Pakistan Economy - News & Updates - Archive
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KARACHI (March 16 2009): Domestic debts surged by 10 percent to the record level of Rs 3.6071 trillion during seven months of the current fiscal year, from Rs 3.2661 trillion on June 30, 2008, due to a significant rise in fiscal deficit and slow foreign inflows.
The slow inflows on the back of slow privatisation process during the past one-and-a-half years and less than target revenue collection compelled the government to borrow more from the domestic market, economists said.
The rising fiscal deficit and high current expenditure also raised the government reliance on domestic debts as well as external debts to meet its financial requirements, they added.
The State Bank of Pakistan has said that the countrys overall stocks of domestic debts, including permanent debt, floating debt, and un-funded debt, have registered a growth of 10.44 percent during seven months of the current fiscal year.
With this upsurge, the outstanding amount of overall domestic debts mounted to a new peak of Rs 3.6071 trillion by the end of January 2009 as compared to Rs 3.2661 trillion as on June 30, 2008, depicting an increase of Rs 341 billion in July-January of 2008-09. Major increase was witnessed in the floating and un-funded debt, which amounted to 16 percent and 7.14 percent, respectively, while the permanent debt showed a less rise of 0.11 percent during this period.
Tremendous rise in overall debt stocks was driven by the healthy growth in the floating debt category, which includes three months treasury bills, market treasury bills and MTBs for replenishment.
The floating debt went up by Rs 267.3 billion during July-January as compared to Rs 235 billion in the same period of last fiscal year. The floating debts stocks touched the peak level of Rs 1.9047 trillion by the end of January 2009, from Rs 1.6374 trillion in June 2008. However, outright sale of MTBs to the commercial banks was not included in the stocks of floating debts.
Permanent debts, which include market loan, federal government bond, income tax bond, etc, went up by Rs 0.7 billion, to Rs 609.1 billion in January 2009 from Rs 608.4 billion in June 2008.
Un-funded debt, based on national saving, rose by Rs 72.9 billion to Rs 1.0933 trillion in January 2009 from Rs 1.0204 trillion in June 2008. "Higher fiscal deficit and low privatisation process pushed the domestic outstanding during seven months," economists said.
They said that presently the government was also increasing its borrowing from the saving schemes, as a result of which the overall stocks of un-funded debts were likely to further increase in the near future.
KARACHI (March 16 2009): The governments blockade of highways to foil lawyers attempt to march on Islamabad and stage sit-in on Constitutional Avenue for reinstatement of deposed judges caused billions of rupee losses to the national exchequer for all exports and imports activities scaled down during the last six days.
Long queues of containers of imported goods are waiting for transportation at Port Qasim and Karachi Port Trust (KPT) for last six days but hauliers are reluctant to transport these because of governments hostile maneuver.
Similarly, a large number of loaded and unloaded trucks, trailers are forcibly being used as road barriers by the law enforcers to block major highways aimed at containing lawyers convoys to reach Islamabad. When contacted President Karachi Goods Carriers Association (KGCA) , Noor Khan Niazi said that some 6000 trucks and trailers, containing goods for domestic consumption, exports, imports and raw material, have forcibly been detained to stymie the lawyers long march.
He said the loaded and unloaded vehicles have mostly been parked at Sukkar, Lodrah, Khanewal, Obaro, Parnawal, Rawaat and Texila. To a question, Niazi said that association has sent a complaint letter to Syed Qaim Ali Shah, chief minister, Sindh and has asked for intervention. But he said the provincial government has so far not responded positively hence transporters are reluctant to take goods to the Punjab.
He urged the government to provide security to the carriers in case of any untoward situation, saying that transporters are still deprived of getting compensation to their losses during December 27, 2008 pandemonium.
He expressed fear of commodity shortage and delay in the export consignments and added that the export shipments could be delayed, if impounded containers were not release. He said the country is passing through severe political and economic crisis, hence the association has called off its strike because it would further deepen the crisis.
KARACHI (March 16 2009): According to March 13 update of the State Bank of Pakistan, monetary accounts of the country showed an overall increase of over two percentage points (2.26 percentage points, to be exact) for the first time in the fiscal year FY09 on February 28 compared with an increase of only 1.48 percentage points on 21st February 2009.
The increase of about 0.8 percentage points in the countrys money supply (or Rs 36.2 billion) during the week was ascribed to a major increase in NDA of the banking system (which amounted to some Rs 26.7 billion, mainly representing a major reduction in the liability build-up under the systems OINs and a modest increase in the private sector credit) and an improvement in its NFA (which amounted to some Rs 9.5 billion). Incremental money supply, during the year so far, thus reached Rs 105.8 billion on February 28, 2009.
Composition of incremental money supply of Rs 36.2 billion during the week indicated that the entire increase occurred in deposit money (up Rs 47.8 billion, though compared with end-June 2008 still indicating a decline of Rs 43.6 billion) as currency in circulation actually declined (down Rs 11.7 billion) to Rs149.4 billion.
According to details, NDA of the banking system during the week surged by Rs 26.7 billion and comprised of a major reduction in net other liabilities of the system (which worked out to Rs 18.9 billion to minus Rs 160.7 billion on 28th February), an increase of Rs 6.1 billion in non-government borrowing (private sector up about Rs 4 billion, public sector enterprises (PSEs) up over Rs 2 billion) and an increase of Rs 1.7 billion in government borrowing (budgetary borrowing up Rs 0.7 billion to Rs 362.4 billion, government commodity operations up Rs 1 billion to Rs 13.3 billion).
In the comparable period last year, non-government borrowing had amounted to Rs 320.5 billion, divided in main among private sector (Rs 289.3 billion) and PSEs (Rs 31.6 billion), while government borrowing amounted to Rs 287.6 billion, shared between budgetary borrowing (Rs 306.4 billion) and commodity operations (minus Rs 18.2 billion).
Minor developments also occurred under other credit heads in both government and non-government sectors. Within budgetary borrowing, of total of Rs 362.4 billion borrowed so far during the year, Rs 299.6 billion were accounted for by indebtedness to the State Bank, while the remaining about Rs 62.9 billion were owed to the scheduled banks. The respective totals in the corresponding period last year were Rs 306.4 billion, Rs 359.3 billion (SBP) and minus Rs 52.9 billion (scheduled banks). From inflation point of view, composition of budgetary borrowing between the central bank and commercial banks is relatively healthier during the current year than in the previous year though considerable scope exits to achieve a still better composition.
According to other details, NFA of the banking system improved by Rs 9.5 billion from minus Rs 311.7 billion on 21st February to minus Rs 302.2 billion on 28th February 2009.
The detailed consolidation of the accounts of the State Bank of Pakistan showed that the entire improvement occurred in the balances held by the scheduled banks as balances held by the State Bank in fact declined by over Rs 3 billion.
In the meanwhile, the countrys liquid foreign exchange reserves, which declined to $10,166.0 million (SBP $6,734.3 million and Scheduled Banks $3,431.7 million) on February 20, continued declining in the subsequent weeks reaching $10,138.3 million (SBP $6,687.1 million and scheduled banks $3,451.2 million) on 27th February, and further to $10,052.6 million (SBP $6,613.0 million, scheduled banks $3,439.6 million) on 6th March 2009.
Following the trend in liquid foreign exchange reserves, weighted average customer exchange rate, which deteriorated to Rs 79.8511 and Rs 80.0345 for buying and selling on 3rd March, suffered further losses and stood at Rs 80.4924 and Rs 80.6796 on 7th March and Rs 80.3108 and Rs 80.4980 respectively on March 14, 2009.
SIALKOT (March 16 2009): Business activities have come to a standstill due to the recurrent public meetings, crackdown and lawyers rallies in this export-oriented and nucleus of cottage industry of the country, Multan. President Sialkot Chamber of Commerce and Industry (SCCI) Hassan Ali Bhatti said on Sunday that according to a rough estimate Multan has faced losses amounting to Rs 20 billion so far due to the long march and political tussle.
The exporters community of Sialkot despite various problems was struggling for fetching maximum foreign exchange for the country and we will continue the fight for strengthening the national exchequer, he further said. Sialkot which is known all over the world for exports of sports goods, surgical instruments, leather products, gloves of all sorts, sportswear, badges, musical instruments and martial uniforms and accessories through the city is earning one billion dollars, was suffering adversely due to the current upheaval in the country.
Bhatti added that business community particularly exporters of the area were facing multiple crisis due to the blockage of highways and seizing of containers loaded with exportable consignments which would delay the delivery of consignments at their ultimate destination.
SCCI President further said exporter community was making its hectic efforts for restoring the confidence of their annoyed foreign buyers because during past months exporters were unable to accomplish the foreign orders on time due to the prices of petroleum and load shedding of electricity and gas.
Hassan Bhatti said under the prevailing situation the exporters were paying 10 to 20 percent of the expenditures from its own packet for fulfilment of the international commitments, adding that how long the business community would spend from its pocket for handling foreign orders.
KARACHI (March 16 2009): : The $600 million Bus Rapid Transit System (BRTS) project of City District Government Karachi (CDGK) is in doldrums due to a lingering dispute between the provincial and city governments on the domain of the important infrastructure development project.
According to CDGK sources the city government was to launch the project at least four years back in 2006 in collaboration with Asian Development Bank (ADB), which was to add $450 million to the $150 million funds allocated locally.
But, they said, Sindh Government had objected the supervision of the project by city government and wanted to get the project under the Sindh Mass Transit Authority (SMTA) despite the fact that Karachi Mass Transit Cell (KMTC) of CDGK had completed feasibility study of the project. They said the programme fate was hanging in balance since ADB had decided to change its decision of investing on such a project after the provincial government decided to take the programme into its hand and it remained as a disputed project.
The recent visit of Mass Transit Cell of CDGKs officials to Islamabad to further motivate the high ups in the government also failed to produce desired results, as the government did not show any interest to ponder over the issue.
The unnecessary interruption of Sindh Government as it has did not carry out study of the project, has stopped the project at such a time when every thing was to complete within months, they added.
They said, "the most unfortunate thing is the lack of consensus, between the two governments, which led the ADB to withdraw its investment on such a project of public importance." ADB Karachi Mega City Sustainable Development Project (KMCSDP) Program, the BRTS, was major project that aims to provide people transport services of the same quality that is available in Western countries. The project encompasses the construction of 11 corridors, which will be built in the four phases.
It is to mention here that in July 2008,on the request of Government of Pakistan, ADB had agreed for funding to the project of urban transport. The urban transport programme cost was $400-450 million including the sub-projects of Development of BRT System for the city, modernisation, linkage of Traffic Signal & Traffic Management System, light rail transit (LRT) preparatory study
Subsequently ADB had fielded a consultation mission to Pakistan from 10-14th November 2008 to finalise the re-packaged programme "Sindh Urban Mass Transit Development Program, (SUMTDP) Phase-I". Under the restructured package, the programme included urban transport studies for other cities such as Hyderabad and Sukkur to facilitate development of BRT System in those cities.
The mission submitted Aide Memoire, which reflected serious ADB concerns regarding execution and implementation of the program by SMTA, and stressed for implementation of the programme by Karachi Mass Transit Cell, CDGK.
Subsequently, Director General, ADB in her letter dated 11 December, 2008 to Joint Secretary, BAD, GOP informed that investment programme has been deferred in consideration of some continuous hindrance in this project like no consensus within the government to proceed with the programme, despite lapse of 4 years, major changes in focus, scope and direction of the programme. In the letter ADB had also presented the excuses as the programme was re-configured with new implementation arrangements, approval of PC-l and other status could not be achieved and also the scope of the programme could not be agreed.
KARACHI (March 16 2009): The Thar Coal Power Project (TCPP) would attract over $20 billion foreign investment within next six months, an official of Sindh Coal Authority Board (SCAB) told Business Recorder on Sunday. According to Sharjeel Memon, one of the SCABs governors, a host of interested companies from United States, China, Britain, Singapore, South Korea, Germany, Poland, Australia etc would invest over $20 billion in the Tharparkar-based energy project.
Memon, who is also the member of provincial assembly of Sindh, revealed that even the neighbouring India had shown interest in the attractive coal-based power generation project, TCPP. He, however, opined that tension at border and an ongoing blame-game between the two nuclear-armed South Asian neighbours were likely to keep New Delhi away from the project. The SCAB official also linked the expected investment with an early end to the ongoing political turmoil in the country.
"Lots of MoUs have been signed and a host of foreign firms keen to invest in the coal sector are visiting the Chief Minister on almost daily basis... work is underway on war footing basis," he added. Also, he said, President Asif Ali Zardari, during his recent visit to China, had inked different MoUs with the investors in Beijing.
He said a nine-member Korean delegation, which had held a "fruitful" meeting with Chief Minister Syed Qaim Ali Shah last Thursday, would soon start boring for mining in Blocks 4 and 8 of the site.
The coal exploration work would follow the power generation process that, the MPA said, was a federal subject and would be carried out by Islamabad.
According to Memon the TCPP would help Sindh province generate at least 7000-8000 MW electricity by 2012, which would not only cater to the countrys 3,500MW power shortage, but would also be exported to the neighbouring countries. He said the provincial government had undertaken a fast track infrastructure development in Thar, along with a coal based mine-mouth thermal power plant by a Korean firm at an estimate cost of $3 billion. According to Asad Ali Shah, another SCAB member, a coal-based power generation plant in Thar would help Pakistan save a huge sum of $8 billion it was presently paying for imports of oil to run its power generation units. A recent study has revealed that Tharparkar has 175 billion tons of coal reserves with a best power generation quality, he added.
EDITORIAL (March 16 2009): Everybody was expecting inflationary trends in the economy to ease gradually but latest available data on price indices must have dampened such hopes. According to the Federal Bureau of Statistics, consumer price index (CPI), a key indicator of inflation, rose by 0.75 percent during February, 2009 over the previous month and was up by 21.07 percent over the same month last year.
Inflation as measured by CPI had been falling since it had hit a high of 25 percent in October, 2008 but the figures for February, 2009 indicate a reversal in the trend which is clearly disturbing. The sub-index for food and beverages, carrying a weightage of 40.34 percent in the overall index, was higher by 25.06 percent during February, 2009 over a year earlier. Other indices recording significant increases were fuel and lighting (+29.77 percent), transport and communication (+21.47 percent), house rent (+18.57 percent), cleaning, laundry and personal appearance (+18.27 percent), education (+17.97 percent) and apparel, textile and footwear (+15.37 percent).
Another indicator of very high inflation ruling throughout the year was a jump in the average of all the price indices during 2008-09. For instance, monthly average of CPI during July, 2008-February, 2009 rose by 23.49 percent as compared to only 8.90 percent in the same period a year earlier and 8.04 percent during 2006-07. The rise in WPI was also much higher at 24.70 percent compared to 11.68 percent in 2007-08 and 7.14 percent in 2006-07.
The latest data on inflation is a cause of concern due to a variety of reasons. The phenomenon of inflation, unlike certain other concepts, is not only in the abstract but affects the quality of human life in physical terms and is, therefore, really painful. The combination is worst when unemployment is rampant in the economy, ordinary people were already living on subsistence level and inflation is driven mainly by increase in the basic food items. Unfortunately, the simultaneous existence of all these elements in Pakistan has made the lives of ordinary people extremely miserable, threatening the social cohesion of the country.
In fact, increasing lawlessness and anarchy are some of the early manifestations of such a phenomenon. Also, the latest data suggests that inflationary targets fixed by the government may be hard to achieve. The authorities of the country were expecting the inflation rate to decelerate to 10 percent by June, 2009 and targeting average inflation rate at a single digit during 2009-10. Besides, a consistent fall in CPI from November, 2008 to January, 2009 had raised expectations of a substantial rate cut when quarterly monetary policy was to be announced in April, 2009.
In fact, the rates on treasury bills were already down in the last few auctions. Now, if the price data for March, 2009 also exhibits a rising trend, monetary authorities of the country would have to think very hard before announcing a rate cut and the IMF may also resist such a move. Some of the analysts may argue that the inflationary tendencies are persisting in the economy due to lower availabilities resulting from a lower growth rate and compression of imports during 2008-09. Also, monetary tightening takes a considerable time to show its impact.
Whatever the reasons, the reality cannot be denied that high inflation still appears to be entrenched in the economy and it may not be very wise to lower the guard at this stage. In other words, the expectations of an easy monetary and fiscal policy could be a little pre-mature. Those who argue for loosening these policies on the basis of present policy thrust in other countries conveniently forget the fact that there is no problem of inflation in those countries.
ISLAMABAD: The production of meat (mutton and beef) has been increased to 2.19 million tonnes in 2008-09 from 1.48 million tonnes in 1995-96 showing 47.5 percent increase, official sources told Daily Times here on Monday. The Livestock and Dairy Development sources said that the demand for livestock products including dairy and meat products would definitely rise in the coming years. The future demand would be even greater than the population growth rate and rapid urbanisation. They claimed that rise in income would be the second most important factor after population growth that would increase demand for livestock products. The sources claimed that the government had taken a number of initiatives for improvement in livestock production.
ISLAMABAD: Pakistan and European Union Joint Commission here on Monday started three-day deliberations to discuss possibility of including Pakistan in EU GSP-Plus arrangement 2009-2011 and initiations of Free Trade Agreement (FTA).
The sub-groups namely sub group on trade; sub group on development and economic cooperation, sub group on migration and civil issues and sub group of science and technology started their technical level negotiations to look into the possibilities of further strengthening of bilateral relations. The four sub-groups would present the recommendations to the commission meeting that is scheduled on March 18 at Economic Affair Divisions.
Sub-group on trade discussed important issues like Doha Development Agenda, GSP-Plus scheme for 2009, anti-dumping duty on Pakistani bed linen exports, de-listing of fishery export companies of Pakistan, technical assistance and listing of Pakistani Basmati as Pakistani variety.
However, during the GSP Plus arrangement review for 2009-2013 by European Commission, the EC was not able to include Pakistan in the beneficiary countries on technical grounds. Soon after, Pakistan demanded EC to review its decision on GSP + agreement and start Pak-EU FTA dialogue. A joint study has been conducted by the University of Sussex to assess the impact of free trade between Pakistan and the EU member countries. The current round of negotiations between Pakistan and EC findings of the said study would also be analysed to reach at a conclusion.
Pakistan EU bilateral trade volume has reached at $10.8 billion during the last fiscal year 2007-08 registering an increase of $1.4 billion as compared with previous fiscal year 2006-07. The EU has tripled development assistance to Pakistan to 200 million Euros for 2008-10 and is engaged in number of projects relating to education, health, environment and trade sector.
The main emphasis by Pakistan is to achieve durable, predictable and reciprocal trade relationship with the EU in the form of an FTA. This has also been stressed by the president of Pakistan, Prime Minister of Pakistan and Commerce Minister in their meetings with their counterparts and EC Commissioner, where need for institutional relationship was acknowledged.
The EC is of the view that its Global Europe Strategy focuses on multilateralism as the preferred option but FTAs are also negotiated based on two-fold criteria i.e. Market size and growth and the level of protection against EU exports. Pakistan argued that it satisfies the criterion of market size and growth of the EU and the current level of protection against EU exports are minimal, which may not be treated as a penalty for Pakistan.
Both sides are also exchanging views on further strengthening of trade relations and looked at options for future consideration and are in agreement that the Sub Group on Trade will monitor the impact of EUs trade policies in the region on Pakistans preferential access to EU markets and will identify possible options for improvement in bilateral trade. Pakistan has criticised European Unions tariff peaks and tariff escalations, especially in textile, clothing and leather products at World Trade Organisation while highlighting the dichotomy in the European trade regime.
During the Trade Policy Review of the European Commission Pakistan has questioned ECs trade regime. Pakistans viewpoint is that EC is Pakistans single largest trading partner, accounting for 26 percent of its total exports and 17 percent of its total imports. However, more recently its trade with EC has not been keeping pace with its international trade growth.
ISLAMABAD (March 17 2009): The textile exports may face loss of Rs 4.8 billion as the foreign companies of EU, Russia and US have refused to take the Pakistani textile products due to economic recession. According to the sources, 200 containers carrying textile consignment from Pakistan have stranded in Russia, EU and US. "Each container is carrying textile goods of worth $0.3 million and the textile sector has to face a loss of $60 million," an exporter said.
"Unfortunately, most of the foreign buyers of our textile products that belong to EU and US defaulted all of the sudden and they refused to receive our containers carrying the textile goods they had ordered. On the other hand, our textile exporters had to face a huge loss in Russia when suddenly, the Russian Ruble depreciated by 40 per cent as compared to Dollar", he said.
He said that already the textile industry was suffering from high cost of production due to constant increase in gas and electricity tariff while the average export target of textile products for current fiscal (2008-09) has been set at $11 billion or to an average $923 million per month by government.
Textile exports of the country during the first seven months of the current financial year decreased by 3.79 per cent as compared to the corresponding period of 2007-08. Exports of textile products during January-July (2008-09) were recorded at 5.82 billion dollars as compared to exports of 6.05 billion dollars registered during July-January (2007-08).
Similarly, the textile exports during the month of January 2009 decreased by 8.98 per cent as compared to December 2008. Exports during January 2009 were of $753.9 million as compared to exports of $720.3 million recorded during December 2008.
During the last month, gas supply to the industrial areas decreased by 50 per cent. The exporter said that the textile sector needs the continuous supply of gas to run the captive power plants as well as boiler. The shortage of gas and electricity has already discouraged the foreign investors, while most of the textile industrialists, by keeping this thing in view, are shifting their businesses to Bangladesh and India.
The exporter said, "Our textile exports are losing the competitiveness in the international market. That is why our foreign export orders have reduced by 20-25 per cent as compared to the last year. Due to decrease in foreign export orders, our industrialists have reduced the buying of cotton from the ginning factories. That is why the ginners have unsold stocks of almost one million cotton bales in the ginning factories."
ISLAMABAD (March 17 2009): The Petroleum Ministry is sending a proposal to the Economic Co-ordination Committee (ECC) of the Cabinet to import Iran gas only for power generation purpose, under Iran-Pakistan-India (IPI) gas pipeline project, as Iran has refused to scale down the price from 78 percent to 70 percent of crude oil.
Sources told Business Recorder that, during President Asif Ali Zaradris visit to Iran on March 10, Iran did not show any flexibility in its offered gas price to link to 78 percent of global crude oil. Pakistan had offered the price of 70 percent global crude oil.
The Petroleum Ministry summary, to be tabled in the next meeting of the ECC, will recommend import of Iranian gas only for power generation, and not for domestic, commercial and industrial consumers, due to its high cost. Sources said that gas from Iran for power generation would cost 8.8 cents/kwh, against 10 cents/kwh from furnace oil at $40 per barrel crude oil price.
According to comparison based on $40 crude oil price, the cost of nuclear-based power generation is 4.1 cents/kwh, from Thar coal 8.8 cents, 9 cents from imported coal, and 12 cents/kwh from wind sources. At present, Sui Northern Gas Pipeline (SNGPL) is providing gas at Rs 299.39 per mmbtu, or $3.7 per mmbtu (valued at 80 rupees per dollar) and Sui Southern Gas Company (SSGC) at Rs 288.22 per mmbtu, or around $3.6 per mmbtu.
However, if Pakistan signs accord linking gas price to 78 percent per mmbtu, its cost would be around $12 per mmbtu, or Rs 960 per mmbtu, which would be beyond the reach of domestic consumers. In the current scenario, Petroleum Ministry is going to propose gas to be imported from Iran, instead of furnace oil. According to an estimate, one billion cubic feet gas per day would generate 5,000 mw electricity that would result in relief regarding power shortage in the country.
Sources said that recent studies had indicated that Iran gas is the most economical option for power generation, against alternative fuels like furnace oil, liquefied natural gas (LNG) and coal. The Additional 2,937 MW generation is required by 2015, and 11,691 MW by 2020. The 1.05 bcfd phase one of IPI can generate 5,000 MW electricity.
ISLAMABAD (March 17 2009): Azad Jammu Kashmir (AJK) Government has kicked off construction work on hydel power project of 1.7 megawatt worth Rs 300 million in a bid to explore the power potential in this Himalayan region. The Dhanna Khoi Ratta, Hydel Power Project is one of the projects of 5,594MW potential explored in AJK.
Prime Minister AJK, Sardar Muhammad Yaqoob Khan on Monday laid the foundation stone of the project, which will start power generation in 30 months and give AJK an income of Rs 40 million per annum. The project, being constructed by Alamdar Engineering, will be handed over to AJK Government in 2011, and will provide employment to 150 to 170 people during construction and after completion 35 to 40 people will get jobs on this project.
AJK Premier told the gathering that AJK government will start work on 969 MW Neelum-Jhelum Hydel Power Project soon, while feasibility studies of 1000 MW Kohala Hydel Project will be completed next year.
With completion of these two projects, AJK will be in a position to run the stalled wheel of industry and agriculture by providing it electricity. He said that besides these two projects, potential of more about 15,000 MW hydro power project was traced in AJK, which can change the ultimate socio economic scene of AJK and of Pakistan as well.
He said that AJK Government is in contact with WAPDA for utilising the hydro power potential of AJK. Wapda has offered AJK Government to help construct the power project below 50 MW capacities. "In next weeks meeting with WAPDA authorities, we will talk to them for initiation of other mega projects of hydel power generation", he added.
He asked the industrialist and investors of Pakistan invest in highly profitable hydro-power generation in AJK, as it will help in eradication of poverty, as AJK have the potential of over 15,000 MW hydro power generation. "We have almost completed the studies of projects of over 5,594 MW hydro power generation and if launched these projects will help end power crisis in Pakistan. "In my personal meetings with private sector, I told them that AJK was completely safe and secure for investors and law and order situation and public approach is ideal for investment", Yaqoob Khan said.
He said that Pakistan was facing a shortfall of about 4,000 MW electricity, which has badly affected the industrial and agriculture sectors and damaged economy. "If Pakistani investors will invest in this sector, it will help the country not only to run the stuck industrial wheel but also help eradication of poverty, unemployment and economic disorder", he said.
Giving details of the explored hydel power potential in AJK, the premier said that potential of 2,468 MW was explored in Muzaffarabad, 1,369 MW in Mirpur, 231 MW in Poonch, 645.4 MW in Kotli, 338.85 MW in Bagh and 541 MW in Neelum districts of AJK. At present AJK is generating just 37.65 MW electricity, while it needs 400 MW he said.
He said that the work in progress on hydel power generation projects include 3 MW Sharda, 3.2 MW Sharian, 1.7 MW Dhanan, 4.8 MW Batter, 0.6 MW Hallan, 0.6 MW Rangarr, 0.32 MW Halmatt and 3 MW Qadirabad power projects. The feasibility study of four projects of 63.80 MW hydro power generation has been completed and will be kicked off soon. These projects include 43.5 MW Kuttan Jagran-II, 14.4 MW Jheng, 3.2 MW Rerra and 3 megawatt Hajeera, he added.
By Engr Hussain Ahmad Siddiqui
Monday, 16 Mar, 2009
UNDER an agreement signed on February 22, China will provide technical assistance to Pakistan for hydropower projects on the model of the Three Gorges Dam, which is one of the largest hydropower complexes in the world.
Hydropower is globally recognised as a renewable, cheap and reliable resource of energy. It generates electricity with zero emission and produces no waste. There is no requirement of fuel, operating cost is much lower and hydropower plants have longer economic lives than thermal plants.
While installed hydropower capacity remains 6,493 MW, enormous potential exists to exploit this hige indigenous resource of energy. According to estimates, it is economically possible to generate some 34,000 additional MW from hydropower, and 150 sites for projects of cumulative capacity of 20,000 MW have been identified.
Pakistan has total installed power generation capacity of 20,456 MW. However, dependable or de-rated capacity is in the range of 14,000 to 16,000 MW during the year, due to a variety of factors, whereas demand for electricity is increasing at an average annual rate of over eight per cent. Thus, there is gross power shortage at national level, demand being projected to around 22,000 MW by the year 2010.
To meet surging demand, an additional 4,000 MW generating capacity, all based on gas and oil, will be commissioned by December 2010, in both the private and public sector, besides another 325 MW nuclear power plant. In contrast, only 516 MW of hydropower is expected to be added to the system.
In fact, the share of hydroelectric power generation in the overall energy mix is persistently decreasing from 57 in the1980s to 42 in the1990s to current 32 per cent of the total installed capacity. The good news is that the government plans to increase it to the level of 20,000 MW by 2017. As a result of recent restructuring, the Pakistan Water and Power Development Authority (Wapda), re-named as Water Resources and Power Development Authority, is focusing on implementing multipurpose water projects, including medium and mega hydropower generation projects, either reservoir-based or run-of-the-river type.
In addition to expediting various on-going hydropower projects and rehabilitating/modernising the operational power stations, WAPDA has recently embarked upon a series of new hydropower projects. Hydropower projects of cumulative capacity of 419 MW are scheduled to go on stream during the period 2009-2010. These are Allai Khwar 121 MW, Khan Khwar 72 MW, Duber Khwar 130 MW, all located in Kohistan area, and Jinnah 96 MW to be located on Jinnah Barrage. In addition, NWFP has commissioned Malakand III hydropower project, of 81 MW capacity, which is expected to achieve commercial operation shortly.
There is a long list of the new projects being implemented or to be launched by WAPDA. The Chinese contractors have commenced construction of 47-km long network of tunnels for the 969-MW Neelum-Jhelum hydropower project, whereas tenders for various works of Diamer Basha Dam project, designed for an installed power generation capacity of 4,500 MW, have been invited. Also, Wapda has launched Golen Gol 106-MW hydropower project to be constructed in Chitral. Construction of Kurram Tangi Dam project (hydropower generation of 83 MW) is planned to re-commence soon. Construction of the Akhori Dam project is on cards, having a power generation capacity of 600 MW. Likewise, design and engineering work on Keyal Khwar project of 122 MW capacity has been undertaken.
Feasibility studies related to another eight hydropower projects are in progress being conducted by the consultants appointed by Wapda. These projects, expected to complete by 2017, would have an installed capacity of about 12,000 MW and would require $16.7 billion to construct. It may take two years to finalise studies enabling Wapda to launch the projects
Kohala hydropower project on the Jhelum River in the AJ&K will have a capacity of 1,100 MW, whereas Bunji hydropower project (Gilgit) will generate 5,400 MW on its completion. Dasu of 3,700 MW capacity is a run-of-the-river scheme, 69-km downstream Diamer Basha Dam. Lower Palas Valley of 621 MW and Lower Spat Gah hydropower project of 610 MW are proposed to be located at Patan, Kohistan. The remaining projects are Phander (Gilgit) 80 MW, Basho (Skardu) 28 MW and Lawi (Chitral) 70 MW. In addition, pre-feasibility or initial studies are being conducted for Thakot hydropower of 2,800 MW and Patan of 2,800 MW, both proposed on Indus River, and Harpo of 33 MW near Skardu.
To resolve the p ower crisis in long-term and to sustain economic growth, the optimal development of hydropower is needed. There are however host of risks, constraints and specific issues linked to undertaking hydropower projects. These include geological risks, hydrological constraints, problems in water use, need for infrastructure, environmental issues and social problems. Thus the complexity and long lead-time inhibits private sector to invest in hydropower projects, in spite of various fiscal and non-fiscal incentives..
The fallout of these factors is reflected in the fact that not a single Independent Power Producer (IPPs) has started construction of hydropower project. Out of 41 Letters of Interest (LOIs) issued to the private sector under hydropower Policy 1995, only 13 Letters of Support (LOSs) for a total of 353 MW capacity could be obtained
by the private sector. Among these, only one hydropower project, known as the New Bong Escape of 84 MW capacity downstream Mangla Dam, may materialise eventually, which has yet to achieve financial close,, even after more than a decade of its initiation.
Again, the government has approved another 15 projects of cumulative capacity of over 3,000 MW under Power Policy 2002. Feasibility studies of two projects have been carried out, whereas other project sponsors have asked for extensions in time period as they experienced problem of law and order and other issues to access the site.
In view of constraints faced by the private sector to developing hydropower projects, the government may be well advised to allow necessary funds to Wapda to implement all the hydropower projects, in pipeline as well as proposed, as scheduled.
Foreign financing from international sources like the World Bank, Asian Development Bank (ADB), Islamic Development Bank (IDB), and from countries such as China, Kuwait, Saudi Arabia and Abu Dhabi will be forthcoming for development of these projects.
Wapda has the requisite resources, experience and expertise in the field and the proposed technical cooperation with the Chinese will further augment WAPDAs capability to construct the hydropower projects in a cost-effective manner. To achieve the desired results, it is important that the Pakistan-China agreement on hydropower generation is implemented on priority basis.
The writer, a former Chairman of State Engineering Corporation, is on the panel of experts of the Private Power and Infrastructure Board, Ministry of Water and Power
Monday, 16 Mar, 2009
UNDER an agreement signed on February 22, China will provide technical assistance to Pakistan for hydropower projects on the model of the Three Gorges Dam, which is one of the largest hydropower complexes in the world.
Hydropower is globally recognised as a renewable, cheap and reliable resource of energy. It generates electricity with zero emission and produces no waste. There is no requirement of fuel, operating cost is much lower and hydropower plants have longer economic lives than thermal plants.
While installed hydropower capacity remains 6,493 MW, enormous potential exists to exploit this hige indigenous resource of energy. According to estimates, it is economically possible to generate some 34,000 additional MW from hydropower, and 150 sites for projects of cumulative capacity of 20,000 MW have been identified.
Pakistan has total installed power generation capacity of 20,456 MW. However, dependable or de-rated capacity is in the range of 14,000 to 16,000 MW during the year, due to a variety of factors, whereas demand for electricity is increasing at an average annual rate of over eight per cent. Thus, there is gross power shortage at national level, demand being projected to around 22,000 MW by the year 2010.
To meet surging demand, an additional 4,000 MW generating capacity, all based on gas and oil, will be commissioned by December 2010, in both the private and public sector, besides another 325 MW nuclear power plant. In contrast, only 516 MW of hydropower is expected to be added to the system.
In fact, the share of hydroelectric power generation in the overall energy mix is persistently decreasing from 57 in the1980s to 42 in the1990s to current 32 per cent of the total installed capacity. The good news is that the government plans to increase it to the level of 20,000 MW by 2017. As a result of recent restructuring, the Pakistan Water and Power Development Authority (Wapda), re-named as Water Resources and Power Development Authority, is focusing on implementing multipurpose water projects, including medium and mega hydropower generation projects, either reservoir-based or run-of-the-river type.
In addition to expediting various on-going hydropower projects and rehabilitating/modernising the operational power stations, WAPDA has recently embarked upon a series of new hydropower projects. Hydropower projects of cumulative capacity of 419 MW are scheduled to go on stream during the period 2009-2010. These are Allai Khwar 121 MW, Khan Khwar 72 MW, Duber Khwar 130 MW, all located in Kohistan area, and Jinnah 96 MW to be located on Jinnah Barrage. In addition, NWFP has commissioned Malakand III hydropower project, of 81 MW capacity, which is expected to achieve commercial operation shortly.
There is a long list of the new projects being implemented or to be launched by WAPDA. The Chinese contractors have commenced construction of 47-km long network of tunnels for the 969-MW Neelum-Jhelum hydropower project, whereas tenders for various works of Diamer Basha Dam project, designed for an installed power generation capacity of 4,500 MW, have been invited. Also, Wapda has launched Golen Gol 106-MW hydropower project to be constructed in Chitral. Construction of Kurram Tangi Dam project (hydropower generation of 83 MW) is planned to re-commence soon. Construction of the Akhori Dam project is on cards, having a power generation capacity of 600 MW. Likewise, design and engineering work on Keyal Khwar project of 122 MW capacity has been undertaken.
Feasibility studies related to another eight hydropower projects are in progress being conducted by the consultants appointed by Wapda. These projects, expected to complete by 2017, would have an installed capacity of about 12,000 MW and would require $16.7 billion to construct. It may take two years to finalise studies enabling Wapda to launch the projects
Kohala hydropower project on the Jhelum River in the AJ&K will have a capacity of 1,100 MW, whereas Bunji hydropower project (Gilgit) will generate 5,400 MW on its completion. Dasu of 3,700 MW capacity is a run-of-the-river scheme, 69-km downstream Diamer Basha Dam. Lower Palas Valley of 621 MW and Lower Spat Gah hydropower project of 610 MW are proposed to be located at Patan, Kohistan. The remaining projects are Phander (Gilgit) 80 MW, Basho (Skardu) 28 MW and Lawi (Chitral) 70 MW. In addition, pre-feasibility or initial studies are being conducted for Thakot hydropower of 2,800 MW and Patan of 2,800 MW, both proposed on Indus River, and Harpo of 33 MW near Skardu.
To resolve the p ower crisis in long-term and to sustain economic growth, the optimal development of hydropower is needed. There are however host of risks, constraints and specific issues linked to undertaking hydropower projects. These include geological risks, hydrological constraints, problems in water use, need for infrastructure, environmental issues and social problems. Thus the complexity and long lead-time inhibits private sector to invest in hydropower projects, in spite of various fiscal and non-fiscal incentives..
The fallout of these factors is reflected in the fact that not a single Independent Power Producer (IPPs) has started construction of hydropower project. Out of 41 Letters of Interest (LOIs) issued to the private sector under hydropower Policy 1995, only 13 Letters of Support (LOSs) for a total of 353 MW capacity could be obtained
by the private sector. Among these, only one hydropower project, known as the New Bong Escape of 84 MW capacity downstream Mangla Dam, may materialise eventually, which has yet to achieve financial close,, even after more than a decade of its initiation.
Again, the government has approved another 15 projects of cumulative capacity of over 3,000 MW under Power Policy 2002. Feasibility studies of two projects have been carried out, whereas other project sponsors have asked for extensions in time period as they experienced problem of law and order and other issues to access the site.
In view of constraints faced by the private sector to developing hydropower projects, the government may be well advised to allow necessary funds to Wapda to implement all the hydropower projects, in pipeline as well as proposed, as scheduled.
Foreign financing from international sources like the World Bank, Asian Development Bank (ADB), Islamic Development Bank (IDB), and from countries such as China, Kuwait, Saudi Arabia and Abu Dhabi will be forthcoming for development of these projects.
Wapda has the requisite resources, experience and expertise in the field and the proposed technical cooperation with the Chinese will further augment WAPDAs capability to construct the hydropower projects in a cost-effective manner. To achieve the desired results, it is important that the Pakistan-China agreement on hydropower generation is implemented on priority basis.
The writer, a former Chairman of State Engineering Corporation, is on the panel of experts of the Private Power and Infrastructure Board, Ministry of Water and Power
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To explore coal deposits, set up 1,000MW power plant: Thar coalfield block allotted to 2 foreign firms
Staff Report
KARACHI: The Thar Coal and Energy Board decided on Tuesday to allot Block-8 of the Thar coalfield to UAEs Bin Daen Group Dubai and Koreas PEDCO for exploring the coal deposits and establishing a 1,000 MW mine-mouth thermal power plant in Tharparkar.
The decision was taken at the third meeting of the board held at the Sindh Chief Ministers House, under the chairmanship of Sindh CM Qaim Ali Shah. Federal Minister for Water and Power Raja Pervez Ashraf and other concerned officials of the federal and provincial governments attended the meeting.
According to an official handout, it was decided that a Memorandum of Understanding would be singed soon with the Dubai and Korean firms, with the signing ceremony likely to be held in Karachi. The board was informed that this will be the first and largest single thermal power plant in Pakistan, which will provide electricity to more than two million households and 600,000 factories, besides creating approximately 90,000 jobs for both skilled and unskilled labourers.
The board also decided that the approval of proposed addition of members would be presented at the next board meeting. It was also decided to appoint legal consultants for the board. The meeting discussed in detail the 11-point agenda, which included reviewing of the Letter of Intent for Bin Daen Group, Pan Energy Developing Company (PEDCO), Korean Electric Power Corporation (KEPCO) and Deloitte Anjin L.L.C to explore coal in Tharparkar district.
The chief minister said that the present government fully intends to utilise coal resources of the province and various internationally experienced groups are approaching for coal mining and power generation projects.
Daily Times - Leading News Resource of Pakistan
Staff Report
KARACHI: The Thar Coal and Energy Board decided on Tuesday to allot Block-8 of the Thar coalfield to UAEs Bin Daen Group Dubai and Koreas PEDCO for exploring the coal deposits and establishing a 1,000 MW mine-mouth thermal power plant in Tharparkar.
The decision was taken at the third meeting of the board held at the Sindh Chief Ministers House, under the chairmanship of Sindh CM Qaim Ali Shah. Federal Minister for Water and Power Raja Pervez Ashraf and other concerned officials of the federal and provincial governments attended the meeting.
According to an official handout, it was decided that a Memorandum of Understanding would be singed soon with the Dubai and Korean firms, with the signing ceremony likely to be held in Karachi. The board was informed that this will be the first and largest single thermal power plant in Pakistan, which will provide electricity to more than two million households and 600,000 factories, besides creating approximately 90,000 jobs for both skilled and unskilled labourers.
The board also decided that the approval of proposed addition of members would be presented at the next board meeting. It was also decided to appoint legal consultants for the board. The meeting discussed in detail the 11-point agenda, which included reviewing of the Letter of Intent for Bin Daen Group, Pan Energy Developing Company (PEDCO), Korean Electric Power Corporation (KEPCO) and Deloitte Anjin L.L.C to explore coal in Tharparkar district.
The chief minister said that the present government fully intends to utilise coal resources of the province and various internationally experienced groups are approaching for coal mining and power generation projects.
Daily Times - Leading News Resource of Pakistan
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