Recently, Oman Oil Company (OOC) has engaged into an international trade deal with Pakistan by buying 49% of stake in the latter's Orient Power Company, which is a 450 MW power plant to be built in 2 phases at Balloki. The stockholders' deal was signed by both Nadeem Babar, the chief executive officer of Orient Power, and Mulham Al Jarf, the deputy chief executive officer of OOC. Mr. Jarf commented that the new project was significant since it represented the initial investments of OOC to Pakistan. He further said that the company was pleased to work with Orient Power, which boats of its expertise in terms of power plant operations. Meanwhile, Mr. Babar stated that his company was also delighted to team up with OOC. He also said that he hoped the international trade deal would pave the way for more foreign investments in the future.
According to sources, Phase I of the project costs around $181 million. The power plant has been developed as a Combined Cycle Gas Fired project that will utilize the most advanced technology of gas turbines. The construction of the facility is expected to be finished within a period of two years. It is also expected to start with its operations by 2008. Under the international trade deal, natural gas would be provided by Sui Northern Gas Pipeline Limited and the power output would be marketed to National Transmission and Dispatch Company.
According to reports, the energy project would be linked directly to the Lahore Grid. After the completion of the 2 phases, the power plant would supply around 20% of electricity to Lahore. OOC is a 100% state-owned commercial firm in Oman. The company was established in 1992 in order to provide the government another alternative of seeking business and international trade opportunities within and outside the country.
The Oman Oil Company plays an important role in the nation's efforts to diversify its economy. Moreover, it was also established in order to help the country in attracting more local and foreign investments and international trade deals. In Oman, the OOC holds several interests in various sectors and projects such as aluminum melting, petrochemicals, refining, petroleum retailing, gas transmission, among others. Meanwhile, outside the country, the OOC holds interests in industries like oil product logistics, petroleum pipelines, and the production and exploration of oil.
Meanwhile, Orient Power Company Limited is a new IPP firm that was established 3 years ago by Mr. Babar and the National Group of Industries. It must be noted that Mr. Babar currently serves as a senior executive in the firm with an extensive expertise in terms of structured finance, energy finance, and power generation. Before he established the Orient Power Company in 2003, he worked as the chief of the International Division of El Paso Corporation of Houston, Texas where he managed around 32 power facilities worldwide. The recent international trade deal is expected to open more investment opportunities and benefit both countries. Moreover, it is expected to boost the international trade relationship between Oman and Pakistan.
Development Of International Trade
The U.S. trade blockade against Cuba effective since February of 1962 is touted as the most enduring trade embargo in modern international trade history. Initially proposed as a stand against the ideology of communism espoused by the Cuban nation and Fidel Castro, the trade blockade had become a political tool. However, developments in international trade and US agribusiness saw Cuba as a potential market with untapped sources. Many propositions to relax the trade blockade were submitted, including the Trade Sanctions Reform and Export Enhancement Act. This was approved by the Congress in October 2000 and signed by President Bill Clinton. The Act was spurred by humanitarian reason to give aid to Cuban residents in terms of medicine and food supply. Inevitably, since 2001, trade relations between U.S. and Cuba gained the semblance of civility. But this peace was interrupted when the Bush government branded Cuba as an "outpost of tyranny" and enforced stricter embargo restrictions.
These restrictions faced tough political hurdles, one of which was the veto threat by President Bush. But the agricultural block and administrators of agribusiness are not to be deterred by the President's strong stand against lifting the international trade blockade against Cuba. The reform proposed by Rep. Moran is touted to be the only reform from the House that can possibly weaken the blockade against Cuba. Should the Moran reform be approved, it will boost private farming and the States's export and manufacturing sector. Consequently, its main supporters are constituents from the farming industry because agriculture and food products comprise about 94% of exported products to Cuba allowed by current Treasury Department policies.
Propositions under the Moran reform include overturning the trade policies imposed in February of last year by the State Treasury. These restrictions staggered international trade opportunities with Cuba because these required Cuban importers to pay prior to the product shipments. The reform aims to decrease difficulties for U.S. exporters by accelerating transactions between U.S. manufacturers and Cuba. This is possible through a provision, which overrides the treasury restrictions. This provision entitles Cuban importers extended deadline payments for the imported goods. The Moran reform was approved with a significant margin with the majority of House votes and enjoys popular support from the U.S. Senate. The only problem political analysts see is President Bush's sustained ban on Cuban products. This is the strength of the Treasury regulations.
The initial victory of the Moran reform is largely attributed to the lobbying efforts of the agriculture industry and business sectors that opposed barriers to profitable international trade opportunities with Cuba. US agriculture and manufacturing industries can raise their profits by a considerable margin if the reform proposed by Rep. Moran gains the approval of the Senate. However, it must be noted that such advantages are directed only for the benefits of the American economy. Its allies like Mexico and the Philippines, who both have discreet ties with Cuba (political or economic), are silent about the issue. But still, they stand to lose much when the US finally trades openly with Cuba. Like a true capitalist, the US economy is seeking out other markets that its allies cannot satisfy. In opening or relaxing economic ties with Cuba, the US may gain a new market. But the Mexico and the Philippines may gain another competitor in exporting raw materials to the US mainland -- a considerable decline in their economic value to the US.
Should the Moran reform succeed, it is a big boost for the arena of international trade not only for US businesses. To sustain their economies after the entry of a new competitor, US allies can openly do business with Cuba without worrying about negative reaction. In general, the US, and the international trade market will benefit with the approval of the Moran reform.
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