Pakistan Economy - News & Updates - Archive

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ISLAMABAD (June 20 2006): Amir of Kuwait, Sheikh Sabah Al-Ahmed Al-Jaber Al Sabah and President Pervez Musharraf vowed to augment bilateral trade and economic ties with the visiting leader stating that Kuwait would benefit from the skills and expertise of Pakistani manpower for promoting growth and development in the two countries.

Speaking at a banquet, hosted in his honour by President Musharraf at the Aiwan-e-Sadr, the Kuwaiti leader also appreciated President Musharraf's efforts for addressing vital issues confronting the Muslim world.

Prime Minister Shaukat Aziz also attended the banquet. "There are challenges and dangers which threaten security and stability of the region, require continuous co-ordination between the two brotherly countries to confront them," the Amir stated.

On resolving conflicts, Sheikh Sabah said, the conflicts wherever they occur should be resolved through peaceful means. "We look forward to forging closer co-operation in regional and international organisations to achieve the objectives of stability and security and sustainable development," he said.

He expressed Kuwait's commitment to fostering stronger bilateral ties in economic, trade and investment sectors.

"We would like to benefit from the skills and expertise of Pakistani manpower in order to promote growth and development in the two countries."

He lauded the economic and investment policies of Pakistan and vowed to benefit from the opportunities, which the country offers, especially the privatisation of major public sector enterprises.

President Musharraf, in his speech, pledged to transform Pakistan into a regional hub for trade, economic and communication activities that connect the Asia sub-regions with the Middle East. He said the presence of 125,000 Pakistani nationals in Kuwait is a testimony to their close and mutually collaborative relations and appreciated the patronage of the Kuwaiti government to the Pakistani expatriate community.

Speaking about Pakistan's efforts for peace in the region, he said Islamabad remains committed to peace process with India.

"Confidence building measures have already led to improvement of relations between the two countries. We believe that we should seize this moment to resolve the outstanding Kashmir dispute as our success will change the destiny of South Asia and the peoples of the two countries would be able to divert their energies and progress and mutual well being."

On Afghanistan, he said, Pakistan is for peace and stability in that country, which is in our vital interest and also essential for peace and development in the region. Turning to the Middle Eastern situation, he said, Pakistan attaches great importance to a secure and stable Middle East.

 

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ISLAMABAD (June 20 2006): The Clean Development Mechanism (CDM) project of Mitsubishi Corporation in Pakistan expected to be completed by January 2007. The implementation of CDM project would benefit environmentally, socially and economically, informed visiting Group CEO of Mitsubishi Corporation Japan, Hajime Katsumura during a meeting with Minister for Privatisation and Investment, Zahid Hamid here on Monday.

The 14-member delegation led by Hajime Katsumura remained with the Minister for some time and discussed the matters pertaining to the upcoming investment opportunities and Pakistan's incentives for the investors.

Hajime Katsumura said their Group had entered into an agreement with Fattier Group, buyers of the privatised Pak Arab Fertilisers (PVC) Limited, to develop Clean Development Mechanism (CDM) project at the cost of Rs 1.8 billion. This project is first of its kind and new in the whole world.

Talking to the delegation, Zahid Hamid said Pakistan is open for investment in all sectors without any restrictions on bringing in or taking out capital. The Minister said the government was ready to facilitate investors to promote both foreign and domestic investment activity in the country. The investors were free to form joint ventures or establish their own businesses with 100 per cent equity.

More than 600 multinational companies were successfully operating and making profits in Pakistan which has become an attractive location for investors due to the liberal investment climate. Zahid Hamid said as a result of business friendly policies foreign investment had increased tenfold during the last five years and was expected to cross $3.5 billion by June 2006.

The Minister appreciated Mitsubishi's efforts to introduce new technology in the privatised entities for increasing their efficiency and production and assured that the government would fully support all such arrangements which bring in modern technology in various sectors.

Pakistan was a good market and partner, which was evident from Mitsubishi's operation in Pakistan since 1990, Hajime Katsumura said. Besides on-going four joint ventures, the company is working on seven more joint ventures, he said.

Tuesday, June 20, 2006

Mitsubishi to increase investment in Pakistan

ISLAMABAD: Hajime Katsumura, CEO Mitsubishi Corporation, Japan, has said that his company is keen to invest in the agriculture sector of Pakistan as a joint venture and would like to provide modern technology in the dairy sector.

At a meeting with Federal Minister for Food, Agriculture and Livestock Sikandar Hayat Bosan here on Monday, he said Mitsubishi Corporation has already started negotiating with the National Agriculture Research Council (NARC) for the establishment of a high security laboratory in which research and diagnosis of zoontic diseases such as avian influenza and Congo fever can be accomplished.

According to an official statement, the minister said livestock plays an important role in the economy of the country. The livestock sector contributed 50 percent of the agriculture value added and 11 percent to national GDP during 2005-06. Its annual share in foreign exchange earnings is approximately eight percent.

The minister said that the government has taken a number of measures to improve the pace of development in agriculture sector with focus on value addition. The import of agro-based machinery/equipment not manufactured locally is allowed at zero tariffs. Import of high yielding animals and their semen/embryo are allowed. The government has established the Pakistan Dairy Development Company and Livestock & Dairy Development Board (LDDB) as a no-profit company, he added.

The minister further said that there is great potential for investment in establishment of model dairy farms, model milk procurement system, center of excellence for dairy technology, market & product development research and vaccine manufacturing units in Pakistan.

He urged the private sector to come forward and support the government’s efforts for development of the agriculture sector. In this connection he specifically indicated that it can play a very effective role in establishment of dairy farms and dairy processing units, cold chain facilities for storage and transportation of livestock products, packing and packaging material plants for processing and packing of oranges, mangoes, dates and apples, livestock feed mills and fisheries sector.

The government has very supportive attitude for investment. All kinds of incentive and facilitation are being provided to the investors. The government does not discriminate between local and foreign investors as the same criterion has been adopted for the both.

Said Jahangir Khan Tareen, Federal Minister for Industries, Production and Special Initiatives, at a meeting with a delegation of Mitsubishi Corporation and Fatima Group.

Hajime Katsumura, CEO Mitsubishi Corporation, apprised the minister about the investment plans of his company. He said that Mitsubishi has already launched four joint ventures with Angro Chemicals, Dewan Salman Fabrics, Packages and Sadiq Sons. The fifth project is being launched as a joint investment with Fatima Group.

He said this fifth project, called Clean Development Mechanism (CDM), will be first of its kind in the world. Apart from Pakistan, a similar project is being launched in Japan as well, he said, adding that the project aims to reduce global warming by treating industrial emissions. He said that an investment of $30 million will be made in this project. Under the project, nitrous oxide emissions from Pak-Arab Fertilizers will be treated to create Carbon Credits (CRs) which will be sold in the carbon market. A lot of revenue will be generated through the project side by side creating employment for the local people. The project will be up and running by January next year, he said.

Mr Tareen assured all kind of co-operation to the delegation for its investment plans. He told the meeting that agriculture is the mainstay of our economy and the government is committed to improving this sector. He urged the Mitsubishi Corporation to invest in the agriculture sector, especially in sub-sectors such as food processing and dairy. Pakistan is the fifth largest producer of milk in the world, so its potential in this sector needs to be utilized to the maximum. A company has already been set up for the development of this vital sector, said the minister.

The minister said that the government is trying to diversify trade. We are moving towards the engineering sector and the Engineering Development board has been assigned the task to improve our engineering products. He told the delegation that investment by Mitsubishi in the automobile sector will also be highly encouraged as the government has adopted liberal policies to attract investment in this sector.

Pakistan is open for investment in all sectors without any discrimination or restrictions on bringing in or taking out capital, said Zahid Hamid, Minister for Privatisation & Investment.

He was talking to a visiting delegation of Mitsubishi Corporation Japan, led by Hajime Katsumura Group CEO.

Mr Katsumura informed the minister that they have entered into an agreement with Fatima Group, buyers of the privatized Pak-Arab Fertilizers (Pvt) Limited to develop Clean Development Mechanism (CDM) project at a cost of Rs 1.8 billion, first of its kind and new in the whole world. After implementation of the CDM project, which was scheduled to be commissioned by early 2007, would benefit environmentally, socially and economically, he added.

He observed that Pakistan was a good market and partner, which was evident form Mitsubishi’s operation in Pakistan since 1990. Besides ongoing four joint ventures, the company was working on seven more joint ventures, he said.

The 14-member delegation remained with the minister for some time and discussed matters pertaining to the upcoming investment opportunities and Pakistan’s incentives for investors.

The minister said that the government was ready to facilitate investors to promote both foreign and domestic investment activity in the country. Investors were free to form joint ventures or establish their own businesses with 100 % equity. More than 600 multinational companies were successfully operating and making profits in Pakistan, which had become an attractive location for investors and due to a liberal investment climate, the government’s business friendly policies, foreign investment had increased tenfold during the last five years and was expected to cross $3.5 billion by June 2006.

Mr Hamid appreciated Mitsubishi’s efforts to introduce new technology in the privatized entities for increasing their efficiency and production and assured that the government would fully support all such arrangements, which brought in modern technology in various sectors.

 

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ISLAMABAD, June 19: Pakistan is the fastest growing economy in South Asian region and Oracle will continue to invest in the country to further boost its Information Technology sector.

Oracle, one of the leading enterprise software company, has a very dominant presence in Pakistani market from the technology and database perspective and it wants to move into the future generations with more advanced technology, said visiting Vice-President of Oracle (Asia Pacific), Adrian Johnston.

Talking to APP here on Monday, he said during his visit he interacted with different subscriber groups and officials of the Ministry of Information Technology to explore ways and means to transforming Pakistan into a leading IT industry.He said the company had a lot of interest in the Pakistani market, and was looking forward towards its expansion.

He also mentioned launch of Oracle-Dell Competency Centre in Islamabad which would serve as a platform to provide technology and infrastructure free-of-cost to business partners and customers in Pakistan.

The centre, he said, would showcase multiple IT solutions that would cater to Pakistani companies in diverse industries, including financial organisations, telecom companies, government organisations and manufacturing firms.

 

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KARACHI: Government will encourage growth of private airlines to provide more options to the passengers, Mir Khalid Ahmed Khan, Minister of State for Defence said speaking at the annual dinner of FENA, a flight engineers association.

He stated that private airlines were not a threat and pointed out that despite their presence, the number of passengers travelling by PIA has risen. He assured President FENA Malik Tariq Ali of his full cooperation for resolving their issues.

Malik Tariq Ali pointed out that human resource is the real asset of any organisation, particularly in a competitive business like aviation. He suggested opening of channels of communication, which is very important for any commercial organisation to get a proper feedback.

The chief guest awarded shields to retired flight engineers Rauf A Khan, Jamshed Ishrat, PI Majid, Bandeh Ali and Ghulam Qadir Shah Jamote. A shield was awarded to Late Zia Qazi who died two days before his retirement.

 

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Tuesday June 20, 2006

ISLAMABAD: Pakistan has welcomed Russian announcement of its willingness to join the Iran-Pakistan-India (IPI) gas pipeline project.
Foreign Office Spokesperson Tasneem Aslam while talking to state-run TV channel late Monday said that Islamabad would welcome any company or corporation interest in the IPI Pipeline Project.

She said that Russian Gasprom was a renowned company and carries vast experience in the field adding that was the reason the offer would be seriously considered.

In response to a query Foreign Office Spokesperson said that United Nations Secretary General Elections are under government’s review but any final decision has yet to be taken.

She said, "its Asia’s turn now and there have been three big Asian candidates for a longtime but now India too has joined them".

 

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Tuesday June 20, 2006

ISLAMABAD: Minister for Information Technology Awais Ahmad Khan Leghari Monday said Pakistan’s ICT sector was on a roll, registering 50 per cent annual growth and generating 150,000 jobs in the past three years.
"The employment rate in the IT sector has been massive with the industry needing nearly 8000 workforce every month and going by this rate, we expect a growth of around half a million jobs in the IT sector within the next three years," he said in a keynote address to a seminar on ’WiMax technology’, organised by WiMax Forum Pakistan.

WiMax is an acronym that stands for Worldwide Interoperability for Microwave Access. It is a standard-based technology that provides fixed, nomadic, portable, and eventually mobile wireless broadband connectivity without the need for direct line-of-sight to a base station. WiMax technology is known for its capacity to facilitate and improve internet access, electronic banking, online shopping/gaming, Voice over IP, movies and music on demand, telemedicine, e-learning, entertainment and video conferencing/streaming.

The minister noted that while the employment opportunities in the IT sector were on a rise, there was a need to match it with a continued supply of top-quality human resource which was unfortunately not being produced in a sufficient number in the country. "Save a few top-tier universities, the rest are not producing the high-end human resource that has the potential to be absorbed by the industry," he said.

However, he said his ministry was mindful the issue and it had already chalked out a comprehensive plan to upgrade IT and telecom disciplines in about 25 leading universities by setting up career placement centres and offering thousands of internships, apprenticeships and scholarships to the IT and telecom graduates.

Awais noted that while the arrival of wireless technologies in Pakistan had led to a revolution in the telecom sector where the mobile phone subscribers alone had gone beyond 33 million mark, broadband services were still far from picking up despite the announcement of a well-received broadband policy and subsequent reductions in bandwidth rates.

He said the broadband users in the country still stood around 100,000 users which had forced the government to invest heavily into this sector in the coming months. "The ministry has decided to use the Universal Service Fund to fuel broadband growth and we are determined to increase the broadband users up to 2 million within the next two to three years," he said.

He said another area which the government had focused closely in recent days was the 3-G spectrum which would be made available within the next nine months through a transparent bidding process. "We shall properly consult all the stakeholders before giving away the spectrum in a transparent manner which has been the hallmark of previous policies introduced by the ministry," he said.

Addressing the seminar, IT ministry member telecom Nooruddin Baqai ruled out transfer or trading of broadband licence or frequency though companies could enter mutually-beneficial inter-connect agreements. He also assured a complete continuity and consistency in the telecom policies announced by the government. Earlier, Keith Doucet, member WiMax Forum, gave a presentation on the scope of WiMax technology in the promotion of broadband services.

 

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RAWALPINDI (updated on: June 24, 2006, 02:44 PST): President General Pervez Musharraf said on Wednesday that Pakistan has an excellent infrastructure in IT sector and environment is conducive for investment and development in this sector.

He said this during a presentation by an internationally renowned IT company here.

President General Pervez Musharraf said Pakistan has the necessary qualified manpower. IT Universities and educational institutions are producing substantial number of qualified people while other educated youth have command over the English language.

He emphasised that this is a strong basis to take a leap in the development of IT and Pakistan needed to exploit this potential fully.

He referred to various initiatives taken by the government during the last six years for the promotion of computer literacy and for software export developed in Pakistan.

The President said the investors can benefit from the hardworking and trained manpower in Pakistan for its operations in other countries.

Welcoming the interest of foreign investors in Pakistan, the President said the government would extend fullest support to it and expressed the hope that they would expand their activities in Pakistan within the shortest possible time.

During presentation, the company gave a broader concept of establishment of IT cities and call centres in Pakistan emphasising that it would help in raising the IT profile of Pakistan through public-private partnership.

The Minister for Information Technology Owais Leghari and Minister of State for Investment Omer Ahmed Ghumman were also present on the occasion.

 

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QUETTA (June 21 2006): Balochistan minister for finance Syed Ehsan Shah presented the annual budget for the year 2006-07 here on Tuesday envisaging a total outlay of Rs 59.696 billion with Rs 37.453 billion as current expenditure, Rs 7 billion as provincial public sector development programme and capital expenditure of Rs 15.184 billion.

The total revenue receipts are estimated at Rs 35.144 billion and capital receipt at Rs 12.437 billion. Thus, there is a deficit of Rs 2.309 billion in case of current expenditure and Rs 1.747 billion in case of capital expenditure.

Adding the PSDP of Rs 7.060 billion, the deficit would go up further. This deficit is to be met from other resources like unfunded receipts and loans from the federal government. After these expected receipts, the total budget deficit would be Rs 12.115 billion.

The finance minister, referring to resource constraints in his budget speech, maintained this factor would hamper the growth and development objectives.

"We cannot come out of our resource constraints unless the federal government comes up with substantial financial package. We alone cannot improve our financial health without assistance of the federal government."

He maintained the budget has been prepared with the goal to improve the financial health of the province.

He said the provincial government is actively involved in improving financial management, improving social service delivery, creating economic opportunities and enhancing financial resources.

Referring to socio-economic indicators of the province, the finance minister said literacy rate in the province is 34 percent. Monthly per capita income is the lowest of all the four provinces at Rs762. Unemployment rate is soaring high at 33.48 percent with just 8 percent of the total road network in the country amply explains reason of the province's poor growth and under-utilisation of resources.

He announced to give ownership rights to kachhi abadies from the next fiscal year in line with the announcement made by President Pervez Musharraf during his recent visit to Gadani. Besides, the province also planned to revive the ship-breaking industries at Gadani.

The minister said desalination plants, one each at Gwadar and Gadani, are being installed with the assistance of the federal government to provide water to people.

As many as 1300 villages would be electrified. Kuwait Fund has been reactivated for village electrification under which Rs 1 billion would be spent on this programme.

The Balochistan government has included no new scheme except one related to poverty alleviation worth Rs 700 million in its public sector development programme (PSDP) for the fiscal year 2006-07.

Total amount that has been allocated under the PSDP in the budget is Rs 10,819 million including Rs 3,760 million as foreign assistance that will be spent on 1,071 ongoing development schemes in various sectors in the province.

According to details, Rs 262.104 million have been earmarked for 396 ongoing schemes in road, Rs 757.635 million for 143 schemes in education and Rs 253.356 million for 70 uplift schemes in health sector.

Besides, Rs 393.642 million have been allocated to complete 117 ongoing water supply schemes, Rs 127.323 million for 15 uplift schemes in agriculture, Rs 29.710 million for 16 schemes in livestock sectors and Rs 740.104 million for 93 uplift schemes being launched under the Balochistan Development Authority.

Rs 3.500 million have been allocated for one scheme being implemented by Gwadar Development Authority in Gwadar district, Rs 136.B40 million for 16 schemes in power sector and Rs 157.370 million for 52 schemes of public health and engineering.

Rs 59 million have been allocated for 4 schemes in industrial and Rs 70 million for seven uplift schemes in mineral sectors.

The provincial government, despite its acute financial constraints, has also allocated Rs 11 million for two ongoing schemes for women development and Rs 29.200 million for 16 schemes in sports sector.Balochistan minister for finance Syed Ehsan Shah has said the provincial government has allocated a sum of Rs 641.2956 million for flour subsidy in the next fiscal year.

Presenting the provincial budget for the year 2006-07 here in the provincial assembly on Tuesday, he said earlier the government was provided subsidy on wheat, but this year they have decided to replace wheat with flour for subsidy to ensure benefit to ultimate consumers.

We need sufficient quantity of wheat to meet our requirements and for this purpose we have to import 300,000 tons of wheat from outside the province while 50,000 tons is procured within the province, he said.

The government supplies wheat to owners of flour mills at the rate of Rsll,130 per metric ton, he said, and added a subsidy of Rs1,900 per metric ton is given in this regard.

The government provides wheat subsidy to the tune of Rs 665 million annually for alleviation of financial miseries of the poor, he maintained. The finance minister said the government has also decided to keep up the subsidy of Rs 2 billion on tube-wells in the wake of adverse effects of drought.

 

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KARACHI (June 20 2006): Not only the overseas Pakistanis remitted home a record amount of $4,136 million during 11 months of FY06, the competing Foreign Currency Deposits (FCDs) under FE-25 scheme also rose to a record $3,481 million by the end of May 2006 as against $3,105 million at the end of May 2005, and $3,282 million at end of June, 2005.

The surge was more pronounced in last five months of the fiscal year with outstanding balances averaging about $3,498 million compared with a similar average of $3,327 million in the first six months of the year. The outstanding balances stood at their highest of $3,567 million at the end of January 2006 and lowest of $3,302 million at the end of July 2005.

Earlier on, balances under FE-25 scheme had reached $2,671 million (resident: $1,954 million, non-resident: $343 million) at the end of FY04 and $2,296 million (resident: $2,340 million, and non-resident: $331 million) at the end of FY03.

It is worth recalling that the FE-25 Scheme was introduced, vide FE Circular No 25 of June 20, 1998, in the aftermath of Pakistan's nuclear explosions and the imposition of sanctions by most of the western countries leading to restrictions, vide FE Circular No 12 of 1998, on withdrawals in foreign currency from selected categories of foreign currency accounts existing as on May 28, 1998.

At the time of the issuance of the aforementioned FE Circular, the Government was under liability to make payments to the holders of FCDs in the amount of some $11 billion (History of SBP: 1988-2003), whereas the FE kitty of Pakistan had only left in it about $1 billion. To allay fears of any future freezing, separate ledgers were to be maintained by Authorised Dealers (ADs) for deposits under the new Scheme. Since these deposits are outside the State Bank's forward cover scheme, these are not required to be surrendered to the State Bank. The ADs, who are free to decide the return on such deposits, are also under no restriction to lend, invest and place on deposit such funds in Pakistan or abroad subject to the observance of the prescribed regulations.

As regards their utilisation as on the end of May 2006, $1,147 million was used for financing foreign trade ie exports both under pre-and post-shipment arrangements ($851 million) and imports ($295 million) while $1,529 million was placed under various arrangements including those with SBP ($181 million under CRR and $534 million under SCRR), banks within Pakistan ($26 million) and abroad ($787 million). An amount totalling $538 million was held as balances abroad ($356 million), cash in hand ($78 million) and as 'others' ($104 million).

Ever since the issuance of FE-12 in 1998, balances in the old FC accounts had been declining since these had to be converted into rupees or Special US Dollar Bonds by the holders at their option. Eight years after the disbanding of the old scheme viz., at the end of May 2006, the outstanding balances in these accounts stood reduced to only $104 million (resident:$76 million, non-resident:$28 million). Three years ago in May 2003, these balances stood higher at $330 million (resident:$266 million, non-resident:$64 million).

 

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KARACHI (June 21 2006): The Prince of Dubai, Suhail Muhammad, has expressed interest for investment in the province of Sindh. A statement issued here on Tuesday said he expressed such a desire in a meeting with the Adviser to Sindh Chief Minister for Livestock and Fisheries, Faqir Muhammad Jadim Mangrio.

It said the meeting took place in the Adviser's office here.

Prince Suhail informed that he would soon announce his plans for investment.

He said he was very much impressed by the hospitality of the people of Sindh. The statement said during the meeting various projects for investment were discussed.

The Adviser pointed out that the environment in Sindh is very conducive for investment. He said the Prime Minister and the Chief Minister of Sindh desire more and more investment come to the province. Jadim Mangnio assured that the Sindh government would provide every possible facility for investment. He said Manchar and Keenjhar are among the big lakes of Asia and the government is working on various projects of their better use.

The Adviser was of the view that there is a need for steps for export of fish available in these lakes. He informed that in the budget an allocation has been made for the construction of cattle colonies in 27 cities of Sindh. Jadim Mangrio said dairy villages are being established at Super Highway and National Highway.

 

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ISLAMABAD (June 21 2006): Zahid Hamid Federal Minister for Privatisation and investment appreciated the role of Pak-Kuwait investment Company and other Kuwaiti investors in promoting industrial activities in Pakistan. He said that Kuwaiti Business Groups would be facilitated to invest in any sector of their choice.

Business groups of both the countries should sit together to identify new avenues for enhancing the existing economic relations. Zahid Hamid stated this in a meeting with the visiting Finance Minister of Kuwait Bader Mishari Al-Humaidi here on Tuesday. The Minister briefed the envoy regarding privatisation, and its policy, process and programme.

Finance Minister of Kuwait Bader Mishari Al-Humaidi appreciated the economic performance of Pakistan and the investor friendly climate and said that Kuwaiti Business groups/companies were keen to explore opportunities for investment in various sectors.

A full-fledge team of Kuwaiti Business groups and investors would soon visit Pakistan to identify the areas of interest.

There was a need to increase the number of flights and carriers between Pakistan and Kuwait, he said.

Leaders of both countries were determined to bring the people and governments still closer and to strengthen their existing relations through accelerating the pace of economic cooperation and interaction, he added.

 

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FAISALABAD (June 21 2006): The Punjab government has launched 'Municipal services improvement project' with the financial assistance ($50 million) of International Development Agency of World Bank.

The project will support in the capacity building of local government and Rural Development Department (LG&RDD); to enhance the Planning and Development Department (P&DD), including the newly established Urban Unit responsible for implementing the cultural heritage component; and support the Punjab Municipal Development Fund Company (PMDFC).

According to official sources, the objective of the project is to improve the viability and effectiveness of urban services provided by tehsil municipal administrations (TMAs) to make such improvements sustainable.

The project consists of the following components: 1) Capacity grants will finance needed improvements in TMAs in the fields of urban planning, financial management, including budget management, investment planning for service delivery, operation and maintenance. 2) To assist the Punjab government in a variety of ways.

In a project report, World Bank team leaders Jaehyang So and Shahnaz Arshad mentioned that the rapid urban transition in Pakistan could contribute even more to the pace of the country's economic growth and poverty reduction, if cities did not suffer from severe infrastructure bottlenecks, service deficiencies, poor local governance, and inefficiencies in land and housing markets.

The WB experts said that the shortfalls in urban services were not merely an outcome of aggregate resource constraints. The shortfalls are exacerbated by constraints in the institutional, governance, and financial arrangements that have defined local service delivery and financing.

They said that the government's devolution of power programme represents a unique opportunity to address key constraints that have plagued urban management and service delivery in Pakistan, as it has done away with some of the institutional fragmentation for urban service investment and operations.

In Punjab, the devolution programme resulted in the establishment of 144 tehsil municipal administrations (TMAs) and 5 city district governments in Lahore, Rawalpindi, Gujranwala, Faisalabad and Multan.

The country has made remarkably swift progress in establishing new legal and administrative structures at the local level, and in establishing the framework for devolving service functions.

According to the WB report, the Punjab Local Government Ordinance (PLGO), 2001 provides a comprehensive list of regulations for local governments in the province. The Ordinance covers the range of regulations from institutional responsibilities of the different levels of local government, including district government, town municipal administration, union councils, and citizen community boards (CCBs).

The broad framework of devolution, as outlined in the PLGO, gives responsibility to TMAs to provide a range of municipal services and the provincial government to monitor the TMAs in the provision of services.

This is a drastic transformation, both for the TMAs, which have to acquire the technical and management expertise needed to deliver services, and for the provincial government to change their outlook from provision to monitoring.

The WB experts observed that the implementation of the devolution plan was progressing slowly. Because the majority of TMAs had only been in operation for about four years, some newly created ones have not been able to discharge full responsibility for planning and financing.

Rather, TMAs have focused on the immediate day-to-day functions in the provision of municipal services such as water supply, sanitation, solid waste, roads, street lighting, parks and fire fighting. Many TMAs are struggling to keep the services going and do not have the capacity or resources to undertake strategic spatial, investment, and operational planning.

At the same time, the provincial governments have adopted themselves, with varying degrees of success, to the changed role they are expected to perform under the new system. Informally, the provincial government continues to influence the performance of the local governments by controlling the postings and transfers of the senior staff of the local governments, and by controlling fiscal transfers.

However, formal reporting mechanisms to enable provincial government to effectively monitor the performance and chart out a policy for performance management and capacity development have not been put in place. While the concept of performance monitoring is still seen as an objective, it has not yet been implemented at the local government level.

The government has worked with several donors to implement devolution.

Asian Development Bank Devolution Support Programme provides technical assistance to the Ministry of Finance and the Finance Departments of the provincial government. The ADB has recently announced an investment in a project focusing on TMAs.

Canadian International Development Agency (CIDA) is providing technical assistance to two TMAs in Punjab on urban planning. CIDA has also provided technical assistance to the LG&RDD on improving its capacity to manage TMAs, including investments in computer equipment and software development.

Japan International Co-operation Agency (JICA) is providing technical assistance on urban infrastructure to one TMA in Punjab.

The World Bank's devolution support programme comprises a range of instruments.

The Punjab big cities development policy loan is being proposed for FY08, to assist the large cities in Punjab to develop capacity in municipal finance, urban transportation and improving service delivery.

The WB has also provided devolution support through training courses targeted at both the national and provincial levels, including direct training to TMA staff in conjunction with PMSIP.

PMSIP will be co-ordinating with the other donor efforts in several ways: the project will not offer duplicate activities to those being financed by the other donors in the same TMAs. For example, PMSIP will not provide the type of classroom training, which is provided under the ADB provincial programme. Within the World Bank urban programme, the WB experts said, PMSIP and the big cities DPL have targeted different levels of the provincial government structure: PMSIP is targeting TMAs and the DPL is targeting city district governments.

Both projects will benefit from the specific work currently being conducted. PMDFC is committed to ensuring that financial management support and capacity building is provided to TMAs in a manner that is supportive and aligned with the government's work on the objectives of the WB-financed project to improve financial reporting and accounting, they added.

 

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ISLAMABAD (June 21 2006): Pakistan and Kuwait have agreed to expand and strengthen the existing co-operation between the two countries in the oil and gas sector to their mutual advantage besides stepping up linkages and inter-dependencies for all round development of the petroleum sector.

It was decided in a meeting between the Federal Natural Resources Minister Amanullah Khan Jadoon and Kuwait's Energy Minister Shaikh Ahmad Fahad Al-Ahmad Al-Sabah on Tuesday. Both sides agreed to step up exchange of experts delegations to benefit from each other's experiences and know-how in the upstream and downstream oil and gas sector to their mutual advantage.

Welcoming the Kuwaiti minister, Jadoon said the setting up of an oil refinery at Port Qasim would not only strengthen the existing economic ties between the two countries, but also help meet the energy requirement of the country. The Kuwaiti companies should also take benefit of the abundant opportunities present in the oil and gas sector, he added.

Jadoon told the Kuwaiti minister that the government was contemplating to set up more refineries in the country with a view to increasing the refining capacity from the present 6 million tonnes to 13 million tonnes per annum to meet the growing energy requirement.

He also briefed him on the upcoming projects in the oil and gas upstream and downstream sector, saying the government would also welcome the Kuwaiti participation in the privatisation of state-owned oil and gas units.

The Kuwaiti energy minister said that Kuwait attaches great importance to its relations with Pakistan, and hoped that bonds of fraternity and brotherhood would continue to grow further in the days ahead for the benefit of the two brotherly Muslim countries.

He said that Pakistan could benefit from Kuwaiti experience in refining and exploration sectors. He expressed Kuwaiti companies' willingness to participate in the forthcoming privatisation of Pakistan's oil and gas companies.

 

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ISLAMABAD (June 21 2006): Prime Minister Shaukat Aziz has approved the 2006-07 development programme for Oil and Gas Development Company Limited (OGDC) and set its oil and gas production target at 56,570 barrels per day and 1346 MMCFD, respectively.

The plan indicates that ODGC will drill 50 wells (34 exploratory and 16 developmental) in the next fiscal year, whereas it's going to complete 30 wells (24 exploratory and 6 developmental) by June 30, this year.

The OGDC Managing Director, Arshid Nasr, gave the Prime Minister a presentation on June 16, covering current production of oil and gas and projected estimates for the next fiscal year. He gave a clear picture of the company's financial strength, its potential, procedures to be followed in the award of contracts for development and exploration works.

The presentation also focused on Global Depository Receipts (GDRs) current status and the deadline for offering to the buyers through London Stock Exchange.

The presentation included projects coming up for production in the next two years. These were Uch-II (Power plant) with 200 MMCFD gas production; Qadirpur Compression 650 MMCFD gas by September 2008; Tando AllahYar gas 28 MMCFD and oil 2500 barrels per day by June 2007; Sinjhoro gas 28 MMCFD and oil 3500 barrels per day by June 2007; Dhodak Expansion gas 20 MMCFD and oil 1700 barrels per day by June 2007; Dakhani Expansion gas 12 MMCFD and oil 720 by March 2007; and Chanda gas 8,5 MMCFD and LPG 25 M.T/D by September 2006.

Financial strength of the first nine months of the current fiscal year showed that OGDC had earned Rs 69.94 billion, and its profit before tax was Rs 48.43 billion, and profit after tax stood at Rs 33.20 billion. It added that OGDC had declared 52.5 percent dividend and paid Rs 7.72 per share earning.

Sources said that the Prime Minister appreciated OGDC's new management vision to take it forward and explore oil and gas potential to an optimal level. He asked the Managing Director to strictly follow the rules and procedures in award of contracts for all development works in the future and make OGDC a world class company in true sense.

The Prime Minister was informed that the previous management had deviated from the rules and standard procedures in award of contracts for various key development projects. The Prime Minister was informed that an in-depth review had shown that the previous management took major deviations in a number of areas from laid down rules, regulations and procedures especially in issuance of Letters of Intent (LOI), tender process, award of contracts for major projects.

Shaukat directed Arshid Nasr to review the decisions taken by the previous management against rules and make corrections wherever and whenever necessary to ensure transparency and good governance in all operations of the company.

Regarding GDRs, Shaukat asked OGDC to closely work with the Privatisation Commission and the advisor appointed for the transaction to complete the entire process as per schedule.

The Prime Minister set the deadline of September 30 for GDR offering in the international market.

Arshid Nasr informed the Prime Minister that the company had established a strong business procedure and internal checks system for all operations to ensure accountability and transparency. He said that OGDC was making all-out efforts to attract foreign investment in the country's oil and gas sector. He in particular mentioned offshore initiatives and said that they would be used as an attraction to encourage foreign investors to invest in Pakistan oil and gas sector.

The presentation also focused on rationalisation of the company's human resources, develop in-house expertise for offshore projects and be a responsible corporate citizen. It also indicated a strategy to improve OGDC image at home and abroad.

According to the presentation, OGDC has 63 percent share of total local exploration. Its share in oil production, as on June 1, stood at 39,048 barrels per day against 65,080 total local production. For gas, OGDC share was 979 MMCFD against total local 3898 MMCFD production.

Total local oil and gas consumption stood at 365,000 barrels per day and 3317 MMCFD respectively. Pakistan meets entire gas consumption from indigenous resources but depends heavily on foreign resources for oil needs.

Arshid informed the Prime Minister that being a corporate citizen, OGDC spent Rs 196 million on construction of road in Balochistan, paid Rs 70 million for Earthquake relief fund, Rs 43 million for Tando Allahyar development project, Rs 15.50 million on construction of Trasuma centre in Ghotki, Sindh, Rs 15.50 million on construction of road at Tando Alam Oil Complex and Rs 10 million for free health care at OGDC dispensaries in 2005-06.

When this correspondent approached Arshid for comments on OGDC future development plan and his presentation to the Prime Minister, he said: " Being a firm believer that collective wisdom can work better, I have taken everybody in my organisation on board to achieve the targets set by the Prime Minister."

He said he was confident that teamwork would serve the purpose of making OGDC a vibrant entity in true sense and complete exploration and production work within the stipulated period.

Arshid said he also believed in merit and transparency. He said: "I have asked everybody, right from top to bottom in OGDC, that deviation in rules and procedures will not be allowed and as far as the past is concerned a committee has already been formed to check the deviations from the rules in award of contracts and issuance of Letter of Intent (LoI)."

He said that the review committee would complete its job on priority basis and submit the cases to the board wherein rules were not followed by previous management. Arshid added that in the future OGDC would advertise all contracts in the press and pick up the right party for the jobs involving huge public money.

 

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Wednesday, June 21, 2006

ISLAMABAD: China and Russia have assured Pakistan of full dialogue partnership in the Shanghai Cooperation Organisation (SCO), Information Minister Muhammad Ali Durrani said on Tuesday.

Addressing a press conference, he said that Russian President Vladimir Putin had told President Pervez Musharraf during a meeting on the sidelines of the SCO conference that the SCO charter would be amended to allow Pakistan’s entry to the organisation. The information minister said that under existing rules of the SCO, no new country could be made a full member of the organisation. Russia and China would initiate the process of amending the rules for Pakistan’s induction, he said.

He said that Pakistan had been given observer status to the body because of China’s efforts. President Musharraf’s recent visit to China had been “very beneficial for the country”, he said. The information minister said that Pakistan and Russia had agreed to “forget their past and usher in a new era of friendship”. The Russian president thanked Musharraf for supporting observer status for Russia in the Organisation of Islamic Conference (OIC). He said that Pakistan had offered “an energy corridor and access to warm waters (Arabian Sea and the Gulf)” to Russia, China and the landlocked Central Asian member states of the SCO.

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