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The overall loss of Bangladesh Petroleum Corporation is likely to hit record high of Tk 4,500 crore this fiscal, if the current upward trend in fuel prices continues both in international and local market, the state-run corporation has estimated.
   The overall annual import bill of the corporation is also likely to touch $3 billion for the first time this fiscal with soaring prices of fuel oil in international market.
   The volatility of current oil price in international market is set to hit hard the corporation as the crude oil price, which has been hovering around $80-$85 per barrel, touched $90 per barrel on Friday, sources in the energy division said.
   The BPC mostly imports refined diesel and kerosene, the prices of which are usually $10 higher than that of crude oil. It imports around 38 lakh tonnes of fuel oils, including 18 lakh tonnes of diesel, 5 lakh tonnes of kerosene and 13 tonnes of crude oil.
   The corporation sent an estimate to the Energy Division last week that the corporation’s loss this fiscal was likely to be around Tk 4,500 crore, if the current upward trend in fuel price in international market continued and the prices of fuel oils in local market was not increased, they said.
   The annual loss of the petroleum corporation, mostly because of low selling price of fuel oils in local market, was around Tk 521 crore in 2002-2003, Tk 998 crore in 2003-2004, Tk 2,899 crore in 2004-2005, Tk 3,167 crore in 2005-2006 and around Tk 3,200 crore in 2006-2007.
   When contacted, the corporation’s chairman, Anwarul Karim, told New Age on Sunday that they estimated the loss based on the oil price in international market in the first week of October when crude oil price was around $83.
   ‘As the oil price has currently touched $90 mark, the BPC’s loss may be more than Tk 4,500 crore, if the upward trend continues,’ he said.
   Anwarul said with the current prices, the corporation’s import bill was likely to touch $3 billion this fiscal.
   The import bill of fuel oils including government taxes was around $2.5 billion last fiscal, sources in the division said.
   Because of soaring prices, the corporation’s loss in selling per litre of diesel and kerosene jumped to around Tk 15, they said.
   The crude oil price was between $60 and $64 per barrel in the international market when the government increased the prices of diesel and kerosene to Tk 40 from Tk 33 per litre in April.
   The division has already sought from finance ministry Tk 2,800 crore as subsidy in the first week of October for the loss the corporation is set to incur. But the latest estimate shows that BPC will need much more subsidy than the division has already sought, if the government doesn’t increase oil prices in local market.
   The government has refrained from taking a decision to increase diesel and kerosene prices because of soaring inflation, flood and increased prices of essential commodities.

Stock analysts have called for an immediate increase in the supply of quality issues to rein in the persistent surge in prices that was created by the injection of huge amounts of money since the start of the year.
   The average daily turnover on the Dhaka Stock Exchange now stands at an all-time high of Tk 2.5 billion, according to bourse data.
   The reasons behind the inflow of funds since January are various, but can be partially accounted for by banks and other financial institutions increasing their participation in order to further build their portfolios due to the low demand for credit among businessmen.
   Other factors are the merchant banks’ ongoing propensity for margin loans, despite caution from the SEC; savings certificate investors’ shift towards stocks; increased foreign investment, as well as interest from large and small retail investors.
   The result: a steady rally in prices. From October 1 to 18, the main DGEN or general index added 12.25 per cent, reaching 2860.56 points. The DGEN grew 17.71 per cent to reach 2548.18 in September from 2149.31 points in June.
   Salahuddin Ahmed Khan, chief executive of the DSE, linked the trend to a shortage of quality issues which drives investors to bet on the limited number of superior issues that exist in the banking, power and pharmaceutical sectors.
   ‘The supply of quality issues should be increased to absorb rising demand. The market suffers from a dearth of quality issues,’ said Salahuddin.
   ‘It is also an opportunity for entrepreneurs and the government to raise funds. However, progress so far in listing good new issues from the private sector is not encouraging,’ he added.
   According to DSE data, five issues are currently waiting to begin trading on the bourses, while nine issues are yet to get approval from the Securities and Exchange Commission.
   Two state-run petroleum marketing companies, Jamuna Oil and Meghna Petroleum, are expected to offload 30 percent of their total shares within one or two months, according to state-owned investment bank ICB.
   But the size of most of the companies, including Jamuna and Meghna, are still too small to absorb the level of demand.
   ‘Only an issue of the size of an Islami Bank bond is large enough,’ the DSE chief executive said.
   A portion of shares from the Titas Gas Transmission and Distribution Company and Bakhrabad Gas Systems Ltd is also expected to be sold through the market, said ICB managing director Ziaul Haque Khondker.
   ‘The surge in demand for shares could be met to some extent if Titas and Bakhrabad come to the market faster. But we should remember that the entry of good issues to the market also brings new investors,’ added Khondker.
   Mamun Rashid, from Citigroup Bangladesh said, ‘It’s a matter of concern that the prices of companies with weak fundamentals are rising due to the immense interest from investors.’
   ‘We should all work to address the supply constraints in quality issues immediately.’
   ‘I think regulators such as the Bangladesh Bank should ask banks not to sanction loans worth more than 100 percent of any company’s capital,’ he added.
   Faruq Ahmad Siddiqi, chairman of the SEC, is also concerned about the current trend, ‘The market is heated. It’s not rational if you consider the increases in price indices,’ he said.

A fact-finding European Union delegation visited a frozen shrimp export factory and a demonstration farm run by the Fisheries Department in Bagerhat on Sunday to examine the quality of exportable shrimps.
   The two members of the team — MC Mac E Boy and inspector Raj Patal — from the EU Food and Veterinary Mission visited the Rupsa Fish and Allied Processing Centre at Kathaltola under Fakirhat upazila and the demonstration farm at Radhaballab under Sadar upazila.
   They took a close look at the process of maintaining quality of the exportable food item, of which European Union countries are the main importers.
   Local Fisheries Department officials said shrimp is cultivated in 1.44 lakh hectares across the country, some 66,000 hectares in Bagerhat alone.
   The country produces 65,000 tons of shrimp annually, and nearly half the quantity, 27,886 tons, is produced in this south-western district along the coast of the Bay of Bengal.
   There are 46 modern shrimp-processing factories in Bagerhat, Khulna and Satkhira districts.
   ‘That’s why a big portion of the shrimps is exported from the Khulna region every year,’ said one source. The Bangladesh Frozen Foods Exports Association said the country earned Tk 3,500 crore by exporting quality shrimps in the 2006-07 fiscal year.
   The inspection team sent by the EU shrimp-importing countries would examine each and every activity, from shrimp production to its processing, and future of shrimp export from the country will largely depend on their reports, the sources said.

World Bank policymakers meet in Washington Sunday to anchor agriculture at the center of their agenda in a major shift aimed at lifting billions of people out of poverty.
   The new WB president, Robert Zoellick, has pledged to boost the institution’s lending to the farm sector after allowing it to decline in 1980s and 1990s.
   Zoellick vows the Bank will use an inclusive approach to fight poverty, hunger and disease, and this week unveiled a controversial proposal to allow private-sector business to help finance aid to poor countries.
   ‘There is much more we can do to connect the ‘bottom billion’ to the rest of the world,’ Zoellick said Saturday, after attending a meeting of the International Monetary Fund steering committee. The twin institutions are holding their annual meetings in Washington through Monday.
   ‘Inclusive development means greater voice for those most affected by our decisions,’ said the former US trade chief and Goldman Sachs executive, who took office in July after his predecessor was forced to resign in a favoritism scandal.
   Globalisation has created opportunities but ‘has not embraced all,’ he said. ‘Too many countries, especially in Africa, are expected to fall short of meeting many of the Millennium Development Goals’ of halving the percentage of people living on less than a dollar a day by 2015.
   The institution’s annual World Development Report, released this week, acknowledged that Bank lending to agriculture had declined from 1980 to 2000 but said its support for rural development had begun to pick up four years ago and would increase further. Commitments this year are expected to come to 3.1 billion dollars.
   Nevertheless, while 75 per cent of the world’s poor live in rural areas ‘a mere 4.0 per cent of official development assistance goes to agriculture in developing countries,’ the report found.
   In sub-Saharan Africa furthermore, public spending on farming amounts to only 4.0 per cent of total government expenditure.
   An improvement in a country’s gross domestic product that is agriculture-driven is four times more effective in reducing poverty than is GDP growth originating in other sectors, the report said.
   ‘We need to give agriculture more prominence across the board,’ Zoellick said in presenting the report Thursday.
   ‘At the global level, countries must deliver on vital reforms such as cutting distorting subsidies and opening markets, while civil society groups, especially farmer organizations, need more say in setting the agricultural agenda.’
   ActionAid, which is spearheading a campaign to stamp out hunger, denounced the Bank report for perpetuating the ‘same market-led approach, which for the last 25 years has been a massive failure even by the bank’s own standards.’
   The ambitious agenda under Zoellick comes as the 185-nation Bank campaigns for contributions among members to rebuild the coffers of the International Development Association, the Bank’s main lender to countries whose populations live on less than two dollars per day, most of them in sub-Saharan Africa.
   The Bank itself recently pledged to more than double its contribution to the 15th IDA campaign, to 3.5 billion dollars.
   Zoellick noted Saturday that about 70 per cent of the poor live in India, China and the middle-income countries served by the International Bank for Reconstruction and Development, the Bank’s public financing arm.
   ‘In order to meet the great needs of emerging-market countries, I have asked our board to simplify and cut our prices so we can expand our lending to support development and growth,’ he said.
   Bank policymakers are also expected to discuss an innovative strategy to involve private-sector business in Bank financing.
   Zoellick said he did not see any ‘particular problem’ with getting board approval for the project, but for some the plan raises conflict of interest concerns.
   ‘The private sector getting involved in the replenishment of IDA raises serious questions,’ said Sebastien Fourmy, a spokesman of Oxfam International, a nongovernmental organisation.
   The World Bank is ‘a public institution accountable to citizens,’ not to shareholders, said Fourmy.

Iran, OPEC’s number-two exporter, hit out Saturday at the recent hike in oil prices, saying real prices were far lower than the 90 dollars a barrel level of last week.
   ‘Oil is still cheap,’ acting oil minister Gholam Hossein Nozari said in an interview with the Iran newspaper.
   ‘The sweet taste of oil is not tangible because it is very far from the range that is expected by us (Iran and OPEC),’ Nozari said.
   Nozari argued that calculations based on current inflation rates and depreciation of the dollar’s value as well as high costs of oil and gas projects puts oil’s true price at less than 50 dollars a barrel.
   ‘Today’s prices even at the level of 90 dollars a barrel in the market are not effective because the real price of oil is currently about 47 dollars per barrel as profit,’ he said.
   Nozari also said political issues were casting a ‘shadow of threat’ on the flow of investment into the oil-producing countries, especially Iraq, Nigeria and Venezuela.
   ‘If the owners of financial sources do not make a meaningful investment in the oil-rich countries, oil prices will be uncontrollable in the near future,’ he warned.
   Oil prices ended lower Friday after striking a record high above 90 dollars in New York amid global supply jitters and lingering tensions between Turkey and crude producer Iraq.
   New York’s key oil futures contract, light sweet crude for delivery in November, closed down 87 cents at 88.60 dollars a barrel. But the contract had earlier surged to a record 90.07 dollars. That beat the previous high of 90.02 dollars set late Thursday.
   In London, Brent North Sea crude for December delivery settled 81 cents lower at 83.79 dollars after hitting a record 84.88 dollars on Thursday.

India’s recent economic performance has been impressive but it needs to reduce its high public debt and undertake structural reforms to further deregulate its economy to have a sustainable and more broad-based growth, a senior IMF official has said.
   ‘India has done remarkably well in recent years. But it faces a number of challenges. It has still high public debt, although it’s made impressive progress in reducing its fiscal deficit in the last few years. It’s recently been facing some inflation pressures, although they’ve taken steps to tighten monetary policy and those appear to have been reasonably effective so far,’ IMF director Asia Pacific Department, David Burton said.
   ‘And of course, above all, there’s a range of structural reforms that India needs to take to further deregulate and open its economy so that it can have more broad-based growth.’

Bangladesh and Laos should increase their bilateral trade aiming at building a long-term economic relationship, said M Shahjahan Khan, acting president of the Dhaka Chamber of Commerce and Industry, on Sunday.
   The volume of trade between the two Asian countries so far has been far short of the potential, Shahjahan said. For instance, in fiscal year 2006-07, Bangladesh’s exports to the Lao People’s Democratic Republic amounted to only $0.62 million and imports merely $0.70 million, he mentioned during a meeting with a visiting Lao delegation led by Phonsavath Boupha, first vice foreign minister of Lao, at a city hotel.
   Shahjahan suggested establishing chamber-to-chamber contact to know more about trade, investment other bilateral business potentials. Laos, like Bangladesh, has a well-established ready-made garment sector and the countries can collaborate more in this sector, he said.
   At the meeting, Boupha said Dhaka and Vientiane could undertake joint ventures in prospective sectors like the RMG, pharmaceuticals, ceramics, light engineering, leather, cement, and tourism and agri-based industries.
   He too emphasised close contacts between the business chambers of the two countries and sending trade delegations to strengthen their economic cooperation.
   DCCI vice president Md Alauddin Malik, directors Shekil Chowdhury and Haider Ahmed Khan, and high officials attended the meeting, among others.

From a nightclub on wheels to a car shaped like a hat, many of the whacky vehicles unveiled at the Tokyo Motor Show over the years have been consigned to the annals of auto history.
   When Toyota wheeled out a futuristic Prius prototype in 1995 powered by a combination of petrol and electricity, many believed it would go the same way.

The IMF, under pressure to move with the times, backed reforms Saturday to give low-income countries a stronger voice in its decision-making and defended its response to recent financial market upheaval.
   Policymakers from the International Monetary Fund also bowed to insistence from member countries that the Fund shore up its shaky finances, pledging to cut costs and boost efficiency.
   The commitment came in a final statement issued after a meeting here of the IMF’s steering committee, held as the 63-year Fund was being pressed to accord greater representation to currently under-represented non-Western countries.
   The committee said reforming the IMF ‘should enhance the representation of dynamic economies, many of which are emerging-market economies, whose weight and role in the global economy have increased.’
   Such countries should see their voting share increased, the committee said, adding that ‘the voice and representation’ of poor countries would also be strengthened.
   It said all elements for an internal reform package, including an increase in the quotas that determine a member’s voting rights, should be in place by the time of its next meeting in April 2008.
   The IMF in September took an initial step toward overhauling its management structure by raising the quotas for four rising economies, China, South Korea, Mexico and Turkey.
   The Fund is now in the midst of a second round of reforms, which was under discussion in Washington.
   While the action taken Saturday was hailed by some IMF officials as a clear advance, outgoing IMF managing director Rodrgio Rato cautioned that ‘we are in an interim moment.’
   ‘Today there has not been any final agreement,’ he said, adding that details of the reform still needed to be thrashed out.
   Brazilian finance minister Guido Mantega earlier in the day implied that the IMF had in fact been slow to act on reform, attributing the hold-up to ‘resistance to change on the part of developed countries, which are over-represented in terms of voting power.’
   The distribution of quotas is determined according to complex mathematical formulas. Moves to adjust the share-out have been the subject of sometimes bitter debate, with certain industrialised nations reluctant to give ground to emerging-market members.
   The Fund also came in for criticism from the Group of 24 developing countries for what it said was the Fund’s failure to foresee the recent meltdown on financial markets, which erupted following a collapse of the US high-risk or subprime—mortgage market.
   The G24 said the IMF should perhaps spend as much time monitoring advanced economies, where the turbulence originated, as it does the economies of less developed countries.
   ‘Allow me to point out the irony of this situation,’ Mantega of Brazil said.
   ‘Countries that were references of good governance, of standards and codes for the financial systems, these are the very countries that are facing serious problems of financial fragility putting at risk the prosperity of the world economy,’ he said, referring to major industrialized nations such as the United States.
   ‘The Fund had little to say that was practical about this crisis,’ he said. ‘It has been excessively cautious in its recommendations. It justifies this caution by pointing to the unprecedented nature of the problems.’
   But Rato countered that the Fund last April was ‘already very clearly stating our worries about the subprime segment in the United States.’
   And at the Group of Eight summit in Germany in June, he said, he spoke in the name of the Fund and had made it clear the IMF was ‘worried about the complacency and the quality of some of the deals that were being done at the time in the markets.’
   The IMF, whose mission is to promote international financial stability, is also struggling with its own finances as many newly cash-rich countries repay debt, leaving it without critical interest payments.
   The current situation had sparked calls from several committee members, notably from the Group of Seven industrialised powers, for the Fund to streamline its finances.
   The committee said Saturday it ‘recognised’ the need for more predictable and stable sources of Fund income, notably from a reduction in administrative costs and greater management efficiency. It said ‘a new income model’ should be drafted for debate at its April meeting.

Brazilian finance minister Guido Mantega slammed the International Monetary Fund Saturday for having been lax in its handling of a US housing-related credit crisis that roiled global markets.
   ‘Allow me to point out the irony of this situation,’ Mantega told IMF policymakers at the opening of annual meetings here of the IMF and the World Bank.
   ‘Countries that were references of good governance, of standards and codes for the financial systems, these are the very countries that are facing serious problems of financial fragility putting at risk the prosperity of the world economy,’ he told the 24-member IMF steering committee, referring to major industrialized nations.
   The finance minister of the emerging Latin American powerhouse bluntly reproached the IMF for its stance during financial turmoil that ‘has its epicenter in the United States,’ by far the largest shareholder in the 185-nation IMF.
   ‘The Fund had little to say that was practical about this crisis,’ he said. ‘It has been excessively cautious in its recommendations. It justifies this caution by pointing to the unprecedented nature of the problems.’
   Mantega said the IMF ‘appears to be inadequately equipped to face such a situation.’
   The IMF managing director, Rodrigo Rato, rejected the accusation.
   The Fund last April was ‘already very clearly stating our worries about the subprime segment in the United States,’ Rato said.
   And at the Group of Eight summit in Germany in June, he said, he spoke in the name of the Fund and had made it clear the IMF was ‘worried about the complacency and the quality of some of the deals that were being done at the time in the markets.’
   The Group of 24 developing countries, which includes the rapidly expanding economies of Brazil, India and Nigeria, criticised the IMF Friday for failing to prevent the crisis in the US subprime sector, where loans were given homebuyers with poor credit histories.
   Amid the collapse last year of a years-long housing boom in the United States and rising interest rates, high-risk borrowers defaulted on their mortgages and thereby threatened billions of dollars’ worth of mortgage-backed securities.
   That in turn triggered a credit crunch, with banks unable to lend to one another.
   Financial markets are recovering, but the turmoil forced the IMF to slash its 2008 economic growth forecast this week to 4.8 per cent from 5.2 per cent.

WT0 head Pascal Lamy on Saturday warned that international negotiators now faced their last chance to reach a global trade deal and said they had just ‘a few weeks’ to agree on the outlines of an accord.
   ‘The hour of truth is very rapidly approaching the Doha trade round,’ Lamy told International Monetary Fund policymakers, referring to currently deadlocked talks to tear down trade barriers launched in the Qatari capital six years ago.
   The negotiations, held under the auspices of the World Trade Organisation, have foundered largely on demands by developing countries that their farm products be given greater access to markets in the industrialised world.
   Rich countries are in turn pressing developing nations to accept more of their industrial goods and services.
   Lamy said that ‘within the next few weeks’ WTO members had to ‘come to closure on the political deal to liberalise trade in agricultural and industrial products and trade in services.’
   ‘It is probably our last chance to move this round to a successful conclusion,’ Lamy told the 24-member IMF steering committee, appealing to members to ‘help political leaders rise above the many doubts and difficulties over details’ that have so far held up progress.
   Despite what he described as a daily flow of negative headlines about the Doha Round, Lamy said he had detected positive movement since his appearance before the committee in April.
   But in Geneva Friday, the chief negotiator guiding talks on farm trade, Crawford Falconer, said a negotiating drive launched last month had not bridged gaps in ‘a number of areas.’
   ‘I am looking for progress to be made,’ Falconer was quoted as saying, giving memmber states until November 2.
   ‘The prospect of imminent death focuses your mind wonderfully,’ he added.

It’s hard enough living on a pension of 500 dollars a month in Moscow. Now Moisei Kelmanovich has to cope with rising inflation and his faith in politicians is taking another hit.
   ‘Food prices have risen sharply, mainly on dairy and meat,’ said Kelmanovich, 87, as he shopped at a local market in central Moscow. ‘Only the price of matches hasn’t gone up.’
   Even President Vladimir Putin’s promise to fight inflation during a televised question and answer session with Russian citizens on Thursday failed to hearten Kelmanovich. ‘I don’t really believe him,’ he said.
   The Russian government has predicted inflation of 10 per cent this year, well above the previous estimate of eight percent, and some officials are expecting the final count could be even higher.
   Officials have blamed inflation on a number of factors, including rising global energy prices, higher prices for EU food exports, as well as inefficiencies in Russia’s own market, such as monopolies.
   ‘It is indeed a big problem in the Russian economy, as in the world economy as a whole.... This has not been a good year,’ said Alexei Savatyugin, a senior official from the finance ministry.
   It is also a problem that is beginning to weigh on the minds of Russians ahead of December parliamentary elections where Putin is set to dominate as the main candidate for the ruling United Russia party.
   ‘Inflation is worsening the mood of the people. I think it could affect the turnout. But measures have been taken and people have softened up,’ said Pavel Medvedev, a member of parliament from United Russia.
   The government has announced price-cutting measures, including increasing export tariffs for grain producers to force them to sell on the Russian market and lowering import duties on dairy products from Europe.
   The Russian government has also extracted a promise from major producers and distributors to impose a temporary freeze on the price of food staples amid reports that Russian pensioners have begun stockpiling.
   ‘This is a problem against which the government must fight. To move effectively we need to increase revenues for the population, particularly for pensioners,’ Putin said in his televised address on Thursday.
   But Andrei Nechayev, head of an investment holding called the Russian Financial Corporation and a member of the opposition Union of Rightist Forces party, said the government’s anti-inflation efforts would fail.
   ‘It won’t have any effect,’ Nechayev said at a roundtable discussion in Moscow on Friday. He emphasised that the government should instead fight monopolies and improve the business climate in order to boost supply.
   Moscow-based Alfa Bank said in a research note on Friday that government measures to control food prices would not work because of the large number of retailers and low incentives for local officials to control them.
   ‘Also, it is obvious that even if some measures are taken, they will be focused only on the short period of time before the presidential election’ in March 2008, the note said. ‘Thus, even if inflation can be kept down to 10 percent in 2007, as promised by government officials, it will not help to reduce inflationary expectations,’ the note added.
   Back at the Moscow market, Tatyana Spitskaya, 54, said she thought the government would succeed in stopping inflation. ‘If they don’t freeze the prices, people won’t believe in Putin and his government any more,’ she said.
   But 45-year Irina Vasilkova said she had ‘stopped believing’ in the promises of politicians. ‘They’ve only started talking about this problem now! They should have done something before. I’m in shock,’ she said.

Overseas fund flows into Indian equities will drop in the coming weeks, triggering near-term uncertainty, amid regulatory moves to restrict record capital flows, analysts say.
   The Indian regulator Tuesday issued a proposal to curb the use of participatory notes or P-Notes — which allow overseas investors to buy Indian shares anonymously.
   Spooked by the move, the benchmark Sensex plunged nearly 1,500 points or 7.86 per cent from its record close of 19,058.67 last Monday in just four days.
   Overseas funds have sold 125 million dollars’ worth of Indian stock since the announcement.
   The Securities and Exchange Board of India, or Sebi, is set to finalise the P-Note curbs at its board meeting on October 25.
   ‘Investor sentiment is likely to weaken considerably as an important source of potential inflows has likely been plugged,’ said Rajeev Malik, Asia economist with JP Morgan Chase, based in Singapore.
   India’s finance ministry, however, insists the restrictions are needed.
   ‘The whole intention is to moderate capital inflows, which have become copious. But we are not in favour of banning participatory notes,’ Indian finance minister P Chidambaram said Tuesday.
   At Friday’s close, the Sensex had risen 27.36 per cent for the year led by overseas fund flows of 17.57 billion dollars.
   Sebi now plans to clamp down on unregulated overseas investors, like hedge funds, from accessing Indian equities through offshore derivative instruments.
   Investments towards emerging markets, like India, surged after the US Federal Reserve cut rates last month, raising fears a potentially destabilising bubble is forming.
   It also led to the rupee surging to a nine-and-a-half year high of 39.26 against the dollar, making it more difficult for Indian exporters to stay competitive.
   ‘As of last week, India has drawn the largest share of inflows in the Asia pack (excluding Japan) — nearly half of the emerging market flows of 32.6 billion dollars—this year,’ says Sanket Desai, analyst with brokerage J M Financial.
   ‘The implementation of Sebi’s proposals, in this form, could have a significant adverse impact on near-term flows and also dampen sentiment of foreign investors towards Indian equities longer-term,’ analyst N. Krishnan of equity research Credit Lyonnais Securities said in a note to clients.
   Sebi data in August shows aggregate outstanding positions in P-Notes rose to 89 billion dollars, of which 29 billion dollars is in derivatives, from 8.1 billion dollars in March 2004.
   A substantial chunk of holdings of Indian equities through P-Notes will need to be wound down over an 18 month period, the Sebi proposal said. Sebi Chairman M Damodaran said India still wanted foreign investors.
   ‘We are not saying that foreign investors should not come in, but please come in through the front door,’ he said on television earlier this week.
   To allay concerns, Chidambaram, on a three-day US visit, met emerging market fund managers at an investor meet in New York on Thursday.
   Analysts urged Chidambaram to simplify cumbersome registration norms for overseas investors.

The head of the European Central Bank said Saturday the recent market crisis shifted turbulence away from emerging countries to rich ones, but its impact on credit would be ‘relatively contained.’
   ‘What has been notable about recent experience is that the epicenter of market turbulence has shifted from the emerging economies,’ the bank’s president Jean-Claude Trichet said at an International Finance Institute event.
   ‘This we saw during the ‘dot com bubble’ at the beginning of the decade and now, a financial market liquidity squeeze that simultaneously affected many advanced economies was triggered in late July.’
   ‘Given the relative strength of the underlying fundamentals — although pockets of vulnerability do exist ... the impact of the financial turbulence on the intermediation of credit is likely to be relatively contained,’ Trichet said however.
   World markets were hit hard by turbulence stemming from a meltdown in the US market for high-risk subprime mortgages in August.
   He added that hedge funds — widely seen as a destabilising factor for the economy due to their bearing on markets and perceived lack of transparency — actually played a role in calming the credit storm.
   ‘Many funds with solid financing structures and/or strategies geared towards distressed asset management are likely to have prospered from recent events, thereby smoothening volatility,’ he said.

NOC cuts petroleum supply
The authorities in Nepal have stopped the distribution of petroleum products so as to save on the precious commodity during the Dashain festival after India’s oil major IOC sharply cut supply because of outstanding dues in the last few months. Nepal Oil Corporation officials said it has stopped the supply of petroleum products for four days beginning from October 19. The decision to stop distribution comes at a time when most of the gas stations in Kathmandu are running dry. On Thursday, serpentine queues of vehicles could be seen at the gas stations of Nepal Police and the army. Supply of petroleum in the country has been erratic since last few months after the Indian Oil Corporation reduced supply citing the NOCs failure to clear the dues. The officials said the supply would be resumed from October 23 as the NOC has imported sufficient quantity from India for normal distribution after the Dashain festival. The monthly loss of NOC, which is the sole supplier of petroleum in Nepal, has reached Rs 38 crore. The Corporation has been demanding that the government either end subsidy on petroleum products or allow it to adjust the prices to balance the losses, the nepalnews online reported.
— PTI

IMF warns of
inflation risks
Global economic leaders warned of inflation risks in advanced countries on the eve of the first World Bank meetings since Robert Zoellick took charge of an institution shaken by internal divisions and scandal. The International Monetary Fund’s policy-setting committee on Saturday noted rising food and oil prices and other indications of inflation in urging finance ministers and central bankers to stay focused on achieving price stability as well as on smoothing global financial market turbulence. With meetings of the IMF and the Group of 7 industrialised countries over, attention turned to Sunday’s meeting of the IMF’s sister organisation, the World Bank, and its policy-setting committee. Zoellick, a former deputy secretary of state, trade representative and investment banker, took over from Paul Wolfowitz, a former defense secretary, who resigned in May in an ethics scandal. Zoellick has been trying to ‘calm the waters’ stirred by differences Wolfowitz had with some of the 185 member governments and the bank staff.
— AP