Pakistan Economy - News & Updates - Archive

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ADB asks government to ensure structural reforms​

ISLAMABAD: Asian Development Bank (ADB), while assuring financing for important projects, has asked Government of Pakistan to ensure structural reforms and align its fiscal and monetary policies according to the guidelines and framework of the Bank, official sources told Daily Times on Friday.

In this regard, economic management teams of Government of Pakistan (GOP) and Asian Development Bank (ADB) would work together on modalities of future cooperation that would lead to structured agreements in near future. “However, ADB’s future funding commitment would come according to the announcement of World Bank’s future assistance for Pakistan,” the official added.

This has been decided during a meeting between ADB delegation led by Juan Miranda, Director General of the bank and Syed Naveed Qamar, Finance Minister here on Friday.

The meeting discussed over all macro economic policy environment in South Asian region generally and Pakistan more specifically. Finance Minister briefed the delegation about GOP’s recent micro and macro economic policy steps aiming to restore stability in all domains of governance – socio-economic development, integrated functioning of state institutions and timely political decision making of the government in sectors that focus people of the country as primary stakeholders.

The Finance Minister stated that MoF and SBP are working in tandem to initiate and implement all difficult and urgently needed measures to attain targeted economic and fiscal goals. “Expenditure controls and rationalisation of monetary spending in public sector is underway,” he added.

The ADB team apprised the Finance Minister that they are working with all stakeholders to support the diverse financial requirements of the government.

Finance Minister added that after taking over of new democratic government Pakistan is going through transformation in streamlining its economy and Pakistan expects substantative support from ADB to beef up its existing economic development projects. Both the sides also discussed GOP’s commitments to structural reforms, which would contribute to economic revival in the country.

The meeting concluded on the note that GOP and ADB’s Economic Management Teams would work together on modalities of future cooperation that would lead to structured agreements in near future. Both the sides shared similar views on ADB’s regional initiatives in the energy, transport and communication sectors, adding that ADB may finally emerge as a regional partner in South Asian Region.

 

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ADB to release $500m soon, says Qamar​

ISLAMABAD: Federal Minister for Finance Syed Naveed Qamar said on Friday the Asian Development Bank (ADB) delegation has assured the government to release $500 million in the next few days and also expressed willingness to double this support keeping in view the ongoing reforms agenda of the government. Speaking to journalists after formally inaugurating the eService project of the SECP, the minister said the meeting with World Bank and ADB representatives was a part of routine meetings.

 

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Aisha steel mills to commence operations in 2009​

KARACHI: Japan’s Metal One Corporation, a subsidiary of Mitsubishi Corporation, will have a 26 percent stake in the under construction Aisha Steel Mills (ASM), a joint venture firm being set up in Pakistan to meet the growing demand of steel, CEO Haseeb-Ur-Rehman told Daily times.

“Besides the Metal one corporation, Japan based Universal Metal Corporation, Arif Habib Ltd would have a 25 percent stake in the venture being established at Karachi with a cost of $100 million,” Heseeb informed. “The plant is expected to be completed in two years and it will have an initial capacity of 220,000 tonnes per annum,” he added.

Steel is a basic raw material used from nails to skyscrapers, bridges and in the large scale manufacturing industry. Steel usage is one of prime barometers of growth of an economy.

Establishment of new steel mills will provide cheap raw material for the whole economy, which depends on its imports and suffered from the higher steel prices in the international market. Local automobile assemblers claim that higher steel prices are contributing to the rising cost of production.

After the set up of Aisha Steel Mills, the local auto assemblers would get a relief as the mills would especially produce steel to help local auto industry, Haseeb said. “The steel mills will cater to the growing demand of cold-rolled coils (CRCs) in the country and will satisfy the demand of the automotive and engineering industries, as well the home appliances sector,” he said.

Haseeb remarked that set up of the mills in Karachi would be the largest plant of its kind in the country in terms of producing value added cold rolled coils sheets.

The capacity of the mills will be later increased to 350,000 tonnes.

Annual demand for CRCs in Pakistan is about 450,000 tonnes, most of which is met through imports, analysts said. ASM would be the second Pakistani firm to manufacture CRCs after the state-run Pakistan Steel Mills.

Experts say that Pakistan needs big projects to pursue the self-reliant policy in the steel making as our neighboring countries are doing in steel production. Our neighboring countries, excluding Afghanistan are taking into consideration the importance of steel production especially.

China has been the biggest steel producers of the world, and India is the on the fifth spot. Unfortunately, Pakistan is not even in the list of top 30 steel producers of the world.

 

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Manpower exports to South Korea on the rise​

KARACHI: Pakistan manpower exports to South Korea continue to increase, as around 900 skilled labourers are in the process of immigration, during August 2008 only, by the Overseas Employment Corporation (OEC), official sources told Daily Times. Sources informed that the workers who successfully pass their interview and language test will be gradually offered job in the coming days. Since the beginning of this year the number of Pakistani citizens who are getting themselves listed for immigration to South Korea has been growing significantly.

 

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SPI rises by 30.90 percent​

KARACHI: The Sensitive Price Index (SPI) based weekly inflation surged by 30.90 percent during the week ended August 28, 2008 over the corresponding period of previous year. However, after rising unabatedly for the past many months, it declined slightly by 0.11 percent during the week under review compared to the preceding week”, official data indicated on Friday. The prices of various food items started receding during the week, which resulted in the overall decrease in the SPI, however the prices of various items were on higher side during the week when compared with the price level of last year.

 

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PSEB, Shaheen Foundation to set up IT Park​

ISLAMABAD: Pakistan Software Export Board (PSEB) has joined hands with Shaheen Foundation for the establishment of a new state-of-the-art IT Park over 360,000 square feet in Lahore. Operational from November 2008, the facility will be one of the largest with redundant connectivity, power backups and top-of-the-line civic amenities. The park will be used for the international branding of Pakistan’s IT Industry and can house more than thirty medium-sized IT companies at affordable rents. The PTCL, being the strategic partner of PSEB will provide networking and communication infrastructure facilities for the park. Talib Baloch, MD PSEB and other senior officials.

 

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10MW before Eid from first wind energy project ​

KARACHI: Before Eid, almost 10MW will be added to the energy pool of the Water and Power Development Authority (WAPDA) from a 50MW wind energy project that will be entirely completed in three years, said Alternative Energy Development Board (AEDB) Pakistan Chief Executive Officer Arif Alauddin while talking to Daily Times on the sidelines of a workshop on carbon credits Friday.

The new 50MW wind energy plant installed at Jhampeer would be ready in a year. Then at least six more plants are in the offing as orders would have been made and 300MW would be available by 2010, said Alauddin. He was one of the speakers at the two-day workshop and training programme on ‘Carbon Credits Potential in the Wind Sector in Pakistan’ held at a local hotel.

As far as the ongoing power outage is concerned, 1,000MWs could be readily saved if 600,000 tube wells were switched to solar energy, he said. If this were undertaken on a fast track it would take a year and a half. “The AEDB has set a target for at least 10,000 MW for the next ten years,” he vowed.

Sindh Minister for Environment and Alternate Energy Askari Taqvi pressed for the acquisition of carbon credit control which investors had to learn about. He was disappointed to see that few people had turned up for the workshop. “Investors do not take carbon credit potential into account and thus lose out on revenue,” echoed Sindh Secretary for Energy Mir Hussein Ali while speaking to Daily Times. The government puts it down to a lack of know-how. “But in future, it would be ensured that not a single project should miss out on the benefits.”

The secretary said that the government was less interested in forcing investors into including carbon credits by law and believed that with the proper awareness they would be automatically attracted to them.

AEDB CEO Arif Alauddin explained that for example, one carbon credit is worth about 21 Euros in the international market. Saving 1 ton of Methane would earn 21 credits and saving nitric oxide 2,000 credits. Saving FF6 (transformer Gas) gives 20,000 credits.

Talking to Daily Times, Core CarbonX Solutions, India Director Niroj Kumar Mohanty said that Pakistan has vast potential for alternate energy but there is a lack of investment and above all alternate energy consultants are not available. “It is an interesting thing that only the World Bank or Asian Development Bank are ready to allocate funds for power projects, especially alternate energy projects,” he commented, “but it is a misery that local banks do not come forward in this huge sector”. Bank Senior Infrastructure Specialist Mihaly Kopanyi told Daily Times that the WB was ready to invest in every reasonable project irrespective of the extent of fund allocation. Answering a question, Kopanyi said that the WB mainly focuses on the establishment of projects while the transfer of technology is not a specific objective.

He felt that the ongoing power crisis is worsened by flaws in the distribution and transmission system, which should be rectified immediately to save time, money and power. UN Industrial Development Organization (UNIDO) National Expert (CDM) Muhammad Matloob Khan said that China and India were taking the lead in carbon credit potential. Presently, China has 245 projects with 113,346,790 CERs/Reductions while India has 355 projects with 31,068,449 CERs/Reductions.

 

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Pakistan needs more steps to save economy: WB​

* World Bank official says additional steps are needed to safeguard country’s economy against further shocks
* Guerrero offers WB technical, analytical support to meet Pakistan’s development challenges​

ISLAMABAD: The steps taken by the Pakistan government to support its economy in the face of an increase in prices of oil and food commodities at international level are commendable, World Bank Vice President for the South Asian Region Isabel Guerrero said at the end of her two-day visit to Pakistan.

However, the World Bank official added that additional steps were needed to safeguard the country’s economy against further shocks.

She said, "I wanted to meet my counterparts in the government, especially the economic team, prior to welcoming them in Washington during the World Bank-International Monetary Fund annual meetings later this year."

Guerrero said, "I will be visiting Pakistan regularly and look forward to working with the Pakistan government and other stakeholders across this wonderful country."

Guerrero held a meeting with Finance Minister Naveed Qamar to discuss development projects of the Pakistan government and the World Bank in the country.

The World Bank official also held meetings with Prime Minister Yousuf Raza Gilani and Pakistan People’s Party Co-chairman Asif Ali Zardari, in which such areas as power, infrastructure, water management, education, safety nets, public health and nutrition came under discussion.

Support: In addition to planned loans and credits, Guerrero offered World Bank technical and analytical support to ensure Pakistan had the best international expertise to address its development challenges.

Guerrero reconfirmed World Bank's commitment to Pakistan during her visit. She said that the World Bank's investment programmes in Pakistan were on the right track despite political uncertainty and law and order prevailing in the country for the last few months.

The World Bank official said, “Policies and administered prices now reflect a better correlation with high international prices. But, to ensure that gains made in poverty reduction are not lost, Pakistan needs to build upon its good economic foundation by taking additional measures to strengthen investor confidence.”

 

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Repatriation of profit by foreign investors up 14.57 percent in fiscal year 2008​

KARACHI (August 30 2008): Repatriation of profit and dividend by foreign investors has rapidly increased and during the last fiscal year they transferred some 921 million dollars abroad, the State Bank of Pakistan said. Repatriation of profit and dividend by foreign investors registered a growth of 14.57 percent during last fiscal year.

After the current upsurge, the overall repatriation reached 921.4 million dollars during FY08, as compared to 804.2 million dollars in FY07, depicting an increase of 117.2 million dollars. The major share of repatriation has been witnessed in the power sector, which is the most favourite sector for foreign investors and they already have made millions of dollars investment in the power sector due to power shortage in the country.

The central bank's latest statistics show that investors repatriated some 169.6 million dollars profit from power sector, which went up by 25 percent or 33.4 million dollars in last fiscal year.

The financial sector is the second leading sector, wherefrom some 142.5 million dollars were sent aboard against some 116.1 million dollars in FY07, showing an increase of 26.4 million dollars in FY08. In addition, communication sector is on the third place with a repatriation amount of 96.8 million dollars in FY08, however it is lower than FY07, in which a amount of 152.5 million dollars was sent abroad.

Foreign investors have sent back 82.6 million dollars from oil and gas exploration sector, 51.7 million dollars from petroleum refining sector, 43 million dollars from tobacco and cigarette sector and some 41.1 million dollars from the pharmaceutical sector during FY08.

Repatriation by foreign investors has shown an increase of 59 percent to 804.2 million dollars during FY07 as compared to 504 million dollars sent abroad during FY06. The government has allowed 100 percent transfer of profit/dividend to foreign investors aimed at boosting foreign investment in the country. Foreign investors are enjoying government's investment friendly policies and consistently sending their earnings to abroad, analysts said.

 

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Ramazan Package: 5 to 10 percent reduction on 1300 items ​

ISLAMABAD: August 30, 2008: The government Saturday announced the Ramazan Package under which one thousand three hundred items will be available at five to ten percent reduced rates at Utility Stores throughout the country.

Announcing the package at a news conference in Islamabad, Minister for Finance Syed Naveed Qamar said it would be effective from Monday next.

He said special emphasis is being given on several essential items.

The Utility Stores Corporation would sell wheat flour at 15 rupee a kilogram; ghee 110 rupee a kilogram, sugar 30.50 rupee per kilo; pulse gram 47 rupee, white gram 63 rupee, basin 59 rupee and tea at 376 rupee per kilogram.

The minister said all utility stores would remain open even on holidays during the holy month to provide items of daily use to the people at reduced rates.

Replying to a question he said the special Ramzan package would cost 1.75 billion rupees to the national exchequer. This subsidy will be in addition to the subsidy being provided by the government through budgetary mechanizm on essential commodities.

To another question he said the network of the Utility Stores corporation has been expanded to 5500 outlets and two hundred more stores would be established in Ramzan.

He said mobile utility store service would be provided to areas not covered by the network especially in Balochistan and some far flung areas of Sindh.

Responding to a question the Finance Minister said strict action would be taken against hoarders and profiteers and monitoring teams would check markets with a view to curbing such tactics.

The Managing Director of the Corporation Brigadier Muhammad Hafeez (retired) told newsmen that sufficient stocks of essential items are available and there would not be shortage of these things.

He said steps have been taken to ensure quality of the products being sold from the outlets of the Corporation.

 

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Government urged to initiate wind power projects to avoid crisis ​

KARACHI (August 30 2008): Experts on Friday urged the government to immediately initiate the wind energy projects to avoid irresolvable energy crisis in the country and warned that window of opportunity is gradually closing with each passing day.

Addressing a two-day workshop on "Carbon Credit Potential in Wind Power Sector in Pakistan," being organised at a local hotel, speakers said that despite Pakistan is far behind in the acquisition of energy through windfalls than developed world, still it has an opportunity to avoid energy crisis.

They said that this technology is available at an affordable cost with easy installation process. Germany is getting 20,952 MW electricity, Spain 12,500 MW, US, 12,376 MW, India 7,093 MW and Denmark 3,136 MW from wind energy set-ups, they pointed out.

They said that it is a ripe moment for the government to invest in this sector otherwise the country may face difficulties in power acquisition in years to come. They said that in Sindh, a trend of developing coal plants for energy generation is also a positive step. However, it requires a huge land where wind blow should be for whole year to keep the turbine moving for ceaseless generation. They apprised the participants that in the post Kyoto Protocol, the acquisition of carbon for energy will be more expensive world-wide.

They said that not only carbon, but also the demand of such technologies are increasing with a passage of every day across the world and the sooner it is installed the lower will be its cost.

They said that in Pakistan there are some 700 villages having wind potential, however, a windless period can deteriorate the generation. They said that Kyoto Protocol enables the developing countries to receive the latest technology and finances from the developed world. Those spoke including Parvaiz Naim Regional Director for Kfw Bank Germany, Mihaly Kopyani Senior Infrastructure Specialist for World Bank, Matloob Khan National CDM Expert Unido Pakistan and Niroj Kumar Mohanty Managing Director Core CarbonX (Pvt) Ltd, besides the chief guest, Askari Taqi Sindh Minister for Environment and Alternative Energy.

 

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Introducing latest telecom technology: PTA to invite application for 3G spectrum auction ​

ISLAMABAD (August 29 2008): Pakistan is ready to auction 3G spectrum to introduce state-of-the-art telecom technology in the country, said Dr Muhammad Yaseen, chairman, Pakistan Telecommunication Authority (PTA). He was addressing the participants of the seminar on the future of mobile communication in Pakistan titled, "Has the clock struck 3G' organised by South Asia Forum in association with the Telenor and the Pakistan Telecommunication Authority here on Thursday.

South Asia Forum Chairman Javed Iqbal, Telenor CEO Jon Eddy Abdullah; Telecom Ministry of Information Technology and Telecom Member Noor-ud-Din Baqai and Next Generation Mobility Manager Director Aadil Rauf were also present on the occasion.

Dr Yaseen said the Pakistan Telecommunication Authority (PTA) has the spectrum earmarked, and all the groundwork is complete and would soon invite applications for 3G spectrum auction. He said the availability of the 3G spectrum would help the operators increase their capacity and revenues by deploying state-of-the-art HSPA technology.

Due to this addition users would enjoy high quality mobile broadband services enabling them to avail facilities of video telephony, high speed internet, video streaming, high quality mobile TV and a number of value-added services.

The Pakistan Telecommunication Authority (PTA) chief said the 3G technologies like HSDPA and HSPA have been widely adopted. There are over 220 HSDPA and HSPA operators in more than 90 countries with 280 million subscribers, he added.

Dr Yaseen also said that over 381 million are increasing at annual growth rate of 88 percent and these 3G users would grow more with its introduction in China, India, and Pakistan.

He said that China has recently lunched 3G services whereas other small countries in our region like Sri Lanka and Nepal have also launched 3G services while India has announced guidelines on 3G licensing and would soon be auctioning the 3G spectrum technology.

He said the Visionary Policies of the government that targeted liberalisation of the telecom sector has exhibited a growth rate of around 40 percent last year almost crossing 90 million mark adding around two million subscribers each month, he added.

He said that the government has taken such initiatives, which compelled the investors to invest liberally resulting spectacular rise of telecom industry, especially the mobile sector. Experts and analysts from Information Technology, Pakistan Telecom Authority, Nokia, Siemens Network and Warid Telecom Pakistan shared and discuss issues, suggesting solutions, sharing strategies and requesting policy support.

Telecom operators were of the view that the 3G auction should be carried out as soon as possible to provide broadband to the masses without delay any gap in the digital divide, he added.

 

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Agriculture sector share in GDP reduces to 20 percent ​

LAHORE (August 30 2008): The agriculture sector share in the GDP has been reduced from 38 to 20 percent because of persistent decline in per acre yield which is a matter of major concern for the present government. The Punjab Minister for Revenue and Relief, Haji Muhammad Ishaq revealed this while addressing the inauguration of two-day kitchen garden promotion campaign at the Lahore Chamber of Commerce and Industry (LCCI) here on Friday.

He expressed his concern over the communication gap between the agriculture researchers and the farmers due to which the farmers are not benefiting from the latest research in the agriculture sector. Haji Muhammad Ishaq said that agriculture sector being backbone of the economy of the country has a huge potential and keeping in view this sector's importance, the present government is spending all its resources for its promotion and the LCCI has taken a very right step at a right time that definitely help supplement government efforts aimed at providing relief to masses. He said that the government was spending a huge amount for the promotion of mechanised farming in the country. He said the kitchen garden is not simply a concept but it is a way of life that not only ensures financial benefits but also help address environmental concerns.

Speaking on the occasion, the LCCI president Muhammad Ali Mian said that Kitchen Garden Promotion Campaign has been launched to overcome the food shortage and to address the issue of prices of daily-use items which are going up like anything. In advanced world this concept is in vogue since ages but now in Pakistan it has started gaining ground. He said that kitchen gardening could either be a principal component of subsistence farming or a beginning of commercial agriculture or horticulture.

The LCCI president said that government would have to take concrete measures for the promotion of agriculture sector as the future is with agro-dollar and not with the petro-dollar. He said that Pakistan despite being an agro-based country and abundant resources is not performing the way it should. Citing the example of Thailand, he said that Thailand is not a Muslim country but its share in 200 billion dollar export of Halal meat is five billion dollars while Pakistan's share is negligible so we all should think over it that why non-Muslim countries are taking lead over Muslim countries in Halal meat export.

Mian said agriculture continues to be the single largest sector, a dominant driving force for growth and the main source of livelihood for 66 percent of the Pakistan's population. It accounts for 20.9 percent of the GDP and implies 43.4 percent of the total work force. But the sector is facing two major problems: firstly, our productions per acre are lower than many countries. For instance our per hectare production of wheat is only 2.5 tons as compared to 4.5 tons in India and 6.2 tons in Egypt. Our sugarcane production per hectare is 45.1 tons as compared to 65.2 tons of India and 90.9 tons of Egypt. Our potato production is 17.2 tons per hectare as compared to 20 tons of India and 23.8 of Egypt, he added.

He said that secondly, around 40 percent of our production is lost as post-harvest losses due to lack of preservation. Pakistan is fifth largest producer of milk in the world but are unfortunately preserving a little amount of this heritage due to lack of the use of biotechnologies and the cool chain systems. The use of biotechnology can not only considerably enhance our productivity but also avoid post-harvest losses. He said that the genetically improved varieties should be available in the market. Genetically improved varieties of livestock are also being developed by the Livestock and Dairy Development Departments.

Now we are increasingly trying to use biotechnology techniques in tissue culture and cutting of floriculture. As a result we are now in a position to export these flowers to the developed world. We need to use genetically modified varieties of flowers for value addition and to maximise our income from the floriculture, he added.

Senior vice president Mian Muzaffar Ali, vice president Shafqat Saeed Piracha and Chairperson LCCI Standing Committee on Kitchen Gardening Ms Nilopher Sikandar and former provincial minister Mumtaz Khan Manias also spoke on the occasion.

 

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Tampering with the stock market ​

EDITORIAL (August 29 2008): Pakistan's economy is facing extraordinary challenges. High inflation and depreciation of currency value are not due just to the weakening of economic fundamentals. The prevailing negative sentiment is primarily due to political turmoil and a common perception that there is no focused approach to lead the country out of the existing chaos.

The KSE index has lost 43 percent since hitting a record high of 15,739.28 points on April 21, 2008, but so have other regional markets. While the KSE fall in rupee terms is as per the regional average, to a foreign investor, however, the fall is much more in dollar terms due to the depreciating Pakistani currency. As a result, there is a persistent selling off by overseas investors.

And, in net terms, the off-loading amounts to $396 million within the calendar year. On Thursday, the Board of Directors of Karachi Stock Exchange adopted an extraordinary measure of setting a floor under individual stock prices, freezing the index on Wednesday's closing level of 9,144. This means scrips cannot be traded below the price prevailing at the close on August 27th, 2008 until normal market forces resume operating.

It is claimed by KSE that this step is not just for stabilising the market but also to prevent the financial system from collapse as a result of a domino impact. There may be some weight in their reasoning. However, this stop-gap arrangement is primarily meant to protect second and third tier brokers from a huge financial loss.

The KSE Board had earlier, in the day, sent this proposal to the Securities and Exchange Commission of Pakistan and the government for approval. Failing to get a nod from the apex regulator, the KSE Board rightly used the enabling provisions in KSE regulations and said that all stakeholders, ie other bourses, government, SECP and the Mutual Fund industry were consulted prior to the decision.

What is the fall-out from the KSE action? To a foreign investor, the freeze would reinforce his fear that the country is moving towards capital controls as its current account deficit is reaching an unmanageable level. The imposition of 100 percent cash margin and hiking of import duties by 50 percent on the same day, as the KSE came into force, would further aggravate foreign investors' looming fears and could expedite enactment the $2 billion of hasten portfolio investment in the country.

Suspending trading for 24 or 48 hours to provide breathing space for settlement, would have been viewed as a temporary measure. The KSE action amounts to tampering with the market. A secondary issue in the freeze is that it encourages side deals, outside the exchange, on the kerb. It is permissible usually as the norm for large lots of a scrip. Liquid scrips can be sold at a discount (on Wednesday's value) of five to 15 percent on the kerb even in small lots.

Compliance requirements generally do not allow foreign funds to undertake such side deals. But one cannot completely rule out a desperate foreign seller doing so when KSE effectively has shut down the market on them. The primary objective of the foreign funds at this stage is to sell and price is of secondary importance to the overseas investor.

It is the shortage of liquidity which is hampering the buyers from purchasing scrips at very attractive values. Shortage of liquidity is primarily due to tight monetary conditions and not exclusively due to SBP's policy rate or high monetary ratios. In fact, SBP is likely to maintain its current stance until the end of the year.

Tight liquidity is primarily due to our inability to pay from our inward forex proceeds for the oil imports. The large trade deficit has forced us to utilise our forex reserves to pay for oil imports. As a result, around Rs 90 billion every month, is sucked away from the banking system, forcing SBP to conduct OMO auctions to pump liquidity on temporary basis into the system.

The first call on excess liquidity in the system is of the government for its budgetary needs. Next, the banks utilise their funds to lend to trade and industry. Bourses are a secondary market. Players on this market have parked their savings and the profits earned over the last few years in real estate in Dubai and the residual amount in land in Pakistan.

This money needs to come back to the exchange to provide it liquidity. This will only happen once the right economic conditions and political stability prevail in the country. Recall the capital flight, after the 1999 military coup, followed by the accountability drive. All that money came back after 9/11. It not only helped in building up the forex reserves but also enabled businesses to expand with equity investment and not through loans.

This was done once and can be done again! But this requires the right set of economic policies along with restoration of confidence and faith in the country's leadership in the business class. The leader must not surround himself with yes men. His team needs to reflect competence and not be formed on cronyism.

 

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Two weekly holidays approved to save energy ​

Federal govt wants to consult Punjab before issuing notification​

Sunday, August 31, 2008

ISLAMABAD: The federal cabinet has approved, in principle, to grant two weekly holidays but decided to withhold formal notification in this regard to consult the Punjab government before making it public, it is learnt reliably.

A situation similar to the decade of 90s is emerging as PPP-led government holds the central government while PML-N is on the driving seat in Punjab the biggest province. There is growing feeling within the bureaucracy that the federal government feels itself squeezed to Islamabad only where it requires consent of Punjab for taking decisions and in this case the granting of two weekly holidays.

“Where is the writ of the federal government,” a federal secretary said while quoting the decision taken in the last federal cabinet meeting in which two weekly holidays were approved in principle but the government preferred not to make it public before seeking approval of Punjab.

The sources said that when the Information Minister, Sherry Rehman, was going to address the press conference after the last cabinet meeting, she was barred to make this decision public as the government wanted to consult with Punjab on it before announcing it.

This correspondent made several attempts to contact the Federal Information Minister for seeking her comments but there was no reply from her mobile phone. Some reports are suggesting that the Punjab government has shown its reluctance for granting two weekly holidays but the federal government has not yet received any formal decision from PML (N) led government of the province.

The sources said that there was no harm in consulting Punjab but it should have been done before taking approval of the federal cabinet. “Once the cabinet has approved two weekly holidays, there is no justification to put formal notification on hold,” added the sources.

The government has approved two holidays in week owing to balance of payment difficulties in the wake of growing import bill. Will the Punjab government look after the Balance of Payment (BoP) difficulties, the sources questioned?

Pakistan’s foreign currency reserves are depleting rapidly and touched $9.129 billion on Friday, resulting into growing vulnerabilities of Islamabad for meeting its requirements on import bill after every passing day.

Although, the government has taken several steps to reduce its import bill in shape of imposing regulatory duty in the range of 15 to 50 per cent as well as imposing restriction of cash margin on opening up Letter of Credit (L/C), which would help to reduce the import bill in the range of over $1 billion during the current fiscal year.

The major factor of growing import bill is unprecedented surge in prices of POL products in the international market. The government has estimated that the oil import bill is set to surge over $14.5 billion in the current fiscal year.

The WAPDA, the sources said, has estimated that two weekly holidays could help save 850 MW to 1000 MW electricity with the closure of all government offices from 9 am to 5 pm on Saturday.

The government is considering various options to ensure conservation of energy resources amid soaring oil prices and electricity shortages.The sources said that the corporate sector was already doing five-day work and other private offices did not contribute a lot in terms of consuming the major chunk of the electricity by working on Saturday.

When the source was asked about the government’s plan to import one million energy bulbs for saving electricity, they said that some people were estimating conservation of the electricity in the range of 500-600 MW but according to WAPDA the energy saver bulbs can help save 225 MW.

“The energy saving of 225 MW is great contribution. Installing new power generation for up to the same level requires investment of $500 million,” the official said.According to WAPDA estimates, the sources said, the government could save 600 MW to 800 MW electricity by ensuring that all shops and bazaars close down by 8 pm every day.

In the wake of lingering energy crisis, Pakistan can save up to $3 billion in its annual oil import bill by implementing an effective energy conservation plan. According to the official estimates prepared by the ministries concerned, the industrial, agriculture, transportation sectors, residential areas etc are wasting energy worth $3 billion per annum.