Crude Oil Refining or Petroleum Product Importation: Which Is Economical for Nigeria

CRUDE OIL REFINING OR PETROLEUM PRODUCTS IMPORTATION: WHICH IS ECONOMICAL FOR NIGERIA? ABSTRACT: One of the most crucial challenges facing Nigeria is being able to meet the energy need of the energy hungry populace; the exponential population growth makes it even more challenging. The approach adopted to meeting this need has impacted severely on the economy of the nation as reflected in the year-on-year economic figures. This can be attributed to her choice of net importer of petroleum products status to the much more economic domestic refining option. This paper analyses the best economic option between refining crude oil and importing the products in Nigeria, at the end making probable suggestions. TABLE OF CONTENT ABBRECIATIONS 1. NTRODUCTION†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 4 2. CRUDE OIL REFINING AND PETROLEUM IMPORTATION IN NIGERIA †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 5 2. 1 Overview †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã ¢â‚¬ ¦ 5 2. Challenges of Petroleum Product Refining in Nigeria †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 6 3. CRUDE OIL REFINING AND PETROLEUM PRODUCTS ECONOMICS †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 8 3. 1 The Economics of Crude oil Refining †¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 8 3. 2 The Economics of Petroleum Products†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 9 4. CRUDE OIL REFINING, PETROLEUM PRODUCTS IMPORTATION AND THE ECONOMY†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â ‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦.. 0 5. CONCLUSION†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦ 11 BIBLIOGRAPHY†¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦Ã¢â‚¬ ¦. 13 ABBREVIATIONS BPSD Barrels per Stream Day B/D Barrels per Day CBN Central Bank of Nigeria GDP Gross Domestic Product NNPC Nigerian National Petroleum Corporation NPRC Nigerian Petroleum Refining Company PHRC Port Harcourt Refinery Company 1. INTRODUCTION The role of crude oil remains key among the energy sources, hence we have to still live with the consequences that are associated with it, one of which is economical. This obviously is an aspect no country, importer and exporter have been able to overcome, though its impact on some countries is less than in others. Nigeria is definitely one of those countries whose economy has been monumentally impacted, ironically though, a leading crude oil producer and exporter in the world. However, this is not to take away crude oil’s enormous contribution to the Nigerian macro-economy over the years it holds sway. The discovery of oil in Nigeria was thought to be a big respite to the growing energy supply challenges facing her and to bring economical gains, especially as the price of oil has often been on the increase. Hence, should have made huge sums of money from it. Incidentally, this is not to be, as oil suddenly took shine off the hitherto major sources of the country’s GDP. Sectors like agriculture and manufacturing went moribund, making Nigeria a mono-economy, with oil being the mainstay of the economy. It provides 95% of foreign exchange earnings and about 80% of government budgetary revenues[1]. The Nigeria economy plays into the hands of the volatility of extremely vulnerable external shocks, particularly the vicissitude of world oil market prices, and the consequent inflations that characterise it most of the times. With the production of 229,008,126 barrels of crude oil and condensates increased in the third quarter of 2010 with an average of 2. 49 million barrels per day of domestic production in recent years, four refineries of 445,000 b/d refining capacity, the issue of meeting domestic oil demand should have been substantially addressed. However, with the 0 – 15% refining capacity in 2009[2], which is often the case over the years, importation became the only available alternative. Hence, Nigeria though a leading exporter of crude oil in the world is also, ironically, a net importer of petroleum products. This paper is divided into four chapters; chapter 2 looks at crude oil refining in Nigeria, offering an overview and challenges that confronts it. In chapter 3, crude oil refining and petroleum products economics is examined and chapter 4 looks at the implications of both crude oil refining and importation vis – a – vis the economy. The chapter 5 concludes the paper with few suggestions as to what the best economic option should be in meeting the petroleum products demand in Nigeria. 2. CRUDE OIL REFINING IN NIGERIA 2. 1OVERVIEW The petroleum products consumed in Nigeria had been imported from refineries abroad; this continued even a couple of years after the discovery of crude oil in a commercial quantity in the country. However, as the demand for the products increased and with the availability of the feedstock, the two Multinationals operating in the country then saw it as a viable business to establish refinery that would serve the domestic demand. This lead to the 50/50 joint venture refining company between Shell Darcy Petroleum Company and British Petroleum called the Nigerian Petroleum Refining Company (NPRC) in 1960. The construction of the refinery took two years to complete; by 1965 it commenced operation at an installed refining capacity of 38,000 bpsd[3] to refine local crude into five petroleum products. It was located at Alesa–Eleme, near Port Harcourt, some kilometres away from the crude oil production location. In order to meet the ever increasing demand for the products, the refinery was de–bottlenecked to increase its production capacity from the initial 38,000 bpsd to 60,000 bpsd. Running as a private entity, the company was able to run efficiently, profitably and met the omestic product consumption demand. In 1970, the Federal acquired and paid for a 60 percent equity share in all private international companies working in the Upstream and Downstream sectors of the Petroleum Industry in the country[4], NPRC inclusive. Despite been the major shareholder, the Federal Government allowed NPRC to operate without interference. It was only represented by its own corporation, th e Nigerian National Oil Corporation (NNOC), on which the shares were invested on to represent it at the board meetings of NPRC. Hence, the company was commercially profitable, well maintained and ran very efficiently. A decree in 1977 gave birth to the Nigerian National Petroleum Corporation (NNPC), which was later to appoint the Chairman of NPRC, and then acquired the remaining 40 percent stake in NPRC. This in effect made the NPRC a full Government entity under the Refinery Division of the NNPC, headed by a general manager. The name was changed to NNPC Refinery, Alesa–Eleme, now headed by a managing director and having a new management structure. It was under the general manager of NNPC Refinery Division at the headquarters. A wholly Government built Refinery commenced operation in 1978, after a 30–month construction. It was located at Warri, and had an installed refining capacity of 100,000 b/d. But was de – bottlenecked in 1985 to have a total capacity of125, 000 b/d. The Warri Refinery was essentially built to process crude oil products and to add value to some of the refinery by-products such as propylene rich stock and decant oil[5]. Soon after, in 1980, another refinery, the Kaduna Refinery came on stream. It was meant to cope with the ever growing demand for petroleum products, especially in the Northern axis of the country. The refinery consisted of two streams, 50, 000 b/d fuel units and 50, 000 b/d lubes, Asphalt plants. It was designed to produce 3,857mt/d of Premium Motor Spirit (PMS), 1,686mt/d of Kerosene, 3,000mt/d of Automotive Gas Oil (AGO), 1,796mt/d of Asphalt, 91mt/d of LAB, 657mt/d of Base Oils, 620mt/d of Liquefied Petroleum Gas (LPG), 2,100mt/d of Fuel Oil. The existing products pipeline linking Warri Refinery to Kaduna was converted to pump crude oils for supply to the new Kaduna Refinery. Again, like the previous refineries, the fuel section of Kaduna Refinery was de-bottlenecked from the 50, 000 b/d to 60, 000 b/d. This brought the Kaduna Refinery to overall 110, 000 b/d capacity[6]. The fourth and final refinery was a new grassroots refinery, adjacent to the existing Port Harcourt Refinery, with an install capacity of 150, 000 bpsd. With this, Nigeria total installed refining capacity is 445, 000b/d, which was originally built to serve both the domestic and international petroleum product demand. Unfortunately, the purpose for these refineries were short-lived, serving only for a couple of years before each began to experience various man-made challenges that made them cost centres instead of the originally intended commercially profitable centres. The ever growing domestic product demands were no more met, as acute scarcity became a normal phenomenon. This led, unfortunately to the return of high propensity of petroleum product importation in order to meet the energy need of the nation. 2. 2 CHALLENGES OF PETROLEUM PRODUCT REFINING IN NIGERIA The Nigerian state-owned four refineries have undergone, and still undergo several man-made challenges that have made it more of a liability to the country than an asset. One of the issues that reduced the refineries to cost centres is bureaucracy. Immediately NNPC took over the running of the first refinery, bureaucracy silenced the commercial cultures that make a business thrive. Tens of signatures would have to be appended on a letter seeking to fix or procure working materials. These unnecessarily delay maintenance and impact the efficient running of the refineries. Also, being fully under the control of Government, all the funds for running the refineries would have to come from Government coffers. This occasioned delays and outright insufficient funding. Working capital especially meant to procure the needed spare parts, chemicals and all other necessary items for operations was not forthcoming, hence leading to the continues breakdown often experienced in the various refineries. The recommended 24-36 months normal industry Turnaround Maintenance (TAM) was hardly done[7]. It took years, far above the recommended time in between for TAM at the various refineries. The results were failures, wear and tear of the equipment, frequent shutdowns and complete non operations. Efficiency of the refining industry is such that needs well trained manpower. However, most of the refinery staff like any other state- ran enterprise were employed or appointed on ethnic or political sentiment. In such case, proper management and efficiency is thrown to the wind. Dedication and commitment to duty is hardly there, and the consequence is obvious. The big one is corruption. The refineries have over the years become conduit pipes of siphoning tax payer’s money. Some individuals in Government seem to have become rich by the comatose state of these refineries, hence would do everything within their powers to make them remain so. These challenges have rendered the refineries helpless and never operating at the capacity utilization. Because of these, the country never really enjoyed product sufficiency with its vast reserve and refineries it ordinarily should have. Hence, Nigeria has always been a net importer of petroleum products. 3. CRUDE OIL REFINING AND PETROLEUM PRODUCT ECONOMICS 3. 1CRUDE OIL REFINING ECONOMICS The overall economics or viability of a refinery depends on the interaction of three key elements: the choice of crude oil used (crude slate), the complexity of the refining equipment (refinery configuration) and the desired type and quality of products produced (product slate). Refinery operating cost, utilization rate and environmental considerations also influence refinery economics[8]. The type of crude used would determine whether there would be investment in the upgrading processes of the refinery. Light, sweet crude require less upgrading, heavy crude do need more upgrading. Also, the product demand in the market determines the configuration of the refinery. For instance, the U. S. refineries are configured to process a large percentage of heavy, high sulphur crude and to produce large quantities of gasoline and low amounts of heavy fuel oil. The Canadian refineries are configured for light, sweet crude, hence would upgrading to process heavy crude. Most of the European refinery configuration favours the production of diesel; gasoline accounts only 20% production[9]. Obviously, the Nigeria refineries were configured for the light crude the country produces and produces a wide range of products meant for her market and other markets. The refinery utilization rate is a very critical component of refining economics. High percentage capacity utilization is needed for a refinery to increase operating efficiency and reduce costs per unit of output. A utilization rate of about 95% is considered optimum as it allows for normal shutdown required for maintenance and seasonal adjustments. The operable capacity of Nigerian refineries has on average 0 – 15% utilization, which make them grossly under utilized. High utilization capacity is one of the things that make for profit margin scenario for refineries. The refinery industry has historically been a high- volume, low- margin industry, characterised by low return on investments and volatile profits. Profitability is measured by return on investment, defined as the net income contributed by refining/marketing as a percentage of net fixed assets (net property, plant, and equipment plus investments and advances)[10]. One way to represent the economics of a refinery is to calculate its Refinery Gross Margin[11]. For example, if a refinery receives $80 from the sale of the products refined from a barrel of crude oil that costs $70/bbl, then the Refinery Gross Margin is $10/bbl. The Net or Cash Margin is equal to the gross margin minus the operating costs (excluding income taxes, depreciation and financial charge. If a refinery experiences operating costs of $2 per barrel, then the Net Margin is $8/bbl[12]. The refinery margins are normally set on a competitive market, where the market is open. The contrary is the case in the Nigerian environment, the refineries are not working, and whenever they do, profit is never the aim. 3. PETROLEUM PRODUCT ECONOMICS Refined products market is different from crude oil market in a number of ways, owing to the scale of operation ( much smaller for refined products: a typical crude oil transaction involves 500,000 or even one million barrels of oil, while a typical refined products sale may involve only 5,000 to 10,000 bbls), quality considerations, price di fferentials and market size. In a competitive market, refined product prices are determined by supply, demand and inventory conditions at a given location and time[13]. International (border) price comes to play in the economics of refined products. The exchange rate used to convert the dollar value of imports into the domestic currency is the interbank exchange market rate, which is market determined. A freight charge (including insurance margin) is added to the value to get the landed cost. Import duty, domestic distribution, storage, marketing, and transportation margins are then added to obtain the order price at retail level[14]. Imported petroleum products also has additional cost like; Port charges, taxes and export duties at source country, insurance costs for transportation and brokerage costs for agents. The obvious reality is that there exists a wide range of domestic prices for petroleum products, determined mainly by the market and subject only to taxes and special charges in the developed countries. However, in developing countries like Nigeria, the prices are fixed by the government. Hence, the products are bought at the international price with a very high interbank exchange rate, and sold at a heavily subsidized, domestic rate, which has serious implications to the economy. 4. CRUDE OIL REFINING, PETROLEUM PRODUCTS IMPORTATION AND THE NIGERIAN ECONOMY. For a start, the estimated daily crisis-free demand for petroleum products in Nigeria today, are 30 million litres of petrol (PMS), 12 million litres of kerosene (DPK), 18 million litres of diesel oil (AGO), and 780 metric tons (1. 4 million litres) of cooking gas (LPG)†¦. †(Braide, 2003)[15]. Nigeria with a population of 158. 2 million (UN, 2010) and increment to workers salary in the recent years, which have empower ed quite a number of people to acquire some petroleum products demanding appliances, is much more pent-up now than in the last ten years. This makes it more challenging to satisfy. Government have obviously chosen a very hard alternative, importation, to have the demand met. With a weak currency (of N153 = $1), at a current price of crude on the international market and heavily subsidized domestic price of petroleum products. For instance, PMS have been at N65 ($42 cents)/litre in Nigeria for a couple of years now, as against the expected open market price of N131. 32 ($84 cents)/litre[16]. Importation, though the only alternative to the non-functional refineries, is economically catastrophic. For instance, Government spent $1. 34billion[17] from January to March, 2011 to import petroleum products to the country. In a year, this will amount to $5. 36 billion for importation alone, this excludes importations from marketing companies in Nigeria, tax waivers, demurrage and other implied costs that makes the total amount of importing the commodities extremely high. Government Petroleum Support Fund (PSF), which was established to disburse funds to the importing companies and the NNPC have between January, 2006 and July 2008 spent US$ 9. 2 billion[18] for subsidy alone. The fund also spent over US$ 3 billion from 2009 to the first quarter of 2010[19] for subsidising the importation of PMS and HHK within the period. The Year-on-year importation of petroleum products keep depleting the country’s external reserve, thereby putting the economy in bad standing. On the other hand, the KRPC, WRPC and PHRC (new) were built with lump sums of $525 million, $478 million, and $850 million respectively[20]. Unfortunately, with the poor management, the refineries from every statistics available have become liabilities to the country. With ultra low capacity utilization, a huge staff, high operating cost, no profit from NNPC year-on-year accounts[21], the refineries at present state are not economical. The implication of these is that the cost of crude oil, refining, importation, and distribution of the products are borne by the country’s treasury. A private sector run refinery industry is the only answer for meeting domestic demand at a very huge economic gain and energy security to the country. This will also revive the ailing petrochemical industry, which has a massive ripple effect on job creation, directly and through other dependent industries like Paint and Plastic industries. But before this can be realised the unavoidable deregulation has to take place. Little wonder why the over 18 private licensed refinery companies are yet to mobilise to site. Therefore, Government should revisit the issue of deregulation, and then privatise the state-run refineries. This massive importation does no good at all to the country, and should be reduced to near zero minimum. 5. CONCLUSION Government should be commended for taking up the challenge of building the capital intensive refineries, being beyond the ability of any local company at the time. It created energy security, jobs, averted looming crisis arising from massive shortage of supply of petroleum products and saved so much cost. But its continual running of the refineries is, to say the least wasteful and harmful to the economy. Refineries are commercial ventures, with huge financial implications, and do not provide much employment opportunities to warrant such protectionism by Government[22]. Obviously, it is only a few that benefits in a State-run refinery at the expense of many. Privatisation of the refineries holds more prospects economically to the country than what obtains. At the time being, the unenviable net importer position of the country is no more sustainable. Less Importation would save so much cost and the Nigerian economy shielded from the unstable, volatile international petroleum price. Subsidy has caused considerable loss of revenue and a rapid growth in domestic oil consumption as low price does not reflect real cost for consumption. It has contributed to the collapse of local refineries, as price of fuel do not show cost of supply. Reluctance of private players to invest in refineries, persistent fuel shortages at filling stations, dilapidated supply and distribution infrastructures, smuggling, and product adulteration, all of which impact substantially on the economy are the consequences of the continues subsidy regime in place. Everything should be done to encourage a functional refinery industry to check the crippling importations. An efficient refinery industry in Nigeria would have massive market both within the country and in the neighbouring ountries, and this brings immeasurable economic gains that are able to change the economic outlook of the country. BIBLIOGRAPHY PRIMARY SOURCES NATIONAL LEGISLATIONS The Nigerian National Petroleum Corporation Act, 1977 The Petroleum Products Pricing Regulatory Act, 2003, No 8, Laws of the Federal Republic of Nigeria SECONDARY SOURCES BOOKS Gary, J. H. , Handwerk, G. E. , Kaiser, M. J. , Petroleum Refining Technology and Economics, (5th Edition) (United States of America, Florida, CRC Press, 2007). OTHERS INTERNET SOURCES Braide, K. M. The Mechanics of Fuel Scarcity in Nigeria, http://www. nigerdeltacongress. com/marticles/mechanics_dynamics_fuel_scarc. htm. (assessed 13/04/2011). CBN, http://www. cenbank. org/Out/2011/pressrelease/gvd/CommuniqueforMPCMeetingofMarch 21 22 2011_21st Mar_. pdf (assessed 01/05/2011). CIA, The World Factbook, http://www. cia. gov/library/Publications/the-world-factbook/geos/ni. html (assessed 18/04/2011). Hossain, M. S. , Taxation and Pricing of Petroleum Products in Developing Countries: A Framework for Analysis with Application to Nigeria, http://www. imf. rg/external/Pubs/ft/wp/2003/wp0342. pdf (assessed 20/04/2011). Iba, L. , Fuel Crisis: Still waiting for private refineries, http://64. 182. 172/webpages/news/2010/july/12//busines-12-2010. 001. htm (assessed 09/05/2011). Nigerian Refineries: History, Problems an d Possible solutions, http://www. businessdayonline. com/NG/index. php/oil/3256-nigerian-refineries-history-problems-and-possible-solutions-1 (assessed 09/05/2011). NNPC, Annual Statistics Bulletin, http://www. nnpcgroup. com/Portals/0/MonthlyPerformance/2009ABS Web. pdf (assessed 01/05/2011). NNPC, Subsidiaries, http://www. npcgroup. com/NNPCBusiness/Subsidiaries/ (assessed 09/05/2011). PPPRA, Report on the Administration of the Petroleum Support Fund (PSF), http://www. pppra-nigeria. org/briefonadministrationofPSF. pdf (assessed 01/05/2011). Refinery Economics, http://nrcan. gc. ca/eneene/sources/petpet/refraf-eng. php (assessed 19/04/2011). Refining & Product Specifications – Overview, http://www. petroleumonline. com/content/overviemCont. asp? mod=8&ord=10 (assessed 19/04/2011). ———————– [1]CIA-The World Factbook, at http://www. cia. gov/library/Publications/the-world-factbook/geos/ni. tml (assessed 18/04/2011) [2] N NPC 2009 annual report and EIA Nigeria Energy Data, Statistics and Analysis-oil, Gas, Electricity, coal [3] This is the maximum number of barrels of input that a distillation facility can process when running at full capacity under optimal crude and product slate condition with no allowance for downtime. [4] Nigerian Refineries: History, Problems and Possible solutions, at http://www. businessdayonline. com/NG/index. php/oil/3256-nigerian-refineries-history-problems-and-possible-solutions-1 (assessed 09/05/2011) [5] Ibid [6] Ibid [7] Ibid [8] Refinery Economics, at http://nrcan. gc. a/eneene/sources/petpet/refraf-eng. php (assessed 19/04/2011) [9] Ibid [10]Ibid [11] The difference in dollars per barrel between its product revenue (sum of barrels of each product multiplied by the price of each product) and the cost of raw materials (primarily crude, but also purchased additives like butane and ethanol) [12] Refining & Product Specifications – Overview, at http://www. petroleum online. com/content/overviewConti. asp? mod=8&ord=10 (assessed 20/04/2011) [13]Gary, J. H. , Handwerk, G. E. , Kaiser, M. J. , Petroleum Refining Technology and Economics, (5th Edition) (United States of America, Florida: CRC Press, 2007) at 18-19. 14]Hossain, M. S. , Taxation and pricing of Petroleum Products in Developing Countries: A Framework for Analysis with Application to Nigeria, at http://www. imf. org/external/pubs/ft/wp/2003/wp0342. pdf (assessed 20/04/2011) [15] Braide, K. M. , The Mechanics of Fuel Scarcity in Nigeria at http://www. nigedeltacongress. com/martiles/mechanics_dynamics_of_fuel_scarc. htm (assessed 20/04/2011). [16] Ibid [17]CBN, http://www. cenbank. org/Out/2011/pressrelease/gvd/CommuniqueforMPCMeetingofMarch21 22 2011_21stMarch_. pdf (assessed 02/05/2011). [18]PPPRA, Report on the

Islamic Banking

[pic] ISLAMIC BANKING: IS IT REALLY â€Å"ISLAMIC†? By: Omar Mustafa Ansari & Faizan Ahmed Memon Is it really Islamic? †¦. In this era of development and growth in Islamic finance and banking, this is a question being raised at every forum by various quarters. All those who raise this question, are undoubtedly well-wishers of Islam, Islamic economic system and Muslim Ummah. Accordingly, while we celebrate the achievements of Islamic banking on one hand, we should not be ignoring the issues and objections being raised by such quarters in order to ensure that we lay the foundations of this industry on strong, straight and acceptable-to-all footings. Objectives Of Islamic Banking Before discussing various objections raised on the present day Islamic banking, we should first try to understand the objectives of Islamic banking, which are as follows: 1. To provide Shariah compliant and prudent banking opportunities; hence providing an opportunity to Muslims to do their banking transactions – a Halal way: In other words, this is just an effort to avoid Riba and other prohibited elements from commercial and banking transactions, in order to ensure that we do â€Å"Nothing-Haram†; and 2. Achieving the goals and objectives of an Islamic economic system. We all can agree that, given the circumstances, the Islamic banking industry is making all efforts to ensure the first objective, while the second objective, although no-less important, is not the prime objective of current-day Islamic banking. History Of Islamic Banking Modern banking system was introduced in Muslim countries at a time when they were politically and economically slave to the western world. The main banks of the western world established their branches and subsidiaries in the Muslim countries and territories to fulfill requirements of foreign business. The Muslim community generally avoided the foreign banks for religious reasons but with the passage of time, it became more and more difficult to engage in trade and other activities without making use of commercial banks. Even then, a large number of Muslims, confined their involvement to transaction activities such as current account or hundred percent cash margin letter of credits. Borrowings from commercial banks or placement the access funds and saving accounts were strictly avoided by practicing Muslims in order to keep away from dealing in interest which is prohibited by Islam. With the passage of time, however, due to increase in cross-border transactions and other socio-economic forces demanding more involvement in national economic and financial activities, avoiding the interaction with the banks became impossible. Local banks were established in Muslim countries (including the names like Muslim Commercial Bank) on the same lines as the interest-based foreign banks and they began to expand within the country bringing the banking system to more and more people. Governments, businesses and individuals began to transact business with the banks, with or without liking it. This state of affairs drew the attention and concern of Muslim intellectuals which gave emergence to the contemporary Islamic banking. By the midst of the last century, many Muslim countries started their efforts to adopt the Islamic economic and banking systems. Many scholars, economist and experienced bankers came with different solutions to initiate the Islamic banking. Those experiences paved the route for modern Islamic banking. Nowadays Islamic financial institutions (IFIs) are spread all over the world including European countries and the United States. In particular these have their significant presence in Pakistan, Saudi Arabia, Bahrain, United Arab Emirates, other GCC countries, Malaysia, Sudan and Iran. Who Raise The Questions? Islamic banking is a weak industry†¦. In respect of resources, in respect of knowledge-bases, in respect of trained-knowledgeable-sincere human resources, in respect of availability of commercial options, in respect of state support, as well as, society support, in respect of sincerity of stake-holders and WHAT NOT. With such adverse footings, unfortunately, it really has certain weaknesses which are not only targeted by the enemies, but, are more severally and forcefully attacked by the FRIENDS. As a consequence, the Islamic banking and finance is facing disagreements from various quarters including certain â€Å"revolutionary† Islamic movements, certain â€Å"rigid† and â€Å"hard-core† religious scholars, and â€Å"idealistic† and â€Å"utopian† Islamic economists (without any disrespect to them all). Can Banking Ever Be Really Islamic? The first question is raised mostly by those who either do not have any knowledge about banking, or those who have the courage to evaluate the banking systems from its evolution to its objectives. They feel that the banking per-se is against the very basic concepts of Islam. They feel that just like the fact that there can not be any â€Å"Halal pork† or â€Å"Islamic prostitution†, there can be no â€Å"Halal banking†. This viewpoint is supported by the fact that, particularly in Pakistan, we have already faced a complete disaster in the name of interest-free banking and so-called IFIs particularly including Modarabas. The argument, as to whether Islamic banking is really Islamic, has two different facets. The first one is that whatever is being performed in the name of Islamic banking is apparently quite similar to the operations of a conventional financial institution hence creates doubts in people’s mind, as to on what grounds we can call it Islamic? So they feel that it is merely a change in name and documents and in fact, it is nothing different from conventional banking. The second facet of this question is more important nd deals with the socio-economic factors associated with the overall Islamic financial system. Due to significance of these objections, we will discuss these two issues before looking for other arguments. Merely A Change In Name And Documents The most common and most discussed argument against contemporary Islamic banking is that there is â€Å"NO DIFFERENCE AT ALL† between the conventional banking and Islamic banking and this is merely a change of name and doc uments. The second argument, which is in-fact a derivative of the first argument, is that even in Islamic banking, the most common products being used e. g. Murabaha, Musawwama, Salam, Istisna, diminishing Musharaka and Ijara Muntahia Bittamleek are on fixed return basis. Even the Musharaka and Modaraba based products are engineered in a way that the profits are â€Å"virtually-fixed†. One should realize the fact that unless we can distinguish an Islamic bank from a conventional bank, it would be difficult for any of us to rely on the same. Particularly, it is observed that they try to make sure that their product is similar to the conventional products in all respects, even if for that purpose they have to incorporate a few provisions in these products which are not considered to be good or a few of them are considered Makrooh. In addition, their endeavors are focused towards minimization of their risk through every possible option and accordingly, the essence of Islamic finance which is based on risk taking is killed. We can note that most IFIs market their products on the models very much similar to those used by the conventional banks. As an example, an Ijara Muntahia Bittamleek transaction introduced by an IFI might be very similar to a finance lease transaction offered by a conventional leasing company, except for a difference of Takaful / insurance cost which in Islamic mode is to be borne by the lessee and accordingly, the same is built-in the rentals. The basic reason behind this similarity is to ensure three objectives. The first one, which is more important one, is to provide an â€Å"even playing ground† to the IFIs in order to ensure their survival in the overall banking system. The second one, is that even by IFIs, it has to be ensured that their shareholders and depositors get some return and preferably a return equivalent to those of conventional banks. And the third reason is to avoid arbitrage amongst Islamic and conventional financial systems which may be exploited by a few big-guns to get the benefit of the pricing difference between the two parallel financial systems. For such reason, time value of money concept is used for performance measurement and pricing of financial products. Most importantly, it should be kept in mind that in some areas Haram and Halal have a very small difference. For an example, only saying the name of Allah Almighty on an animal at the time of slaughter makes it Halal and permissible while by not saying that name we make it Haram or by just a few words of acceptance in Nikah, in presence of a few persons, a man and woman become Halal for each other. Similarly, if a transaction can be engineered in a way that the same becomes Shariah compliant, then we should not conclude that the same is Haram only due to its resemblance with the interest based financing. It is also pertinent to note that since the Islamic financial services sector is in its infancy phase, as compared to the conventional banking, we unfortunately have to follow the conventional system in the pattern of financial products and are still not in a position to invent absolutely new financial services. During the last few centuries, the conventional banking system has well read the human needs and psychology and has invented a considerable number of financial products and accordingly, it is not simple to just invent a new financial tool just for the purpose of inventing one. For example, if they have running finance and overdraft as a financing tool, we have invented an alternate to the same in form of Istijrar with Murabaha or Musharaka based running finance model. Similarly, if they use finance leases as a financing tool, we have converted the same in a Shariah compliant form in form of Ijara Muntahia Bittamleek or in form of Diminishing Musharaka. These are only two examples, but the tally is practically very high and for each interest based financial product except for those explicitly Haram, more than one alternates have been engineered. The objective of this discussion was just to emphasize that merely an amortization schedule similar to the one offered by a conventional bank, is not a basis for declaring a Halal product to be Haram. If just a pricing model or just the similarity of a cash-flow model makes the transaction Haram, what you will say regarding a conventional loan offered at a price much higher or much lower than the market prevailing rates for which the pricing model and the cash-flow model are not similar to those generally applied in the industry. Does anybody think that such dissimilarity will make it Halal? Accordingly, from Shariah principles it is rightly concluded that it is the substance of a transaction what makes it Halal or Haram and not a pricing model used to price the transaction or the cash-flow model used for the payments and repayments in monetary terms. Socio-Economic Effects Of Islamic Banking And Finance Second most significant argument from such group, predominantly by certain Islamic economists and certain Islamic revolutionary movements, is about the socio-economic factors of Islamic banking. They feel that since Islamic banking is also based on profit motive and in present form, it generally works on â€Å"virtually-fixed† return basis; hence the same cannot attribute anything-positive towards the socio-economic changes that Islam desires. This is a crucial question and, we believe that, every conscious Muslim will concur with the concerns of those who raise the same, although the conclusions derived by different people might vary. Nobody can argue that virtually-fixed return based banking, although being Shariah compliant, is not what has been desired by Islam as a complete way of living. In addition, the current-day Islamic banking is emphasizing more on consumer finance as compared to financing to SME sector, agricultural sector, and more importantly, on the micro-finance; hence, it is not contributing enough towards the â€Å"just and equitable monetary system† that Islam needs. Having due regard for these arguments, may we remind you that that the Islamic economic system is not something that can work in isolation of the geo-political and legislative system, as well as, and more importantly the society’s behavior towards the injunctions of Islamic Shariah in personal and collective matters. Accordingly, one can easily imagine that in an economy whereby most of the businessmen are not honest in fairly presenting the financial statements of their businesses, how difficult it is to introduce a profit and loss sharing based financial solution. Similarly, in most of the cases payment of Zakat and Sadaqat depends on the individual and particularly, in view of the gigantic volume of the black economy in the country, what can be expected even if a good system for Zakat and Ushr is introduced? It needs to be emphasized that only the change in banking system is not a solution to the overall revolution of economic system unless other facets of Islamic economic system, as well as, Islamic social system are not implemented simultaneously. Accordingly, the complete transition of economy to an Islamic economic system can be performed, when and only when, the overall consensus of the society is developed towards practical application of Shariah in all the facets of human life, particularly including the governmental, political and legislative structures. Despite such an unsatisfactory and rather discouraging attitude of the society towards application of Islamic Shariah, it should be noted that such a situation do not relieve a Muslim from the applicability of Shariah principles, but rather increases his responsibilities in the way that it becomes his duty not only to try to abide by all applicable Shariah requirements in his personal capacity but also to put his endeavors towards improvement in such system. Consequently, in case the Islamic banking, in your opinion, is not contributing enough towards betterment of society, you cannot blame the same alone. The responsibilities of the Muslim Ummah as a whole (or of the State) can not be expected to be borne by a single sector only, which, at this point of time is in its infancy stages. Is It Heela Banking? This is a general discussion at various forums that contemporary Islamic banking is based on Heelas. From Shariah perspective, a Heela is an option utilized to disobey the divine guidance through engineering the circumstances and playing with the facts and intentions. Having an insight into the industry, one can not disagree with this argument to certain extent, as it has been observed in a number of cases that in-fact, certain transactions are practically applied on this basis. Having said that; this argument should, however, not be used to blame the entire industry. We should acknowledge that the foundations of the industry have been built using the pillars which are directly derived from the Holy Quran, Sunnah and Fiqh. It is worth-noting that mostly, a Heela is applied in the â€Å"execution of a transaction† rather than â€Å"designing of a transaction†. In other words, we can safely conclude that application of Heelas in Islamic banking is not a weakness in the theories of Islamic banking, but actually is a matter of misuse / misinterpretation of basic Shariah guidance in respect of various Shariah compliant financial transactions. Accordingly, it needs to be emphasized that in order to support the growth of Islamic banking and finance on right footings, we need to strengthen the Shariah compliance mechanism for the industry. In addition, in the longer run, we need to eliminate the Islamic financial products which have the potential of misuse. Use Of Interest-Rate As Benchmark; Is It Halal? Critics, including scholars, as well as, economists, strongly condemn that most of IFIs while providing financing by way of any of the â€Å"Halal† transactions, determine their profit rate on the basis of the current interest-rate benchmarks prevailing in the conventional money market. Scholars are of the view that by applying these benchmarks, the Islamic banking industry makes their transactions â€Å"similar† to interest-based transactions and as a consequence, these transactions become doubtful from Shariah point-of-view. Economists feel further issues and that and are of he view that this thing makes these financial institutions a part of the prevailing capitalistic economic systems, hence this sort of transactions are absolutely not desirable by Islam. Here it would be worthwhile to have a look on the arguments by the Islamic banking for better understanding of the pricing issue. They generally give examples like; s uppose you enter into a supermarket in UK and see that the pork, the beef and the Halal beef are all being sold for GBP 2 per kg. Do you think that this similarity of price or the fact that these products are being sold under the same roof renders the Halal beef as Haram? Or for example; in the same superstore you note that they are using the same balance for weighing these three types of meat. Do you think that using the same balance will render the Halal beef, as Haram? If not, then we should better understand the principle that it is the substance and legal form of the transaction that makes it Halal or Haram and not its pricing, rate or the cash-flow model or the institution, or even the environment that offers such transaction. This issue, however, needs to be addressed by the government, as well as, the market players. A strong Islamic inter-bank market will InshaAllah provide us opportunities to develop our own benchmarks for Islamic banking operations. Dealing of Islamic Banks with Conventional Banks Another strong argument against Islamic banking is against dealing with conventional banks. These dealings are of two types i. e. sharing of services and commercial transactions. As far as services are concerned, where the Islamic Banks are facilitating the foreign businesses of their customer or helping out their customers to transfer the money from safe channels. For these services, the remuneration or expense of Islamic banks is service charges which are allowed by Shariah jurists, although they recommend that such interaction should be avoided wherever IFIs are available. The second argument which is much strong is regarding the commercial transactions with conventional financial institutions. These transactions generally relate to the treasury side of the Bank whereby either the IFIs place their excess liquidity with the conventional banks or obtain financings from them to meet their own liquidity requirements. For placement of funds with conventional banks most of Islamic banks in Pakistan are using the product of Commodity Murabaha or they invest in certain â€Å"Halal assets† of the conventional financial institutions. On the other hand, they normally obtain financings from the conventional banks on the basis of profit and loss sharing, although the profit rates are once again â€Å"virtually-fixed†. Although, most of the Shariah scholars have allowed these transactions duly considering the Shariah requirements, however, nobody can argue that it is a must to avoid all such transactions. For this purpose, however, we need to strengthen the Islamic inter-bank market and to provide further liquidity management options to the IFIs particularly, in form of strong Shariah-compliant government securities and a stable capital market with plenty of Halal investment options available. All dealings with conventional financial institutions should remain limited to the necessities which reach the extremes of compulsion. Cost Of Being A Muslim Those who have bad memories of dealing with Islamic banks are in front-line of critics with this remark. People feel that there are serious doubts on the honesty and integrity of IFIs. They feel that these Banks are using the name of Islam to earn a few bucks more as compared to the conventional banks or rather they are exploiting the faith of Muslims by charging them, the â€Å"cost of being a Muslim†. On the financing side, they charge higher than conventional banks. In other words, internal rate of return on Islamic financial products is higher than the conventional products. On the contrary, it is observed that on the deposit sides they pay less as compared to the conventional banks. In addition, it is generally observed that the expected rates, as well as, the actual rates of return offered by these financial institutions are fairly equivalent to (generally slightly less than) the rates being offered by conventional financial institutions. A justification against the first argument is that since IFIs are subject to the commodity risk, asset destruction and holding risks and the price risk, as well as their relevant costs e. g. Takaful expenses, in addition to the risks and costs that a bank faces, they are justified in their demand i. e. higher internal rate of return. Nevertheless, financial experts have generally felt that even if these factors are considered, the pricing by these Banks is on the higher side. On the other side, in a profit and loss based model, it is agreeable that they assign weightage to different types of deposits in a manner that the total return on investment and financing pools is allocated amongst various depositors and the Bank (working as a partner). Even then, it is generally noted that IFIs are paying less than the market. We can only hope that in near future, with increasing competition in the Islamic banking industry, this effect will minimize because of market-forces except to the extent of pricing against actual additional risk elements. Marketing Approach Of IFIs Another valid argument is about the marketing approach being used by these financial institutions, which adversely effects the public reliance on this mode. People raising objections on the marketing approach of IFIs have two grounds for the same. The first one is the general marketing approach being applied by the a few IFIs which include advertisement and other publicity materials including involvement of women and traditional marketing and advertisement styles for promotion of â€Å"Islamic† banking business. Second ground is the marketing strategy in which sometimes it is felt that false statements are made for promotional purposes. An example of the same is the claim by a leading Islamic bank that all its day to day activities are monitored by its Shariah Advisor. Just imagine, if it is humanly possible, that a part time Shariah Advisor can look after all day to day activities of a full fledged bank with a number of branches even located at other cities. Another example is the claim by an Islamic mutual fund that it is the first one of its kind in the country, whereas another fund was operating in the country for around one year earlier to subscription for such mutual fund. They Don’t Look Like Islamic Once you enter into a glittering branch or office of an IFI, generally you do not feel any difference with a conventional bank. This issue is raised particularly by the blend of people who feel that once they enter into such location, it should look like a sacred place instead of a commercial office. You generally feel that they have over-spent on the furniture, interior-decoration and publicity stuff, which apparently, is against the injunctions of Islam. This impression is further strengthened when you see the overall environment, the dealing style of personnel and most significantly, you feel (in most of the cases) that there are ladies working for the organization without Hijab or even â€Å"appropriate attire† (in line with the dress-code of a Muslim woman as defined by Shariah). Although a few â€Å"moderate-enlightened† Muslims will not like this objection at all, nevertheless, it should be kept in mind that a common Muslim cannot digest â€Å"Islamic† banking while he feels that other factors of business are not really Islamic. We can’t argue with these objections as these have due weightage in them and the management of IFIs should take these objections seriously. However, we should keep in mind that the prime objective of Islamic finance, is to ensure that â€Å"financial† matters are dealt with in line with Islamic Shariah. In other words, environment does not make anything Haram. Needless to mention, from Shariah perspective, you can always buy a Halal product from a store where everything else is Haram although the same needs to be avoided if other options are available. Islamic Bankers – Don’t Know Islamic Banking This argument, once again, has key significance from the perspective of the overall control environment of these banks with regard to the applicability of Shariah principles. Particularly, it is astonishing when you deal with an Islamic banker, who knows very little about Islamic banking, but unfortunately, this is not very uncommon. The prime cause behind this issue is the fact that most of the IFIs have hired the conventional bankers and generally no or very little consideration is awarded to ensure that they are well conversant with the Shariah requirements with regard to the modes of finance being used by these Banks. Similarly, the IFIs do not spend enough on their resource-building for Shariah compliance and training of their staff, in comparison to what they spend for marketing. Having experience of training â€Å"Islamic Bankers†, as well as, performing Shariah compliance reviews, we may safely conclude that, this objection is not without substance. This accordingly, is a strongest need that the IFIs should allocate more and more resources for staff training and Shariah compliance. Monopoly Of Shariah Advisors Another objection is regarding the appointment of Shariah Boards and Shariah Advisors. People have largely noted and discussed at various forums that the major contribution in this field in Pakistan is limited to a very small group of jurists most of whom relate to a single family and their pupils (a single religious university). Besides this, another question is also being raised that generally the honorariums, consultancy fee and other benefits being offered to such jurists by the IFIs in Pakistan, as well as, abroad are quite high and this may jeopardize their independence. In addition, it is felt that they are the only ones who are whole and sole responsible for Shariah compliance. They approve the products, they review the transactions and in the end; they perform Shariah audit themselves, which is, however, an indicative of a conflict of interest (without any doubt on their personal independence and integrity). Most of the people conversant with the business and operations of Islamic finance do not agree with this observation, because the contribution of these people to the industry as a whole is remarkable and they deserve even more than that based on their contribution and efforts in the promotion of this industry. The general concept that a â€Å"Moulvi† should be paid the minimum for his life, is not justifiable. If you are getting benefits from their efforts, their knowledge and skills, then they should be justifiably rewarded. Having said that, it is always agreeable that it is the right time that contributions from jurist from other schools of thought should also be sought and they should necessarily be provided opportunities to enter into the field. For this purpose, it is a good proposition from the State Bank that a jurist should not be allowed to hold more than one remunerative position as a Shariah Advisor or member of a Shariah Board. This will ensure that fresh blood gets an option to enter into the field which will eventually improve the overall Shariah compliance in the field, as well as, will help these institutions to innovate fresh products. IFIs Use Conventional Insurance A valid objection; can’t argue with that. It was a real issue that according to the legal requirements, as well as, derived from real â€Å"compulsion†, the banks were required to obtain insurance coverage from conventional insurance companies and this practice was allowed by the Shariah Advisors to the extent of compulsion only. This situation, Alhamdolillah has changed after introduction of Islamic mode of insurance (Takaful) in Pakistani market. Unfortunately, there are a still IFIs who have not yet switched to Takaful while to-date three Takaful companies and a family Takaful company have commenced operations in Pakistan and now this lame excuse of compulsion can not be exercised anymore. Now it’s high time that the State Bank and the Shariah Advisors should take strong steps to ensure that no business is iven by the IFIs to any conventional insurance company either in respect of owned assets, or against assets held under security. Should We Still Prefer Islamic Banking? As a conclusion to this debate, we may say that we are required by our religion to implement a complete Islamic way of living in our individual and collective lives and the society and the government as well. The Islamic banking and financial system is a part of such system and is not construed to be applicable in isolation while o ther laws and customs repugnant to the Shariah requirements are still in force. However, for the sake of our own benefits, in order to avoid interest by ourselves and providing interest-free opportunities to our brothers and sisters in Islam, we should promote and support the Islamic banking and finance in the country with all our possible efforts and endeavors. We should not try to pull legs of an infant who is just trying to take his first step towards a long journey to go. However, we should try to ensure that he commences his journey on the right way, with strong footings. Such Islamic banking, may not be termed as perfect, but can provide us with a shelter from interest based transactions for the time being, and might support us in augmenting a truly Islamic financial system, and more appropriately said, will serve as an experiment for the time when we will really be in a position to the implement the complete Islamic way of living in our beloved country. May Allah Almighty bestow us his blessings and enable us to evolve a complete system of life in accordance with the principles of life provided by the Holy Quran and the Holy Prophet (SAAWS). May Allah accept our efforts and forgive us for our mistakes in this field in our individual capacities, as well as, as a society. About Omar & Faizan: Omar is a Chartered Accountant by profession, and is presently working as Partner – Islamic Financial Services Group with Ford Rhodes Sidat Hyder & Co. (A member firm of Ernst & Young Global Limited). Omar enjoys vast experience in audit, Shariah compliance and providing related services to Islamic finance industry in Pakistan. He is author of a Book on Islamic finance namely â€Å"Managing Finances – A Shariah Compliant Way†. Faizan holds experience in the field of Shariah audits and product development. In past, he has worked with a leading Islamic bank as Shariah Coordinator and Shariah Auditor. Presently, he is working with Ford Rhodes Sidat Hyder & Co. as Manager – Islamic Financial Services. [pic][pic]

Report on Carrebean Internet Cafe Case

REPORT ON CARRIBEAN INTERNET CAFE CASE Assignment – 1 CASE SUMMARY David grant is an MBA student hoping to open Caribbean Internet Cafe in his hometown Kingstons, Jamaica upon his graduation as he always wanted to be his own â€Å"boss†. Due to low accessibility and usage of internet in Jamaica, David thought of it as a good timing to pursue this business opportunity. He has gathered data on all the relevant costs: equipment, rent, labor, etc. He has also found a partner in the local telephone company, Jamaica Telecommunications Limited (JTL), where he previously worked.JTL has offered to provide equity and a long-term loan at favorable interest rates. He is now faced with the task of analyzing the gathered information and making a decision of whether he should proceed with the venture, and if so, if it would be a profitable business for him and JTL. TABLE OF CONTENT CASE SUMMARY1 INTRODUCTION2 PROBLEM DEFINITION3 CONCEPT FEASIBILITY STUDY3 TARGET MARKET4 LOCATION4 COMP ETITION4 ECONOMIC FEASIBILITY4 CAPITAL AVAILABLE5 START UP COST5 FIXED MONTHLY COST5 PRICE COST MARGIN ESTIMATION5 TARGET CUSTOMER SEGMENT – 200006 REVENUE PER YEAR6 PROFITABILITY6 CONCLUSION6 RECOMMENDATIONS7 INTRODUCTIONThe report deals with the study of a business proposal to open an internet cafe. The report studies the decision of David Grant who is an MBA student, to open Caribbean Internet Cafe in his home town Kingston, Jamaica. David while studying in London visited a number of cafes and was intrigued by the concept. While visiting his hometown Kingstons, Jamaica during summers he noticed that in spite of high awareness of the internet, there was low accessibility and usage of the same. Seeing a potential market of consumers, David decides to open a European concept based Cafe which will offer brewed coffee, imported wines, juices and baked products.He decides to have three areas in the cafe: a computer area with booths, a wine lounge with comfortable sofas, and a ge neral cafe area with table and chairs. He envisioned providing the customers, a perfect vehicle to use internet and other service without making an expensive investment in computer hardware and in addition a social outlet where people can surf together , listen to music or simply relax and socialize. He gathers the required information for starting the cafe and makes notes. PROBLEM DEFINITIONAfter gathering all the information David grant has to decide whether it will be a profitable and sustainable decision to open an Internet Cafe in Kingstons, Jamaica. CONCEPT FEASIBILITY STUDY In order to make a sound decision a feasibility study is carried out which will focus on analysing the target market, location , the competitors in the area and the three categories of costs: Start up costs required to be invested in the business, Fixed monthly costs that are to be bore as result of operations and variable costs, that result with every customer visit to the cafe.TARGET MARKET It was assume d that main segment that can be targeted as the potential customers would be university students, who have computer knowledge and professionals with high disposable income as they would appreciate a venue where they could relax and socialize along with availing internet facilities. Total segment size was assumed to be around 20,000. LOCATION Location that was chosen for setting up the cafe was New Kingston as most of the banks, other financial institutions and corporate had their head offices in that area.Also this area consisted of hotels and shopping centre, which would mean more masses, would come to know about CIC. Along with these factors, one more important reason was that New Kingston was close to several affluent suburbs from which CIC could attract patrons. COMPETITION In Jamaica, internet accessibility and usage was low. There were many reasons, that accounted for low internet usage such as 1) High cost of computer as percentage of average salary, 2) the lack of telephone lines in some areas of Kingston and,3)the high rates that was being charged by the existing service providers.Along with these factors, the idea of an† Internet cafe† was not very popular in Jamaica. So, this overall plan was quite new for that region and as a result the competition was not quite great. ECONOMIC FEASIBILITY CAPITAL AVAILABLE Table [ 1 ] PARTICULARS| AMOUNT (JA$)| DAVID GRANT’S SAVINGS| 5,00,000| JTL INVESTMENT IN EQUITY (50% SHARE)| 5,00,000| LOAN PROVIDED BY JTL @ 10% pa| 12,50,000| TOTAL| 22,50,000| START UP COST Table [ 2 ] PARTICULARS| TOTAL COST (JA$)| EQUIPMENT | 1426000| UTILITIY DEPOSIT| 7000| ADVERTISING (Prior to Opening)| 20000|LEGAL AND DECORATIONS| 120000| TOTAL| 1573000| FIXED MONTHLY COST There is an assumption that loan from JTL in the startup is a 5 year loan with principal payable on maturity and 10% simple interest payable monthly. Table [ 3 ] PARTICULARS| TOTAL COST (PER MONTH) (JA$)| WAGES TO EMPLOYESS (90*40*4*2)| 28800| SALA RY TO MANAGER | 40000| SITE RENTAL| 30000| TELEPHONE BILL AND UTILITIES| 15000| INTERNET LINK RENTAL| 10000| INSURANCE PREMIUM| 10000| ADVERTISING, MARKETING AND PROMOTION COST| 10000| ADMINISTRATIVE AND MAINTENANCE| 50000| INTEREST ON LOAN| 4167|TOTAL| 197967| YEARLY TOTAL (197967*12)| 2375604| PRICE COST MARGIN ESTIMATION PRICE/CUSTOMER (JA$) Table [ 4 ] PARTICULARS| TOTAL CHARGES| COST INCURRED| MARGIN (REVENUE)| INTERNET (PER HOUR)| 120| 60| 60| DRINKS (PER VISIT)| 140| 50| 90| FOOD (PER VISIT)| 60| 30| 30| TARGET CUSTOMER SEGMENT – 20000 An independent research firm, commissioned by JTL, conducted a study and came to the conclusion that the estimates by the owner regarding target size and demand were indeed correct.They also provided three scenarios of the demand that the cafe would attract. The market firm projected tha , optimistically, 50% of the segment would visit the cafe, on an average of , five times a year. A realistic projection was that 40% of the segment woul d visit the cafe on an average of three times a year. Finally, a pessimist estimate was that 30% of the segment would visit the cafe twice per year. Total Customer Visits / Year Optimistic (50%, 5x/yr) – 50000Realistic (40%, 3x/yr) – 24000 Pessimistic (30%, 2x/yr) – 12000 REVENUE PER YEAR Table [ 5 ] PARTICULARS| OPTI MISTIC | REALISTIC| PESSIMISTIC| COMPUTER USAGE (40%)| 12,00,000| 5,76,000| 4,32,000| FOOD/DRINKS| 60,00,000| 28,80,000| 14,40,000| TOTAL| 72,00,000| 34,56,000| 18,72,000| PROFITABILITY * In optimistic scenario the cafe would generate a profit of 45263 JA$ * In realistic scenario the cafe would incur a loss of 214737 JA$ * In pessimist scenario the cafe would incur a loss of 334737JA$ CONCLUSIONAfter analyzing the various aspects of the proposal it may be seen that the only scenario turning out to be a profitable and sustainable proposal is the optimistic one where the assumption is based on the fact that 50% of the total segment i. e. 10000 of the total 20000 customer segment will visit the cafe on an average of 5 times a year. But it would not a practically advisable to go ahead with such an assumption as the realistic as well as pessimist scenario shows a loss reflecting a negative probability of the business being profitable and sustainable in the long run.But it has been mentioned that the area does not have a cafe which provides internet facility and at the same time a hang out joint offering snacks and music at the same place, which makes Caribbean Internet Cafe first of it kind in Kingstons Jamaica. Therefore scrapping the whole idea leads to loosing out on an opportunity which gives David Grantâ€Å"First Mover Advantage† of offering a new experience to the customers. Secondly, a potential unexplored market which can be catered to by opening such cafe.Therefore David must proceed with his proposition but only after making certain changes in the area cost and tariff. RECOMMENDATIONS * David should revise his ta riff of 120$ per hour considering the average charges of the internet facility is 90JA$ per hour. * Also David can reconstruct the menu of the snack bar as the offerings does not fits the demand of the local people and is adding to the cost due to being exotic in nature. Eg. It is clear from the case facts that local people does not drink coffee and hence it may be omitted from the menu.

Why I Want to Study Msc in Finance and Investment and How I Feel I Can Essay

Why I Want to Study Msc in Finance and Investment and How I Feel I Can Contribute to the Course - Essay Example I attribute this to the environment I grew in where most people were business people who had invested in different sectors of the economy. I undertook the course of Finance and Investment during my undergraduate programme and I would like to get a deeper understanding of the field. This would be possible through a MSC undertaking in the course. I want to gain the necessary skills and knowledge needed in the sphere in order for me to have first hand information when approaching investment situations. The understanding that I inherently have in issues of investment and finance also plays one of the most significant roles in my choice of pursuance of the MSC course in Finance and investment. Among my understanding is the appreciation that money which is invested wisely will generate more money, thus, boosting a country’s economy (John, 2006, p. 58). In the contemporary society, entrepreneurship is the only way of building a country’s economy since job opportunities are min imal. Due to this, it is very important for one to understand how to identify opportunities and strategize appropriately on how to use the available resources to generate more money. In this regard I will play a role in boosting the economy. MSc in finance and investment will enable me to understand behavioral finance.

Internal and external Environments for the oil and gas management Essay

Internal and external Environments for the oil and gas management - Essay Example The theory of peak oil is largely based on Hubbert’s work. He foresaw peak oil production in 48 countries of the U.S. The theory is represented in a bell curve showing the sudden rise in discovery of oil reserves declining gradually as the rate of reservoir discovery slows down. Significant inferences have been made about the peak oil theory. Increase in oil prices will be intensely felt with respect to transportation of energy fuels. Air transport is likely to face a sad demise as it is heavily dependent on oil. Ultimately, the unfortunate picture demonstrates that the tourist-dependent areas will largely suffer because of the fall in the peak. Higher transportation costs signal higher food costs; we are not self-sufficient societies anymore hence, industrial agriculture will suffer. This on the contrary means that the organic foods department will thrive on its own because it is not dependent on oil as much. Peak oil theorists predict the aforementioned possibilities . Expert analysts delve into the evaluation and usefulness of alternative energy sources in the long-run. The alternative sources need to be cost effective; these can be divided into liquid biofuels and other category which involves hydrogen and electricity. Biofuels can easily enter into the transportation market in the next decade. Biofuels have their environmental advantages as well which gives them an edge over petroleum. Experts are still discovering the potential uses of carbon cars, sticks and carrots, hydropower, solar energy etc. The need of the hour is to subsidize agencies and organizations to make efficacious use of these resources (Kopp, 2006). The research analysts studying oil and gas management also focus on the extent to which U.S and other oil producing countries are dependent on OPEC, a prestigious corporation. OPEC plays a major role in determining the prices of oil and

Finance Report Essay Example | Topics and Well Written Essays - 2500 words

Finance Report - Essay Example f beta measurements helps an investor in manipulating the portfolio in the changing economic times and ensures that investments patterns have higher probability of performance. The purpose of this study is to analyze use the study of portfolios, by learning their measurements, purposes, and methodologies to show how portfolios are instrumental in helping investors make informed investment decisions in the market. The volatility of the stock market invites investors despite the daily, quarterly, and the annual dramatic occurrences at the stock market. The average return of a security describes the value of the volatility of the stock market. The volatility of the portfolios is measured by the daily, monthly, quarterly, and yearly standard deviations. The standard deviations also show price variations, in the sense that when the prices are pooled together, the standard deviation tends to be very small and the reverse is true when the prices are spread apart. In the events of securities, when the standard deviations are higher, there is a greater dispersion of the returns and the risks associated with the investments are high. The risks that are created through the analysis of the daily, monthly, quarterly, or yearly averages, returns, and other measures of dispersions, are based on the degree of these analyses averages. As the chances of the expected returns lowers, the riskiness of the investments increases. According to the daily, monthly, and yearly average return, standard deviation, covariance, and correlation analysis it is clear that there is a strong link between the portfolio volatility and the stock market performances. In the analysis sheet 1, the stock portfolios of EQR, PSA, QEM, SPG, and VNQ represents the stock fluctuations that depends on volatility. A sample of the sheet1 is shown below. As shown in the table below, when the average daily range in the S&P 500 Index is low (the first quartile 0 to 1%) the odds are high (about 70% monthly and 91%

Fluorescence Lab Report Example | Topics and Well Written Essays - 500 words

Fluorescence - Lab Report Example In this experiment, anthracene was the electronically excited species while carbon tetrabromide was the quencher. A 250 ml solution of 0.1 mM anthracene (AN) was prepared in spectrometric quality n-hexane and used as a â€Å"solvent† to prepare 25 ml of 15 mM â€Å"stock† solution of CBr4. Eight dilutions of the AN/CBr4 were made using AN as the solvent starting with 0% (10 ml of AN) and ending with 100% (10 ml of CBr4). The solutions were then introduced into a fluorescence cell and deaerated with dry N2 for two minutes one after the other. The full fluorescence spectrum was then recorded using the instrumental conditions set by the TA. The fluorescent intensities of all the dilute solutions were recorded. The Stern-Volmer plot in this experiment is curved upward because the system is considered to be suddenly exposed to a steady-state excitation source. A graph of I0/I vs [Q] gives KÏ„0 as the slope. The rate constant value obtained from the Stern-Volmer plot was 8393.7 Lmol-1s-1 while the theoretical value is estimated at 5.37 Ãâ€" 10^10 Lmol-1s-1. The rate constant obtained in this experiment is lower than the theoretical value due to factors such as ground-state complex formation between A and Q, competition between A and Q for the incident light and polarization effects. From equation 10 a graph of (I0/I) versus [Q] gives KqÏ„0 as the slope, and knowing the numerical value of Ï„0 then the value of Kq can be

Policemen of the World Thesis Example | Topics and Well Written Essays - 500 words

Policemen of the World - Thesis Example The dollar-standard system of exchange further strengthened America’s economy, hence its rise to a world superpower. Instances of America’s Military Operations Abroad and justification. America’s foreign policies are fundamental in keeping world peace and interventions since the end of the second war. America has a vital role in resolving conflicts among nations. The country’s foreign policies grant Congress and the president power to undertake military operations abroad, either to combat global terror attacks or promote peaceful co-existence among warring nations. a) America’s military operations in Iraq in 2014President Obama, on August 8, 2014, authorized a military operation to be undertaken in Iraq. The operation involved targeted airstrikes on target areas. The mission of America’s military intervention was to suppress emerging Islamist militants in the area. Airstrikes targeted areas dominated by Islamist militants in Iraq. Areas such as the Persian Gulf were of interest and target for intelligence missions conducted by US military. President Obama’s decision conformed to the country’s foreign policy provisions of preventing international terror attacks. b) The effort to end global terrorism The American military operations target perpetrators and planners of terrorism as a measure to fight the emergence of militant groups in identified areas, regions, or nations. In 2011, the U. S. military through its intelligence operations in Yemen killed Anwar al-Awlaki.

Persecution in the Early Church Research Paper Example | Topics and Well Written Essays - 3000 words

Persecution in the Early Church - Research Paper Example The essay discusses that religion today is a matter of personal choice in many parts of the world, and this is in sharp contrast to the difficult times of persecution Christianity as one of the world’s religions underwent in its initial stages to become one of the greatest as documented in history. Persecution began in the period after Christ and continued for a period of about 300 years. It was witnessed at the time of the Roman rule during the period 64 A.D to 311 A.D and was facilitated by different Emperors and Jewish religious leaders. Professing to be a Christian during that period was like declaring the death sentence upon oneself because people were martyred in some of the cruelest ways witnessed which included beheading and being thrown alive to man eating beasts, being boiled in oil and crucifixion among others. Emperors like Nero are documented in history to have cruelly ordered that Christians be thrown to hungry lions in amphitheaters as spectators enjoyed. The me aning of the word martyr to the followers of the Christian religion meant just a witness, but it acquired a deeper meaning and implication when the followers were ready to die for what they believed and through this many people were converted probably due to the deep conviction shown by the martyrs. Christians endured persecutions in the early church, not only from Jews, but from Romans as well and they all advocated for removing Christianity in their systems. There were many reasons why the persecution occurred and continued for the long period that it did. Rome had embraced paganism and thus all citizens were expected to adhere to it as the state religion. Failure to do so was considered to be rebellious and was punishable by death. The followers of Christianity were also influenced by ancient Jewish stories as narrated in Christian literature, for example, the story of Daniel who was thrown into a lions den when he refused to stop praying.   Shadrack, Meshak and Abednego were a lso thrown into a furnace when they refused to bow to an idol. The revolt of the Maccabees who believed that it was better to die than deny the nation of Israel was also one of the sources of inspiration for Christians.2 Persecution was not only caused and done by Roman authorities. The Jews who were followers of Judaism, one of the oldest religions in the world and which is based on Abrahamic beliefs strove against the immerging group of Christianity whose beliefs were based on Jesus Christ. Christians believed they were the new dispensation. One of the first Christian martyrs, Stephen as narrated in the book of Acts 7 was not killed by the Romans, but by the Jews when he tried to explain to them about the new faith based on Jesus Christ while they believed in Judaism.3 The Jews in protecting what they believed was the truth teamed up many times with the Roman authorities to persecution. The fire of Rome in which a very great part of the city was burnt was also used as an excuse to further persecute the Christians in the year A.D 64. Emperor Nero, the reigning monarch was thought to have been responsible, probably in his quest to destroy old buildings to give way for new ones, but he was able to lay blame elsewhere. The Jews were accused, but lastly it was the Christians who suffered the consequences.4 Many of them were arrested, tortured and martyred for the Arson. This act made them become classified as trouble makers instead of an accepted religion. This was a reason enough to do all things possible to prevent their rise to become a recognized religion. Roman emperors did not entertain anything that appeared to be superstitious and to them, failure to pray to Roman gods was against state policy. Atheism was construed to mean the worship of other gods other than those accepted by the Roman authorities. The Christians were supposed to deny their faith and accept to adhere to the faith of the Roman gods.5 Many publicly disagreed and were ready to die for Chri stianity and thus were martyred because they were considered

Marketing Cultures Essay Example | Topics and Well Written Essays - 500 words - 1

Marketing Cultures - Essay Example Subway India unlike USA offers various veg and non-veg stations specialized in fast food services. These stations give fast food service ranges from: This is a crunchy, crispy, and delicious Veggie Delite sandwich. It is a tasty combination of tomatoes, garden fresh lettuce, green peppers, olives, onions and pickles sandwiched on freshly baked bread Most vegetarian who loves this subway fast food livened up! It is a light, golden brown patty that combines the flavors of high-quality carrots, beans, bell peppers, and other assorted ingredients. As Indians say, the spice of life is variety! All these varieties emerge from the various veg and non-veg stations in Subway India but one may not necessarily get them in Subway USA due to the fact that there is only one veg and non-veg station in Subway USA. The Subway sandwich chain intended to team up with Softcard in an effort to offer customers a means of buying food via their own mobile phones (Gong, 2013:28). Indeed, Subway lived to its words and kicked off the NFC-based mobile payments using Softcard, a payments venture engineered by T-Mobile USA, AT&T Mobility and Verizon Wireless. Previously known as Isis Wallet, Softcard provided an app which supported mobile payments in at least 80 mobile devices sold by T-Mobile, AT&T and Verizon and was preloaded on at least 30 different devices. Consumers were now able to utilize their NFC-enabled mobile devices to access payment terminal at their regional Subway restaurant in USA when paying for their food. This pilot program was only launched in Subway USA in 2013 and not in Subway India. The intention of payment service from the NFC-enabled mobile device was to reach at least 26,000 Subway locations within the US. The question as to whether iPhone 6 users will tap into Apple Pay to take advantage of these new systems was still valid by late 2013. However, Softcard and

Health Project management Essay Example | Topics and Well Written Essays - 750 words

Health Project management - Essay Example After the determination of the main agenda, preliminary steps prior to implementation are undertaken such as the gathering of the tools and resources required in every aspect of administration and implementation of the objectives. After this, the planning phase required prior to implementation is needed. In the said phase the specific schedule of the actions are indicated (Dwyer, Stanton and Thiessen, 2004). The culmination of the said phases is the implementation phase where the skills of the personnel, the leadership of the head and the teamwork and cooperation of the different units and members are crucial to the success of the project and the attainment of the goals and missions. The said factors are very crucial in the implementation of the health project since governance can make or break the goals of the project. If any of the said factors fail, the whole system is affected. Facing project scope creep can be considered as a common phenomenon in the process of project implementation. This is a common case based on the fact that the plans are made and implemented by human being. Scope creep is defined as the ‘low-key’ incremental changes upon project implementation (Melton and Iles-Smith, 2009, p.118). There are different issues related to scope creep such as requirements creep, feature creep and instruction creep. Requirements creep can be related to the changes in the scope of requirements due to the changes or variation in the disposition of the end user. In a health project, it can be related to the procedures required for a particular case, patient or project. The feature creep on the other hand is related to the unforeseen features that can arise in the development of the project. These issues are often originating from the people implementing the project on the basis of the view to improve services. This is important to uphold the quality

Chocolate eassy Essay Example for Free

Chocolate eassy Essay Chocolate is†¦ Well when you think about chocolate you have a joy feeling, and it’s exciting. Not all chocolate is wonderful though, there are many different kinds of chocolate and depending on the type of person you are not all chocolates are enjoyable. You can tell a differences of chocolate by the appearance, smell, texture, flavor, and especially the percent of coca in a chocolate. The coca plays a very important role in chocolate. Coca is cocoa butter and powder mixed which is cocoa solids and it all comes from the cocoa beans, usually found near the equator. In my experiment of tasting and telling differences between chocolates I found the important role coca plays. The difference coca made with 90%-85% coca in a chocolate. The 90% coca was very dark and dull compared to the 85% that was slightly lighter, less dull than the 90% one. The smells for both the 90% and 85% were similar except the 90% chocolate smelled very dull of chocolate just like black coffee as was the taste also, in the 85% coca it was still hardly any smell of chocolate but very mild and the test was more sugary until the black coffee after taste. The texture of all the chocolates felt the same in my hands but in my mouth it was the hardness or easiness of how the chocolate melted, the 90% chocolate did not really melt it was snappy an di had the chew it to break it down, the 85% chocolate started to melt a little bit but I still had to bite to break it down. Now which chocolate would you prefer? Even though the 90%-85% coca wasn’t much of a difference in the amount of coca, it made a difference in taste, but how much of a difference will 70% coca to the 85%-90% make? Now with less coca the chocolate is starting to look like the average Hershey’s bar we get from any store worldwide. Now there’s less coca I get more of a milk chocolate smell but it’s only a little stronger than the 85% coca. This type of chocolate melts or at least it starts to melt in my mouth and is a lot smoother than both the other chocolates. The flavor of this chocolate with only 70% coca is almost like black coffee with sugar but no milk or cream. Out of all the chocolates that were tried so far the 70% would be my pick of a chocolate. Milk chocolate. One of the most common eaten chocolates in the world, but did you know there are different qualities of milk chocolate and they differ from taste, smell, texture, and appearance? Threes the simple generic brand milk chocolate always 35% coca, wow a drop from every other chocolate, right. The generic chocolate is the lightest of all the milk chocolates and the cheapest as well as quality. All the milk chocolates have around the same smell except the generic brand smells duller of milk chocolate but bold of chocolate more than the dark chocolates. The generic chocolate tastes like the cheap Easter candies, or like drown out not really flavored coffee, old and cold coffee. Again 35% coca but a higher quality chocolate, the one and only Hershey’s brand that’s seen on almost every shelf at stores. The appearance in Hershey’s gives you the signature look of chocolate, it’s the darkest of the 3 kinds of quality milk chocolates. This one has the strongest chocolate smell it gives you the memory of that enjoyable taste of CHOCOLATE. Instead of the coffee flavors that every other chocolate has had Hershey taste like how it smells, wonderful. The highest quality of chocolate is less seen and is also more expensive than Hershey. The look is just a little darker than Hershey but has a very distant flavor. There’s more flavorings in the more expensive brands like vanilla milk sugar and any other additives. All the milk chocolates of 35% coca melt in your hand, even though the qualities are different there all 35% and have the same melting temp and have very distinct flavors. The last chocolate that was tried isn’t actually a chocolate but it’s in its name, none other but white chocolate. The looks are completely different it’s white/yellow because there’s eggs and not coca and also only has coco butter in it. It smells like Hershey’s milk chocolate but taste completely different like cream. The white chocolate melts in my mouth still and there are also different qualities of white chocolate. Two other chocolates that were tried are chili chocolate and sea salt chocolate. Both just have additives in it as different flavors and are 47% coca. The two flavors tasted different than any other chocolate because you weren’t just getting the chocolate taste. Although both of the chocolates smelled, had the same appearance and texture as all the other dark chocolates, it tasted very different. My thoughts on this experiment, changed my thinking of chocolate all together I didn’t know that coca could make such a big difference in the taste smell appearance or texture of a chocolate.

The Media In India Media Essay

The Media In India Media Essay Looking at the history of news coverage of the war and internal crisis situation, it is quite evident that the news from the area of operation has always interested the mankind. Media these days has now assumed a status which it had seldom enjoyed earlier. Starting as an institutionalized approach to generate awareness and inform masses, media has become an instrument to govern our lives. A close scrutiny and study of Mahabharata would expose to us the nuances of battle that went on between the two adversaries and till date it remains a great testimony to what the quality of battlefield reporting analyses was during the epic period in India. If we were to identify a war correspondent in correspondingly modern India, possibly William Howard Russells name could be the first one to be cited as he reported upon the first war of independence in India in 1857.The coverage of the war and internal crisis in present day scenario has taken an interesting turn with the near real time to live co verage of the events showing pictures from the crisis zone instantly. Media has been playing a vital link to the rest of India on the ongoing insurgency/militancy in Kashmir and North East. Media coverage took an upward surge almost nearing a deluge during the Kargil conflict. Twenty four into seven channels began churning the battlefield in a hunt for not only the latest stories but a series of stories eclipsing the previous one thereby arousing public interest and forming opinions. Never had there been so much support to the war effort in the recent history as was evident during the Kargil conflict. Why did it happen the way it did-did media play a role in it? Do we expect the media to be as supportive during future operations as it was during Kargil? Would the part of media that is controlled and financed by people from outside the country continue to play the ball the way it did during the Kargil conflict? Today, the images of war, for that matter peace, can decisively draw the contours of a nations public opinion even before the authorities can confirm or repudiate the authenticity. Therefore, it is all the more essential to critically analyse the role media can pl ay and how best can it be optimized without compromising any of its essential elements. Press council of India 1. Press Council is a mechanism for the pres to regulate itself. The raison detre of this unique institution is rooted in the concept that in a democratic society the press needs at once to be free and reasonable. If the press is to function effectively as the watchdog of public interest, it must have a secure freedom of expression, unfettered and unhindered by any authority, organised body or individuals. But, this claim to press freedom has legitimacy only if it is exercised with due sense of responsibility. The press must therefore scrupulously adhere to accepted norms of journalistic ethics and maintain high standard of professional conduct. Where the norms are breached and freedom is defiled by unprofessional conduct, a way must exist to check and control it. But, control by government or official authorities may prove destructive of this freedom. Therefore, the best way is to let peers of the profession, assisted by a few discerning layman to regulate it through a properly stru ctured representative impartial machinery. Hence, the Press Council. 2. The Press Council of India was first set up in the year 1966 by the Parliament on the recommendations of the First Press Commission with the objective of preserving the freedom of the press and of maintaining and improving the standards of press in India. The present Council functions under the Press Council Act 1978. It adjudicates the complaints against and by the press for violation of ethics and for violation of the freedom of the press respectively. The Press Council is headed by a chairman, who has by convention, been a retired judge of Supreme Court of India. The council consists of 28 other members of whom 20 represent the press and are nominated by the press organisation/news agencies recognised and notified by the Council as all India bodies of categories such as editors, working journalists and owners and managers of newspaper, five members are nominated from the two houses of the Parliament and represent cultural, literary and legal fields as nominees of Sahitya Academ y, University Grant Commission and Bar Council of India. The members serve on the Council for a term of three years. The Council was last reconstituted on May 22, 2001. The Press Council of India has the following function:- To help the newspaper to maintain their independence. (ii) Medium of Media Role of Media 2. Role of media is that of mediation between the government and the people of the nation. Due to its responsibilities, media is the fourth pillar of the democratic India. After 63 years of achieving independence and quest towards becoming number one power of the world by 2020 through economic growth, the role of media is somewhat uncertain and putting a question mark on the Indian journalism. Before moving ahead we need to ask ourselves and think as to is Indian media playing the role for what it has been known that is the fourth pillar of the state? If not then what role media should play? The obvious answer to this question is that the media should be fair, reliable, impartial, accurate analysis/reporting and work in an integrated manner towards the overall benefit of the people of the nation. As far as news is concerned, media should analyse the news in a very rigid manner, how it has happened and what is the very existence of the news to go to the root cause of the problem inste ad of being biased to any facts and figures available of hand or floated by anybody. But the fact remains very often rather going deep into any problem, journalists are blindly accepting the news as truth which is being formulated and carefully manipulated by the evil elements and disseminate the same publicly. Well, the entire community of journalist s cannot be placed under suspicious category for the inappropriate reporting or misdeeds of few journalists. 3. Medias basic role is to inform, influence, entertain and help develop economy of state which involves news evaluation, analysis and assessment and finally dissemination. Newspapers have a dual role; it is a quasi public institution and a free enterprise and same holds good for the electronic media also. However when the media overlooks its responsibility to the people of a nation and lays more emphasis on being free enterprise that is the problem starts. Another problem is what news is worthy and what is not, and most important is what news need not be published or broadcasted is decided by whom? The journalist is neither to be considered as a detective nor a historian but as mediator in conveying its readers all about the event. Major General Winant Sidle of the US Army says, The appropriate media role in relation to the government has been summarised aptly as being neither a lap dog nor an attack dog but, rather, a watch dog. Apart from acquisition, interpretation and disseminat ion of news, role of media can be summarised as; to create public opinion and attitudes, act as watch-dog for citizens in terms of human rights issues and abuses by institution of power, inform public with events that are balanced and finally maintain national morale by responsible news coverage. The Constitution of India and Press Freedom 4. The Constitution of India, specifically in the chapter on Fundamental Rights, surprisingly, does not mention freedom of press. Later on, Dr. Ambedkar however had mentioned that being part of the guarantees of Freedom of Speech and Expression in Article 19 (1) (a) of the constitution it was not necessary to stipulate the freedom of press separately. Freedom of expression as mentioned in the Constitution implies all forms of opinions, thoughts, ideas and conviction and thus covers most of what is needed for the freedom of press. Censorship is no way covered in any provisions of the Indian constitutions. However during an emergency under the Indian Constitution, Fundamental Rights including Freedom of Expression and Speech stands suspended. The Article 19 (2) of the Constitution of India states that the freedom of the press can be restricted for reasons of sovereignty and integrity of India, preserving democracy and the security of the state, besides some other contingencies. 5. Freedom of the media in actual facts is tempered by hard ground realities such as power and influence of the ownership on editorial policies, commercial orientation of the media, government control over key resources such as newsprint, communications and advertisements. Very often media misuses the freedom given to it and it is evident from a number of issues. Media these days are more engaged in dramatization of an event or news rather than reflecting the informative part. More often, unnecessarily intruding into private lives/personal matters of the people and especially focussing on the distress victims and their families. Media has been in highlight for being involved in corrupt practices and favouring the publishers, political parties, business houses, religious institutions to name a few. Biased publishing, journalist and editor block some news while highlighting others for the reasons of there own. There have been instances where media play up regional emotions leading to s trong appeal and wide spread commotion. During reportage of war or any operations related to internal crisis situation, many a times media has show immaturity and is irresponsible in its reporting by sensationalizing and escalating the conflict. Police, politician and corporate can still be considered for double standards, but how can we expect the same standards from our journalist community. When one pillar collapses, the whole building is likely to fall down. Media being the fourth pillar need to be strong enough in breaking the ice and put forward news and make the truth distinct from ambiguous or falsehood which will entail death of social evil and the people of the nation and the state itself will live in peace. This is the responsibility than needs to be understood and taken up by the Indian journalism. Now, how they are going to shape, direct and lead the new generation of India towards to a peaceful nation as a whole is matter of time and the self awakening. Media ethics 6. Media both print and more so the electronic media plays an important catalyst in shaping the public opinions, sentiments and dogmas by promulgating accurate and desirable information and knowledge. Due to the vast intrusion of television news in public life, it has the power and can create an enduring impact on society, culture and security of a region. These days media is generally facing a qualitative crisis pertaining to the news disseminated by it and it seems as the news channels in India have their respective doctrine charted out presenting anything as news which leads to an departure from the ethical issues of journalism. They have metamorphosed themselves towards packaging of information and have adopted a policy of corporate culture wherein their basic motto has transformed from disseminating information to earning television rating points. With numerous news channels being beamed to our houses the thirst for the actual news by the public is not met due to lack of content , quality and authenticity which have deteriorated over a period of time. Electronic media in India has been irresponsible in presenting news and sensitizing crucial events without understanding and realising the impact and implications on the people and security of the nation. Investigative journalism is the in thing now where in the channels has become a self proclaimed investigating agency which to some extent is instrumental in bringing out the truth but slowly the channels are being used as a means of personal vendetta or gains by insiders as well as outsiders. 7. Media used to be known as the voice of common people and a medium to grab knowledge of the world. Media had over a period of time had built some ethics which was appreciated but with the rapid development, mushrooming of news agencies and requirement of growth it is loosing its credibility. Print media compared to electronic media was known for its accuracy and its ethics and with passage of time everything has become part of marketing and news turned into commodity. The so called free media talks the language of the agencies they are benefited from. The ethics which is being talked about is what should be written or shown and what shouldnt be. The overall aim should to add to society, nation building for a better tomorrow. Contrary to this, media coverage includes matters which are of no use to the citizen but surely for their own mileage. News is supposed to connect the world and not a soap opera in which media ethics, duties and purpose is lost. Reach of mass media 8. It is important for a country like ours to know the capabilities of available mass media facilities, readership, listener ship and viewer ship habits of the people to gauge the reach of media. But do we know when it comes to the reach of various mass media individually and in combination among the diverse population in the country. There many question which arises like how many in the country are exposed to or read newspaper, view television, listen to radio, surf internet, etc? Which one of the available media and how frequently? How many and who all read more than one newspaper, which one and where in India? During what period of the day and how frequently do the people watch TV and listen to radio? What is the duplication/overlap of programmes between different media and many more intricate questions like such will determine the influence the media will create in the people of a nation and gauge its reach. 9. In the year 2006, National Readership was carried out in India which is considered the largest survey of its kind in the world, with samples from 2,84,373 house interviews to measure the media penetration and exposure in both urban and rural India and obviously the readership of publications. According to the survey, today average urban adult is spending 44 minutes per day reading magazines and dailies. Readership of dailies continue to grow as compared to the previous year however there is a decline in magazine readership both in urban and rural India. Satellite television has grown in leaps and bound and has a considerable reach: TV now reaches 112 million Indian homes. Internet has also spread predominantly with a reach now exceeding 12 millions. Resurgence of radio cannot be ignored as its reach has increased to 27% of the population tuning in to any radio station in the average week, almost equaling the number of readers. This boom in media reach and penetration will play a v ital role towards national perception and national security as such. Media Ownership and control in India 10. In February 1995 in a landmark judgement, Supreme Court of India ruled that the airwaves are public property and no longer under government control. In 1996 a Broadcasting bill was formulated and an autonomous Broadcasting Authority was vested with regulatory powers. The ministry of information and broadcasting in June 1998 allowed private Indian satellite channels to uplink from India. With the media being liberalised entry of foreign media was eminent, now the question which comes to mind is; do foreign media impact the policy decisions, a tool of cultural imperialism, western business and foreign policy interest in turn hampering national security. The positive side may be in favours of foreign media on the ground of plurality, competition and readers right to know. Their influence will mould the perception of the population as they wield through their agenda. 11. It is very interesting to know as to who controls the various media entity in India and obviously it will stem out from the ownership. A very popular news channel NDTV, is funded by gospels of charity in Spain which supports communism. CEO of this company is Prannoy Roy who is related to Prakash karat, the General Secretary of communist party of India. CNN-IBN is funded by Southern Baptist Church with its branches all over the world with its HQ in US. Times Group which includes Times of India, Mid-Day, Nav Bharat Times, Stardust, Femina, Times Now (TV news channel) and many more is owned by Benet and Coleman. Star TV is managed by an Australian, who is supported by St. Peters Pontifical Church, Melbourne. Birla Group owned Hindustan Times have changed hands which is presently owned by Shobhana Bharatiya and working in collaboration with the Times Group. English daily, The Hindu started over 125 years has been taken over by Josua Society, Berne, Switzerland. The Indian express in which ACTS Christian Ministries have a major stake. There are many other regional news print who are privately owned by Indians which have more reach and impact in the rural, semi-urban and to some extent urban population. Regional TV network like Enadu is controlled by Ramoji Rao who has connection in the film industry. 12. The ownership explains the control of media in India by external agencies be it foreigner or Indian. The news will be biased by their owners and the product that filters down to the common man will distort. The result is obvious; we are going to be fed with tailor made news by the companies who are holding the strings. Media responsibility 13. Freedom of press might have potential unintended effect while engaged in the internal crisis situation especially when considering modern media as a force multiplier. Many a times the media is in an awkward position when it is covering terrorist events. Medias role to protect the societys right to know comes in direct conflict with the states (military, law enforcement and investigating agencies) mission is to protect and serve, and maintain order when covering internal crisis situations. The precarious balancing act that the press faces while covering terrorist incidents is like having censorship on one side of the weigh scale and freedom on the other side. During internal crisis situations, press needs to be always vigilant about balancing their freedom relating protecting the peoples right to know against their responsibility to play a constructive role. The more the freedom and accuracy goes into reporting, the more the coverage favours the terrorists and vice versa. Issues f acing the governments and media outlets before, during and after a terrorist incident need to be closely examined by both the agencies towards dissemination of information which will strike a balance. The terrorist and governments agendas tend to dramatically oppose, while the media position is often judgment call. Media is a force multiplier stuck in between complete censorship and total freedom of the press. It is important that the media continues to play a constructive role during times of local and national crisis but it is also critical that the media be allowed to continue to provide a counterbalance.