Pakistan Economy - News & Updates - Archive

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ISLAMABAD, April 12: Chairman Senate, Mr. Mohammedmian Soomro has said that Pak–Netherlands friendship is vital for peace, stability, economic growth and prosperity at the global level, an official statement said on Wednesday.
He made this observation at a banquet hosted in his honour of Chairman Senate by the President of the Dutch Senate, Mrs. Timmerman Buck, according to a message received here from The Hague on Wednesday.
The Senate Chairman informed his Dutch counterpart that the democratic institutions were flourishing in the country. He said that the main purpose for the creation of the Senate was to give equal representation to all the federating units. Underlying the need for greater cooperation between the two countries at the Parliamentary level, the Senate Chairman said that such interactions pave the way for strengthening of bilateral relations and the people to people contact.
He told the Dutch Senate Chief that Pakistan was keen to improve economic & trade ties with Dutch Government and remarked that the people of Pakistan owe a gratitude to their Dutch brethren for making investments in fertilizers, fish processing and pharmaceutical industries.
The President of Dutch Senate, Mrs. Timmerman Buck welcoming the Pakistan Senate delegation expressed satisfaction that Parliamentary cooperation between the two countries was growing steadily.
Earlier, the Senate Chairman and members of the Senate delegation held detailed and fruitful meetings/discussions with Mr. Gerrit Zalm, Vice Premier & Foreign Minister of Holland as well as the Senate Committees for Foreign & Economic Affairs.
Mr. Mohammedmian Soomro stated that bilateral relations between the two countries have traditionally been cordial. He lauded the Dutch Government for playing a very supportive role in European commission’s anti dumping.

 

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KARACHI (April 13 2006): In the current financial year, for the first time ever, privatisation receipts from abroad are expected to overtake investment from overseas investors.

According to official projections, around $1.971 billion will be earned by the government due to the change of ownership in existing entities in FY06. This will include $255 million against sale of management stake in KESC; $99.27 million as the last tranche for 51 percent management stake in Habib Bank; $1.1 billion from Etisalat for PTCL; and around $361 million for the ownership sale of Pakistan Steel Mill Limited.

Besides the privatisation receipts, an additional amount of foreign direct investment (FDI) of $1.435 billion by the end of June 2006 is expected. In the first eight months, ie July '05 to February '06 the FDI has already reached $1.149 billion. It was only $597.9 million in the first eight months of FY05. The figure of FDI for 12 months of FY05 stood at $1.162 billion. As such, the rise in direct investment is just under 24 percent over last year.

On the other hand, privatisation receipts between FY05 and FY06 will quadruple to $1.971 billion in FY06 as against $360 million in FY05. Last year, the government received only two payments--$102.96 million from AKFED for HBL and $260 million from Etisalat as down payment for PTCL.

Portfolio investment in FY05 was $162 million. It rose sharply to $471 million in the first eight months of the current financial year. However, due to the high level of volatility in this type of investment, officials estimate some draw-down because of profit taking and portfolio investment is projected to be around $415 million at the end of the financial year. The government expects $56 million outflow under this head of account between March and June 2006.

Portfolio investments are not taken into FDI head but they do form part of the total private investment.

However, privatisation proceeds are traditionally lumped with FDI by the government. Until last year, they constituted a much smaller portion of FDI. In FY03 privatisation accounted for $176 million out of total FDI of $820.3 million, ie 21.5 percent. In FY04 privatisation (on account of HBL's sale) was $198.8 million within FDI amount of $921.7 million (21.5 percent). In FY05 privatisation receipts were slightly higher but still at 27.7 percent of FDI.

Since privatisation proceeds now constitute more than half of FDI, knowledgeable economists want the government to segregate the two heads to get a correct picture of fresh investment. They reiterate that privatisation receipts are not new investment per se but only reflect a change in ownership of existing investment on ground.

These economists also stress that the investment to GDP ratio continues to hover around 17 percent of GDP - which is on the low side. Unless, this ratio touches 23 to 24 percent, they do not see a major breakthrough towards industrialisation. It is emphasised that investment-to-GDP ratio had dropped below 17 percent in FY05 and is likely to be above 17 percent in FY06 but would still be way below the desirable figure of 23 to 24 percent required for creating new jobs to outstrip fresh entrants into the job market. This requires seeking investments both domestically and from overseas in labour-intensive industrial units as well as establishing of mega greenfield projects.

So far, cement manufacturing and auto assembling have received new investment from domestic constituents. Overseas interest has thus far remained confined to oil and gas and telecom. Food processing and agro based industry needs to be targeted, say the experts to bring about the right agro/industrial mix in the economy.

 

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RAWALPINDI (April 13 2006): President General Pervez Musharraf on Wednesday assured full protection to foreign investment, saying foreign entrepreneurs enjoy an equal playing field with local investors amid growing prospects on the back of a vibrant economic growth.

He was speaking to leaders of two multinational mineral exploration companies of Latin American region, who expressed a keen desire to invest in Pakistan.

Highlighting the investment opportunities existing in the country, the president said the foreign entrepreneurs could hold 100 percent equity and have tremendous scope for healthy returns.

"All sectors of the economy are open to foreign investment and the latest figures show that foreign investors see Pakistan as a secure and promising destination for expanding their business," he stated.

President Musharraf noted that Pakistan is endowed with rich natural resources and offers attractive opportunities for their exploration and utilisation for sustaining high economic growth of the country.

He also identified rapidly growing sectors like energy, information technology, telecom, agriculture, small and medium enterprises, mining and exploration as holding great promise.

In this respect, the president noted that all macro economic indicators show positive trends, reinforcing the broad-based economic turnaround the country has achieved in the last few years.

The heads of Latin Companies, Tathyan Copper Company and Antofagasta and Barrick Gal Corporation, said they plan to shortly launch their business in Pakistan in a big way.

The delegates appreciated the consistency of investor-friendly policies and a range of economic reforms introduced in the last five years. They observed that Pakistan's recent economic strides have increased the international confidence manifold in the country's business climate. Minister of State for Petroleum and Natural Resources Naseer Mengal was also present.

 

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FAISALABAD (April 13 2006): The World Bank will provide 'First NWFP Development Policy Credit' of 90 million dollars to contribute to poverty reduction, improving human development and accelerating broad-based, inclusive economic growth through support to the provincial government's medium-term reform programme.

According to World Bank sources, these overarching objectives will be reached through achieving intermediate objectives, which are:

-- Improving service delivery in health and education, focusing on access to and quality of services.

-- Fiscal sustainability and enhanced effectiveness and accountability of expenditures, and improved resource mobilisation.

-- Improved governance with transparency and enhanced accountability in the civil service, public financial management and procurement.

-- Improved administration of multi-tiered government and making local governments more accountable for improved service delivery.

The proposed NWFP DPC-1 is a transition operation that will complete the series of three IDA credits that assisted the government's fiscal reform agenda, and will also commence a new series of IDA support for the government's medium-term reform programme with a strong emphasis on human development and inclusive growth.

The DPC-1 is broad-based, reflecting the multi-sector and crosscutting nature of the provincial government's multi-year provincial reform programme (PRP).

The DPC-I supports the PRP through a disbursement to the government of Pakistan of 90 million dollars (IDA) with the rupee equivalent being on lent to the NWFP government on IDA terms.

The reform programme, launched by DPC-1, will support the following pillars of the government programme:

-- Human development (for progress in education and health indicators).

-- Fiscal reform.

-- Governance reform (focused on financial management, procurement, civil service and administrative devolution).

-- Continued support for private sector development to create sustainable employment opportunities.

The rapid environmental impact assessment undertaken by World Bank staff is that the DPC would have no negative environmental affect and may have beneficial consequences by improving the sustainability of common property management and promoting public sector efficiency.

After a decade of worsening macroeconomic problems, stagnation in the poverty reduction and social indicators and political instability, in 1999 Pakistan embarked on a new course with comprehensive economic and governance reforms, aiming at restoring macroeconomic stability, raising growth rates and reducing poverty.

The Federal reform policies had been supplemented by reforms in several provinces, including NWFP started in 2001, to further make the efforts in poverty reduction.

 

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ISLAMABAD (April 13 2006): Russian oil and gas companies have expressed their keenness to invest in the cross-border pipeline, LNG, oil and gas exploration and upgradation of oilfields.

A five-member delegation from Russian Consortium of Oil and Gas Companies headed by Dr Alexander S. Bornov, Vice President, International Projects of Siburgo and Adviser to the President of International Co-operation of OGIC, called on Petroleum and Natural Resources Minister Amanullah Khan Jadoon on Wednesday and discussed with him investment prospects in the oil and gas sector.

The delegation said that they would mobilise reasonable number of drilling and exploratory rigs, logging equipment, unitary pipeline construction machinery and high calibre professionals to Pakistan shortly.

They also appreciated Pakistan's economic growth, oil and energy's sector development during the last few years. Welcoming the delegation, the minister said that there existed a lot of potential in oil and gas exploration, cross-border pipeline, gas storage, LNG projects, and upgradation of oilfields. The government would welcome the Russian consortium's participation in these activities for the mutual benefit, he said.

As many as 1,467 oil and gas exploratory wells have been drilled in the country with 183 successful discoveries - 51 of oil and 132 of gas. Twenty-six companies are engaged in oil and gas exploration and production activities of which 22 are foreign, the minister added.

Jadoon said that the government offers lucrative incentives to the investors engaged in the oil and gas exploration and production activities, attracting unprecedented investment.

Other members of the Russian delegation included Batyr A. Geldyev, President, ROSS, Russian Federation, Nikolay N. Velikorechin, General Manager, Drilling and Exploration, SIBURGEO, Moscow, Alexander V. Tokarev, Senior Geologist and Drilling Expert, SIBURGEO, Grigory N. Klimenok, Chief Engineer, Pipeline Construction Projects, ROSS, Moscow and Roman B. Geldyev, Senior Design Expert, Oil and Gas Projects, SIBURGEO.

 

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Thursday April 13, 2006
ISLAMABAD: Prime Minister Shaukat Aziz has said that Pakistan is rich in mineral resources waiting to be tapped by both domestic and foreign investors by bringing in latest techniques and staff-of-the-art technology in this attractive sector.
The Prime minister said this while talking to the Chairman of two of the world’s largest copper and gold mining companies Mr. Jean Paul Luksic of Antofagasta and Mr. Gregory Charles Wilkings of Barrick Gold Corporation who called on him at PM house Tuesday morning.
Mr. Aziz told the delegation that currently several minings projects are underway in the province of Balochistan for exploring Copper, Lead and Zinc as well as oil & gas.
He said increase in mining activity in the country would contribute towards increase in economic growth and exports in addition to creating more jobs for the people.
Mr. Gregory Charles Wilkings, CEO Barrick Gold Corporation told the PM that substantial amount of works need to be done before the challenging project can be built.
He appreciated the support given by the government and said both the companies would make sure that the project is viable.
Mr. Jean Paul Luksic, Chairman Antofagasta appreciated the economic policies of the government and said that because of the investor-friendly atmosphere foreign investors are happy to come here. We are looking forward to a long partnership with Pakistan, he said.
The Prime Minister assured the visitors that the government would help the investors in every way in providing infrastructure, facilities and a level playing field.
He emphasized the need to hire and train local personnel to work in the project.
Prime Minister Shaukat Aziz said that logistics chain would be improved throughout the country to facilitate the movement of Cargo.
He expressed the hope that Gwadar Sea Port would be a hub for the export of mining products from Balochistan and said that building roads and infrastructure linking it with important business places in the country is a major priority for the government.
When the companies would verified the copper and Gold reserves in the province the government of Balochistan would have 25% share in the investment.
Minister of State for Petroleum and Natural resources Mr. Naseer Khan Mengal also attended the meeting in addition to senior government officials.

 

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13 April 2006


ISLAMABAD — Japan has fully restored its $400 million annual assistance to Pakistan in order to help complete its mega development projects.
"Japan's yen loan package of about $400 million annual assistance has been fully resumed which was discontinued in 1998. Japan plans to help complete Pakistan's important development projects including the Indus highway programme", a diplomatic source said.
Pakistan and Japan, he pointed out, have decided to strengthen their existing political and economic ties aimed at fulfilling Islamabad's genuine needs in various fields.
Japan, he said, had recently disbursed $400 million to Pakistan which also included $200 million for the survivors of the October 8, 2005 earthquake. This $200 million assistance for earthquake was mainly a grant and was not the part of yen loan package, he clarified.
Responding to a question, he agreed that Pakistan needed nuclear energy for meeting its 8,800MW of electricity requirements by 2030. But he said Pakistan has limited choices to seek nuclear technology for civilian purposes.
"Pakistan is on a tight and difficult corner", he said adding that China might not be in a position to offer 12 to 15 nuclear power plants to Pakistan as it was busy constructing its own power plants. China, he said, did not have much capacity to extend cooperation to other countries in the field of nuclear technology.
Asked about US-India nuclear deal he, "My advice to Pakistan would be not to make hasty conclusions as it takes long time to get this deal through in the US Congress as well as in the Nuclear Suppliers Group (NSG)".
Japan, he said, was still examining the Indo-US nuclear deal and would comment on it after having all the official details about it. Japan needs details to pass a judgment about this deal.
The good thing about India, the source said, was that it has agreed for the first time that its 14 nuclear power plants out of 22 will be subjected to international safeguards.
"In that sense this deal may help advance the cause of nuclear non-proliferation. But it is a dilemma that the United States signed the deal without India signing the NPT", he said.
To another question, he said that Pakistan will never be able to achieve real development and progress unless it fully concentrated on education. "It is regrettable to have such a low literacy rate in Pakistan," he said adding that it was a fundamental question to promote education without which human development index of the country could not be substantially improved.

 

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13 April 2006


ISLAMABAD — The Asian Development Bank (ADB) will provide close to $4 billion, an all time high development assistance to Pakistan during 2006-08, informed sources said.
They said that the ADB has expressed its willingness to assist the government in improving the country's weak and old infrastructure in order to help attract sizable local and foreign investment.
The Bank, which provided $15.8 billion as part of the project assistance during 1968 to 2005, sources said, has agreed to make further investment in sectors like energy, agriculture, transport & communication, social sector, governance, finance & trade and rural development.
The government has been advised to put certain effective dent on poverty by drastically improving its public and private sector education. The bank argues that given the poor quality of public sector education, regulatory checks are ill-designed and ineffectively enforced upon by the public and private institutions.
According to a new study got conducted by the ADB, the poor infrastructure particularly in the power sector has increased the cost of growth for firms of all sizes. Poor provision entails high cost, poor quality of service, lack of reliability and corruption in obtaining supplies.
"This reflects the failure of state-owned utility providers to deliver, and is reflected in high levels of line theft and opaque, politically negotiated power tariff rates that significantly distort the growth potential of Small and Medium Enterprises (SMEs)".
The bank believes that infrastructure constraints could be eased through privatisation, unbundling and competition. The success of this policy depends on the government's ability to establish strong, independent and suitably equipped sector- specific regulators. This will require significant investments in capacity building.
"These regulators will then be responsible for the creation, enforcement, and maintenance of a transparent, predicable and fair regulatory structure," the study said.
The bank asserts that the poor performance of the financial and leasing sectors has raised the cost of credit and lease finance for Pakistani firms.
The study also said that the labour regulations are not effectively enforced. Similarly, Pakistan's tax administration and regulatory procedure impose a significant burden on investors.

http://www.khaleejtimes.com/DisplayArticle.asp?xfile=data/business/2006/April/business_April267.xml&section=business&col=
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Porsche reveals long-term plans in Pakistan

Porsche Middle East & Africa is proud to announce the official launch of Porsche operations in the heart of Pakistan, in the state of the art Porsche Centre Lahore.



Porsche's all-new Cayman S.

This highly important event coincides with the launch of Porsche's all-new Cayman S in the Pakistani market. Furthermore, a new Porsche showroom will open in Karachi in May 2006 while the Service Centre has already been operational there since January 2006. Porsche's next step in Pakistan will be the relocation to a permanent facility scheduled to take place during 2007.

Speaking at the event, Deesch Papke, Managing Director of Porsche Middle East and Africa, said:

'It is rewarding to come back to Pakistan after less than a year and witness the vast progress achieved to date. This temporary facility we are in at present leaves us full of confidence in our partner's ability to present the Porsche brand in Pakistan the way it is meant to be. Launching our latest all-new model here, the Cayman S, only adds to the significance of the occasion. Sales of this brilliant mid-engined coupe around the world are above expectations, a trend we expect to reflect strongly in the Pakistani market.'
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Although sales and service activities have already started, the official launch ceremonies were postponed due to the devastation following the earthquake in Northern Pakistan. However, as promised in August 2005 when the importership was awarded to Autotechnik, the opening date for the temporary facility (Porsche Centre Lahore) took place in the first quarter of 2006.

Abuzar Bokhari, Chairman of Porsche Centre Lahore & Karachi, Autotechnik Pvt. Ltd., stressed the significance of holding on to previously set targets: 'Meeting targets is one way of assessing a company's professionalism and strong commitment to its business case. From this perspective, it is with utmost pleasure that I present to you the state of the art Porsche Centre in the heart of Pakistan, Lahore. It is with this kind of work that Autotechnik proves its full commitment to spreading Porsche's culture of pure-bred sports car excellence throughout Pakistan.'

Cayman S will be the first in a series of new Porsche models to hit the Pakistani roads. Soon, the second most powerful road car ever built by Porsche after the Carrera GT, the Cayenne Turbo S, will follow in addition to the legendary new 911 Turbo and 911 GT3 in summer. The latter two cars will brim with many firsts in automotive technology that would guarantee a shattering performance and unrivalled driving pleasure.

On the other hand, Attique Ahmed, CEO of Porsche Centre Lahore & Karachi, Autotechnik Pvt. Ltd., detailed the progress on ground for Porsche in Pakistan: 'Frantic activity in the past 11 months has resulted in great accomplishments. A Porsche showroom has already opened in Lahore, while another one will open soon in Karachi. Meanwhile, the site for the permanent Porsche Centre Lahore has been secured, while plans for the facility are in the process of being finalized. Currently, Autotechnik employs a staff of highly experienced and competent employees. As usual, training is an integral part of the development program all employees are subjected to.'

Meanwhile, Porsche Middle East & Africa is on the way to setting a new sales record of at least 4,500 new cars by the end of the current 2005/06 fiscal year. In the first sixth months of this fiscal year sales were once again clearly exceeding the same period of the previous year and our order books are well filled. These figures confirm the strong growth potential of the Middle East region. Porsche will definitely continue to expand regionally in close cooperation with its motivated partners.

Announcing the official launch of Porsche operations in Pakistan lays the foundations for a true sports car experience like no other. Every Porsche driver deserves the best, and the company's strict corporate identity guidelines, to which every Porsche Centre adheres, definitely guarantee that.

 

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ISLAMABAD (April 14 2006): The World Bank economist Tercan Baysan called on Prime Minister's adviser on Finance Dr Salman Shah and presented to him a report on Pakistan's growth and export competitiveness.

The meeting discussed analysis and various options enumerated in the report to improve technology, skill and various components of value chains in the various sectors.

Welcoming the visiting economist Dr Salman Shah said the government's objective was to improve the GDP growth and sustain it between 7-8 percent.

He emphasised the need to prepare an action plan indicating the benchmarks of various components in the value chain, which need to be improved so as to make better the productivity, competitiveness and reduce the cost of production.

The adviser asked the economist to prepare recommendations for policy and structural changes conducive to improve growth and productivity. Dr Salman Shah added that Pakistan needed skilled professionals to get a competitive edge in export of surplus products over its neighbouring countries

 

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ISLAMABAD (April 14 2006): President Hosny Mubarak of Egypt has extended an invitation to President General Pervez Musharraf to participate in the World Economic Forum to be held in Sharm el-Sheikh from May 20-22.

"President Mubarak is looking forward to welcome President Musharraf in Sharm el-Sheikh", said a press release issued here on Thursday by the Egyptian embassy. More than 1300 statesmen, senior officials, entrepreneurs, investors and media personnel from all over the world are expected to participate in the forum.

During the Forum the participants will hold discussions on peace in the Middle East, situation in Iraq, the role of the United States in the region, the current developments in the Arab World in addition to the role of the European Union in the region.

Moreover, challenges of unemployment and migration will be thoroughly discussed, with special emphasis on the current conditions of Muslim and Arab immigrants in the Europe.

The forum will also address the relation between Islamic thought and democracy, political reform, women empowerment, democracy in the Middle East and the political situation in Israel.-PR

 

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LAHORE (April 14 2006): The 'Business Watch Programme' being launched in the Punjab capital to combat the cases of crime in the markets will be made successful at all cost.

This assurance was held out to the business community by Acting Deputy Inspector General Police, Lahore, Amir Zulifqar while addressing the members of Business Watch Committee, here on Thursday.

LCCI President Mian Shafqat Ali and Senior Vice President Abdul Basit also spoke on this occasion. Expressing a profound sense of optimism about the outcome of the liaison being developed between the Lahore Chamber of Commerce and Industry and the police, he said that this initiative would be as successful as the Citizen Police Liaison Committee (CPLC) working in the port city of Karachi.

He said, though the Business Watch Programme is new thing for Lahorites but such systems are already in place in various countries of the world.

Amir further said that performance of Lahore Police in combating the individual and organised crimes was exemplary despite the lacking resources. He urged the business community to extend full co-operation to the police so that it could be able to weed out the menace of crime. He also promised to hold regular meetings of Business Watch committee to make the Citizen-Police Liaison Programme effective in true sense.

Earlier, the LCCI President Mian Shafqat Ali expressed gratitude to the Inspector General of Police Ziaul Hasan, Additional Inspector General of Police Azhar Hasan Nadeem and DIG Amir Zulfiquar for giving a quick response to LCCI call for formation of Business Watch Committee. He said that from now onward, the business community would work hand in hand with police to eliminate crime from the society.

Speaking on the occasion, the LCCI Senior Vice President Abdul Basit said that formation of Business Watch Committee is a good step and would go a long way in redressing police-related complaints of the business community. He said the step would also bring to the limelight the problems confronted to the police which generally remain out of common man's perception.

 

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RAWALPINDI (April 14 2006): Condemning the Nishtar Park suicide bombing, the Rawalpindi Chamber of Commerce and Industry (RCCI) has termed it a setback to economy and asked the government to ensure law and order in the country.

"Bomb blast in the Eid Miladun Nabi congregation in Karachi has sent wrong signals to investors", said RCCI President Jalil Ahmad Malik, while talking to reporters here on Thursday.

 

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Thursday April 13, 2006

ISLAMABAD: Prime Minister Shaukat Aziz has said that Pakistan is rich in mineral resources waiting to be tapped by both domestic and foreign investors by bringing in latest techniques and staff-of-the-art technology in this attractive sector.
The Prime minister said this while talking to the Chairman of two of the world’s largest copper and gold mining companies Mr. Jean Paul Luksic of Antofagasta and Mr. Gregory Charles Wilkings of Barrick Gold Corporation who called on him at PM house Tuesday morning.

Mr. Aziz told the delegation that currently several minings projects are underway in the province of Balochistan for exploring Copper, Lead and Zinc as well as oil & gas.

He said increase in mining activity in the country would contribute towards increase in economic growth and exports in addition to creating more jobs for the people.

Mr. Gregory Charles Wilkings, CEO Barrick Gold Corporation told the PM that substantial amount of works need to be done before the challenging project can be built.

He appreciated the support given by the government and said both the companies would make sure that the project is viable.

Mr. Jean Paul Luksic, Chairman Antofagasta appreciated the economic policies of the government and said that because of the investor-friendly atmosphere foreign investors are happy to come here. We are looking forward to a long partnership with Pakistan, he said.

The Prime Minister assured the visitors that the government would help the investors in every way in providing infrastructure, facilities and a level playing field.

He emphasized the need to hire and train local personnel to work in the project.

Prime Minister Shaukat Aziz said that logistics chain would be improved throughout the country to facilitate the movement of Cargo.

He expressed the hope that Gwadar Sea Port would be a hub for the export of mining products from Balochistan and said that building roads and infrastructure linking it with important business places in the country is a major priority for the government.

When the companies would verified the copper and Gold reserves in the province the government of Balochistan would have 25% share in the investment.

Minister of State for Petroleum and Natural resources Mr. Naseer Khan Mengal also attended the meeting in addition to senior government officials.

 

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Friday, April 14, 2006

By Maryam Hussain

ISLAMABAD: An inquiry team constituted by Prime Minister Shaukat Aziz to investigate a $100million deal for the purchase of 69 locomotives from China has confirmed that top bosses of Pakistan Railways sanctioned the purchase even though the trains are too heavy for Pakistan’s railway tracks.

The 3,000-horsepower locomotives weigh 140 tonnes, but local tracks can withstand only up to 132 tonnes of weight and so the trains cannot be operated in Pakistan.

The deal with the Chinese firms, with suppliers credit of $100 million, was signed when General (r) Javed Ashraf Qazi was railways minister. Another retired general, Saeedul Zafar, was then chairman of Pakistan Railways and secretary at the Ministry of Railways.

The deal caused uproar in the Senate and after detailed discussions in the Public Accounts Committee, Prime Minister Aziz set up a team to investigate. The prime minister had originally asked former railways minister Dr Hafeez Sheikh to head the investigation team, but he declined. Dr Akram Sheikh, the deputy chairman for planning and development, was then appointed head of the investigating committee. The committee has reportedly finished its report and will soon submit its findings to the prime minister.

The disclosure that top railways bosses had sanctioned the deal despite the locomotives being unfit for Pakistani rail track came at the second meeting of the inquiry team. Railways Secretary Shakeel Durrani, Finance Member Javed Akthar Sheikh, Locomotives Managing Director Asad Saeed and Finance Ministry officials also attended the meeting.

According to documents made available to Daily Times, Dr Akram Sheikh was shocked when he was informed that railways bosses had not realised that the locomotives could not work on local tracks. Railways Secretary Durrani informed Sheikh that the Chinese locomotives could operate at a speed of 105-110 km per hour. However, from the operational point of view, this was not feasible since the railways system is not fit for trains operating at high speed.