Pakistan Economy - News & Updates - Archive

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ISLAMABAD (September 07 2006): The construction of Rs 18 billion ($300 million) new Islamabad airport would begin in next three months. The Civil Aviation Authority (CAA) officials told PPI that the contract for construction of airport would be awarded by January 2007.

Advertisements for expression of interests have already been issued and process of short listing was in progress. The airport was to be completed before December 2009.

The contract agreement with the selected consultant from USA had been signed while selection of the design consultant was in process. CAA Board was currently reviewing different designs of the new airport submitted by five international firms of consultants and architects.

Representatives of these firms had given detailed briefings to the CAA board regarding their respective designs. The board was likely to approve a design very soon. The groundbreaking ceremony of the airport would be held in a month or so.

 

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Thursday, September 07, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\07\story_7-9-2006_pg5_11

* ADB to invest $200m in energy, power sectors in 2006, to spend $150m-$200m a year on NHA programmes

ISLAMABAD: The Asian Develop-ment Bank’s (ADB) future assistance programmes for different sectors of Pakistan’s economy were reviewed here on Wednesday.

A high-level delegation of the AD led by Juan Miranda, Director-General of the Central and West Asia Department, held a meeting with Dr Salman Shah, Adviser to the Prime Minister on Finance, and senior officials of the ministries of finance, planning, agriculture, communications and others to discuss the ADB’s future assistance programme for different sectors of Pakistan’s economy.

Briefing the adviser to the PM, the ADB director-general said that the main objective of his department was to evolve a focused and targeted strategy for preparation and implementation of its various programmes by creating an enabling environment for both the private and public sectors.

He stressed the emphasis on involvement of private sector in different sectors of the economy. He supported the second-generation reforms being implemented by the government. He said that the ADB programme in Pakistan will be enhanced to about two billion dollars annually, which would be available for development of energy, transport, urban services, infrastructure and the social sectors as well as for second generation reforms and projects in the water and agriculture sector.

Support will be provided for financial sector and capital market reforms and for public resource management. He emphasized on improving productivity, efficiency, credibility and liberalization in the overall development plans of the country. He also stressed that more and frequent interactions would be held between the ADB and the project executors for successful and timely completion of the projects.

About the agriculture sector, the ADB emphasized on raising the productivity and integration of various projects under a cohesive overall framework. The ADB official said that an integrated rural development programme with development projects like development of livestock, building of farm to market roads, providing inputs to small and marginal farmers would be coordinated to close the urban-rural gap.

Referring to the proposed megacity project in Karachi, the ADB official said that the project would involve about 800 million dollars. The ADB expressed its plans to invest about 250 million dollars in the sectors of energy and power in 2006. It said that it would spend about 150 to 200 million dollars a year on the National Highway Authority programmes.

In addition an investment of around a billion dollars would be made for the National Trade Corridor connecting Karachi with northern borders under the proposed programme. The ADB also showed its readiness to finance projects in education, health and sanitation.

About the agriculture sector, the adviser said that agriculture has to be commercialized. He said that there is much potential for developing the agriculture sector to make it more competitive and profitable. Referring to the mega city project, the adviser said that Karachi should become a real financial, industrial and commercial center of the region. It should be benchmarked with other mega cities such as Singapore, Bangkok, Kuala Lumpur, etc. He stressed that it should become a driver of growth for Pakistan.

The adviser said that after completion of the national trade corridor, Pakistan would become the center of regional cooperation with China and the Central Asian Republics. He said that development of the capital markets was key for economic development and national competitiveness. The adviser also informed the delegation that there is a big scope of promoting the insurance sector in Pakistan. He said that there is still a great opportunity for expanding capital markets with new instrument of financing such as private equity, voluntary pension schemes, REITS, mutual funds, etc.

Earlier, the adviser gave a comprehensive presentation to the delegation on different aspects of the economy. The ADB appreciated the government’s roadmap for development of the economy, which would include development of agriculture, roads, banks and social services, water sector and financial markets. The adviser thanked the delegation for its cooperation and assured it that the government would be working closely with the ADB on its assistance programme.

 

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KARACHI, Sept 6: The World Bank report on Sindh economy is being delayed because of sharp conflict in perceptions and assessment of the bank’s researchers and surveyors with the provincial and federal governments on provincial finances and functioning of the departments.

There are now doubts if the document will be released within the year 2006 or even later.

“We have sent a final draft of the report to Sindh government about two months ago and we are waiting for their comments,” a source in World Bank office in Islamabad informed Dawn by telephone on Wednesday.

The Sindh government officials are not at all happy with the World Bank draft report and call it a “document of ignorance”.

“The World Bank team did not see any mining potential in Sindh,” a senior official retorted who wondered as to how could “they ignore provincial annual development outlay has gone up from a mere Rs5 billion about four years ago to Rs32 billion in the current fiscal year”.

“Our financial discipline is worth emulating,” claimed another bureaucrat, who pointed out that the government cleared a State Bank loan of Rs10 billion, paid bills pending for last more than a decade, absorbed salaries increase, pre-paid federal government loans, established pension fund and invested Rs50 billion in development during last five years.

“We are executing projects being funded by the World Bank, Asian Development Bank and the federal government involving billions of rupees,” he said and wondered as to why the Sindh government would be entrusted with this gigantic task if there is poor governance, corruption and law and order problem.

What has angered most the Sindh government — politicians and bureaucrats both — is the observation “poor governance is the single most important developmental challenge facing Sindh,” in a report based on World Bank team’s survey of stakeholders in May 2005.

“Corruption and law and order, which are derivatives of a weak governance system, emerge as the second and third most critical challenges” is another observation of the same report that has failed to amuse Sindh government functionaries.

The World Bank team found the “coalition nature of the government in Sindh to have been burdened with political stalemates” and that the government find it difficult to “focus on developing the type of strategic vision, action programme and implementation drive” that made Sindh once a leader in implementing reforms in earlier years too unpalatable and impossible to swallow.

The World Bank team also noted “sustained bureaucratic inaction” and Sindh government’s “lack of attention to business related issues” has created a severe policy uncertainty, and heightened the level of distrust between the business community and the public sector institutions.

“The economy has stagnated and the number of people below the poverty line has increased steadily,” is a comment that has embarrassed Sindh government and “irritated federal government” to quote an analyst who said that “Islamabad is now very sensitive to provincial economic disparities issue”.

To illustrate his point, the analyst says that federal government claims to have brought down

poverty level by 10 per cent in two years but has deliberately ignored to mention poverty issue with

reference to the provinces.

Another example of suppressing poverty reports on Sindh is concealing the findings of district based Multiple Indicator Cluster Survey carried out in 2002-03 with the help of Unicef.

The report lies buried deep under the heap of files of the provincial chief minister and according to the officials “now another survey is due”. The report reveals extreme poverty conditions in rural population of the province.

The first World Bank team came to Karachi in August 2004 in response to a request made by the Sindh government to prepare a report on provincial economy.

In its Concept Note the World Bank called Sindh “historically one of more affluent and developed provinces of the country”. The initial observations were that Sindh is clearly left behind other provinces in growth and development.

Karachi’s problems are getting acute, and the renewed country wide focus on economic growth is yet to be pursued with similar vigor at (Sindh) provincial level.

Another World Bank team visited Sindh in January this year and gave its observations on education and finance departments which too were not welcome.

A final presentation of the proposed roadmap of reforms was given to Sindh government in March 2006 and according to a source the final draft of the report was given sometimes in June.

According to the World Bank source the final assessment and findings are shared with authorities, the Sindh government in this respect and their observations and views are sought. The World Bank then gives final touches to the report in light of the views and observations of the authorities involved in the survey and is considered and discussed in the bank’s board of directors before making it public.

The bank committed to prepare the report on Sindh economy before the presentation of 2005-06 budget. It has not been presented in 2006 and analysts and observers doubt if this report would be given before December next.

“The government will like to hold this report even in 2007 or 2008 so that it does not figure in the election campaign,” remarked a political activist.

 

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KARACHI: Pakistan and Russia on Wednesday agreed to enhance cooperation and start joint ventures in the field of IT and telecom, an official statement said.

“The two sides also announced exchange of trade and investment delegations and set up focal groups to further explore possibilities of collaboration in the areas of information technology, business process outsourcing, telecommunications and space technology,” said the statement issued following a meeting between Awais Ahmad Khan Leghari, Federal Minister for IT and Telecom and a six-member Russian trade delegation.

The delegation was led by Elena Danilova, Director Russian Ministry for Economic Development and Trade, currently visiting Pakistan to explore business opportunities. IT Secretary Farrukh Qayyum, Member Telecom Nooruddin Baqai and other officials were also present.

“Pakistan considered Russia a country with huge potential to participate in the growth of IT and telecom sector in Pakistan,” it quoted Leghari as saying.

He said the two countries could also forge stronger business ties in the field of space science, which Pakistan was seeking to develop with the help of reliable technology and expertise such as that possessed by Russia.

“We do not want to become mere purchasers, but strategic partners and transfer of technology and skills should form the core of any business relationship,” he added.

He said Pakistan and Russia could also reap economic benefits through interaction and close partnerships in business process outsourcing, which was gaining a strong foothold in Pakistan due to cheap workforce and excellent English language skills.

The minister said his country had embarked on a massive e-government programme and the provision of IT-enabled services had become a key area of focus for partnerships with the local and international IT players.

Elena Danilova said Russia viewed Pakistan as an emerging economic centre and the growth of telecom and IT sector had encouraged many Russian companies to look at possibilities of coming to Pakistan in a big way.

“Russia is ready to facilitate exchange of traders and investors to discuss and earmark areas in which the countries could forge joint ventures,” she said.

Meanwhile, Leghari also met with Greg Oliveau, Head Asia Pacific Region Aeromobile, who briefed the minister on his company’s plans to launch ‘GSM on Board’ initiative in collaboration with Telenor Pakistan to provide a safe and cost-effective way for air passengers to use mobile phones without interruption.

CEO Telenor Pakistan Tore Johnsen told the minister his company was one of the two partners in the UK-based joint venture Aeromobile, and discussions with the management of Aeromobile were already under way to make Pakistan one of the first countries to have the GSM-on-board technology.

The minister assured complete government support to the visiting Aeromobile official in bringing this technology to Pakistan as a pioneering initiative in the world.

 

[Owais]

China pledges $50 billion investment


ISLAMABAD (September 08 2006): China has pledged $50 billion investment to Pakistan to develop Gwadar port on the pattern of its Shenzhen port over the next five years. The plan referred by Beijing to Islamabad indicated that Chinese investment for this mega project will come in two phases and its lion share will go to the petrochemical industry.

Pakistan had offered China co-operation in the energy sector in a big way when President General Pervez Musharraf visited Beijing in February last. The President conveyed his Chinese counterpart Hu De Ping during the course of consultations that Gwadar port will be the best facility for his country to meet its growing energy demand.

This was followed by a Pak-China energy forum, which was held in Islamabad in April this year. The Chinese President had led a 150-member team in the forum.

These high-level negotiations led to a formal understanding between China and Pakistan that the two sides will take full advantage of each other's potential to ensure their energy security. China pledges to make huge investment in Pakistan to develop its infrastructure and other facilities to help it become an energy corridor for the region.

Sources said Chinese investment plan was under study in Islamabad and the two sides are likely to sign a formal agreement for the Gwadar port-specific investment during the upcoming visit of the Chinese President to Pakistan.

The plan was discussed more than once at the highest level to make it work and achieve objectives in the stipulated time period.

They added the Chinese President's visit to Pakistan is expected in November and foreign ministries of the two sides were actively busy in giving final touches to the schedule and activities of the meeting. China contributes 25 to 30 percent of Pakistan's investment in different areas and it intends to increase this percentage in the future.

Sources said Pakistan is targeting to take Chinese investment between 120 to 150 percent in next 10 years and the Gwadar port will serve as a hub to achieve the target.

Pakistan is planning a petrochemical zone at Gwadar to attract foreign invest to promote petrochemical industry. The plan also included at least two major oil storage facilities for supply to China and other regional countries, besides meeting growing national demand of petroleum products.

Islamabad is positioning itself to become an energy corridor to ensure supply of petroleum products to China and other countries of the region. China's energy needs are growing fast and with the development of Gwadar port Pakistan can ensure supply of oil and gas through pipelines and land route.

 

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Government looking for site to build new port: minister


KARACHI (September 08 2006): The federal government is looking for a suitable site to build country's fourth port, preferably in Balochistan. In this regard, experts in the ministry of ports and shipping are already working to identify the suitable site to build a port.

Minister for Ports and Shipping Senator Babar Khan Ghauri shared these views in an exclusive interview with Aaj TV here. Though no decision has yet been taken, the minister said potential site could be Ormara or Sonmiani. Pakistan's economy is rapidly growing because of strategic location the country enjoys. "There is a place for fourth port in Pakistan," he added.

Babar Ghauri said Pakistan was poised to become hub of transit trade for North Western India, Western China, Afghanistan, Central Asia and even parts of eastern Iran.

The port operator for Gwadar deep-water port would be finalised in one-month time. The ministry had received expression of interests (EoIs) from local and international firms, including DP World, P&O, PICT and others.

The Gwadar port has potential to become a major port of the region. "We expect that the Gwadar port will also grab some business held by other regional ports. Therefore, all the applicants are being examined carefully."

Without naming any port or operator, the minister said the government wanted to make sure that the port operator did not make Gwadar a second category port. Ghauri was optimistic about improving financial health of the Pakistan National Shipping Corporation (PNSC).

He said the corporation was operating a fleet of 14 vessels, including four oil tankers and one bulk carrier. While, two oil tankers and another bulk carrier would be inducted in the existing fleet soon. "Pakistan is no more dependent on foreign shipping lines for the import of crude oil," he added. Ghauri said that country's annual crude oil import stood around nine million tonnes. Of which the PNSC is transporting 8.1 million tonnes.

"After acquiring two more oil tankers by the end of this year, Pakistan will be supplying oil to Sri Lanka, Bangladesh and other countries." He said rising PNSC fleet would also benefit Pakistani seafarers, who had suffered discrimination after 9/11 incident, as many shipping lines refused to board Pakistani seamen due to strict regulations in many countries.

He informed about the successful negotiations with DP World regarding establishing of second container terminal at Port Qasim and increase in royalty charges for containers' movement. As opposed to the previous cargo terminal at PQA, the second terminal is being built on build-operate and transfer basis for period of 30 years. The government has allotted the QICT at build-operate and own (BOO) basis with movement charges of $4 per container.

Under the new contract, the terminal operator will pay PQA $9.2 for movement of each container. The PQA would earn an additional $300 million over 30 years, due to revision in royalty charges.

 

[Owais]

Russian team visits commerce ministry

ISLAMABAD (September 08 2006): A Russian delegation headed by Ms Elena, Director of the Department for Foreign Economic Relations visited the Ministry of Commerce. The delegation was told that the economy of the country is increasing. There is a substantial increase in exports. The Russian delegation expressed its interest in the fields of gas, oil and agriculture machinery.

The delegation also expressed its interest in the construction of power stations to counter the energy crisis of Pakistan Regarding agriculture machinery, the delegation was told that there is no ban on the import of tractors. Only new tractors could be imported on zero duty.

 

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ISLAMABAD (September 08 2006): The Asian Development Bank (ADB) has offered investment of $3 billion in water and power sectors in Pakistan during the next three to five years, but questioned transparency in utilisation of funds.

The federal government has also sought $6.46 billion investment from the bank for the construction of Diamer-Basha dam for which a working group comprising concerned federal ministries and development partners would be established to work out financing modalities.

The World Bank (WB) has already expressed its willingness to finance the project, after all the confronting issues are resolved by the government amicably. The bottlenecks of ongoing and future water and power sector development projects funded by the ABD were discussed at a meeting between a seven-member bank's delegation headed by Juan Miranda and the Minister for Water and Power, Liaquat Ali Jatoi on Thursday.

The ADB team assured technical and financial support for major water and power sector projects, including up gradation of distribution systems and transmission lines in order to improve system efficiency for supply of electricity to the consumers besides major rehabilitation and infrastructure projects in water sector.

The bank would extend $500 million financial assistance for renewable energy development, $1200 million for power transmission improvement, $250 million for power distribution system and $800 million for irrigated agriculture and water resources, besides number of technical assistance programmes for capacity building and other relevant studies.

Jatoi, while welcoming the delegation informed that Pakistan under the able leadership of the President and the Prime Minister was making rapid economic progress resultantly economic activities were contributing to achievement of high GDP growth.

He further said that Pakistan was also focusing on alternate energy projects like wind power, solar energy, coal-based generation along with hydel power, which is cheapest and that the bank's support would be of great importance.

He further informed the delegation that the power sector is currently undergoing reforms and restructuring, which are fully supported by the ADB, stressing for co-ordinated meetings of the donors for expediting the progress of work on Diamer-Basha dam and urged upon active role of ADB in this regard.

Miranda appreciated the efforts of the present regime to maintain stable economic growth and offered both technical and financial assistance to keep up the momentum. He also apprised the minister about the ADB's internal system for making investment in such projects.

The minister thanked the ADB for offering assistance in water and power sectors and assured the delegation of his full support and co-operation for implementation of the programmes in a transparent manner. The adviser, Ministry of Water and power, member (Power), Wapda and senior officers of the ministry attended the meeting.

 

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ISLAMABAD (September 08 2006): Pakistan automobile industry needs to develop indigenous capability focussing on quality of vehicles instead of price and quantity to sustain in a competitive and free global market.

This was stated by Takahiro Fujimoto, Director Manufacturing Research Centre, Tokyo University while delivering a lecture to automobile manufacturers and policy makers organised by Japan External Trade Organisation (Jetro) on Dynamics of Japanese Industrial Management Policy and System-application in Auto and Manufacturing Industry of Pakistan".

He suggested that Pakistan's future designs of cars should be different from the one of India and Japan, if the industry wanted to have an indigenous identification in world auto market and develop their own vendors industry.

Fujimoto said there are many lessons the Pakistani manufacturers could learn from their Japanese counterparts, which had faced many challenges by European, and American manufacturers in 1990s but did not compromise on quality. Japanese manufacturers had rather learned from these experiences and further strengthened their capability in operation, brand power, and market strategy.

He said India, Thailand and Taiwan are emerging as potential automobile hub in the region whereas Pakistan's industry is yet to frame policies for improving production quality. As the local market is expanding, Pakistani companies need to strengthen their own capability instead of looking outside, he said emphasising that Japanese companies had never compromised on quality for the sake of profit, as a result they not only enhanced volume but also became major players in auto sector.

"The India auto industry, which has almost developed itself indigenously and strengthen wide range of other supporting industries, provides direct employment to 550,000 persons whereas 12 million are indirectly attached to it," he added.

Earlier, in his opening remarks, Engineering Development Board (EDB) CEO Imtiaz Rastgar highlighted the initiatives taken by the government for the promotion of the sector.

He said that after the implementation of Tariff Based System (TBS), the key requirement for vendors is to focus on quality, productivity and organisational development to meet the growing domestic demand. The other major area is to develop a missing link between academia and industry, he added.

A government representative contended that industry was not playing its due role as manufacturers are relying on import instead of localising their product. Spare parts of over Rs 40 billion are being imported annually, which is more than half of total requirement of Rs 70 billion cars. All they have been focussing on door locks, seats cover and other small invaluable localisation and continued importing all the major auto components, he added.

Later talking to Business Recorder, he said how the country could achieve localisation of parts when the manufacturers of one or the other company have developed a chain for smooth supply of parts instead of developing local capability.

India, Taiwan and Thailand are likely to be regional players in the auto sector because of their indigenous capabilities, which always remained low priority of Pakistani industry and subsequently they would be facing problems in a free market, he added.

 

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KARACHI (September 08 2006): A meeting, presided over by Sindh Chief Secretary, Fazlur Rehman, on Thursday reviewed the matters pertaining to revival of Karachi Circular Railway and setting up of Karachi Urban Transport Company. Federal Secretary, Railway, Shakeel Durrani and City Nazim Syed Mustafa Kamal also attended the meeting.

The federal secretary apprised the meeting of Japanese investment offer of $800 million in KCR and stressed on introducing modern railway services in Karachi to facilitate the citizens. He also assured fullest co-operation in this respect from Pakistan Railways.

The chief secretary on this occasion directed the departments of transport and planning & development to jointly prepare the PC-I of a project and submit the same by September 10 so that the Karachi Urban Transport Company could be set up under the rules and regulations for operating from Sohrab Goth to Tower.

The company would be formed jointly by the provincial government and CDGK.

The meeting decided that Sindh government and CDGK would finalise the strategy by September 15 and during this period, Director General, Karachi Mass Transit, Malik Zaheerul Islam, as a representative of city Nazim, would co-ordinate with the Sindh government, Pakistan Railways and other stakeholders. It further decided that a consultant would immediately be appointed under the law for finalising the financial structure of the project.

For meeting the initial financial requirements of the project, Rs 10 million would be sought and a summery to this effect would be moved this week by the finance department for approval at higher level.

ACS, Development, Ghulam Sarwar Kherro, Secretary Transport, Nasar Hayat, Special Secretary, Development, Rehana Memon, railway and other officials also attended the meeting.

 

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ISLAMABAD, Sept 7: The United States sees significant investment opportunities in Pakistan, especially in power generation, ports, airports and other infrastructure projects, says Robert Adam Mosbacher, chief executive officer of the US Overseas Private Investment Corporation (OPIC).

"We want to be part of Pakistan's very impressive story by strengthening additional capacity, supporting small and medium sized businesses and by promoting access to credit," he further stated.

A source said Mr Mosbacher called on Prime Minister Shaukat Aziz here on Thursday. The OPIC CEO said the United States had decided to provide funding to the American investors through Citigroup which was operating throughout the country.

"The government has been assured that OPIC would also provide necessary guarantees to the US investors about the protection of their investment in Pakistan," he said. Without the involvement of OPIC, the source said, the US investors were reluctant to invest in the country.

Mr Mosbacher said the US strongly supported increase in investment in Pakistan in view of the "extraordinary economic progress made by Pakistan in the last few years".

The prime minister on the occasion said last year Pakistan attracted an investment of $3.8 billion, including FDI, which was the highest in country's history. Pakistan offered lucrative investment opportunities, especially in power generation, IT, telecom, agriculture business, tourism and construction, the premier added.

"We want OPIC to have a bigger footprint in Pakistan. Our energy needs are growing by 10 per cent and one cannot go wrong by investing in power generation," he said.

Giving an overview of the economy, the prime minister said Pakistan was virtually bankrupt seven years ago and the economy was rebuilt by focusing on the macro side by containing deficit, debt and managing other economic indicators.

Simultaneously, a massive structural programme was initiated which has transformed the country's economic scene. “Deregulation, liberalisation and privatisation are the guiding principles of our economic philosophy,” he said.

Mr Aziz said the economy, which had been growing six-eight per cent consecutively in the last three years, was projected to grow at seven per cent during the current financial year.

Per capita income, he said, had reached $850, which was the highest in the region. “Due to vibrancy in the economy and reforms, tax collection is increasing by 20-25 per cent per year and, we are now in the phase of second generation reforms.”

The Fiscal Responsibility Law, he said, introduced by the government, had limited the borrowing powers of the government, which could not go beyond a fixed percentage of the GD.

Privatisation Minister Zahid Hamid and other senior officials also attended the meeting.

 

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ISLAMABAD, Sept 7: The higher transportation cost has severely constrained economic growth, competitiveness of Pakistan’s exports and improvement of people’s life. Official sources told Dawn on Wednesday that the World Bank, in one of its studies, estimated an annual loss of Rs220 billion or 6 per cent of GDP due to inadequacies of the transportation system.

The bank listed some of the major issues of transport sector which also included inadequate physical capacity, inadequate maintenance system, poorly targeted priorities of investment, operational and financial inefficiencies of the public investment, lack of private sector participation and environmental impact.

The government was told to consider the rational allocation of inland freight traffic between rail and road network, privatisation of railway’s operation in selected sections and inclusion of private sector in development of roads, airlines, ports and shipping.

The inland navigation could help in improvement of the efficiency of the transport sector.

The road density, an import indicator of economic development, is low (0.32 km per sq. km) in Pakistan as compared to neighbouring countries such as India (0.49 km per sq. km and Sri Lanka (0.48 km per sq. km).

Punjab and Sindh have high and Balochistan has density of only 0.12 km per sq km. Road population and road per vehicle point to a different story. Balochistan is the highest and Punjab is the lowest in both indicators.

The current road network is considered to be insufficient to cater to the needs of the growing population. Pakistan needs at least another 100,000 km network of roads to increase the road density to be at par with India and other regional countries. Due to insufficiency of roads, 30-35 per cent of perishable harvest is lost annually.

The assessment of roads done by a joint study of National Highway Authority (NHA) and World Bank indicated that 47 per cent of national highways were in poor condition and only 28 per cent of the network was in good condition.

The major causes of deterioration of the road network include (a) rapidly increasing traffic volumes partly due to shift from rail to road (b) inadequate funds for maintenance, (c) inefficient government institutions, (d) overloading, and (e) lack of private sector involvement.

It was said that the inclusion of the private sector in road development was not very successful in spite of policy framework and package incentives. Private sector could be involved in many ways including toll operation and maintenance contacts.

Due to insufficient funds allocation, proper maintenance of road network is not taking place and causing deterioration of networks. A study by Asian Development Bank estimated that in Punjab the budget allocation of road maintenance was just 19pc of the total requirement of Rs8bn.

About air transportation it was said that currently 43 airports are operative in Pakistan including 10 airports equipped for international traffic and 15 feeder airport.

However, whereas the number of passengers in domestic and international flights has increased by 27 per cent during the last two decades, the share of air transportation is merely 10 per cent of passenger traffic and negligible in freight.

The main issue in the air transportation is said to be the poor quality of the services and airport facilities. The service level is not of international standard which is the main hurdle in developing tourism industry.

The capacity at Karachi and Lahore airports has increased but Islamabad is still low. The car parking facilities and aircraft parking stands need attention of the government.

Similarly, the share of entire Pakistan merchant fleet including Pakistan National Shipping Corporation (PNSC) is barely eight per cent which is much lower than 40 per cent share allowed under Unctad Code of Conduct.

Private sector partnership is not good enough because of poor investment climate, lack of level-playing field with PNSC enjoying the first right of refusal for government cargoes. Also, application and processing of documents is slow in the port and shipping ministry.

The government has been advised to modernise facilities at the Karachi and Qasim ports by containerisation of traffic on Built Operate Transfer (BOT) and Built Operate Own (BOO) arrangements with the help of dry ports and bounded warehouses.

 

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Singapore: India and Pakistan have two months to agree with Iran on a major natural gas pipeline or Tehran will earmark more of its reserves for liquefied natural gas (LNG) projects, a senior official said on Thursday.​

Talks on the $7 billion gas pipeline from Iran home to the world's second-largest natural gas resources through Pakistan to fast-growing India have stumbled recently as Tehran has asked nearly twice the rate that New Delhi wants to pay.​

"(They) are not prepared to pay the real price of gas in the market, therefore we are reviewing increasing the capacity of gas allocated to LNG," Mohammad Hadi Nejad Hosseinian, Iran's deputy oil minister for international affairs, said at a conference in Singapore.​

"We may increase the capacity to these LNG projects and decrease capacity allocated to the pipeline."​

Separately he told Reuters: "We have to decide in a maximum of one and a half to two months (on the pipeline)."​

Past deadlines set by Iranian officials for completing major energy projects have often been missed as negotiations on key deals can carry on for years.
India, Pakistan and Iran agreed last month to appoint an outside consultant to suggest a price for the gas. ​

Iranian officials had offered a price linked to Dated Brent crude that equated to about $8 per million British thermal units (mmBtu), while New Delhi wants to pay about $4.25 per mmBtu.​

Nejad Hosseinian said yesterday that they were now working to change the pricing formula to one based on LNG import prices to Japan, the world's biggest consumer of the fuel, taking into account the cost of freight and transport.​

India is trying to eliminate power shortages by securing new sources of energy for its booming economy, the fourth-largest in Asia, while Iran is eager to finally tap into its mostly undeveloped gas resources.​

But New Delhi is also weighing the cost of using cleaner fuel natural gas against more abundant but dirtier domestic coal. It has already agreed a landmark civilian nuclear co-operation deal with the US to boost its atomic power capacity, forcing it to walk a fine line in dealings with Tehran.​

"The reality is the Asian buyers have to compete with the Western market, they can't use the old rules that gas should compete with other energies," said Nejad Hosseinian.
India is also a potential buyer of Iran's LNG, but a preliminary supply deal agreed nearly two years ago has also stalled over the issue of price.​

Singapore (Reuters) Oil prices would rise if the West imposed new obstacles to investing in Iran's oil sector, although Tehran does not expect such measures from the United Nations, a senior government official said yesterday.​

"I don't think the Security Council will put sanctions against oil and gas," Nejad Hosseinian told reporters in Singapore.​

"If they stop us from more investment in oil, long-term, oil prices will increase."
Apart from the risk to short-term supplies, analysts fear sanctions could slow much-needed investment in Iran's upstream sector, home to the second-largest oil reserves, accounting for about 10 per cent of the world's total proven reserves.​

A lack of investment stymied for decades by vicious infighting and layers of bureaucracy in Iran would make it more difficult for Tehran to bring onstream new oilfields or boost output at older ones to meet future demand.​

 

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Friday, September 08, 2006javascript:; http://www.dailytimes.com.pk/print.asp?page=2006\09\08\story_8-9-2006_pg5_2

ISLAMABAD: Russia has shown interest in investing in water, power, energy agriculture machinery, steel manufacturing and irrigation sectors as a fact-finding mission of the Russian Federation has started initial negotiations with different ministries, a senior government official told the Daily Times on Thursday.

This is the first time that a high-level Russian delegation is visiting Pakistan to identify sectors for investment that would usher in a new era in economic relations between Islamabad and Moscow, he added.

Ms Elena V Danilova, Director of the Department of Foreign Economic Relations of the Ministry of Economic Development and Trade of the Russian Federation, who is heading the delegation, has already called for the establishment of a Pakistan-Russia Joint Business Council.

The Russian delegation, according to the official, has expressed interest in investing in manufacturing agricultural machinery, especially tractor manufacturing. This is the sector in which the Russian authorities want to invest within a short span of time, he said.

However, on long-term basis, Moscow is keen to invest in diversified sectors as Pakistan has become attractive for investors from different regions. A recent report of the World Bank said that doing business became easier in Pakistan than India in the fiscal year 2005-06. In the world ranking of 175 countries, South Asia's Maldives ranked at 53, Pakistan 74, followed by Bangladesh 88, Sri Lanka 89, Nepal 100, and India 134, Bhutan 138 and Afghanistan 162.

The report states that Pakistan has been ranked 74 in case of doing business, 54th in starting a business, 89th in dealing with licences, 126th in employing workers and 68th in registering property.

The inflow of foreign direct investment from various countries had registered a growth in the last fiscal. This year too the government expects that FDI would increase as the interest among foreign investors is rising.

The official said the government is doing everything possible to facilitate foreign and local investors through various means. The powers of the Board of Investment have been increased that will play a great role in facilitating investors, who are coming from different regions and countries.

Pakistan is focusing on various regions, including the Gulf, Southeast Asia and some other regions to persuade investors to invest in the country.

Russia, the official said, has the expertise most sectors. It has the skill to provide products at relatively competitive prices to local and international markets. The official said each and every sector of the country is open for investment. However, top priority is being given to the industrial sector, which will not only provide more jobs, but transfer technology as well, the official added.

 

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KARACHI: MCB Bank Ltd, Pakistan’s second-largest listed bank, said on Thursday it was preparing a global depository receipt (GDR) sale in London worth up to $150 million.

MCB, which ranks behind National Bank of Pakistan on the Karachi Stock Exchange (KSE) with a market capitalisation of about $1.9 billion, will start pre-marketing the offer later this month.

That timetable could beat to the market a potentially larger London issue by Oil and Gas Development Company Ltd (OGDCL), which plans to list between 10 and 15 per cent of the $9 billion oil firm as a GDR by the end of the year.

“We will be launching the roadshows from the 25th, with an approximate pricing date of the GDR of Oct 9,” said Ali Munir, Chief Financial Officer of MCB Bank. “The size of the issue will be $100-$150 million,” he said, confirming information given to Reuters earlier by a source in Beijing.

Munir said roadshows for the GDR issue will be held in Dubai, Singapore, Hong Kong, Amsterdam, London, Boston, New York and San Francisco.

The lender first announced its GDR plan in July and it has appointed Merrill Lynch as its sole book-runner. The bank, which has more than 950 branches, is offering all primary shares, representing about seven per cent of its total enlarged share capital.

Shares of MCB Bank closed more than two per cent down at Rs223.15 on Thursday while the broader market was down 1.41 per cent.