Profit E-paper 28th January, 2012

Monday, 28 January, 2013

SYEd ImRaN ahmEd

FOR decades, we have taken forgranted a steady supply of natu-ral gas. As population grew and

new discoveries became few and far be-tween, clarion call, especially from gasutilities, for conserving this non-renew-able natural resource became more fre-quent and louder.

Consider this: While Pakistan pro-duces 4 billion cubic feet per day of nat-ural gas, 3.2 bcfd is pumped into SSGC’sand SNGPL’s systems while the rest isdirectly supplied by the Exploration andProduction (E&P) Companies to powerand fertilizer sectors. Both the utilitiesin turn supply gas to consumers catego-rized as power (bulk), industries andcaptive power, domestic, commercialand CNG. Since the mid-2000s, de-mand has been outstripping supply andthe gap has been widening. Supply-de-mand gap widens with the advent ofwinter season. Against the total demandof 1,350 mmcfd, total supply is only1,150 mmcfd which leads to a low pres-sure situation. This sordid state of af-fairs is further compounded by the factthat incidence of Unaccounted for Gas(UFG) or gas losses, caused by line leak-ages, measurement and billing errorsand theft, has increased drastically,making the two utilities vulnerable toshrinking bottomline.

Significantly, there is a huge varia-tion in demand for natural gas duringsummer and winter seasons. Becausethe use of gas appliances increases sub-stantially, the demand for gas inBalochistan, Punjab and KhyberPakhtunkhwa increases four times morein winters than in summers. Balochis-tan consumes 25 to 35 mmcfd gas insummers. In winters, gas needs shootup to 130 to 150 mmcfd. Similarly whencold wave sweeps through Karachi, gasdemand in the country’s biggest gasload centre swells by 50 mmcfd.

SSGC attempts to alleviate the in-convenience caused to the domesticcustomers by slashing gas to fertilizer,industrial and CNG sector in order toaddress low pressure problems and im-prove line pack situation to ensure anuninterrupted supply.

Space heating and hot water re-quirements lead to a major increase indemand for gas during winters. Gasutilities attempt to meet this burgeon-ing demand by increasing gas pressureproportionately. Ideally this step

should augment the supply situationconsiderably. However, age old distri-bution networks and a seemingly un-stoppable population growth actuallyresult in increasing leakages and evenmore gas shortages. Invariably duringthe winters, consumers can be heardcomplaining of low pressure and littleor no gas.

Irrespective of the seasons, SSGC,being an increasingly customer-con-scious utility, is mindful of the direneed to conserve natural gas. The Com-pany is cognizant of the fact that unlessit does not involve its biggest stake-holder i.e. the customers, in its elabo-rate energy conservation plans, thesituation will not turn for the better.This explains why in the recent years,the Company has intensified its mass

education and awareness campaigns re-lated to natural gas conservation.

It would have been easy for theCompany to run its conservation cam-paigns through its Communication De-partment by making pompousstatements ‘instructing’ the customersto conserve natural gas. However, thatwould not have been a very pragmaticapproach. SSGC’s media campaign,therefore, stresses on giving instant tipsto the customer to ensure that they usegas not just sensibly but do it in such away that they do not risk their lives inthe process.

Through such campaigns, SSGCclearly sends multiple messages, simplybecause their outcomes are inter-re-lated. Interestingly while the underly-ing motive is conservation, SSGC’s

campaigns also expect its customers tobe a little more proactive by reportingleakages and theft in their localities.

With the advent of winter season,use of gas appliances increases mani-fold. However, little negligence canprove to be extremely costly. On aver-age, 20 deaths are reported every yearespecially in Balochistan where gasheaters are perhaps the only feasiblespace heating tool. SSGC’s campaignsstress on sensible use of gas geyserswhich consume 4 times more gas ascompared to stoves. Moreover, mar-kets are inundated with sub-standardlocal and international gas heaterswhich are said to burn only 60% gaswhile causing 40% to be leaked, besidesputting lives to extreme risk. Hence thecompany’s stress on using PSQCA-ap-proved appliances and fittings.

SSGC’s current Conservation Cam-paign, having started in late January2012 is running side by side with an-other campaign called ‘Manage yourgas bills in winter’ campaign or simply‘Winter Campaign’ which runs fromNovember to March every year. A care-fully worked out print and electronicmedia plan ensures maximum cover-age. Since SSGC’s franchise areas areSindh and Balochistan, widely read andwatched national and regional newspa-pers and TV channels are targeted.Timing is all important. For instance,running winter campaigns before theadvent of say, winter season is impor-tant since in colder areas, chillyweather begins much earlier than inwarmer regions. Our advertisementsare further reinforced by distribution ofcommunication material includingfliers and posters to the customers vis-iting the Customer Facilitation Centreslocated across the length and breadth ofSindh and Balochistan.

A wise man once said, ‘We neverknow the worth of water till the well isdry,’ When the gap in demand andsupply had not widened, we con-sumed gas almost with a recklessabandon. In a scenario character-ized by depleting reserves, SSGC’smessage could not be clearer, ‘If wedon’t conserve on gas, we will actu-ally run out of it.’ It is a horrifyingprospect but one that we the stake-holders can reverse with a practical andsensible approach.

The writer works for the CorporateCommunication Department SSGC

Conserve gas before we run out of it!

BEIJING

AGENCIES

A television ad in China forNestlé’s (NESN) Pure Lifebrand of bottled water showschildren making unhappy faces

after tasting water. One child pours hisglass into a fish tank instead of drinkingit; his face lights up when his mother of-fers Pure Life instead. Water quality is abig concern for Chinese consumers.They’re turning to bottled water as a saferalternative, and that’s bolstering Nestlé’sbottled-water sales. “You don’t dare drinkthe tap water in China,” says Hope Lee, aEuromonitor International analyst inLondon. Sales are also up because “somany people are moving from rural areasto work in the cities,” where bottled wateris more common, she says.

The Swiss company, which Euromon-itor says is the world’s No. 3 producer ofbottled water, has seen growth in its busi-ness in parts of the West slow becausebudget-conscious shoppers are turning totap water and environment-consciousconsumers are concerned about thegrowing number of plastic bottles enter-ing the waste stream. In China, where in-dustrial and agricultural expansion havepolluted water supplies, environmentalconcerns of a different kind are driving

Nestlé’s growth. Sales of bottled water inthe country will climb to $16 billion by2017, up from $9 billion in 2012 and $1billion in 2000, according to Euromoni-tor. The market in Western Europe willremain flat at $21 billion, while NorthAmerica will increase 18 percent by 2017,to $26 billion, Euromonitor predicts.

Nestlé’s water business in Chinaclimbed 27 percent last year, reports Eu-romonitor. The Swiss company wasChina’s ninth-biggest seller of water in2012, with 1.7 percent of the market byvalue, up from 0.7 percent in 2009. Localrival Hangzhou Wahaha Group is theleader with 14 percent. Says Gilles Duc,the head of Nestlé Waters in China,“China is a key priority for us. The marketis increasing a lot, and we want to partic-ipate in that growth.”

Nestlé owns more than 60 waterbrands, including Vittel, Poland Spring,and Pure Life, the world’s best-sellinglabel. In Europe, the U.S., and Australia,Nestlé’s share of the water business by re-tail sales fell to about 10 percent in 2011from more than 12 percent in 2006, saysEuromonitor. While Nestlé continues torely on developed countries for the bulkof its water business, “it recognizes thatemerging markets are high-growth andprofitable and that it has to increase itspresence,” says Richard Withagen, an an-

alyst at SNS Securities in Amsterdam.About half of the water Nestlé sells in

China is delivered in five-gallon jugs. InShanghai, Nestlé has opened 12 waterstores where customers can phone in or-ders. Tucked between a pharmacy and abeauty salon, a store in the affluent Luji-azui district sells 400 to 500 containersdaily. On the busy street outside, workersstack about two dozen bottles onto elec-tric tricycles for delivery to homes and of-fices. “People would have considered itOK to just boil tap water a few years ago,but consumption is changing because ofenvironmental concerns,” Duc says.About 70 percent of China’s lakes andrivers have been polluted by power plantsand chemical, paper, and textile factories,reports Worldwatch Institute, an envi-ronmental research group. In Shanghai,the city’s Water Authority says “almostall” surface water has been polluted anddoesn’t meet drinking standards.

Even water that’s been purified attreatment plants is often recontaminateden route to homes. About half of tapwater suppliers provide substandardwater because deteriorating pipes harborcontaminants, sediment, and bacteria,according to China’s Ministry of Housingand Urban-Rural Development.

Nestlé, which has been selling waterin China since the 1980s, has opened

two water facilities there since 1998.One close to Beijing extracts water froma spring; another near Shanghai taps anaquifer. The Swiss company also boughtYunnan Dashan Drinks, a naturalspring water producer in southwestChina, in 2010.

One key to Nestlé’s success: middle-of-the-pack pricing. Nestlé chargesabout 16 yuan ($2.57) for a five-galloncontainer of purified water and 18 yuan

for natural mineral water. A container ofCoca-Cola’s (KO) Ice Dew water brandcosts 16 yuan, and Nongfu Springcharges 20 yuan. “Chinese consumerstend not to be very confident about somelocal products in terms of quality andsafety,” Duc says. “We want consumersto understand that for the same pricethey get European technology and Nestléquality, and if that’s something theyvalue, they go for our brand.”

China’s unsafe water is Nestlé’s opportunity

Apple loses

world’s most

valuable

company crownNEW YORK

APP

Apple shares extended their losses Fri-day, ending a miserable week for theCalifornia tech giant as it surrenderedits position as the world's biggest com-pany based on market value.Apple ended down 2.36 percent at$439.88, giving it a market capitaliza-tion of $413 billion, while oil giantExxonMobil rose 0.36 percent to$91.68 with a market cap of $418 bil-lion to edge into first place.Apple first overtook ExxonMobil in Au-gust 2011 as the most valuable com-pany in the world based on the value ofits stock.A year later, Apple dethroned longtimerival Microsoft as the most valuablecompany in history based on the valueof its stock at $622 billion.But the company took a bruising thisweek after a gloomy forecast accompa-nying its record quarterly profit an-nouncement prompted pessimism overthe tech giant's slowing growth trajec-tory. Apple's profit was $13.1 billion on rev-enue of $54.5 billion in the fiscal quar-ter that ended on December 29, withsales of iPhones andiPads settingquarterly highs.

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BusinessMonday, 28 January, 2013

WaShINGTON

AGENCIES

M ORE than $114 billion exitedthe biggest US banks thismonth, and nobody’s quitesure why. The Federal Re-

serve releases data on the assets and li-abilities of commercial banks everyFriday. The most current figures, cover-ing the first full week of 2013, show thelargest one-week withdrawals since theSept. 11, 2001, attacks. Even when sea-sonally adjusted, the level drops to

$52.8 billion—still the third-highestamount on record, and one for whichbank experts and analysts were reluc-tant to give a definitive explanation.The most obvious culprit is the expira-tion of the Transaction Account Guar-antee program, the extraordinaryfederal effort to shore up the country’snon-gigantic banks during the 2008 fi-nancial crisis. Big banks were consid-ered “too big to fail,” while smaller oneswere vulnerable to runs. The TAG pro-gram backstopped their deposit basesby temporarily offering unlimited in-

surance on money kept in non-interest-bearing accounts. That guaranteeended on Dec. 31, so a decrease in de-posits would be expected first thing inJanuary. But hold on: The Fed datashow $114 billion leaving the 25 biggestbanks—about 2 percent of their depositbase. Only $26.9 billion left all the oth-ers, equivalent to 0.9 percent of theirdeposit base. Experts had predictedthat the end of TAG would hurt the na-tion’s small banks because the big onesare still considered too big to fail. “Ithink [customers] are going to go back

to the mega banks,” the head of a re-gional bank in Bethesda, Md., told TheWashington Post in December.“They’ve been assured by the govern-ment that mega banks are too big tofail. It’s a horrible, bad, poorly-thought-out situation.” Small banksfearfully lobbied the Senate to extendTAG, with analysts telling the New YorkTimes that they expected $200 millionto $300 million—yes, with an m—tomove from affected accounts intomoney market funds or elsewhere. So ifthe missing $114 billion is not the result

of the TAG program expiration—or atleast not all related to TAG—what’sgoing on? Paul Miller, a bank analystwith FBR Capital Markets, cautionsagainst reading too much into the Fed’sweekly data. “It’s a noisy database,” hesays. Among large U.S. banks, therehave been movements of greater than$50 billion (not seasonally adjusted)during 107 different weeks since 2000.It’s not uncommon to see 11-figureswings—that is, tens of billions of dol-lars—from positive to negative, or vice-versa, one week to the next.

$114 billion withdrawn from big US banks

Foreign companiesin India to getrewards of royalty

NEW dELhI

AGENCIES

Some foreign companies workingin India are still making bigprofit even now when India isdesperate to attract capital tofund its big balance-of-paymentsgap, the red carpet it rolls out is alittle dusty. A year after rules were eased topermit foreign “single-brand” re-tailers to operate in India, Swe-den’s IKEA is still waiting for thego-ahead to sell Nordic comfortfood and furniture. India’s cabi-net has yet to make its mind upabout the flat-packed sort, itseems.The delay may become just an-other war story about foreign di-rect investment (FDI) in India. Inthe 1970s India chucked out IBMand Coca-Cola in a fit of nation-alist pique. In the late 1990s thealchemists at Enron met theirmatch in the subcontinent, losingbillions on a power plant em-broiled in a government spat. Re-cent acquisitions by foreigners,including those by Vodafone, aBritish mobile-telecoms firm,and Dai-ichi Sankyo, a Japanesedrugs firm, have done poorly.Yet just how representative arethese horror tales? The stock ofFDI in India is now quite big—some $220 billion, or 12% ofGDP, according to the ReserveBank of India (RBI), the centralbank. This includes everythingfrom research centres in Banga-lore to cement plants.

US braces for

'six strikes'

anti-piracy

programmeWaShINGTON

APP

A new voluntary systemaimed at rooting out onlinecopyright piracy using acontroversial "six strikes"system is set to be imple-mented by US Internetproviders soon, with theimpact unclear.The programme was cre-ated with the music andfilm industry and thelargest Internet firms, withsome prodding by US gov-ernment.The system had been set totake effect late last year butwas delayed until early2013 by the Center forCopyright Information, theentity created to managethe programme.Even though the programbecame known as "sixstrikes," backers say thename is misleading andthat it is not aimed at cut-ting off Internet access forpeople downloading pi-rated films or music.The center's director JillLesser said the program isnot "punitive.""We believe a voluntary,flexible programme will bethe best way to addressthis, and we think con-sumers will respond to it,"she told AFP.

Volvo set to be worldleader in heavy trucksSTOCKHOLM: Volvo Trucks says it expects to over-take Daimler as the world's leading producer of heavytrucks, after acquiring a 45 percent stake in Chineseauto manufacturer Dongfeng. Currently the world'sthird biggest producer behind Dongfeng and German-owned Daimler, the merger with its nearest rival will,Volvo believes, elevate it to the top spot. The Swedishcompany said in a statement Saturday that it had signedan agreement with Dongfeng Motor Group (DFG) to ac-quire 45 percent of its new subsidiary Dongfeng Com-mercial Vehicles (DFCV) that will include "the majorpart of DFG's mediumand heavy duty commercial vehi-cles business." The deal, worth 5.6 billion yuan ($900

million, 669 million euros), willallow Volvo to "become the world'slargest manufacturer of heavy-dutytrucks," the statement said. In2011 Volvo produced 180,000units, 6,000 fewer than Dongfeng,but a large part of the Chinesefirm's production will pass to the

new subsidiary. The deal should becompleted in the next 12 months, Volvo said. AGENCIES

daVOS

APP

What a difference a year makes! At thelast World Economic Forum in Davosthere were frantic secret meetings on sav-ing the euro and private straw polls onwhether the euro zone would break upand how soon Greece would be forcedout. Twelve months on, the euro's survivalis widely taken for granted by the policy-makers and business leaders attending

the annual forum, and the EU's top eco-nomic official has time to go skiing whilein the Swiss mountain resort. "I recall lastyear in 2012, Davos was full of uncer-tainty about the euro zone," EuropeanEconomic and Monetary Affairs . Com-missioner Olli Rehn said in an interview."Last year there was a very tense moodhere. This year I think we are seeing a sen-timent moving from stabilisation to re-covery, and that means I should get achance to do some cross-country skiing."

Britain's EU future elbows out euro woes at Davos

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