Pakistan Economy - News & Updates - Archive

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Rice exports cross $1.18 billion mark in six months​

KARACHI (January 06 2009): Pakistan's rice exports have crossed $1.18 billion mark in the first six months of the current fiscal year. "This is the first time in the country's history that rice exports have crossed $1 billion mark in six months period", Abdul Rahim Janoo, Chairman of Rice Exporters Association of Pakistan (Reap) told Business Recorder on Monday.

He said that this year's total rice exports are expected to exceed the target of $2.30 billion. He said that export of basmati variety would start in March 2009 and it was expected that total rice exports would touch $2.40 billion this year.

He said that rice exporters were receiving attractive orders from various countries for Pakistani rice. "Despite economic crisis and various other difficulties, the country's rice exports are increasing tremendously mainly due to untiring efforts of the private sector", Janoo said. "We are not able to understand why the government wants TCP and Passco to enter the rice trade, when the private sector is doing well in this regard," he added.

He said that it was the private sector that introduced the Pakistani rice in various markets of the world and invested millions of dollars to establish the brands of rice in different markets.

He said that the Rice Exporters Association of Pakistan (Reap) has once again started efforts to capture potential markets to export Pakistani rice. In this regard, Reap has decided to send three delegations to Saudi Arabia, South Africa and Senegal. These delegations will be led by Janoo.

The decision was taken at a meeting of Janoo with Secretary Trade Development Authority of Pakistan (TDAP) Naveed Arif here on Monday. Various issues regarding rice trade were discussed in the meeting. The meeting observed that the country has a bumper rice crop this year with the total production of 6.2 million tons.

The meeting observed that Saudi Arabia is a market of over 9 million tons rice. Some eight years back, Pakistan's share in total rice exports to Saudi Arabia was 54 percent, which has now declined to only eight percent due to various reasons. The meeting noted that the Saudi potential market can be easily re-captured to export Pakistani rice with some efforts.

South Africa is a market of over 10 million tons rice, in which Pakistan's share is only three percent. Naveed Arif suggested that Senegal is also another potential market for Pakistan's Irri broken rice, and Reap should also send its delegation to that country. The meeting decided that Reap will send its delegation to Senegal in March 2009.

Javeed assured the rice exporters that TDAP would provide every possible facility and co-operation to increase Pakistan's rice exports to different markets.

 

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Gilani directs elimination of load shedding by year end ​

ISLAMABAD (January 06, 2009): Prime Minister Syed Yousuf Raza Gilani has directed the Ministry of Petroleum and Natural Resources to arrange uninterrupted supply of oil and gas to the IPPs to ensure optimal supply of power.

He further directed the Ministry of Water and Power to ensure elimination of load shedding by end of this year.

The Prime Minister here on Tuesday was chairing a high level meeting on energy situation and to review the implementation of the decisions taken on January 2 meeting co-chaired by the President and the Prime Minister to address the energy situation in the country.

Gilani emphasized the importance of integrated energy plan so as to meet the future energy needs on sustainable basis.

He also desired to hold a meeting to finalize integrated energy plan.

He further directed that the fast track power projects should be established on priority.

Gilani was informed that during the last three days additional generation of 1800 MW was brought about.

This was due to increased availability of oil and gas and another 1100 MW will be added within this week. Resultantly the power deficit will be further reduced to about 2000 MW.

The Prime Minister was briefed on the financial situation of the power sector.

He directed Ministry of Finance to provide the requisite funds to optimize power generation and ensure payments to the fuel suppliers and IPPs as a special measure despite the financial constraints.

The meeting was attended by Minister for Water and Power Raja Pervez Ashraf, Minister of State for Economic Affairs Hina Rabbani Khar, Adviser to the Prime Minister on Petroleum Dr. Asim Hussain, Adviser to the Prime Minister on Finance Shaukat Tarin, Secretary General to the President Salman Farooqi, Secretary Finance, Secretary Petroleum, Secretary Water and Power, Managing Director PEPCO, Managing Director SNGPL and Managing Director SSGCL.

 

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Power shortfall reduced to 2,200 megawatts a day: minister ​

ISLAMABAD (January 06 2009): The power shortfall, which had surged to 4500 MW, has been reduced to 2200 MW per day after the measures taken on the directives of the President and Prime Minister. Addressing a seminar held on "Public-private partnership and its role in management of water resources" at a local hotel on Monday, Federal Minister for Water and Power Raja Pervez Ashraf said that government had covered the power shortfall of 1500-2000 MW after the measures taken on the direction of the President and Prime Minister.

Executive Director of Infrastructure Management Unit Lieutenant General Muhammad Zubair; Advisor to the Ministry of Water and Power Riaz Ahmad Khan; Project Director/Additional Secretary, Ministry of Water and Power Zarar Aslam, representatives of Asian Development Bank (ADB) and representatives of the World Bank also attended the seminar. The Minister said that the country was currently facing the power shortfall of 2000 to 2200 MW and due to circular debt, the energy crisis had been worsened.

The President and Prime Minister had taken the notice of the energy crisis and hold the meeting on the said issue. He said that the country had faced more power shortfall of 4200 MW in the corresponding period of the last year that was more than the power shortfall prevailing in the current situation.

He urged the people to be patient regarding the load shedding, and said that some times unscheduled load shedding occurred due to some technical problems. He said that Kalabagh dam was the controversial project as three provinces had passed resolutions against its construction.

The government would not initiate such projects that were controversial, he added. He held the former government responsible for the power crisis, as it had not inducted/introduced even a single unit/plant to generate electricity. He said that the situation would start improving after January 31 after the opening of the canals.

"The government is working on some power projects that will result in storing 20 million acre feet water, generating 10,000 MW hydro power," the Minister said. The minister said that the seminar had been arranged with the assistance of Asian Development Bank under the capacity building project. The ADB was a major donor, helping Pakistan in many sectors besides massive support in water and power sectors. He said: "We appreciate the keen interest and support by the ADB in our development efforts."

The minister maintained that the theme of the seminar was Public-Private Partnership (PPP) to meet the financial outlay of the mega water sector projects. "This is an appropriate subject to sensitise both the public and private sectors as how to co1laborate under varying arrangements to meet the dire needs of investment in this sector, " the minister said, adding this was an area which constituted the lifeline of the economic and social needs of the citizens of Pakistan.

The minister noted that whatever the mode of participation whether, the public sector or the private sector taking the lead role, investment was to be brought in these sectors to implement projects of gigantic size, which were so vital for our economy and social uplift of the masses.

"We are not left with any time and space, for allegations and counter allegations as to why we failed to construct large dams and hydropower projects over the past many decades," minister added.

"We must try to pool all resources to move forward for implementation of these vital projects in the shortest possible time," he said, and added that Water and Power Development Authority (Wapda) had done the pioneering work of identifying the potential sites for dams and hydropower projects.

Work on as many as 12 sites to construct dams and hydropower projects could be started in the next five years, he said, and added some very useful projects like Mirani Dam, Sabakzai Dam and Satpara Dam had been recently completed. These dams would address the needs of those isolated areas bringing prosperity to deprived segments of the society.

However, construction of mega dames and hydropower projects to address the needs of the main Indus Basin System was of utmost urgency in view of dwindling per capita water availability, which was as low as 1100 cubic metres almost touching the limits of being a water scarce country, he added.

The Minister said that Mangla Dam raising project was near completion and construction work on Neelum-Jhelum hydropower project had been started. The design and feasibility study of Diamer Basha Dam had been completed and it was now being offered for open international competitive bidding, he said.

 

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Suggestions to overcome gas shortage ​

KARACHI (January 06 2009): Central Chairman All Pakistan CNG Association (APCNGA), M.A. Tariq Kandaan, has urged the government to connect Tal and Bhurburi gas fields with the national gas grid station to overcome gas shortage in the country. Speaking at a meeting of Karachi Chamber of Commerce and Industry (KCCI) on Monday, he said that Tal and Bhurburi gas fields are developed and they can produce more than 3000 MMCFD gas.

However, this resources remained unutilised due to disputes between gas field developers. He said that the government must call a meeting of gas field developers and resolve their disputes so that these resources could be fully utilised. He pointed out that total gas shortage is around 400 MMCFD out of which these two gas fields can meet 300 MMCFD and there would only be a shortage of 100 MMCFD.

Criticising government policy of closing down CNG stations in the country to save gas for industrial, commercial and domestic consumers, he said the closure of CNG stations will make no difference as 70 percent CNG stations are already closed in Punjab due to low gas pressure. He pointed that during the winter season domestic gas consumption increases from 22 percent to 60 percent of the total gas supply every year.

He suggested that a separate gas pipeline should be installed from national gas grid station for Faisalabad textile industry to increase gas pressure. The chairman said that the closure of CNG stations will render more than 400,000 people jobless will shake confidence of investors in government policies, ruin President's Rozgar scheme under which people have purchased CNG auto rickshaws on instalments from the National Bank, and the bank will face serious financial crises due to non payment of instalments by the scheme' beneficiaries. He said CNG policy was framed in 1992 and it was implemented in 1994. In the policy it was decided that there will be a difference of 40 to 50 percent between CNG and petrol prices so that people could start utilising CNG and conserve petrol and save huge foreign exchange.

He said that gas prices were also linked with international oil prices to attract foreign and local investors to invest in gas and oil exploration. When oil prices were increasing in international market gas price was also increased in the country. Now when oil prices have dipped from 147 dollars per barrel to 40 dollars per barrel, gas prices should also be reduced. He said that use of gas should be encouraged as it is environment friendly and helps in reducing environment pollution. He suggested that the government should frame a new gas consumption policy to know what will be its requirements in winter and summer.

President KCCI, Anjum Nisar assured APCNGA members that the chamber would arrange a meeting of the association with advisor to Prime Minister on finance and take up the issue with him to get it resolved. He agreed that once a policy is decided it should be implemented and there should be no change as frequent changes change the confidence of investors. He said that CNG stations should not be closed and they must be allowed to work to their full capacity.

 

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Govt needs $30bn for mega water and power projects​

* Minister says hydro generation to improve by month-end when present canal closure will end​

ISLAMABAD: The government needs an investment of about $30 billion for completion of various mega water sector and hydropower projects that would help in provision of power at affordable prices.

The government resources were limited to match the requirement of such huge investment therefore, soliciting support of the donor agencies, the multinational and the private sector for joint ventures was the only way forward.

Federal Minister for Water and Power Raja Pervaiz Ashraf expressed these views in a seminar on ‘Public-Private Partnership (PPP) and its role in management of water resources’ on Monday.

The PPP was an alternative way of procurement for the public sector involving a medium to long-term relationship between the public and the private sector thereby mobilising private sector capital and management to plan, implement and operate infrastructure projects, he maintained.

The minister said that Mangla Dam raising project was near completion and construction work on Neelum Jhelum hydropower project had been initiated. The design and feasibility study of Diamer Basha Dam had been completed, it was now being offered for open international competitive bidding.

Kurram Tangi Dam construction in southern NWFP was moving forward and after a long turbulent period was proceeding satisfactory. The minister said government had determined to start construction of large and small dams in the country on priority basis. The minister claimed that these dams would make available 18 to 20 MAF additional water to the system, which would generate more than 10,000MW cheap hydropower.

Later talking to journalists, the minister said that country’s hydro generation would improve by end of January when the present canal closure was expected to end. “This is totally a technical matter however, some elements are trying to politicise this issue which is not fair.”

He said as canal closure had taken place, all efforts were underway to compensate for the loss of hydro generation through different means as hydro generation had plummeted sharply due to canal closure and reduction of water releases from Tarbela and Mangla reservoirs.

He said taking notice of increasing power crises in the country the president and prime minister had issued various instructions, which were being followed to improve power situation in the country. He said following the directions additional electricity of 1,500MW to 2,000MW power has been added in the system however, he said still the country was facing power deficit of around 3,000MW.

Replying to a question about construction of Kalabagh Dam, the minister said, “We will not go to constructing any such dam which is controversial and the government is planning several other mega projects in this sector like Diamir-Bhasha Dam.” He said the country was facing acute power shortage due to gap between demand and supply as power consumption was increasing. However, the minister assured that by December 2009 the government would include 3,500MW electricity in the system. He assured that there will be no load shedding after December 2009 and the government would overcome power deficiency.

 

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Gas shortage to worsen as LNG imports not expected before Oct 2011a ​

Wednesday, January 07, 2009

KARACHI: The gas shortfall in Pakistan has widened to 700 million cubic feet per day (mmcfd) and first cargo of imported gas is not expected before October, 2011, parliamentarians and industry officials said on Tuesday.

The gap in supply and demand of country’ main fuel, which meets 49 per cent of its energy needs, will be bridged through LNG imports from Qatar, said Senator Dilawar Abbas, Chairman Senate’s Standing Committee on Petroleum and Natural Resources. “In the first phase, 500mmcfd will be imported, hopefully by October 2011,” he said at a press conference after committee met Sui Southern Gas Company (SSGC) officials. “But that would be like a drop in the ocean considering the severe energy shortage.”

These imports are imperative since gas reserves will start to exhaust in next two years as indigenous production of oil and gas is limited, he said, explaining that another 500mmcfd will be imported in the second phase by 2013. “We came here to see the advancement on the project, which was started three years back. There are some complications in its way and those will be removed,” he said, without specifying the obstacles delaying the project.

He also did not say if second phase of imports will too come from Qatar. But SSGC’s Deputy Managing Director, Azeem Siddiqui, said Shell was one of the two companies interested in the project that can arrange supplies from numerous sources.

The Mashal LNG project, which was started back in 2005, is being facilitated by SSGC. Shell and a consortium of 4gas were two parties short listed for the project. “Pakistan government has issued a letter of support to 4gas after Qatar sought official assurance,” he said, signifying that key details like price of gas remains to be finalised.

He also disclosed that a floating ship will be used for the project opposing to the original plan of constructing a regasification plant and storage facilities on land. “LNG is short around the world. Our main concern should be to secure adequate supplies at reasonable prices,” he said, insisting that project structure was same as was initially determined.

Gas load shedding which hit part of Punjab and NWFP in recent weeks has promoted violent protests by industrial workers and citizens perturbed by incessant power outages as most of the power plants in the country run on gas.

Total production of natural gas is close to 4000mmcfd and mounting deficit in its supply that has now touched 17.5 per cent has made imports imperative, analysts say.

 

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Pakistan can use coal as substitute for gas: expert ​

Wednesday, January 07, 2009

KARACHI: There is an acute gas shortage all over the country besides power, and we have to use our indigenous coal reserves to convert into natural gas to overcome the shortage instead of importing gas at very higher rates.

The natural gas reserves in Pakistan will be exhausted in the next six years against the high demand, while the government claims that reserves are for the next 20 to 25 years, which is not a factual position.

This was stated by alternate energy expert, Manaullah Khan, consultant of an American firm ATCO based in Houston, Texas, USA. Khan these days is working in the Middle East for oil companies.

Natural gas plays an important role in Pakistan’s economy, as it contributes around 50 per cent of the total commercial energy supply in the country.

Pakistan’s total remaining gas reserves are estimated at 29.80 trillion cubic feet (2008) which are adequate for meeting the gas requirement of Pakistan for 6 years at the current rate of production.

The present constrained demand of gas for 2008-09 is 5.28 trillion cubic feet. Pakistan’s gas demand and supply projections indicate a widening gap of approximately 600 MMCFD by the year 2010-11. The gap starts to emerge in 2007-08 and builds up to 1000 MMCFD by 2010-11, as the current gas fields gradually go off plateau.

It should be noted that the present international rate of natural gas is around $6.00 per 1000 cubic feet. When the cost of import plus the cost of transportation and distribution is added, it will cost 5 times higher than the present gas price in the country.

Unless we start using coal directly as a substitute for gas consumption in the power plant and other related industries, we may not be able reduce the growing demand of our natural gas.

Coal gasification and coal-to-liquid are some proven technologies available which can be successfully employed in Pakistan to reduce dependence on imported oil and natural gas.

In addition to coal, there are many waste materials like cow dung, municipal solid waste, industrial waste, rice husk, wheat and rice straw and other composite materials which can be used to produce bio gas, which can be used a substitute of natural gas for winter heating and CNG filling stations for vehicle fuels. If this waste-to-energy technology is adopted in Pakistan on a fast track basis, then the problem of gas shortage can be overcome within a few years.

Coal gasification offers one of the most versatile and cleanest ways to convert the energy content of coal into electricity, hydrogen, and other energy forms.

Rather than burning coal directly, gasification breaks down coal, or virtually any carbon-based feedstock, into its basic chemical constituents.

In a modern gasifier, coal is typically exposed to hot steam and carefully controlled amounts of air or oxygen under high temperatures and pressures. Under these conditions, carbon molecules in coal break apart, setting into motion chemical reactions that typically produce a mixture of carbon monoxide, hydrogen and other gaseous compounds.

Gasification, in fact, may be one of the best ways to produce clean-burning hydrogen for tomorrow’s automobiles and power-generating fuel cells. Hydrogen and other coal gases can also be used to fuel power-generating turbines or as chemical “building blocks” for a wide range of commercial products.

The pioneering coal gasification electric power plants are now operating commercially in the United States and in other nations, and many experts predict that coal gasification will be at the heart of future generations of clean coal technology plants for several decades into the future.

A coal gasification power plant, however, typically gets dual duty from the gases it produces. First, the coal gases, cleaned of their impurities, are fired in a gas turbine, much like natural gas, to generate one source of electricity. The hot exhaust of the gas turbine is then used to generate steam for a more conventional steam turbine-generator. This dual source of electric power, called a “combined cycle,” converts much more of coal’s inherent energy value into useable electricity. The fuel efficiency of a coal gasification power plant can be boosted to 50 per cent or more.

As early as the 1890s, lamplighters once made their rounds down the streets of many of America’s largest cities lighting street lights’ fuel with “town gas,” the product of early and relatively crude forms of coal gasification (town gas is still used extensively in some parts of the world, such as China and other Asian countries). Once the vast fields of natural gas were discovered and pipelines were built to transport the gas to consumers in the 1940s and 50s, the use of town gas phased out.

Coal gasification-based power concepts got their biggest boost in the 1990s when the US Department of Energy’s Clean Coal Technology Programme provided federal cost-sharing for the first true commercial-scale IGCC plants in the United States. Pakistan must take a similar initiative if it wants to solve the energy shortage problem.

Coal plays a major part in the world’s energy system and hence in global economic and social development. Coal currently supplies over 38 per cent of the world’s electricity and 23 per cent of global primary energy needs. Coal-fired electricity drives the economies of the two most populous and fastest growing countries in the world today, China and India, as well as a number of key industrial economies, such as the USA and Germany. Coal consumption is expected to grow by around 1.4 per cent per year over the next thirty years.

Another important local fuel which can be used is fuel grade ethanol which is a by-product of sugar mills. Brazil, India and other countries are using 20 to 30 per cent fuel grade ethanol with petrol to reduce the dependence of important fuel.

If we reduce the cost of petrol by using fuel grade ethanol, then it will reduce the use of CNG in motor vehicles. The cost of production of fuel grade ethanol can be reduced by using bio gas as fuel in place of natural gas or fuel in their boilers. The bio gas can be produced from the process waste of fuel grade ethanol plant, thereby reducing the cost of production.

 

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MoF revises GDP growth at 3.4 percent​

ISLAMABAD: Given the domestic and international economic pressures the Gross Domestic Product (GDP) growth has been envisaged at 3.4 percent against the budgetary target of 5.5 percent and downward revised projection of 3.5 percent, according to a economic analysis prepared in the Ministry of Finance.

3.4 percent GDP growth is to be contributed by sectoral growth rate of agriculture 3 percent, manufacturing 1.5 percent and services sector by 4.2 percent in 2008-09.

According to the analysis, Pakistan is facing mounting pressure from ever rising inflation, food prices, acute power shortages, bewildering stock market, perceptible slowdown in manufacturing and services sectors and a sharp increase in interest rates and widening current account deficit.

External Sector: Country’s exports staged a recovery by 11.8 percent in July-November with $1 billion addition in exports compared with last fiscal. Imports added $2.7 billion more with a growth of 21.6 percent in Jul-Nov. Merchandise trade balance widened to $6.6 billion with a growth of 37.3 percent. Workers remittances totaled at $3 billion in Jul-Nov as compared with $2.6 billion last fiscal.

Current Account Deficit: Current account deficit expanded by 44.5 percent in Jul-Nov, which amounted to $6.9 billion against $4.7 billion last fiscal.

Exchange Rate: After remaining stable for more than 4 years, Rupee lost significant value against US dollar and depreciated by 21 percent during March-November 2008. It is expected that with increased inflows from abroad the exchange rate will remain stable.

External Debt Liabilities: EDLs as compared with foreign exchange earnings of the country decreased 125.3 percent to 112.2 percent. EDLs as percentage of GDP increased from 27.6 percent in end June 2008 to 27.9 percent by end September.

Domestic Debt: Domestic debt witnessed an increase of Rs 248.5 billion in first quarter and stock stood at Rs 3465.7 billion by end September. This implies an increase of 7.7 percent in debt stock in one quarter, however, in percentage of GDP domestic debt has declined from 30.7 percent to 25.9 percent.

Foreign Direct Investment: FDI has reached $1.602 billion in Jul-Nov 2008 as compared with $1.712 billion same period last fiscal depicting a decline of 6.4 percent.

Foreign Exchange Reserves: Reserves, which were $11.4 billion at end June 2008 declined to $6.4 billion by November 25, 2008. With the addition of $3.1 billion IMF package, import coverage ratio that declined to uncomfortable level of 9.1 weeks by end of October 2008 improved to 12.3 weeks by end November 2008.

Fiscal Policy: The faster growth of 23.1 percent in total revenues is more than off-set by even faster growth of 25.5 percent in current expenditures. Despite decline in fiscal deficit in first quarter, the growth in domestic debt accelerated reflecting non-availability of finances through external resources. The stock of domestic debt grew by 6.3 percent since beginning of the fiscal year as against the growth of 4.6 percent same period last fiscal. The financing patterns of fiscal deficit remained dominated by the banking system, which financed 75 percent of the fiscal deficit and only 25 percent through non-bank sources.

Tax Revenues: Some Rs 543.3 billion taxes were collected during the first half (July-December) of the current fiscal year 2008-09 as compared to the Rs 431.1 billion in the same period last fiscal year 2007-08 showing a growth of 24.9 percent.

Monetary Policy: The SBP has kept its tight monetary policy stance in July-November period and policy rate was adjusted upwards to shave off some aggregate demand from the economy.

Money Supply (M2) contracted by 0.2 percent against the target of expansion of 10.6 percent for the year. Net Domestic Assets (NDA) have increased by Rs 345.5 billion as compared with increase of Rs 264 billion in last year, projecting an increase of 8.6 percent.

Net Foreign Assets (NFA) recorded a contraction of Rs 356.3 billion as against contraction of Rs 102.1 billion in comparable period last fiscal year. Credit to private sector witnessed an increase of Rs 145.9 billion in Jul-Nov as compared to Rs 133.9 billion in same period last fiscal year. Weighted average lending rates and deposit rates increased to 15.1 percent and 9.5 percent respectively by October 2008 while weighted average yield on 6-months t-bills increased to 14.2 percent in October.

Agriculture: The agriculture has been facing acute shortage 32 to 39 percent of irrigation water and sugarcane crop is estimated to fall short of the target, however, rice and cotton yield is expected to be higher than target. Wheat is expected to record highest ever harvest in 2008-09.

Services Sector: This sector has exhibited resilience to fluctuation in the economic activity and Foreign Direct Investment in services sector increased by 2.5 percent in first quarter (Jul-Sep) period of 2008-09.

Inflation: In sheer contrast to significant abatement in the inflationary pressures across the globe, the inflation rate as measured by changes in consumer price index (CPI) stood at 24.6 percent during July-November as against 7.9 percent in comparable period last fiscal year.

 

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Gilani orders uninterrupted gas and oil supply to IPPs ​

ISLAMABAD (January 07 2009): Prime Minister Syed Yusuf Raza Gilani has directed the Ministry of Petroleum and Natural Resources to arrange uninterrupted supply of oil and gas to the IPPs for optimal supply of power. He was chairing a high level meeting here Tuesday on energy situation and to review implementation of the decisions taken in the earlier meeting held with President Asif Ali Zardari on January 02.

This is the second high level meeting within a week to resolve the power crisis that has led to riots and protests in different parts of the country. Gilani directed the Water and Power ministry to ensure elimination of load-shedding by the end of this year and underlined the need of an integrated energy plan to meet the future energy needs on sustainable basis. The Prime Minister said that the fast track power projects both solicited and unsolicited should be established on priority.

The meeting was informed that during the last three days additional generation of 1800MW at peak was brought about. This was due to increased availability of oil and gas and that the generation of another 1100MW will be added within this week. Resultantly the deficit of power will be further reduced to about 2000MW.

The Prime Minister was briefed on the financial situation of the power sector. He directed Ministry of Finance to provide the requisite funds to optimise power generation and ensure payments to the fuel suppliers and IPPs as a special measure despite the financial constraints.

Those who attended the meeting included Minister for Water and Power Raja Pervez Ashraf, Minister of State for Economic Affairs Hina Rabbani Khar, Adviser to the Prime Minister on Petroleum Dr Asim Hussain, Adviser to the Prime Minister on Finance Shaukat Tarin, Secretary General to the President Salman Farooqi, Secretary Finance, Secretary Petroleum, Secretary Water and Power, Managing Director, Pepco, Managing Director SNGPL and Managing Director SSGCL.

 

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India takes steps to curb cement import from Pakistan ​

KARACHI (January 07 2009): The Indian government has imposed some 12 per cent duties on cement import, which a primary aim to curb cement import from Pakistan, industry sources said. Sources told Business Recorder that the Indian government for the last one-month had been taking measures to reduce cement import, particularly from Pakistan.

In a such move, it reduced excise duty on the domestically manufactured cement by Indian rupees 8 per bag on December 8, 2008 to enable the local product compete the imported cement. Although the Indian government has imposed duty on import of several items, the duty on cement imports is seen as a deliberate hedge against the Pakistani cement flooding its markets.

"India has restored certain duties on import of cement, such as TMT bars, zinc and Ferro-alloys, which were removed earlier to overcome inflation. It claims that the duties have been restored only to protect domestic companies," they added.

Indian government imposed eight per cent countervailing duty and four per cent customs duty on import of cement, which is largely imported from Pakistan. Sources said that Pakistani exporters were exporting cement to India at lowest cost and with the imposition of cumulatively 12 per cent duties on cement export to Indian will become inviable.

The newly imposed duty is some eight per cent higher than the previous one, as earlier only four per cent import duty was on cement import, which has been removed on April 3, 2007 to fulfil local demand through import from neighbouring countries including Pakistan.

Sources said that Pakistani cement exporters are already paying some Indian Rs 2 per tonnes BIS fees on the export of cement and at present some 12 Pakistani cement manufacturers were exporting cement to India. With recent duties, Pakistani cement price in the Indian markets will surge by Indian Rs 24 per bag to Rs 220-230.

Whereas, the locally produced cement is already available at Indian Rs 220-230 per bag. Earlier, Pakistani cement was available at Indian Rs 210-215 per bag, they added. At present India is facing enormous cement shortage, which has provided a huge advantage to Pakistani cement companies to export in bulk with large buying orders in hands, they said.

According to the statistics of All Pakistan Cement Manufacturers Association (APCMA), the country has exported 786,672 tonnes of cement to the India during the last fiscal year.

Until now, cement export to India was gradually increasing with a growth of some 206 per cent during the first four months of current fiscal year 2008-09. Pakistan has exported some 294,120 tonnes of cement during July-November 2009 as compared to some 96,236 tonnes in the same period of the last fiscal year 2008, showing a rise of 197,884 tonnes.

Pakistani exporters explored the Indian market in 2007 and met all conditions to begin export cement to India. However, later Pakistani exporters found difficulties of quality certification, a primary condition the Indian authorities laid down, which they consequently obtained from Bureau of Indian Standard by paying huge fee.

 

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Foreign real estate projects in Pakistan feel the heat of the UAE market downfall ​

Thursday, January 08, 2009

KARACHI: The super-luxurious residential and commercial projects that had been initiated by foreign developers of United Arab Emirates (UAE) are rumored to be under a cloud as the construction work on some such projects had to be rescheduled following the impact on the real estate crises in the region. But the Gulf builders contend that everything is on track and their project will proceed as per plan.

While the local real estate market is booming with the popularity of small housing projects initiated by local developers, investors in projects by property giants like Emaar Pakistan Pvt Ltd and Al Ghurair Giga Pakistan Pvt Ltd are worried about the status of their investments in both Islamabad and Karachi.

One investor, requesting to remain anonymous shared that he had repeatedly visited the project site, only to see “barren land with a lot of machinery and work force carrying out tasks at a snail’s pace. I have repeatedly inquired on the status of the venture and I am always assured that it would be completed on time. But I fail to understand how they would manage when my eyes tell me otherwise,” he expressed.

On the other hand, an insider of the real estate industry informed that the UAE market is predicted to slump further and this will impact local projects taken up by these Gulf-based giants. He said “more projects would be cancelled and abandoned in the months to come and these are directly going to affect the projects in Pakistan too.”

Referring to the UAE market, the source further stated that Emaar requires billions of Dirhams to complete their existing projects which they had planned to borrow from Abu Dhabi who have in turn asked for shares in the Emaar projects instead.

“Similarly, other big developers such as Nakheel, Damac and Ruwad have laid off staff in massive numbers while shares of the real estate sector of UAE have plunged from as high as Dhs11 per share to a mere Dhs3 per share,” he informed.

“The UAE developers that are here have been rumored to be planning to also lay off people or worse abandon projects and flee with the investors’ money” he continued. “The best bet in these times is caution, as the market is highly speculative right now.”

When The News contacted Chief Executive Officer of Emaar Pakistan, Dr Dia Malaeb, he denied any such news and said that they continue to believe in the Pakistani real estate market’s potential as the global financial meltdown had not affected this country as severely as the UAE market. He said that the projects that had already been launched would go ahead as planned and Emaar Pakistan would ensure that they are delivered to their investors on time and according to their agenda.

Malaeb informed that their project Canyon Views in Islamabad is all set to be handed over to its investors in a few months’ time, whereas the work on The Highlands, also in Islamabad and Crescent Bay in Karachi continues to be completed as per the schedule.

However, the CEO did say that their sales were affected slightly and some new projects that they had been planning to introduce in Pakistan in Karachi, Lahore and Islamabad have been put on hold for the time being.

Malaeb expressed that these new projects may now be launched by the 2nd quarter of this year and have in no way been abandoned. “We are studying the market for our other projects and would launch them when the time is right,” he said.

Al Ghurair Giga Pakistan Pvt Ltd, on the other hand, when contacted, commented that they were an independent private limited company and therefore they were not answerable to their parent company in the UAE, and hence, did not have to follow any orders from them either.

They said that some rescheduling had been done as they had indeed been affected by the Gulf situation. However, they said that they were in no way abandoning their projects as they were “in earnest” over their projects in Pakistan.

The representative of Al Ghurair Giga further stated that since they had been officially granted the license for the World Trade Center to be constructed in Islamabad, they “had to deliver as there was much at stake.”

“Adjustments are made according to the economic situation, be it increasing prices or the global recession but we take everything in our stride optimistically. In fact, we actually benefited from the real estate recession in the UAE as local investors came back into the country and invested in our local ventures and therefore we gained more than we lost,” the representative said.

 

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Friends of Pakistan term $60bn requirement for development projects a ‘wish list’ ​

Thursday, January 08, 2009

ISLAMABAD: Many developed countries in the Friends of Pakistan (FOP)
forum have termed Pakistan’s request for obtaining $60 billion financing for 71 development projects as a “wish list” or a “long shopping list”, recommending that each donor country may be assigned one or two projects so that some concrete commitment is obtained.

When contacted, Federal Finance Secretary, Dr Waqar Masood, told The News on Wednesday that the next expert level meeting of the FOP, which was scheduled to be held by January 13, 2009, was delayed till the third week of January.

It is relevant to mention here that Islamabad will have to deliberate upon its strategy keeping in view the received feedback from donors’ capitals in order to fine tune its future course of action.

A detailed feedback obtained by Pakistan’s Foreign Office as well as Economic Ministries in the aftermath of the last FOP meeting held on November 17, 2008 at Abu Dhabi spells out in details the prevailing thinking of the developed world, which clearly states that if Islamabad did not prioritise its list, the member countries would remain non-committal to come forward to undertake these projects owing to the worldwide financial crisis, the burn of which was being felt by all the developed countries.

The donors are also suggesting Pakistan formulate short term, medium term and long term strategies in accordance with the importance of each projects. The best way should be to adopt an incremental approach because it would not be possible for the member countries to commit everything on the long demand list immediately.

Official documents exclusively available with The News state that the donor countries appreciated these efforts for undertaking this initiative in order to meet two major challenges which Pakistan is confronting, namely security issues and economic crisis.

The participants, according to the feedback, supported the ideas and plans of the Government of Pakistan. The success of this will now depend upon the hot pursuit by Pakistan.

The donor countries also raised objections on duplication of work, saying that the Friends of Pakistan and Pakistan Development Forum (PDF) are more or less the same.

The donor countries in PDF are also similar so either these two forums should be merged together or the existing PDF should be reactivated. “The PDF meetings are an annual event but no such meetings have taken place for the last two years,” the donors’ response further stated.

The bilateral donors also asked Islamabad to utilise the expertise of international financial institutions (IFIs) such as the IMF, WB and ADB. “Therefore, it was recommended that the WB may be invited in the next Experts Level Meetings to be held in January 2009,” they added.

The donors also proposed to Islamabad to establish a FATA Trust Fund under the umbrella of the World Bank so that necessary trust and confidence of members is strengthened. It was also suggested that each component of FATA Development Program such as construction, publication and distribution of books and training of teachers may be assigned to each country separately for effective implementation.

It was pointed out that since Pakistan needs long term development assistance, it is necessary to highlight the economic, political and administrative constraints for devising strategies. “There is no credible data or any necessary factsheet available for the international community on Pakistan’s economic situation,” they added.

The donor countries during the meeting were not briefed about the possible impact of the IMF program on the economy and its impact on the general masses of Pakistan. “Pakistan may request the IMF to circulate amongst all concerned countries, the necessary data and factsheet about the country, highlighting the likely impact of the IMF package on the overall economy of Pakistan. The report may also recommend additional funding to Pakistan,” it stated.

The donors are also stressing upon Pakistan to establish a close collaboration between USA and itself in all areas of mutual interest. The lukewarm attitude of USA would make other member countries of the FOP give a cold shoulder to Pakistan’s economic assistance requirements, they concluded.

 

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Govt plans 16 projects for generating 25,270MW power​

ISLAMABAD: In order to boost the GDP growth to 8 percent in the medium term, the government has planned 16 hydropower projects worth $46.2 billion, which would be completed by 2016, sources in the Ministry of Water and Power told Daily Times.

After completion of all these projects the government would be able to generate 25,270MW power. Some of these projects like Diamer-Basha dam, Golen Gol dam are ready for construction while the remaining 14 are still under consideration by Water and Power Development Authority (WAPDA).

The sources claimed that after completion of these projects, the government would be able to provide power a affordable prices to general consumers as compared to expensive electricity produced by thermal and gas.

Cumulatively, the cost of these 16 hydropower projects will be $46.2 billion and these projects would be completed till 2016. The sources informed that around seven projects would be completed in next five years (2009-2013) and would generate about 20,000 MW power. These projects are: Diamer Basha Dam, Golen Gol, Kohala, Dasu Buinji, Munda Pattan and some others.

These 16 projects are: Diamer-Basha Dam with cost of $12.6 billion and installed capacity 4500MW, Golen Gol with cost of $130 million and installed capacity of 106MW. The remaining under study projects are: Palas Valley with cost of $700 million and installed capacity of 621MW, Spat Gah with cost of $700 million and installed capacity 610MW, Kohala dam with cost of 2.16 billion and installed capacity 1100MW.

Dasu dam with total installed capacity of 4000 MW, Bunji hydro-project with cost of $6.5 billion and installed capacity 5400MW, Phandar project with total cost of $6 billion and installed capacity 80MW, Basho with cost of $65 million and installed capacity 28MW, Keyal Khwar hydro project with cost of $30 million and installed capacity 122MW, Lawi project on river Shishi with cost of $160 million with installed capacity 70MW. Others hyro power projects are: Harpo project with cost of $40 million and installed capacity 33MW, Thakot HPP on river Indus at Thakot with cost of $5 billion and installed capacity 2800MW, Pattan project with total installed capacity 2800MW, Yulb project on river Indus at Skardu with total cost of $6 billion and installed capacity 3000MW and the last project is Yugo on river Shyok at Skardu with total cost of $1 billion and installed capacity 600MW.

Sources said that land and water resources could assure water supply for irrigated agriculture development for ensuring food security of ever increasing population. It would also assure energy supply for industry at cheaper rates. The water resources could also assure flood mitigation to avoid huge flood losses during flood seasons. Proper utilisation of water resources can help in poverty alleviation and improvement in the standard of living.

If these projects were not properly funded, the country would confront severe economic consequences. Scarcity of public sector funding would delay development of water resources, which would delay benefits of the projects to the project area's population. The delay would also enhance food and energy crisis, increase unemployment along with dilapidation of socio economic conditions and living standards.

For achieving objectives of development of water projects, the sources said, private investment could be attracted. The problem with the private investors is that they are only interested in development of lucrative components of the project, the sources added. Thus it is feared that full potential of the project might be left undeveloped and cause loss to the nation.

 

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Pakistan likely to get massive help from Friends this month​

* Govt likely to revise proposals’ list
* Finance Ministry calls for more access to markets​

ISLAMABAD: Donor and friendly countries are expected to lend maximum financial and technical assistance to Pakistan at the Donors’ Conference on Pakistan and a meeting of the Friends of Pakistan (FoP) forum in Washington towards the end of this month, official sources said.

Keeping the keenness of donor countries in view, the government was revising its list of projects that require international assistance, they said.

Projects: The sources said many new projects were likely to be added to a proposed list, which includes those aimed at enhancing the capacity of troops and law enforcement agencies in the war against terror.

The government had earlier tabled ventures worth $60 billion in the FoP’s last meeting in Abu Dhabi on November 17 last year, however, after the donors’ feedback, the list was being amended, they said.

The government had directed various ministries for reviewing their proposals, and a recent high-level meeting at the Presidency evaluated the changes in the projects’ list, especially those forwarded by the Interior Ministry, they added.

The Donors’ Conference, which was to be held in Beijing earlier, will include participants from international financial institutions and development funds operated by various affluent nations.

The meeting of the FoP was also rescheduled for the month’s end due to unexplained reasons, the sources said.

Access: However, they said, the Finance Ministry wanted more access to markets in the developed countries instead of financial assistance for government projects.

It said market access through free trade agreements with the United States and the European Union would benefit the country more, the sources said.

They said the names of the leaders who would represent the country in the two meetings would also be announced soon.

Following the FoP’s first meeting in Abu Dhabi, Pakistan’s Additional Foreign Secretary for South Asia Aizaz Ahmad Chaudhry had termed the meeting successful. ‘People are interested in finding ways to help,’ he had said, adding the gathering had ‘put together a framework’ for cooperation in the fields of development, security, energy and institution building.

But Pakistan’s Ambassador At Large Javaid Malik had said the FoP “is not a donors’ club meeting, this is for galvanising broader support to Pakistan”. The forum’s last meeting had deliberated upon building institutions in Pakistan, supporting the democratic government and battling extremism.

 

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British MPs express confidence over Pakistan's investment policy ​

ISLAMABAD (January 08 2009): British Parliamentarians on Tuesday expressed confidence over Pak investment policy and assured their full support in gaining the confidence of foreign investors. Salim Mandviwala, Minister of State for Investment & Chairman Board of Investment briefed the delegation led by Pakistan's ambassador at large, Javed Malik about the investment policy of Pakistan and the ongoing projects.

The parliamentarians included James Devine, Mark Fisher, James McGovern and Mohammad Sarwar. Mohammad Sarwar, first Muslim parliamentarian of UK said that overseas Pakistanis were very important in bringing more foreign investment into Pakistan. He stressed the need to focus on them to boost foreign investment in the country.

Mandviwala said Pakistan wanted to boost good investment relations with UK and EU states. He said Pakistani businessmen needed more market access to UK and EU countries. James McGovern said he was impressed of the growth and development of Pakistan and assured UK government's full co-operation to improve Pakistan's image abroad.

Meanwhile, the visiting delegation also visited Nadra headquarters and praised the efforts being made for transparency in Benazir Income Support Programme (BISP). Nadra Deputy Chairman Tariq Malik briefed the delegation about the functioning of the institution.

They appreciated the efforts of the government for transparent documentation of the data of every Pakistani. Javed Malik said the event was part of public diplomacy initiatives being launched at the Foreign Office with a view to galvanising the support for Pakistan. On behalf of British delegation, Muhammad Sarwar thanked the government for taking the initiative to reach out to the world community.