Pakistan Economy - News & Updates - Archive

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ISLAMABAD, June 22: The Chairman Central Board of Revenue (CBR) Abdullah Yousuf on Thursday said that the revenue collection would easily cross the Rs700 billion mark as against the target of Rs690 billion by end of the current month.

Addressing a press conference here on Thursday the chairman said that the tax authorities had so far realized around Rs661.5 billion as on June 21. "We would achieve our target easily", he added.

The chairman said that more than Rs25 billion of additional revenue would be collected due to the new taxation measures announced in the budget of 2006-07. However, an amount of Rs16.5 billion would be lost due to relief measures taken in the budget.

When asked about the taxation measures providing maximum relief to the high salaried class, the chairman said that his team did a lot to give maximum relief to all. However, he said that it was not possible to avoid it. He was of the view that the new taxation regime for the salaried class was to facilitate all taxpayers.

He said Member Direct Taxes Salman Nabi, the architect of the new system, defended it on the pretext that it was not possible to raise the rate for the higher salaried class, which was reduced in the budget due to which they were given maximum relief. The chairman was of the opinion that the general sales tax (GST) and income tax were the tax of the future. He said that the GST net was extended to all items, which was as per international standards, while the share of income tax collection did not increase to the extent as was expected.

"There is a room for improvement. We are working for collecting data in this regard," the chairman said.

Answering a question, he said that the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) had offered to help tax officials in reducing the menace of under-invoicing and over-invoicing causing harm to the national kitty.

 

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Abu Dhabi: Asset managers from Pakistan, until now inactive, plan to lure investors from the Gulf into their country's capital markets, the chief of the Pakistan Business Council said yesterday.

S. Qaiser Anis, President of PBC, said he led a delegation from the UAE recently to Pakistan and held meetings with asset managers, bankers and others to apprise them of the potential in the UAE and neighbouring markets.

"Pakistan needs to attract fresh capital into the country through mutual funds, specifically offshore funds which is a better way of getting into the capital markets there," he told reporters.

"Asset managers and Asset Management Companies from Pakistan will be coming to the UAE shortly to raise funds and tap the potential here. The recent flow of investments from the UAE and GCC to Pakistan is indication that there is potential."

Rupert N. Bumfrey, a director with Alliott Management Consultancy, UAE, who was part of the delegation said Pakistan's asset managers have only onshore mutual funds and need to launch offshore funds.

"There are huge opportunities in that emerging market and the potential hasn't happened. Returns from the equity markets there are between 30-40 per cent average."

While equity holdings by funds are some $45 billion in Korea and $30 billion in China, India and Taiwan, it is nil in Pakistan. "The marketing and distribution of funds is poor and the managers need to be pro-active in attracting capital."

He said there are some 30 mutual fund players in Pakistan but didn't specify the size of the market.

The European market had over-subscribed the euro-bond issue by Pakistan recently. "UAE investors too should invest in Pakistan government's debt bonds," he urged.

OPPORTUNITIES
Country 'needs to launch offshore funds'

Rupert N. Bumfrey, a director with Alliott Management Consultancy, UAE, who was part of the delegation to Pakistan, said the country's asset managers have only onshore mutual funds and need to launch offshore funds.

 

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World Bank validates Pakistan's poverty estimates

ISLAMABAD (June 23 2006): The World Bank has validated the Pakistan's official poverty estimates as published recently in the Pakistan Survey 2005-06, World Bank sources said here on Thursday. The government has maintained consistency with past measures using the same poverty line and inflation indices as used for the 2000-2001 estimates.

Using this same methodology, the latest government estimates show poverty to have fallen from 34.4 percent to 24 percent. "It is clear that poverty has indeed fallen sharply between 2000-01 and 2004-05. Of course, there are other ways to calculate poverty estimates useful for analytical purposes but using the same methodology for the official estimates is important to maintain comparatively over years," said John Wall, World Bank Country Director for Pakistan.

http://www.brecorder.com/index.php?...&term=&supDate=

 

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Thursday June 22, 2006

ISLAMABAD: In order to end the control of federal government over Water and Power Development Authority (WAPDA) government has finally decided to restructure the department, said Liaqat Ali Jatoi, federal minister for Water and Power.
Addressing a press conference in his chamber at the parliament house, Jatoi said under its new form Wapda will be run like a private company and the decisions will be taken at local level. Secretary Water and Power, Chairman IRSA and other senior officials of the department were also present on the occasion.

Mr Jatoi said in order to save land losses and stop misuse of funds more measures would be taken pointing out that last year the land losses were 23.2 percent, which have further dropped down to 21.7 percent. We are also taking steps to bring these losses further down to single digit, he held.

He also pointed out that black sheep of Wapda are dealt with sternly and so far disciplinary action has been taken against 5733 corrupt officials of the department. No corrupt element will be spared at any cost, he underscored.

Federal minister also recalled that during last year 15.82 million new electricity connections were provided throughout the country and only Karachi bagged 1.8 million connections from the total figure.

Liaqat Ali Jatoi said that last year 12200 tubewell connections were given to farmers. This year we had a plan of providing 15000 connections but after detailed discussions it has been decided that 16404 connections would be provided to the countrymen.

"Under President Gen Pervez Musharraf’s vision, 9000 villages had been provided electricity last year and by the end of next year every house of the country will have electricity. Under Roshan Pakistan Program 15000 more villages will be provided electricity," he held.

He also said that with a cost of Rs 9.83 billion 23 new grid stations will be built throughout the country besides expanding the main power transmission line to 609 kilometers.

The federal minister also pointed out the good performance of NESPAK and National Power Construction Company’s performance as because of their good work Pakistan got a transmission line contract worth 335 million Saudi Riyal and this project will generate job opportunities for 600 Pakistani engineers and thousands of workers.

Mr Jatoi also said that after the privatisation of Karachi Electric Supply Company (KESC) WAPDA was providing 35 percent electricity to KESC and in order to overcome the electricity shortage in the ’city of lights’ 73 percent electricity will be provided to KESC.

Whereas for the work on Khuzdar Transmission Line for providing alternate energy to Balochistan a sum of Rs 3 billion is being spent, he said.

He said under Public Sector Development Program Rs 52 billion will be spent on power sector while Rs 40 billion will be spent on water sector. An increase of 35 percent has been made in water and power sector, he held.

Citing water situation in dams, he said glaciers have started melting and water reservoirs have sufficient amount of water. At present in Tarbela Dam 3.016 MAF water is present and there is no threat of water shortage and per day flow of water in River Indus is 200,000 cusecs. The water stored in reservoirs is sufficient for three months as per our requirement, whereas the work on Mangla Dam upraising project will be completed by next year and it will also provide extra 2.9 MAF water.

 

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By Mohd. Saleem Shaikh​

Energy is considered as one of the most important input to economic growth and development. Its consumption is also one of the significant indicators of the level of development of any country.

According to recent reports, developed countries use more energy per unit of economic output and per capita than developing countries. Over a billion people in the industrialised countries use about 60 per cent of the world’s total commercial energy supply. Moreover, according to the Economic Survey of Pakistan 2005, about 5 billion people living in the developing countries consume the remaining - with the majority of them being poor. It is estimated that about two billion people around the world have access to modern energy services and, as a result, struggle to meet their basic daily needs.

According to data kept by the US department of energy, Pakistan’s energy consumption has nearly tripled in the last two decades. And the fact given that 7-8 per cent GDP growth per annum is targeted will further push up demand for energy.

Despite its best efforts, the country barely produces about 30 per cent of its required energy. The rest of the needs are met by importing oil which means spending huge amounts from foreign exchange reserves.

Since Washington nearly ruled out any nuclear-specific deal of the kind offered to New Delhi, Islamabad should alternatively consider the possibility of seeking assistance in exploring all sources of energy, especially hydroelectricity, natural gas, coal and solar energy.

According to reports, the country’s large potential for hydropower continues to be under-utilised mainly because of the cost of transmitting the power generated in the mountains of the north - where most likely hydropower sites are located - to the urban centres down south. Here, perhaps the US could help with regards to funding and transfer of technology as well. As for the exploration of its sizeable gas reserves, the country would require assistance in expanding its existing reserves, particularly with the growing popularity of CNG as an alternative motor fuel. The option of aid for harnessing solar energy must also be mulled over, especially in view of the climate, which is well suited for this purpose.

Presently, the cost of producing energy and delivering it to the end user remains excessively high. Moreover, a huge amount of the energy is lost because of the transmission and distribution networks being obsolete and in dire need of a complete overhaul.

According to State Bank of Pakistan’s (SBP) second quarterly report for 2006, Pakistan is caught in the grip of severe imbalances in energy demand and supply for the last couple of decades. During the early 1890s, domestic supply of energy was meeting nearly 86 per cent of the total domestic energy demand, while a gap of 14 per cent was being bridged through imports. However, the demand-supply gap set out widening since then and reached to almost 47 per cent by the year 2000.

The energy sector comprises power, gas, petroleum and coal. Oil and gas drilling activity remained slothful in 2003-04 as compared to 2002-03 and, accordingly, 29 exploratory wells and 24 development wells were drilled in 2003-04 as against 32 and 45 in 2002-03.

If energy consumption trends during the last quarter of the last century until now are analysed, oil has been the largest source of the country’s energy. Nevertheless, its share in total consumption fell to 32 per cent in 2005, down from 42 per cent in 1980. The share of electricity has also dropped considerably in the total fuel consumption. In a parallel manner, natural gas has grown up to be the most popular source of energy, almost doubling its share in fuel consumption during this period.

Given this perspective for the last 30 years, one notes that energy consumption patterns have drastically changed over time in apparent favour of the natural gas. Energy experts believe the consumers’ inclination towards natural gas is due to its easy availability and the escalating prices of other fuel sources, especially oil.

According to the SBP report for the lsat quarter of the last year, there have been significant changes in the intra-sector pattern of the energy consumption. Since the inter-sectoral distribution of energy has not changed much, the industrial sector continues to be the largest energy consumer with 58 per cent share followed by the transport sector with a share of 22 per cent.
If the current growth tendency in the energy supply and demand goes on, then energy consumption in the country is estimated to be about 150 MTOE against the current 103 MTOE net supply from indigenous sources by the year 2020.

 

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Therefore, the country would be facing a dearth of 31 per cent of energy in the foreseeable future with grave aftermath on the country’s balance of payment position, making it harder for the economy to move any longer on the present growth trajectory, the report warns.

The emerging worrisome energy situation for the country, however, underlines need for effective initiatives for capacity-building to augment the supply of energy from all possible sources, mainly the most neglected energy sources, say, coal.

According to Economic Survey of Pakistan 2005, the coalfield in Sindh province is replete with huge coal resources of 175 billion tons. The huge coal resources can be utilised as an alternative energy resource to meet the country’s soaring energy demand.

Moreover, there will be conversion of cement industries to coal and this would generate demand for 2.5 million tons of coal per annum by 2010. In view of anticipated shortfall of electricity and other energy resources during the next 10 years, maximum utilisation of the indigenous coal would be required in power generation and gasification.

Energy experts say in view of the big deficit in electricity and other energy sources during the next 10 years maximum utilisation of coal will be the most appropriate for power generation and gasification. The present share of coal in the overall energy mix is only about 5 per cent, which need to be increased to 25-30 per cent by 2020. It may be noted that in India the share of coal was as high as 54.5 per cent in the total energy mix in 2002. Power generation accounts for about 70 per cent of India’s total coal consumption. Despite the fact that Indian coal is of poorer quality with low in caloric content and high in ash and located far from major consumption centres, its coal consumption is estimated to increase to 510 million short tons by 2020 from 393 short tons in 2002. China too, is producing more than half of her electricity through thermal power stations run by coal.

In 2003-04, some 11 new discoveries including 4 oil and 7 gas/condenses were made in Pakistan. Average oil production dropped from 64,268 barrels per day in 2002-03 to 61,817 barrels per day in 2003-04, while natural gas production increased to an annual average of 3,295 million cubic feet per day from 2,719 million cubic feet per day in 2002-03 showing an increase of 21.2 per cent.

Incentives given by the government for an investment-friendly environment resulted in Pakistan signing six agreements for US$42 million with various international companies.

Lately, the country has focused on achieving self-sufficiency in food production, meeting rising energy demands, slowing population growth and pushing up economic growth levels and curtailing pollution or other environmental risks.
The experience of the government with Independent Power Producers (IPPs) points to a need for hammering out new polices by keeping long-term scenarios of country’s energy needs in mind. Although the 1994 power policy proved helpful in bridging country’s much needed power shortages, it fell flat to deliver inexpensive power to the masses.

Electricity tariffs have witnessed an unchecked upward trend since 1994. The bulk power tariff again was a major incentive to attract foreign investment in this sector. However, it proved costly too in the medium-term for the consumers.

As the government moves ahead to further privatise the energy sector in Pakistan under the influence of various international lending agencies, there is a strong need to strengthen the regulatory mechanism in the country. Besides restructuring various government departments, the country needs to lay emphasis on the following initiatives in its future energy strategies:

* The government must improve the functioning of the state utilities, namely: Water and Power Development Authority (WAPDA) and Karachi Electricity Supply Corporation (KESC).

* Private and public partnership in exploration of oil, gas and coal reserves in the country should be launched to meet energy demands.

* New projects should be launched to promote renewable energy resources in Pakistan. Renewable energy resources can prove vital in the electrification of remote areas in the provinces of Balochistan and Sindh, in particular, and in other areas, in general.

* The government must also actively promote energy efficiency and conservation. A right step in this direction will be the enactment and implementation of laws that promote energy efficiency and conservation at all levels.

Given the mounting demand for energy in the country, both large-scale hydel power projects and nuclear energy are inappropriate to meet future energy needs. The issues attached to large-scale hydel power projects are not environmental and social in nature only. Projects like Kalabagh Dam and other such massive projects have political connotations as well. Any urgency on the part of the government in this regard can cause horrendous damages to the federation of the country.

Alternatively, the government should actively pursue coal, natural gas and renewable energy options in the country to meet future energy demands and at the same time, and also invest in public sector energy projects. The projects should be both in power and other energy sectors. This is important to ensure supply of energy be it natural gas or electricity at cheaper and affordable prices to its consumers.

 

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WASHINGTON (June 24 2006): Ambassador to the US Mahmud Ali Durrani on Thursday said that Pakistan-US Bilateral Investment Treaty (BIT) was nearing finalisation. In his meeting with newsmen at the Pakistan Embassy, he said BIT was under final negotiation.

He said that Secretary Jehangir Bashar was here recently, and "minor apprehensions" on provisions of BIT were going to be overcome "Economic relations will be my focus," the new Ambassador said. "It's time to concentrate on economic co-operation, and development of national economy. "I think, the most strong binder between two countries is business, and money there would be no depth in bilateral relations."

He said "this depth in ties" would be added when Bilateral Investment Treaty was signed and implemented. So that, enhanced co-operation protocols are in place so that, our bilateral business gets a boost, and there are more exports Firstly, he said that we must get a space for exports and secondly it is imperative that our quality and price is competitive. Then, there comes our responsibility and those of our business community, and we need sympathetic consideration by the US authorities. Pakistan and the United States are scheduled to hold a high level meeting of energy co-operation on coming Monday in Washington.

The Pakistan team will be led by Mukhtar Ahmed, Energy Advisor to the Prime Minister of Pakistan, while the US team is to be headed by assistant secretary of state for energy Herbet Dobbs. The other members of Pakistan delegation will be Air Marshal Shahid Hamid, (Retd), chairman, Alternate Energy Development Board and Bilal Raza, director general, Pakistan Hydro Carbon Development Board, besides officials from the Pakistan Embassy dealing with energy issues.

In response to a question, Durrani said, "energy is an engine of progress."

Monday's meeting, he said was significant, both the sides have entered into an energy dialogue, and that Pakistan was seeking help and assistance of the United States in terms of technology-more than anything else and the support of their government to help us interact with their energy private sector."

"To fuel our growth, we need energy and we need their support it is very fundamental for us." Ambassador Durrani said Pakistan was looking for alternate fuel, use of coal to improve technology, to make safe energy out of coal reserves.

 

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KARACHI (June 24 2006): Sindh Governor, Dr Ishrat-ul-Ebad Khan has said that availability of vast investment opportunities is becoming a source of attraction for investors world over. "Both local and foreign investors are showing practical interest due to full attention paid on simplification of rules and regulations as well as infrastructure".

He was talking to a delegation, led by Chairman of Al-Sandoofi Group of Companies, Dubai, Sohail Mohammed Al-Sandoofi, which called on him at Governor House on Friday along with Provincial Fisheries Minister, Fakir Mohammed Jadem Mangrio.

The Governor welcomed the delegation desire for investment in Karachi and interior of Sindh and highlighted the investment opportunities available in the mass transit, dairy farming and other fields. Fakir Jadem Mangrio informed about ongoing projects in the fishing sector and said modern techniques are being promoted in this regard.

Sohail Mohammed Al-Sandoofi said the group intends to make investment of billions of rupees in mass transit and dairy farming in the interior of Sindh. The Governor assured all possible co-operation in this regard and appreciated the efforts of Jadem Mangrio regarding improvement projects in the fishing sector.

Talking to a delegation of Asian Development Bank, Governor Ishrat-ul-Ebad said that provincial government is established with best configuration of urban and rural representation. He informed that government is working on a multi-faceted strategy to reduce rural and urban disparity and improve the living standard of common man.

The Asian Development Bank met the Governor under the leadership of Vice-President, Liqun Jin. The Provincial Advisor Finance, M.A. Jalil, Additional Chief Secretary, Ghulam Sarwar Khehro, Secretary Finance, Malik Israr and other officials were also present on the occasion. The Governor appreciated ADB's role in the development process for Sindh.

Vice-President ADB said Karachi is a mega city and it enjoys great importance in the world. It is an important hub for linkage in Middle, South and East Asia. The Governor and delegation had an exchange of views on development works regarding farm to market connections, water treatment and other fields.

 

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ISLAMABAD (June 24 2006): Foreign Direct Investment (FDI) in Pakistan during July-May 2005-06 soared by 212 percent year-on-year to $3.212 billion and portfolio investment by 122 percent to 313.4 million dollars. However, withdrawal of capital from portfolio investment was on the rise, the State Bank of Pakistan (SBP) said on Friday.

During July-March 2005-06, FDI increased to $3.212 billion from $1.029 billion and portfolio investment to $313.4 million from $141.1 million.

It is worth mentioning that though the FDI swelled enormously, but it was at the cost of privatisation proceeds, which stood at $1.54 billion (half of total FDI). The question is that would the government be able to sustain this inflow without privatisation.

Things are rapidly moving towards a different situation ahead as the Supreme Court of Pakistan has declared the privatisation of Pakistan Steel Mills (PSM) null and void. The move would have a negative impact on the whole privatisation process. This might adversely affect the inflow of foreign direct investment in the future.

However, the notable feature of the data was that during the period under study, foreign investors withdrew about $138 million from portfolio investment.

Therefore, on balance, the total foreign private investment (FDI and portfolio investment) in 11 months increased by 201 percent to $3.525 billion from $1.171 billion of last year.

According to the break-up of investment by region, developed countries made a total investment of 1.517 billion including FDI $1.265 billion and portfolio investment of $253 million. The developing economies invested $1.88 billion (FDI $1.818 billion and $64.4 million portfolio investment).

Among developed countries, Western Europe made a total investment (FDI and Portfolio) of $695.3 million and European Union, $285.9 million against $422 million and $265 million in corresponding period last fiscal.

Besides, under unspecified head (investment by IFIs) was $124.4 million. This includes FDI of $128.5 million while in portfolio, it withdrew $4.1 million investment.

Among developing economies, Caribbean Islands invested $10.7 million in FDI and withdrew $9.4 million portfolio investment during the period under review. Africa, including Libya, Egypt, Mauritius, South Africa and other African countries invested $71.4 million.

Asian countries (west Asia, south, East and south East Asia) made total investment of $1.81 billion including $1.729 billion FDI and $76.3 million portfolio investment.

The break-up of investment further shows that United Arab Emirates (UAE) was the biggest investor in Pakistan totalling $1.415 billion with $1.357 billion FDI and $58 million portfolio investment, respectively.

United States was next with total investment of $744.6 million, including FDI of $451.4 million and portfolio investment of 293.3 million dollars. However, in terms of direct investment, Saudi Arabia was third ($275 million) following Norway with $248.6 million and Switzerland with 166.4 million dollars.

A significant feature of the data is that US portfolio investment during the period showed a high growth, it grew to $293.3 million from $30.8 million of the corresponding period last year, however, compared to previous months it is sharply declining.

Saudi Arabia's direct investment during the first 11 months of this fiscal jumped to $275.3 million, as it was only $15.3 million in corresponding period of last year.

Direct investment from UK slightly moved up to $166.4 million as against $164.1million of last year. While, it withdrew worth $22.2 million from portfolio investment against withdrawal of $9.5 million in the same period of last year.

FDI inflow from Netherlands increased by 164 percent to $91.1 million against $34.5 million in corresponding period last year. Its portfolio investment decreased considerably to minus 0.9 million as last fiscal it was 24.9 million dollars.

The United Arab Emirates (UAE) portfolio investment doubled to $58 million as against $49.2 million in corresponding period of last year.

It is pertinent to note that by end June 2004-05, total investment inflow had crossed $1.67 billion mark as against $0.921 billion in 2003-04. However, for the current fiscal year there was hope of further improvement in foreign investment, especially with better macro-economic indicators and infrastructure.

The government expects that the foreign investment in Pakistan is likely to cross $4 billion mark by end of this fiscal year. The rising trend of investment inflow since the beginning of this year also endorses the government's claim.

A significant feature of the data was that besides FDI, y-on-y basis inflow of portfolio investment increased enormously. It followed steep path right from the beginning of the new fiscal year.

However, the weak point of the data released by the State Bank was that, this time it has not given month-wise inflow of investment which does not show the extensive trend of the inflows.

Independent experts believe that the current inflow of foreign investment was not satisfactory taking into account the other countries of the region. During the last 15 years, Pakistan attracted nearly $10 billion, whereas it was $1.67 billion in 2004-05.

FDI in India since the onset of the liberalisation process was $36.28 billion (up to November 2005). During 2005-06 (April-November 2005), FDI inflows were $3.36 billion as compared to $2.25 billion during the corresponding period for the previous year.

China's FDI-led growth was a strong indicator where FDI inflows since 1978 totalled over one trillion dollars with $153 billion in 2004 alone.

It is worth mentioning that foreign investors are in direct control of their investment funds, also transfers in the latest technology and modern management practices resulted in economic gains largely from efficient, effective and economic utilisation of the funds.

While the present economic managers boast of over $1 billion FDI during the last fiscal year, the reality is that given the prevalence of poverty and unemployment, this is too negligible an amount to have had a worthwhile impact on our economy.

 

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KARACHI (June 24 2006): The British Deputy High Commission in Karachi has assured its support to the Ecommerce Gateway for the events scheduled for August and September. This was announced by the President of the Ecommerce Gateway Pakistan, Dr Khurshid Nizam, here on Friday.

He said that there will be a British pavilion at the 6th ITCN Asia, third Health Asia, Second Build Asia, Second Food, Agriculture and Livestock Asia 2006 International exhibitions scheduled to be organised in August and September this year by the Ecommerce Gateway Pakistan.

The statement further pointed out that the British Deputy High Commissioner in Karachi, Hamish Daniel, expressed full support to form `British Pavilion' at these events.

He also expressed utmost desire to promote and circulate information of these international exhibitions to potential British entrepreneurs and leading companies through the electronic sales-lead system of British Deputy High Commission (BDHC).

He also assured co-operation with Ecommerce Gateway Pakistan to promote a good image of Pakistan in the international business community to make stronger economic co-operation between Britain and Pakistan.

The authorities in Britain are encouraging companies to increase trade ties with Pakistan, as changing political and economic conditions in Pakistan demand that on merit.

The statement said that the events are being organised in August and September at Karachi Expo Centre by Ecommerce Gateway Pakistan and Jamal's Yellow Pages of Pakistan with the support from Ministry of Privatisation and Investment, Ministry of IT and Telecom, Ministry of Health, Ministry of Housing and Works, Ministry of Communications, Ministry of Food, Agriculture and Livestock and Islamic Chamber of Commerce and Industry.

 

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BEIJING (June 24 2006): A Chinese company has offered to undertake ferry service along 1,100-kilometre-long coastal region in Pakistan, bringing attraction for tourists.

The negotiation to this effect is in progress to operate the ferry service between Jiwani and Gadani, said provincial Minister for Tourism and chief of Gwadar Development Authority Syed Sher Jan Baloch, in an interview with APP here on Friday. The ferry service will provide a link between Karachi and the Gulf region, including Iran.

This project will be highly significant to develop communication network with the Gwadar seaport and generate enormous socio-economic benefits for the local people. The central government, he said, was providing maximum possible financial support to the province, developing the highly rich coastal region.

About the Gwadar seaport, Sher Jan Baloch said that its first phase had almost been completed. It would become fully functional after the inauguration, hopefully within the next three months.

Several countries, including China, the United Arab Emirates (UAE), Saudi Arabia and Singapore had shown interest in the port's operation, he said, adding an oil refinery project at the port's site was also under negotiation with the Chinese government.

The port comprises three berths with lengths of 602-metre, 4.5-kilometre dredged to 11.5-metre to 12.5-metre as well as one 100-metre service birth and related port infrastructure and port handling equipment, including pilot boat, tugs, survey vessel, etc.

The government, he said, also planned to establish a special economic zone to make Gwadar a hub of economic and industrial activities. About the 653-kilometre-long Makran Coastal Highway, he said this project was of great significance that would provide direct approach to Gwadar and other small ports.

The 248-kilometre-long Lyari-Ormara section of the Makran Coastal Highway and the work on Gwadar-Pasni section had also been completed, he added. About the Mirani dam, Sher Jan Baloch said it would be inaugurated for operation by September this year.

To a question regarding the second phase of Gwadar port, he said feasibility work to had already been initiated. To be built on BOO/BOT basis, the estimated cost of the second phase was about 600 million dollars, he said, and added it would comprise nine additional berths, including four container berths, one bulk cargo terminal to handle 10O,000 DWT ships, one grain terminal, one Ro-Ro terminal and two oil terminals to handle 200,000 DWT ships.

He lauded the Chinese support for the development of the coastal region, and said the Chinese engineers and workers were being provided complete security.

The minister said that a small anti-development group in Balochistan had failed to cause any harm to the ongoing projects. The development projects had turned the coastal areas into most prosperous parts in the country.

President Pervez Musharraf and Prime Minister Shaukat Aziz were taking personal interest to remove the economic deprivation and hardship that the people of the province had been facing for the last 57 years, he added.

 

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WASHINGTON, June 23: Pakistan needs to take immediate steps to meet, what some speakers at a seminar in Washington on Friday described as a “looming energy crisis,” but the focus has to be on developing sustainable sources of energy, said Mukhtar Ahmed, energy adviser to the prime minister.

The first session of this day-long seminar on ‘Fuelling the Future: Meeting Pakistan's Energy Needs in the 21st Century” focused on defining the challenges confronting the country.

Mr Ahmed set the agenda for the discussion with a thought-provoking, 30-minute presentation, in which he acknowledged that the country was facing an energy crisis but the government was already taking steps to deal with it.

“Not to react to the crisis situation will be imprudent, but we are also looking at energy sector development on a sustainable basis,” he said.

In the new strategy, he said, the government looks after the policy, the regulatory commission oversees regulation while the private sector is involved in implementation.

Mr Ahmed is in Washington for energy talks with the US administration which begin on Monday. Energy Secretary Samuel Bodman will lead the US side in the talks that follow an initiative announced during President Bush’s visit to Pakistan in March this year.

Responding to a suggestion from one of the speakers at Washington’s Woodrow Wilson Centre, Mr Ahmed said although the country has the world’s 8th largest reserve of coal, most of it was in inaccessible areas and cannot be utilised in the near future, he said.

He said that Pakistan also had the potential to produce hydro energy at a large-scale but political and technical constraints were delaying this as well.

While the country develops these sustainable sources of energy, “there has to be an infusion of imported energy to meet immediate needs,” he added.

Mr Ahmed said that Pakistan was already negotiating various projects with countries like Iran, Turkmenistan and Qatar to import gas and was also looking at the possibility of importing electricity from Central Asia.

The country, he said, was spending a disproportionate amount on importing oil, and “cannot afford to have millions and millions of cars floating around the country.”

Mr Ahmed said that although environmentally benign technology for the production of energy was 20 to 30pc more expensive than regular technology, Pakistan was “actively thinking of going for environment friendly options.”

To ensure transparency, he said, energy sector projects will be run by independent board of directors who would be required to implement transparency mechanism.

Pakistan, he said, was developing wind, bio and solar energy sources and had an active programme for producing wind-powered energy in Sindh.

Shahid Javed Burki, a former finance minister and World Bank official, said he was not sure if the investment needed to implement these projects was available. “With relatively low-level of investment, it will not be possible to generate the kind of resources needed to produce the kind of energy we want to,” he said.

Mr Burki said the government was putting out a passive approach, reacting to the demands generated by a rapidly restructuring economy” rather than working on a sustainable, long-term approach.

Robert Looney of the US Naval Postgraduate School spoke on ‘alternative energy and development scenarios in Pakistan to the year 2035, stressing the importance of scenario planning.

Bikash Pandey of Winrock International spoke on clean energy options for rural Pakistan: Lessons from South Asia, noting that half the country was not linked to the national grid. He underscored the need for developing renewable energy for the rural areas, and urged the government to ensure “equity in access.”

 

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Saturday, June 24, 2006


KARACHI: The country received an all-time high foreign direct investment (FDI) of $3.525 billion up by 201 percent in July-May 2005-06 compared with $1.171 billion received in 11 months of last fiscal.

The FDI received include privatization proceeds of $1.538 billion against the sell-off of government entities, including Pakistan Telecommunication Company (PTCL), Pakistan Steel Mill (PSM) and others.

“Total FDI may touch $3.6 to $3.7 billion by the end of this fiscal,” said Mohammad Sohail, director research and equity at Jahangir Siddiqui and Co. The government has set an FDI target of $4 billion for the next fiscal, he added.

The central bank has received FDI of $3.212 billion in 11 months, while the bourses received portfolio investment of $313 million, data released by the State Bank of Pakistan (SBP) said here on Friday.

The analysts said the government has achieved full year FDI target of $3 billion in the current fiscal and if the privatization of PSO, PPL and other government entities continued in the next fiscal year, the government could achieve $4 billion target easily.

A senior banker said: “The country’s reserve are stuck at $13 billion despite the huge inflows on account of the FDI, privatization proceeds and earthquake relief fund.

“The country received a portfolio investment of $313 million up by 122 percent compared with $141 received in the same period last year. The FDI received from the United Arab Emirates stood at $1.357 billion, including $1.184 billion from the privatization proceeds, United States $451.4 million, Norway $248 million, Switzerland $166.4 million and Saudi Arabia $275 million.

The portfolio investments during the last few months have been on the declining at the local bourses. Investments have been declining since March this year.

“The main reason for the declining portfolio investment is the rising interest rate in the money market globally,” an analyst said.

The investment in the local bourses stood at $293 million from the United States, $58 million from the United Arab Emirates and $33.8 million from Asian countries.

The SBP data shows that most countries pulled back their investment from the local bourses, including the European union, Western Europe, Bahrain, etc.

The local bourses are receiving an average inflow of $40 - $50 million per month, the analyst said.

The country’s reserves now stand at $13.05 billion, equivalent to only three months’ import bills.

The overseas Pakistanis remitted an amount of $3.809 billion to the country during 11 months of the current fiscal.

The country’s trade deficit has gone up to $10.636 billion in the said period of the current fiscal, which is an alarming situation.

 

[sigatoka]

The country’s trade deficit has gone up to $10.636 billion in the said period of the current fiscal, which is an alarming situation.

I wonder what Current account deficit is which is more important statistic than the trade deficit.

 

[Neo]

I wonder what Current account deficit is which is more important statistic than the trade deficit.

Sig,

CAD has been fluctuating between 4-5% for last two years. Its supposed to be around 4.7% now.

Current account deficit may rise to 4.7 percent of GDP

KARACHI (April 20 2006): The country's current account deficit is expected to swell to 4.7 percent of GDP by the end of fiscal year 2005-06. According to State Bank of Pakistan (SBP) Second Quarterly Report for 2005-06, released on Wednesday, although the projected current deficit is not low but is quite sustainable in the short run.

In the longer run, however, large current account deficits cannot be sustained, as that would initiate a vicious circle of debt creation, exchange rate deprecation and inflation, the report noted.

According to the report, the current account deficit posted a deficit of $3.4 billion during July-January 06, worsening sharply from $0.96 billion in corresponding period of last year. More than 80 percent of this $2.4 billion increase in current account deficit stemmed from a steep $2.2 billion Y-o-Y rise in trade deficit during July-January 2006. However, this substantial deterioration of $2.4 billion was more than offset by a significant increase in the capital & financial account surplus, the report added.

The State Bank attributed this sharp deterioration in the current account principally to higher imports-related activities, including an exceptional 31 percent Y-o-Y rise in imports during July-January fiscal year 2006 (based on exchange record), which overshadowed a reasonably strong 13 percent YoY growth in exports and higher import freight payments, which increased the services account deficit.

The growth in imports, and therefore the current account deficit, could not be easily contained. Data suggests that much of the growth in imports comprised capital goods for input for industries, curtailing of which would directly have resulted in significant fall in economic activities, the SBP noted.

Moreover, further growth in imports was inevitable for the developing economy of Pakistan, particularly as it seeks to address infrastructural shortcomings, the report pointed out.

While mentioning that large current account deficit can be sustained in FY 06, the report said that some hard choice would have to be made in future years if it continued to persist.

The SBP suggested that a medium to long term policy options must therefore revolve around reducing the need for imports eg reducing energy imports by promoting energy efficiency and raising domestic production, promoting exports, and attracting non-debt creating flows (eg FDI).

Although the current account deficits could also be financed through a mix of privatisation receipts and higher debt or a draw-down of reserves, but these are less desirable options, it added.

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