Pakistan Economy - News & Updates - Archive

[Janbaz]

Malaysian company to invest $100m

OUR STAFF REPORTER
LAHORE - Provincial Minister for Housing & Urban Development, Syed Raza Ali Gillani has said that Punjab Housing and Town Planning Agency will set up a housing scheme at Jhelum in collaboration with a Malaysian construction company. The foreign company will invest 100 million dollars in the scheme. MoU will soon be signed in this regard, he added.
He was speaking at a briefing given by a 7-member Malaysian delegation headed by Datuk Mohamed Zaini Amran, Chief Executive of Bumihiway Group Malaysia which is currently on a visit to Pakistan to explore investment opportunities in residential projects for low-income people.
The Minister during a meeting with the delegation said that real estate sector is fast expanding in the country and investment in residential schemes has become a profitable business. He said that government is endeavouring to provide relief to the low-income people by providing them affordable residential facilities.
Syed Raza Ali Gillani said that after the enforcement of WTO, Punjab has become an ideal place for investment in South Asia as the government is providing a number of incentives for this purpose.
The Malaysian delegation assured its full cooperation for developing low-cost residential schemes. The members of the delegation said that they would again visit Pakistan for signing of MoU in this regard.

The Nation.
http://www.nation.com.pk/daily/feb-2007/9/bnews9.php

 

[Janbaz]

OGDC, Petro Brass finalize agreement for oil exploration

ISLAMABAD: Oil and Gas Development Company (OGDC) and the largest petroleum company globally, Petro Brass have finalized an agreement for offshore oil exploration.

OGDC sources said that the Government Holding Private Limited, OGDC and Petro Brass would be exploring oil in the Indus Offshore Block 1-2265 over a radius of 7466-kilometres, which is owned by OGDC 100 percent presently.

Petro Brass is in operation in 170 blocks out of the 357 blocks of 35 countries across the world, while the company’s per day oil production works out to 2 million barrels.

On the other hand, OGDC has 100 percent ownership of 27 blocks in Pakistan, while the 13 exploration blocks were being run under partnership.

The News.
http://thenews.jang.com.pk/updates.asp#17550

 

[Janbaz]

Awesome, oil exploration deal. With the reserves in FATA and if oil is found in the Indus Block areas it will be a mojor breakthrough for the economy and may boost(transform) the outlook in the coming years.:flag:

 

[Neo]

New possibilities emerge in trade with China: Elahi

LAHORE (February 09 2007): Punjab Chief Minister Chaudhry Pervaiz Elahi on Thursday said that there had been expansion and new possibilities emerging in trade between China and Pakistan. This he stated while, meeting Haijuzeng Senior Advisor and head of 34-member delegation of Ningxia Hui province of China here on Thursday.

The CM said there had been increased interest of Chinese investors in Pakistan and with facilities provided in Sundar Estate, M-3 Industrial Estate and other industrial Estates their interest had compounded. He said that besides China, Saudi Arabia, UAE, Qatar and Germany other countries were making investments in Punjab. The leader of Chinese delegation thanked Punjab CM for providing support to Chinese investors in Punjab.

http://www.brecorder.com/index.php?id=526641&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

'Government to produce 50,000 skilled workers yearly'

ISLAMABAD (February 09 2007): The government is working on a strategy to produce 50,000 skilled persons per year over a period of three years to meet the need of industrial needs. Jahangir Khan Tareen, Minister, said this for Industries, Production and Special Initiatives while chairing a meeting on Skill Development Initiatives here on Thursday.

The meeting was attended by Shahab Khawaja Secretary, Industries Ministry, Altaf Saleem Chairman NAVTEC, Sadruddin Hashwani Chairman Hashoo Group, Tariq Saigol Chairman Maple Leaf, Arshad Nasir Chairman OGDC, Ahsan Saleem CEO Crescent Steels, representatives of industry and JICA, says a press release.

The minister said that there was a huge supply and demand gap as far as the skilled manpower is concerned and this may become one of the impediments in industrialisation. Realising the importance of skilled manpower for the industry, President Musharraf has tasked M/O IP&SI to launch a Skill Development Initiative for producing enough skilled workforce so as to meet the growing needs of the industry, he added.

Tareen said that 20 different companies for the industries/trades like oil & gas, textile, tourism, hospitality, construction, furniture, sports, chemical/fertiliser, electronics etc will be set up on the basis of public-private partnership.

These companies will start functioning from the next financial year. Each company will produce 2500 skilled workers per year. The companies will set up technical and vocational training institutes across the country, said the minister adding that these institutes will be set up in all parts of the country so that each part becomes an important and integral part of the industrialisation process. The students enrolled in these institutes will get a stipend of Rs 1000/ per month, said the minister.

Altaf Saleem Chairman NAVTEC told the meeting that the NAVTEC is working to impart technical and vocational training to the people. New institutes are being set up and the existing ones are being overhauled, he added.

http://www.brecorder.com/index.php?id=526677&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

UAE and UK firms team up for over $250 million DHA project

ABU DHABI (February 09 2007): Injaz Mena Investment Company has teamed up with United Kingdom-based Global Haly Investment Limited to develop a landmark 250-plus million dollars shopping mall and office complex in Defence Society in Karachi. The complex will be situated next to Creek Golf Club along Arabian Sea coastline, said a senior official.

It was awarded by Defence Housing Authority Karachi to Global Haly Investment Ltd, highest bidder among seven international consortia that participated in bidding. The joint venture project was officially announced this week under key sponsorship of Dr Shaikh Sultan bin Khalifa bin Zayed Al Nahyan.

Injaz Mena Chief Executive Officer (CEO) Ahmed Al Dhahry said "with projected IRR well in excess of 35 percent, project was in high demand with investors". The commitments from investors exceeding offered subscription amount for this opportunity were received within a week as a result.

The complex will provide high quality shopping and premium office space on 5.3 acres land, having total built-up area of about 1.7 million square feet, of which some 600,000 sq ft will be saleable space.

It will have three basement levels for parking, ground floor, mezzanine, five upper floors, offering about 350,000 sq ft of dedicated retail space, while balance of area will be for offices.

Land was acquired by Global Haly Development (Pvt) Limited, a joint venture company established in Pakistan to develop the project. Its Board of Directors has Mubarak Bin Fahad, who will also serve as chairman and CEO, Shariq Azhar, director general Injaz Mena, Shahid Choudri, president of Global Haly Investment Ltd and Elahi Baksh Baloch.

Complex development will be managed by Injaz Mena through off-shore special purpose subsidiary, Injaz Pakistan Development Company I Ltd Project plans and architectural design are at initiation stage. Construction is expected to commence around mid 2007, with completion due to take about three years. Deutsche Bank will perform fiduciary functions on behalf of investors as Custodian and Administrator of Injaz Pakistan Development Company I Ltd.

http://www.brecorder.com/index.php?id=526588&currPageNo=2&query=&search=&term=&supDate=

 

[Neo]

Pakistan, China to boost IT cooperation

KARACHI: Pakistan and China have agreed to enhance collaboration in information technology trade, venture capital funds and IT parks to strengthen partnership in technology, an official statement said on Thursday.

“This was decided in the first meeting of Pakistan-China Joint Working Group on Information Technology,” said a Pakistan Software Export Board (PSEB) statement. The Chinese delegation comprised 17 members, including senior officials of the Ministry of Information Industry, led by Zhao Wenzhi, Deputy Director General, Foreign Affairs Department while Yusuf Hussain, MD PSEB led the Pakistani side.

It said the working group reviewed the current status and future direction of the IT industry of both countries.

“The Chinese IT industry has achieved rapid growth in the last four years with domestic revenue at $48 billion,” it said. “IT exports and outsourcing in China have also experienced rapid growth and crossed the billion dollar mark.”

It said Pakistani IT industry had also experienced remarkable growth over the last three years, adding total industry size including global receipts of Pakistani IT companies, domestic revenue, hardware and IT services had crossed $2 billion.

“The Joint Working Group members believe that collaboration between Pakistan and China in IT will be highly beneficial to both countries and will help them in becoming a world force in IT,” it said.

“The brotherly countries of Pakistan and China are poised to become world leaders in IT. We are eager to work closely with Pakistan to our mutual benefit,” the statement quoted Zhao Wenzhi as saying.

MD PSEB Yusuf Hussain said China had experienced enormous growth over the last two decades and was poised to become a global IT leader. Pakistan had also shown tremendous economic growth and stability over the last few years, he added.

http://www.thenews.com.pk/daily_detail.asp?id=42046

 

[Neo]

February 09, 2007
$5.4bn power plan approved

By Khaleeq Kiani

ISLAMABAD, Feb 8: The government on Thursday approved a plan to set up 11 power projects to cope with expected energy shortage of about 2000MW in coming years.

A mix of hydel-, coal- and gas-based projects, the $5.4 billion power projects would generate about 4,200 MW of electricity in three to seven years.

A meeting of the Private Power and Infrastructure Board (PPIB) presided over by Minister for Water and Power Liaquat Ali Jatoi decided to issue letters of interest to AES Corporation of the United States and Mitsui Corporation of Japan to conduct feasibility studies and then set up two power projects of 1000-1200MW each to be based on imported coal.

The coal-based projects would take about five years to start production with an estimated cost of $2.5 billion. The sponsors would be required to complete their feasibility studies in about one year and then complete construction of projects in about four years.

The board directed Wapda to instal a 100MW power plant in Khuzdar on a fast-track basis to improve the power supply situation in Balochistan, particularly in the Khuzdar area.

The meeting also approved a decision of the prime minister to set up another 450MW power plant based on low quality gas from the Uch field in Balochistan, instead of Sindh. These two projects are estimated to cost about $550 million.

The board approved issuance of letters of interest to various local and foreign firms to set up seven hydropower projects in the NWFP and Azad Kashmir with a total investment of about $2.4 billion. These projects would generate about 1620MW of power.

These include 197MW Kalam-Asrit Hydropower Project, and 209MW Asrit-Kedam Hydropower Project (both to be located in Swat) and 548MW Kaigah Hydropower Project (district Kohistan) NWFP.

The hydro projects to be located in Azad Kashmir include 240MW Karot Hydropower Project, Kotli, 65MW Sehra Å Hydropower Project, District Poonch, 222MW Azad Pattan Hydropower Project at Sudhnoti, and 139MW Chakothi Hattian Hydropower Project at Muzzaffarabad.

The meeting had been convened as a follow-up of an earlier meeting presided over by Prime Minister Shaukat Aziz a few days ago that had decided to speed up implementation of projects which had been in the pipeline for quite some time to meet energy shortages rising continuously by 10 to 12 per cent per annum.

While a number of projects -- mostly high-cost thermal -- have been lined up for commercial production after 2008, the immediate shortages expected to be up 2000MW in coming summer season could partially be met through about 300MW to be generated by two power projects recently imported form the United States on rental basis.

The tariff, however, of almost all the thermal power projects would average between 13 to 18 cents per unit on a levelized basis. Their tariff would, however, keep on going up continuously to reach about 29 cents per unit after 20 years or so, translating into Rs17 per unit from the current rate of about Rs4 per unit.

http://www.dawn.com/2007/02/09/top2.htm

 

[Neo]

February 09, 2007
Economy faces serious risks

KARACHI, Feb 8: Pakistan's economy faces serious risks and challenges and desperately needs basic infrastructural changes. During the last two and a half financial years, many economic indicators are showing negative trends. The current account and trade deficits numbers are too high and the national exchequer is suffering a loss of Rs725 billion per month due to corruption, tax evasion, exorbitant expenditures and poor performance of public sector enterprises.

This was stated by Dr Shahid Hasan Siddiqui, a renowned economist and chairman of the Research Institute of Islamic Banking and Finance. He was speaking at a seminar on “Where is Pakistan's economy heading” which was organised by the Department of International Relations, University of Karachi on Wednesday.

Expressing concern over the economic scenario, Dr Saddiqui said that it was important to note that the situation today was far worse as compared to the state of affairs in 1999 when Pakistan was penalised with sanctions for going nuclear.

Giving a comparison between the 1999 and 2006 situations, he said inflation rate was 5.7 per cent in June 1999 and was over eight per cent in 2006; unemployment rate was 5.8 per cent in 1999 and 6.5 per cent last year; trade deficit was $1.5 billion in 1999 and $12 billion last year; the current account deficit was $1.8 billion in 1999 and over $5.2 billion last year. During the same period, the health expenditure as percentage of GNP had also gone down despite the fiscal space provided by 9/11.

The educational expenditure had not shown any improvement.

Banks had reduced their rate of returns from 6.5 per cent in 1999 to 2.5 per cent. That means they had enhanced their profitability tremendously, but were paying very less to the depositors. From 2000 to till to date, Rs450 billion had been paid less to the depositors, he said.

To improve the economy, he said, the policy of consumption led growth should be changed to production led growth. Consumer finance schemes should be banned and banks be directed to offer a minimum return of one per cent over the inflation rate to the saving bank account holder.

For the time being unless the tax GDP ratio was raised to 15 per cent in the shortest possible time, which would mean an increase of about Rs350 billion in the next financial year, the government can neither bridge the current deficit nor can provide development expenditures for education and health.

Dr. Siddiqui also criticised the government for selling profitable units to foreigners and maintained this could result in what he called re-colonisation. The government, he said, had violated law by using the money from the sale proceeds to meet the budge deficit, a product of corruption and tax evasion.

Referring to the initiatives for poverty alleviation, he said that it was ironic that in Pakistan Rs150 billion were given every year in charity, but that money was wasted in a sense that nobody came out of poverty.

There are reports that from the Zakat deducted by the government, about Rs6 billion are being used by senators to perform Umra every year.

http://www.dawn.com/2007/02/09/ebr3.htm

 

[Janbaz]

Banks provide Rs231 billion to private sector

ERUM ZAIDI
KARACHI - The domestic banks have provided Rs 231 billion credit to the private sector from July to January 21, 2007 as against Rs 273 billion credit provided in the corresponding period of last fiscal.
The SBP latest profile of monetary assets indicate that the commercial banks have provided Rs 225 billion credit to the corporate sector and individuals while the specialised banks extended Rs 5.40 billion credit during the said period of this fiscal.
The reason for this is that the impact of monetary tightening stance pursued in FY06 as well as the policy signals through the FY07 changes, has made evident in the slowdown in the private sector credit growth, which dropped to 5.9 percent during Jul-Nov FY07 against the10.9 per cent growth witnessed in the corresponding period of FY06.
A review of monthly trends in private sector credit shows that the slowdown is largely concentrated in the month of September 2006. Trends during October-November 2006 period depicts presence of strong demand for private sector credit in the economy. While the nominal lending rates are rising, the real lending rates are still very low. The real lending rates under export finance facility are even negative. Though the overall demand for credit by the private sector has decelerated, the slowdown is not broad-based. This shows that monetary policy would remain tight.
However, while the transmission of the monetary policy on lending rates has improved over the last year, the impact on deposit rates has been less than desired, contributing to an unhealthy high banking spread.
The available evidence shows that banks are mobilising deposits at higher returns and the share of such deposits has been rising. Since the long-term deposits lower the maturity mismatch for banks and reduce liquidity risks, it was expected that the banking spread would decline. But in the meanwhile, lending rates have also risen thereby leading to a sharp rise in the banking spread (calculated on the basis of incremental loans and deposits) in recent months. Such a large spread can have a dampening effect on economic growth by discouraging savings.
The available evidence suggests that the slowdown in private sector credit is not broad-based as the increased net retirement, particularly by the sugar manufacturers during Jul-Nov FY07 contained the growth in private sector credit and deceleration in bank credit against equities. The government borrowings from the banking system are higher and volatile.

The Nation.
http://www.nation.com.pk/daily/feb-2007/10/bnews8.php

 

[Owais]

Qatar Islamic Bank eager to invest in Pakistan

DOHA: Qatar Islamic Bank (QIB) is interested to expand their banking operation by making investment in the banking sector of Pakistan.

A Qatar newspaper said that the QIB, the 4th largest ranked bank in Qatar, was keen to make investment in the baking sector in Karachi, Lahore and Islamabad.

State Bank of Pakistan for the issuance of license allowing Islamic banking in Pakistan requires the minimum of $67 million investment, which would be enhanced to $100 million by 2009.

The newspaper said that Pakistan since 2005 witnessed an unprecedented progress in the Islamic banking and the Islamic banking system was working in complete Sharia compliance. According to QIB report Pakistan GDP growth rate during the last three years recorded exceptional performance

http://geo.tv/geonews/details.asp?id=1898&param=3

 

[Neo]

Local cars' sales, production moving up

KARACHI (February 10 2007): The production and sale of cars during the seven-month period (July - January FY07) were up by 5 percent and 7 percent to 86,992 units and 88,031 units respectively, while the statistics for the month of January alone suggest a single digit growth.

According to the data issued by the Pakistan Automotive Manufacturers Association (PAMA), tractor production and sales were up by 4 percent and 2 percent to 29,268 units and 28,675 units respectively. Trucks in the current year surpassed last year's production and sales by 4 percent and 6 percent to 2,551 units and 2,460 units. A jump was witnessed in LCV's whose production and sales posted a growth of 13 percent and 14 percent to 19,199 units and 19,195 units respectively.

Buses and motorcycles registered a decline in sales by 4percent and 12percent to 507 units and 263,698 units respectively. Overall units sold by the assemblers listed below during 7M/FY07 were up by 7percent to 134,418 units as against 125,629 units in the same period last year. However on m-o-m basis the unit sales were up by half a percent to 18,583 units (18,491 units in FM/FY06).

Those companies who performed better month-on-month registered a decline in the seven-month period and vice versa except Indus Motors and Millat Tractors. Pak Suzuki registered a sales growth of 27percent y-o-y and 8percent decline m-o-m basis.

Sales of 8,035 units in the month of January 2007 took the cumulative seven-month figures to 62,720 units. Indus Motors sales on m-o-m and y-o-y basis were up by 28percent and 18percent to 3,797 units and 26,802 units respectively. Dewan Motors sales during the seven month period of FY07 were down by 28percent to 6,186 units, however it managed to increase its sales by 5percent m-o-m to 905 units.

Al-Ghazi tractor managed to post a growth of 11percent to 15,379 units while Millat Tractors sales declined by 6percent to 13,296 units during July-January FY07.

Pak Suzuki's decline in sales on month-on-month basis can be attributed to the unhealthy performance of its newly introduced Suzuki Liana. Liana registered a decline of 84percent to 137 units during January 2007 when compared to 851 units in December 2006, said Hettish Karmani of Atlas Capital Markets.

Sales of Suzuki Jeep and Suzuki Ravi were also down by 49percent and 33percent, however better sales performance of its lower end segment cars Cultus and Alto led cumulative sales to increase during the period.

Indus Motors has rolled out all its inventories of Hilux with the remodelled brand coming up soon. On m-o-m basis sales of Corolla posted a healthy surge of 46percent whereas Cuore sales declined by 12percent. Dewan Motors hasn't produced Santro since last two months whereas Shehzore continues to be its leading brand.

Al-Ghazi leads the tractor assemblers segment in terms of market share with a 54percent share of the pie, rest being acquired by Millat Tractors. On m-o-m basis Al-Ghazi and Millat Tractors both registered a decline of 23percent and 16percent to 1,962 and 2,053 units respectively.

"When the capacities were intact and no expansions took place, the market share of individual car manufacturers was more-or-less constant over the years. However, realising the potential of Pakistan automobile sector and low motorization level the car assemblers carried out significant expansions during the last two years as a result a quantum jump can be witnessed in their market shares," the analyst added.

Plant capacity of Pak Suzuki has reached 150,000 units and the same for Indus Motors has crossed 50,000 hence enhancing their respective market shares by 8pps and 5pps in FY07 at the expense of others in the industry. It was also learnt that IMC is also launching Toyota Camry to be assembled at IMC plant. "It is crucial to maintain competitiveness in the automobile sector in the long term.

Transition from deletion program to a transparent and competitive TBS environment - a paradigm shift in the auto industry. Now, with a clearly spelt-out tariff policy for at least the next five years and a support program for its safe transition through a long-term auto policy, it's necessary for the assemblers to reach half a million capacity by 2012. The first advantage has already been taken by IMC and PSMC," Hettish added.

http://www.brecorder.com/index.php?id=527030&currPageNo=2&query=&search=&term=&supDate=

 

[Neo]

February 10, 2007
Trade moot to attract $3.375bn investment

ISLAMABAD, Feb 9: The government is organising an Overseas Pakistanis Investment Conference (OPIC) here in the first week of March to attract over $3 billion investment mostly by Pakistanis living abroad.

“Some 257 overseas Pakistanis have shown interest to invest over $3.375 billion in different sectors in Pakistan, including real estate, communications, telecommunications, information technology, agriculture, health, education and in capital markets,” minister for labour, manpower and overseas Pakistanis, Ghulam Sarwar Khan, told a press conference on Friday.

The event, to be held on March 5-6, will be attended by both President General Pervez Musharraf and Prime Minister Shaukat Aziz.

He said some 36 businessmen from Saudi Arabia were willing to invest $300 million, 55 from US have shown interest to invest $1.129 billion, 38 investors form UK will make an investment of $935 million and 18 businessmen from UAE wanted to invest $84 million.

"We have invited overseas Pakistanis across the world but a good number of foreign investors are also interested to come and invest in the country," the minister said.

He expressed the hope that the conference will help encourage and facilitate effective participation of overseas Pakistanis who were keen to take part in the country's economic development.

“The conference is being held in view of an extremely favourable investment climate in the country,” he said.

"It will also provide a platform to overseas Pakistanis to interact with the private sector and policy-makers in the country, besides, being instrumental in attracting direct foreign investment in Pakistan", he added.

Mr Khan said Pakistan’s foreign missions had been requested through foreign office to send details and particulars of the potential investors in the two categories --- those who could invest $1 to 5 million and others who have potential to invest over $5 million.

The conference, he said, will provide an opportunity to interested parties to display their products and services at the exhibition pavilion of Jinnah Convention Centre.

He said Pakistan International Airlines (PIA) had offered 30 per cent discount for the registered participants of the conference.

The minister appreciated the efforts of Overseas Pakistanis Division and said they were playing role for the development of the country.

http://www.dawn.com/2007/02/10/ebr12.htm

 

[Neo]

New power plan

MORE power to the government if it can pull it off. On Thursday, the Private Power and Infrastructure Board approved of an ambitious but necessary $5.4 billion power plan that aims at adding some 4,200MW to the country’s existing generation capacity in three to seven years. According to the Economic Survey of Pakistan, total installed generation capacity stood at 19,439MW in 2005-06. This figure is only 10 per cent higher than what it was in 1999. Fuelled by rapid economic expansion and a growing population, demand for electricity has been rising by more than eight per cent a year and now exceeds summertime supply by nearly 2,000MW, a shortfall that could to increase to 5,300MW by 2010. Over 60 per cent of the projects envisaged under the new plan will be based on coal and natural gas, with hydropower schemes in the NWFP and Azad Kashmir accounting for 1,620MW of the total output. Though relatively expensive to operate, thermal power projects have become inevitable in the short term, courtesy the authorities’ abject failure over the last eight years to plan for the future. Still, it is encouraging to note that coal-fired plants are being given due emphasis. Although they will be run on imported coal, the electricity generated should be significantly cheaper than what is produced by oil-based plants. Ultimately, one hopes, the country’s vast indigenous coal deposits will be the source of supply for all such projects.

Along with thermal and hydropower plants, the government must accelerate efforts to fully exploit renewable energy sources. While solar energy is still an expensive proposition, wind and biomass power have already proven their cost-effectiveness in other countries. Geothermal power is another option that ought to be explored in earnest. Increasing generation capacity is, however, only one side of the coin. Transmission and distribution losses must also be tackled forthwith. Wapda’s T&D losses stood at 21 per cent in 2005-06, while 34.4 per cent of the KESC’s total available units were lost in transmission and distribution. This wanton waste of a precious resource is unacceptable. The transmission network must be overhauled and electricity thieves dealt with an iron hand.

http://www.dawn.com/2007/02/10/ed.htm#2

 

[Neo]

Saturday, February 10, 2007

‘Energy consumption grew by 5.4% annually in 5 years’

By Farhan Sharif

KARACHI: Increasing gap between energy consumption and supplies will continue to favor local Energy and Production (E&P) sector, according to a report compiled by Jahangir Siddiqui Capital Markets Limited.

By posting a five-year (from financial year 2002 to financial year 2006) compound annual growth rate (CAGR) of 6.1 percent, energy consumption, due to broad based economic growth, has outpaced supplies, which grew by 5.4 percent annually in this period.

In financial year 2006, while energy supplies grew by 4.2 percent, energy consumption rate, once again, beat the supply rate and recorded a growth of 5.7 percent.

In financial year 2006, Pakistan’s primary energy supplies grew by 4.2 percent to 57.9 million toe (tons of oil equivalent) from that of 55.5 million toe in financial year 2005. The growth rate is lower than the preceding two-year 8.0 percent during financial year 2004 and 9.2 percent in financial year 2005 increase. The decline in growth rate was due to slowdown in the growth of gas coupled with falling high speed diesel (HSD) demand and reduction in coal imports by Pakistan Steel. Once again increase in energy supplies in financial year 2006 was mainly contributed by gas, given its highest share, followed by oil and hydel power.

According to the report, gas supply was up by 4.4 percent to 29.2 million toe while oil witnessed a nominal 0.5 percent increase to 16.4 million toe. Hydel power showed a healthy growth of 20.2 percent to 7.4 million toe, which was attributable to better availably of water in reservoirs. Oil share in domestic energy mix during financial year 2006 was 28.4 percent. This has been on the declining side since financial year 2000, when it used to be 43 percent. Despite rise in hydel generation, furnace oil usage grew by 11 percent to 4.92 million toe, which is an indication of growing energy appetite. Final energy consumption in financial year 2006 reported an increase of 5.7 percent to 33.9 million toe. With rising economy, energy deficiency is also widening with demand growing at faster pace than the supply.

Faraz Farooq, an analyst at Jahangir Siddiqui Capital Markets Limited said, in overall pie of energy supplies, the contribution made by the indigenous supplies was 74 percent in financial year 2006 against 72 percent in financial year 2005. The indigenous resource utilization ratio has been on rise in last five years as in financial year 2001 this ratio was 61 percent mainly due to rising gas supply. While gas demand is being met through local sources, domestic oil production of 3.2 million toe in financial year 2006 was only 21 percent of its demand. And the country imported 15.1 million toe of crude oil and refined products worth US$6.6 billion in financial year 2006.

Mr Farooq said natural gas is the mainstay of Pakistan’s energy mix with a share of 50 percent in the overall energy pie. This is because Pakistan’s exploration acreage is largely skewed towards gas. In Asia Pacific region, Pakistan ranks sixth in terms of balance recoverable gas reserves. In India, gas occupy only 9 percent share with major reliance on coal. In Asia Pacific region, gas accounts for 11 percent of the primary energy supplies.

“Situation favours the E&P companies,” he said. With oil and gas occupying 80 percent share in primary energy supplies, the rising energy consumption is a positive development for the E&P firms. Besides local oil production meets only 21 percent of its demand, Pakistan is also pursuing a gas supply shortage of around 1,000mmcfd by financial year 2010. Thus, the situation favors the E&P sector and provides an opportunity to enhance exploration activities and realize the upside potential in their asset portfolios, according to Mr Farooq.

http://www.dailytimes.com.pk/default.asp?page=2007\02\10\story_10-2-2007_pg5_6