They say SBP's outright buying from kerb is in addition to its 
long-term buying of greenbacks in dollar-rupee swap both from banks 
as well as from money changers.

The total amount of such swaps is not known but bankers close to 
SBP say SBP has bought $65 million from banks in more than one-year 
swap in the past few weeks.

Despite SBP's outright buying of about $450 million from kerb in 
less than past three months net liquid foreign exchange reserves 
have fallen during this quarter. Net reserves fell to less than 
$675 million in mid-March from $1 billion at the end of December 

Back to the top
'I could be a solution' 
By Ardeshir Cowasjee

ON March 19 The Helpline Trust of Karachi (an affiliate of which is 
the Consumers Protection Council) held a question-answer seminar, 
supposedly our form of Hard Talk, on the subject of 'The Crisis of 
Leadership in Pakistan'.

The founder and maker of this Trust is Hameed Maker who, along with 
his few member citizens, keeps the platform throbbing, but in fact 
he is the captain, chief engineer, boatswain, chief cook and 

To start off the seminar, Maker made an introductory speech, 
telling us, inter alia, that "the meaning of leadership is much 
more than motivating and influencing people to perform. A leader's 
character must be based on proven character traits, principles, 
honest values, a code of conduct, and ethics. A leader must also be 
able to inspire confidence and trust. Unfortunately none of our 
recent leaders have possessed these leadership qualities. We have 
tried and seen various forms of democracies and military rules 
under deceptive leaders, ideologies and different disguises. All 
have left us more confused and economically and morally poorer."

On the mat was none other than Sardar Farooq Ahmad Khan Leghari, a 
former member of the PPP and a former president of Pakistan, 
handpicked by Benazir Bhutto. He was sworn in on November 14, 1993, 
during her second round as prime minister (October 20, 1993, to 
November 5, 1996) and resigned on December 2, 1997, during Nawaz's 
second premiership (February 17, 1997 - October 12, 1999).

He is now president of his own political party, the Millat Party, 
which he formed after he climbed down from the top slot. We assume 
he was elected to lead his party by its loyal members and will 
remain as its leader until it folds or slides into oblivion.

Last Monday Leghari was full of himself, and like all our disgraced 
politicians made an attempt to convey that he, unlike the rest, was 
as pure and pristine as driven snow. The taped record of the well 
attended seminar makes an interesting transcript. When one question 
was put to him as to whether he considered himself part of the lack 
of leadership problem or part of the solution, he made no bones 
about unabashedly admitting that he "could be a solution."

Leghari is a seasoned speechifier and can hold forth with the 
greatest of ease for hours. He is stuck in the time warp of his 
presidentship, obsessed by his relationships with both Benazir and 
Nawaz, with Benazir holding the upper hand. Very few questions were 
asked as Leghari's answers to each was a long speech on his 
presidential experience which wandered far off and beyond the 
point. During one of his stories on the subject of how he dealt 
with the two recalcitrant premiers, he wandered on to the matter of 
the murder of Benazir's brother as being one of the reasons for his 
having to dismiss her and her government. One remark he threw at us 
was that we all knew who was responsible for the murder of Murtaza 
Bhutto on September 20, 1996.

Later, he was questioned on this statement of his and asked to name 
the murderer. He admitted that he did not 'know' for sure who it 
was but that he 'suspected' it was Asif, as Benazir had gone to 
great pains to provide cover for him during the aftermath of the 
murder when he was openly accused in the press of being its 

At least his assertion was more precise that of the chairman and 
the two members of the tribunal of inquiry appointed to investigate 
the circumstances leading up to the murder, Justices Nasir Aslam 
Zahid, Dr Ghous Mohammad and Aminullah Khan in their report 
released in May 1997 concluded that there was a plan to the murder 
and that the plan "must have been cleared by a much higher 
authority" than the two most senior policemen involved. They 
failed, naturally, to even hint at the identity of the "much higher 

Leghari waxed eloquent on how Benazir, Asif, and their party in 
power had robbed the country dry and rendered it bankrupt, and that 
one reason for his having to remove her under Article 58(2)(b) of 
the Constitution was that had he not done so at that particular 
point in time Pakistan would have defaulted.

As we all now know, this constitutional article, good or bad as it 
may have been, was a much needed safety valve which kept 
'democracy' chugging along, albeit to our detriment, but avoided an 
army takeover. The equally corrupt and irresponsible Nawaz, who was 
at least capable of estimating his own level of corruption, during 
his second round felt that it could be used against him once again 
as it had been in 1993. Having found Leghari to be not too straight 
a man in his presidential-political dealings, three months after 
being sworn in once again he produced his 13th Constitutional 
Amendment, doing away with the offending Article, had it swiftly 
passed by an acquiescent assembly and Senate, and chased Leghari 
all the way to Choti to have him put his signature to it.

Leghari need not have signed, though bound to do so under the 
Constitution. He could have resigned at that stage, boosted himself 
in the eyes of the people and gone down in Pakistan's history as a 
rare breed of man. His excuse that had he resigned, the acting 
president, the Muslim League Senate Chairman, in any case, would 
have signed it with great eagerness, does not absolve him.

When talking about the incident of the storming of the Supreme 
Court which took place on that disastrous morning of November 28, 
1997, Leghari rightly admitted that had the army sent four men in 
commando uniform to merely stand at the gates of the court, the 
storming would not have taken place. Now, as supreme commander of 
the armed forces, as he was under the Constitution, could he not 
have used his persuasive powers with the army chief, who was 
reluctant to move on his own, and saved the court from the 
vandalism and humiliation heaped upon it?

What we cannot forget as far as Leghari is concerned is his 
involvement with that known corrupt banker Yunus Habib who was 
ultimately convicted and jailed. Placed as he was, had he any 
business to get himself embroiled in shady affairs with shady 
characters merely for pecuniary gain?

We have suffered Benazir twice and Nawaz twice. Each in his/her 
second round, with Leghari as president of the republic, did far 
more wrong than in the first. The people surely do not again want 
or need Farooq Leghari in any future position of power. His friends 
and 'admirers' should advise him to live off his ancestral 
properties and whatever assets he has gathered unto himself along 
the way and renounce politics for his own and our good. He should 
be satisfied with the fact that he at least occupies a fairly 
notorious place in the history of Pakistan in the 1990s and is not 
merely a footnote.

>From the past to the present, and I refer to Kunwar Idris's column 
in this newspaper last Sunday in which he listed the 'retreats' of 
General Pervez Musharraf during his eighteen months as Chief 
Executive of the land, as enumerated by suspended Senator Iqbal 
'Groovy' Haider: refusing to sign the CTBT, surrendering on the 
announced procedural changes in the blasphemy laws, continuing the 
separate electoral system, restoring zakat grants to religious 
seminaries which impart military training, refusing to apply to the 
Supreme Court for a review on the interest verdict, failing to 
appeal against the Shariat Court ruling on family laws, negotiating 
with extremist groups when they issue their frequent 'threats', 
encouraging the formation of militant organizations, amending the 
PCO with respect to the status of Ahmadis, etc, etc.

Retreats are at times strategically necessary. As Churchill put it 
after Dunkirk: the British expeditionary force made a 'glorious 
retreat'. From his recent remarks and body language it would appear 
that General Musharraf has regrouped and is attempting to swing 
along the right path. He is considering signing the CTBT - this is 
a must. He talks of the difficulty which he is facing having to 
deal with 1.5 million extremists and their spreading tentacles, the 
uneducated bigots who can sink any country or empire. One and a 
half million is a substantial number, and ten of them in Lahore or 
Karachi, or five in Islamabad, Quetta or Peshawar, could easily 
disrupt any form of governance, particularly when law and order is 
not enforced.

What the general must remember is that people cannot forgive a 
military government, with the funds, force and power it has, for 
refusing to, or being incapable of, imposing on this unruly country 
some stable, strong form of law and order. Sufficient numbers of 
rangers are camped in our cities. Surely this force can do what the 
police are unable to do. The first observation of the founder of 
this country was that the first duty of any government is to ensure 
the safety of the lives and property and religious beliefs of its 
citizens. After 54 years, is it not time that the first 'duty' is 
finally carried out?

A question of horses
By Ayaz Amir

FORGET about large corporations. Try running a corner retail store 
part-time. You'll have a job on your hands balancing the books and 
running up a profit. Yet is it not a little strange that ordinary 
rules of prudence which would apply to any business are regularly 
disregarded when it comes to the running of Pakistan's premier 
institution: its puissant army?

In recent times no professional army of such size and standing has 
had so many part-time chiefs who have dabbled in politics as much 
as they have devoted time and attention to their own calling. Those 
who rode off into the sunset when their time was up are the 
timorous exceptions in this story; the part-time generalissimos who 
commanded the army, ruled the country and presided over some of its 
more epic disasters the dispiriting norm.

Now with General Musharraf saying that come October when his term 
as army chief expires he will not be retiring, thus confirming what 
has been suspected for some time, the norm once again is set to 
take precedence over the exceptions. Of the two roads before him 
Musharraf has chosen the one taken not by Karamat, Kakar and Tikka 
Khan - the on-time retirees and in Karamat's case the premature 
retiree - but by his more illustrious predecessors: Ayub, Yahya and 

Maybe it is necessity (another name for the Fates) which is 
determining his course. After all he finds himself in power much as 
the afore-mentioned caesars did. And the retention and preservation 
of power puts a premium on sound insurance policies. While elected 
leaders look to their approval ratings, un-elected leaders have 
other priorities. Turning the Christian doctrine of reciprocity on 
its head, they try to ensure that what they have done unto others 
happens not to them. In other words, that they are not hoisted on 
their own fire-engines. That is why in a setting such as Pakistan's 
they try to provide for themselves by riding two horses at the same 
time: that of the army and political power.

But a pressing question arises. If in this one particular General 
Musharraf is taking out the insurance policy of his predecessors, 
what makes him so sure he will remain immune to their example or 
fate (take your pick) in other particulars?

Ayub and Yahya came to sticky ends. So in a manner of speaking did 
Zia. Eventually, all the insurance policies in the world could not 
save them. Why? Because the very fact that they rode two horses, 
and no Roman slave was around to whisper into their ears that they 
were mortal, befuddled their vision and undermined their 
horsemanship. As Plato instructs in the Republic, don't mix 
professions. Stick to what you know best. As any barman will tell 
you, don't mix your drinks.

As president, Ayub had a nominal C-in-C in the loyal Musa Khan 
(there being no running away from Khans in Pakistan). But Ayub in 
everything was very much his own master and it was he not Musa who 
took the fateful steps which led to the futility of the 1965 war. 
Yahya of course was architect to Pakistan's greatest humiliation. 
Zia's baleful legacy continues to haunt the nation. What will 
Musharraf's contribution be to the sum of national achievement?

If only the army was clear about its priorities. We have the 
examples of Thailand, Burma and Indonesia where the army is a 
domestic player, keen on politics and corporate business and not 
driven by extra-territorial aims. In Pakistan it is altogether 
different: domestic and external ambitions impinge upon each other. 
The army's star status at home encourages it to adopt brave 
postures abroad. Hence the involvement in Afghanistan and Kashmir. 
Hence also the confusion surrounding our nuclear doctrine.

It is a case of one fallacy leading to another. In Afghanistan all 
the strategic gains went to the US. We only acquired a set of 
problems - guns, drugs, refugees - which continue to bedevil us 
till today. In Kashmir tactical engagement has become an end in 
itself with no strategic purpose, at least none readily 
identifiable or consistent with reality. As for our nuclear toys, 
the fallacies they helped breed led directly to Kargil. This is not 
to say we should not have acquired a nuclear capability. India 
perhaps left us with no choice in the matter. But what ill wind 
drove us to ape India's example and test our nuclear devices?

Over-extended reach, over-extended lances, that's our predicament: 
the tilting at windmills in the distance when more pressing 
problems nearer home call for attention. Taxes the state cannot 
collect, law and order it cannot maintain, or at least not 
adequately. But it must be prey to grandiose if not farcical 
ambitions. Of course Pakistan is better off than many countries. Of 
course its people, or most of them, have enough to eat. But that is 
not the point. Why is its potential lying unfulfilled? Why is the 
machinery of state stricken by paralysis? Why can't simple things 
be done? We are not a nation without talent. We don't deserve to be 
at the bottom of the league. Why then are our affairs so 

Musharraf is doing the familiar thing, anointing himself pope (wait 
for Tarar's exit), emperor and warlord. It is as if we have learned 
nothing from the past. If after all our travails the only solution 
to hand is the Ayub Khan, Yahya Khan or Zia-ul Haq way of doing 
things it does not say much for our political ingenuity. Never 
reinforce failure is a military maxim. What about not following bad 

At present too much is being taken for granted. Agreed that Nawaz 
Sharif pushed the army command into taking precipitate action. In 
trying to remove Musharraf in a manner that can only be called 
cavalier he no doubt over-reached himself. But then the army's 
response should have fitted the provocation, not exceeded it. Maybe 
General Musharraf had to become Chief Executive: a compulsion of 
the situation he was in. But what is the compulsion in playing 
Napoleon (who crowned himself emperor with his own hands) in 
October? If he achieves nothing in two years what does he hope to 
achieve thereafter?

In the wake of such a decision come a hundred other compromises. 
Because Zia kept extending his term as army chief he had to humour 
his fellow generals. Thus in his time we had a surfeit of four-star 
luminaries: Iqbal Khan, Sawar Khan, Rahimuddin, Akhtar Abdur 
Rehman, K. M. Arif. Grand admirals without ships, air chief 
marshals without adequate aircraft, full generals more adept at 
politics than the requirements of command.

Riding double horses is dangerous for you can fall in between. A 
political leader who has the army as his real constituency loses 
suppleness: knowing he can count on the army's support he acts 
rigidly when he should be flexible. On the other hand, an army 
chief who is also political satrap compromises his professionalism. 
It was not boozing or womanising which did us in in 1971 but a 
sclerotic high command whose exposure to wealth and power had left 
it unfit for war.

But is wailing or breast-beating going to make the slightest 
difference? It never has in the past and will not do so now. We are 
set on a course and must gather its fruits before we can move on to 
anything else.

Partisan politics
Irfan Husain

SO the velvet glove is off, and the authoritarian fist of military 
rule is out in the open. However, the display of strength by the 
government on March 23 was as hamhanded as it was unnecessary.

By using brute force to abort the planned rally of the ramshackle 
Alliance for the Restoration of Democracy (ARD), the regime showed 
simultaneously that the alliance was a genuine threat, and revealed 
its own sense of insecurity. While there may be considerable reason 
for the latter perception, the fear of the ARD is surely misplaced. 
Pakistan's political history is littered with alliances made and 
broken (and the only thing most of them have had in common is the 
leadership of the indefatigable Nawabzada Nasrullah), but few of 
them have been as diverse and ineffective as the current power-
hungry grouping.

The opposition rally was supposed to be held at Lahore's historic 
Mochi Gate on Pakistan Day, but the area was completely sealed off 
by thousands of cops. Earlier, a series of pre-emptive arrests had 
scooped up scores of political leaders. The impression given was 
that the event had to be thwarted at any cost. So virtually the 
entire Punjab administration concentrated its considerable 
resources on preventing what would have been at best a fairly minor 
political gathering.

Poor old Nawabzada Nasrullah was surrounded by a phalanx of 
Punjab's finest, and when Asma Jehangir and a few of her colleagues 
from the Human Rights Commission tried to call on him, they were 
physically stopped and manhandled. When they finally managed to 
break the siege, they found the 80-year old Nawabzada to be in good 
spirits, but scarcely a threat to the foundations of the state.

A few days later, Shakil Sheikh, the chief reporter of The News in 
Islamabad, was kidnapped, driven to a remote place, and mercilessly 
beaten up. His assailants repeatedly told him that "he wrote too 
much" while kicking him with their boots and hitting him with rifle 
butts. Although their identity has not been established, the 
operation has the fingerprints of some spook outfit all over it.

Over five decades of independence have done nothing to alter the 
mindset of our police and security agencies. Under British rule, 
their primary function was to protect the interests of the Crown; 
after 1947 this priority shifted to protecting the Pakistani state. 
The protection of the citizen was a remote concept that was only 
invoked when the status of an individual was high enough to command 
the attention of the administration. The rest of us have always 
been on our own and hence the proliferation of private security 
agencies. Indeed, most Pakistanis see the police as a threat to 
life, limb and property rather than as a shield against the 

However, instead of reforming the police to bring it in line with 
today's requirements, successive governments - both elected and 
unelected - have used it unabashedly as an instrument of oppression 
against their opponents. While there has been desultory talk of 
reforms, all the laws, rules and regulations governing the police 
are from the colonial era. 

Underpaid, ill-trained, semi-literate and overworked cops are 
supposed to take on armed criminals and terrorists when all they 
are really capable of is to beat confessions out of helpless 
suspects, break up opposition rallies and stand by the roadside for 
hours when some VIP is expected to drive past.

While it is understandable (although deplorable) for ambitious, 
insecure politicians to resort to strong-arm methods to bully and 
hound their rivals, for an unassailable military government to do 
so is incomprehensible. Given the current climate of political 
apathy, there is absolutely no prospect of any kind of popular 
movement developing momentum against the government. Indeed, by 
resorting to mindless violence in a predictable knee-jerk reaction 
against the ARD, our military rulers have demonstrated that their 
use and abuse of the levers of power is no different from the 
politicians they love to revile.

By contrast to the treatment received by the ARD, the tame elements 
of the Muslim League - known by the ridiculous sobriquet of the 
"like-minded group" - saw the benign face of the military 
government when it staged its public meeting in Islamabad two days 
later. United by its determination to pick up whatever crumbs the 
government dropped from its high table, the breakaway faction of 
the PML (estimated to be the fifteenth faction to split away from 
the long-dead mother party) consists of the usual power-hungry 
professional politicians ready and willing to cut any deal with 
anybody for a slice of the cake.

The government's open favouritism seems to confirm that it is 
seriously considering the formation of a king's party, the 
resurrection of assemblies, the election of a pliable prime 
minister and the elevation of General Pervez Musharraf to the 
Presidency. While there seems to be very little the opposition can 
do to prevent this scenario from becoming a reality, the real 
problems will arise when the next general election falls due next 

In Pakistan, three years in power are enough to tarnish the 
cleanest and most efficient government in the public view. The 
scale and magnitude of the problems we face are such that no amount 
of rhetoric and wishing will even begin to address them. 

Unemployment, disease, inflation and illiteracy will all be worse 
next year than they were when General Musharraf seized power in 
1999. And whatever facade this government acquires in the 
meanwhile, anybody associated with it will be punished at the 
polls. Granted that a sitting government has vast powers to get the 
electoral verdict of its choice, the amount of rigging it can get 
away with will be limited. The likely presence of several 
international monitoring groups during the elections can contribute 
to minimize the degree of official interference in the process.

The rapidly developing situation is reminiscent of the many efforts 
made by past military regimes to shape events to their liking. 

 Unfortunately, real life politics seldom conforms to parade ground 
commands. Time and again, General Musharraf's predecessors misread 
the situation and placed their trust in Quislings who just could 
not deliver. There is no reason to think he will fare any better.

And yet he can pause and reconsider his options: by remaining above 
the political fray instead of becoming partisan, he can oversee the 
orderly and quick return to democracy. While our mainstream parties 
and politicians have been united in distorting and discrediting 
democracy, the fact remains that there is no alternative available, 
so we will have to restore it in the hope that politicians will 
have learned a lesson from this interlude and will do a better job 
next time. A forlorn hope, perhaps, but it's all we have to think 

Kiwi openers grind Pakistan

HAMILTON (New Zealand), March 29: Matthew Bell and Mark Richardson 
became just the third New Zealand opening pair to score a century 
apiece to leave Pakistan struggling in the third Test on Thursday.

Both reached three figures for the first time in a Test as New 
Zealand ended a rain-shortened third day on 260 for two, a lead of 
156 over Pakistan's meagre first innings total of 104.

Bell scored 105 and Richardson was unbeaten on 106 at the close 
alongside promoted No 4 Craig McMillan on seven.

Just 43.1 overs were possible after rain and bad light interrupted 
the day, with New Zealand adding 100 runs for the loss of two 
wickets to their overnight score.

Bell and Richardson put on 181 for the first wicket, the fifth-
highest opening partnership in New Zealand Test history.

Bell was playing his 11th Test and Richardson his ninth as they 
partnered each other for just the fifth time. Their previous 
partnerships had been one, 91, 102 and 69.

The only other opening pairs to score centuries in the same innings 
were Glenn Turner and Terry Jarvis against the West Indies in 
Georgetown, Guyana, in 1971-72 and Stu Dempster and Jack Mills 
against England in Wellington in 1929-30.

Bell and Richardson had to wait an anxious four hours before they 
got back on the field after the entire second day was washed out.

Bell, resuming 45 hours after going to stumps unbeaten on 89 on 
Monday, took 31 balls to reach his milestone.

He achieved it with a thick-edged single off spinner Saqlain 
Mushtaq in the day's ninth over after 258 minutes and 153 balls, 
including 16 fours.

His parents Gary and Sheryl arrived at the ground just 30 minutes 
before and were among the crowd of 1000 who gave Bell a standing 

"I was pretty nervous and I wanted to get it out of the way as soon 
as possible," Bell said.

"It was a special moment ... it was quite hard to fight back the 

Richardson hadn't added to his overnight score of 64 when Bell 
brought up the mark under gloomy, threatening skies.

Bell celebrated reaching the milestone by pulling Waqar Younis 
through square-leg for four but Waqar then trapped him leg-before-
wicket for 105 with a swinging yorker.

It was his sixth first-class century of the domestic season and 
left him with 1092 first-class runs for the New Zealand summer.

Richardson then had a lucky escape when he top edged a hook shot on 
65 and it just cleared Fazle Akbar at fine leg.

With Mathew Sinclair, he ground away against some accurate Pakistan 
bowling, particularly from Saqlain.AFP/Reuters

Cricket board snaps relations with India
Imran Naeem Ahmad

ISLAMABAD, March 25: The Pakistan Cricket Board (PCB) on Sunday 
said it has broken all cricketing relations with India after the 
traditional rival pulled out of next month's Sharjah Cup where 
Pakistan was one of the three contestants.

The chairman of the PCB, Lt. Gen Tauqir Zia added that Pakistan 
will not cross borders if the game's governing body allocated the 
International Cricket Council (ICC) knockout tournament to India.

"We have had enough and we are not going to have a rethink. Our 
cricket relations with India are over," an angry Tauqir said when 
asked to comment on India's recent decision.

Tauqir's stern reaction came hours after director of the PCB, Brig 
Munawwar Rana, said Pakistan would still play India in India if the 
knockout tournament was held there.

"We would not like to play cricket with India any more," Tauqir 
said but clarified that Pakistan would still send its team to 
Sharjah (April 8 to 20) tournament that involves Sri Lanka as well.

Tauqir slammed India for its double standards and hypocrisy.

"If they can play us in field hockey why not cricket," he said 
referring to the hockey tournament in Dhaka where India and 
Pakistan contested the final.

The general said, he would not chair the April 15 Asian Cricket 
Council (ACC) meeting in Sharjah in protest.

He pointed out that the ACC should seize to exist. "I would not 
like to chair the meeting because I don't think the ACC can 
function if India continue refusing to play Pakistan.

"If Asia is not together, it is just no point of having the 

Ex-stars chide India over refusal to play Pakistan

KARACHI, March 28: Former Pakistani cricket greats said on 
Wednesday the future of cricket in Asia is in danger following 
India's stubborn refusal to play Pakistan due to political 

Imran Khan, who launched a career in politics following his 
retirement from Test cricket in the early 1990s, appealed to India 
to save international cricket on the sub-continent.

"Pakistan's sharp reaction was long overdue because of the Indian 
government's rigidity. Now the ball is in India's court to stop the 
breakup of Asian cricket," the former Test captain said.

Pakistan Cricket Board (PCB) chairman Lt Gen Tauqir Zia said on 
Sunday that Pakistan would never play India again in response to 
New Delhi's refusal to send a team to a one-day tournament in 
Sharjah next month.

In addition to the Sharjah pullout, India skipped the Sahara Cup in 
Toronto last year and cancelled a tour to Pakistan in December.

"The Indian board earned millions through Pakistan's tour in 1999 
but when it was Pakistan's turn to earn some money they refused to 
allow their team to come, costing us millions of dollars," Imran 

India and Pakistan are the backbone of cricket in Asia, the fastest 
growing region for the sport following the granting of Test status 
to Bangladesh in June last year.

Test match attendances in both countries put the rest of the 
cricket world to shame, especially when they play each other.

"When Pakistan and India can play in hockey, squash and other 
sports why can't they play cricket?" another former Pakistan 
captain, Zaheer Abbas, asked.

Pakistan and India clashed in the final of Bangladesh's President 
Cup hockey last week and Pakistani players crossed the border to 
appear in the Asian junior squash championship last month.-AFP

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