Pakistan Economy - News & Updates - Archive

[Neo]

Biotechnology for sustainable agriculture

Agriculture provides raw material to industry which generates employment and strengthens economic self-reliance. Unfortunately, contemporary agriculture is confronted with multifarious problems which have shattered the concept of sustainable agriculture.

Though the world farming communities are harvesting the fruits of green revolution, there are many snags in boosting production. These include uncertain and low productivity and failure of conventional farming in resolving the long-standing agriculture and environmental issues.

In the present scenarios, biotechnology has emerged a novel area of scientific endeavour which possess a huge potential to realise the dream of sustainable agriculture and environment.

Being enriched by inputs from both conventional and modern scientific experimentation like genomic research, biotechnology could prove a panacea for uplifting of degraded socio-economic and scientific infrastructure on sound basis in all developing countries like Pakistan.

As embedded with cultural and socio-economic values, biotechnology might be helpful in resolving long lasting agricultural and environmental issues like over-exploitation of human resources etc.

Across the globe, an intensive work is going on to exploit the biotech knowledge ornamented with the genome reshuffling to address major agricultural and environmental issues like salinity, drought and biodiversity degradation which the so-called green revolution almost failed to resolve.

Through gene reshuffling, the drought and salt resistant varieties are being introduced for obtaining optimum benefits from less than ideal soil conditions.

Green revolution performed well on normal soil conditions but unfortunately it could not help farmers having degraded landscapes in most countries of the world. There is no significant change in the rehabilitation of soils affected by higher salts concentrations.

Like other countries, in Pakistan, a major portion of irrigated and rain-fed area is salt affected. Since green revolution, different strategies based on physio-chemical methodologies have been proposed by scientific communities.

Admittedly, some success stories exist within the domain of these approaches but in most cases these proved timely. None of these helped farming sector on sustainable and long-term basis. Particularly, under our natural conditions, we could not reap bonanza due to our arid conditions.

Drought conditions coupled with salt affected conditions proved a major limiting factor in the success of these conventional approaches to attain sustainable agriculture and environment.

Around the globe, all conventional approaches to long-lasting agricultural and environmental issues have been replaced with recent biotech approaches. But unfortunately, the pre-existing trend in our research endeavour has not shown a remarkable shift accordingly.

Likewise pest problem remained unresolved and became more severe. About 30-50 per cent of food produced becomes victim to pest each year. In addition, extensive use of pesticides on crops has given birth to contaminated commodities.

Many people within the country and abroad have raised their comments on the quality of cotton, vegetables, fruits, rice and other crops. Contamination of vegetables and fruits with pesticides residues in the daily-use vegetables have been extensively reported by the scientists.

Indiscriminate use of pesticides has also played havoc with environmental quality, biodiversity and public health in many parts of the country. On global scale, usage of pesticides on crops has greatly declined due to several alternatives based on biological approaches.

In addition to introduction of pest, drought and salt resistant genetically modified crops, use of plant growth promoting rhizobacteria and their metabolites as bio-fertilizers, bio-pesticides and plant growth regulating substances, have received much attention.

Meanwhile, though it is hard to describe recent advances in agronomy in all its domain, a change in conventional approaches in all sectors of agricultural research by respective research institutes is highly needed in the era of biotech revolution after green revolution. For future endeavour. following strategies are suggested.

•Legitimate efforts are needed to review biotech approaches in respective fields and future research work should be based on novel ideas.

•Hi-tech instrumentation is pre-requisite before taking any initiative as most of our research laboratories are devoid of hi-tech instruments and have not conducted research of international standards.

•Characterization of plant or microbe origin enzymes/secondary metabolites and their production on commercial scale for agricultural application should be carried out to minimise the use of agrochemicals in agriculture.

•Efforts should be made for bio-remediation of contaminated and rehabilitation of the degraded landscapes for production of high quality commodities.

•There is a dire need to upgrade the infrastructure of research institutes by undertaking reforms proposed by the scientific communities to encourage them to demonstrate well on scientific grounds.

•Exploitation of biological alternatives employed for sustainable crop production and environmental remediation should be promoted at academic and research institutes for the development of successful biological approaches to resolve the different agricultural and environmental issues.

 

[Neo]

Upgrading skills for knowledge-based economy

By Noor Fatima

Technological developments in the last century have transformed a majority of wealth-creating activities which are now more “knowledge-based” and not so much physical-based.

In a knowledge-based economy, the capital is enhanced not only through the material production (manufacturing) but also by non-material production. The ratio of education and training is comparatively very high in knowledge- based economies and a considerable portion of GDP is invested in the skill development.

Now multinationals compete head-to-head locally as well as internationally. A substantial structural adjustment is required at local and regional level. The global knowledge has to be transferred into the local context and should be used for the enhancement of the local knowledge. It has to be globalisation of local knowledge and localisation of global knowledge.

By inter-connecting local, regional and global knowledge, an economy based on knowledge and innovation can be built.

The knowledge economy is differentiated from the industrial economy on basis of the following features: first:1) communication revolution has intensified the move towards knowledge codification.(2) Flexibility of organisation reduces waste and increases the productivity of both labour and capital by integrating the ‘thinking’ process. 3) intensive knowledge, skills development and constant learning process- knowledge is being created on an every increasing scale. (4) Innovation and knowledge networks.

These basic factors are cost reducing and the skills are rated. Therefore, investments become mandatory for human capital and use of information becomes more crucial. Now sources of economic productivity depend on the ideas more then the goods.

Pakistan’s is also working to move towards ‘knowledge based economy’. According to Medium-Term Development Plan (MTDP)2005-10, there is a strategy to move towards an efficient, balanced, internationally competitive, environmental friendly and technologically driven knowledge economy.

One can look forward to Pakistan’s pursuits for knowledge economy but with greater doubts in the given state of skill and knowledge attainment.

There are two major potential challenges in shaping the knowledge based economy- the quality and quantity of education and investment in skill development- to develop knowledge hubs.

As such there is no prescribed unit for quantifying knowledge to measure in numerical figures but it can be assessed on certain indicators which reflect in economic performance.

Peter Drucker, in 1966 in his book, ‘The Effective Executive’, described the difference between the manual worker and the knowledge worker and proved that it does make difference to produce product ‘by hand’ and by ‘head’.

That is why the patents, trademarks and other intellectual property rights(IPRSs) are considered critical by WTO as an incentive for investment and generation of new idea, information and knowledge.

According to the study of World Bank based on the indicators of knowledge economy on science and technology development table). It reflects where we stand in integrating our firms with the world.

The data on R&D development shows that Pakistan is behind comparable countries like India and China. Bangladesh is also performing better in some of the indicators. That is the reason why Pakistan has smaller number of applications for patents. The high technology exports exhibit the same trend.

The training of various skills is imparted through polytechnics and vocational training centres. And new centres of excellence are being established as a result of efforts made by Higher Education Commission.

But as Dr A. R. Kemal argues that cost-effective and demand-driven investment in education and skill was required but it alone would not suffice “until institutions were developed that recognise the value of investing in people and provide dignity, respect and fair deal for working men and women”.

Pakistan is a country with about 25 million youth of 18-25 years age group but a very small percentage of 1.7 are able to make contribution in national economy with their right kind of training and education.

Around 540 technical and vocational institutions have the capacity to produce only 200,000 skilled people every year which is inadequate as compared to the demand of the knowledge economy and the country’s population.

Just focusing on enhancing the enrolments in technical institutes is not enough. We need to emphasise on quality with quantity of skill development according to the need of the firms and entrepreneurs.

To make knowledge based economy, there is a need to have a change in strategy. Long term planning is mandatory based on a realistic assessment of our economic activities in the light of emerging trends and prudent investment polices.

This requires three generation of investment reforms: First generation reform calls for adoption of market friendly policies- to liberalize the investment regimes by reducing barriers to inward FDI, strengthening standards of treatment for foreign investors and giving a greater role to market forces in resource allocation.

Second generation reforms are the investment promotion policies which attracts investment by ‘marketing’ their locations.

To move to- wards third generation reforms, investment promotion policies framework is required for attracting investment to target key investors in the identified industries and firms.

Further to meet their specific vocational workforce, there is a need to have programmes of transfer of knowledge through global production networks and establishment of ‘knowledge hubs’, in the light of industry development priorities.

This is the only gateway for Pakistan to establish a successful knowledge- based economy.

Globalization of local knowledge and localisation of global knowledge are the pre-requisites of knowledge based economy.

 

[Neo]

$500m UAE fund for Pakistan planned

ISLAMABAD, Nov 5: A group of Dubai-based investors has decided to create a $500 million ‘Pakistan Infrastructure Fund’, especially to help improve energy, transport, power, health and sanitation sectors.

“This fund will be officially launched at the end of the three-day World Islamic Economic Forum,” said Dr Marcus Fedder, the fund’s chairman.

He told this correspondent that its basic objective would be to promote public-private partnership for offering funding to Pakistani private sector through multilateral agencies.

He said that it had been decided to increase the level of funding from $500 million to $5 billion over the next decade.

Dr Feeder said that the government had agreed to facilitate the new fund, adding that the government would not be required to pool its financial resources for the fund.

He said that a number of international investors were taking part in the World Islamic Economic Forum to assess the potential of cooperation with Pakistan’s private sector.

He said that Pakistan was one of the most important regional destinations for foreign investment because it offered a competitive investment policy.

He hoped that the government would reduce the cost of doing business in Pakistan by offering inexpensive facilities like power and gas to investors.

He regretted that vested interests in the West were painting a poor picture of Pakistan to discourage foreigners from investing here. “This is not fair,” he said.

He urged the United States and Britain to stop issuing negative ‘travel advisories’ about Pakistan.

 

[Owais]

UAE to invest $4 billion in Khalifa oil refinery near Hub


ISLAMABAD (updated on: November 06, 2006, 17:11 PST): The country's booming oil sector will be receiving another US$ four billion investment in a joint initiative by Pak Arab Refinery, International Petroleum Investment Company and Associated United Arab Emirates.

The International Petroleum Investment Company (IPIC) and Associated UAE Investors will take up to 75 percent stake while Pak Arab Refinery (PARCO) will take the 25 per cent stake to set up the Khalifa Refinery.

This refinery is planned at Khalifa point about 50 km West of Karachi on the coast line and 25 km South West of the Industrial town of Hub.

Managing Director Pak-Arab Refinery Limited Muhammad Rasheed Jung told APP in an interview that the refinery will help overcome the diesel shortfall in the country and produce value added products for the local market as well as for export.

"Our objectives is to establish a market leader in producing clean high quality middle distillates and other value added products for Pakistan's domestic market and for export in the international market," Rasheed said.

"It is after quite some time that the oil industry is receiving that voluminous investment," he added.

About 1000 Acres of land is available for the project being planned close to Hubco power plant (1250 MW) and in the vicinity of Bosicor refinery.

The refinery requires SPM, marine for receiving crude and product export and products pipeline connected to white oil pipeline terminal at Port Qasim.

The Government of Pakistan will facilitate with infrastructure.

Rasheed said the Refinery will have capacity to process about 250,000 to 300,000 tons of crude oil and hence double the existing refining capacity of the country.

"Oil production at this refinery will help overcome the shortfall and meet the occasional shortfall in the like hydel energy and LPG," he said.

Rasheed said products over and above the local needs will be exported.

As part of the incentives of the government for foreign investment, the refinery location is being declared export processing zone (duty free area) and all imports during project implementation and operation will be duty free.

Rasheed said, desired product quality is based on Euro IV specifications, a parameter in vogue in European and other developed countries.

The government has already set the 2011 as cut off date for refineries to elevate their standards to Euro III in phases.

The Managing Director Pak Arab Refinery said the detailed refinery configuration will be finalised after scheme optimisation.

However, he added, conceptually it will be a deep conversion refinery based on latest technology having Isomerisation, reforming, hydrocracking and coking technologies.

Its major units will include Crude distillation, Vacuum Distillation, Isomerisation, Gas Treating Unit, Naptha HDS, Reformer, KERO HDS, Hydrocracker, Delayed Coker, Sulphur Recovery Unit and Hydrogen Plant, he added.

Rasheed said, the refinery will maximise middle distillates (diesel, jet fuels and Kerosene) and current plans reveal that more than 60 per cent of refinery production will be middle distillates.

Gasoline will be one of the major products with 2.1 to 3.0 million tonne per annum that would be suitable for domestic and major markets with high RON/MON and low Aromatic and Benzene.

Other products include very low Sulphur ultra clean Gas Oils and Diesel Fuel (5.5-8.2 million tonne per annum), high quality jet fuels and Kero (0.5-0.8 million tonne), Low Sulphur high propane LPG (0.3-0.4 million tonne), NAPTHA (0.02-0.1 million tonne), Sulfur (0.1-0.2 million tonne) and Coke (0.7-1.1 million tonne per annum).

Rasheed described facilities by the government as a major contributor in attracting foreign investment.

He said the project had been planned for a barren area and its implementation would lead to economic activity in the area.

"The project will be employing 800 to 1000 professionals directly and benefit 2000 another families indirectly," he said.

He foresaw more industries in that area once this project kicks off, ushering in massive socio-economic activity and creating job opportunities for the poor people in the area.

He stated that being Euro IV standard project, it would be environment friendly and fulfilling the environmental standards in terms of emissions particularly GreenHouse Gases.

He said the sponsors are keenly pursuing the project benefiting from the government support and facilitation for the foreign investment.

"As the documentation has been initiated for the incorporation of the company, the project is expected to complete by 2011," Rasheed said.

 

[Owais]

IT sector to attract $3 billion investment in four years


ISLAMABAD (updated on: November 06, 2006, 16:53 PST): Further investment of $3 billion is expected in country's IT and Telecom sector by 2010 due to the consistent policies and incentives offered to investors.

Senior Project Manager Ministry of Information Technology Salman Maalik on Monday told the state-run TV channel that around 750 reputed IT companies were working in the country due to excellent profit margins and availability of cheap skilled labour.

Planning is being finalised to ensure judicious utilisation of Rs 3 billion research and development fund. Universities would be equipped and provided excellent facilities to ensure production of skilled labour in the country, he said.

World's GSM association has already awarded Pakistan as a country providing mobile companies excellent opportunities to grow.

 

[Owais]

Upsurge noted in Pakistan's FDI: Kasuri


ISLAMABAD (updated on: November 06, 2006, 16:59 PST): Foreign Minister Khurshid Mahmood Kasuri on Monday said there was an upsurge in the foreign direct investment (FDI) and last year investment was 3.8 billion dollars, which was 300-400 million dollar six or seven years ago.

Talking to private TV news channel, he said a refinery project which is joint venture of Pakistan and Abu Dhabi would be started within three or four months, adding it is project of four billion dollars which is the biggest single project in the history of Pakistan.

He rejected the misconception that only Islamic countries are investing in Pakistan and said, a major investment is expected from US soon, and other countries are also interested in investing in Pakistan.

The interest which investors of the world are showing manifests that the environment for investment was friendly in the country, he added.

Talking about Islamic Economic conference held recently he said, it was very successful and some agreements of co-operation were signed with Malaysia and both are interested in establishing banks in each other's countries, which would flourish business activities in both the countries.

He said that in Makkah summit, most of the proposals presented by Pakistan were approved and now, "We will try our best for the implementation of these proposals".

 

[Owais]

USA continues strengthening its SCRA

KARACHI (November 06 2006): USA, whose balance under Special Convertible Rupee Accounts (SCRAs), a non-residents portfolio investment financial arrangement, rose to $113.1 million on October 31, further rose to $133.3 million on November 3, showing an increase of $20.1 million in the first three days of November, including $4 million pouring in on November 3 alone.

Balances held by Singapore showed only nominal improvement over its position on October 31 as its balance stood at $111.8 million on November 3 compared with $111.3 million on October 31.

UK also improved its balance under the SCRAs, reaching to $107.2 million on November 3 compared with $104.6 million on October 31, an increase of $2.6 million during November so far.

The other major player, Hong Kong, went disinvesting $0.5 million during November so far, though it still enjoyed positive inflows amounting to $14.6 million as on November 3 compared with $15.2 million on October 31.

Switzerland, whose disinvestments had been by far the largest since the beginning the new financial year, disinvested another $1.2 million during the first three days of November with its account showing a debit balance of $29 million compared with a debit balance of $27.8 million on October 31.

Disinvestments by Luxembourg and Qatar also increased marginally and stood at minus $0.1 million and minus $0.02 million, respectively.

As a result of all these changes in the balances of aforementioned countries, overall balances of all players under SCRAs increased from $312.6 million on October 31 to $334 million on November 3, an increase of $21.4 million in just three days of the current month

 

[Owais]

Pakistan ideal place for foreign investment: National Assembly speaker

SIALKOT (November 06 2006): National Assembly Speaker, Chaudhry Amir Hussain has said that economic activities are picking pace in all sectors of the economy as Pakistan has become ideal country for the foreign investment.

Talking to exporters and traders here on Sunday, he said the government was making strenuous efforts for providing solid base to the industrial sector through extending various incentives and concessions to the business sector.

He said under the present global scenario the exporters and manufacturers should concentrate on diversifying the export and introduce new products for fetching maximum foreign exchange for the country.

He said the concept of this programme was to expand strong industrial base and create wide employment opportunities for the skilled and educated persons.

The Speaker further said that in order to produce technical and trained hands the government had already taken numerous measures. Under the strategy vocational education institutions were being established at district and tehsil headquarters shortly for imparting technical education to the male and female students.

He said the step would not only help scaling down the unemployment graph but also supportive for the industrial sector of the country.

He stressed upon the businessmen to establish industrial units in ignored areas for generating the employment opportunities for the rural population and discouraging the rural migration towards cities.

He called upon the business community to play a pivotal role in the development of far-flung areas through the establishment of cottage and small sized industries.

 

[Neo]

Malaysian telecom company investing $100 million in Pakistan

ISLAMABAD (updated on: November 06, 2006, 18:22 PST): One of Malaysia's leading telecom companies is investing 100 million dollars in Pakistan for connecting 107 cities with 4,100 kilometres of fibre optic cable.

Speaking here at a news conference, chief executive officer of Telekom Malaysia (TM) Yusof Annuar Yaacob, said "Project Ittehad" will boost country's overall communications infrastructure.

One of its subsidiary companies, Multinet is providing broadband internet access via wired and wireless media in 12 cities in Pakistan.

The CEO of Multinet, Adnan Azdar said 40 percent of the total investment by the TM has already been made.

The Multinet is first private sector operator in developing optic fibre infrastructure in Pakistan.

Yaacob said the company, which has 23 million mobile subscribers all over Asia, is looking seriously at making inroads into Pakistan's lucrative mobile market.

The TM, headquartered in Kuala Lumpur, has a string of other subsidiaries in Asia where it has substantial equity control in several mobile operators, Yaacob said at the press conference held on the sidelines of the World Islamic Economic Forum.

"We are the emerging leader for Asian communication and has all the right ingredients for international success," he added.

He said the Multinet will be able to fulfil the needs of Pakistan's high growth telecommunication sector, offering services to mobile operators, long distance international operators and internet service providers.

As one of the largest listed companies in Malaysia, the TM has a market capitalisation of $ 8.38 billion and interests in Indonesia, Singapore, Cambodia, Thailand, Bangladesh, Pakistan, India, Sri Lanka and Iran.

With a combined population of nearly two billion across nine Asian markets, where it has invested over $1.3 billion, Yaacob was confident that the company will capture further telecommunication market share.

"We are focusing on quick and efficient execution of specific strategies and we hope to capture more market share," he added.

 

[Neo]

Pakistan wants back-office business

Simon Hayes
NOVEMBER 07, 2006

AUSTRALIAN companies are starting to add Islamabad, Karachi and Lahore to their list of offshoring possibilities as Pakistan builds up an IT push.

At least four large Pakistani software development companies are understood to be working in Australia, taking on big Indian groups including Tata Consultancy Services, Satyam Computer Services and Infosys.
"In IT collaboration everything is electronic so it doesn't matter if you're in Sydney, Afghanistan or Pakistan," Pakistani Consul-General Azam Mohammed says.

"That's not a real challenge in this sector."

Pakistan's status as a "front-line state in fighting international terrorism" had not done much for its reputation where business travellers are concerned, Azam says.

But business is taking place regardless, he says.

"We are very bad at perception management," he says. "Those who visit Pakistan have a totally different perception."

The Pakistan Software Export Board estimates the nation's IT industry is worth $US1 billion ($1.3 billion) a year, with $US600 million of that coming from offshore software and services.

Pakistan is offering some attractive incentives for foreign IT firms, including a tax holiday until 2016 and 100 per cent profit repatriation.

Pakistan, unlike India, is not chasing call-centre and back-office work, Azam says.

"We don't actively pursue call centres because the trained labour is already absorbed," he says.

"That's something we're not keen on, as there is a negative perception of it in many countries where jobs might be lost.

"We say we are not the bad guys in everything. We are not responsible. Someone else is."

The country has taken on some fairly unusual back-office work, though.

First Marvel uses Pakistan's cheaper workforce to run customer relationship management data cleansing and marketing campaigns for Australian companies.

"The aim of CRM is ultimately to market one-to-one, but that's not really possible because you'd need an army of campaign managers," First Marvel director Ian Goldman says.

First Marvel cuts costs for marketers by running campaigns from its Lahore headquarters.

"In the traditional world you might do 10 campaigns," Goldman says.

"But the difference in labour costs means you can do 100 or 1000 campaigns."

The Australian

http://australianit.news.com.au/articles/0,7204,20697228^15317^^nbv^,00.html?from=public_rss

 

[Neo]

M'sia-Pakistan Trade To Reach US$1 Bln With FTA, Says PM

ISLAMABAD: The implementation of the Malaysia-Pakistan free trade agreement (FTA) next year is expected raise two-way trade to US$1 billion from the current US$730 million, Prime Minister Datuk Seri Abdullah Ahmad Badawi said here Sunday.

He said the present bilateral collaboration in various fields between both countries was showing positive signs and progressing well.

"We hope to achieve the US$1 billion mark," said Abdullah at a joint press conference with his counterpart Shaukat Aziz after their bilateral meeting at the Pakistani prime minister's official residence.

Abdullah arrived here Saturday for a three-day official visit.

Malaysia and Pakistan had signed the agreement on early harvest programme (EHP) in October last year, which paved the way for the free trade accord. The EHP took effect from January 1, 2006.

The EHP covers products with most favoured nation (MFN) tariffs of 10 percent and below and products with MFN tariffs of 5 percent eliminated.

Pakistan's EHP offer to Malaysia covers 5.49 percent of the import value or RM146.3 million involving 1,256 tariff lines.

The products include machinery, mechanical equipment and appliances, plastic products and chemical, rubber and timber products.

Malaysia's offer to Pakistan covers 114 tariff lines covering an import value of RM22.7 million or 10.97 percent of its total imports from Pakistan. The products include textile and clothing, agriculture and jewellery.

Touching on the bilateral, Abdullah said that he was happy with the outcome of the meeting and hoped to see that it would further expand in the future.

Meanwhile, Shaukat said that trade in goods between both countries had increased while Malaysian investments in Pakistan over the last two years have improved tremendously.

"So far, there are 40 Malaysian companies doing business in Pakistan," he said.

Shaukat also said that Malaysia and Pakistan have both agreed in principle to set a joint investment company to promote investments in Pakistan and vice versa.

Both leaders later witnessed the signing of two memoranda of understanding.

The first was between the National Highway Authority of Pakistan and Minconsult Sdn Bhd for the construction of a 409km Qila Saifullah-Zohb-DI Khan and Qila Saifullah-Loralai roads in Balochistan.

It was signed by Minconsult International Limited Director Datuk Ir Dr Dennis Ganendra while NHA was represented by its chairman, Maj Gen Farrukh Javed.

The other was between the International Centre for Education in Islamic Finance (INCEIF) and Pakistan's National Institute of Banking and Finance (Guarantee) Limited (NIBAF).

Bank Negara Malaysia Governor Tan Sri Dr Zeti Akhtar Aziz, who is also INCEIF chairman, signed on behalf of the centre while Dr Shamshad Akhtar signed for NIBAF.

http://www.bernama.com/bernama/v3/news_lite.php?id=227966

 

[Neo]

Refinery project approved despite exaggerated cost: bidding decision cancelled

ISLAMABAD (November 07 2006): The Federal Government seems not to have learnt any lesson from Supreme Court's verdict on Pakistan Steel Mills (PSM) sell-off, whereby it was directed to exercise care and ensure extreme transparency while dealing with public offerings.

The summary approved by the Economic Co-ordination Committee of the Cabinet (ECC) on October 31 2006, for setting up Khalifa Coastal Refinery with an approximate range of 9-13 million tonnes per annum capacity, was fraught with a number of anomalies in the modus operandi in granting permission to International Petroleum Investment Company, to execute the joint venture with a public concern, Parco.

It is surprising such a major decision has been made without the support of any study and thus knowingly the date of commissioning announced at the press briefing 2010 has been changed to the first quarter of 2012.

First of all, the summary offers a strange logic that in view of the fact that IPIC is an Abu Dhabi Emirate-owned company and other members of consortium would also be Dubai/Abu Dhabi companies (who knows what those companies are or may be). Therefore, the condition of international competitive bidding may be withdrawn in modification of earlier ECC decision taken on April 14, 2006.

Such an autocratic selection of a firm for a major joint venture gives rise to the feeling that the ECC has once again used a short cut to oblige a specific party. International bidding should have helped to determine the real price tag of the project. But those sitting at the helm of affairs preferred to act in their autocratic style of governance in deciding the fate of a huge project like this, said a Karachi based consultant.

It is also well known that Royalties in Middle East, besides running the government, are also in private business for themselves. For instance, UAE companies like Etisalat have competed with Singapore government's investment arm of Tamasek for PTCL.

The price tag of any project is always a debatable issue. Khalifa Coastal Refinery is no exception. The cost of the proposed refinery is estimated at $4-5 billion. Also, six years gestation time indicates that the joint venture will have to do everything from scratch and that the proposed project is yet a thought on paper only.

The estimated cost of the Khalifa Refinery, if compared with the cost of under-construction Essar Oil Ltd--a refinery in India with a production capacity of 10.5 to 12 million tonnes of processed products per year (million MT per annum)--seems highly exaggerated. Essar Oil Limited is being constructed in Gujarat, India, at an estimated cost of $2.26 billion which is less than half of the Khalifa Coastal Refinery's estimated cost.

On the other hand, India's Reliance Industries Ltd is presently undertaking extension of 33 million MT per annum in Reliance Petroleum situated at the special economic zone in Jamnagar at an estimated cost of $6 billion. The oil and petrochemicals company plans to nearly double the capacity at its 660,000 barrels per day facility, which is greater than the proposed capacity of the Khalifa Coastal Refinery.

Compared with the cost of Essar and Reliance oil refineries, the Khalifa's estimated cost of $4 to 5 billion is highly dubious. These facts were needed to be taken into account had there been study to support the agreed cost. It is more surprising that in the blue book referred to in the ECC summary itself the cost has been kept at $1.7 billion by government experts Enar Petrotech.

Moreover, 26 percent of such an exaggerated cost would be funded by Parco with the option to offload up to 20 percent shares to parties like Asian Development Bank with the approval of the government. Such an agreement for the offloading of 20 percent shares will be enough to bear the real cost and the exceeding amount will reduce the investors' equity in the project.

Ultimately, the nation will again have to bear the burden in the years to come as ex-refinery price would still be fixed by the government taking into account all costs including debt servicing, the consultant remarked.

A leading local textile-cum-banking group has already showed interest in putting up a coastal refinery. How can free land and infrastructure (including mooring) be offered to foreigners and not to Pakistani businesses? asked the consultant.

The text of the summary is being reproduced below for the interest of the general public. ECC vide its decision in Case No ECC-72/4/2006 dated April 14, 2006 approved a package of incentives for setting up of a new state-of-the-art oil refinery of 200,000 to 300,000 barrels per day (about 9-13 million tons per annum) at Khalifa Point near Hub, Balochistan, with the direction that the Ministry of Petroleum and Natural Resources and Oil and Gas Regulatory Authority will select the party on the basis of international bidding.

Various incentives, including free of cost land, have been offered for this refinery in addition to those already given in the Petroleum Policy 1997, subject to its commissioning by 31st December, 2010. ECC Summary along with approval is at Annex-1.

The Ministry of Petroleum and Natural Resources prepared a Blue Book through a consultant Enar Petrotech Services (Pvt) Ltd, which inter alia contained all basic information relating to investment opportunity in the setting up of a new oil refinery at Khalifa Point. The Blue Book was proposed to interested investors as well as investors in the Pak-China Energy Forum held in Islamabad from 25th - 27th April, 2006.

International Petroleum Investment Company (IPIC) of Abu Dhabi, a Government owned company, approached the Ministry of Petroleum and Natural Resources and expressed its keen interest in making investment in the Coastal Refinery of 200,000-300,000 barrels per day capacity at Khalifa Point and thereafter confirmed their interest through a letter dated 10th August and 24th September 2006 (Annex-II).

IPIC established in 1984 is run by an independent Board of Directors, whose Chairman is Sheikh Mansour Bin Zayed Al Nahyan and it has 24 years experience of investing in petroleum related projects. IPIC's shareholding in Parco is held through its IV holding company Abu Dhabi Petroleum Investment Company (ADPI).

Salient features of IPIC proposal in the Coastal Refinery are as under:

i) A Consortium to build the proposed refinery will consist of IPIC and its associated investors in the ratio of 75 percent and Parco 25 percent. Out of IPIC's proposed 75 percent stake, half of the stake could be retained by IPIC while the remaining half to be taken by other UAE Government institutions including companies from the Emirates of Abu Dhabi and Dubai.

ii) IPIC has proposed that the name of the refinery would be Khalifa Coastal Refinery.

iii) IPIC proposes that Parco should join in this project with a view to having integrated approach with reference to Parco's existing Mid-Country Refinery Project.

iv) IPIC would be only financing the project while Parco, apart from putting in its share of funds, will co-ordinate and act as Operator of the new Coastal Refinery.

v) The cost of the proposed refinery is estimated at $4-5 billion and it could be commissioned by the year 2011-2012.

Parco management is of the view that in order to exercise effective control of the company, particularly in relation to fundamental business decisions, their shareholding should not be less than 26 percent of equity. The Ministry of Petroleum and Natural Resources is in agreement with Parco's above proposal.

The Asian Development Bank vide its e-mail dated October 3, 2006 (Annex-III) has also shown interest in participating in the proposed Coastal Refinery which will be considered against Parco's 26 percent shareholdings.

In view of the investment proposal offered by IPIC at para 3 above and the position explained at paras 4 & 5, following is submitted for consideration and approval of the ECC:

i) Parco may be allowed to form a joint venture company with IPIC for setting up of the state-of-the-art new deep conversion refinery at Khalifa Point, Hub Balochistan.

ii) Parco may be allowed to take 26 percent share equity with the option to offload up to 20 percent of their shares to parties such as Asian Development Bank subsequently with the approval of the Government of Pakistan. Accordingly, JV Company will comprise IPIC 74 percent and Parco 26 percent shareholding.

iii) The land up to 1000 acres from the 1800 acres available at Khalifa Point Hub, Balochistan, will be provided to IPIC/Parco joint venture free of cost for the proposed Khalifa Coastal Refinery Project. In modification of earlier ECC decision dated 14-4-2006 referred above, the land will be used only for the Refinery Project.

iv) All other incentives/concessions, terms and conditions approved by the ECC vide its decisions dated 14-4-2006 will be applicable for IPIC/Parco Joint Venture Company. The refinery project will be commissioned by 1st quarter of 2012 as proposed by the IPIC in modification of earlier commissioning deadline of 31st December 2010.

v) In view of the fact that IPIC is an Emirate of Abu Dhabi owned company and other members of consortium would also be Government of Abu Dhabi/Dubai owned companies; therefore the condition of international competitive bidding may be withdrawn in modification of the earlier ECC decision dated 14.4.2006. The proposals at para 6 above are submitted for the approval of the ECC.

 

[Neo]

Chinese firm gets new Gwadar airport contract

ISLAMABAD (November 07 2006): The federal government has decided to award the contract of new Gwadar International Airport (NGIA) to a public sector Chinese company, the China Harbour Engineering Company (CHEC), which will execute the project in the shortest possible time on fast track turnkey basis, official sources told Business Recorder here on Monday.

However, the Civil Aviation Authority (CAA) would be responsible for design review and supervision of the project, ensuring that the new airport is built as per best international practices, sources said.

The airport, which is expected to be a regional hub, would be developed primarily to cater to cargo market, with an investment of $70 million. CAA had invited proposals for project management and design consultants in March. Several firms expressed interest in the project, including CHEC, which also offered to undertake the entire airport project on fast track turnkey basis.

The firm also submitted its proposal to President Pervez Musharraf before his visit to China in June, 2006. Sources said that Defence Ministry examined the Chinese offer and found it to be an attractive proposition. It was also observed by the government and CAA that Pakistan could benefit by the early completion of the project through turnkey/EPC methodology due to its low cost and financing offered by the Chinese firm, they added.

"CAA's analysis of the Chinese offer showed that if it were to undertake the project in the conventional way then it would take 36-42 months to complete it, whereas the completion time given by CHEC is 24 months," sources said.

Other benefits of the offer are that the company is already mobilised in Gwadar and is familiar with the working conditions there. The firm had completed a major reference project in Pakistan--the Gwadar Deep Water Port Phase-I--and has vast experience of undertaking several engineering-based projects including airports (China-Macao-Hang Kong).

With the completion of the project at much earlier date than planned, both CAA and government could benefit from early realisation of revenue. Defence Ministry is of the view that being a State enterprise, the firm is in an ideal position to arrange finances for the project on the same lines as was done in the case of Gwadar Deep Water Project Phase-I ie preferential buyers credit and grants/soft loans.

Sources said that the offer of CHEC has already been approved by CAA Board in its meeting on July 8. In order to move forward, CAA has proposed to enter into a Memorandum of Understanding (MoU) with CHEC. After its signing, the firm would undertake a feasibility study, inclusive of site investigation, necessary surveys, preliminary design, cost estimates etc and finally submit a technical and financial proposal to the CAA.

The CAA would then review the technical and financial proposal to ensure that the requirements of ICAO are satisfactorily met. Once the technical and financial offers are accepted by CAA, the government would be requested to enter into a formal agreement with the firm on price and terms and conditions of the financial offer, as the project is being funded through PSDP.

The Planning Commission has supported the proposal, but it advised MoD to obtain approval of the Prime Minster for awarding the project to the Chinese company. Sources said that the MoU is likely to be signed during the visit of the Chinese President in due course of time.

 

[Neo]

France plans huge investment in hotel and auto sectors

LAHORE (November 07 2006): French Ambassador Regis De Belent has said that France is planning a huge investment in hotel and auto sectors in Pakistan in near future and all the modalities to this regard had been finalised.

He further said that two high-powered delegations would visit Pakistan, first in the end of this month while the second in the next month, to have firsthand knowledge about the available opportunities here.

He expressed these views while speaking at the Lahore Chamber of Commerce and Industry (LCCI) function on Monday. LCCI President Shahid Hassan Sheikh, Senior Vice President Yaqoob Tahir Izhar, Vice President Mubasher Sheikh and former presidents Mian Misbah-ur-Rehaman and Bashir A Baksh were also present on the occasion.

Regis De Belent, who spoke at length on issues of mutual interest, said that economic reforms initiated by the present government had impressed the French businessmen, who were now diverting their attention towards Pakistan. He called for making more frantic efforts to improve the perception of Pakistan, which has been tarnished by a number of factors.

He also urged the LCCI members to make investment in France, which has become a land of opportunities. He was of the view that there were a number of sectors lying unexplored at the moment and this was high time for both the sides to initiate joint ventures.

He said the French embassy was holding seminars to educate Pakistani businessmen on economic scenario in France. It is high time that both the countries should join hands to take the existing volume of trade between the two countries to new heights.

Speaking on the occasion, the LCCI president said that France and Pakistan enjoy extremely cordial and friendly relations. "Both the countries have common perception about most of the international political and economic issues, and have steady trade relations. A brief analysis of our bilateral trade indicates that the total trade between France and Pakistan had averaged about $471 million over the last six years.

Exports from Pakistan to France averaged around $299 million and imports from France to Pakistan were $172 million during this period. Pakistan's exports to France during this period have been showing an increasing trend," he added.

He said that France had also significantly contributed to the building up of defence capability of Pakistan's Air Force and Navy. This speaks of remarkable relations that exist between the two countries, which form the basis for more co-operation in other fields also, he added.

He further said that major areas where France and Pakistan could work together included telecommunication, automobiles, shipbuilding and automotive parts, defence equipment, oil and gas exploration, infrastructure, textiles, garments, leather products, electrical and electronics appliances, fruits and vegetables, livestock and dairy, fisheries, horticulture, storage facilities for agro-products and cool chains.

"Any investment made in Pakistan would find market for its products in Pakistan, Central Asian States, China and other regional countries. Pakistan Railways also intends to lease out facilities to the private sector. France may be interested in this offer also," he added.

He averred that although Pakistan was the fifth largest producer of milk in the world, the current industry was inadequate to meet the growing demand for milk and other dairy related products.

 

[Neo]

Foreign investment on rise: Kasuri

ISLAMABAD (November 07 2006): Foreign Minister Khurshid Mahmood Kasuri on Monday said there was an upsurge in the foreign direct investment (FDI) and last year investment was 3.8 billion dollars which was 300-400 million dollars six or seven years ago.

Talking to private TV news channel, he said a refinery project, which is a joint venture of Pakistan and Abu Dhabi, would be started within three or four months, adding it is $4 billion project, which is the biggest single project in the history of Pakistan. He rejected the misconception that only Islamic countries are investing in Pakistan, saying a major investment is expected from US soon, and other countries are also interested in investing in Pakistan. The interest, which foreign investors are showing, manifests that the environment for investment was friendly in Pakistan, he added.

Talking about the World Islamic Economic Forum conference held recently, he said it was very successful and some agreements of co-operation were signed with Malaysia and both are interested in establishing banks in each other's country which would flourish business activities in both the countries.