Pakistan Economy - News & Updates - Archive

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Mismanagement cause of power crisis ​

Ex-WAPDA chief says IPPs producing below capacity​

Friday, May 30, 2008

LAHORE: Gross mismanagement of WAPDA affairs has caused power shortage as is evident from current electricity production of 11,000 megawatts against installed generation capacity of 18,000MW and the demand for 15,000MW.

Former WAPDA chairman Lt-Gen (Retd) Zulfiqar Khan stated this during a panel interview with The News and Daily Jang.

He said independent power producers had an installed electricity generation capacity of 6,500MW while they were supplying 4,000-5,000MW to the Water and Power Development Authority (WAPDA).

Similarly, he added WAPDA’s thermal units with an installed capacity of 5,000MW produced only 2,500-2,700MW of electricity daily. He mentioned that when he was WAPDA chairman the production from its thermal units was more than 3,700MW.

He said the hydro-electric generation capacity was 6,500MW, out of which only 4,000MW were being generated, but added lower hydropower production was understandable as it was linked to water released from reservoirs.

He claimed the IPPs were not producing electricity to their full capacity as they were not being paid to cover even the cost of fuel they required for their generators.

WAPDA’s financial woes, he said, were due to its inability to recover dues from influential quarters. “WAPDA dues have exceeded Rs130 billion,” he said and claimed when he left WAPDA it had a positive balance of Rs13 billion. The only way to recover dues was to cut power supply to defaulters, he suggested.

He said the cost of electricity production had increased because the country was dependent on imported furnace oil whose prices had skyrocketed.

About the potential of Thar coal, he said it had not been exploited during the last five years, adding coal-based power projects or hydro-electric projects were the only viable solution to the ever-increasing energy needs of the country.

He deplored that all projects launched under Water Vision 2000 had been unduly delayed. Had those projects been completed on time, they would have added 1,200MW of cheap hydro power to the system.

“There is a need to correct the hydro-electric and thermal generation mix.” He said the cost of power generation from Mangla and Tarbela came to 10-11 paisa per unit and that of Ghazi Barotha project was Rs2.60 per unit while the fuel cost of furnace oil-fired generators was 11 US cents per unit plus other expenses of 6 to 7 cents.

Gen Zulfiqar deplored the decision to put the Kalabagh dam project on the back burner and said the country just needed $1 billion in foreign exchange to cover the cost of consultants and electric generators.

The balance amount of $5 billion, he added, could have been arranged locally as it related mainly to cement, concrete and steel.

He said the cost of the project could be recovered in five years, adding the genuine grievances of provinces, which opposed the project, should have been addressed to pave the way for the construction of the project.

He was of the view that Karachi Electric Supply Co’s privatisation needed to be reversed, particularly after the buyer failed to make promised investment of $450 million for upgrading its systems.

Separation of the Pakistan Electric Power Co (PEPCO) from WAPDA was a wrong step as most of the WAPDA activities were placed under the chairmanship of water and power secretary, he said.

Mismanagement cause of power crisis

 

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WB assures support to Thar coal power plant​

KARACHI, May 29: The World Bank has assured support both financial and technical for the proposed 1,000MW power plant based on Thar coal to be set up as public private joint venture.

The assurance was given by World Bank Vice President Praful C Patel at a recent meeting with the Sindh Chief Minister. He said that the power generation through cheaper resources other than oil and water was the main priority of the bank’s development agenda. He said that the WB would help in arranging financing from the IFC for the project.

The Sindh mines and minerals department has already invited expressions of interest (EoIs) from both the local and international investors for the joint venture to be set up on the basis of 75:25 equity.

The Sindh government would provide 50 per cent of the equity.

The last date for submitting EoIs is June 15 after which a committee would scrutinise offers and submit its recommendation to the government.

Sources at the department said that encouraging enquiries had been received and China, Indonesia, and some Gulf countries have shown interest in the proposed joint venture with technical assistance from Australia and Germany.

The department made a presentation to the WB vice president, which indicated that in Pakistan share of coal in power generation is just 0.1 per cent against 40 per cent in the world. Poland and South Africa are on top in coal power generation with 93 per cent followed by Australia 80 per cent, China 78 per cent, India 69 per cent Kazakhstan 70 per cent and Morocco 69 per cent.

Sindh has 175 billion metric tons coal deposits in Thar, which are enough to produce electricity for three centuries.

The WB was informed that two bankable feasibility studies had been carried out by Shenhua Group of China in 2003 for Thar Block 11 and by RWE of Germany. The Chinese study suggested a tariff of 5.75 cents with production based on open cast mining. The second study suggested a tariff of 7.18 cents.

The WB was informed that the vital infrastructure, including roads, electricity, communications and water supply, was in place up to the coalfields in Thar and Nagarparker granite areas.

Construction of an air strip is at designing stage while construction of Thar Lodges was under way to provide modern accommodation to the investors and engineers.

It was further informed that so far six blocks of cola in Thar and three blocks in Sonda have been explored at a cost of Rs500 million.

The proposed joint venture project has been envisaged on debt equity ratio of 75:25. The eligible parties would be required to invest at least $200 million. The size of mining operation for the coal-based power project will be six million tons per year.

WB assures support to Thar coal power plant -DAWN - Business; May 30, 2008

 

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Number of cell phone users jumps to 85m​

ISLAMABAD, May 29: The number of mobile phone users in Pakistan has increased phenomenally and this figure is expanding by almost one million every month.

The tele-density in the country has increased to 58 per cent of the population, which is the highest in South Asia with the total number of fixed and mobile subscribers touching 85 million in 2008 against only 8 million in 2003 with major contribution coming from the mobile sector.

This information was provided to Prime Minister Yousuf Raza Gilani by a delegation of the GSM Association and CEOs of mobile phone companies in Pakistan headed by Robert Conway, which called on him at the PM House on Thursday.

He was told that Pakistan continued to be one of the fastest growing telecom markets in the world where only last year the mobile industry invested close to $3 billion of total foreign direct investment coming into the country.

The delegation assured the prime minister that the mobile industry would continue to work with the government for swift provision of state-of-the- art information and communication services in Pakistan with a heightened focus on empowering rural communities.

The delegation informed the prime minister that Group Special Mobile Association (GSMA) is a global trade association founded in 1987 and represent more than 700 GSM mobile phone operators across 217 territories and countries the world over.

He was further briefed that more than 180 manufacturers and suppliers support the association’s initiatives as associate members.

Number of cell phone users jumps to 85m -DAWN - Business; May 30, 2008

 

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External debt at peak level of $44.59 billion ​

KARACHI (May 30 2008): The country's external debt witnessed a rise of over 5.5 billion dollars to hit a new peak of some 44.59 billion dollars during the current fiscal year mainly due to rising current account deficit. As per Fiscal Responsibility and Debt Limitation Act, 2005, the government has to reduce its foreign debt by 2.5 percent every year and current year it should be 24.5 percent of GDP from 27 percent.

However, during the current fiscal year it is difficult for the government to meet this target due to rising current account deficit and it is expected that by the end of June it would remain at 27 percent of GDP. Economists said that the government has borrowed some 5.58 billion dollars foreign debts during the first three quarters of the current fiscal year to meet its over 10 billion dollars current account deficit.

They said slow foreign inflows coupled with declining foreign investment and sluggish privatisation process compelled the government to use the tool of borrowing to fulfil its foreign payment requirements. The central bank statistics revealed on Thursday that the country's foreign debt has witnessed an upsurge of 14.32 percent or 5.58 billion dollars during the first nine months of current fiscal year.

After the current upsurge, first time in the history of the country, overall foreign debt that earlier stood at 39.008 billion dollars on June 30, 2007, rose to historic level of 44.596 billion dollars by the end of March 2008. The rise during July-March 2008 is much higher than the overall foreign borrowing of FY07, as during the last fiscal year foreign debt increased by 8.43 percent or 3.034 billion dollars to 39.008 billion dollars from 35.97 billion dollars.

The statistics show that major surge has been witnessed during the third quarter (January-March) of FY08, in which foreign debt rose by 7.35 percent or 3.056 billion dollars from 41.54 billion dollars to 44.59 billion dollars. Meanwhile, the overall external debt and liabilities mounted to new peak level of 46 billion dollars during FY08.

External debt and liabilities showed an increase of 13.45 percent to 45.926 billion dollars till March 2008. It previously stood at 40.481 billion dollars on June 30, 2007.

Economist said that during the first three quarters of FY08, the country faced 9.85 billion dollars current account deficit because of high goods and services trade deficit as compared to some 6.16 billion dollars deficit during the same period of last fiscal year, which forced the government to use foreign exchange reserves and borrow from international financial institutions.

During the current fiscal year, the government utilised some 3 billion dollars from foreign exchange reserves and some 3 billion dollars of foreign investment to meet current account deficit, while remaining gap was bridged through new foreign loans.

Business Recorder [Pakistan's First Financial Daily]

 

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Prime Minister urges US to increase economic, defence aid ​

NEW YORK (May 30 2008): Prime Minister Yousuf Raza Gilani has urged the US to increase its economic and defence assistance to help strengthen his newly elected democratic government. In an interview with The Wall Street Journal, he also said he is willing to work with President Pervez Musharraf, but he would let his party decide whether to try to force the president from office.

"I have no problem working with him (Musharraf), but will go by the party's decision," the prime minister added. Gilani said further US assistance "will help deliver a democracy dividend to the people" after Pakistan held landmark elections for a new parliament in February.

Further aid, he added, is needed to help provide political and economic stability as the nation seeks to fight terrorism, but did not specify the amount. He made his case for further aid during a recent meeting in the Middle East with President George W Bush, according to the newspaper.

Gilani said the use of military means alone to try to stamp out militancy from Pakistan's hinterlands would never bring peace. "We need to review our strategy to deal with the situation in the tribal region," he said. The new government has taken a different tack in the battle against terrorism than that followed by Musharraf, The Wall Street Journal noted, referring to government's negotiations with militants and exchanging prisoners.

Gilani said the government is talking only to the tribesmen who renounce violence and surrender their weapons. Pakistani forces would remain deployed along the border, he said, while emphasising the need to increase the strength of Afghan troops on the Afghan side of the border, saying there is an inadequate force to protect against border crossings.

Business Recorder [Pakistan's First Financial Daily]

 

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KESC to wait for 1,000 MW from K-2 by 2015​

KARACHI: The Karachi Electric Supply Company (KESC) has repeatedly made claims that there will be no load shedding after 2015 and that at least 2,000 MW will be added to the system. What it has not specified, however, is how that will happen.

With good reason too. According to sources, KESC doesn’t plan on putting in any more money towards the 2,000 MW. That is why it has not made public actual details of plans to increase power generation. The 2,000 MW will reportedly come from someone else.

Eight years ago, the government planned to set up two nuclear power plants in the vicinity of the Karachi Nuclear Power Plant, K-1. These plants were to be called K-2 and K-3 and would have a capacity of 1,000 MW each. Land has already been demarcated and the seismic and geological surveys completed. Final work will begin this year, sources said.

Thus, sources said, KESC was planning on buying that electricity, not necessarily generating it on its own.

The Pakistan Nuclear Regulatory Authority has upgraded K-1 and the International Atomic Energy Agency has approved its physical life extension for 12 more years.

Presently, the power demand of the city is 2,769 MW, but is expected to increase to 5,166 MW by 2015.

Sources also said that KESC has planned to sell 50 percent of its shares to a new partner, for which the present owners needed to gather as much revenue as possible. This is why the utility’s Defence Zone has started a recovery drive, to discourage people from using unauthorized electricity.

KESC’s Executive Director Syed Tanzeem Hussain Naqvi has directed the department concerned to carry out a full-fledged campaign for the recovery of outstanding dues against defaulters and unauthorized consumers.

The KESC Service Assurances General Manager Asad Hussain Zubairi, with area managers and staff, has started the work. During the campaign, the Service Assurances department has disconnected 116 residential and commercial connections for non-payment in bills worth Rs 14.71 million.

Daily Times - Leading News Resource of Pakistan

 

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Forex reserves decline to $11.51 billion​

KARACHI: The foreign exchange reserves fell by $374 million to $11.511 billion in the week ended May 24, according to the figures released by the State Bank of Pakistan Thursday.

Of the total reserves $9.060 billion was held by the SBP and $2.451 billion by other banks.

The reserves continue to deplete, as there is very high demand for the greenback in the interbank market against a limited supply and the central bank has to support the domestic currency by many ways. The SBP supplies dollars to the market for meeting oil importers' demand. It is responsible for supply of dollars for 70 percent of oil imports. In addition, it has to inject dollar in the market through some banks when there is sharp fall in the rupee's value. The country's foreign exchange reserves have now fallen by $4.823 billion or 41.89 percent if compared to the highest ever level of $16.334 billion achieved in October last year.

When the reserves had started building up in the wake of 9/11 incidents thanks to rescheduling of debts of the country, inflow of grants and loans, and tighter controls placed by governments in the developed world over transfer of money, the Shaukat-Aziz led team of economic managers appointed by General (now retired), Pervez Musharraf had tried to take credit for it. But the critics of the government had argued that the build up was not due to any improvement in the country's economic situation but a result of changed geopolitical situation. However, Shaukat Aziz and his team would not agree. The situation now shows that the critics of the previous regime were correct when they said that the improvement in economic indicators was not sustainable. In the absence of export growth, there can be no sustainable growth in foreign exchange reserves. Foreign exchange earnings, not loans and grants, boost reserves.

Daily Times - Leading News Resource of Pakistan

 

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Government to establish IT network in rural areas: Kaira ​

ISLAMABAD (May 30 2008): The Development of Information Technology (IT) network in rural areas is the top priority of government for ensuring easy access to scientific research and information for the growers, said the Minister for Information Technology and Telecom, Qamar uz Zaman.

He said, 'The government would develop telecome network and establish PCO in undeserved areas to bring these areas at par with developed ones', Kaira said. He was addressing the concluding session of the one-day training workshop on 'Agriculture Decision Supports System (ADSS)' the indigenously created Data Mining tool. The workshop was organised by the Fast National University to apply emerging scientific system in agri-sector to enhance crop production with use of minimum output.

The Data Mining of different sectors of national economy including education, health, and infrastructure and agricultural was vital for developing vibrant future strategies and for uplifting living standard. The 26-month ADSS project funded by the National ICT R&D, which was attended by a number of research scientists and agri-experts of different ministries, division and private sector.

The objective of the workshop was to facilitate the participants with hands-on training in ADSS data mining applications including clustering and extraction and Analysis. The Minister said that database network development was vital and need of modern era for proper planing to bring the country out of prevailing crises and meet the future challenges.

Further, Kaira assured ministry's continues support to the projects of national importance that were being executed at Fast National University. He told that the e-government system would be introduced soon and at least 45 ministries will be linked to bring efficiency, transparency and better functioning.

Kaira acknowledged the importance of the application of IT in agriculture through ADSS having the potential to bring about the second 'Green Revolution', leading to reduction in poverty.

The Rector, Fast, Dr Amir Muhammed said in his address that currently there were 50 post-graduates students pursuing their PhD, a multi-campus institution specialising in studies of Computers and Emerging Sciences, having additional campuses in Karachi, Lahore and Peshawar.

Principal Investigator, ADSS, Dr Ahsan Abdullah, said this system was based on the input of researchers and scientists from more than 12 organisations. Currently, the ADSS Project was running with a team of more than 30 professionals and was financially supported with approximately Rs 30 million by the National ICT R&D Fund.

It has successfully identified the susceptible cotton varieties and pesticide groups as related to the mealy bug pest and discovered the correlation between years of education, ICT and crop yield. Dr Abdullah also maintained that this system was ready to be implemented for the study of other diverse crops and fruits. Later, the IT minister distributed certificates among the participants.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan Revises This Fiscal Year Inflation Rate To 13.4% From 6.5%​

KARACHI -(Dow Jones)- Pakistan's annual headline inflation rate, as measured by the consumer price index, is expected to be 13.4% in the current fiscal year ending June 30, according to a finance ministry document.

The expectation marks an upward revision to an earlier target of 6.5%.

The document, seen by Dow Jones Newswires Friday, was presented to the National Economic Council.

The Federal Bureau of Statistics said earlier this month that the headline annual inflation rate had accelerated to 17.21% in April from 14.12% in March.

Pakistan Revises This Fiscal Year Inflation Rate To 13.4% From 6.5%

 

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IMF and World Bank urge Pakistan to do away with subsidies​

30 May 2008

ISLAMABAD — Pakistan's new elected government has regretted to accept the joint proposal of the World Bank and the IMF to withdraw oil subsidy in the next budget. Official sources said that the Prime Minister Syed Yousuf Raza Gilani believed that the nation cannot withstand the "shock" of eliminating subsidies on oil, wheat and fertilizer at this stage.

The prime minister stated at a high-level meeting held yesterday on budgetary matters that the process of withdrawing subsidies can only be gradual and when the government succeeds in mobilising new resources by overhauling the weak taxation system.

New resources were required to provide "certain respite" to the poor and the lower middle-income groups in the society, the prime minister said. The visiting IMF director for South Asia and Middle East Mohsin Khan and the World Bank Vice-President for South Asia Pruful Patal had proposed to the new government to "immediately do away with all subsidies" on oil, wheat and fertilizer etc. to arrest the fast declining economic situation in the country.

Sources said that the prime minister was told that Indonesia and Sri Lanka have removed subsidies recently and that Pakistan should also swallow the "hard pill" in order to achieve the much needed macroeconomic discipline in the country. "Off course macroeconomic fundamentals need to be set right but it does not mean that we should further burden our people by removing various subsidies," a source said who attended the meeting. He said that the meeting agreed to "restrict further bleeding" in the economy by re-prioritising every thing so as to achieve economic stability.

"The situation is extremely challenging as the budget making process has been constrained due to lack of funds", the source said. He said balancing act will have to be maintained in the new budget to collect resources including from the international donor agencies and to offer some relief package to the people. It will also have increase in the salaries of the government employees. Sources said that the meeting decided to restrict Public Sector Development Programme (PSDP) in the vicinity of about Rs400-425 billion during 2008-09. In fact, they said, there will be over 10 per cent reduction in the funds being allocated for the new PSDP compared to existing development programme of 2007-08.

A senior government official when approached said that the situation was pretty difficult but not "unmanageable" and the prime minister was informed that there was no need to be panicky as the government would not accept undue demands of the donor agencies particularly with respect to eliminating subsidies. He said that the meeting decided to achieve 6.5 per cent GDP growth rate and bring down the fiscal deficit from 9.5 per cent to sustainable limit of around 5-6 per cent by further reforming the country's spineless taxation system. Responding to a question, the official said that IMF has a very "conservative view" of achieving financial discipline by doing away with all subsidies.

"We cannot accept Fund's proposal as its role is now that of a advisory body but we have to take into account WB advice which is our regular donor," he said adding that Bank's will be convinced that Pakistan at this stage cannot afford to remove all subsidies and that it may take some time to start implementing their proposal, the official said.

According to an official handout about the meeting, the prime minister said that providing tangible and concrete relief with specific financial allocations to the people especially those in the lowest income groups should be the topmost priority of his government in the forthcoming budget. le explaining government's priorities for the forthcoming budget, the he directed all the concerned officials involved in the budget making to incorporate objectives which could provide relief to the lowest income groups, boost agriculture and manufacturing growth, help in overcoming energy and water shortages, developing human resource and avoiding wastage of tax payers' money.

The prime minister said that providing relief to the poorest of the poor who are facing back breaking hardship due to high food inflation and shortage of power and other essential goods is the real objective of the elected government. He said that the government is committed to making a sizable allocation in the budget for direct income support to the poorest and vulnerable groups.

Gilani said that government will soon start rural employment generating projects to generate employment for at least 100 days per family especially in the poor and backward districts. He said that skills development programmes for both rural and urban areas will also be initiated so that employability and productivity can be increased. He said that social protection measures including health care and nutrition support for children especially girls, will also be put in place besides allocating resources for provision of safe drinking water.

The prime minister said that government will also provide relief to government employees to compensate for rising inflation especially the low paid employees.

He directed that budget should also incorporate both fiscal and development support measures to boost growth in agriculture and manufacturing sectors which would include increasing incentives to enhance profitability, output and productivity in agriculture by suitable adjustment in subsidies and timely support prices.

This he said would boost agriculture production, improve income of farming community and eliminate the possibility of food shortage in the country.

He said that fiscal and development support for manufacturing in terms of tax incentives, encouraging industrial clusters, support for technology transfer and facilitation of import of power generating small units are some of the areas to be given priority in the budget.

Khaleej Times Online - IMF and World Bank urge Pakistan to do away with subsidies

 

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Rising oil, food prices hurting Pakistan's poor: World Bank ​

ISLAMABAD (May 31 2008): Praful Patel, World Bank Vice President, ended the five-day farewell visit to Pakistan on Friday, noting that tough, yet essential, reforms can ensure that high international prices for petroleum and food commodities would not derail the country's poverty reduction and economic development.

"International oil and food prices have continued to rise since then, and we are working closely on their programme to address the cost to Pakistan of high prices, and to ensure the poorest are protected," he remarked.

A statement issued by the World Bank here on Friday said that Patel had met with Prime Minister Yusuf Raza Gilani and government economic team led by Federal Minister for Finance Naveed Qamar, and discussed the economy and safety nets to protect the poor, as domestic prices are adjusted.

In this regard Patel offered World Bank support to build upon international best practices in responding to the current situation. In meetings with President Pervez Musharraf, Pakistan People's Party Co-Chairman Asif Zardari, and President of Pakistan Muslim League-N Shahbaz Sharif, Patel thanked them for the warm reception and hospitality shown to him throughout his tenure as the regional Vice President of the World Bank.

Patel is retiring from the World Bank after 35 years' service. He expressed hope that Pakistan's development partnership, with the World Bank, would continue to grow from strength to strength. During his visit, Patel once again reconfirmed the World Bank's ongoing commitment to Pakistan.

He noted that despite uncertainty in the recent months the World Bank's programmes in Pakistan would remain on track. He said that World Bank's technical assistance with targeting exercises on the social safety nets, capacity and institution-building for water management, and electricity generation and distribution efforts would help Pakistan in meeting its development priorities.

In Sindh, Patel met with Chief Minister Qaim Ali Shah and his economic team to learn of the new government's priorities and to get an update on the ongoing World Bank assisted development initiatives in the province. Patel made a good-bye visit to Keti Bunder, a community that he has come to know over the years through Bank assisted Pakistan Poverty Alleviation Fund (PPAF) project in Thatta.

The Keti Bunder community is benefiting from social mobilisation, small infrastructure projects of drinking water and street pavements, and income generation activities under the project. "Over the last five years, I have visited Pakistan very often, and have always gone back impressed with the resilience of its people," said Patel.

"Persisting and new challenges notwithstanding, I am sure that with the right policies and strong support from its development partners, Pakistan can maintain its poverty reduction path. I take very fond memories with me and wish Pakistan well."

Business Recorder [Pakistan's First Financial Daily]

 

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Needy families may get Rs 1000 per month subsidy ​

ISLAMABAD (May 31 2008): Finance Minister Naveed Qarmar on Friday chaired inter-ministerial committee meeting to devise strategy for immediate relief to the needy families. The ECC of the Cabinet in its meeting on May 6 had constituted the ministerial committee comprising Ministers for Finance and Revenue, Industries and. Production and Social Welfare and Special Education and organisations of Bait-ul-Maal and Nadra.

It was tasked to devise strategy for immediate relief to the needy families and also to finalise scheme for the grant of targeted subsidy on essential food items to them. The committee will submit its recommendations to ECC within two weeks. Relevant ministers would monitor and oversee the implementation of scheme to be launched by the government.

The meeting deliberated on a scheme for provision of targeted subsidy on essential food items for the needy families. The committee had earlier recommended that Nadra should carry out detailed sample analysis of the data about unemployed, illiterate and widows for assessing the number of deserving persons and needy household families, besides using existing data available with provincial education department which could also be availed for identification of eligible beneficiaries.

According to Nadra estimates, the targeted population warranting relief to needy eligible households comes to 3.75 million. The Bait-ul-Maal data confirmed the needy household around 2 million warranting GoP relief support.

The Finance Minister affirmed that the government would do its best to reach the bulk of needy population on the basis of transparently available data-based criteria with Nadra, Bait-ul-Maal and other allied agencies.

The committee noted that the criteria to support eligible needy people should be based on the CNIC-supported national data. Once the data-based modalities are finalised, a cash subsidy of Rs 1000 per month may be disbursed on quarterly basis to an agreed list of eligible needy households nation-wide through the forum of union councils.

The committee decided to consult banks and post offices to lend support in financial disbursement of the government for relief package to needy households through devising a credible mechanism once the disbursement proposals are finalised by the stakeholders. The government will create fiscal space in the national budget and put it up to the government for approval.

Business Recorder [Pakistan's First Financial Daily]

 

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'Rs 500 million to be allocated for rural uplift in Sindh budget' ​

KARACHI (May 31 2008): Sindh Minister for Rural Development Zubair Ahmed Khan has said that Rs 500 million are being allocated for rural development in coming budget of the province. This he said in a meeting with Additional Chief Secretary Development Nazar Hussain Mahar at his office on Friday.

He said that Sindh government wants to provide all basic amenities to people of rural areas of Sindh besides bringing changes in living standard at village level. The minister said that soaring prices of wheat, rice, oil and energy have increased the woes of lower and middle classes, while income per capita is on decline and local economy is almost ruined. He said that improving living standard of poor and eradicating unemployment is responsibility of the government.

He stressed the need to pay more attention to agriculture sector in supporting economy as 600 million people of the world living in rural areas depend for their livelihood on agriculture. Zubair Ahmed vowed that a mega rural development project would be initiated in collaboration with Asian Development Bank in the province.

He called to follow Indian and Bangladeshi models for rural development in Pakistan, particularly in Sindh. He said that a comprehensive strategy is being chalked out for rural development as per aspirations of the masses. He disclosed that Hallmark, Metro and Macro like super departmental stores would be set up at villages of Sindh to facilitate villagers.

Business Recorder [Pakistan's First Financial Daily]

 

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WB may provide $3bn to build 3 dams ​

Saturday, May 31, 2008

ISLAMABAD: The World Bank has assured water and power authorities that it will invest $3 billion for the construction of three reservoirs, it is reliably learnt.

The bank is the main funding partner along with others for the construction of reservoirs, which are estimated to generate 3,000 megawatts of electricity, a source privy to the meeting with a senior official of the World Bank told this correspondent.

The proposed dams are Tarbela-IV, Munda Dam and Kohala and the water & power officials assured the visiting bank team for taping indigenous resources like water and coal, the same official said quoting one of the high ups of the meeting.

The visiting WB team was also told that the construction of said dams would also reduce dependency on imported oil and also improve the basket rate of electricity.

The World Bank has also expressed strong reservations about any possible merging of Pakistan Electric Power Company (PEPCO) and any such move could affect the future lending to Pakistan for power sector, another official told this correspondent.

He said that World Bank could provide lending only to Pakistan for power sector if it maintained the PEPCO status as an independent entity. Government is currently negotiating with World Bank for different power sector projects including mega dams projects.

After its separation from WAPDA, PEPCO was practically made functional in October 2007 as an independent entity to deal with matters related to the power generation. PEPCO is an independent entity and all matters relating to the electricity went to the company while WAPDA was left with only operational command of dams and hydropower houses.

PEPCO was established in 1998 as an independent body with a mandate to restructure the power sector, corporatise and commercialise restructured entities, and to bring about reforms through competition, enhancement of efficiencies and best financial and prudent utility practices. PEPCO initiated restructuring and reform process in 1998 with limited success.

The official said that PEPCO mandate to restructure the power sector would be badly affected if its merging with Water and Power Development Authority (WAPDA) was materialized. He said that PEPCO is an independent body that deals with electricity distributions.

According to official, though the government was eager to merge the PEPCO into WAPDA but the main donor, the World Bank has shown concern any such move that unbundling of electric distribution companies, the DISCOs (distribution companies) was part of the conditionality for loans given to Pakistan earlier in this decade under an agreement inked in 1998. He said that PEPCO is also part of the privatisation and World Bank would also support fully to its privatisation.

Though the unbundling and financial autonomy of all the Discos were accomplished but privatisation process was not initiated. He said that World Bank believed in the privatisation of all power distribution companies. Official believed that if the merging of PEPCO with WAPDA was done it would be a u-turn on power reforms policy. He said that World Bank that is the main financer in the power sector is pushing the government for not only unbundling and giving financial autonomy of said entities from WAPDA followed by phase wise privatisation.

Apart from an obvious aspiration of WAPDA, the merger was also demanded by the Independent Power Producers (IPPs), who produce almost 40 per cent of the total electricity in the country and owes billion of rupees on account of selling electricity to PEPCO.

WB may provide $3bn to build 3 dams

 

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USAID provided assistance of nearly $2.4 billion to Pakistan ​

ISLAMABAD (May 31 2008): The United States government re-opened the Agency for International Development (USAID) mission here in 2002 and from 2002 through 2007, the agency provided nearly 2.4 billion dollar to Pakistan.

This assistance included Emergency Economic Assistance to address needs in education, health, economic growth and good governance, as well as assistance for reconstruction in areas devastated by the October 2005 earthquake, USAID sources said. According to the sources, the goal of US assistance to Pakistan is to support peace and stability in the South Asia over the long-term.

Continued broad-based economic progress is essential to maintain and enhance Pakistan's political and economic stability, they remarked. The sources further said that the USAID's education programmes cover the entire spectrum, including early childhood instruction, education policy reform, literacy and scholarships for higher education.

In the remote and undeserved areas of Balochistan and Sindh, USAID helped teachers, school administrators, and parents formed over 3,000 committees to improve their government schools, they remarked.

In the Federally Administered Tribal Areas (Fata), USAID is rebuilding 65 schools. USAID is giving 500 students Fulbright scholarships to study in the United States and need-based scholarships to 906 students to study in Pakistan since 2004, they remarked.

In the Health sector, they said USAID is upgrading 31 hospitals and trains 3,000 health staff to improve care for pregnant women and new-borns. It increased the availability of quality reproductive health products, so families can space births.

"USAID helps to eradicate polio, reach communities vulnerable to HIV/AIDS and decrease the incidence of tuberculosis," they remarked. Regarding the Creating Economic Growth Opportunities, the sources said that Pakistan's future depends on its ability to create jobs and promote investment sine 2001.

"USAID helps the poor directly by providing small loans and financial services in parts of the country that lack banks or other lending programmes," they remarked. They added that a nation-wide USAID-supported programme changed banking practices to reach the large market of small businesses too big for micro-credit but too small for conventional loans.

In Balochistan, USAID teaches techniques to increase agricultural production. USAID help small-and medium-sized enterprises in industries like dairy, marble and granite, gems and jewellery, horticulture, furniture and surgical instruments to become competitive and to create more and better jobs.

They further said that accountable governance involving citizens' input can strengthen development and make it more effective. They said that USAID, helps strengthen Pakistan's national and provincial assemblies with technical assistance, training and resource centres. The USAID also supports the devolution of responsibility and budgeting to local governments by strengthening their ability to deliver better public service. In addition, "USAID helps Pakistan's Election Commission oversee and carry out free and credible national elections."

They added that the October 2005 earthquake caused a massive loss of life and damage in NWFP and Azad Jammu and Kashmir. Following its relief efforts, USAID has now transitioned to a recovery and reconstruction programme. The programme rebuilds schools and health facilities, strengthens system and capacities of public health workers and district government education officials, and restores and improves livelihoods.

They further said that the US government's Emergency Economic Assistance (EEA) Agreements provided balance of payments, budget and policy reform support to the Government of Pakistan during a time of economic hardship and political strain associated with Pakistan's participation in the Global War on Terror. In 2008, the Emergency Economic Assistance will be put into USAID-managed development programmes that directly improve the health, education and economic opportunities of Pakistan, they added.

Business Recorder [Pakistan's First Financial Daily]