Pakistan Economy - News & Updates - Archive

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Highly interactive web-portal launched​

ISLAMABAD (August 02 2008): A US-based company, LMKR, has launched a talent showcasing, innovative and highly interactive web-portal, the bc.com, here on Friday. Speaking at the launching ceremony, Chief Executive Officer (CEO) Salman Chaudury said that the portal was a successful convergence of the three inter-dependent technologies the information technology (IT), telecom and TV.

It would provide a clean medium to all individuals to promote and broadcast their talent world-wide, he said. He said that in the first phase, "we are focusing on South Asia and the Middle East, as these two regions have immense talent, but the opportunities to excel are very limited.

"We want to provide an opportunity to all to showcase their talent and get recognised," he added. He said that an innovative feature of the portal was that it allowed mobile phone users to load their profiles, photos, songs and videos. The portal made auditioning for TV contests, campaigns or competitions much simpler, cost effective and quick, he added. He said: "We are in the final stage of dealing with television channels, production companies, film studios and mobile companies world-wide."

Giving the presentation, he said: "To reach the facility, take your videos, snap your photos and record your songs and put it on the bc.com to get discovered." He said: "By just logging on the bc.com, you get a chance to get into films, fashion, television, commercial, theatre, singing, choreography, hair and makeup.

"The portal brings wealth of opportunities for the youngsters to fulfil their dreams to become models, singers, actors, dancers or any other top of the line professional. Producers and directors can search online for new talent vertically as well as horizontally," he added. He said that unlike other social networking websites, they had a cause to promote talent. Every individual had some unique talent in some specific field, which until now could not be showcased and cashed. "Our website is a platform for individual talent to broadcast its potential world-wide and get connected to the right people," he added.

Business Recorder [Pakistan's First Financial Daily]

 

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Dell seeks tremendous prospects in SMBs in Pakistan​

KARACHI (August 01 2008): Dell has unveiled its innovative products to cater the needs of Pakistan's fast-growing market of small and medium-sized businesses. The launch of Dell's product line having the latest features is a landmark development in Pakistan's small and medium-sized business (SMB) sector.

Director and Country Manager, Dell Pakistan, Ali Jaleel, while addressing the occasion said, "Growing businesses are quickly reaching breaking points where they need high performing and more sophisticated systems. Dell is rolling out its new product line to address the needs of small and medium-sized business customers in Pakistan by using cutting-edge technology.

Pakistan is a thriving market for Dell and we are very excited about the opportunities in SMBs.", said It is for the first time in Pakistan that Dell is offering a comprehensive suite of products, specially designed for SMBs promising to deliver an exceptional experience and improving return on their technology investments.

The SMB product unveiling include the Vostro line of Notebooks, PowerEdge T300 and R300 tower and rack servers, and PowerVault MD3000i network storage. Dell via its partner will also provide end-to-end support throughout planning, deployment and maintenance of customers' technology investments.

Meanwhile, Country Manager Intel Pakistan, Ashar Zaidi said, "The launch of Dell's most sophisticated product line will prove a turning point for the efficiency and output of small and medium-sized businesses (SMBs) in Pakistan and an ultimate experience for the customers. As customers want faster performing systems to run their computer networks, Intel is committed to providing state-of-the-art technology especially for SMBs."-PR

http://www.brecorder.com/index.php?id=780801&currPageNo=1&query=&search=&term=&supDate=

 

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FDI inflow into financial sector rises by 72.8pc ​

In power sector down by 65pc; total FDI in 12 months up by only 0.3pc​

Sunday, August 03, 2008
By Israr Khan

ISLAMABAD: Foreign direct investment inflow into Pakistan’s financial business sector during July-June 2007-08 increased by 72.8 per cent to $1.61 billion while in the communications sector, it dropped by 14.4 per cent to $1.62 billion. In the power sector, it went down by 65.6 per cent to only $70.3 million.

During the corresponding period July-June 2006-07, inflows into financial businesses stood at $930 million, communication sector $1.9 billion and in the power sector FDI inflow stood at $204.6 million.

In the power sector (thermal and hydel), it is pertinent to note that thermal sector inflows were down by 69.5 per cent to $61.5 million from $201.6 million in the last fiscal year, while FDI in hydel sector was up by 189 per cent to $8.8 million from $3 million recorded in the corresponding period of the last fiscal year.

Although during the fiscal year under review, communication sector topped the list by attracting a huge chunk, however, its inflows slowed down over the corresponding fiscal.

FDI data released by the State Bank of Pakistan (SBP) indicated that sectors having the capacity to generate employment and give a sizeable boost to the national economy had a weak inflow during fiscal year 2007-08.

It is worth mentioning that total FDI to Pakistan during these 12 months, has increased by only 0.3 per cent year-on-year to $5.15 billion and as compared to the corresponding period of the last fiscal 2006-07. In the corresponding period of the fiscal year 2006-07, it stood at $5.14 billion.

From the beverage sector, the foreign investors withdrew $1.7 million during the fiscal year 2007-08 against a total investment of $88.8 million that they invested in the sector during the last fiscal year, thus, depicting a decline of 102 per cent.

FDI inflow into tobacco and cigarettes was down by 98 per cent to only $9.8 million against $389.5 million, sugar by 42 per cent to $9.4 million against $16.2 million, textiles by 49 per cent to $30.1 million against $59.4 million, paper and pulps by 5.4 per cent to $1.1 million against $1.2 million, leather and leather products by 40 per cent to $1.8 million against $3 million and inflow in rubber and rubber products sector was down by 15 per cent to $3.7 million against the $4.3 million that it attracted in the last fiscal 2006-07.

Investment in the petroleum refining sector also dipped by 52 per cent to $74.5 million against $155.2 million in the last fiscal year. In the fertilizer sector, foreign investors made no investment during the fiscal year under review, against the $3.9 million that they made in the last fiscal year. In basic metals, investment declined by 81.7 per cent to only one million dollars against $5.3 million in last fiscal.

Break-up of investment by sectors further reveal that under the communication head, the telecommunication sector attracted $1.44 billion, information technology $180.7 million and postal and courier services inflows were $6 million.

The notable encouraging point in the IT sector was that during the period, software and hardware development fetched $13.7 million and $6.6 million respectively, more than that in the corresponding period of the last fiscal year.

Oil and gas exploration sector during July-June 2007-08 also attracted $634.8 million, which was 16.5 per cent higher than $545.1 million in the corresponding period of the last fiscal year. The trade sector attracted $175.5 million against $173.4 million during the last fiscal year.

It is to be noted that the inflow of direct investment in the cement sector compared to the corresponding period last year was very high. During the period under review, it attracted $102.2 million against only $33.7 million in the last fiscal year, depicting a growth of 204 per cent.

FDI inflow in transport equipments (automobiles) during the 12 months of fiscal year 2007-08 stood at $111.5 million with a growth of 121 per cent over $50.4 million recorded in the corresponding period of the last fiscal. In the construction sector, inflow declined by 43.7 per cent to $88.5 million against $157.1 million in the last fiscal year.

The transport sector also fetched 142 per cent more investment to $73 million against $30.2 million in the previous year.

The Petro chemical sector attracted $27.4 million and mining and quarrying absorbed $42.3 million foreign investment during the period under review. In the fiscal year 2006-07, investment in these sectors was $6.3 million and $23.7 million respectively.

FDI inflow during the period under review was up by 69 per cent to $78 million in the chemical sector; 18.4 per cent in foods ($43.2 million); food packing was up by 530 per cent ($6.4 million); pharmaceutical and OTC products 18.6 per cent ($45.6 million); metal products 96 per cent ($15.2 million); machinery other than electrical 47 per cent ($5.9 million), electrical machinery 442 per cent ($18.3 million) and inflows in electronics was up by 48 per cent to $27.6 million.

It is also worth mentioning that FDI inflow in storage facilities fell by 97 per cent to $0.58 million from $18.3 million recorded in the corresponding period of the last fiscal year. The tourism sector also fetched 65 per cent less FDI during the period under review by receiving $6.6 million against the $18.8 million during the previous year.

FDI inflow into financial sector rises by 72.8pc

 

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Nine firms submit tariff bids for power projects ​

Sunday, August 03, 2008

ISLAMNABAD: The country will retain over 2,600MW of power additional in the national grid by the end of next year.

This was stated by PPIB Managing Director Fayyaz Elahi speaking to media persons on the occasion of a ceremony held here on Saturday at Private Power and Infrastructure Board (PPIB) for opening of tariff bids, says a press release.

The PPIB MD who chaired the meeting on behalf of the Minister for Water and Power briefed that on due realization of the upcoming power shortages in the country, the government directed PPIB to invite investors for establishing power plants in the country on a fast track basis, consisting of two packages namely Package-A for IPP projects of 1,000MW cumulative power generation capacity and Package-B for Rental Power Projects including Barge Mounted plants near Karachi of upto 500MW cumulative power generation capacity.

The technical bids were earlier opened on July 15, 2008 in presence of the bidders and the media, a total of 9 bids (3,060 MW) were received for Package-A, whereas for Package-B rental projects, three bids (678 MW) were received. A bid evaluation committee, comprising the representatives of Ministry of Finance, NEPRA, WAPDA/PEPCO and PPIB processed these bids, and out of the twelve bids, nine bids were declared as qualified. Under PackageñA, Attock-Wartsilla Consortium came up with the Levelized tariff of 13.9893 cents per kilowatt-hour for 203MW powerhouse based on residual furnace oil (RFO). The project will be located at Mandi Bahauddin. For installing a 170MW power house based on RFO, the Creative Energy Resources turned up on the occasion with 11.7199 cents on kilowatt per hour (unit) for simple cycle tariff and for combined cycles the same company came with a levelized tariff of 13.3690 cents per unit. Cavalier Energy & Defence Systems Group which wants to establish 500MW power house at Port Qasim based on LPG submitted simple cycle tariff at 13.2418 cents per unit for first one year and levelized tariff of 11.5368 cents per unit. Progas Energy Ltd, which aspires to establish 345MW at Port Qasim based on LPG submitted 15.5964 cents per unit as simple cycle tariff first year and levelized tariff of 11.045 cents per unit for combined cycle.

The RUBA Energy Pakistan (Pvt) Ltd that aspires to install 166MW at Kala Shah Kaku based on RFO submitted 14.4137 cents per as simple cycle tariff for first year, and levelized tariff of 14.9786 cents per unit for combined cycle. Saba Power Company (Pvt) Ltd for 171MW project at Arifwala based on RFO turned up with 16.9639 cents/kwh as simple cycle tariff for first year and levelized tariff of 16.2550 cents/kwh for combined cycle. Under the PackageñB in which the investors submitted their bids for rental projects Cavelier Energy & Defence System Group for 200MW project to be located at Port Qasim based on LPG submitted its tariff bid of 15.22 cents per unit average for 5 years.

Karkey, Karadeniz Holdings, for 248MW to be located near Karachi based on RFO, came up with tariff 18.6288 cents per unit for five years. For 200MW project proposed at Korangi based on RFO, Walters Power International submitted its tariff of 17.43 cents per unit for five years.

Elahi stated it is a very good response from the private sector, as for the Package-A where 1,000MW was required, “we have 6 responsive bids for 1,555 MW, and for the Package-B where 500MW was required, responsive bids for 678MW are in place, all these bids will be evaluated by the evaluation committee strictly according to the criteria which have been approved by the ECC.” The tariff given by the parties is not final and the evaluation committee will declare the final tariff. He said in four days the evaluation will be completed and recommendations will be submitted to the ECC in its next meeting for approval.

Nine firms submit tariff bids for power projects

 

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Moody’s to review Pakistan’s credit rating​

* Sovereign ratings were lowered in May 2008
* Government bond ratings were cut to B2 from B1​

ISLAMABAD: Moody’s International, a reputed international credit rating agency would review the strategy and policy direction of the new government, for addressing the current political as well as economic challenges, for possible change in the country’s credit rating, official sources told Daily Times on Saturday.

The government has good plan for economic consolidation, in its first year, however, political uncertainties and law and order situation are the issues that are out of control of the government till date, said the sources.

A high-level review mission of Moody’s International would hold review of country’s economic and political situation during August 5 to August 6 for possible review and determination of the country’s credit rating afresh.

“Delay in resolving the political issues is leading to uncertainties in the country and may have negative impact on future credit rating,” the sources mentioned.

A review mission of Moody’s International would hold discussions with Pakistan’s economic managers and high ups in the government to evaluate the challenges faced by the country and the strategy to resolve these issues, the official added.

The prevailing political uncertainties, law and order situation on Pakistan’s borders as well within the country along with economic difficulties are likely to have negative effects on fresh credit rating to be determined by the rating agency.

The review would focus on the strategy the new government has in hand to address the political as well as economic challenges and its possible outcome in near future. If the policy and strategy of the present government were found workable during the review than a positive rating can be expected.

Political uncertainties i.e. judges issue, rift in coalition partners on different important issues and law and order situation in Federally Administered Tribal Areas as well in Swat are now having effects on country’s economy. On the other hand growing domestic and external debt, falling foreign exchange reserves, exports, growing budget deficit, current account deficit and external balance of payments are the challenges that require government’s attention.

According to the official sources, the review of the economic situation of the country will mainly focus on what steps the government has in hand to control growing budget deficit. Keeping the budget deficit at sustainable level is important for improvement in country’s credit rating. It will also be evaluated whether the efforts of the government for containing the budget deficit at 4.7 percent of the projected Gross Domestic Product (GDP) of the country are viable or not.

Moody’s Investors Service had lowered Pakistan’s sovereign ratings in May 2008.

Moody’s cut its government bond ratings to B2 from B1, or five levels below investment-grade, citing its concerns over the country’s fiscal position and economic policies in a volatile political environment.

Improvement in country’s credit rating could help regain investor’s confidence, especially the foreign investors, as the government has already delayed the launch of its sovereign bonds in the international financial markets.

Daily Times - Leading News Resource of Pakistan

 

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Government borrowed Rs 690 billion from SBP in fiscal year 2008: It will take five years to retire Rs one trillion stock​

KARACHI (August 03 2008): The Federal Government will be informing the State Bank of Pakistan about how it plans to retire the existing stock of borrowed funds from the central bank. In a meeting with the Central Board of Directors of SBP, Federal Minister of Finance Syed Naveed Qamar raised the issue of Rs 690 billion borrowed from SBP for budgetary needs in FY08.

The Additional Secretary, Ministry of Finance, explained the reasons behind the 70 percent rise in Market Related Treasury Bills (MRTBs) stock in one year to one trillion rupees.

The SBP directors emphasised the need for evolving better information-sharing mechanisms between the Finance Ministry and SBP. However, the Finance Ministry regretted that it was extremely difficult for it to share information with SBP for the nature of problems in various spheres of its activity is often of a highly "sensitive" and "secretive" type.

There was disagreement between Finance and SBP with regard to the accounting treatment of Rs 165 billion borrowed during the 13 weeks of the last fiscal year. This amount was used to clear the outstanding dues the previous government left behind. A technical committee was formed to resolve the issue. The PPP government strongly feels that Rs 165 billion should be treated as part of the borrowing undertaken by the Caretaker government of Mohammadmian Soomro for the period from November 15, 2007 to February 24th, 2008.

SBP wants the ministry to work out a plan of how this huge monetary hangover stoking inflation is to be retired at the earliest, although it would take as many as five years for full and final retirement if it is retired at the rate of Rs 200 billion a year.

Another issue raised by the SBP Directors with the Minister was the need to amend the Fiscal Responsibility and Debt Limitation Act 2005 so as to incorporate borrowing from SBP as part of the limits fixed in the Act. At present, SBP is obliged to pay for the imbalances in the government account with the central bank.

Earlier, the Finance Minister also met the heads of five big network banks for targeted subsidies to the very poor under the "Benazir Card scheme". The bankers told the Minister that the government should develop the distribution process and that the banks will be happy to provide their networks for the distribution of funds aimed directly at helping poorer families.

Business Recorder [Pakistan's First Financial Daily]

 

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TDAP chief favours 'trade policy' for five years​

LAHORE (August 03 2008): Trade Development Authority of Pakistan (TDAP) Chief Executive Officer Syed Mohibullah Shah has said the one-year trade policy does not yield desired results thus it should be for a period of five years. Addressing the Lahore Chamber of Commerce and Industry (LCCI) here on Saturday.

He stressed the need for harnessing indigenous resources, enhancing investment and utilising new technology to bridge the fast widening trade gap. The indigenous resources were ignored in the past whereas industry relied on the imported raw materials due to which the entire nation has to suffer a lot, he added.

Mohibullah Shah said the country needs export surplus to give a boost to the country's exports, which could only be possible, by ensuring continuity in the economic policies. "I will expedite the process of consultation with the stakeholders, including the chambers of commerce and industry to identify the objectives to increase our exports", he added.

In future, special importance will be given to the Punjab, particularly to the LCCI for participation in trade delegations and exhibitions in foreign countries, he added. He said that 80 percent production of the energy is based on imported raw materials and stressed the need for development of local resources in this regard. He asked the LCCI office-bearers to extend its co-operation to the TDAP for bringing economic prosperity in the country.

Speaking on the occasion, LCCI President Mohammad Ali Mian said that concentrating on a few items and markets was the main reason of instability in export earnings. It can be evident from the last year export figures to North America, European Union, and the Middle East recorded a marginal increase during first eight months of last financial year.

The Trade Development Authority of Pakistan is responsible for the implementation of trade policy thus it should be more proactive in searching new markets. Pakistan needs to look beyond traditional market and should concentrate on new export destinations such as Japan, South Korea, Mexico, Brazil, African countries and OIC, he added.

The TDAP should focus on five regions namely Africa, South America, Central America, Eastern Europe, and central Asian states. Africa is the biggest continent and can become a major market for Pak exports. At the same time, trade liberalisation needs to be sped up as it leads to new investment, knowledge and technology essential for increasing productivity, high growth and low inflation. This is the new growth theory, which is placing more and more emphasis on variable like knowledge and innovation, which cannot be promoted in the absence of free trade, he added.

Business Recorder [Pakistan's First Financial Daily]

 

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ADB to provide $100 million for Punjab MDGs programme​

FAISALABAD (August 03 2008): Asian Development Bank (ADB) will provide 100 million dollars for Punjab Millennium Development Goals (MDGs) Programme (Subprogramme-1) to improve availability and quality of primary and secondary healthcare, better management of health service delivery and sustainable pro-poor healthcare financing.

According to an update project report of ADB, the programme's outcome will be to improve access, quality and equity of health services. The programme will assist the Punjab government in undertaking health sector reforms to improve availability and quality of primary and secondary health services, develop sustainable and pro-poor healthcare financing system and better-manage the health service delivery.

The programme will help provincial government to ensure the implementation of the minimum service delivery standards (MSDS) for primary and secondary healthcare, through incorporation of the MSDS in provincial and district health sector plans, and qualitative and quantitative improvements in human resources in the health sector. The programme will also help Punjab government in improving daily management of health service delivery by increasing timeliness of essential drug procurement, institutionalising contracting of health services to non-governmental organisations, and enhancing and streamlining existing performance monitoring and evaluation systems.

The programme will assist in substantially increasing healthcare budget and improving planning and management of the budget, introducing a targeted programme for reducing out-of-pocket health expenditure among the poor and developing a sustainable healthcare financing and provider payment system.

The ADB report disclosed that improved access and quality of primary and secondary healthcare services would save at least 11,000 women's lives, increase and improve efficiency of public healthcare financing, improve management of health services.

The loan proceeds will be used to finance the full foreign exchange costs (excluding local duties and taxes) of items produced and procured in ADB member countries, excluding the items specified in a negative list of ineligible items (and imports financed by other bilateral and multilateral sources).

The proceeds of the programme loan will be disbursed to Pakistan as the borrower. No supporting import documentation will be required, if during each year the loan proceeds are disbursed, the value of Pakistan's total imports minus imports from non-member countries, ineligible imports, and imports financed under other official development assistance is equal to or greater than the amount of the loan expected to be disbursed during that year.

The government of Pakistan will certify its compliance with this formula with each withdrawal request. Otherwise, import documentation under existing procedures will be required. Disbursements will be made under the simplified procedures for programme loans, ADB report concluded.

Business Recorder [Pakistan's First Financial Daily]

 

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Bhasha dam construction to start soon: Shahbaz​

ISLAMABAD (August 03 2008): The government would start construction of Bhasha dam with 2500 megawatt hydro-power generation capacity, very soon to give the nation good news to get rid of load shedding, said Punjab Chief Minister Shahbaz Sharif here on Friday night while addressing the '21st Achievement Award Ceremony' of Rawalpindi Chamber of Commerce and Industry (RCCI).

"It was criminal negligence on the part of previous regime, which caused a big gap between demand and supply for not starting work on this important dam", he said. He said that construction of Bhasha dam would take 6 years, but if built on war footing, it would be completed in four years. He said that the country is facing a shortfall of more than 5000 megawatt electricity due to criminal negligence of previous regime and which has badly affected agriculture and industry sectors.

"We have planned to construct small power projects on different canals and rivers all over Punjab and you people come forward to identify sites and invest your money to earn profit besides giving cheaper electricity to masses", he said and assured full protection to the invested money.

Pakistan's economy is passing through a very difficult time, but it was not because of last four months rule of PPP and PML-N coalition, but was due to last eight years dictatorial rule of Musharraf and his allies, he said, adding that it would take some time to be on track.

He said the previous regime destroyed industrial and agricultural sectors of the country because of power shortage, and the worsening law and order situation and attack on judiciary had added to this. "Now it is responsibility of each and every person in or outside the government to play his role to bail out the country", he added.

"It is looking very pleasant to attend such a function after nine years and I deserve to join this gathering of business leaders to flex my muscles", the chief minister said, adding that "after assumption of the office of chief servant of Punjab I am moving to far-flung areas to know about problems the people are facing".

He said that he and his party were ready to pay any price for independence of judiciary and supremacy of law. "An independent judiciary can attract foreign and local investors to bring their money here", he added. He said people from Khyber to Karachi would be without justice if the deposed judges were not reinstated. Independence of judiciary is vital for survival of Pakistan, he cautioned.

"I am considering the industrialists and businessmen as my masters as you people are paying taxes and filling the national exchequer and I am at your service", he said. He said that the government was a facilitator, and running of industries and agriculture is not government's affair.

"It is the job of you people, and the government will provide all possible facilities and security to you in your endeavours", he said. He assured full support to RCCI in its projects, saying that RCCI identify land in Rakh Dhamial for construction of a most modern polytechnic college, and the government will provide it free of cost.

He asked Secretary Industries to sort out the matter of proposed Chakri Industrial Area of Overseas Pakistani Foundation (OPF) with RCCI officials and look at the possibility of provision of plots to local industrialists. He also announced government support for construction of RCCI building. RCCI President Abdul Rauf, Sr Vice President Sheikh Hafeez and Kashif Shabir addressed the gathering. Shahbaz distributed the achievement awards to industrialists and businessmen of Rawalpindi.

Business Recorder [Pakistan's First Financial Daily]

 

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Pakistan to import 1000 MW electricity from Central Asian states​

Pakistan will import 1,000 megawatts of electricity from the two Central Asian states Kyrgyzstan and Tajikistan through Afghanistan, the country's minister for water and power said on Sunday.

Energy ministers from Afghanistan, Pakistan, Tajikistan and Kyrgyzstan started a two-day meeting in Islamabad to sign a formal agreement about the project on Monday.

Raja Pervez Ashraf told the inaugural session of the 3rd international conference on Central Asia/South Asia Regional Electricity Market (CASAREM), the project will be completed by 2013.

According to sources, the Central Asia-South Asia (CASA) project is being facilitated and sponsored by a consortium of international lenders, comprising the World Bank, Asian Development Bank and Islamic Development Bank, for development of electricity sources in Tajikistan and Kyrgyzstan for export to Pakistan and Afghanistan.

The inter-governmental agreement will cover a host of contracts relating to commercial, legal, financial, power purchase and transmission arrangements, media reports said.

The project will ensure a supply of 5.5 billion units of electricity per year to Pakistan from different hydropower stations in the two Central Asian states and the electricity will be delivered to Peshawar through a 650-700km extra-high voltage transmission line.

Reports said that two routes have been identified for the project.

One route will run through Afghanistan's Kunduz province, Salang Pass and Jalalabad before reaching Peshawar and will cost 4.4 cents per unit.

The transmission line through this route will stretch 170km in Tajikistan, 430km in Afghanistan and 50km in Pakistan. The World Bank supports this route.

Pakistan supports a route via Wakhan and Chitral whose length is estimated at 700km and its per unit cost in Peshawar is estimated at 4.9 to 5 cents.

The line will run 360km in Tajikistan, 30km in Afghanistan (Wakhan) and 310km in Pakistan.

The World Bank has been trying to persuade Pakistan to import some 4,000MW of cheap electricity from Central Asian states, besides working on domestic sources to overcome electricity shortage.

The bank estimates that Pakistan's peak demand now exceeds some 14,000MW and the present installed capacity of 19,500MW has become inadequate on account of wide variations in water availability.

The demand is expected to exceed 20,000MW by 2010.

The World Bank says Pakistan should immediately start importing 1,000MW from Tajikistan and the Kyrgyz Republic and then increase imports to 4,000MW in the second phase.

Pakistan to import 1000 MW electricity from Central Asian states - Irna

 

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Pakistan saves US $ 100 million by winning case in London court ​

ISLAMABAD, Aug 2 (APP): Pakistan has saved an amount of US $ 100 million including award of US $ 70 million and costs and interest by winning a case in the Queen’s Court of London against a Saudi company Dallah Real Estate and Tourism Holding Company of Al Baraka Group, a Religious Affairs Ministry official here said.

According to a judgment announced by the Queen’s Court London on August 1, the Court accepted the request of the Government of Pakistan by setting aside the exparte order issued by Mr. Justice Christopher Clarke earlier.

The Commercial Court of Queen’s Bench Division of the High Court of Justice, London, announced on 01 August a reserved judgment in the case of Dallah Real Estate and Tourism Holding Company, a Saudi Arabian company of the Al Baraka Group, and the Ministry of Religious Affairs, Government of Pakistan.

According to details given by a senior official of the Ministry of Religious Affairs, the matter was heard in London from July 8 to 10, 2008.

In a 58-page judgment, Mr. Justice Aikens of the High Court of Justice in London accepted the argument of the Government of Pakistan that it was not a party to the agreement and therefore no arbitration proceedings were maintainable against it.

The arbitral tribunal could not make an award against the Government

of Pakistan and the agreement between Awami Hajj Trust (AHT) and Dallah could not bindibg for the Government. The High Court allowed the application of the Government and set aside an exparte order of the High Court, which had allowed Dallah to enforce the award.

Vakeel Ahmed Khan, the then Secretary Religious Affairs and Agha Rafiq, Secretary of the ministry of Law and Justice engaged Mr. Toby Landau QC, Mr. Patrick Angenieux, solicitor, mr. Makhdoom Ali Khan, senior advocate of the Supreme Court of Pakistan and Barrister Mehmood Mandviwala to challenge the exparte award and order.

Dallah Real Estate and Tourism Holding Company was represented by Ms. Hilary Heilbron QC, Kearns & Co, solicitors and senior advocate of the Supreme Court of Pakistan Abdul Hafeez Pirzada.

The case was the result of a proposal made in 1995 by Mr. Shezi Naqvi, a director of one of the Al-Baraka companies to the Government that Dallah be permitted to provide a housing complex in Makkah/Medina on term lease for use of Pakistani Hajjis.

In July 1995, an agreement was executed whereby Dallah was to acquire land within Makkah for construction of housing facilities for Pakistanis to perform Hajj and Umra.

In January 1996, an Ordinance was promulgated to establish the Awami Hajj Trust (AHT). The AHT entered into an agreement with Dallah. When the Government of the day was dismissed by the then president Farooq Ahmed Khan Laghari, the Ordinance was not re-promulgated. As a result, Awami Hajj Trust ceased to exist.

The agreement between Dallah and Awami Hajj Trust had an ICC arbitration clause. Dallah commenced arbitration proceedings against the Government claiming US $ 70 million.

The case was heard by a three-member tribunal consisting of Dr. Ghalib Mahmasssani, Lord Mustill and former Chief Justice of Pakistan Justice Dr. Naseem Hassan Shah.

The Government did not appear before the Tribunal, which made an exparte award in favour of Dallah and also gave it interest and costs. Dallah approached the High Court of Justice in London to enforce the award. An exparte order was made by the High Court in favour of Dallah on 19 October 2006.

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Punjab for greater fiscal autonomy​

The question of greater financial autonomy for the provinces is most likely to dominate the new National Finance Commission (NFC) deliberations, officials in the Punjab finance department tell Dawn.

“We have long been pursuing with the federal government two issues that are critical for enhancing the provincial resource base of Punjab. First one concerns our share from the net hydro profits of the Ghazi Barotha Hydro Power Project and the other relates to the expansion in the scope of the provincial sales tax.”

We are going to raise these and other issues, which are affecting pace of development in the province, again at the new NFC proceedings whenever these commence,” a senior finance department official, who did not want to be identified, said.

The PPP-led coalition has already constituted the new NFC for the fresh determination of the vertical distribution of the tax resources between the federal and provincial governments as well as horizontal sharing of the provincial portion between the federating units. But its first meeting is yet to be scheduled.

As prime minister Yousuf Raza Gillani and some of his cabinet ministers have indicated their intention to change the population based formula for inter-provincial distribution of funds to also include other indicators like tax collection and economic backwardness in it. On the other hand, Punjab is likely to persist with its stance on the continuation of the population based distribution of funds.

“The existing formula is a great equaliser,” the official said. But, he hastened to add, if the inter-provincial resource distribution formula is modified “Punjab will insist that it is given its share, including arrears, from the hydro profits of the GBHP project and complete transfer of the provincial sales tax to the provinces. Also we shall press for the expansion in the scope of provincial sales tax to services like telecommunications and financial services”.

Punjab is being denied its share from the net hydro profits of the GBHP project on the pretext that the late provincial chief minister Arif Nakai had forgone the right in the early 1990s to facilitate its construction.

“That was illegal and unconstitutional. No chief executive could do so in his personal capacity because it means compromising on the rights of the people of the province. They should get what the constitution guarantees them,” the official said.

On the issue of provincial sales tax on services, the federal government has taken a position quite opposite to the stance of Punjab and Sindh, which want its complete transfer to the provinces. Islamabad says it is not possible to resolve the issues that may crop up if the provinces seek to tax the large, revenue generating inter-provincial services. The finance department official reminded that the provincial finance ministers who had met in June in Lahore ahead of the budget for the year 2008-09 had also agreed to this and called upon Islamabad for the transfer of collection this tax to the provinces and expansion of its net.

In addition, Punjab is also trying to persuade the federal government to allow provinces a greater say in the identification and implementation of development projects and schemes undertaken in the provinces under the Public Sector Development Programme (PSDP).

“This is also another area where all the four federating units have developed a consensus,” the official said.

A senior Punjab Planning and Development Department official, who also wanted not to be identified, said the proposal had been made to reduce overlapping of development schemes in the provinces.

“Besides, the provinces are better equipped to know and prioritise the needs of their people. We want optimal use of federal and provincial funds for development and improvement of public service delivery. That goal requires a closer co-ordination between the federal and provincial governments,” he said.

The official, who described the relations between Punjab and Islamabad as cordial and co-operative, said the letter written by Chief Minister Shahbaz Sharif to the federal government to fully fund the development schemes that may be announced by president or prime minister in future in the province should also be seen in this context.

“It doesn’t have any political connotations; it is motivated purely by the feelings that such schemes and projects put unnecessary burden on the provincial resources and we have to make adjustments and compromises on our priorities to fund these projects,” he stated.

“That is precisely why we want that such schemes should be totally funded from the federal funds.”

The letter has reportedly expressed the provincial government’s inability to provide funds from its resources for development projects that may be announced by president or prime minister.

Currently, both the federal and provincial governments equally share the cost of the schemes that are initiated on the presidential or prime ministerial directives.

“This practice compromises provincial development priorities and distorts its development planning,” the P&D official said. “The new government is opposed to such practices because it erodes provincial autonomy in the sphere of development, and, of course, politics,” the official said.

The officials reject that the provincial government’s demand for greater financial autonomy could unleash a tussle between the federal government and Punjab.

“It isn’t correct to presume that these demands and suggestions are going to lead the federal and provincial governments to the path of confrontation. Our demands and suggestions for greater financial independence and improvement in co-ordination and co-operation between the federal and provincial agencies have been made in good faith and purely from the point of view of stopping waste of meagre resources for development and public service delivery.”

“There is no politics involved and there is no need to read too much. Moreover, most of the demands and suggestions are not new ones. If these didn’t create any acrimony between Islamabad and Lahore in the past, why would they in future?” the P&D official asked. “That is why we have received very sympathetic response from the federal government on our issues and concerns,” he said.

Punjab for greater fiscal autonomy -DAWN - Business; August 04, 2008

 

[Neo]

Need for rural hydro-power units​

A significant portion of the population, particularly those living in low density scattered settlements, are still without electricity. These people depend on traditional biomass and kerosene to meet their daily energy needs.

Fortunately a large number of thinly populated settlements in the Northern Areas have access to potential sites for small and micro-hydro schemes. Hydropower’s development does not pollute environment. In addition, replacement of firewood with electricity helps control deforestation.

The market price of kerosene and LPG reaching these areas increase due to heavy transportation charges. In addition respiratory, eye and other pollution-related diseases are common due to excessive use of kerosene for lighting and wood for cooking and heating.

The present extensive use of firewood as a source of energy has led to depletion in natural resources and degraded local environment putting enormous pressure on forests in these areas. Indiscriminate cutting of trees, if allowed to continue at the current pace, will reduce further forests cover in the next few years. Deforestation results in increase in intensity of floods, droughts and other natural catastrophe.

In a typical small hydropower (SHP) unit, potential energy of water stream is used to rotate turbine. This rotational motion is converted into electrical energy through a generator. The electricity is then transmitted to a sub-station where transformers increase its voltage to allow transmission to houses. The amount of electricity, a hydropower installation produce, depends on the quantity of water passing through a turbine and height from which the water falls. The larger the flow and higher the fall, the more electricity is generated.

Rural electrification based on exploitation of local water resources plays a significant role in economic development and improvement of living standards. It has been observed that skilled workers, teachers, doctors and nurses prefer to live and work in rural areas to contribute towards improving human development indicators in rural areas well connected to nearby urban centres and where electricity and communication services are available. However they are reluctant to work in areas where there is no electricity.

Access to electricity provides women with an opportunity to improve their social and economic condition. The SHP projects benefit local environment by using a natural resource to generate the needed electricity without depleting the quantity or quality of the resource or harming aquatic fauna and flora. The monetary saving from kerosene to electricity is also considerable.

According to the World Bank, the world’s poor people spend more than 12 per cent of their total income on energy, more than four times what a middle-income family in the developed world spends.

There is no international consensus on the definition of small hydropower (SHP). In China, it can refer to capacities of up to 25 MW, in India up to 15 MW and in Sweden small means up to 1.5 MW. However, a capacity of up to 10 MW is accepted norm by the European Commission.

Within the range of small hydro-power, mini-hydro typically refers to schemes below one MW, micro-hydro below 100 kW and pico-hydro below five kW. Small hydropower is a mature technology, although innovations are continually occurring, especially in the field of electronics and controls.

Generally speaking, micro- and pico-hydro technologies are used to provide electricity to isolated communities where the electricity grid is not available, whereas mini-hydro tends to be grid connected. In most of the cases, no dam or reservoir storage is involved in pico-, micro- and mini-hydro schemes. The local resources utilised to operate the micro- and pico-hydro-power.

In fact some 300 micro and mini hydroelectric plants, installed by the private and public sector in the northern hilly areas, are supplying electricity to areas not connected with the grid. The turbines used in these plants are manufactured in local workshops. The unit cost of MHP in Pakistan was $1,000-$1,200 in 2005. The demand for all equipment components cannot be met locally. The costs of local manufacture can be reduced still further by developing local engineering capabilities and advisory services.

Once the plant is installed, the local community takes the responsibility of operation. Electricity is mainly used at night for lighting, watching TV, etc. During the day, power requirement is minimal for lighting. As a result day-time generation power help villagers in running small agro-processing plants for flour grinding, rice husking and to charge car-batteries which are mostly used for supply power for television sets for those who were not directly connected to the micro hydroelectricity supply.

The amount of electricity generated by pico-hydro unit is very small in magnitude. This allows only a small number of basic appliances to operate. The voltage in the supply line varies with the amount of flow in the channel. This creates seasonal as well as daily fluctuation in power supply, making it unsuitable for sophisticated devices. This can, however, be overcome through use of load controllers and standby batteries or generators.

A recent report by the US Agency for International Development (USAID), which makes a cost comparison of different technologies to harness green energy in south Asia, proves that hydro-energy is five to ten times cheaper than wind and solar energy respectively. Assuming an efficiency of 38 per cent for the conversion of oil into electricity, each 600 kWh of electricity generated with a hydro plant is equivalent to one barrel of oil.

Sustainability criteria demand that economic decisions incorporate environmental stewardship and social justice. For the areas remotely located at considerable distance from the national grid, SHP is the most attractive option of power generation.

Unfortunately, locally manufactured turbine has no design or quality control facilities. In order to accelerate the development and enhance the performance of small hydro power, it is imperative to benchmark the work of the SHP industry to identify and adapt the proven best practices of the world leaders in the industry. The government should also encourage private-public cooperation in the SHP sector.

The federal government should provide special loans on discount and technical support to union councils and town councils for the instillation of SHP projects. If cheap hydro-power generation through small, local power generation and supply systems, can be successfully realised it would help the government save money needed for linking remote areas with the national grid.

Need for rural hydro-power units -DAWN - Business; August 04, 2008

 

[Neo]

Untapped hydropower potential of Punjab​

By Engr Hussain Ahmad Siddiqui

​

As the nation faces the worse power crisis of recent times, the government is exploring possibilities of creating additional capacity for generating electricity optimally, on an emergent basis.

Punjab’s irrigation system can be effectively utilised to generate, in first phase, about 400 MW cheap electricity that could be made available within a short span of time, provided harnessing of this potential of renewable energy is prioritised..

The Punjab Power Development Board was created as an arm of the Irrigation Department (now known as Irrigation and Power Department) for the promotion of hydropower generation in the province. As many as 591 potential sites at different river falls, canals and barrages, with medium and low head and high discharge, having a total capacity of more than 5,000 MW have been identified. Pre-feasibility studies for 35 raw-site projects of cumulative 350 MW capacity have been conducted. In addition, detailed feasibility reports of another 12 projects of about 50 MW total capacity are available since long. Yet, nothing physical has been done towards development of these small hydroelectric power projects .

In fact, there were no sincere and concerted efforts made by the successive governments to promote construction of these power projects, either in public or in private sector. During the period 1995-1997 the provincial government had issued letter of interest (LOIs) to the private sector for setting up power stations at 22 identified sites. Not a single project could materialise. For many years the government did not re-launch the programme. Sometime in September 2005 the government formulated a revised power policy. This was however formally approved and announced only on July 28, 2006, as Punjab Power Generation Policy 2006. Two years thereon, the implementation of policy did not make any progress

The scope of power policy covers development of projects of capacity up to 50 MW, through public sector, private sector or under public-private sector partnership. In view of lack of interest exhibited by the private sector in the past to develop these projects, it was decided by the government to set up a few projects in public sector to serve as model or pilot projects. Ten project sites with confirmed technical feasibility and economic viability were earmarked for the purpose.

The Irrigation and Power Department launched, in September 2006, the first project namely Khokhra hydropower project on Upper Jhelum Canal, for which detailed feasibility study was conducted in August 2005. International tenders for the 3.20-MW project, to be located near Mandi Bahauddin at a total cost of Rs260 million, were invited on turnkey basis. But no decision was taken on the bids received. After a lapse of almost a year, tenders were re-issued, this time only for turbines and other electromechanical equipment. Again, decision could not be made and tender has been scrapped.

Besides the projects to be developed by the government itself, there are four projects of cumulative capacity of 13 MW ready for take-off. These are 4.80 MW and 1.99 MW both on Lower Bari Doab Canal (Sahiwal district), 4.24 MW on Tail Mainline Upper Chenab Canal (Bambanwala-Sialkot) and 1.90 MW on Upper Gogera Branch (Mannawala- Sheikhupura). Bankable feasibility studies have been prepared for these projects. Private sector has to be invited to develop these solicited projects on build-own-operate-transfer (BOOT) basis, project allocation being on minimum levelised tariff received through competitive bidding, in accordance with the provisions of the policy.

However, pre-qualification for developing only one project has so far been invited by the Punjab Power Development Board. Pre-qualification documents from interested parties were received by October 31, 2007 for a 4.80 MW project on Lower Bari Doab Canal in district Sahiwal. There has been no further progress reported since then. According to project schedule specified in the policy, bids were to be invited from selected parties within 100 days after submission of pre-qualification documents.

In addition, there are 35 sites identified as potential projects to develop hydropower stations of 160 MW cumulative capacity, on various canals located in Lahore, Faisalabad, Multan, Sargodha, DG Khan and Bahawalpur zones. These are classified as raw sites as detailed feasibility studies have not yet been undertaken and are to be conducted by the respective sponsors. There are another 10 projects, of cumulative capacity of 125 MW, proposed on various barrages on Chenab, Jhelum, Ravi and Sutlej rivers.

Seven private companies were allowed to develop projects at 11 raw sites. For the purpose as many LOIs were issued to them during October-December 2007, requiring the investors to prepare detailed feasibility study for the respective project within 12 months. Till to-date there is no progress made by any of the sponsors to commence requisite investigations for preparation of feasibility report. It is obvious that preparation of the feasibility reports, and consequently construction of these projects, will be delayed inordinately, if at all the projects do materialise eventually.

The governments as well as sponsors are indifferent to the opportunity cost the nation has to pay heavily in case of long delays in implementation of these projects. It was in 1992 that Wapda assessed the potential of power generation on the Punjab canals and barrages and, subsequently, completed feasibility studies at various sites. During the year 2003-04, Wapda had received and evaluated bids from local contractors for construction and supply of machinery for a 3.30 MW Pakpattan hydropower project. Then the subject was transferred to the provincial government, putting spanner in the whole process.

To develop a hydropower project it is vitally important to conduct proper feasibility study. Realising the need for capacity building at Punjab Irrigation and Power Department to prepare feasibility studies, Asian Development Bank (ADB) had extended technical and financial support for the purpose in 2004. The 3-year capacity building project has completed last year. But it appears the project has failed to achieve its objectives, as feasibility studies of potential projects are not being undertaken departmentally. The department has recently asked for the expression of interest (EOIs) from consultants, as in the past, to prepare feasibility studies of another five projects proposed on canal falls, of cumulative capacity of over 34 MW. There has been no progress regarding appointment of consultants as yet, though the department received the EOIs in September 2007.

The development of hydropower is considered a key factor for future progress. Punjab government needs to take stock of the situation, executing the identified projects speedily to meet its political agenda of improving the socio-economic conditions.

Untapped hydropower potential of Punjab -DAWN - Business; August 04, 2008

 

[Neo]

The growing informal economy​

Pakistan’s black economy is believed to have grown to be more than half the formal economy which yields a GDP of $166 billion.

One report says that it has reached such proportions that it was upsetting public welfare plans. The report puts its size at $83 billion and that it could yield the national exchequer revenue of $8 billion if taxed even at 10 per cent.

But there is a belief that the country’s parallel economy has already touched $100 billion. To determine the size of the informal economy is problematic simply because there is nothing on paper. According to an assessment, the underground economy expanded at the rate of nine per cent in last 23 years—1977 to 2000.

The informal economy helps its sections make easy profits since the cost of labour becomes much lower than fixed by law. Black economy grows along with corruption, speed money, consultancies, smuggling, narcotics, government contracts and tax evasion.

Only recently, hoarders and speculators of staple food commodities like rice and wheat were able to make a killing by their covert activities with the active connivance of government officials.

No government has shown nerves to tackle this problem. The present government had also initially taken a serious view of the situation but then decided to offer incentives to whiten the black money/assets. In 2000-01, Shaukat Aziz regime had launched a campaign for documentation of the economy but abandoned it in the face of resistance of unregistered traders and factory owners.

A study conducted by the Lahore University of Management Sciences in 2003 showed that out of Rs100, the government receives only Rs38 and Rs62 is pocketed by the tax payer, tax collector and tax practitioner. It means that Rs720 billion tax collection in 2005-06 was only 38 per cent of about Rs2 trillion which should have been collected by the Federal Board of Revenue.

According to an SPDC study, the black economy in Pakistan had reached its peak in the early 1960s, when the corporate income tax rate was 30 per cent and super tax 30 per cent, the aggregate being 60 per cent. This rate dropped to 40 per cent during the late 1980s.

Likewise, the maximum personal income tax rate was 75 per cent during the 1960-64 period, which was the reason for the black economy to remain well above 30 per cent of the GDP in that period. The black economy kept declining during the 1965-75 period, until this rate came down within the 60-70 per cent range. It was 56 per cent in 1980-1986 period, and 39 per cent in 1988 and subsequently 28 per cent in 1993.

The black economy declined by nine per cent during 1996 and 1997 after having remained relatively high, 26 per cent of the GDP, in the early 1990s. During that period, tax-to-GDP ratio was almost stagnant at 13 per cent and the rate of return on deposits was falling – a disincentive to withdraw from activities related to the black economy.

The size of the informal economy slightly increased from 2000 onwards. This is, perhaps, due to the reduction of rate of return on deposits, which declined by more than 30 per cent in 2000-2003 fiscal year. Despite the fact that the black economy as a percentage of the GDP decreased, its annual compound growth rate remained more than 11 per cent.

At disaggregated level, this growth remained at two per cent during the 1960s, 17 per cent during the 1970s, 15 per cent during the 1980s and 13 per cent during the 1990s and onwards. Similarly, tax evasion grew at the rate of 12 per cent. This growth remained at five per cent during the 1960s, 19 per cent during the 1970s, 16 per cent during the 1980s and 11 per cent during the 1990s and onwards.

The black economy is, of course, a global phenomenon. The Economist, London, for instance, estimated that in 1998 the world’s black economy accounted for a missing $9 trillion worth of output – a volume of output almost equivalent to that of the US. Later, a study by Friedrich Schneider, an Austrian economist, attempted to measure the size of the black economy in 76 developed and emerging economies, revealing that underground activity is equivalent to 15 per cent of officially reported GDP, on average, in rich economies, and about one-third of GDP in emerging ones.

In India, the black economy which was rampant in the 1970s, is back and booming, pushing up stock and property prices, causing inflation and even making the rupee unusually strong against the dollar. According to Arun Kumar, a university professor and author of “Black Money in India”, the informal economy has assumed huge proportions and it keeps growing. His estimates suggest it is worth a whopping $500 billion – almost half the size of the official economy – but some say it is even larger and could be as high as 70 per cent of the official economy, if parallel activities undertaken outside the country are considered.

While most of the underground economy elsewhere in the world revolves around criminal or illegal activities, the major contributors to the black economy in India are legal businesses and the government. According to Indian Council for Research on International Economic Relations, legal businesses controlled by the government, government expenditures and taxes have also been the “major source of black-money creation.” For instance, no real-estate deal in the country is done without the involvement of at least 40 per cent unaccounted-for money, and a large portion of the billions of dollars in foreign-exchange inflows that India sees every year is actually the returning black money that went out of the country in the high-tax regime before liberalisation began.

America’s fast-growing black economy is believed to be worth $970 billion, or nearly nine per cent of the real economy. It could soon pass $1 trillion. What is fuelling this economy is the country’s growing ranks of low-wage, illegal immigrants. The government puts this population at 8.5 million but another study puts it at 20 million.

In the OECD countries in 1999–2001, Greece and Italy had the largest black economies, at 30 per cent and 27 per cent of the GDP, respectively. In the middle group were the Scandinavian countries, and at the lower end were the United States and Austria, at 10 per cent of GDP, and Switzerland, at nine per cent.

The growing informal economy -DAWN - Business; August 04, 2008