Privitization in Pakistan

This is brief update on privitization taking place in Pakistan.

Recently, Karachi Electricity(KESC), Kot Adu Power Plant (KAPCO), Oil & Gas Development Coroporation(OGDC)have been privatised while Pakistan State Oil (PSO), National Refinery (NRL), Pakistan Telecommunication are in the pipeline in next six months or so. With the exception of KESC, all other Companies are high performing Companies in Pakistan.

I am planning to write more on privitization and also would give brief profile of the Companies under consideration with necessary linkage.

Pakistan - the regional gateway for energy

Pakistan is emerging as a preferred transit route for energy in the region due to its ideal geographical location at the crossroads of Central Asia and the Arabian Sea.

The commercial energy needs of the country doubles every ten years due to its fast paced industrial developments. The government is therefore attaching high priority to the energy sector and is planning for the upgradation and construction of multi-billion dollar projects over the next dacade to meet the long term requirements of the country. So Pakistan offers excellent opportunities for International Entrepreneurs to invest and make a success story.

Challenges to Textile Industry in Pakistan-Post WTO period

Pakistan’s Textile & clothing sector accounts for 64 percent (approx) of the country’s total exports earnings. Pakistan’s Textile sector is in process of investing close to US $ 3 billion in expanding existing capacities, in higher value added exports and towards product diversification with an aim to face the post WTO era.

Therefore the challenges of 2005 and beyond for Pakistan is to move up the value chain, shift its focus to value added products and build capacities capable of timely delivery of significant volumes at competitive prices. Pakistan has got all the basic ingredients in terms of human capital, skills and the top quality cotton production in the country for meeting up such challenges. However, Pakistan has to prepare itself very quickly to be success story in the International market in post WTO era.

An Overview of Power Sector in Pakistan

For the success of economic activities, electricity is a basic ingredient. Although, in recent days, Pakistan has witnessed surplus power scenario but in very near future there will be a huge gap between demand and supply of electricity. In year 2010, the deficit between firm supply and peak demand is estimated around 5500 MW. The gap is to be plugged with the help of private sector’s involvement.

Power sector of Pakistan comprises mainly NEPRA, WAPDA, KESC & PPIB under the umbrella of Ministry of Water and Power. PPIB is the Facilitator for the private sector whereas NEPRA is the overall Regulator of the power sector. WAPDA and KESC are the power utilities, high on the privitization agenda of Pakistan.

WAPDA & KESC generates an approximate of 10000 MW and 1800 MW of electricity respectively while PPIB administers 4400 MW (approx.) of electricity generated through the Independent Power Producers(IPPs) and sold to WAPDA/KESC.

Private Power & Infrastructure Board (PPIB)

The functions of PPIB is to provide “One Window” facility to Investors by acting as one stop organization on behalf of of all ministries, departments and agencies of the GOP in matters relating to establishing power projects in the private sector For more information, visit its website http://www.ppib.gov.pk

Physical Incentives for Investors

Pakistan’s strategic position with warm water ports, road & railway networks and shortest routes to Central Asian Republics makes it attractive for many Multinationals which are already doing good business in Pakistan. The human resources available in Pakistan is another attraction which many prospective Investors factor positively in their future plans. Availability of large reserves of Coal & Gas is another important plus point in the overall investment schemes.

The Policy of Power Generation 2002 announced by Government of Pakistan offers maximum incentives and assurances to foreign & local Investors to invest in the power sector in Pakistan.

An Overview of Oil & Gas Sector

The petroleum products and natural gas account for 80% of commercial energy use, electricity for about 15% and coal & liquefied petroleum gas account for the balance. The total consumption of oil has been in the vicinity of 18 Million MT/annum with heavy reliance on Imports in the range of 6-8 Million MT/annum in recent years. Given the high level of imports, the economy of Pakistan is vulnerable to the fluctuations in world market prices of crude oil and products.

The transport sector is the largest user of petroleum products (48%), followed by power generation (35%) and industry (11%) while the balance is shared by other sectors including the residential sector.

Proven oil reserves are relatively small and are estimated around 300 million barrels. The Gas reserves are estimated around 27 trillion cubic feet (TCF) are equivalent to more than 25 years of current production/consumption estimated as 900 billion cubic feet/annum.

The scope of significant increase in gas production are there which would enhance the share of gas in the commercial energy mix. The shares of hydro electricity and coal are low, given the country’s large hydropower potential, and substantial coal deposits which have been discovered in the province of Sind.

The heavy reliance on petroleum products and gas, particularly on crude and product imports, calls upon the Energy Managers of Pakistan to diversify the sources of energy supply for strategic as well as financial considerations

Web Master's Welcome Note

Welcome to Pakistan's Industry & Business Review. The Website shall cover newsletters, articles and latest developments taking place in the important sectors driving the economy of Pakistan. The Webmaster is in touch with knowlegeable people who would give their views and articles in individual capacity or through Web Master.

I thankyou for visiting Pakistan's Industry & Business Review. I hope to have the postings shortly which should be informative, useful and interesting.