Pakistan Economy - News & Updates - Archive

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Forex reserves dip to $10.15bn ​

SBP’s reserves fall while those of commercial banks rise​

Friday, August 08, 2008

ISLAMABAD: Pakistan has entered into a danger zone on the external economic front as its precious foreign currency reserves dwindled by $328 million during the last one week and reached $10.159 billion, it is learnt.

With existing level of foreign reserves, the country can pay import bill of just over one month. Economic managers are really worried over rapidly depleting reserves in the wake of rising petroleum and food commodities’ import bill.

Balance of payments’ vulnerabilities are increasing in the wake of falling foreign reserves, which is putting pressure on the rupee.

The State Bank of Pakistan has not given details of forward liabilities, which according to market sources have crossed $1.2 billion. So the real reserves, held by the central bank, have touched the lowest level in recent years.

The foreign currency reserves stood at $10.487 billion on July 26 and dropped to $10.159 billion in the week ended on Aug 2, recording a decrease of $328 million. According to Reuters, the State Bank said its reserves fell $48 million to $6.968 billion, while those held by commercial banks rose $151 million to $3.190 billion during the week.

“There are no inflows coming into the kitty, leading to more pressure on the rupee,” an official said here on Thursday.

Former minister of state of PML(Q) government Omar Ayub Khan told The News the current economic situation clearly indicated the rupee would further depreciate in coming weeks and if the existing situation persisted the currency would dip to Rs85 against the dollar from the present level of Rs73 in one and a half months.

Last fiscal, the government met its financing gap of $5.5 billion by utilising foreign currency reserves, which stood at $16 billion in November 2007. However, the reserves have now declined to $10.15 billion.

This year, total financing gap will be around $16.5 billion against envisaged inflows of around $10.5 to $11 billion. So the country cannot afford to use its foreign reserves anymore and economic managers will have to do something to avert the threat of default.

The possibility of Saudi oil facility worth $5 billion could provide some relief in the current economic and political crisis as uncertainty is triggering capital flight from the country.

Independent economic analysts believe if the Saudi facility is not received in the next few weeks, then Islamabad will have to think seriously about approaching the International Monetary Fund during the second half of the current fiscal year.

Forex reserves dip to $10.15bn

 

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Italy interested in marble industry ​

Friday, August 08, 2008

KARACHI: Ambassador of Italy to Pakistan, Vincenzo Prati said that in order to enhance trade and investment with the Pakistani business community, it is essential to promote trade and investment and to intensify cooperation and collaboration particularly in the field of stones and marble and its products. During a meeting with members of the Karachi Chamber of Commerce and Industry (KCCI), he also informed that Verona Exhibition Authority from Italy intends to hold a Marble Exhibition in Karachi in 2009.

The delegation representing the marble sector of Italy showed interest in the development of trade relations and requested the President of KCCI, Shamim Ahmed Shamsi, to send a delegation from the marble sector to interact with Italian investors and business community for elaborating and enhancing trade and investment.

Shamsi briefed the ambassador of Italy about the composition and role of the Karachi chamber towards the promotion of business and trade activities, locally and globally.

He spoke about the possibility of business and investment opportunities by saying that there are good prospects for undertaking joint ventures in Pakistan with the help of Italian technical know-how.

Italy interested in marble industry

 

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Move to reduce $11bn oil import bill​

ISLAMABAD, Aug 7: The Economic Monitoring Committee (EMC) asked the ministry of petroleum on Thursday to prepare proposals for curtailing oil consumption in order to lower the oil import bill which has now reached $11 billion.

The EMC which met under Minister for Finance, Privatisation and Investment Syed Naveed Qamar also directed the ministry to make public the oil pricing structure in order to safeguard people’s interest.

It advised the ministry to specify government’s guidelines in sync with the Oil and Gas Regulatory Authority (OGRA) on gas pricing mechanism to the benefit of public at large.

The issue of recent declines in oil prices was also discussed and some committee members are reported to have urged the government to look into the matter and offer some relief to the people.

“The government may initially provide some relief to those who had been affected by the increase in diesel prices over the past few months,” a source quoted the finance minister as saying.

The committee said a decision to grant a waiver by relaxing the framework for setting up more CNG stations in Balochistan would provide relief to the common man.

It reaffirmed earlier decisions not to apply ban on sugar export on LCs opened prior to the announcement of ban.

It advised Minfal that decision to import refined or raw sugar must be taken in conjunction with fixing prices.

The EMC had directed Minfal to finalise a decision on wheat release prices after meeting provincial food secretaries and taking into consideration their viewpoint.

The ministry of industries was advised to convene a meeting of the committee on fertilisers to formulate recommendations on subsidy mechanism and submit the report.

The Minfal briefed the EMC on the Pakistan Sugar Mills Association’s existing and carry-forward stock position and said that stability in prices of foodgrains compared well with prices in regional countries—India, Iran, Afghanistan and Bangladesh.

It was observed that sugar prices in international market had been rising continuously from October 2007 to June this year.

But, in domestic market, sugar prices remained stable since the export ban.

The finance minister advised that fertiliser-related subsidy should remain focused to domestic consumers in terms of relief and benefit.

The Minfal also briefed the EMC on the outcome of its meeting with provincial food departments and said that the federal government might decide on wheat release prices.

The EMC directed the Minfal to work out the issue price in consultation with provinces, authorising them to decide the dates of release of wheat as per local circumstances which governed local cost calculations.

Minfal informed the EMC that the forthcoming shipment of 36,000 tons of wheat should arrive on August 10, followed by the second and third shipments on August 15 and 21 (40,000 and 36,000 tones respectively).

The fourth shipment of 40,000 tones of wheat will arrive on August 26 followed by further imports on voyage time basis of the ships engaged.

The Minfal, also informed EMC that Pakistan’s projected edible oil consumption was likely to be around 2.8 million tons.

Taking stock of declining international edible oil prices, domestic oil and ghee rates have registered a fall in the open market.

Move to reduce $11bn oil import bill -DAWN - Top Stories; August 08, 2008

 

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New plants may halve generators import​

KARACHI, Aug 7: Dealers expect a decline in generators’ import by at least 50 per cent in case the government succeeds in realisation of various power and alternative energy projects.

Generators’ markets presently facing a slump in sales as the peak season ended after heavy buying over the last three months till July.

Pakistan’s import bill for generators in 2007-08 surged by 60 per cent to $1.2 billion as compared to $738 million in 2006-07 since the demand for power generating machines remained high owing to load-shedding of lengthy duration.

Karachi Machinery Merchants Group President Sikandar Shahzada told Dawn that the government had been claiming that the load- shedding will be over by next year depending on the recent offers made by foreign companies in new power projects and finding alternative power energy options. “If various power projects start generating from the next year then it will definitely curtail generators’ import,” he said.

He said that the markets currently had surplus stocks, which means that dealers/shopkeepers will have to carry the old stocks for the next six months in their shops as the new buying season will kick off from March next year.

Mr Sikandar said that the devaluation of rupee against the dollar in the last three months had made the imports costlier. For example, it had made an additional burden of Rs3,000 on the cost of import of a 2KVA generator. Some dealers have passed on the impact to consumers, while others have been trying to clear the stocks at old prices.

The substantial increase in diesel prices has plunged the sales of diesel generators of over 30KVA for industrial purpose by 50 per cent. The cost of running a diesel generator now comes to Rs16 per unit as compared to Rs11 per unit few months back.

However, the sale of petrol generators has not dropped very sharply as 95 per cent of them is immediately converted into gas generators soon after its purchase. He said that a petrol generator usually costs Rs86 per litre for one hour, while the cost comes to only Rs6 per hour on running it on gas.

He was of the view that rising food prices and other expenses are other factors that are not

favourable for a good sale of generators.

New plants may halve generators import -DAWN - Business; August 08, 2008

 

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Small dams project: Islamabad to give Rs nine billion to Sindh ​

KARACHI (August 08 2008): The federal government has agreed in principal to provide Rs 9 billion to Sindh government for the construction of 14 small dams in different parts of the province to overcome the water scarcity. It will be recalled that there was a longstanding disagreement between Islamabad and Sindh on their respective monetary share in the Rs 12 billion project of developing over 200 small dams across the water-thirsty province.

Pakistan Muslim League-Q led federal government wanted the government of Sindh to contribute 50 percent (Rs 6 billion) of the total amount, with the latter insisting more and more funding from the center.

"As a matter of principle the federal government has guaranteed to give us a sizeable share... Rs 9 billion after we prepare feasibility reports of the projects," Sindh Minister for Power and Irrigation Jam Saifullah Dharejo told Business Recorder on Thursday.

The minister said work was started on 11 sites identified for the construction of dams while feasibility reports of 5 to 6 dams, including two in Kohistan, were under preparation. He said dams to be built on the Nayabaran River would cost the government of Sindh around Rs 4 billion. Official sources in Sindh power and irrigation department, however, said the Sindh government has not sent PC-I of the small dams project to the federal government.

The feasibility work, they said, was in the last stages. The provincial government has a plan to construct at least five dams on Nayabaran River, said the sources, adding that the size of the dams would be determined after completion of the feasibility reports. They said Sindh government was also planning to develop small dams type reservoirs in Nangar Parkar.

According to the sources the previous government was thinking of providing the entire money to the Sindh government, "but the intentions of the present government are still not clear."

They said the project, which is aimed at recharging the underground water table, would be completed in different phases and Sindh government in the first phase would build at least 14 small dams in different parts of the province, including two, Cold Dam and Parekh Dam, in Karachi.

Business Recorder [Pakistan's First Financial Daily]

 

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Government urged to attract investment in energy sector ​

LAHORE (August 08 2008): Speakers at a seminar have asked the government to announce incentives and tax rebates to attract investors in the energy sector, so that the power crisis hindering the country's economic development could be eliminated. They also asked the government to announce a national conservation campaign on saving energy, as Pakistan currently faces a shortfall of over 4000 MW of electricity.

The seminar on "Policy Framework and Incentives for New Technology In Energy Conversation and Demand Side Management", was organised by The Institution of Electrical and Electronics Engineers Pakistan (IEEEP) and held here on Thursday. Former Member Power at the Water and Power Development Authority (WAPDA), Engineer Javaid Akhtar said that engineers should focus on resolving the energy crisis being faced by the country.

He also urged political parties, the public and educational institutions to be a part of an awareness campaign on national energy conservation. Former MD Pakistan Electric Power Company (PEPCO) Munawar Baseer and Director General Energy Management and Conservation at PEPCO, Tahir Bisharat Cheema said energy conservation needs to be part of public policies and that the concept of public policy should be based on the concept of "public good".

Pakistan has the largest coal reserves of the world at Thar, they said, adding that its value was more then the oil reserves of Saudi Arabia. They lamented that Pakistan however is unable to develop these reserves. They said that it appears the government was not serious in developing these reserves and made five departments to develop the Thar Coal Field, without any liaison between these departments.

The experts also felt that the nation spent US $16 billion on the import of oil in 2007-2008 because it doesn't have alternate sources of energy. They said that our motto should be that a "unit saved is a unit produced." They also said that there should be a load limit of electricity for consumers and necessary legislation in this regard should be made.

President IEEEP, Engineer Anwar Khalid and honorary Secretary General IEEEP Saleem Arif called for the ending of load shedding by increasing capacity, reducing demand and increasing efficiency. The Head Faculty of the Engineering and Technology Lahore College for Women University Dr Zahir said that we need energy funding institutions and international collaboration to solve the energy crisis.

Business Recorder [Pakistan's First Financial Daily]

 

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Inflationary pressure highest on lowest income group ​

Saturday, August 09, 2008

ISLAMABAD: The Federal Bureau of Statistics (FBS) on Friday reported that the weekly Sensitive Price Indicator (SPI) based year-on-year inflation of 53 daily use kitchen items, for the week ending on August 7, 2008, has increased by 31.72 per cent as compared to the corresponding week of the last fiscal.

Inflationary pressure was higher on the lowest income group, earning below Rs3,000 per month. For them, SPI registered an increase of 33.45 per cent. For the income group between Rs3,001 to Rs5,000, it stood at 32.34 per cent, for those between Rs5,000 to Rs12,000 it was at 31.89 per cent and for those between Rs12,000 and more, it stood at 31.59 per cent as compared to the same week of the last fiscal.

All the multinational donor agencies, financial institutions, the central bank and even the government itself, have voiced concern over the rising inflationary pressure, but the policy response from their side looks grim, as economists say that in Pakistan, high inflation is due to supply but the government is trying to rein in the high inflation by curtailing demand.

The State Bank of Pakistan (SBP) last month increased its discount rate by 100 basis points to 13 per cent, aimed at curtailing the demand pressure in the economy and ultimately capping inflation. SBP governor Dr Shamshad Akhtar said that the government was heavily borrowing from the central bank which was pushing up inflationary pressure in economy.

Independent economists have also blamed the government for its huge borrowings to bridge the gap between its revenue and expenditures, resulting in nothing other than a huge price hike and which has become an apparent threat to the country’s economic well being and has severely disturbed the social and economic life of the common man as well.

The weekly SPI based inflation, with base year 2000-2001 during the last 10 weeks as compared to their corresponding weeks of the last fiscal, shows a steep trend. The week ending on June 5, 2008 stood at 26.18 per cent, June 12 (26.16 per cent), June 19 (26.79 per cent), June 26 (26.3 per cent), July 3 (28.37 per cent), July 10 (28.3 per cent), July 17 (30.36 per cent), July 24 (32.22 per cent) and on July 31, 2008, it stood at 31.92 per cent.

According to the SPI bulletin, the year-on-year rise in the prices of some necessities and kitchen items was exorbitant. These items were onions, LPG, tomatoes, potatoes, chicken, gur, firewood, eggs, beef, fresh milk, rice, wheat flour, ghee, petrol, diesel and all type of pulses.

The bulletin on SPI, based on the data collected for about 53 items from 17 centers, showed that 27 items registered an increase, whereas eight items showed a decline, while prices of 18 items remained unchanged.

In a span of one week, prices of onions shot up by 10.83 per cent to Rs21.9 per kilogram, LPG by 6.39 per cent to Rs848.82 per 11kg cylinder, tomatoes by 6.11 per cent to Rs36.11 per kg, potatoes by 2.8 per cent to Rs24.88 per kg and chicken price was up by 2.6 per cent to Rs102.42 per kg over the previous week.

However, further analysis of the data revealed that on year-on-year basis, some items are dearer by double digits. These include; masoor pulse at 124 per cent, IRRI 6 113 per cent, kerosene 84 per cent, mustard oil 63 per cent, wheat flour 61 per cent, gram pulse 53 per cent, LPG (11 kg cylinder) 52 per cent, red chillies 49 per cent, potatoes 49 per cent, egg 47 per cent, onions 47 per cent, washing soap 40 per cent, chicken (farm) 30 per cent, firewood 23 per cent and fresh milk prices were up by 20 per cent over the corresponding week of the last fiscal year.

Prices of eight items decreased, compared to the prices of the corresponding week of the last year. Items which showed an increase in their prices were; basmati rice (broken) dearer by 72 per cent, wheat 71 per cent, vegetable ghee (loose) 54 per cent, cooking oil (tin) 51 per cent, vegetable ghee (tin) 50 per cent and bananas 26 per cent.

Though the price of 18 items remained unchanged, the prices of some items compared to the corresponding week of the last fiscal year are still dearer by double digits.

These items include diesel which was up by 71 per cent, petrol 62 per cent, plain bread 36 per cent, bath soap 33 per cent, tea packet 28 per cent, match box 22 per cent and electricity charges, which were up by 16 per cent.

Inflationary pressure highest on lowest income group

 

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Pakistan seeks Polish investment in coal mining, power generation ​

Saturday, August 09, 2008

ISLAMABAD: Pakistan on Friday urged Poland to invest in the coal power generation and coal mining sector.

During a meeting with the Ambassador of Poland to Pakistan Dr Krzysztof Debnicki, Federal Minister for Water and Power Raja Pervez Ashraf has offered Poland to invest in the coal power generation and coal mining sector in Pakistan to benefit the country with the expertise of Polish technology.

The ambassador in the meeting discussed matters of mutual interest, especially power and mining sectors, to further strengthen the economic ties between the two countries.

The minister while welcoming the ambassador, informed him about the current energy situation faced by Pakistan. The minister said that the new political government of Pakistan is fully determined to facilitate the foreign investors and remove all hindrances and bottlenecks to promote investment in the power sector in Pakistan, which has great potential, attractive benefits and high returns for investors.

He said that today Pakistan is facing great challenges especially in the power sector, as the shortage of energy has badly affected the country’s economy.

He expressed hope that his ministry would benefit from the expertise of the Polish business communities who have great experience and most modern technology to explore the mining sector. There are large coal reserves in Pakistan and the government wants to explore the indigenous resources for various purposes. He said that an independent energy board has also been established for the development of Thar Coal mining and clean coal technologies.

The Polish ambassador said that they were aware of the energy crises world over and informed the minister that his country had great experience in mining development. He also added that the Polish companies would be briefed on investment opportunities in Pakistan during the Ambassadors Conference to be held shortly in Poland.

The ambassador also discussed investment possibilities in other sectors in Pakistan. Matters of mutual interests, bilateral trade and the current political situation of Pakistan also came under discussion during the meeting.

Pakistan seeks Polish investment in coal mining, power generation

 

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Chile prepares feasibility study of copper in Pakistan ​

Saturday, August 09, 2008

SANTIAGO: Chile’s Antofagasta Minerals, a London-listed copper miner, expects to complete a feasibility study of its Reko Diq copper property in Pakistan by May next year, company President Marcelo Awad said on Thursday.

Awad said on the sidelines of a business conference in Santiago that the study contemplated mine output of 72,000 tonnes of mineral per day. He said the figure could be raised to as much as three times that, but there was no plan to do so at the moment.

The Reko Diq property is jointly owned by Antofagasta with 37.5 per cent, Canadian miner Barrick Gold Corp also with 37.5 per cent, and the government of Pakistan. The partners could develop enough capacity to process up to 220,000 tonnes of mineral per day, at a cost of some $5 billion, but that option has been discarded for the moment. Under the smaller mine plan, Reko Diq would enter production in 2012, with output of some 150,000 tonnes of copper per year.

“We are analyzing the 72,000,” Awad told journalists.” There could be a rise but that will depend on what infrastructure is required.” He did not say how much the project would cost. The Reko Diq project has a resource of some 4.5 billion tonnes of mineral, with the equivalent of 0.85 per cent copper including a gold credit.

Awad also commented on the El Mauro tailings dam under construction in central Chile to serve its Los Pelambres copper mine high in the Andes mountains. The dam is being opposed in the courts by farmers and environmentalists, but Awad said the company is working through the legal problems.

Chile prepares feasibility study of copper in Pakistan

 

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Gas accord delay may cost govt Rs30 billion​

ISLAMABAD, Aug 8: An inordinate delay by the government in renegotiating the gas purchase agreement with producers of the country’s second largest gas field may cost consumers an additional Rs6 for each unit of gas and cause a loss of around Rs30 billion to the national exchequer.

Under the gas sales and purchase agreement with partners of the Qadirpur gas field joint venture, the producer price was required to be renegotiated about three years ago to limit the adverse impact of increase in oil prices on national economy and the consumers.

That did not happen because of an institutional oversight until some of the producers claimed higher returns in accordance with the international oil market.

Background interviews with government officials and producers showed that the Ogra is fixing wellhead price for Qadirpur gas field under an interim executive order.

But this is a stop-gap arrangement without any legal cover, proper agreement with the joint venture partners or formal approval from any competent forum like the federal cabinet or the ECC. Sources said that at least one of the joint venture partners had threatened to move court of law if their profits were capped unilaterally.

Discovered in 1990, Qadirpur field is the country’s second largest after Sui, both in terms of reserves and daily production. With about 500 million cubic feet per day (MMCFD) gas supply to the national transmission system, Qadirpur’s gas sales account for about Rs29 billion under the original agreement if taken on international furnace oil price of $200 per ton but goes beyond Rs59 billion when furnace oil rates rise to $400 per ton.

The original agreement required the government to renegotiate the wellhead price with the joint venture partners in case the furnace oil prices went beyond $200 per ton. About three years ago, the furnace oil prices increased to $400 per ton but the government failed to revise the wellhead/producer price.

The Oil and Gas Development Company Limited (OGDCL) is the operator of the field with 75pc share, while Premier-Kufpec, Pakistan Petroleum Limited and PKP Exploration hold on an average 8pc shareholding.

When contacted, a senior government official declined to comment on the issue saying the matter was under consideration of the government and price renegotiation process was in progress.

He, however, said the impact of higher international furnace oil prices had not been passed on to consumers and an interim order issued by the director-general of gas was sufficient for Ogra to maintain status quo.

Some other sources, however, said the interim arrangement lacked legal protection and depended on government’s influence over the OGDCL, which could come under pressure from international lenders because of its listing on the London Stock Exchange.

The sources said the furnace oil prices had crossed $600 per ton that could increase Qadirpur’s sales to Rs90 billion. The sale rate from Qadirpur is currently kept at Rs185 per MMBTU (million British Thermal Unit) by Ogra under the interim arrangement but the joint venture partners have submitted a fresh claim of Rs385 per MMBTU for the last six months.

Petroleum ministry sources said the joint venture partners of Qadirpur were persuaded to offer 65 per cent discount to the government, assuming the maximum furnace oil price of $300 per ton.

But this rate has to be further renegotiated to get more discounts given the fact that the international furnace oil prices have crossed $600 per ton. Unless a revised sale price is finalised under a fresh binding agreement, an additional burden on consumers and the national exchequer could not be ruled out.

Gas accord delay may cost govt Rs30 billion -DAWN - Top Stories; August 09, 2008

 

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Banks’ capital limit to be raised to $300m​

KARACHI, Aug 8: The Minimum Capital Requirement (MCR) will be increased to $300 million for both conventional and Islamic banks, said banking sources.

Bankers said they had already been informed by the regulators that the capital requirement would be enhanced with other structural changes as part of the 10-year strategy of the State Bank of Pakistan.

Small banks fear that the implementation of new plan with the requirement of $300 million as minimum capital will ruin their business. They feared that it could be a part of the so called ‘consolidation strategy’ of the SBP.

For the last five years the State Bank has been following a policy to reduce number of banks with a vision of consolidation of banking in the country.

“No time-table has been provided for this $300 million capital requirement but we believe a time span of five to seven years may be given to banks to achieve the target,” said a senior banker. He said the MCR will be increased after the end of current target for banks, which is $100 million till end of 2009.

A number of small banks failed to achieve the target of $100 million or they opted to remain far behind the target and their fates were sealed by selling them to big banks. Most of the small banks were sold to giant foreign banks, which increased their share in the banking industry of Pakistan.

“Excluding five big banks and foreign banks, only few banks have potential to reach the new gigantic target of $300 million of capital requirement,” said the senior banker.

However, the move will support the big banks as they would get larger chunk of the banking boom.

An analyst and banking expert said the presence of only few banks would reduce competition in the industry, which could be beneficial for few banks but not for the customers.

“Banking spread is above 7 per cent and is the highest in the region. In the absence or low level of competition one should not hope for better returns to the depositors,” said the banking expert.

At the same time, the quality of services will also suffer. He said the services provided by the small banks were much better than the bigger banks and their fee is comparatively less than the latter.

It was observed that even some big banks fear that the target of $300 million could also hurt them as the requirement is, too, big in the context of current banking industry growth and low performance of the economy.

“If banks continue to grow as they have been performing since the last three years, then the target could be achieved in 6 to 7 years but any setback to economic growth could even hurt the efforts of the big banks to reach the target,” said another banker.

He said any setback to local banks can be advantageous to the foreign banks, which have the capital more than the entire local banking industry.

In the presence of giants like Royal Bank of Scotland, Standard Chartered, and NIB Bank, local Pakistani banks can not compete in an unfavourable situation like sharp decline in the economic growth, he said.

Banks’ capital limit to be raised to $300m -DAWN - Business; August 09, 2008

 

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$3.811 million outflow recorded in equity market​

KARACHI (August 09 2008): The outflow of portfolio investment from the country's equity market continued and a net withdrawal of over $3.811 million was registered by the offshore investors during the week ended August 8, 2008. "The prevailing uncertainty on political front and weakening economic indicators forced the foreign investors to offload their holdings", an analyst said.

Out of total five trading sessions, only one day witnessed net buying by foreign investors, while outflow was witnessed by them on the remaining four days. The week started with the outflow of portfolio investment as a net selling of $2,513,113 was witnessed by the foreign investors on Monday and a total of $3,409,022 was withdrew by the offshore investors on Tuesday.

On Wednesday the net foreign investment remained positive and a net inflow of $4,923,583 was recorded due to healthy buying by the foreign investors. A net outflow of $1,932,130 was witnessed on Thursday while the foreign investors net selling was recorded at $880,609 on Friday.

Business Recorder [Pakistan's First Financial Daily]

 

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Extension to China: IPI gas line project can be redesigned cheaply: report​

ISLAMABAD (August 09 2008): A feasibility study has established that Iran-Pakistan-India (IPI) gas pipeline project could be redesigned, after minor changes and very small extra expenditure, to divert gas pipeline to China.

Sources said that IFL, a reputed firm, conducted the feasibility study on Pakistan government's order to establish if it was possible or not to lay the pipeline to China, if India did not come up with a clear decision to join the proposed IPI gas lime project.

Sources in the Ministry of Petroleum and Natural Resources said that the consultant has submitted the feasibility report, indicating that IPI gas line could be routed to China from northern parts of Pakistan. They said that after studying all aspects of the feasibility report the document has been sent to China for consideration and views.

If Pakistan gets a positive response on the feasibility report then it will give a formal proposal to China to become a party to the project. Pakistan had offered China to become a party to the project when President Pervez Musharraf visited Beijing early this year.

Decision-makers in Islamabad believe that China can be the best alternative to India for the project. On offering the project by President Musharraf, China had immediately shown willingness to join it. However, before formally inviting China for joining the project, Pakistan decided to hire consultant for conducting the feasibility report to suggest the possible route for rerouting the project to China.

India had joined Pakistan for the project at a very early stage, which led to declare it as 'IPI' project some 14 years back. But developments, which took place in the region during the last five years, diluted India's interest in the project.

In particular, US-India agreement on civil nuclear energy transfer to help the latter meet energy demand gave a big shock to Pakistan. This development forced Pakistan to look for some other partner, as alternative to India, for the project. India has been giving mixed signals to Pakistan for staying in the project.

However, officials in Islamabad have developed a strong feeling that India's assurances to become party to the 'IPI' project were just waste of time and, instead of keeping on waiting for its final decision, Pakistan should join hands with China to make the project a reality.

Business Recorder [Pakistan's First Financial Daily]

 

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Antofagasta to prepare Reko Diq feasibility study by May 2009​

SANTIAGO (August 09 2008): Chile's Antofagasta Minerals, a London-listed copper miner, expects to complete a feasibility study of its Reko Diq copper property in Pakistan by May next year, company President Marcelo Awad said on Thursday. Awad said on the sidelines of a business conference in Santiago that the study contemplated mine output of 72,000 tonnes of mineral per day.

He said the figure could be raised to as much as three times that, but there was no plan to do so at the moment. The Reko Diq property is jointly owned by Antofagasta with 37.5 percent, Canadian miner Barrick Gold Corp also with 37.5 percent, and the government of Pakistan.

The partners could develop enough capacity to process up to 220,000 tonnes of mineral per day, at a cost of some $5 billion, but that option has been discarded for the moment. Under the smaller mine plan, Reko Diq would enter production in 2012, with output of some 150,000 tonnes of copper per year.

"We are analysing the 72,000," Awad told journalists. "There could be a rise but that will depend on what infrastructure is required." He did not say how much the project would cost.

The Reko Diq project has a resource of some 4.5 billion tonnes of mineral, with the equivalent of 0.85 percent copper including a gold credit. Awad also commented on the El Mauro tailings dam under construction in central Chile to serve its Los Pelambres copper mine high in the Andes mountains.

The dam is being opposed in the courts by farmers and environmentalists, but Awad said the company is working through the legal problems. He said construction of the dam, part of a $1 billion expansion of the Los Pelambres copper mine, continued and that it would be ready for use by the first quarter next year.

Business Recorder [Pakistan's First Financial Daily]

 

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OMV to explore oil in Kalat and Barkhan​

VIENNA (August 09 2008): Austrian oil and gas giant, OMV, said on Friday it had acquired stakes in two licences to explore oil in Pakistan. OMV said in a statement it had agreed to acquire a 30 percent stake in the Kalat exploration licence and a 15 percent stake in the Barkhan licence, both in the province of Balochistan.

"The areas are under-explored but considered as highly prospective drilling areas," OMV said. Partners in the Kalat licence were Pakistan Petroleum and ENI Pakistan, while partners in the Barkhan licence were Pakistan Petroleum and MND Exploration and Production.

Kalat is a block of 2,842 square kilometres and Barkhan 2,105 square kilometres. "These new exploration licences acquire acreage with highly attractive exploration potential," said OMV board member Helmut Langanger. "It enables us to proceed with our plans for further growth in Pakistan were we are currently the biggest international gas producer," Langanger said.

In all, OMW holds exploration and production licences in 20 countries in central and eastern Europe, North Africa, north-western Europe, the Middle East, Australia and New Zealand, and Russia and the Caspian region. OMV's daily production volume is around 316,000 barrels per day and at the end of 2007, it had reserves of 1.22 billion barrels.

Business Recorder [Pakistan's First Financial Daily]