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Sudan says Qatar to deposit $1B in aid

KHARTOUM: Qatar will deposit $1 billion at Sudan’s central bank as part of an aid package, Khartoum said Wednesday, a move likely to worsen neighboring Egypt’s already tense relations with Doha.

The announcement by Sudanese Finance Minister Badr al-Din Mahmoud came at the end of a state visit to Khartoum by Qatari Emir Sheikh Tamim bin Hamad al-Thani.

Mahmoud, speaking to journalists at Khartoum airport, said Qatar also planned to invest in large agricultural and energy projects in Sudan, a country vital to Egyptian interests because of its location upstream on the river Nile.

Mahmoud said the deposit was the second part of an aid package but declined to give details of the first part.

In a written statement, Sheikh Tamim said his visit “comes to confirm the two countries’ desire for continued dialogue and coordination on issues of mutual interest.”

Egypt has accused Qatar of meddling in its internal affairs and supporting the Muslim Brotherhood, the Islamist movement that was ejected from power by the army last year after mass protests against President Mohammad Morsi’s rule.

 

Reuters

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Tunisia’s prime minister wants to fix ailing economy

TUNIS: Ahead of his Friday meeting with President Barack Obama, Tunisia’s interim prime minister says the government at last has a handle on extremism and the transition to democracy is back on track. Now, he says, it’s time to fix the faltering economy. In Washington, Mehdi Jomaa will be talking about security in North Africa but also how the United States can support the troubled finances of Tunisia – which kicked off the region-wide pro-democracy uprisings in 2011.

“The security situation in Tunisia is today much more under control,” Jomaa told the Associated Press in an interview. “ Tunisia has learned how to confront [the extremists] over the past three years and we have a security force that has organized itself and is well prepared to prevent new attacks.”

Jomaa, an engineer by training, was appointed in December to form a Cabinet of technocrats to guide the country to new elections.

Tunisia has a new constitution called the most progressive in the Arab world, written by Islamist, left-wing and liberal parties. The country is now looking forward to new elections by the end of the year, after a transition that has been marked by terrorist attacks, political assassinations and widespread social unrest.

The initial promise of the 2011 pro-democracy revolutions in the Middle East has faded in many countries, with a military coup in Egypt, a civil war in Syria and militia-fueled chaos in Libya.

Tunisia alone seems to be managing a transition characterized by consensus between political factions, but it hasn’t been easy. The rise of radical Islamists linked with Al-Qaeda – and armed with weapons spilling over the porous borders with Libya – has challenged the state.

Last year, extremists gunned down two prominent opposition politicians in front of their families, plunging the country into crisis and stalling efforts to write the new constitution. Meanwhile soldiers clashed with armed militants holed up in hideouts on the Algerian border, resulting in dozens of deaths.

Jomaa said that following initial setbacks, Tunisia’s forces have now mastered the threat. In a pair of operations in February, seven members of the radical Ansar al-Shariah group were killed and six arrested.

“The authors of these assassinations have been arrested and when that wasn’t possible, eliminated,” he said, adding that only two or three top leaders remain at large outside the country, including the group’s leader, Seifallah Ben Hassine, who is believed to be in Libya.

Jomaa could not confirm or deny reports in December that Ben Hassine had been arrested in libya.

The premier said talks with the U.S. would include requests for advanced equipment to fight terrorism. “When we have such needs, we speak with all our friends, particularly the Americans, who have a high level of technological expertise.”

Just as important, however, will be American help in confronting the country’s shaky finances and plugging an estimated $2-3 billion hole in the 2014 budget, mostly likely through external borrowing.

Jomaa will also be courting U.S. investors on his trip, which starts with a stop in New York.

“The coming months will be very difficult for the finances of the state, but aside from that, Tunisia remains attractive to private investment and in the coming months, you will see many investors coming to Tunisia,” said Jomaa, who has recently visited a number of wealthy countries in the Gulf and included many businessmen in his delegation to the U.S.

Growth in 2013 was 2.4 percent, which is low for the region and isn’t expected to improve much in 2014. Unemployment remains high at 15 percent. Tunisia, however, has a good debt-to-GDP ratio of around 48 percent, allowing it to keep borrowing.

The World Bank, International Monetary Fund and other international institutions welcomed the completion of Tunisia’s new constitution by releasing hundreds of millions of dollars in loans, but with these come unpopular conditions such as cutting subsidies.

Inflation hit highs of 6 percent in Tunisia in 2013, provoking angry demonstrations over the cost of living – demonstrations that could get worse if subsidies are cut.

Jomaa said the government would find a way to reform the subsidies without hurting the purchasing power of low-income groups, by consulting with political parties and non-governmental groups, and predicted the country’s fortunes would change as new investment pours in.

“The consensus which made us overcome the difficulties and adopt a very modern and progressive constitution will also guide us through this difficult period and lead us to calmer waters,” he predicted.

Associated Press

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Lebanon poised to delay gas auction date

BEIRUT: International oil companies want the April 10 offshore gas and oil auction to be pushed back at least three months to allow them more time prepare bids, a source said Wednesday.

“The oil companies that showed interest in Lebanon’s gas and oil wealth are not planning to make any investments in oil blocks for the time being,” a Lebanese source familiar with the auction told The Daily Star. “They need to know the number of blocks that will be auctioned off and the conditions for exploration.”

He added that some of the firms had reallocated investments to other countries that had already passed laws and named blocks for auction.

“At present, we are not on the map for investments. These investments will only take place once the decrees have passed and blocks are named,” the source said. “They also need more time to put their resources together.”

Former Energy and Water Minister Gebran Bassil delayed the auction multiple times, after the caretaker Cabinet failed to pass two decrees to establish the number of blocks that would be auctioned and set the revenue mechanism.

The source stressed that even if the decrees were passed by the Cabinet this week, the energy minister had no choice but to set a new date for the auction.

A CEO of an international company involved in the process warned, however, that Lebanon would face stiff competition, considering that several other countries had recently opened up all of their shoreline for drilling and exploration.

“Greece, Croatia and Montenegro have invited the international oil companies to bid for all of the available blocks,” the CEO told The Daily Star. “These countries did not restrict the companies to bid for three or four blocks only as in Lebanon’s case.”

He added that it would be advisable for Lebanon to open all 10 blocks for bidding.

“This way the companies can choose two or three blocks out of the 10 blocks Lebanon has. At the moment, Lebanon is facing competition with countries that have opened up all of their offshore for bidding,” the CEO said.

However, many experts in the oil and gas field have said that Lebanon should only include a limited number of blocks in the first auction.

Commenting on the U.S. efforts to mediate between Lebanon and Israel over the disputed maritime waters, the Lebanese source said that as far as Lebanon was concerned, the entire zone was part of its own territorial waters.

“ Lebanon has identified the zone as area 23 or triangle 23. The area is located in the far south, which is close to the Israeli territorial waters. The Americans have offered to draw a line in the border to help both sides explore gas,” the source said.

But he insisted that all 10 blocks, including the disputed area, were up for grabs.

“It is up to the oil companies to apply or not for area 23 which stretches over 860 kilometers off the Lebanese coast,” the source said.

However, the source admitted that international oil companies are hesitantto drill in disputed areas.

“It took Russia and Norway 40 years to reach an agreement over a disputed zone,” he said. “These things happen even between friendly countries.”

Amos J Hochstein, U.S. deputy assistant secretary for energy diplomacy, told The Daily Star earlier that Washington advised Lebanon not drill in the disputed zone until a solution was found.

He also said that Washington had offered to mediate indirectly between Lebanon and Israel to settle the dispute.

The Daily Star

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Stress test on Lebanese banks asserts importance of liquidity

BEIRUT: Lebanese banks have been subjected to a stress test as a precaution against potential future economic crises in the region, the head of the Banking Control Commission said Tuesday.

Speaking at a risk management conference organized by the Union of Arab Banks, Osama Mikdashi said the test “included all the local banks in Egypt, Syria, Jordan and most recently Turkey.”

A stress test, in financial terminology, is a simulation designed to determine the ability of a given financial instrument or financial institution to deal with an economic crisis. Instead of making financial projections on a “best estimate” basis, a company or its regulators may do stress testing, in which they look at how robust a financial instrument is during crashes, a form of scenario analysis.

Mikdashi added that the primary goal of the test, which lasted 30 days, was to consolidate and buttress resistance against risks in the short term, by ensuring the existence of high-quality liquidity.

“The second goal was to reduce the risks of long-term financing, by requesting that banks finance their operations through sources of stable funding in order to reduce the risks of funding in the future,” he explained.

He pointed out that the Lebanese banks involved in the test were connected to a network whose branches and subsidiaries span 27 countries.

Joseph Torbey, the chairman of the World Union of Arab Bankers, stressed that the global financial crisis in 2008 had underlined the importance of having abundant liquidity in order to weather any future crisis.

He said some international banks had failed to manage wisely the liquidity that was at their disposal, claiming this was one of the causes of the crisis.

He added that Lebanese and Arab banks were improving their risk management strategies to strengthen their position.

The Daily Star

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Food and beverage sector faces economic challenges

BEIRUT: The absence of tourists in Lebanon and the deteriorating security situation have weighed heavily on different sectors of the Lebanese economy, and the food and beverage industry is no exception.

“Our sales dropped remarkably in the past year due to the absence of Arab tourists,” said Ali Beydoun, brand manager at Balkis, a manufacturer of fresh juice, on the sidelines of the HORECA 2014 trade fair being held in the Beirut International Events and Leisure center.

“We used to rely heavily on tourists in mountain areas and on the beaches to reach a decent sales level, but we were not able to do so this past summer,” he said.

Beydoun explained that Balkis juice was more expensive to produce than other products because they were fresh, and thus his company could not make up for the loss of revenues from summer Gulf tourists by marketing to Syrian refugees.

“Syrian refugees, of course, would not be interested in buying our products. They’d rather go for less expensive items in order to be able to survive,” he said.

While some food and beverage companies have failed to achieve growth in recent years, others have relied on foreign markets to make up for their domestic sales drop.

“We were surely affected by the difficult situation over the past couple years because our products are not considered to be a basic need for people,” said Peter Daniel, managing partner at Castania, a well-known Lebanese brand of roasted nuts.

“However, we were able to make up for our drop in Lebanon by exporting to other markets, which helped us in maintaining our stability,” he said. “We are present in over 30 countries now.”

Castania is considered lucky compared to food manufacturers who have been unable to turn to export because of the high cost of production in Lebanon, which has prevented them from being competitive.

“We cannot rely heavily on exporting our products because of the high cost of production in Lebanon, which makes our items less competitive compared to oil products from other regional countries,” said Elvire Kettaneh, director of Slim Oil in Lebanon.

“We would like to export but we cannot compete outside because of the high costs.”

Kettaneh added that the Lebanese market was very difficult because the purchasing power of people had diminished in the past few years.

“We have not been able to achieve any growth, unfortunately,” she said.

Slim Oil is also facing a major challenge from foreign companies that do not have to pay customs on the oil they import to Lebanon, which makes her products vulnerable to competition from foreign brands.

Other food industrialists interviewed by The Daily Star at HORECA voiced their worries over Syrian factories that had launched operations in the Gulf and that are expected to impact their exports to these areas in the coming months.

“A lot of Syrian factories have started operating in the Gulf, and we are expecting a drop in our exports to this area soon,” said Jamil Haffar, area sales manager at MEC3, a manufacturer of chocolate and ice cream ingredients.

Following the beginning of the Syrian civil war, some Syrian industrialists moved their businesses to other countries in the region including Lebanon, Egypt and Saudi Arabia.

However, many of those who have moved to Lebanon resorted to illegal operations in order to avoid paying taxes and other dues. This has affected Lebanese industrialists, mostly in areas outside Beirut.

“Some Syrians opened shops and factories, and this has definitely affected our business because they do not pay taxes or social security for their workers,” Haffar said. “Some of them do not even pay rent, but they live in the buildings that house their businesses as well.”

HORECA is the region’s premier hospitality and food event and features nearly 15,000 square meters of product displays, as well as a program of culinary, business and industry innovation activities.

The Daily Star

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EDL staff threaten to pull the plug

BEIRUT: Part-time Electricite du Liban staff blocked the road and doors to the company’s Beirut headquarters Monday to demand full-time employment.

The protesters also burned tires to shut down access to the state-run power company in the Mar Mikhael neighborhood, preventing full-time employees from entering.

The protesters, who have staged similar demonstrations over the past few months, want Parliament to amend and approve a draft law that would grant them full-time work.

The workers called off their sit-in at midday but warned that they would escalate their movement if Parliament failed to amend the bill which requires them to pass exams before they are considered eligible for full-time work.

The staff also threatened to cut power across Lebanon if Parliament ignored their demand and “approved the bill as is.”

The Daily Star

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BankMed confirms strong growth in 2013

BEIRUT: BankMed maintained double-digit growth in deposits and total assets in 2013 despite an overall economic slowdown that saw net profit almost flatten due to the conservative management strategy of allocating an additional $35 million in general provisions.

Customer deposits increased by 12 percent to reach $10.3 billion at of the end of December 2013, and the customer loan portfolio expanded by 7 percent to $4.3 billion, while consolidated net profit grew year on year by 1 percent to $128.1 million.

In line with its conservative management strategy, BankMed decided to increase its general provisions by $35 million to $140 million rather than post higher profits, a BankMed statement said.

The loan loss provision coverage ratio stood at 203 percent.

“Despite tough economic conditions and a year that witnessed numerous challenges, the bank maintained healthy activities in 2013 that resulted in continued growth in deposits and assets,” the statement added.

By the end of December 2013, BankMed’s total assets posted a 10 percent growth to hit $13.8 billion.

The bank invested around $679 million of its balance sheet growth in 2013 in liquid assets including cash and deposits in the Central Bank and commercial financial establishments and $422 million in marketable securities such as treasury bills, while granting around $282 million in loans.

BankMed is committed to its long-time policy of maintaining high liquidity ratio, the statement said. BankMed’s foreign currency liquidity ratio stood at 40.6 percent compared to the Central Bank limit of 10 percent. The bank’s capital adequacy ratio reached 13.8 percent by the end of 2013 compared to the 10.5 percent required by the Central Bank.

International rating agency Moody’s recently reiterated its negative outlook for Lebanon’s sovereign rating and warned that banks’ profitability would remain under pressure owing to slow economic growth.

Moody’s said the outlook reflected banks’ increasing exposure to B1-rated Lebanese government securities, which leaves their modest capital buffers susceptible to sovereign event risk.

The majority of Lebanese banks are rolling over their maturing treasury bonds but have been cautious to buy new issues of government debt.

Pressure arising from banks’ operations in regional countries hit by turmoil was also among the issues highlighted in Moody’s report.

However, despite the political concerns in Turkey, the operations of BankMed’s Turkish subsidiary (T-Bank) were not affected, and its assets grew by 39 percent during 2013, according to the statement.

Turkey’s central bank hiked all its key interest rates last February in a bid to defend the country’s crumbling currency.

According to Moody’s, the sharp interest rate hike will squeeze the profitability of the banking sector through higher funding costs and hurt the quality of bank assets.

BankMed’s statement downplayed the impact of the rate hike in Turkey on its operations, saying the current circumstances were the result of a political spillover into the economy rather than vice versa.

BankMed, which was the first Lebanese bank to expand to Turkey in 2007, has more than 29 branches in the country.

BankMed posted an 8 percent growth in profits in 2012 as well as 16 percent growth in deposits and 15 percent growth in loans.
The Daily Star

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Cost of phone cards cut in half to help low-income Lebanese

BEIRUT: The Telecommunications Ministry has slashed by up to 50 percent the price of local and international phone calls made through prepaid cards issued by the state-run telecom provider Ogero.

Telecoms Minister Boutros Harb told reporters at a news conference Monday that he would “reduce the price of phone calls made through the prepaid cards Telecarte and Kalam by 50 percent for landline calls and 30 percent for cellular phone calls.”

People using the cards will now pay LL50 instead of LL100 for every minute of call time from a landline and LL100 instead of LL200 from a mobile line.

As for international calls, users will now pay LL300 between 7 a.m. and 10 p.m., and LL200 for the rest of the day.

Prices will be adjusted starting April 1 as per Harb’s policy decision, his first since his appointment last month.

“This will facilitate communications and better serve citizens, particularly low-income individuals such as students, workers, and users of public phone booths and domestic workers,” he said.

Harb said the move would boost the prepaid cards market.

“It will also revitalize the process of selling and purchasing these prepaid cards after a three-year freeze in sales, which affected [government] revenues,” he said, noting that the treasury was losing $110 million annually as a result of the decline in the sales of prepaid cards.

The Telecommunications Ministry is also considering how to cut mobile rates without significantly lowering telecom revenues, which represent a significant percentage of the treasury’s income.

Harb also said he planned to reverse an earlier decision that required the registration of the International Mobile Station Equipment Identity, a unique number assigned by manufacturers to every handset, with the customs department.

The decision issued by former Telecoms Minister Nicolas Sehnaoui required large importers and individuals to register the IMEIs of new mobile phones on the database before they could be used on the touch or Alfa networks.

The decision was aimed at cracking down on smuggled phones, but Harb said large cartels were still capable of evading detection.

“The measure had a negative impact on the telecoms sector and tourism activity while large cartels of smugglers continue to bypass the system,” Harb said.

A telecoms expert who spoke on condition of anonymity had earlier told The Daily Star that several smugglers were illegally feeding the database with the IMEIs of untaxed mobiles before importing them to Lebanon.

The Daily Star

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U.S. urges Lebanon not to drill for gas in disputed waters

BEIRUT: A senior U.S. official advised Lebanon not to drill in disputed waters off its coast until a deal on maritime boundaries is reached, adding that Washington was working on ways to resolve competing claims over the territory.

“I think the most advisable policy for choosing where to drill is to reach an agreement on the disputed zone so there isn’t a disputed zone. I think it would be good not to touch the disputed zone until there is a resolution for this dispute,” Amos J Hochstein, U.S. deputy assistant secretary for energy diplomacy, told The Daily Star in an interview.

He added that most oil companies were not willing to risk drilling in disputed zones, claiming that firms preferred to work in areas that were within the recognized Lebanese territorial waters.

“People need to understand that oil companies take lot of risks, more than any industry. They spend an enormous amount of money – over $100 million – to drill one well before knowing if there is gas there. And once they discover it, they spend more money to exploit it and it takes years to bring your money back,” Hochstein said.

The United Nations and Washington have been working to resolve the dispute between Lebanon and Israel over 850 square kilometers of water that both countries claim.

The zone is thought to contain abundant quantities of valuable natural gas, and Lebanon has been keen to demarcate the area in order to determine its share of the possible resources.

Hochstein said that the United States has been suggesting ways to resolve the dispute between Lebanon and Israel, but declined to give any details about the proposals.

“The maritime dispute between Lebanon and Israel needs to be resolved. We [the United States] have gone to both sides on a number of occasions to share some ideas on how to solve this issue. The reason that it is critical to resolve this dispute between Lebanon and Israel is because in order to attract investments, there needs to be some kind of accommodation. There has to be certainty that the investments will be sound,” the official said.

He added that companies were eager to begin drilling in Lebanon, especially since nearby Israel and Cyprus have proven reserves.

But Hochstein warned that further delays in resolving the issue of the disputed waters could dampen investor appetite

“The longer you wait on resolving this dispute, the less likely it is that international oil companies will wholeheartedly invest in that area. For this reason, we have come up with certain ideas to solve this issue.”

He admitted that reaching an agreement would be difficult.

“These are not easy decisions to make,” he said.

“We hope that some of these ideas will stick and become attractive enough,” Hochstein said.

Despite the difficulties of reaching an agreement, he remained upbeat about the prospects of resolving the issue.

“The main goal here is to allow Lebanon to be in a position to attract foreign investors: come to the offshore of Lebanon and be part of the economic revival,” Hochstein explained.

He said the United States was coordinating with the United Nations in resolving the issue of the disputed zone.

Hochstein urged the Lebanese not to miss the opportunity to exploit their country’s gas and oil wealth.

“ Lebanon would be able to transform its economy if in fact there is gas. Before anyone plans what to do with the gas, first you have to find it, and seismic data is important but it’s not decisive. You have to drill a hole in the ground to find if there is gas.”

A 3-D seismic survey of part of Lebanon’s waters showed that Lebanon has an estimated 25 trillion cubic feet of gas off its coast.

Apart from the prospects of high revenues, the U.S. official emphasized that a major gas find would allow Lebanon to secure cheaper energy, which would be a major boost for the economy.

Hochstein said it was up to the Lebanese government to decide whether to auction off all 10 blocks off the coast or to begin with just three or four of them.

“Ultimately every country is a sovereign of its territory to make its own decision. I think for a country which has not done this before and the experience of going to a big round, it would be beneficial to argue this one at a time, or one or two or three at a time, and not by negotiating all [10 blocks],” he said.

Hochstein did not see a major problem if Lebanon delayed the April 10 auction date one more time in order to ensure political consensus.

“It’s always ideal to run things on time. But I think it’s better to delay than to launch it before its ready. If you launch something before there is political consensus then this will have risks too because if companies invest money and resources and later the political attitudes change then this is worse. I think it would be good for Lebanon to move quickly and at the same time it is better to move correctly,” Hochstein said.

By Osama Habib

The Daily Star

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