Pakistan Economy - News & Updates

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Pak, China agree on services for exports under FTA ​

Friday, July 03, 2009

ISLAMABAD: Pakistan and China has agreed to include eleven sectors from services under the Free Trade Agreement (FTA) to evolve a transparent and predictable service regime for attracting FDI from China, reveals an official who concludes recently PakistanóChina talks on services on Thursday.

Both the countries agreed to include business, communication, construction & related engineering, distribution, education, environment, finance, health & related social, tourism & travel, recreational & cultural sporting and transport services, he added.

Pakistan exported services of $4 billion against the Chinese imports in services of $10 billion with deficit. The services consist of the government services, transportation, business services, travel, communication, computer & information, finance, construction, royalties & licence fees, insurance and personal, cultural and recreational services.

The diplomatic notes of this recently concluded talk on services under the FTA would be exchanged on July 28-29 and after 30 days, the free trade commission will formally make the agreement operational, an official familiar with the talks told The News.

The agreement also does not apply for the sector, which encompasses air traffic rights, services supplied by governments, procurement of services by government agencies, subsidies or grants can be provided only to domestic services supplier, general exemption for security related services and citizenship or employment on a permanent basis, the agreement stated. China under this agreement will also make investments as joint ventures and it has also provided 100pc equity in sectors that include computers & related services, research & development services, distribution, retail/wholesale and commission agent services, environmental services, tourism & related services and maintenance & repair of motor vehicles, it said.

The merchandise exports of Pakistan would become competitive both in China and globally through quality services, transfer of technology, capacity enhancement and employment creation, the agreement hoped. It further expected that the agreement will attract Chinese investment in infrastructure, energy and waterways (dams and bridges), human resource development and technical training and research & development.

Overall the country’s exports of services in 2003 were $2.96 billion; $2.74 billion in 2004; $3.67 billion in 2005; $3.5 billion in 2006 and $3.75 billion in 2007.

 

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Cotton output may increase in Pak, US, India: report ​

Friday, July 03, 2009

LAHORE: Cotton production is expected to increase in the three largest producing countries after China that is India, United States and Pakistan.

However, significant production declines are expected in Turkey, Brazil and the CFA zone.

This was stated in the press release of International Cotton Advisory Committee that also forecast cotton mill use outside of China higher by 1 per cent at 14.2 million tons in 2009/10. Both cotton imports and exports from World-less-China are expected to recover slightly in 2009/10, to 5.1 million tons and 6.5 million tons, respectively.

Due to a faster increase in supply than in use, cotton stocks outside of China are forecast to continue to grow by 4 per cent to a record of 9.5 million tons by the end of July 2010, accounting for two-thirds of cotton mill use in that region.

In China, cotton production is expected to decline by 7 per cent to 7.5 million tons in 2009/10. Cotton mill use is expected to increase by 3 per cent to 9.3 million tons, slightly recovering from a sharp drop in 2008/09. Chinese imports are expected to increase only slightly to 1.5 million tons in 2009/10. Chinese stocks are expected to decline by 10 per cent, to 3.4 million tons.

Based on a price forecast of 60 US cents/lb for 2008/09 and an expected increase in the stocks-to-mill use ratio in the world-less-China (Mainland) in 2009/10, Cotlook A Index of 56 US cents/lb in 2009/10. This would represent a 7 per cent decline from the projected 2008/09 average.

 

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KSE jumps 228 points on local foreign institutional buying ​

Friday, July 03, 2009

KARACHI: The significant foreign and local institutional buying placed the Karachi bourse very close to 7,500 points level on Thursday. Just before the closure of the day session, market once briefly breached through this crucial level as well in forward gear.

The KSE 100-share Index posted a significant increase of 227.62 points or 3.13 per cent and ended at 7,498.34 points - just 1.57 points away from 7,500 points level.

Heavily dominated by the heavy weighed stocks, the 30-Index soared by 288.62 points or 3.74 per cent and settled at 8,000.53 points.

Analysts said that the release of funds for Pakistan from international financial institutions; reasonable cut in rate of return on National Saving Schemes; expectations about reduction in central bank’s lending rates sometime next week; hope of having leverage product for ready and future markets in near future; increase in cement exports; and hike in furnace oil price altogether invited the liquidated participants to accumulated their favourite stocks ahead of corporate results announcement season.

Credit for inflating the indices this much goes to the heavy weighted selective stocks, which exhibited excellent performance under the lead of oil giant Oil & Gas Development Company. This scrip (OGDC) alone added 57 points in the leading benchmark 100-Index.

The other notables are included National Bank, MCB Bank, Habib Bank, Fauji Fertilizer and Pak Petroleum. These stocks cumulatively included 71.5 points in the 100-Index, while each of them shared in range of 11 to 18 points.

United Bank, NIB Bank, Allied Bank, Engro Chemicals, Pak Oilfields, Pakistan State Oil and Kot Addu Power Company also gave considerable gains in the index.

The leading oil & gas exploration & production, bank, fertilizer, cement and securities companies sectors remained in limelight. Majority of them enhanced between four to five per cent in their value terms.

The buying euphoria helped market generating 196 million shares on ready board, which is over 87 per cent higher than 104.6 million shares changed hands yesterday. No deal was seen on future counter that remains virtually suspended.

The overall market capitalisation rose by Rs63 billion to stands at Rs2,213 billion. This increase is included an inflow of Rs199 million ($2.5 million) by the foreign portfolio investors.

M Sohail at Topline Securities said the release of funds from ADB and expectations that funds will flow from national savings to stocks generated buying euphoria at local bourse mainly led by OGDC. Good institutional buying seen with news of buying by foreigners in selected stocks. Stocks, whose board meeting will be held soon for results, remained under limelight, he added.

Ahsan Mehanti at Shahzad Chamida Securities said that intense buying continued as expectation loomed over record payouts by oil and fertilizer scrips on year-end result announcements. Investors celebrated reduction in NSS rates ahead of result announcement session, he added.

Rise in furnace oil prices was taken positive for oil marketing companies, while record cement exports and expectation of reduction in discount rates in next week’s monetary policy announcement played catalyst role for positive activity, he further said.

Hasnain Asghar Ali at Aziz Fidahusein said relaxation in Capital Value Tax (CVT) has certainly reduced the cost on trading, which allowed a decent follow-up support.

While the roar of introduction of modified leverage products (details known to privileged) to cater both ready-board and future trades allowed the seasoned participants to accumulate the main board liquid stocks, which are supposed to be eligible for leveraging. Smooth law & order situation will allow the momentum to continue till the development on leverage is known to all and finally introduced, he added.

Out of total 296 actives, 196 stocks advanced, 84 declined, the value of remaining 16 stocks closed unchanged.

Highest volumes were witnessed in DG Khan Cement at 23.9 million closing at Rs30.55 with a gain of five paisa, followed by Pakistan Telecommunication Company at 14.6 million closing at Rs17.87 with a gain of 23 paisa, Oil & Gas Development Company at 13.6 million closing at Rs83.81 with a gain of Rs3.53, JS Company at 12 million closing at Rs24.51 with a gain of Rs1.11, and Lucky Cement at 11.7 million closing at Rs61.54 with a gain of Rs2.39.

 

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Construction of first palm oil mill in Pakistan begins ​

Friday, July 03, 2009

THATTA: Federal Minister for Food and Agriculture Nazar Mohammad Gondal on Thursday performed the ground breaking and foundation stone laying ceremony of the first palm oil mill in Pakistan.

The palm oil mill will be constructed at a cost of Rs59.743 million on an area of 300 acres by the Pakistan Oil Development Board near Ghulamullah town, some 20km from here.

Addressing the occasion, the minister said that Shaheed Mohtarma Benazir Bhutto had taken keen interest in the cultivation of oil seeds and production of edible oil in Pakistan.

It was the government of Shaheed Mohtarma Benazir Bhutto that had imported palm oil seedlings from Malaysia in 1996 and now President Asif Ali Zardari has taken up this project once again, he said, adding that the present PPP government was striving hard to serve the masses and fulfill the mission of Shaheed Zulfikar Ali Bhutto and his daughter.

A sum of Rs2 billion is being spent on the import of edible oil every year, Gondal said adding that after the commissioning of this mill, large amounts of foreign exchange will be saved.

He said that that the land of Thatta and Badin district, especially coastal areas, are extremely suitable for the plantation and production of palm trees.

He said that each tree will give crops up to 25 years and the growers can earn Rs56,000 per acre from this crop each year. He noted that with the progress and prosperity of growers, the entire country will reap the benefits.

 

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Tax collection target may be missed, final figures by weekend​

ISLAMABAD: Federal Board of Revenue is far behind thrice-revised tax collection target of Rs 1.179 trillion for the last fiscal year 2008-09 ended on June 30, 2009.

Federal Board of revenue (FBR) has reported on Thursday that it has collected over Rs 1150 billion revenue for the financial year 2008-9 so far.

According to an official statement issued Thursday FBR authorities have clarified that a substantial amount of the revenues collected for the month of June 2009 is still in the pipeline and the final figures are likely to be settled by this weekend. Nevertheless, the provisional figures of total revenues worked out so far are over Rs 1150 billion as against Rs 1007 billion collected during the last financial year. The present provisional figures thus show an increase of over 14 per cent vis-à-vis the last year’s collection. However, the final figures are expected to be on the higher side.

It is worth mentioning that in the budget 2008-09, the government had assigned FBR tax collection target of Rs 1.250 trillion, however, according to the understanding reached with International Monetary Fund authorities the tax collection target was revised to Rs 1.360 trillion. After realising the mistake, fund authorities and economic managers of the country revised the target to Rs 1.179 trillion for 2008-09.

The expected revenue shortfall along with a delay in release of $1 billion by the US for military services would make it an arduous task to keep the fiscal deficit to 4.3 percent of GDP.

The FBR has collected Rs 989.09 billion during first eleven months of the current fiscal against Rs 856.203 billion in the same period last fiscal, reflecting an increase of 15.5 percent.

Besides taxation measures of Rs 77 billion taken in budget 2008-09, the revenue collection target for 2008-2009 also included administrative measures worth Rs 15 billion including Rs 5 billion each for customs duty, direct taxes and sales tax.

Break-up of the tax collection revealed that direct taxes collection stood at Rs 361.582 billion during July-May (2008-2009) against Rs 312.762 billion in the corresponding period last fiscal, reflecting an increase of 15.6 percent. Indirect taxes collection stood at Rs 627.515 billion during this period against Rs 543.437 billion during corresponding period last fiscal, reflecting an increase of 15.5 percent. Sales tax collection was Rs 398.82 billion during July-May 2008-09) against Rs 333.095 billion in the same period last fiscal, depicting an increase of 19.7 percent.

The FBR also missed the first half-year revenue target of Rs 580 billion by a wide margin of Rs 36.7 billion.

This shortfall in revenue is owing to slowing down in the economy largely because of sluggish growth in the large-scale manufacturing industries.

The manufacturing and services sectors are the biggest contributors in revenue collection, which entered negative growth owing to global recession coupled with high cost of doing business and political instability in the country.

The decline in revenue is also because of slowing down in the imports bill of oil sector this year due to falling oil prices in the international market. The government raised more than Rs154 billion revenue collection alone from the oil sector last year, which is 23 per cent of the total indirect taxes collection.

Other potential sectors, which could contribute to revenue collection, were also facing sluggish growth, such as the telecom, wholesale and retail sectors etc. while two sectors —agriculture and stock market — were exempted from taxes.

 

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Cost of war on terror estimated at $10bn in 2008-09​

ISLAMABAD: The direct and indirect costs of the war against terror borne by Pakistan in fiscal year 2008-09 are estimated at $10 billion, the Planning Commission’s Panel of Economists Chairman Hafiz Pasha said on Thursday. Talking to reporters at the launching ceremony of the Human Development in South Asia Report 2008 at the National Library, Pasha said the army operation in Swat was likely to cost the national exchequer an additional Rs 100 billion. The economy of Swat was expected to bear losses estimated at Rs 30 billion because of the war, he said. He said due to the war, Pakistan’s economy was facing were multidimensional losses as investment and exports were declining and economic activity was leading to reduced revenue. According to official sources, the loss of life and the economic cost had reached an unbearable level.

 

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Pakistan a gateway of trade and commerce for Central Asia​

ISLAMABAD (July 03 2009): Pakistan really can be a gateway of the Central Asia for trade and commerce and that would be a tremendous source of revenue stated Ambassador, Extraordinary and Plenipotentiary of Tajikistan, Zubaydov Zubaydullo Najotovich during a call on with the Federal Minister for Industries and Production, Mian Manzoor Ahmad Wattoo here on Thursday.

The ambassador said that both the countries have signed about twenty agreements, protocols and memorandums of understanding (MoU's) to extend co-operation in energy, communications, insurance, investments and industry, air transport, banking and financial, agricultural and food industry, transport and constructions of roads, science and technology, education, health, tourism, culture on the basis of mutual equality and to increase the current level of trade.

Tajik ambassador said that Tajikistan is in a dire need of access to the world through Pakistani ports like Gwadar, and Pakistan is also looking to import Tajik power to its northern areas, as Tajikistan has the huge Hydropower potentials and cheapest electricity in the world.-PR

 

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World Bank to give $134.68 million for various projects​

ISLAMABAD (July 04 2009): The Government of Pakistan here on Friday signed two agreements with the World Bank amounting to US $134.68 million for financing projects in different sectors, namely: Third Partnership for Polio Eradication Project (US $74.68 million) & Social Safety Nets Technical Assistance Project (US $60 million) in the Economic Affairs Division (EAD).

The agreements were signed by Farrukh Qayyum, Secretary, EAD on behalf of the Government of Pakistan and Yusupha B Crookes, Country Director on behalf of the World Bank. The overall objectives of these projects are to help the Government of Pakistan in enhancing the efficiency and productivity of sectors like Health & Social Welfare.

The terms and conditions for the Education Sector Credits will remain as per the World Bank standard ie maturity period of the credit is 35 years having a grace period of 10 years. The Government of Pakistan has to pay service charges @ 0.75 percent and commitment charges @ 0.5 percent per annum.

THE PROJECTS DETAILS ARE: The Third Partnership for Polio Eradication Project (US $74.68 million) and the objective of the project is to assist the Recipient in its efforts under its Polio Eradication Initiative (PEI) to eradicate polio from its territory.

The project consists of: Procurement, supply and use of OPV for the purpose of immunising children under five (5) years of age under the Supplemental Immunisation Activities (SIAs). Social Safety Nets Technical Assistance Project (US $60 million): The objective of the project is to enhance the operation and management of a nation-wide effective and transparent safety net system for the poor within the territory of the Recipient.

THE PROJECT CONSISTS OF THE FOLLOWING PARTS:

Part 1: Establishment a National Targeting System (US $34.6 million).

Part 2: Strengthening Safety Net Program Operations (US $12.9 million).

Part 3: Enhancing the Safety Net Program Management, Accountability and Evaluation (US $10.7 million).

Part 4: Developing the Social protection Policy and Strategy Monitoring (US $1.7 million).

 

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WB commits $1.7bn to cope with crisis impact​

Saturday, July 04, 2009

ISLAMABAD: The World Bank committed a record amount of $1.7 billion in fiscal year 2009 (FY09) to help Pakistan cope with the impact of global economic crisis, the bank said on Friday.

“This represents an increase of $1.064 billion over FY08,” said the WB in a statement issued here.

The bank’s financial support and technical assistance to Pakistan focused on helping the country to maintain economic stability, steer the economy back onto a higher growth path, help the government put in place the systems, realise its vision and protect the poor from economic shocks.

“Pakistan has faced daunting challenges over the past year, including a domestic macroeconomic crisis, a global recession, political turmoil and serious security challenges,” said Yusupha Crookes, World Bank Country Director for Pakistan.

“The tripling of our support during a time of need demonstrates our commitment to promote growth and stability in Pakistan. The focus of our assistance has been on ensuring the country’s poorest and most vulnerable citizens are shielded from the major adverse impact of these external shocks.

“Pakistan should also not lose the momentum in seeking to build the capability of its citizens especially the poor and our support puts considerable emphasis on supporting the government to continue its efforts in this regard.”

During this time, the Pakistan Poverty Alleviation Fund (PPAF) has facilitated the formation of 80,000 community organisations and provided 1.9 million micro-credit loans and 16,000 community infrastructure schemes.

The bank also continued to invest in education in Punjab and Sindh.

In FY09, the bank committed a total of $650 million to support the provincial governments’ education reform programmes which aim to increase school participation and progress, reduce gender and rural-urban disparities and improve quality and education sector governance.

In addition to its lending and technical support, the bank, together with the government of Japan, convened the international community in Tokyo for a donor’s conference in April to mobilise additional resources for Pakistan.

Donors rallied to support Pakistan’s macroeconomic recovery with $5 billion in funding designed to meet its immediate needs and protect expenditures on safety net and human development programmes. Globally, the WB Group committed $58.8 billion in fiscal year 2009, up 54 per cent from fiscal year 2008.

 

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Pakistan sells 15,000T corn as Indian supplies dry up​

Saturday, July 04, 2009

SINGAPORE: Pakistan sold around 15,000 tons of corn this week mainly to Malaysia as supplies from India dried up, while Asian wheat importers bought 20,000

tons of Black Sea wheat on competitive prices and tight Australia supplies.

Pakistan sold corn cargoes in containers at around $190 a ton including cost and freight for prompt shipment and more deals are likely as India’s export season is nearing an end, regional traders said. “Pakistani exporters are in the market, negotiating deals,” said a Singapore-based grains trader. “I think they will be active, but we don’t expect big deals as the market is very volatile.”

Traders said Asian grain importers were buying hand-to-mouth, importing smaller quantities in containers on weakening global prices. “Not many want to take a bulk delivery when the market is falling so much,” said a trader who sells wheat and corn cargoes in Asia.

 

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Kenya offers flower growing tech to Pakistan​

ISLAMABAD: Kenya has offered the transfer of flower growing technology to Pakistan to enable the country to export flowers and earn precious foreign exchange.

Ambassador of Kenya, Mishi Masika Mwatsashu called on the Federal Minister for Commerce, Makhdoom Amin Fahim on Friday. The Minister expressed that Kenya and Pakistan are trading partners and both should see maximum opportunities to explore potential trade. The ambassador appreciated the efforts being made by government of Pakistan to organize exhibitions and trade fairs in Kenya. Pakistan imports mainly tea from Kenya , constituting 55 percent of total consumption of tea in Pakistan , and exports manly rice there. It was proposed that Pakistan could learn from Kenyan expertise of producing flowers, which is a big source of income for them. Pakistan has a fertile terrain, suitable for producing flowers and the Kenyan experience in this field would help Pakistan to a larger extent. Once the technology of growing flowers is transferred, Pakistan can earn a handsome amount of foreign reserves through export of flowers. The Ambassador showed interest in importing pharmaceuticals and surgical instruments from Pakistan. The Ambassador of Iran, Masha Allah Shakeri also called on Makhdoom Amin Fahim. The Ambassador stated that after kinnow, Pakistani mango is also gaining ground in the Iranian market.

 

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Cement exports growing despite global recession​

KARACHI: Despite global economic slow down around the world the local cement exports continued to exhibit growing trend, as the cement exports to Afghanistan jumped to 23 percent month-on-month in June 2009, as compared with April.

According to the latest cement exports break down released by the All Pakistan Cement Manufacturers Association (APCMA) for the month of June 2009, exports to Afghanistan were up by 23 percent M-o-M and 54 percent year-on-year (Y-o-Y) which can be put down to improving law and order situation in Afghanistan’s border adjoining areas of NWFP region.

However, the exports to India dropped 14 percent M-o-M and 28 percent Y-o-Y, to the Middle East and African region remained flat on a M-o-M basis though were still up 34 percent Y-o-Y, as planned capacities are yet to come online in the Middle East.

Furthermore, for the full year FY09, exports to Afghanistan and to the Middle East and African countries rose by 15 percent and 81 percent Y-o-Y respectively. However, due to political tensions with India during the year, exports to the country fell by 15 percent.

The export trend to Afghanistan may only sustain if military operation in the Afghanistan’s border adjoining areas and NWFP region is completed successfully, an analyst said.

Furthermore, anticipated capacity expansions in the Middle East (likely to come online by the end of FY10) and prolonged global recessionary woes remain a major downside risk to country’s exports.

 

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Cotton production to rise 3% to 16m tonnes in 2009-10​

KARACHI: Cotton production is expected to increase by 3 percent to 16 million tonnes in 2009-10. Production is expected to increase in the three largest cotton-producing countries after China, India, the United States and Pakistan.

A senior trader at Karachi Cotton Association, Ghulam Rabbani said significant decline in production is expected in Turkey, Brazil and the CFA zone.

He said that the use of cotton mill in the world except China is forecast 1 percent higher at 14.2 million tonnes in 2009-10.

Both cotton imports and exports in the world except China are expected to recover slightly in 2009-10, to 5.1 million tonnes and 6.5 million tonnes respectively, he added.

Due to a faster increase in supply than in use, cotton stocks outside of China are forecast to continue to grow by 4 percent to a record of 9.5 million tonnes by the end of July 2010, accounting for two-thirds of cotton mill use in that region.

He said, “Cotton futures are currently trading higher due to the decline in the US dollar and the influence of Chicago soybeans, which are much stronger.”

Technical buying is also accompanied by the rumours of China’s additional import quota. Cotton open interest has reached a 3-year low and the market has successfully tested last week’s reversal upwards.

According to Beijing Cotton Outlook, the volume of cotton stocked by traders’ has decreased sharply (Cotlook’s sources suggest perhaps to 800,000 tonnes in total, a portion of which remains in Xinjiang) and some are said to have sold out.

As noted previously, some of them have been purchasing from the state reserves on behalf of mills. Expectations persist in unofficial circles that additional import quota will soon be forthcoming and some traders fear that the result could be to depress prices, which might make cotton bought at auction look expensive.

 

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Pakistan gets WB funds for two projects​

ISLAMABAD: The government signed two agreements with the World Bank amounting to $134.68 million for financing two projects on Friday.

Under the agreements, the World Bank would provide $74.68 million for the ‘Third Partnership for Polio Eradication Project’ and $60 million for ‘Social Safety Nets Technical Assistance Project’ under the Economic Affairs Division (EAD). The objective of these projects is to help Pakistan enhance the efficiency and productivity of sectors such as healthcare and social welfare. The terms and conditions for the education sector credits will remain as per the World Bank standard, i.e., maturity period is 35 years and a grace period of 10 years. Pakistan has to pay 0.75 percent service charges and 5 percent commitment charges per year.

The agreements were signed by EAD Secretary Farrakh Qayyum and WB Country Director Yusupha B Crookes. The ‘Third Partnership for Polio Eradication Project’ aims at assisting the recipients in their efforts under the Polio Eradication Initiative (PEI).

 

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Power company to be set up in Northern Areas​

ISLAMABAD (July 04 2009): The government is reportedly set to remove all legal hitches in the establishment of an electricity entity in Northern Areas, which would be referred as 'Northern Areas Electricity Development Company' (NAEDC), with the objective of facilitating private investment in hydropower projects, sources told Business Recorder.

This decision was taken in a meeting of the Economic Co-ordination Committee (ECC) of the Cabinet on a proposal submitted by the Ministry of Kashmir Affairs and Northern Areas (Kana), by Minister Qamar Zaman Kaira. The background of this decision was a controversial Letter of Interest (LoI) issued by the Alternative Energy Development Board (AEDB) to Tassaq Energy, owned by (retired) Major General Sikandar Hayat Khan who showed intention to establish an independent power producer (IPP) project of 16-20 MW in Northern Areas on Gilgit river.

On this, Prime Minister Secretariat directed Kana to convene a meeting of all stakeholders and resolve the following issues: (i) who will be the client? Wapda, Finance Ministry or the government of Northern Areas? (ii) who will be empowered to set the tariff and give the IPP the licence? Nepra or any other agency? (iii) which agency will pay return on investment to the IPP?

These issues were also raised by the Planning Commission. Sources said that Kana Ministry convened a meeting of all stakeholders wherein it transpired that keeping in view the limited resources, capacity and mandate of Northern Areas Electricity Department and the potential of power generation in the Northern Areas through IPPs, establishment of regional grid, extension of national grid in Northern Areas, establishment of NAEDC, purchase of electricity from IPP and return on investment are the major issues that need to be tackled before an IPP can be established.



A SUMMARY WAS SUBMITTED TO PRIME MINISTER TO SEEK APPROVAL TO INITIATE FORMAL PROCEEDINGS ON THE FOLLOWING LINES:

i) Initiate steps for the establishment of NAEDC.

ii) Look into the legal aspects of extending the jurisdiction of Nepra to Northern Areas.

(iii) Co-ordinate with Planning Commission, Finance Ministry and Water and Power Ministry to plan extension of the national grid and the establishment of regional grid in Northern Areas.

Sources said that the Prime Minister endorsed the recommendations of Kana Ministry and directed that the matter should be placed before the ECC. According to sources, the ECC was informed that in January 2008, AEDB had issued LoI for establishing an IPP on Gilgit River, but resolution of a few legal and administrative issues was required so that the project should progress.

Sources said that issuance of LoI by the AEDB became contentious when some ECC members observed that the Board had no jurisdiction to issue LoI for a hydropower project. It was also pointed out that other major projects in Northern Areas would make the area a surplus producer of electricity. In any case, establishment of regional grind and generation/marketing company was desirable and should be progressed alongside the construction of dams/power generation facilities.