KARACHI, Jan 30: Pakistani cement has started trickling out to the war-torn Afghanistan, and DG Cement, a giant privatized unit, is supplying 250 tons a day.

“We have set up a warehousing facility between Chaman (Pakistan) and Kandahar in Afghanistan to supply 20,000 tons initially,” Mian Mohammad Mansha, the chairman of DG Cement said on Wednesday.

He said another Pakistani cement company has also set up distribution arrangements on the Northern side near Kabul. Mansha was, however, not in a position to assess the full potential of cement demand from Afghanistan.

“It all depends on the disbursement pace of 4.5 billion dollars committed for Afghanistan reconstruction by the donors community in Tokyo this month,” he said.

Mian Mansha signed on Wednesday a debt rescheduling agreement with the team of the executives of the International Finance Corporation (IFC), an affiliate of the World Bank to finance private sector projects.

Peter Woicke, leader of the visiting IFC team who signed the agreement said that the corporation is extending financial assistance of $20 million in gas sector and $1.6 million in other areas.

The IFC has completed debt rescheduling with all its client private power and cement projects in Pakistan. With a total exposure of about 400 million dollars in Pakistan, the IFC completed on Wednesday the debt restructuring for Pakistan’s leading cement manufacturer DG Khan Cement Company.

Those who signed the rescheduling agreement were Mian Mohammad Mansha, Chairman, Raza Mansha, Executive Director of the DG Cement project and the leader of the visiting IFC team Peter Woicke. Also to put their signature were the officials of the participating syndicating banks, Standard Chartered, Grindlays Bank, Deutsche Bank A.G., Agricole IndoSuez and ABN Amro.

The restructuring involved local currency guarantee issued by the IFC amounting $14.5 million, which would allow the DG Cement to borrow locally to refinance part of its foreign currency debt.

“This is the first restructuring of its type done by the IFC in Pakistan,” Mian Mansha said.

The rescheduling cost, he said, was two to two and half per cent above Libor, which would enable his company to draw rupee equivalent to $14.5 million up to July 15, 2004. This facility matures on January 15, 2009.

Besides signing debt rescheduling agreement with the DG Cement, Peter Woicke and IFC team held two detailed meetings on Wednesday with leaders of Pakistan’s financial and manufacturing sectors and private power projects.

In a dialogue of ‘IFC and its Associates’ on the theme ‘Are we on the Right Path towards Growth’ with the visiting IFC team about two dozen top manufacturers, private operators and financial sector leaders wanted Pakistan government to consider lowering of tax rates and in fact should review the whole taxation system.

“Now is the time to attend to the growth and employment generation issues in Pakistan,” Bashir Alimohammad said. Bashir Alimohammad, a leading textile manufacturer and exporter and operator of a power project, participated in the dialogue, said the local market support was essential for economic growth.

Other participants generally appreciated the steps taken by the government to revive the confidence of the private sector, but, by and large, were of the unanimous view that specific steps should be taken to raise income levels.

“Too few people are giving too much tax,” remarked a participant, who said that a plea was made to “review the whole taxation system to make it investment friendly.”

Peter Woicke said that it was quite a big opportunity for private sector as government had done a good job by addressing the external sector. “Now the government should focus on domestic side.”

He said that during his two meetings with leaders of the financial sectors, insurance industry, capital market and top manufacturers and power operators he got the opportunity to hear view on all range of the business and investment issues.

“Initial investment in China came from its expatriates abroad and so should be here in Pakistan where expatriates are a great potential for future investment,” one participant remarked.

But for this, the business leaders say that the government would have to take more steps to create an environment in which adequate return on capital is assured.

“We are ready for a big leap forward,” another participant of the meeting remarked.