Pakistan Economy - News & Updates - Archive

[Neo]

Hi-tech sugar syrup plant designed to arrest invisible losses

KARACHI (May 20 2007): A hi-tech sugar syrup plant has been designed to arrest the invisible losses in Pakistan's antiquated sugar industry. Javed Malik, Convenor, Sugarcane Grower's Association (SGA) told Business Recorder that the plant would cost Rs 160 million having 70% local and 30% imported components and would be ready on about a year's time.

Besides local, several foreign entrepreneurs from Latin America and Africa have shown interest in setting up this plant. He said that in the backdrop of sugarcane and white sugar crises in Pakistan, a lot of research and development and practical experience have gone in the designing of this project.

The sole is increasing white sugar production and reducing poverty in the rural areas particularly and urban areas generally. It would provide jobs to the rural folks and urban skilled labour (iron foundry workers) to ease unemployment in the country.

Javed Malik said that that the research results show that invisible losses to Pakistan's sugar industry come to about 30-35% according to industrial and grower's estimates. As per sugar chemistry harvested cane should be crushed within 12 to 24 hours while in mega sugar mills it is crushed after 3/4 days provided the system is efficient otherwise it takes about 5/6 days.

As the hi-tech syrup plant would be small and efficient unit, it has been designed to have a capability to crush grower's sugarcane within 12 hours, thereby arresting the invisible losses to the tune of 30 to 35%. Similar to textile industry, which comprises ginning unit, spinning unit, weaving unit, and stitching unit.

In the United States there are several sugar syrup plants which supply sugar syrup to big sugar mills. The sugar syrup plant designed here, being small and efficient, the focus would be on development of different varieties of sugarcane in gate areas, ie early maturing variety, middle maturing, and late maturing variety, he said.

This, he said, would result in increased quality sugarcane and white sugar production manifold and fresh cut, neat and clean sugarcane would help improve the sugar recovery to new heights.

These small sugar syrup units of 500 TCD capacity would be satellite units of nearby bigger sugar mills ensuring continuous supply of quality sugar syrup to help bigger sugar mills to run its full capacity and producing white sugar very competitively.

The small units would be equipped with the 21st century high-pressure steam technology to produce about more than one mega watt of electricity on 24-hour basis from bogass. This should bring down the cost of running small industry in Pakistan coupled with increased quantity of sugar syrup quality. Further it would bring prosperity to rural and urban Pakistan at grass root level.

It is a win-win position for all the stakeholders in the sugar industry, Javed Malik said and urged the government to provide 50percent grant and bank financing for this project of growers as India provides 100% grant and gives priority to grower's projects.

http://www.brecorder.com/index.php?id=566212&currPageNo=2&query=&search=&term=&supDate=

 

[Neo]

Country's nuclear power output capacity only 400 megawatts

KARACHI (May 20 2007): Country's total nuclear power generation capacity is 400 Mega Watt (MW) that accounts only 0.8 percent of the total power generation of 19,540MW. According to a report published in a monthly, 'Energy Update' in the last 35 years of nuclear research, the country is not yet able to produce nuclear electricity at its own.

As a result, it remains far behind the target of economically viable nuclear power generation that comes only when every plant is capable of producing 1000MW or above.

This is the crucial point where the country feels hurt because of the US-India nuclear deal. With this deal, India would make a quantum jump by setting up nuclear power plants having 1000MW and above capacity. Pakistan's all weather-friend, China, that helped Pakistan in setting up Chashma-1 and now Chashma-II, itself is not capable to put up plant of more than 600MW capacity.

Country's first ever nuclear power plant -Karachi Nuclear Power Plant (Kanupp-I) - installed in 1971 has lost drastically its generating capacity from an original 137 megawatt to only 40 megawatt now and remains closed in major part of the year as the authorities concerned could not maintain it over the years.

The second plant, Chashma Nuclear Power Plant (Chashnupp-1) started supplying about 300MW to the national grid in September 2000 but it is among the most expensive power plants in Pakistan in terms of its tariff. The third plant, Chashma-II is currently in the construction phase and is expected to be ready by 2011.

The radical drop in the power generation capacity of Kanupp-1 is sufficient to prove the authorities' incompetence in this field. Now, the government is also planning to install Karachi Nuclear Power Plant-2 (Kanupp-2) with a generation capacity of 600 MW with the help of China.

Negotiations are under way for the purpose. 2019 will retire Kanupp-I and the dismantling of the plant, keeping in view the nuclear emissions factor, will be a test case of the ability and capacity of country's nuclear regulatory authority.

The authorities concerned are trying to increase its generation capacity to the extent possible and within days it could be able to enhance its generation capacity to inject more power in the city's system, which is facing electricity deficit.

It is strange why the authorities concerned have wasted too much time in enhancing the generation capacity of the nuclear power plant, which has actually been reduced from 137 MW to 40 MW.

However, at long last, the authorities concerned have made a plan to attain the generation capacity up to 70 to 80 MW as it is not possible to retrieve the total generation capacity lost because many of the parts being used in the plant have become outdated. In this connection, the authorities are in talks with the Canadian government for importing some key parts of the plant.

The country plans to increase nuclear power generation capacity to about 8,800MW by 2030. The government has already selected six sites in the first phase to install more nuclear power plants to materialise the plan to increase the country's capacity to generate 8,800MW nuclear power by 2030. The Pakistan Atomic Energy Commission (PAEC) has selected six sites for the purpose in line with the recommendations of the Pakistan Nuclear Regulatory Authority (PNRA) and the International Atomic Energy Agency (IAEA). The government has recently approved funds for the feasibility studies.

The PAEC has selected six sites for installation of more nuclear power plants (NPPs) that include (1) Qadirabad-Bulloki link canal near Qadirabad headworks (2) Dera Ghazi Khan canal near Taunsa Barrage (3) Taunsa-Punjnad canal near Multan (4) Nara canal near Sukkur (5) Pat Feeder canal near Guddu and (6) the Kabul river near Nowshera.

http://www.brecorder.com/index.php?id=566202&currPageNo=2&query=&search=&term=&supDate=

 

[Neo]

Roadmap for future intra-trade among D-8 group in offing

KARACHI (May 20 2007): "The Roadmap for future intra-trade between the members of the D-8 organisation is being prepared and it is expected that it would lead to doubling of the trade to over $60-70 billion within ten years. The present global trade of the eight countries is over $750 billion and the combined population is over 900 million.

"Dr Dipo Alam, Secretary General of D-8 organisation disclosed this during a meeting with Majyd Aziz, President and members of Karachi Chamber of Commerce and Industry at KCCI. Dr Alam, who is from Indonesia and was on a short visit to Karachi, moreover added that although this decade old organisation is primarily on a government-to-government level, the new thinking is to involve the private sector and focusing it more as private sector oriented.

He said that the eight Muslim countries, Bangladesh, Egypt, Indonesia, Iran, Malaysia, Nigeria, Pakistan, and Turkey have signed the Preferential Trade Agreement among themselves although it has not yet been ratified by all countries. He said that D8 countries could soon take advantage of trade with Asean countries through Malaysia and Indonesia.

He said visa, custom, and shipping agreements have already been reached within the D-8 membership. Dr Alam who was accompanied by senior Indonesian diplomat, Mr Hikmat Moeljawan, also stated that a process of Sectoral Dialogue is being initiated such as Jewellery development, fruits and fisheries, large-scale manufacturing investment, etc which would be done through 15 working groups.

Earlier, Majyd Aziz in his presentation called for setting up of a designated group of the largest Chambers in each country and that this chambers group could become the focal point in each country and set up a D-8 Cell in each Chamber.

He said that common exhibitions, position papers, and proposals could be done through this Group. Moreover, a continuous flow of information and exchanges of delegations could be undertaken. He offered the services of Karachi Chamber in this regard. He also presented the progress of the My Karachi exhibition which would be held by KCCI on June 01-03.

Dr Alam appreciated the proposal of KCCI and advised that the Chamber should present a formal proposal that would be deliberated in the D-8 headquarters and a decision taken soon. He also suggested that the Pakistani Ministry of Foreign Affairs be kept informed about the proposal too. Mr Hikmat Moeljawan in his remarks assured KCCI that the Indonesian Consulate General in Karachi would continue to provide maximum co-operation and support to KCCI and that is why Indonesian firms have been the first to reserve stalls and participate in the My Karachi exhibition. Later mementos were presented to the Secretary General.

http://www.brecorder.com/index.php?id=566271&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

'Industrial sector upgradation budget increased manifold'

SIALKOT (May 20 2007): Federal Science and Technology Minister Choudhry Nouraz Shakoor Khan has said the budget has been increased to manifold for the modernisation and upgradation of industrial sector in the country. Speaking as chief guest at the earth-breaking ceremony of "Cast Metal Technology Testing and Training Centre" in mini-industrial estate in Daska on Wednesday.

He added that this centre would cater to the needs of advanced foundry, costing, forging and metal testing requirements of industries of Sialkot, Daska, Gujranwala, Wazirabad and Gujrat areas.

The Minister said this centre would be well equipped and it would provide training in various advanced skills to the artisans of these areas. The government was mobilising all available resources and modes for the modernisation of industrial sector of the country aimed at enabling it to cope with modern global challenges and standards more easily, he added.

The "Cast Metal Technology Testing and Training Centre would be accomplished at a cost of Rs 350 million in two years stipulated period. This well-equipped centre would be an international standard and it would provide necessary advanced forging and testing facilities to the industrial sector. Although the construction of this centre would be completed in two years, the provision of metal-testing facilities would be started next month.

http://www.brecorder.com/index.php?id=566258&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

MCCI calls for five-year realistic trade policy to boost economy

MULTAN (May 20 2007): The Multan Chamber of Commerce and Industry (MCCI) has urged the government to introduce a realistic trade policy for five years, which can boost the economy and should be transparent, comprehensive, viable and free from bureaucratic hurdles, aiming at generating more foreign exchange and additional jobs, and ending the trade deficit to strengthen the economy of the country.

MCCI President Anis Ahmed Sheikh said the incentives of promoting industrialisation with environmental consideration, energy conservation, pollution control and the recycling and use of industrial and city waste by industries as their raw material should be allowed five-year tax exemption.

There is no fruit tin packing industry in southern Punjab, he said, and added that it should be given zero-rated for all taxes as it would enhance exports. He said it was a longstanding demand of southern Punjab that Multan airport should be upgraded for wide-bodied aircraft to operate and for timely exports of perishable agricultural products including fruits and vegetables and other commodities from Multan. The government should take serious steps to control smuggling, promote small industries, which are unable to face competition against bigger industrial units.

The export of value-added engine parts should be allowed 20 percent export incentive to boost exports as there is no duty drawback on these parts, he said, adding that the neighbouring country, China, is providing 22 percent export incentive on these parts. The economic survival of the country depends on its foreign exchange earnings, he said, adding that every country of the world, whether developed or underdeveloped, is making frantic efforts to gain a major share in world trade.

MCCI president said that to boost the country's exports and to achieve national export target the following measures are suggested:

1) TAX RELIEF FOR ALL EXPORTERS: However, new entrant in the export trade have to face considerable problems in the early stage. To encourage the newcomers and small exporters it is suggested that liberal tax relief be given to them.

2) EXPORT RE-FINANCE SCHEME: The mark-up rate on export be made more attractive. Under part-II of export re-finance scheme the exporters are requested to export goods worth two times of their export finance limit, which should be reduced to 1.5 times.

http://www.brecorder.com/index.php?id=566193&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

Textile exports reach $10.11bn

ISLAMABAD: The National Assembly Standing Committee on Textile was informed here on Saturday that textile exports of the country increased from $8.92 billion in 2004-05 to $10.11 billion in 2006-07.

The committee met here under the chairmanship of Ch Niaz Ahmed Jaat, member National Assembly. The committee was informed that during the nine-month period of 2004-05, total exports were $7.55 billion, which registered an increase of 3.55 per cent during the corresponding period of the current financial year.

It was further informed that the main issues confronted by the textile sector included increase in the cost of doing business involving a rise in utility tariffs, increase in interest rates and cost of finance affecting investment as well as liquidity and lack of value addition to keep pace with the competitors.

The committee was also informed that export refinance rate in the country increased from 3 per cent to 9 per cent, adding to the cost of doing business. A member of Central Board of Revenue (CBR) told the meeting that the CBR is taking every possible step to facilitate the business community and exporters and modern software is being developed to provide fastest refund facilities to its clients.

She said that 2,100 refund cases were cleared, out of a total of 2,700 cases and paid Rs34 billion. Minister of Textile Industry Mushtaq Ali Cheema stressed the financial sector to take serious steps to bring the industry out of crisis and put it on the path of stability and progress.

He said that the textile sector is an important segment of national economy and it can change into a job-creating engine for the workforce of the country, besides being a source of foreign exchange for the country. The minister said that the value of Pakistani currency is stable against the dollar, which is a positive sign for national economy.

Officials of Ministry of Food Agriculture and Livestock (MINFAl) informed the committee that research work on world best and high production cottonseed for production of clean cotton in the country.

The meeting was attended by NNAs Harron Ihsan Piracha, Ahmed Raza Maneka, Sahibzada Muhammad Mahbob Sultan, Ghalib Hussain Domki, Sayed Ayaz Ali Shah Sheerazi, Liaquat Ali Marri, Muhammad Farhan Latif, Iqbal Muhammad Ali Khan, Maulana Rehmat Ullah Khalil, Farid Ahmad Piracha, Asiya Nasir, Nayyer Sultana, Manzoor Ahmed, Yasmeen Rehman, Syed Amir Ali Shah, Muhammad Pervaiz Malik, Mushtaq Ali Cheema and officials of concerned ministries.

http://www.thenews.com.pk/daily_detail.asp?id=56689

 

[Neo]

May 20, 2007
Foreign investment reaches $6 billion
By Shahid Iqbal

KARACHI, May 19: Rising foreign investment in Pakistan is setting new records with each passing day, reflecting attraction and opportunity attached with the growing economy.

Foreign investment reached almost $6 billion during the first 10 months of the current fiscal 2006-07, rejecting speculations that general elections would bar the investors to put their money at risk.

Speculators believe that that risks are attached with instability which may emerge after general elections expected by the end of 2007.

Though foreign investment has been limited to a few sectors, it has increased by over 47 per cent compared to the corresponding 10 months of last year.

Latest official figures showed that foreign investment during July-April 2006-07 reached $5.979 billion against $4.049 billion during the corresponding period of last year.

“It looks that foreign investment would reach $7.2 to $7.5 billion by the end of the current fiscal which will give immense support to country’s soaring current account deficit,” said Abid Saleem, an analyst.

The government has been lucky that it received unexpectedly very high flow of workers’ remittances being sent by the overseas Pakistanis.

During the first 10 months of the current fiscal, the country received $4.450 billion which was 22.6 per cent more than the corresponding period of last year.

The fear of unexpectedly low exports growth and high import has been subsided by the record foreign investment and workers’ remittances.

Analysts said the widening trade deficits were of prime concern for the government which could hit up to $12 billion by the end of the fiscal 2006-07.

“The government has been borrowing heavily to meet the gap, but it will result in more borrowings in future,” he said.

Pakistan has planned to launch Euro Bonds to fetch dollars from the market not relying on donor agencies but despite high commercial prices, the country would have to pay interest on the bonds.

Sources said the government would launch Euro Bonds worth $1 billion and it is now encouraged by the latest rates assigned by the Standard & Poor’s. The rating agency assigned B+ to the bonds in pipeline.

The rating agency also rejected the speculations that the recent political uncertainty would hurt Pakistan’s rating in the international bonds market. This supports the government to carry on its economic policies without making any significant change in the coming budget.

http://www.dawn.com/2007/05/20/ebr1.htm

 

[Neo]

May 20, 2007
NEC to set PSDP at Rs535bn for 2007-08

By Ihtashamul Haque

ISLAMABAD, May 19: The National Economic Council (NEC) is likely to set the size of the next year's Public Sector Development Programme at Rs535 billion, about 25 per cent above the PSDP of the outgoing financial year.

Dawn has learnt that the NEC, the highest body on taking economic decision, will also review the PSDP 2006-07 and the Medium Term Development Framework (MTDF) 2005-10 when it meets here on May 31. It is also scheduled to monitor the ongoing development projects and approve the working draft of Vision-2030.

Prime Minister Shaukat Aziz will preside over the meeting to be also attended by the planning and finance ministers of all the four provinces, senior officials of the ministries of finance, commerce, industries and the Planning Commission.

The issue of under-utilisation of PSDP funds during the ongoing financial year is also expected to be taken up in the meeting.

"We are proposing about 25-30 per cent increase in the new PSDP and this is how the government plans to offer increased resources for development purposes in the budget for 2007-08", Deputy Chairman Planning Commission Dr Akram Sheikh told Dawn here on Saturday.

He said there will be around Rs95-100 billion additional funding to be provided and approved by the NEC in the new PSDP.

Dr Sheikh said the current PSDP included Rs270 billion share of the federal government, Rs115 billion share of the provinces and over Rs50 billion for the rehabilitation and reconstruction of October 8, 2005 earthquake, totalling Rs435 billion.

The growth momentum, he pointed out, needed to be maintained which required increased funding for new PSDP so as to make available adequate resources for education, health and vocational training.

According to an official summary to be presented in NEC and also obtained by this correspondent, rising inflation, poor exports, slow- down in imports and the widening current account deficit will be thoroughly discussed in the meeting.

The summary projects 7.5 - 8 per cent GDP growth for 2007-08 due to what it claimed strong pick up in domestic and foreign direct investment and strong performance of agriculture, manufacturing and service sector.

"The prospects for sustained high economic growth in 2007-08 would remain excellent," it added.

It further said that GDP growth for 2005-06, provisionally assessed at 6.6 per cent, is likely to go up to about 7 per cent in the revised estimates.

"Strict vigilance needs to be kept on money expansion to contain inflation to the annual target," the summary warned adding that the major taxes collected by CBR showed a comfortable position on government revenues and on the basis it is expected that the full year revenue target would be achieved.

The trade gap though has been widened to higher level but foreign inflows also recorded equally similar growth to bridge the gap.

"The only disturbing aspect of the current year's performance is export growth, which needs to be closely analysed for redressal of its problem, as this is important driving force of the country's economy, having impact on the overall economic performance," the summary added. In this regard, it said that Pakistan's first export plan to increase exports to 15 per cent of GDP from current level of 12-13 per cent by 2013 has been conceived proposing ways and means to accelerate the pace of exports growth.

The summary also conceded that slowdown has been witnessed in import growth, especially those related to production and export process, which are textile machinery and iron and steel.

"Current account deficit is likely to surpass the Annual Plan target of $6.3 billion, as it has already amounted to $4.4 billion during July-December 2006".

GDP growth for the year 2006-07 is estimated to be 7 per cent on the basis of preliminary assessment of agriculture growth and large scale manufacturing (LSM). Taking into account the growth objectives, containing inflation and likely behaviour in the external sector, the Credit Plan for the 2006-07 envisaged 13.46 per cent increase in money supply.

This was based on GDP growth target of 7 per cent and inflation rate target of 6.5 per cent. Net domestic assets were estimated to grow by Rs450.1 billion or 13.2 per cent. Credit Plan target for the private sector was set at Rs390 billion. "The net foreign assets of the banking sector system were envisaged to exert an expansionary effect to the tune of Rs9.8 billion."

The government borrowing for budgetary support at Rs59.4 billion has been 49.5 per cent of the credit plan target. Demand for the private sector credit amounted to Rs227.4 billion as against Rs283.4 billion during the corresponding period of last year. Expansion in credit to private sector is 58.3 per cent of the annual target.

The net assets of the banking system witnessed an expansion to the tune of Rs14 billion as against the contraction of Rs89 billion during the corresponding period last year.

The balance of payment projections for MTDF have been made keeping in view the long-term objectives of reducing the external dependency by increasing those sources of external financing that are stable, sustainable and have positive effects on growth.

The main element of strategy is diversification of exports, stable exchange rate, export competitiveness and trade liberalisation.

http://www.dawn.com/2007/05/20/ebr6.htm

 

[Neo]

Australian company may produce cheap power from Thar coal

KARACHI (May 21 2007): An Australian company is planning to establish power plants with latest technology for utilising huge Thar coal deposits for cheaper power generation. The Couger Energy Company, based in Australia is planning to generate electricity through underground gasification system (UGS), which is the cheapest method for power generation from coal, sources told Business Recorder.

The company, in this regard, headed by L.K. Walker is scheduled to arrive here on May 24, 2007 to discuss the plan with the Sindh Mines and Mineral Department, sources said.

The UGS was being applied in three countries successfully in which no need to make mines for coal excavation. The cost of power generation was lesser than any other method that would be passed on to consumers, they said.

Power purchase issue always discourages potential investors to set up coal-fired power plants, where cost of power exceeds as compared with power purchase by the authorities, sources said.

Recently, a Chinese state-run company, Shenhua Group, had left the project on the basis of lesser tariff offer by the authorities. The Group had completed all formalities producing electricity from coal-fired power plants. But the tariff issue failed the project to materialise, sources said.

In this scenario, uniformed pricing formula for electricity purchase is needed to guarantee foreign and local investors for establishing coal-fired power plants in the country. This was the only way the government could increase share of coal in country's energy mix to at least 19 percent by 2030 and 50 percent by 2050.

Sources said that several foreign and local companies had prepared feasibility reports in the past and confirmed coal deposits but they were reluctant to start power generation due to unfair pricing formula for coal-fired power generation.

The government after realising energy crisis in coming years had opted for developing coal sites for power generation, which was not materialised for about 15 years.

Sources said underground gasification system is cost effective and saves huge amount for making coal-mines. In this system, coal is being burnt underground and the exertion of gases utilised for power generation, sources added.

http://www.brecorder.com/index.php?id=566943&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

ACCOR GROUP TO OPEN MORE HOTELS IN PAKISTAN

Monday May 21, 2007, 6:06 pm

KARACHI, May 21 Asia Pulse - The Accor Group, after starting Grand Mercure Karachi Airport Hotel, will introduce new hotels in Pakistan i.e. Sofitel, Novotel and Ibis, which will provide the finest quality services to meet the clientele's needs.

This was stated by Grand Mercure Hotel General Manager Thierry Goepfert while briefing the media here on Thursday.

The Grand Mercure Karachi Airport Hotel was inaugurated in March 2007 near Jinnah International Airport with English colonial architecture under the fitness of French style. The hotel is managed by the Accor Group of Hotels. The Accor Group has 4,500 hotels worldwide, of which 750 are Mercure Hotels in 49 countries.

http://au.biz.yahoo.com/070521/17/18s44.html

 

[Neo]

Rs 549 billion development outlay worked out

ISLAMABAD (May 22 2007): The total development outlay for 2007-08 has been worked out at Rs 549 billion that includes Rs 479 billion for the federal and the provincial Public Sector Development Programme (PSDP) and Rs 35 billion each for special programmes and corporations, said working paper prepared for the Annual Plan Coordination Committee (APCC).

The APCC, which met here Monday with Deputy Chairman Planning Commission Dr Akram Sheikh in the chair, will recommend the PSDP size to the National Economic Council (NEC) which will meet on May 31. The sources said that there could be some minor increase or cuts in the proposed size of the PSDP. The APCC will conclude its deliberations on the development outlay for the next fiscal today (Tuesday), said the working paper.

The APCC meeting continued for over ten hours. According to the working paper prepared for the meeting, the APCC rejected the proposal of the priority committees, which recommended that PSDP allocation should be around Rs 420 billion.

However, according to the sources, the PSDP size proposed by the priority committees was actually for ongoing development projects in various sectors. Nothing was proposed by the priority committees for new projects.

Sources privy to the meeting told Business Recorder that Sindh and the NWFP raised serious objections over the allocation of Rs 2.6 billion in the next fiscal year for five big dams.

The representatives of the two governments said that the federating units and the centre had not reached any consensus on the construction of Kalabagh and Akhori dams. They questioned the allocation for both the dams. However, the deputy chairman informed the meeting that allocated amount would be spent on the two projects only after consensus among the federal and the provincial governments.

In an informal chat with a group of journalists after the meeting, Dr Akram Sheikh said that the APCC reviewed the PSDP 2006-07 and the projections for the 2007-08. He said that there would be substantial increase in the PSDP allocation especially for water sector, as the country needed more water resources.

He said that economy would grow by 7.1 or 7.2 percent in the current fiscal. He said the size of economy would remain around $149 billion to 150 billion in 2006-07 and the projections for the next fiscal suggest that the economic growth would remain on track.

The Deputy Chairman Planning Commission refused to give any detail about the exact allocations in the PSDP for next fiscal for federal ministries and provincial governments. The actual size of the PSDP would be determined by the NEC. He said the APCC would remain in session and the final proposed allocations would come today (Tuesday), he said.

The NEC, he said, would review the PSDP spending in the current fiscal and the projections for next fiscal. The NEC will also look at the economic growth in the current fiscal and the projections for the same in the next fiscal, he added. Besides this, the NEC would also take the Vision 2030, which calls for co-ordinated, holistic, integrated approach for knowledge-based economy.

According to the working paper, the allocations for federal ministries has been worked out at Rs 329 billion in the next fiscal, which is 22 percent more than the allocations for the same in the current fiscal.

The allocation for provinces has been proposed at Rs 150 billion, which, according to the working paper, is 30 percent more than the allocation for the same in the current fiscal. Sources said that around 49 percent of the proposed PSDP allocation would go to infrastructure sector around 40 percent to communications and transport and the remaining allocation to other sectors.

The sources said that the total demand of the executing agencies was more than 578 billion. However, the total demand of the ministries, other federal provincial agencies could be approved in toto. The sources said that the priority committees had suggested that PSDP size should be around 420 billion, which was not even accepted by the APCC.

According to the Planning Commission assessment the PSDP size has been proposed at Rs 361 billion. However, the allocations proposed by the Priority Committees and the Planning Commission were not in conformity with the GDP/PSDP ratio. The PSDP size must increase to 4.7 percent of the GDP to meet the MTDF and MDGs targets.

Water and power ministry has sought an amount of Rs 51 billion for water sector and Rs 48.7 billion for power sector. Apart from this the Karachi Electric Supply Corporation has sought an amount of Rs 4.18 billion for the implementation of financial improvement programme. However, according to the sources, the demand is excessively higher and the APCC would discuss the issues in detail today (Tuesday).

http://www.brecorder.com/index.php?id=567165&currPageNo=1&query=&search=&term=&supDate=

 

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GNP to reach $150 billion, per capita income $950 this year

ISLAMABAD (May 22 2007): Despite high international oil prices and devastating earthquake 2005, the economy has grown on an annual average of 7.5 percent during the last four years 2003-06. This year, 2006-07 by achieving growth rate of over 7 percent, the GNP would reach about $150 billion and per capita income around $950.

The growth is broad-based agriculture sector particularly on account of wheat, pulses and sugarcane production and livestock development has achieved a high growth rate of 5 percent in 2006-07, large-scale manufacturing has grown in double digits and growth in services sector has also been robust.

Total investment has increased tremendously in recent years. It reached all-time record level of Rs 1,900 billion in 2006-07 and National Savings at Rs 1,500 billion.

Total foreign investment is rising every year. This year it is expected to reach to $6 billion - highest in South Asia. The workers' remittances an important component of national savings is increasing fast. It will be around $5.5 billion by end June 2007. Tight monetary policy is pursued by the State Bank of Pakistan to control rising inflationary pressures.

The fiscal accounts have considerably improved in recent years. Revenues are buoyant, expenditures are rationalised. Revenue deficit is eliminated and public debt and fiscal deficit has been brought to a sustainable level. It is expected that CBR collection would exceed the target of Rs 835 billion in 2006-07.

Although the trade deficit is on the higher side, rising FDI and workers' remittances over $6 billion and $5.5 billion respectively would keep the external account position comfortable. Foreign exchange reserves currently stand around $14 billion expected to reach around $14.4 billion by end June representing about seven months of imports an improvement of $1.1 billion over the last year level.

The public expenditure on social sectors has increased from Rs 103 billion in 2001-02 to Rs 228 billion in 2005-06 reflecting an increase of 22 percent per annum.

The pro-poor expenditure has also increased sharply by 27 percent annually from Rs 180 billion 2001-2002 to Rs 464 billion in 2005-06. In terms of GDP, the expenditure during this period has increased from 4 percent to 6 percent.

Poverty has declined significantly from 34 percent in 2001 to 24 percent in 2005. Situation should further improve with the good agriculture growth this year. Unemployment rate has declined from historically high level of 8.3 percent in 2001-02 to 6.2 percent in 2005-06.

Knowledge based economy, technology driven development, innovation, value addition, and establishment of quality/accredited laboratories and achievement of MDGs and long-term objectives of the Vision 2030.

For this purpose, Planning Commission is striving hard for just and fair treatment to all and carries everybody along in development of every inch of Pakistan on the basis of equality. Smooth working, growth and equitable development are underlying principles of our development process.

http://www.brecorder.com/index.php?id=567145&currPageNo=1&query=&search=&term=&supDate=

 

[Neo]

US firm willing to extend bid date for 500 megawatts power plant

ISLAMABAD (May 22 2007): A US-based power sector firm, M/s Alstom, has expressed its willingness to extend bid date for further three months for setting up 500 MW combined cycle plant at Chichoki Mallian (Sheikhupura).

The Economic Co-ordination Committee (ECC) of the cabinet in its meeting on May 10 authorised the Ministry of Water and Power to award the project to M/s Alstom and Japanese firm M/s Merubini for 8.842 cents tariff per kWh to be financed by Qatar government subject to the condition that M/s General Electric (GE) would give performance guarantee.

However, the government has also decided to retain the contract of M/s DEC of China using GE turbines with 0.001 cents per kWh higher tariff than that of M/s Alstom and Merubini.

Sources in Private Power Infrastructure Board (PPIB) told Business Recorder that a meeting was arranged between the Alstom and Wapda to discuss the modalities for further extending the bid date, which was agreed by the former. They said that the PPIB, which earlier distanced itself from the Ministry of Water and Power over the inclusion of Qatar in the project, was in the process of finalising the accord to be signed with Doha.

Any material deviation from the approved market tested security documents, particularly in areas of governing laws, dispute resolution, reward/ reward matrix or framework would adversely affect the IPP program, the sources quoted Managing Director PPIB as stating in his letter to Joint Secretary (Water) Zahir Shah on March 31.

Asked how Qatar had become part of the consortium at a later stage, the sources pointed towards the Prime Minister House and Saif-ur-Rehman, former Chairman Accountability Bureau, a close friend of former Prime Minister Nawaz Sharif.

Ministry of Water and Power in its summary had informed the ECC that to meet projected supply deficit on fast track basis Wapda had invited international tenders for three thermal power plants of 200 MW capacity each based on diesel engine combined cycle in September 2006. The bids were evaluated and the resultant levelised tariff was in the range of 11.11 to 11.17 cents per kWh. Wapda had also invited bids for combined cycle plants in the range of 500 MW capacity to be located at Chichoki Mallian through ICB.

It was informed that due to non-availability of gas and high prices of alternate fuel ie diesel, Wapda had stated that the next ranked bid in the bidding process by M/s DEC of China based on G.E turbines could be modified for dual fuel firing on Refined Furnace Oil (RFO) and gas with additional investment of $15 million.

The net capacity after conversion would be 540 MW and the price per kWh would be 8.842 cents.

The ministry further stated that Wapda's proposal was also discussed in a meeting chaired by Prime Minister Shaukat Aziz on February 26 wherein it was decided that the ministry would examine the merits of the proposals for establishing three diesel engine plants at Chichoki Mallian, Nandipur and Faisalabad vis-à-vis a 450 MW combined cycle plants based on RFO at Nandipur with a 100 MW unit at Khuzdar and submit its recommendations.

The Planning and Development Division had agreed to the proposal in principle. Finance Division supported it subject to the condition that funds would be arranged by Wapda from its own resources and there would be no burden on federal budget, the sources continued.

http://www.brecorder.com/index.php?id=567194&currPageNo=2&query=&search=&term=&supDate=

 

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'Foreign investment up to $6 billion in 10 months

SIALKOT (May 22 2007): Federal Privatisation and Investment Minister Zahid Hamid has said the tempo of foreign investment has gained the momentum as a result of which foreign investment has been increased to six billion dollars in 10 months of the current year and more is expected in a couple of months.

Speaking as the chief guest at the inaugural ceremony of a showroom of Habib Motorcycle on Sunday here, he added that due to strong and effective economic policies of the government, economic activities were picking pace in all sectors of the economy.

Zahid Hamid revealed that poverty rate had been decreased to 25 percent, while the growth rate had been increased considerably as well as per capita income had been doubled. The government had formulated highly friendly-foreign investment polices, aimed at providing even opportunities to the foreign and overseas Pakistanis to invest in Pakistan, he said.

Due to the strong economic polices, Pakistan had been converted into an attractive hub of foreign investment and a large number foreign investors, including overseas Pakistani, were showing their keenness in investing in various trade fields, Zahid Hamid added.

The Investment Minister further stated that to bring a big boom in foreign investment, the government was making strenuous efforts for attracting the foreigners and overseas Pakistanis investors. He said the present government had made concerted efforts on the promotion of maximum industries, aimed at ensuring strong industrial base and converting the country into a strong economic hub. Earlier, the Federal Investment Minister along with Sialkot District Nazim Muhammad Akmal Cheema inaugurated the showroom. Habib Motorcycle Chairman Imran A Habib and others also attended the ceremony.

http://www.brecorder.com/index.php?id=567237&currPageNo=1&query=&search=&term=&supDate=

 

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'Strong economic performance can put Pakistan on growth path'

FAISALABAD (May 22 2007): Pakistan Resident Mission of Asian Development Bank (ADB) observed that the recent economic development and developments in external debt show that Pakistan is at a crossroad. The strong economic performance, including the improvement of the public debt situation over the past few years, if sustained, can put Pakistan on a growth path.

But there are real challenges and risks that need to be managed carefully. In a brief overview on "Pakistan's Public Debt", which was prepared by Peter Fedon, Country Director, Pakistan Resident Mission, Emma Xiaoqin Fan, Senior Public Resource Management Specialist, Safdar Parvez, Programmes Officer, Farzana Noshab, Economic Policy Officer and Waqas ul Hasan, Project Officer Governance stated that the maintaining political stability, sound macroeconomic management, and structural reforms are key for Pakistan to move forward.

Pakistan's public debt overview reveals a number of important features. First, the public debt situation is closely related to broader economic performance. Accelerating economic growth, improving fiscal conditions, increasing export earnings, and increased foreign direct investment have provided the foundation for improved debt management in Pakistan.

Second, the improved debt situation is also attributable to more favourable external conditions for Pakistan since September 2001. This has led to debt relief and rescheduling, and increased official inflow and workers remittances. While it has helped the country to achieve a significant improvement in debt indictors in the short run, it also exposes Pakistan to risks relating to the sustainability of both economic performance and debt management.

Third, in order to sustain and build on its existing achievements, Pakistan needs to deepen its structural reforms to improve the domestic investment environment, external competitiveness, sustain macroeconomic stability, and maintain political stability. Reforms that improve a country's creditworthiness and investment climate are important for improving domestic savings and investment, attracting FDI, and diversifying the financing sources. FDI is especially important because it not only brings in finance, but also contributes to technology transfer and improved management know-how. Pakistan has had considerable success in attracting FDI in FY06. However, much can be done to improve on this performance in the years ahead.

Fourth, sound public debt management supports macroeconomic stability and economic growth. Debt management should take advantage of favourable economic conditions to strengthen the technical and institutional capacity in managing public debt.

Fifth, multilateral development banks play an important role in lending to the government. This calls for sound project and programme designs and implementation to enhance the effectiveness of development assistance. Introducing innovative and efficient assistance approaches and practices in response to the changing context of economic development is especially important.

The Pakistan economy has experienced a turnaround since 2000. Growth has accelerated, and most macroeconomic indicators have improved. Public debt indicators have also shown significant improvement. Modest growth in public debt, coupled with the strong growth in nominal GDP, led to a significant fall in public debt to GDP ratio. In fact, FY 2005/06 is the fifth successive year that the public debt to GDP ratio has improved. This is also the first time in more than two decades that the ratio has fallen below 60 percent.

The debt servicing capacity of Pakistan has also improved over the past few years. As growth in foreign exchange earnings in Pakistan outpaced the growth in debt servicing payments, external public debt servicing as a share of exports of goods and non-factor services declined.

There has been a particularly noticeable increase in foreign direct investment (FDI) in Pakistan in recent years, reflecting the country's privatisation programmes and increased investor confidence. While Pakistan has significantly improved its economic performance and the debt situation, strong efforts must be made to guard against potential risks.

http://www.brecorder.com/index.php?id=567230&currPageNo=1&query=&search=&term=&supDate=