The New Nation - Internet Edition

Repo auction held

UNB, Dhaka

The Repo auction for commercial banks and financial institutions was held at Bangladesh Bank here on Wednesday. Seven bids of 1-day tenor amounting to Tk 1151.00 crore were received. Of those, 7 bids of 1-day tenor amounting to Tk 863.25 crore were accepted, said a press release. The rate of interest of the accepted bids was 8.50 percent per annum.

Cairn urges Petrobangla to increase gas price

BUSINESS REPORT

The UK-based Cairn Energy has warned Petrobangla it would not carry out further exploration in the Magnama structure in the Bay this dry season if Petrobangla did not increase the gas price or allow it to sell its share of gas directly to a third party once gas is found.

The company in a letter recently said it would be "uneconomical" for Cairn if it sold gas to Petrobangla from Magnama for the price mentioned in the existing production sharing contract as gas exploration and production cost increased manifold in recent years, said Petrobangla officials.

The company asked Petrobangla either to increase gas price or to allow it to sell its share of 50 per cent gas of the total production to a third party in Bangladesh at the price fixed by the company.

Cairn said if Petrobangla did not agree to the company proposal by August 15, it would not go for a planned 3D seismic survey in the structure under Block 16 this dry season, between November 2008 and April 2009.

Petrobangla officials termed the Cairn letter "outrageous" and said the demand of the company was a "clear violation" of the production sharing contract.

"The PSC that the company signed with Petrobangla has a specific formula on how the gas price will be fixed. It will be clear violation of the PSC if the gas price goes beyond the formula price," said an official.

"Besides, the PSC says Petrobangla has the first right to buy the gas. Petrobangla wants to buy the gas and that is why we have signed the PSC. So the company cannot sell the gas to a third party directly unless we decline purchase," he said.

Petrobangla officials said Cairn was trying to hold Petrobangla "hostage" as the country needs new gas reserves because of severe gas crisis. "The discovery and production of gas from Magnama is very important for Chittagong as the area is facing a severe gas crisis," he said.

Cairn said if it was not able to explore gas because of uneconomical price, how gas could be extracted from Magnama and Petrobangla would sell it.

The company said it wanted to sell the gas to crisis-hit industries in Chittagong, especially to the Karnaphuli Fertiliser Company and the Karnaphuli Export Processing Zone at the price fixed by the company.

Petrobangla officials said it was not Cairn's "headache" where Petrobangla would sell the gas it would buy from the field.

Cairn discovered the Sangu gas field in the same block in 1996 and it is selling gas to Petrobangla for the price mentioned in the PSC, which is about 3.5 dollars per 1,000 cubic feet or one unit.

The company in the past dry season drilled wells in Hatia and the Magnama structure and found the presence of gas in Magnama, but it could not establish whether it was economical.

It claimed to have invested 100m dollars. It proposed a 3D seismic survey this dry season before drilling further exploration wells.

The company said the price of the gas from Sangu would not be economical for gas from Magnama as exploration and production cost and gas price on the international market had gone up manifold in 12 years.

A Petrobangla official, however, said Petrobangla bought gas for 3.5 dollars in the late 1990s and the company made a huge profit.

"The company will recover its exploration and development cost from gas price. It should not have any problem in buying gas at 3.5 dollars at present. This is the contract it signed and it should honour it."

The Petrobangla chairman, Jalal Ahmed said they were yet to go through the letter completely. "We are examining it. We will reply to Cairn at an appropriate time. We have not made any decision yet on what will be the reply."

Bangladeshi co to invest $4.170m in KEPZ

BUSINESS REPORT

M/s Votary Accessories Limited, a Bangladeshi company will set up a garment accessories manufacturing industry in the Karnaphuli Export Processing Zone.

This 100 per cent local owned company will invest about Taka 30 crore in setting up their plant and will produce to export annually 9,000 metric tonnes of garments accessories. The company will also create employment opportunity for 114 Bangladeshi nationals.

An agreement to this effect was signed between the Bangladesh Export Processing Zones Authority and the M/s Votary Accessories Limited in BEPZA Complex, Dhaka on July 29.

Prasanta Bhushan Barua, Member (Investment Promotion) of BEPZA and SM Al Mamun, Managing Director of M/s Votary Accessories Limited signed the agreement on behalf of their respective organisations. Other officials from respective sides were present on the occasion.

NRBs can be biggest investors if govt takes necessary steps: Country's first NRB CIP Syed AK Anwaruzzaman says

BUSINESS REPORT

Non-Resident Bangladeshis (NRBs) can become the biggest investors if the government takes necessary initiatives in this regard, said Syed AK Anwaruzzaman, Chairman and Chief Executive Officer of SM Group.

Anwaruzzaman, who has been selected as one of the five CIPs (Commercially Important Persons) of Bangladesh for the first time, observed that the country would be benefited significantly if the government takes initiatives to bring the meritorious Bangladeshi citizens back to the country.

"Many Bangladeshis now living in different parts of the world are able to invest millions of dollars. Necessary initiatives should be taken to bring them back to the country providing them proper honour and facilities," he suggested.

"We won't have to be anxious about the foreign investment so much if the expatriate Bangladeshi businessmen start making investment in their own country."

Anwaruzzaman, who was formally given away the CIP certificate by the government on Thursday, noted that the investment by NRBs was more profitable for the country compared to the foreign investment, because all kinds of income and profits of the NRBs would remain in the country. But, it would not happen regarding the foreign investors. Foreign companies have been repatriating millions of dollars to their own countries every year by investing in Bangladesh.

"If a company invest US$50 million in Bangladesh, it repatriates US$500 million," he said.

According to Anwaruzzaman, NRBs expect guarantee of security of their investments before investing their hard-earned money in this country. Many of the potential NRB investors don't want to invest here fearing lack of insecurity of their investments.

He said the NRBs would re-invest their profits in this country instead of repatriate them abroad. Modern technology will come to this country and many people will get employment opportunities if the NRBs are provided with special facilities to invest in Bangladesh. For this the government will have to ensure supply of gas, electricity and other facilities.

Anwaruzzaman also suggested encouraging the NRBs to come back to their motherland. If this can be done, many intelligent and meritorious Bangladeshis will return to their own country. In this regard, he drew the attention to the Indian government's initiatives to bring the Non-Resident Indians to their own country offering higher salaries.

The SM Group chairman said that NRBs faced harassment at the airports frequently.

"There are three types of NRBs living abroad. They are Bangladeshi workers, Bangladeshi businessmen and Bangladeshi intellectuals. Among them, workers do not receive minimum respect at the airports. On the other hand, many of the businessmen and intellectuals become the victims of harassment frequently at Dhaka, Chittagong and Sylhet airports. Abandoning the idea of investing in Bangladesh, majority of them think of return tickets right at the airports to go back abroad.

"This kind of situation must come to an end. We can also take lessons from other countries' experiences in this regard," he suggested.

Regarding investment in Bangladesh, Anwaruzzaman said he left for West Germany in 1978. After spending few years, he joined a company of the United Arab Emirates as a factory expert.

"Later, I passed long 19 years. During this period, I have built eight establishments in Dubai, Khartoum, Paris and the UK. All of my investments were at abroad. But, in 2001, I felt the necessity of involving my children with their motherland. Since then I started thinking to invest in Bangladesh, and set up SM Knitting Industries Ltd under a joint venture. In the following years, areas of my investment in the country started to expand quickly, and at one stage, it appeared as SM Group. I have established as many as 12 companies in the areas of ready-made garment, accessories, agriculture, real estate, and media. Some 350,000 people are now working in these companies. I hope that the number of people working in my companies will reach 5,000 by December next. The annual turnover of these companies is US$21.5 million," he said.

When asked why he had made investment taking so many risks, Anwaruzzaman said, "I don't think that investment in this country is risky. Wherever I stay in my life, I will have to return to my motherland one day.

I always thought that foreign countries were the places of my income and Bangladesh is my motherland. If I can make profit in my own country, why shall I go to Dubai to develop it? From this consideration I tried to increase my investment in this country. Another objective of mine was to create employment opportunities in the country. My country will be benefited if I can contribute to its development, which will also benefit me indirectly."

WB gives $50m to recover damages from Sidr

The Bangladesh government yesterday signed a credit agreement worth US$50 million with the International Development Association (IDA) to help restore assets and livelihoods for families affected by cyclone SIDR.

The US$50 million in additional financing for the Social Investment Program Project (SIPP) would support rehabilitation of the cyclone affected families. The additional financing would scale up support to the government in developing effective financing and institutional arrangements to empower the poorest and most vulnerable and improve their access to small scale local infrastructure, assets and livelihoods. SIPP, which has already benefited over 1,000 villages across Bangladesh, was identified as the best instruments for quickly channeling funds to support livelihoods restoration at the cyclone affected areas.

The operations under the additional funding will commence in the first week of August in four upazillas as pilot in the coastal areas. The project will cover 14 most affected upazillas and about 40-50 unions.

The agreement was signed at the Economic Relations Division yesterday morning.

Mohammad Mejbahuddin, Additional Secretary, Economic Relations Division and Xian Zhu, World Bank Country Director, signed on behalf of the Government of Bangladesh and the World Bank.

After the devastating cyclone SIDR, the World Bank offered US$250 million short and medium term support to help the millions of affected people to recover and to strengthen disaster mitigation systems. Already US$ 100 million was quickly disbursed as budget support in the last financial year. Another US$ 100 million support is under preparation for delivery in FY 09.

The credit from the International Development Association (IDA), the World Bank's concessionary arm, has 40 years to maturity, including a 10-year grace period; and carries a service charge of 0.75 per cent.

IFIC Bank holds foundation course for Probationary Officers (9th Batch)

A four-week long "Foundation Course for Probationary Officers (9th Batch)" of IFIC Bank Ltd was inaugurated on July 28 at its Academy at Chamber Building, Motijheel C/A, Dhaka. Mosharraf Hossain, Managing Director of IFIC Bank Ltd was present on the occasion and delivered speech before the participants. The main objective of the course is to impart different operational aspects of general banking to the participants.

A total of 52 probationary officers of the bank working at various desks at the branches and Head Office attended the course. It may be mentioned here that this was the 22nd programme of IFIC Bank Academy in 2008.

Course Directors are Md Abu Tayeb, Senior Vice President and Incharge of Training and Research Division, AK Mojibur Rahman, Assistant Vice President and Omar Sharif, Senior Staff Officer.

Lafarge Surma Cement signs deal with Uttaran Structural Designers

Bangladesh's leading cement manufacturing company Lafarge Surma Cement Limited has signed an agreement with Uttaran Structural Designers Ltd to sponsor the release of Audio/visual footage of the best construction practices and norms in Bangladesh.

Mike Cowell, Managing director of Lafarge Surma Cement Ltd and Hamid-uz-Zaman, Managing Director of Uttaran Structural Designers Ltd signed the agreement recently on behalf of their respective organisations.

Lafarge Surma Cement Limited is the major sponsor of the release of the audio/visual footage, to be developed by Uttaran Structural Designers Ltd.

A panel of advisor from BUET, PWD and RHD will provide technical assistance to Uttaran Structural Designers Ltd for developing the video footage of construction practices.

Speaking on the occasion, Cowell said that he strongly believes the release of CD/DVD would help the construction professionals, including engineers and architects to enforce and maintain good quality of construction in the country.

K. Swaminathan commercial Director and Masud Khan, Finance Director of Lafarge Surma Cement Ltd were also present during the signing ceremony.

ICCB exposes urgent needs to improve power situation

BUSINESS REPORT

Bangladesh needs huge investment in its dwindling energy sector as the country is facing acute shortage of power. Staggering shortage and frequently interrupted supply of power is considered to be the main bottleneck for Bangladesh to achieve its desired level of development to become a middle-income country by 2015 or so. Had we been able to take appropriate steps for investment in the power sector over the last fifteen years, the country's per capita income by now could have been close to US$1,000 from the current level of US$599, said International Chamber of Commerce (ICC) Bangladesh, The World Business Organisation in the Editorial of its Quarterly New" Bulletin released on July 30.

According to energy industry experts, Bangladesh is facing three roadblocks and three opportunities for the development of energy sector. Lack of proper strategy for augmenting increasing demand for power supply, depleting natural gas reserves, and exorbitant world price hike of petroleum and food are posing three big challenges for the sector while quick development of hitherto neglected ever increasing demand for power & gas for growth and investment and low operating costs of business are positives for the energy sector.

It is said that the country needs an investment of US$8 billion in the energy sector to fulfill the rising demand by 2025. According to government estimate, Bangladesh, with 13.54 tcf of proven and recoverable gas reserves, is facing at least 100 million cubic feet of gas (mmcf) shortages a day, as the country can supply up to 1,738 mmcf of gas against daily demand of 1,833 mmcf. In order to achieve and maintain at least seven per cent growth, the country would need supply of energy at a much higher rate to meet increasing demand.

According to latest official statistics, per capita power consumption in Bangladesh is only 140 kilowatt hour (kwh) as compared to 325 Kwh in Sri Lanka, 408 Kwh in Pakistan and 663 Kwh in India. Moreover it keeps electricity out of reach of 70 percent people of the country. Besides, whatever is available is so erratic and irregular that nobody knows when it is going to come and go-its like a hide and seek game.

The present installed capacity of power generation of the country is around 3500 MW, against a demand of over 5000 MW on an average. Even against the installed daily generation capacity of 3500 MW, the load-shedding, which is a regular phenomenon, is in the range of 600 to 1200 MW. Out of this, 500 to 600 MW is due to gas shortage. Stoppage or curtailment of gas supplies to industries or power plant has been aggravating the situation further.

Last year 87 percent of total electricity came from gas. Experts said that ground reality of gas production does not suggest that future generation can be continued based on mono primary energy, which is gas. They apprehend that the power crisis will not be over before next 3-4 years. Even situation might worsen. This obviously hampers the much needed growth of industrial sector. Agriculture will also be affected severely due to power crisis.

The power sector master plan suggests that Bangladesh requires 43,000 megawatt (MW) electricity to ensure power for all by 2025. According to the plan, 76 percent of the requirement or 33,000 MW will come from coal although now the percentage is only 5. In USA, coal contributes to over 50 percent of total power generation while in India it is 70 percent and the figure for fast growing China is similar. On the other hand, the Phulbari coal field, having a recoverable reserve of 572 million tonnes has been forcibly stopped in the name of environmental preservation and conservation of nature by vested quarters in order to block the economic use of this huge power reserve.

Energy is the biggest challenge for the country specially when the oil price reached US$ 146 per barrel and apprehended to reach US$ 200 by the year-end. It is indeed an irony that, despite being blessed with such an energy asset (coal and gas), Bangladesh is one of the most energy-starved countries in the world, lagging far behind in its development initiative. .