Count on Nestlé's Swiss efficiency

If this is what qualifies as a tough year for Nestlé (NSRGY), I’ll take it.

The company faces a headwind from a strong Swiss franc, which makes its products more expensive for customers pretty much everywhere else.

Costs are also climbing, with increases in the prices of everything from corn to sugar.

And yet for the first quarter of 2011 -- despite what the company calculates was a 9.8% hit from foreign-exchange rates -- the company saw sales for its continuing business fall by just 1.2% from the first quarter of 2010.

Organic growth, a measure which excludes currency effects, climbed by 6.4%, as the company’s emphasis on growing its business in emerging economies paid off big. The volume of goods sold climbed by 4.9%, beating the 3.7% increase expected by Wall Street analysts.

Organic sales growth came to a sluggish 4.3% in the Americas and 3.9% in Europe -- but to a better-than-solid 11.8% in Asia, Oceania, and Africa.

Strong growth in emerging markets resulted from the company’s success in adding new retail outlets by tailoring products, package sizes and prices to emerging economy customers. The company’s goal is to add 1 million additional retail outlets in emerging economies by 2012. Emerging economies now account for about a third of Nestlé sales.

The company also benefited from its decision to make nutrition products one of its core businesses, as sales in that unit showed 8.9% organic growth.

In its earning conference call, the company reiterated its guidance for 5% to 6% organic sales growth for 2011 and its projection that it will increase margins on a constant currency basis.

Tough times tell investors a lot about how well a company is managed, and Nestlé’s ability to continue to execute its strategy against currency and commodity headwinds has been impressive to date.

The stock has pulled back slightly from its 52-week high on weakness in European stocks on new worries about the euro. (Yes, Nestlé does its business in Swiss francs, but the Swiss stock market isn’t immune to turmoil around it.)

I think that continued euro turmoil might take the stock a bit lower -- say $56, from today’s $59-plus -- although it could fall even down to the $51 to $52 range of the February and March lows.

I’m adding the stock to my watch list today while I wait for a better entry point.

If, as now looks likely, investor sentiment continues to show a shift toward preferring safety in such sectors as consumer goods, the stock is likely to move higher even from today’s levels. If you own the shares, I’d certainly hold on with that expectation. Nestlé is, at the moment, the class of the global consumer goods sector.

Dubai stocks climb to 2011 high on earnings optimism; Emaar, DIB advance

Dubai - Dubai’s benchmark stock index advanced to the highest this year on investor expectations first-quarter earnings will exceed estimates and after oil increased for a second day.
Emaar Properties PJSC (EMAAR), builder of the world’s tallest skyscraper, rose to the highest in three months. Emirates Integrated Telecommunications Co. (DU), the phone company known as Du, gained 1.3 percent.
The DFM General Index (DFMGI) climbed 1.6 percent to 1,680.96 at the 2 p.m. close Dubai, the highest since Dec. 9. The measure has surged 24 percent from a low of 1,352.24 on March 3, after surpassing the 20 percent threshold some consider the beginning of a bull market.
“There are positive expectations for first-quarter results,” said Mohammed Ali Yasin, chief investment officer at Abu Dhabi-based financial services company CAPM Investments PJSC. “On the macro picture, higher oil prices have supported the rally.” Investor optimism that the U.A.E. will secure an upgrade in June at MSCI Inc. has also helped gains, he said.
Dubai Islamic Bank PJSC (DIB) [], the lender with the second- heaviest weighting on Dubai’s index, may report a 55 percent increase in first-quarter profit to 310 million dirhams ($84 million), according to an EFG-Hermes Holding SAE analyst estimate on Bloomberg. Du may next week report first-quarter earnings that more than doubled to 207 million dirhams, according to the median estimate of two analysts on Bloomberg.
DIB jumped 3.1 percent to 2.31 dirhams, the highest since February and Du advanced to 3.22 dirhams. Emaar rose 1.5 percent to 3.46 dirhams.
Expected Earnings
Oil climbed as much as 1.6 percent to $109.92 a barrel in electronic trading on the New York Mercantile Exchange. The contract has soared 20 percent so far this year amid an armed conflict in Libya. The six nations of the Gulf Cooperation Council, including the U.A.E. and Qatar, supply about a fifth of the world’s oil.
Dubai’s index declined 4.6 percent in the first quarter after uprisings in the Middle East and North Africa that ousted Egypt and Tunisia’s leaders reached the Persian Gulf states of Oman, Saudi Arabia and Bahrain. The gauge has advanced 8 percent this month on investor optimism Dubai’s market will be raised at index provider MSCI. The MSCI Emerging Markets Index has gained 1.9 percent in the period.
The U.A.E. and Qatar are seeking to secure an upgrade to emerging-market status at MSCI, which will revalue its assessment in June, according to its website. Qatar’s QE Index (DSM) slipped 0.1 percent, paring the gain this month to 2 percent.
The Bloomberg GCC 200 Index (BGCC200) increased 0.9 percent. Abu Dhabi’s ADX General Index (ADSMI) gained 0.2 percent and Saudi Arabia’s Tadawul All Share Index (SASEIDX) climbed 0.8 percent, trimming the loss for the week to 0.5 percent. Bahrain’s BB All Share Index rose 0.6 percent, while Oman’s MSM30 Index (MSM30) declined 0.1 percent.

$5b savings eyed as UAE connects to Gulf power grid

The second phase of the Dh5 billion ($1.4 billion) Gulf power grid became operational on Wednesday with the United Arab Emirates joining the grid, officials said. The electricity grid unifies those of six Gulf states with the first phase having become operational in early 2009 connecting Saudi Arabia, Kuwait, Bahrain and Qatar. “This would provide a platform for energy trade and exchange, while improving the reliability of existing energy systems and lowering electricity reserve requirements on GCC countries,” His Highness Shaikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, said in a statement. After the National Anthem Shaikh Mohammed pressed the button for officially launching the project. The project will save up to $5 billion and will lay the foundation for a common energy market among the GCC countries, he said, adding it will provide the GCC states with sustainable energy supplies to support the national economies. The UAE has contributed Dh800 million to the project. Essa Al Kawari, chairman of the Gulf Cooperation Council Interconnection Authority (GCCIA), said studies were under way to connect the Gulf grid to the wider Arab region as well as to Europe. “The Arab League is conducting a study for the connection to the wider Arab region and Saudi Arabia along with the World Bank is conducting the study for connection to Europe,” he told reporters without giving a timeline. The total capacity of the Gulf grid is up to 1,200MW, the maximum power that can be transferred to any country at any time, said Kawari. Discussions are currently going on for selling power on a commercial basis. Currently each Gulf country can negotiate bilaterally with one another to agree on tariffs for purchase and sale of electricity, he said. “All countries have benefited from the grid,” Kawari said, adding there was a penalty for countries for not supplying their quota or spinning reserve to the grid. Oman had delayed joining the grid by two years, Kawari said. “Due to rapid growth in demand in Oman and the GCC they are expected to join in two years.” Gulf oil producers need to produce more electricity to sustain regional growth averaging about 10 per cent a year, Jarmo Kotilaine, chief economist at National Commercial Bank in Jeddah, Saudi Arabia, said last month. “If you look at the annual growth rate of electricity consumption in the Gulf, it is far ahead of the average increase elsewhere in the world,” UAE Oil Minister Mohamed Al Hamli told reporters on Wednesday. While domestic demand is high during summer, “in winter, we have a lot of spare capacity, we can even export”, he said. Saudi Arabia can give and receive 1,200 megawatts, the UAE 900 megawatts and Qatar 750 megawatts. Nations are now negotiating to sell power to each other starting from next year and will be penalised in future if they don’t maintain a minimum reserve level to support their neighbours in an emergency, Al Kuwari said. The inaugural ceremony of linking electricity between Al Sila station in the UAE and Salwa station in Saudi Arabia was attended by Shaikh Hamed bin Zayed Al Nahyan, President of the Diwan of the Crown Prince; Shaikh Nahyan bin Mubarak Al Nahyan, Minister of Higher Education and Scientific Research; Ahmed Jumaa Al Za’abi, Deputy Minister of Presidential Affairs; Lieutenant-General Misbah Rashid Al Fattan, Director of the Office of His Highness Vice-President and Prime Minister and Ruler of Dubai; and a number of Shaikhs and senior officials.

The challenges facing investors and investment professionals

Personal investment is a goldmine for some but a minefield for most. The decade ahead is going to pose tough challenges for both personal investors and the investment professionals who serve them.

 

Most personal investors have wholly unrealistic expectations of what returns are achievable. Beginning some 40 years ago, there was a long period when high inflation was the norm. As a result, it was possible to earn large nominal returns, even if, in real terms, there was no gain at all. Many investors still expect high nominal increases in asset prices now, even in a world of low inflation.

Moreover, in the period of high inflation, bond yields and interest rates were also high. Accordingly, if investors didn't like the prospects for the equity market, they could at least get attractive rates of return on bonds, or even on cash deposited in the bank. At one point, Bank Rate was 17pc and at one stage gilt yields stood at more than 17pc.

Ironically, the end of this era of high nominal interest rates itself brought a major boost to returns, albeit a temporary one. For the big drop in bond yields conferred large capital gains on the holders of bonds. Moreover, the effects of this fall in yields helped to buoy up the price of other assets, including equities.

Mind you, not all asset markets responded at the same time. Until very recently, investment in housing continued to deliver super returns. Now reality has caught up there as well. The rental yield is now extremely low, and for both investors and owner–occupiers, the prospect for capital gains varies between poor and dire.

Over and above this there is an attitude problem. Many investors remind me of the gamblers I have known who believe that it is readily possible, by luck or by skill, to enjoy decent returns and are over-confident of their abilities to pick the right horse/card/whatever. And, after all, some people did back the Grand National winner and enjoyed wonderful returns. Many of them will have said, after the event, that Ballabriggs was an obvious winner. Some of them may well have said this before the event as well. The trouble is that there are umpteen other people who said the same thing about other horses which did not win.
In the world of equity investment, even if the overall value of the equity market is pretty flat, there will always be some shares which deliver spectacular returns to their shareholders – just as there are always winners of the Grand National. For some gifted – or lucky – investors, it will be possible to be disproportionately invested in those shares. This will not be possible for investors in general. But the chance that you can be one of the successful ones is a powerful draw.
Buoyant investor expectations have had a bruising encounter with reality. Over the past decade, the average investor in UK equities has done very badly. The FTSE peaked at 6,930 in December 1999. Since then the market has fallen by about 14pc – equivalent to just over 1pc per annum on average. Of course, there have been dividends on top of this capital performance, but there have also been the massive charges of the investment management industry, as well as depredations from inflation and taxes.
In a way, the modern investment management industry and the average private investor deserve each other. They are both too greedy. Over the next decade they will both have to learn to be less so. Investors will have to accept that getting 20pc, or even 10pc, returns is distinctly abnormal – unless you are taking huge risks. And the investment professionals will have to learn that earning huge fees from managing investments only makes sense if you add value by delivering above average performance.
I suppose that it is possible that both could enjoy a respite as a result of a surge in the world's investment markets. But I doubt it. Although I don't buy the idea that emerging markets are caught up in a bubble, equally, equity markets there do not look cheap.
You can make a case that the UK equity market is reasonably valued. And even if the market overall does not do very well, it will be possible for the most skilled investors to pick stocks well.
Even these investors, however, will have to face a strong headwind. As and when Western economies fully recover, then interest rates and bond yields will have to go up substantially and this will undermine the value of all sorts of assets, including equities. It will also, of course, bring capital losses for bond holders. When this happens, at least new investors in bonds and bank deposits will be able to get a reasonable return on their money, in contrast to the daylight robbery which they have to endure today. Still, you might not think that this is much of a silver lining.
Roger Bootle is managing director of Capital Economics and economic adviser to Deloitte

roger.bootle@capitaleconomics.com

The 'other' housing market, where house prices have regressed 60pc

An apartment on London's Hyde Park recently changed hands at an astonishing £136m.

 

Even the row of terraced houses in North West London where I live has managed to put the housing crash behind it; these relatively modest late Victorian properties again sell at record prices.

Yet stray beyond London and the South East, and you see an altogether different picture, one that goes largely unrecorded by the established indices for measuring the UK housing market – Halifax, Nationwide, Rightmove and so on.

To see this "other" housing market, I've been to Newcastle and its surrounding areas in the North East, the region that gave birth to the folly of Northern Rock.

Like all property markets, prices in the region are highly calibrated. There remain sizeable pockets of prosperity, where values, though still significantly off, have held up reasonably well. As in many parts of London, it's easy to imagine from these relatively well to do districts that there never was much of a housing crash.

Unfortunately, they are more the exception than the rule. Little more than a stone's throw from these posher areas lies a tale of catastrophic decline and value destruction to match the very worst the sub-prime crisis has managed to produce in the US. Tens of thousands of houses in the North East alone will have fallen in value by 30-60pc since the peak, and by the look of it, still have further to go.

Many can neither be sold nor let. You've heard about Britain's chronic shortage of housing stock, one of the factors which allegedly underpins the value of domestic property in the UK. Well, there's little sign of it here in Newcastle and the rest of the North East. Row upon row of properties that used to house workers in the region's once proud industrial tradition of shipbuilding, coal and steel lie half boarded up or otherwise derelict.
Yet believe it or not, these very same houses and flats were until three years ago as much a part of the British property bubble as everywhere else – perhaps more so in some cases.
Over a seven year period, prices for a typical two to three bed house or flat were chased all the way up from the low teens to well in excess of £60,000. New build subject to mortgage fraud would fetch £125,000 or more. Today you'd be lucky to get half. Prices are fast regressing all the way back to where they came from before the bubble began.
Typical of this phenomenon is Benwell, located on the hillside that tumbles down to the Tyne in Newcastle's West end. A scene of grim degradation, it stands as a lasting reminder of the policy failures and illusory prosperity of Brown's Britain. Pumped up on a sea of credit, make work public expenditure and benefit payments, prices rocketed from 2000 onwards.
First came the local money, chasing the apparently mouth watering yields that housing benefit could offer to buy-to-let landlords. Then having exhausted the possibilities down south, in came the London investors. In the final hurrah came the Irish, their pockets overflowing with loans from their now hopelessly bust banking system.
Many of these investors will already be in substantial negative equity, but still they refuse to adjust their price expectations to the all too dire reality. So they hold on in the hope they can find the tenants to pay the mortgage and that prices will eventually recover. Denial is the order of the day.
London is always first in and out of any housing market downturn. The trend then ripples out from the capital, with regions such as the North East lagging London by a year or two. If that relationship holds, then you would indeed expect prices in the regions soon to be chasing London higher again. Regrettably, it's more than likely broken. Even if the banks were prepared to fund another rip-roaring property boom – they are still scarcely in any condition to do so – the fundamentals in regions such as the North East are most unlikely to support it.
Highly dependent on public sector employment and handouts – which are being severely cut – there appears nothing to stop the free fall in prices. Ever optimistic, one estate agent in Blyth, on the coast south of Newcastle, insists that with the advent of the prime Easter selling season, things are picking up. Buy-to-let investors from London are back, he says, in part because low interest rates are driving them into riskier assets in the search for income and capital gain. "They know a bargain when they see one", he says, pointing to the recent sale of a property at half its bubble peak. In the real world, prices have in fact taken a further lurch downwards.
A little further south still, at Dean Bank, Ferryhill, it's the same depressing scene of boarded up housing and decline. Even the warm spring sunshine fails to make a dent in the oppressiveness of it all. A woman is grilling meat on a disposable barbecue in her front door porch. "I've been in this town a long time. It always was s*** and it still is. But my mortgage broker is a good man. He'll look after me", she says, generously offering a sausage sandwich. Somehow I doubt it.
But let's not single out the North East. To a greater or lesser extent, you find much the same story around all the major regional cities of Northern England. It's still the same rubbish property with the same down at heel tenants, but in the past ten years the prices have been up like a rocket and now they are falling back down again like a spent stick.
It's hard to know what's going to rescue districts like these. With the anaesthetic of abundant credit and public money now largely gone, many areas of Britain are simply returning to the way they were before the New Labour boom began. It's as if it never happened at all.
George Osborne's hoped for private sector recovery threatens entirely to bypass areas like these. For the North East, the somewhat underwhelming programme of supply side reforms he announced in the Budget is unlikely to make any significant difference. Better education and training may lift things in time, but it all costs money, which is in short supply. Eventually, incomes might slip to levels that make the region competitive with emerging markets, but that's hardly an outcome to aspire to.
Everywhere's hurting right now, yet few places are hurting more than the North East. The collapse in low end property prices is only one outward sign of it. Public policy must focus like a lazer on these forgotten badlands, or risk permanently entrenching an ever more divided society.

 

Bank of England has an inflated sense of puzzlement

It's never good to hear that the Bank of England is “puzzled” by something.

 

The Bank trades in euphemisms, just like the European Central Bank, which uses the word “vigilant” to indicate a likely rate rise. Euphemisms allow central bankers to drop hints about what they are thinking without committing to a course of action so that they can follow John Maynard Keynes' famous quote: “When the facts change, I change my mind."

“Puzzled”, though, is puzzling – the word is not shorthand for anything specific. However, it’s certainly not good to hear that the Bank is worried about an aspect of the economy, and doubly bad that the subject “puzzling” our policy makers is trade. Trade is supposed to be driving the economy back to health, alongside business investment. But, as the Bank noted, “the contribution of net trade to growth had been negative in 2010”.

So far this year, the contribution has still been negative – not because we are failing to export more but because we are importing even more than we are exporting. The UK’s trade deficit, how much our exports lag imports, did improve to £2.4bn in February, down from the previous month’s £3.9bn figure and the lowest in a year. However, the Bank noted in the latest Monetary Policy Committee minutes, it “was puzzling that import growth had remained so robust, despite the substantial depreciation of sterling”.

With the pound 20pc cheaper than it used to be on international exchanges for the past two to three years, cheaper domestic goods were supposed to have replaced expensive imports. Not so, it seems. “It was possible that domestic substitutes for some imported goods and services were not available,” the Bank noted.

“It was also possible that UK firms in some industries lacked the plant or capacity to expand production rapidly in response to the past depreciation of sterling and it would take time for them to install it. Consistent with that, responses to a special survey by the Bank’s Agents suggested that a lack of domestic alternatives had been a significant factor restraining substitution away from imported goods and services.”

In other words, our manufacturing base had been so denuded of skills over the past decade that the desired rebalancing of the economy away from consumption will take longer than originally thought. Perhaps more worrying has been the failure of business to invest. Britain’s businesses are sitting on a cash pile of £71bn, the Ernst & Young ITEM Club has pointed out, and need to funnel that into the economy.
Britain’s export-led recovery is under way, but export growth has not even been as fast as in Germany or France - countries which have not enjoyed the benefit of a falling currency. It appears that Britain is more competitive in its existing export industries than previously but that it has so far failed to diversify into new ones. That will take investment, and time.
Until then, our companies will continue to import inflation – due to the weak pound. Business surveys have reported the scale of input inflation in recent months, and the Bank remarked worryingly in the minutes: “Near-term developments in inflation were also a source of concern to the extent that businesses were finding it easier than might have been expected to pass on cost increases.”
Far from just being a temporary blip due to sky-high oil, rising prices may be more malign than thought. Puzzling, indeed.

Better to raise interest rates now and avoid the panic rush later

Although numerous loud voices of late have been insisting that an increase in interest rates would be a mistake, a rise remains inevitable.

The three members of the MPC who have been voting for a rate rise, continue to vote for a rate rise despite recent wobbles in the economy and uncertainty abroad, caused by Japan and the Middle East. Photo: GETTY

A more doveish sounding set of minutes yesterday from the Monetary Policy Committee (MPC) doesn't change that. In fact very little, if anything, has happened of late to change the UK economy's inherent weakness to inflationary pressures. Our economic Achilles' heel is getting worse.

The economy's bumpy road to recovery continues unchanged with some quarters better than others. High street demand is getting weaker, as evidenced by several profits warnings from retailers, but that won't be enough to significantly dampen overall inflationary pressures.

A weaker pound has boosted exports by making them cheaper but continues to suck in increasingly expensive imports.

The MPC said it was "puzzling" that import growth had remained so robust, despite the pound's devaluation. But we stopped making most of what we're consuming a long time ago (as the MPC postulated in its minutes) which is one of the flaws in the structure of our economy that lays us open to imported inflation.

It's a reminder of why rebalancing the economy away from financial services is important, not just to give us a more diversified and therefore more robust economic base but also to insulate us from cost pressures from abroad.

But that process will take a long time and certainly won't help bring our immediate inflation problem under control.
Significantly, three members of the MPC who have been voting for a rate rise, continue to vote for a rate rise despite recent wobbles in the economy and uncertainty abroad, caused by Japan and the Middle East.
A persistent belief of the doves is that the economy carries a wide margin of spare capacity (unemployment) which will dampen wage growth and cool inflation. But this spare capacity is unlikely to be as meaningful as the academic economists assume.
An increasing proportion of the unemployed do not possess the requisite abilities to join the ranks of the employed without expensive remedial training by reluctant employers. Companies are fishing in an increasingly small pool of employable candidates, meaning wage inflation may not be as dormant as some experts assume. Immigrant workers appear to be helping dampen wages for the moment but relying on this as a permanent source of cheap labour is risky from a political point of view.
Global demand for commodities such as energy and food continue on their upward trend. Which brings the debate back to timing. Rates could have risen this month without causing economic ruin and if they rise next month or in three months it's largely academic.
Far more important is starting the process with small increases that re-establish the MPC's inflation-fighting credibility, and avoid the need for larger, knee jerk rises later that will smack of panic and ironically have less effect than starting a calm and controlled process of monetary tightening now.

damian.reece@telegraph.co.uk

Three major refineries stop supply of oil to PSO

ISLAMABAD: With the circular debt issue still unresolved, three major refineries have stopped oil supplies to Pakistan State Oil and two others have threatened to do the same if their dues are not cleared.

The PSO sent on Wednesday an “SOS” to the prime minister`s adviser on petroleum and ministers for finance and water and power for immediate payment of Rs60 billion to avert a shortage of petroleum products in the country.
In his last communication to the federal government, PSO`s outgoing managing director Irfan Qureshi said: “Attock Refinery Limited, National Refinery Limited and Byco have already discontinued supplies to PSO while Parco and Pakistan Refinery Limited have expressed their inability to continue supplies because of financial constraints. This will ultimately lead to severe shortage of POL products in the country.”
The refineries have taken the extreme step because of PSO`s inability to clear about Rs100 billion dues. The PSO`s own receivables from power sector and the government of Pakistan on account of price differential claims reached Rs181 billion on April 20.
The country`s largest fuel supplier said that from Feb 1 it had supplied oil worth Rs78 billion to the power sector but received only Rs45 billion. The remaining Rs33 billion and the opening balance of Rs148 billion on Feb 1 have left the PSO in dire straits. It has already defaulted on its tax obligations and is on the verge of international default on Rs39 billion in 21 days.
The PSO said it immediately needed Rs60 billion to avoid default on international payments and to clear its dues to tax authorities and local refineries.
Last week, the fuel supplier had expressed its inability to import furnace oil for power generation.
“The circular debt issue has now reached a point where the PSO expresses its inability to be able to continue its furnace oil imports from May onwards.
“With no financial limit available and all our bank borrowing limits exhausted, we have no option, but to suspend import of fuel oil from May 15, 2011 to avoid any default and create a bad image of Pakistan in the international community.”
The government plans to issue term finance certificates of Rs130 billion to the local banks, but no concrete step has been taken because of the absence of the finance minister and finance secretary who have been in Washington for talks with the International Monetary Fund and other lenders.
Because of water and gas shortages, power companies are already resorting to more than five hours of loadshedding which could escalate if furnace oil supplies are affected.

Nepra allows KESC to raise tariff

KARACHI: The National Electric Power Regulatory Authority has allowed the Karachi Electric Supply Company to raise its tariff by Rs1.80 for quarterly adjustment for Oct-Dec 2010 and 85 paisa per unit for fuel adjustment for Jan 2011 while giving its verdict on KESC petitions.

In both the determinations, Maqbool Ahmad Khawaja, a Nepra member, recorded his dissenting note on the plea that the KESC was not utilising full capacity of power generation from its available plants.
Both the Nepra`s determinations mentioned: “Pursuant to the orders of honorable High Court of Sindh, Karachi, passed on writ petition No. 1380 of 2009 titled the Law Foundation and 16 others Vs Nepra and 9 others on 25.06.2010, the Fuel Adjustment Charges (FAC) of KESC shall not be passed on to the consumers till final orders are passed in the petition.”
According to Nepra`s registrar Syed Safeer Hussain, application of both the tariff increase decisions will be subject to notification by the Ministry of Water and Power.
“In order to allow adjustment in KESCL`s tariff for the aforesaid cost variation for the current quarter, the Authority has decided to allow a uniform increase in the consumer-end tariff for all consumer categories by Paisa 180 per kWh except for life-line consumers consuming up to 50 units per month. The revised schedule of tariff will be applicable from January 01, 2011 to March 31, 2011,” said Nepra in its determination dated April 19 on the KESC petition for quarterly adjustment in tariff from October to December of last year.
The KESC determination dated April 19 on a petition for monthly fuel adjustment surcharge in tariff for January 2011 said: “In order to allow the KESCL for variation in fuel cost of its own generation as well as power purchased from external sources for the month of January 2011, the Authority has therefore decided to pass on Ps. 84.891/kWh to consumers of KESCL as fuel surcharge adjustment.
“The paisa per kWh, rounded off after taking into account its effect on the consumption of lifeline consumers, to be charged by KESCL in the prospective billing month of April 2011 from each consumer works out to be Ps. 85/kWh.”

Govt raises Rs232bn from banks

KARACHI: The government on Wednesday raised a staggering sum of Rs232 billion from the banking system reflecting its increased dependence on borrowed money while the eagerness of the banks to invest in the security papers was also visible.
The State Bank report showed that the banks were willing to invest in treasury bills more than the accepted amount while the cut-off yield was almost the same.
The banks offered a total bids worth Rs352 billion reflecting enough liquidity in the banking system but it also reflected that banks were not taking pain to make advances to the private sector, which is the real force behind the growth of any economy.
The government has been under tremendous pressure from the IMF to stop borrowing from the State Bank because it inflates the economy and deteriorates the investment environment.
However, the government has now been making extensive borrowing from the scheduled banks offering risk-free return of up to 13.8 per cent.
This return is enough to keep the banking sector profitable in an economy failing to grow. The bank profits have been rising every year giving false picture of the economy. While the ‘unproductive’ cash flow towards the government is unable to generate economic activity, it also drastically curtailed opportunity for the private sector to enter into new business or expand its already existing business.

The State Bank reported on Wednesday that the private sector’s total borrowing from the scheduled banks was just Rs177 billion while the government’s borrowing soared to Rs317 billion during first nine months of this fiscal year.The auction of T-bills showed that the banks were investing more in the T-bills for six-month tenure reflecting the investors’ belief that policy interest rates would remain stable or fall in the coming months.

Earlier, the banks have been investing in three-month papers to avoid losses in case of further increase in the discount rate, which looks stable now.
According to auction results, the banks invested Rs168 billion for 6-months (13.62 per cent) Rs47 billion for 12 months (13.86 per cent) and Rs16.9 billion (13.25 per cent).
Despite severe cuts in the development expenditure the government is still facing threat of widening of the fiscal deficit as it could not improve revenue generation.

Dollar falls on upbeat stock markets

DollarsTOKYO: The dollar was sold against other major currencies in Asia on Thursday as upbeat stock markets gave investors a renewed appetite for risk, dealers said.

The greenback eased to 82.28 yen in Tokyo morning trade from 82.54 in New York late Wednesday.

The euro rose to $1.4574 from 1.4519. The single European currency fetched 119.90 yen against 119.83.

"The dollar is broadly under selling pressure," said Tohru Sasaki, strategist at JPMorgan Chase Bank in Tokyo.

"Investors' risk appetite is increasing on the back of brisk gains in stock markets amid growing expectation for economic recovery," Sasaki said.

"Investors are selling the dollar and the yen to finance investment" in riskier assets with higher returns.

US and European stocks soared Wednesday, with the Dow in New York closing near three-year highs, on strong earnings reports that beat Wall Street expectations, particularly in the technology sector.

The benchmark Nikkei stock index in Tokyo finished the morning session Thursday up 0.58 percent.

Against riskier assets, the dollar hit a 31-month low of 1,080.50 South Korean won, against 1,082.20 on Wednesday, and plunged to a 13-year low against the Malaysian ringgit, fetching 3.0080 from Wednesday's 3.0140.

The lingering US debt problem was also weighing on the dollar following Standard & Poor's warning on Monday it may downgrade US debt, dealers said.

"The market's focus is on the US debt problem, giving an additional blow to the greenback," Sasaki said.

Meanwhile, a smooth bond auction in Spain helped ease worries about the euro-zone debt problem, dealers said. Spain has been caught up in renewed fears over sovereign debt levels, propelled by Portugal requesting a bailout April 6.

PalmOilKUALA LUMPUR: The following factors are likely to influence Malaysian palm oil futures and other vegetable oil markets on Thursday. Exports of Malaysian palm oil products for April 1-20 fell 13 percent to 638,666 tonnes from 734,897 tonnes shipped during March 1-20, cargo surveyor Societe Generale de Surveillance said on Wednesday. Exports of Malaysian palm oil products for April 1-20 fell 15 percent to 612,342 tonnes from 719,302 tonnes shipped during March 1-20, cargo surveyor Intertek Testing Services said on Wednesday. Malaysian palm oil futures rose more than 1 percent on Wednesday as traders booked positions on firmer overseas markets, despite key exports data showing weakening demand. Soybean prices retreated from early highs but retained some of their gains and closed 1.2 percent higher on Wednesday as worries subsided that stalled corn seeding would shift more US acreage to soybean cultivation. Brent oil jumped 2 percent to near $124 a barrel on Wednesday as US crude oil inventories fell for the first time in seven weeks and the dollar weakened sharply, fueling Oil up in Asian trade, boosted by US equities Monday at 0230 GMT & 0630 GMT,

Oil FieldSINGAPORE: Oil was up in Asian trade Thursday, boosted by a stronger close on Wall Street overnight, analysts said.

New York's main contract, light sweet crude for delivery in June, rose 53 cents to $111.98 a barrel, while Brent North Sea crude for June gained 38 cents to $124.23.

"The US stock market was up very well yesterday, and we're seeing a rebounding in the oil market (after losses earlier in the week)," said John Vautrain, a Singapore-based analyst at Purvin & Gertz energy consultancy.

Prices were also lifted by hopes of increased demand from Japan as the world's third biggest economy starts to rebuild from last month's devastating quake and tsunami disasters.

"Japan needs more oil to make power in the absence of nuclear power," said Vautrain.

Crude prices had closed higher Wednesday in New York after an unexpected drop in US petroleum reserves and a sharply weaker dollar, which makes dollar-priced commodities cheaper for other currency holders.

The US Department of Energy reported Wednesday that crude oil reserves fell by 2.3 million barrels to 357.0 million barrels in the week ending April 15, contrary to analysts' predictions of a rise after the previous six straight weeks of increases that added nearly 13 million barrels to reserves.

Gasoline stocks fell for a second week running by 1.6 million barrels. And stocks of distillates -- including diesel and heating fuel -- unexpectedly fell, by 148.3 million barrels.

Total petroleum reserves fell by 6.7 million barrels last week in the United States, the world's biggest oil-consumer.

Palm futures seen gaining strength on higher soy, crude

PalmOilKUALA LUMPUR: The following factors are likely to influence Malaysian palm oil futures and other vegetable oil markets on Thursday. Exports of Malaysian palm oil products for April 1-20 fell 13 percent to 638,666 tonnes from 734,897 tonnes shipped during March 1-20, cargo surveyor Societe Generale de Surveillance said on Wednesday. Exports of Malaysian palm oil products for April 1-20 fell 15 percent to 612,342 tonnes from 719,302 tonnes shipped during March 1-20, cargo surveyor Intertek Testing Services said on Wednesday. Malaysian palm oil futures rose more than 1 percent on Wednesday as traders booked positions on firmer overseas markets, despite key exports data showing weakening demand. Soybean prices retreated from early highs but retained some of their gains and closed 1.2 percent higher on Wednesday as worries subsided that stalled corn seeding would shift more US acreage to soybean cultivation.  Brent oil jumped 2 percent to near $124 a barrel on Wednesday as US crude oil inventories fell for the first time in seven weeks and the dollar weakened sharply, fueling investor appetite for riskier assets. Gold hit another record high above $1,500 an ounce and oil rose to nearly $124 a barrel on Wednesday, as a weaker dollar fed risk appetite among investors Major stock markets rose sharply on Wednesday after strong corporate earnings in both the United States and Europe, while gold jumped to record highs above $1,500 an ounce in a broad commodities rally. Cargo surveyor Intertek Testing Services and Societe Generale de Surveillance to unveil Malaysian palm oil products export data for the period of April 1-25 on Monday at 0230 GMT & 0630 GMT, respectively.

China intends to invest in Thar coal project

Syed-Qaim-Ali-ShahKARACHI: Sindh Chief Minister Syed Qaim Ali Shah on Wednesday held a meeting with seven-member Chinese delegation here at the CM House.

Shah welcomed the Chinese delegation on behalf of the Sindh Government, Sindh Cabinet and people of the province.

He said that Pakistan and Peoples Republic of China have friendly and old relations which were strengthened during the visit of former Prime Minister Shaheed Zulfikar Ali Bhutto.

He added that the Prime Minister of China during his visit to Pakistan had expressed that his country wants to invest in Pakistan particularly in energy sector.

China is a very advanced country and has achieved remarkable development and progress in various sectors, and Pakistan intends to avail the facilities from those achievements, he said.

Chairman of state owned China Godian Group Ms Renaiquin, in her discussion informed that their group is engaged in Mining and Power sector based with coal power, solar energy, wind energy and also in petro-chemicals.

She said that their group was generating 88,000 MW of power in China and intends to invest in Thar coal and all other projects under infrastructure.

The Chinese group informed that they will prepare detailed proposal and the same will be sent to the Sindh Government for further negotiations.

Advisor to C.M. Sindh for Investments Zubair Motiwala said that Pakistan has always treated China as trust worthy and hoped that the Chinese Guodian Group will fully participate in development process of Thar coal and energy project.

He added that the project is commercially viable and the Chinese group can also utilise sources of solar energy and wind energy together with coal gasification for power generation.

Sindh Secretary for Thar Coal and Energy Department Aijaz Ali Khan in his detailed briefing informed that there is an estimated 860 billion tonnes of coal reserve in the world which includes bituminous and anthracite 405 billion tonnes, sub-bituminous 260 billion tonnes and lignite 195 billion tonnes.

He said that there is coal reserve of 186.560 billion tonnes in Sindh, 235 million tonnes in Punjab, 217 million tonnes in Balochistan, 90 million tonnes in Khyber Pakhtunkhwa and 9- million tonnes is Azad Kashmir.

Aijaz Ali Khan also pointed to the socio-economic impact of load-shedding and said that Pakistan is facing acute energy shortages leading to socio-economic costs of load shedding estimated at $ 37 billion between 2007 and 2012 while loss of Rs 219 billion to industrial sector alone during 2008 in Pakistan.

He said that the vision for Thar coal is to develop it as a source of power generation for energy and economic security of the country and as a Hub of petro chemical industry while as per goal, at least 10,000 MW power will be generated by 2020.

The meeting was also attended by Advisor to C.M. for Investment Zubair Motiwala, Secretary to C.M. Alamuddin Bullo, Secretary Investment Sindh M. Younis Dagha, Asad Ali Shah, and others.

Goldman cuts stake in South Korea's Hana

GoldmanSachsSEOUL: Goldman Sachs has disposed of part of its stake in South Korea's Hana Financial Group through a $297.9 million block sale, documents showed Thursday.

The US-based firm sold 7.5 million shares at 43,000 won ($39.79) each, according to a term sheet seen by Dow Jones Newswires. The price represents a 6.5 discount on Wednesday's closing price.

The sale cuts Goldman's stake in South Korea's fourth-largest financial holding company in terms of assets to 4.46 percent from 7.56 percent.

The country's National Pension Service is now Hana's largest shareholder, with 5.1 percent as of the end of last year.

Goldman's action follows the sale by Singapore state-owned investment firm Temasek Holdings of its entire 9.6 percent stake in Hana last October for 680.86 billion won.

A Hana official quoted by Dow Jones said Goldman would remain a key strategic shareholder.

Hana Financial is awaiting regulatory approval to take over a controlling stake in fifth-largest bank Korea Exchange Bank from US-based buyout fund Lone Star Funds.

Japan in focus in Nokia Q1

HELSINKI: Nokia investors concerned about dwindling market share are anxious for better news on the tie-up with Microsoft and details of cost cuts when the the handset maker posts quarterly figures on Thursday.

Nokia is expected to report a 29 percent fall in earnings per share as nimbler Asian rivals eat into its dominant position in cheaper phones and it continues to lose out in more expensive smartphones to Apple and others. To turn around its smartphone fortunes, Nokia's new Chief Executive Stephen Elop in February unveiled a deal to start using Microsoft software instead of its own Symbian platform.

Investors are awaiting details on the cost savings stemming from the switch.

"Broader knowledge of what the agreement contains would reduce the uncertainty relating to the share and would thus support the share price," said Pohjola analyst Hannu Rauhala.

Nokia shares have dropped some 30 percent following the Microsoft deal as investors doubt the wisdom of the new hardware-centric strategy.

Nokia said the deal would enable it to cut a significant number of jobs. The final deal between the two is expected to be signed this month.

Finnish unions have said the firm will cut thousands of jobs in its home country alone, with analysts pointing to possible annual savings of 1 billion euros ($1.4 billion).

The underlying operating profit margin at Nokia's phone unit, a key metric for the group, is expected to fall to 8.6 percent from 11.3 percent in the previous quarter, hurt by market share losses and price cuts of its key models.

Analysts say that, despite its bigger bargaining power, Nokia is likely to be among the phone makers worst hit by the disruption to supplies from last month's devastating Japanese earthquake.

It makes 450 million phones a year, which means quick and big changes in component supply are difficult.

Nokia warned in March it would have shortages of some of its phones, but said the impact on earnings would be limited.

Nokia's smaller rival Sony Ericsson said this week there were shortages of displays, batteries, camera modules and some printed circuit boards due to the quake.

Zimbabwe rewinds its musical technology

Diamond Studios in Zimbabwe is operating one of the few commercial music cassette production facilities in the world.

Many people from the younger generation, who listen to music on an MP3 player, probably have no idea what a music cassette is.
Seen by consumers as unreliable and inconvenient, with poor sound quality, cassettes began a dip into obscurity, followed shortly afterwards by vinyl records, in the 1990s.
But the humble cassette is still alive and well in parts of southern Africa. And in Harare, Diamond Studios has opened to serve the demand.
Financial advantage
It has installed a machine that produces cassettes, and has contracts with several leading artists, from both Zimbabwe and Botswana.
There are three stages in the process of producing a cassette.

• A computer copies the master recording of the music to reels of cassette tape, which go into a duplicator

• A machine winds the tape into empty cassette shells
• The name of the album is printed onto the shells

John Muroyi, the marketing executive of the studios, says the production cost of a cassette is 65 US cents, whereas for a compact disc (CD) it would be $1.15 (£1).

“Start Quote

I have had some of my cassettes for more than 10 years and I am still playing them. So for durability it is better for me to have a cassette than a CD”

End Quote Record shop customer

The wholesale price for a cassette is $2 and for a CD it is $4, which means the consumer ends up paying about $7 for a CD and $5 dollars for a cassette.

And 60% of Diamond Studios' customers choose cassettes over CDs.
Robust format
"Cassettes are still going strong because they are more durable than CDs," says Mr Muroyi.
In the Diamond Studios' music shop in Harare's city centre, a middle-aged customer agrees with him.
Apart from the fact that he cannot afford to buy original recordings on CD, he is critical about how easily they can be damaged.
"Children play with the CDs and they can so easily get scratched," he says.
"I have had some of my cassettes for more than 10 years and I am still playing them. So for durability it is better for me to have a cassette than a CD."

The music of Thomas Mapfumo has been banned by the government but is still widely available

Rural market
The shelves in the record shop have a display of cassettes sitting proudly alongside CDs.
The number of people buying them proves that there is still a significant market for cassettes.
However, it is hard to determine the size of the overall market in a country where there is much copyright piracy. And those Zimbabweans who do buy music tend to gravitate towards the illegal copies of CDs sold on the streets.
The biggest market for cassettes is normally found outside the towns.
"Most of the people in rural areas still have old audio cassette players, while even the new radios being manufactured incorporate a cassette player," Mr Muroyi says.
"And most of the old Japanese cars which are being imported into Zimbabwe have cassette players in them."

“Start Quote

People will still be buying cassettes for another 20 years”

End Quote John Muroyi Diamond Studios

Fortunately for Mr Muroyi, there is also a big market outside of Zimbabwe.

"Botswana is still using cassettes," he says, "and we have a significant trade with that country."
Replacement problem
Mr Muroyi is confident that Diamond Studios' investment in the cassette plant will pay off - but with the cassette rapidly becoming extinct in most parts of the world, his main problem is accessing resources.
"It is very difficult for us at the moment, especially getting hold of the raw materials for the cassettes," he says.
"The raw materials are imported from China - the only country making them, while a company in South Africa is distributing them."
He is also faced with a potentially serious problem with the machinery because it is becoming increasingly difficult, with such an outdated technology, to find spare parts.
"People think there is no market for cassettes - but there is for us," Mr Muroyi says, "and people will still be buying cassettes for another 20 years."

Mongolia targets global mining role as investments soar

For centuries the Gobi Desert has been regarded as a place to avoid.

Its harsh landscape of barren plains, freezing winters and scorching summers has kept human habitation to small number of nomadic camel breeders eking out a solitary existence.
But with the recent discoveries of copper, gold and coal, the era of isolation is rapidly coming to an end.
The Gobi is now seeing a flood of geologists, miners, investors and speculators, all in search of the enormous mineral wealth lying below its desolate surface.
"Mongolia has finally arrived on the global mining scene," investment banker Bold Baatar recently told a delegation of coal mining executives attending a conference in the capital Ulan Bator.
"Over the next five to 10 years we are going to produce a world class mining industry that will rival Chile or Brazil."
Broadening horizons
Until recently, Mongolia's nascent mining industry had been based on artisanal gold mining, small-scale oil joint ventures with China and a 50-year-old copper mine built by the Soviets.
But a tidal wave of bigger deals is transforming the entire industry.

“Start Quote

We are reducing bureaucracy, building up mining-related infrastructure and striving to ensure transparency and international standards”

End Quote Altanhuyag Norov Deputy Prime Minister, Mongolia

Canada-based Ivanhoe Mines is currently building a $5bn (£3bn) mine, with production set to start within 18 months.

The Oyu Tolgoi deposit has the potential to become one of the world's top three copper producing mines and could single-handedly boost Mongolia's gross domestic product (GDP) by one third.
But despite the magnitude of the deal, Oyu Tolgoi has fallen out of the headlines as the government is moving onto equally spectacular mining projects.
Teed up next is Tavan Tolgoi, a high-grade coal deposit with six billion tonnes of reserves.
The deposit is rich in coking coal, a necessary element in the production of steel, convenient for Mongolia as the world's largest steel industry lies just across the border in China.
The Chinese market is the obvious one - but in order to diversify its clients, the government is pursuing a plan to build a 1,000km (621-mile) rail link to Russia, where the coal can be sent along the Trans-Siberian railway to Far East ports, providing Mongolian coal with access to Japan, Korea and Taiwan.
And the supply chain is lining up to fill in other gaps created by Mongolia's basic infrastructure.
Power plants, coal washing plants and oil refineries are planned.

An increase in mining activity is likely to boost the Mongolian economy in the coming years

Banking, transport and service industries are all just waking up to the potential.
"Mongolia lags behind in many areas," Deputy Prime Minister Altanhuyag Norov told the conference delegates.
"But the government is striving to offer a favourable investment environment. We are reducing bureaucracy, building up mining-related infrastructure and striving to ensure transparency and international standards."
Reaping rewards
Some of the world's biggest mining companies are courting the Mongolian government to get a piece of the action at Tavan Tolgoi.
A tender process will determine which company has the right to join the state-owned Erdenes Tavan Tolgoi (ETT), which holds the mining license.
Peabody Energy, Xstrata and Vale are a few of the mining companies still in the fray.
Billions are needed to construct the mine so plans are under way to sell shares of ETT on the open market.
Average Mongolians could also reap benefits from the initial public offering of the shares as the government has promised every citizen 536 shares of common stock in the mining company.
If successful, the dividends could lift thousands of Mongolians out of abject poverty.
"There is no question that GDP will double in five years and triple in 10 years," says Bold Baatar, a one-time Wall Street banker who recently returned to Mongolia to explore new opportunities here.
Baatar predicts that in a decade per capita income could exceed $10,000, well above the current per capita GDP of about $3,200.
Road bumps
But as a developing country with entrenched graft and an inexperienced democracy, there are clear obstacles ahead.
Many fear the nation's wealth will remain in the hands of a small class of the mega-rich.
"Whether we end up as Norway or Nigeria remains an open question," says Mr Bold, referring to oil-based wealth distribution schemes developed by the Norwegian government.
The key, says Mr Bold, is to avoid rash decisions.
"It's not a slam dunk - but I think over the long term as long as we are not rushing to develop these resources, I think the country will be prosperous."

Counting the cost of the BP disaster one year on

A year after the explosion on the Deepwater Horizon the cost of the human and environmental disaster is still being counted.

For BP, the company at the heart of the disaster, the effects have had a deep and widespread impact.
On the eve of the explosion BP's chairman Carl-Henric Svanberg had a letter for shareholders.
It was all about "a revitalised BP", with the company trumpeting better finances than its rivals, but also big improvements in, of all things, its safety record.
No one has celebrated BP's safety record since.
This year's annual letter to shareholders had Mr Svanberg strike a very different tone.
He said that "after a very troubled and demanding 12 months BP is a changed company" .

Continue reading the main story

“Start Quote

The Gulf of Mexico is the most profitable part of the world for BP”

End Quote Fadel Gheit Oppenheimer

In fact the company has become synonymous with everything that is dangerous about oil exploration.

And that is just the beginning of the damage to its reputation.
Immediate harm
Never mind the mud. In America, BP's name sometimes seems to have been dragged through each one of the four to five million barrels of oil that were spilled into the ocean, live on TV.
Such was the immediate harm to its reputation that many began to question whether the company could survive in America in its existing form.
A former cabinet secretary called for BP's US operations to be nationalised.

BP's chief executive Tony Hayward was forced to resign in the aftermath of the disaster

Congress passed legislation restricting BP's business here and many assumed that a sale of its assets in the Gulf of Mexico was on the cards.
So what will this eventually cost?
Well, like the effects of the oil spill itself, there are different ways of counting.
One might start with the loss of one boss.
Before the spill BP's CEO, Tony Hayward, was getting plaudits for BP's financial strength and its improved safety record.
'Smile and bonhomie'
The Wall Street Journal wrote articles contrasting the "well-tanned" Tony Hayward who "welcomed press... with a smile and bonhomie" with his more uptight counterparts at other, less profitable oil companies.

The oil spill has had a huge impact on communities around the Gulf of Mexico

By the time Deepwater Horizon had finished dumping its toxic load onto America's shores Mr Hayward was the most vilified business leader anyone could remember.
His eventual resignation was no surprise.
Then there's the financial cost - BP's accounts for 2010 put aside $41bn to pay for the spill, two and a half times more than BP's entire profit in 2009.
While it's true it might cover all the costs, it very well might not with the meter is still running, particularly on the legal fees.
One of the biggest costs could be the fine levied by the Environmental Protection Agency as the EPA sets its fines on a per-barrel basis.
So BP will be fined between $1100 and $4300 for every barrel that was spilled.
Once everyone's agreed on how many barrels that was then the fine will be set according to how negligent BP is deemed to have been.
In short, if the company is found to have been grossly negligent and something like 4.5 million was spilled, that's a fine of over $19bn.
Endless bills?
Another year's profit lost?

Despite this disaster, the Gulf of Mexico will remain a vital source of oil for the US in the future

Admittedly that's a worst-case scenario for the biggest single civil case, but with hundreds of other cases behind that, the company itself admits it has no useful way of forecasting the total legal bill.
So with a shattered reputation, a lost CEO and costs in the untold billions, it's hardly surprising BP describes itself as a changed company.
But in certain crucial respects BP has not changed, because it never did get out of the US oil exploration business.
The breathless talk of leaving the US from last summer has gone, BP executives always knew as they fought the gruelling PR battles of 2010 that the Gulf of Mexico is just too lucrative to leave.
As oil analyst Fadel Gheit from Oppenheimer says: "The Gulf of Mexico is the most profitable part of the world for BP."
Mr Gheit offers a simplified calculation to illustrate this.
He says that if, for the sake of round numbers, you assume BP sells oil at $100 per barrel, a barrel from the Gulf can be broken down as follows:
BP pays $20 of the $100 to the US government in royalties - i.e. for the right to extract the oil in the first place.
It then spends something like $25 getting the oil out of the ground (in truth, Mr Gheit says, BP is much more efficient than this.)
The US government then taxes BP's earnings at a rate of 34%.
All of which means that BP is left with a little over $36 dollars of profit for every $100 barrel it gets from the Gulf of Mexico.
Contrast that with Russia where BP is so energetically trying to secure its future.
Mr Gheit says that if BP gets $15 a barrel from Russian oil it is "extremely lucky".
Bitter arguments
It's also clear from such arithmetic that billions of dollars are at stake for the US government.

The extent of the oil spill's effect on wildlife in the region are still not yet clear

Given the bitter arguments over spending and debt, the US government needs all the billions it can find.
Then there's the other pressing economic problem of unemployment.
A jobless rate of 8.8% does not give politicians any reason to turn down an industry that's ready to hire thousands, in the region that suffered the worst hardship.
The government has every incentive for the big oil companies to get back to work in the Gulf.
Drilling permits there are being issued again, albeit slowly. BP hasn't been granted any yet, but analysts expect it will be by the end of 2011.
So fast forward another year and the "changed" company that is BP may be in a strikingly similar position to the one it was in on the eve of the Deepwater Horizon explosion.
It will doubtless once more be emphasising the safety of its operations.
The most lucrative part of its business may well be in the Gulf of Mexico.
Thousands of people on the Gulf Coast may rely on it for their livelihoods, and it will again provide a vital source of revenue and energy for the US.
In most vital respects, as a business, it turns out that BP might not be that changed by the Deepwater Horizon disaster.
That doesn't belittle the scale of the human and environmental catastrophe so much as it reflects the size and importance of BP.

Online poker industry in turmoil after US indictments

US authorities have unveiled an indictment against the owners of three of the world's biggest poker websites, throwing the young industry into turmoil.

Criminal and civil charges filed in New York have forced online poker sites PokerStars (based in the Isle of Man) and Full Tilt Poker (based in Alderney, in the Channel Islands), as well as Canada-based Absolute Poker, to stop doing business with Americans.
It is the latest upheaval for the industry, which over the last decade has grown from nothing into one that rakes in an estimated $5bn (£3.25bn) each year and is regulated in vastly different ways in countries around the world.
America is the biggest market, with up to a million online players. Gambling laws vary from state to state, but in 2006, the US federal government attempted to put the brakes on online poker with the Unlawful Internet Gambling Enforcement Act (UIGEA).
The UIGEA was meant to halt money transfers to online gaming sites, and several big poker sites, wary of running foul of the law, pulled out of the American market. However the three companies named in the indictment continued to welcome US-based customers.
Federal prosecutors in New York are seeking at least $3bn (£1.8bn) in civil money laundering penalties. If convicted, the 11 men named in the indictment face possible prison time and huge fines.
As a result of this latest scandal, the share prices of competing poker sites, which have already turned down business from US players, have experienced a significant jump.
'Elaborate' fraud
Prosecutors accuse the companies and alleged co-conspirators of concocting dozens of fake corporations - purportedly selling items such as clothing, golf clubs and pet food - to collect money from US players.

“Start Quote

These defendants concocted an elaborate criminal fraud scheme...to assure the continued flow of billions in illegal gambling profits”

End Quote Preet Bharara Manhattan US attorney

After American financial institutions got wise to the trick, the indictment alleges, the companies decided to change strategy.

Prosecutors say they managed to persuade several small local banks that were facing financial difficulties to process poker-related transactions, by promising fees and fresh investment cash.
In one case, the indictment says, PokerStars and Full Tilt Poker took a 30% stake in a Utah bank, SunFirst, and used it to process $200m (£123m) in poker funds.
"These defendants concocted an elaborate criminal fraud scheme, alternately tricking some U.S. banks and effectively bribing others to assure the continued flow of billions in illegal gambling profits," Manhattan US attorney Preet Bharara said in a statement.
"Moreover, as we allege, in their zeal to circumvent the gambling laws, the defendants also engaged in massive money laundering and bank fraud."
A court order seized poker company funds in 76 bank accounts in 14 countries. The companies also had their .com domain names seized - the usual images of chips, cards and superstar poker players replaced by blunt legal statements and the FBI logo.
On Wednesday, the prosecutors announced that they would be handing back control of the .com domain names to PokerStars and Full Tilt Poker so that the companies could refund their US customers.
Negative attention
Aaron Todd, a senior editor for industry news site Casino City Times, said the poker companies were caught off-guard by the indictment despite years of openly challenging the US law.

Poker fans have dubbed the FBI's action "Black Friday" for the industry

"If you're a big player in an industry as big as poker, with laws in place designed to stop what you're doing, it's not that surprising that the authorities are going after you," Mr Todd said.
He says that estimates suggest a large proportion of players on the British sites actually come from the US - perhaps up to half of all players on the Alderney-based Full Tilt poker site.
Mr Todd says the indictments will hit the incomes of big-name American players who reap endorsement money on top of their poker winnings, but also lesser-known "grinders" - low stakes players who squeeze out smaller profits over time.
"At this point, a lot of players have lost two main places they play.
"There are some sites that are still open for US play, but people will be wary of playing on those sites, as they too could close to American players or face similar legal action."
Last year, 5 live Investigates reported on a ring of Chinese poker players who colluded to rip off players on the Isle of Man-based PokerStars site. PokerStars refunded $2.1m (£1.3m) to customers across the world after the scam was uncovered.
That case was not an isolated one. The company had previously refunded $80,000 (£52,000) to players who unwittingly played against poker "bots" - automatic card-playing software programmes.
And in 2007 Absolute Poker refunded $1.6m (£985,000) after it was alleged that a company insider cheated customers.
'Black Friday'
However, this latest indictment, unsealed last week, could cost the companies far more than cheating scandals ever did.

“Start Quote

This is a huge deal and it has absolutely shifted the landscape of online poker forever.”

End Quote Aaron Todd Casino City Times

PokerStars and Full Tilt Poker blocked US customers after the FBI's action on what poker players are calling "Black Friday" on blogs and in online forums.

However, players elsewhere in the world have continued to use the online card rooms after the company websites were moved to .eu domains, outside the reach of American authorities.
An e-mail sent to PokerStars players said: "It is business as usual for all players outside the USA …you can rest assured that player balances are safe."
In a statement released after the indictments were unsealed, Full Tilt said it was "saddened" by the charges.
The company added: "Full Tilt Poker believe online poker is legal and has always has been committed to preserving the integrity of the game and abiding by the law."
Absolute Poker did not respond to the BBC's inquiries.
Aaron Todd of Casino City Times says the indictments could potentially lead to more political pressure to relax online gambling laws in America.
"This is a huge deal and it has absolutely shifted the landscape of online poker forever."

Tech upstarts reveal the flaws in healthcare IT

WATCH: A premature baby receives treatment in the high-tech neonatology ward of the Centre Hospitalier de Villefrance Sur Saone

It is something that patients in many countries are acutely aware of: while our personal lives are effortlessly kept in sync by the internet and mobile devices, the management of our healthcare can seem stuck in the dark ages.

Hard-copy patient records are easily neglected, lost, or delayed in transit between busy clinicians. And even when an individual hospital or clinic uses computers, these may not be connected to the internet or to any other part of the wider health service.
Some countries, like Hong Kong, have succeeded in putting patient records online. But others have struggled: most notoriously, the UK has spent £12bn of public funds on centralising its IT, but the program is years behind schedule and has had to be scaled back.
Worse than a can of tomatoes

Healthcare Heartbeat uses smartphones instead of bleepers to help doctors keep track of their patients

"We've worked with hard-pressed hospitals that have spent a fortune on IT and yet uniformly the staff don't even know what's going on with individual patients", says Gregg Webb, chief executive of Service Heartbeat.
His company sells communication technology to hospitals in the UK and US. The system uses smartphones as a replacement for old-fashioned beepers.
"We couldn't believe it at first. Compared to the way a supermarket chain manages the its stock, healthcare is way behind. Cans of tomatoes are being treated better than patients."
Mr Webb's company is one of a new breed that takes a non-traditional approach to healthcare IT. Instead of putting patient records at the heart of the system, these companies emphasise the need for timely, easy communication between health professionals in any location.

This approach sidesteps the most expensive and complicated obstacle: that of digitising millions of existing patient records and putting the information into a mammoth central database.

And when you remove the need for billion-dollar IT projects, which inevitably favour billion-dollar IT companies, then suddenly much smaller enterprises are in with a chance of getting their products into hospitals.
'It's not about the money'
"You can spend as much as you want on IT and still have nothing to show for it", says Dr James Britton, founder and financier of a small company called MeddServe.
"We can only invest a tiny amount compared to other companies, and certainly compared to the British government. But it's not actually about the money."

This privately-run Indian hospital has tested a cloud-based IT system, called Meddserve

Meddserve has developed a cloud-based hospital management system, giving doctors, administrators and patients the ability to share information via a website, regardless of where they are.
Meddserve has just completed a trial of the online service at a 2000-bed super hospital in Chennai, South India.
"It's a relatively poor part of the world. But now patients there are getting a more efficient, more high-tech service than patients in the UK", says Mr Britton.
But so far, MeddServe has only got its product into hospitals in the developing world, which have the benefit of a 'fresh start' - they have no incumbent software and no central government policies getting in the way.
And this highlights a potential downside of hospitals going it alone with new technology products like Meddserve and Healthcare Heartbeat: if hospitals adopt different products ad hoc, then it may be harder to integrate them in future.
A fragmented future
A hint of these difficulties is already being seen in southern France, where hospitals have adopted different systems and are only now trying to share information.
Doctors and nurses at the Centre Hospitalier Villefranche-sur-Saone, near Lyon, walk around with laptops rather than clipboards, and they are proud that their hospital has made the leap online.
"The nurses have got everything on computer - heartrate, breathing, video, the patient's file," says Dr Phillip Rebaud.
"This allows a completely coherent set of data, which helps us to refine our treatment of the patient."

Doctors, nurses and parents can all keep a remote eye on neonatology's young patients

But although the hospital is wired-up internally, it's Health Information Manager, Jean-Francois Botton, admits that there are problems "achieving wider connectivity".
In an ideal world, all hospitals might integrate via a single online platform. But things have gone way past that point, and now Mr Botton has to cope with many systems working in parallel.
Villefranche-sur-Saone uses Orange Healthcare's "Connected Hospital" technology for some of its IT applications - such as allowing the parents of premature babies to log in and watch their babies via the web.
It uses a separate system, Crystal-Net, designed by the University of Grenoble, to connect its various departments and administrators. In turn, Crystal-Net has been bolted onto a regional network that connects with other hospitals around Lyon. And finally, the whole lot has had to be tacked onto a national network, Dossier Médical Personnel, that is being rolled out this year.
But while this sort of fragmentation might sound like a headache for Mr Botton, he strongly believes that his hospital did the right thing in choosing its own technology.
"Governments try to concentrate everything into a single central system - but it is too complicated and it makes data vulnerable.
"Our system is based on communication, rather than concentration. Every hospital goes its own way, but we still manage to share information. It's just easier to make that happen."

$16 million Malaysia email plan sparks big online protest

KUALA LUMPUR: Thousands of Malaysians are mocking a 50 million ringgit ($16 million) plan to offer government-linked email accounts to all adults, saying most Internet users already have free email service .

The project has become an embarrassment for Prime Minister Najib Razak . He announced it Tuesday as part of efforts to boost government efficiency, but Malaysians ridiculed it as a publicity stunt and a waste of funds.

The plan aims to provide 16 million Malaysians with free email accounts for online communication between them and government agencies.

More than 20,000 people had joined a Facebook group by Wednesday opposing the initiative.

Najib insists a private company will spearhead the project without using taxpayers' money.

Do not bank only on company medical insurance

PREETI KULKARNI, ET BUREAU

Group health insurance covers provided by employers are a great source of comfort for millions of employees. Such schemes typically pick up the hospital bills of employees and their family members. However,their utility value ranks the highest when it comes to the employees' elderly parents or inlaws . Generally, many health insurers dither from extending covers to senior citizens, as the likelihood of individual claims is quite high in this category. Even when they do, many senior citizens find the premiums to be beyond reasonable limits. Little wonder then, that employees treat employers' group health cover as a godsend.

However, last year, some companies and health insurers decided to impose ceilings on the benefits in order to control mounting losses in their health portfolios. In most cases, this took the form of introduction of the co-pay clause. A few organisations completely excluded the cover for parents, while some others transferred the cost (premium for parents' cover) to employees. "Last year, some companies had capped the benefits provided to employees' in terms of parental coverage and the trend continues this year as well," says Sanjay Datta, head, health insurance, ICICI Lombard. Adds Damien Marmion, CEO, Max Bupa: "Organisations are looking at managing their costs better. So, one of the ways for insurers to take care of both ends is to maintain the same costs, but revise their service offering.

Sensex rises on firm world stocks, good monsoon forecast

MUMBAI: Indian markets pushed 1.8 percent higher on Wednesday, boosted by firm world equities and a normal monsoon forecast, but the companies named in a telecoms graft scandal plunged in huge volumes after a court rejected bail pleas of their executives.
A court rejected bail applications of five business executives from Reliance Anil Dhirubhai Ambani Group, the Indian joint ventures of Norway's Telenor and the UAE's Etisalat . The accused will go to jail over the sale of telecoms licences at below-market prices.

Unitech , DB Realty and Reliance Communications dropped between 1.5 percent and 5.5 percent.

"We want to keep away from these stocks. In my opinion, we are getting into a more robust compliance environment," said Rakesh Rawal, head of private wealth management at Anand Rathi.

Rawal said he does not hold these three stocks for his clients and would not consider buying them right now.

The 30-share BSE index gained 1.83 percent or 349.15 points to 19,470.98, with 27 components closing in the green.

"Until the earnings season gets over, the focus will be more on company-specific moves as and when results trickle in," said Rawal.

"The RBI (Reserve Bank of India) policy is the next big event to watch out for," he said, referring to the central bank's annual policy review on May 3.

Gainers were 2.8 times the number of losers on the National Stock Exchange (NSE), in a volume of 739 million, higher than the 90-day average volume of 654 million shares.

Foreign funds have invested nearly $3 billion in equities since the start of March, betting on the country's robust growth, driving the benchmark index 9.2 percent higher.

For the year to date, the index is still down 5.1 percent. The 50-share NSE index or Nifty gained 1.9 percent to 5,851.65 points.

Financials led the rally on expectations that Tuesday's forecast of normal monsoon rains this year will strengthen the prospects of farm output in a country that depends largely on the annual monsoon for irrigation.

Bumper crops usually put more money in the hands of rural India, where most of the people live, and boosts consumer spending on a wide range goods from automobiles to television sets. Higher farm output could also ease inflation pressures in Asia's third-largest economy.

Top lender State Bank of India firmed 2.3 percent, ahead of a press briefing scheduled after market hours, in which the bank said it will make a "significant announcement."

Leading private lenders ICICI Bank and HDFC Bank rose 1.9 percent and 1.4 percent respectively. HCL Technologies , the country's No. 4 software services firm, jumped as much as 10.4 percent to 526 rupees -- its highest in more than a decade -- after posting a better-than-expected 33 percent rise in March quarter net profit.