Sunday, July 24, 2016

Pakistan Sees Robust Growth in Demand For Energy, Autos, Cement & Steel

Pakistan's energy consumption grew by 5.7% in 2015, faster than the 5.2% increase in neighboring India that claims significantly faster GDP growth. Primary energy consumption growth in a country is often seen as a strong indicator of its GDP growth. Ever since the advent of the industrial age, energy has become increasingly important as a driver of farms, factories, communication, transportation, construction, retail and other sectors of the economy.   In addition to energy, other important economic indicators include cement and steel consumption, auto sales and air travel which are also growing significantly faster in Pakistan than in India.

Pakistan Primary Energy Consumption Trend (Source: British Petroleum)

Primary Energy Consumption:

According to British Petroleum Statistical Review of World Energy released in June 2016,  the primary energy consumption in Pakistan rose to 78.2 million ton oil equivalent (MTOE) in 2015, compared with 73.2 MTOE in 2014 confirming greater economic activity. It was the third fastest growth in energy consumption in Asia. Only the Philippines (9.7%), Vietnam (9.6%) and Bangladesh (8.7%) saw faster growth than Pakistan's.

Domestic Cement Demand:

All-Pakistan Cement Manufacturers’ Association reported cement industry sold 33 million tons in domestic market in fiscal year 2015-16, posting a robust growth of 17.01 per cent compared to the 28.2 million tons sales during the same period in 2015.

Local Auto Production:

Domestic auto production in Pakistan jumped by 21.57 percent (vs 2.58% growth in India) in fiscal 2016 compared to fiscal 2015, according to data from Pakistan Automobile Manufacturers Association. The data collected by Pakistan Bureau of Statistics (PBS) noted that as many as 168,363 jeeps and cars were manufactured during July-May (2015-16) while 138,490 units were produced last year(July-May 2014-15).

Rising Steel Demand:

Pakistan is experiencing 30% growth in steel imports, according to the State Bank of Pakistan. Local steel production is about 6 million tons. In addition, Pakistani imports of steel this year could surpass $2 billion as China-Pakistan Economic Corridor CPEC-related projects ramp up.

Air Travel Growth:

Pakistan air travel market is among the fastest growing in the world.  IATA (International Air Transport Association) forecasts Pakistan domestic air travel will grow at least 9.5% per year, more than 2X faster than the world average annual growth rate of 4.1% over the next 20 years. The Indian and Brazilian domestic markets will grow at 6.9% and 5.4% respectively.

Pakistan saw 23% growth in airline passengers in 2015, according to Anna Aero publication. Several new airports began operations or expanded and each saw double digit growth in passengers. However,  Gwadar Airport growth of 73% was the fastest of all airports in Pakistan.

The top 12 airports all saw large double digit increases. Multan  grew 64%, Quetta 62% and Faisalabad +61% all climbing one place as a result of all of them seeing a growth of over 60%. Turbat Airport in Balochistan is the newest airport to reach the top 12 in terms of traffic.

Mobile Broadband Uptake:

Mobile broadband subscriptions have rocketed from zero to over 30 million in just two years since 3G/4G service rollout in Pakistan. Rapid growth is continuing with over 1 million new subscribers are signing up for 3G and 4G services every month. An equal or larger number of smartphones are are being sold.


A whole series of indicators from auto and steel to manufacturing and construction and telecom services are confirming that economic growth is accelerating in Pakistan. Among the reasons for this growth are significantly improved security situation, political stability and soaring Chinese foreign direct investment (FDI) in CPEC related energy and infrastructure projects.  These indicators are attracting investors who have already made Pakistan Stock Exchange the hottest shares market in Asia.  KSE-100, Pakistan's main shares index, is up 18% year-to-date compared to 6% increase in India's BSE-30 index. The challenge for Pakistan is to continue to improve security and political stability to reassure investors of superior returns from their investments in the country.

Related Links:

Haq's Musings

Politcal Stability Returns to Pakistan

Auto and Cement Demand Growth in Pakistan

Pakistan's Red Hot Air Travel Market

China-Pakistan Economic Corridor FDI

Mobile Broadband Subscriptions and Smartphone Sales

Pakistan in MSCI Emerging Market Index


Majumdar said...

Wonderful news, sir. Wish all the best to my Pakistani friends.


19640909rk said...

Haq sab, India's per-capita power consumption per capita is more than twice that of Pakistan. Also India's power grids are much better than Pakistan's. The usage of energy will be much more efficient.

Riaz Haq said...

19640909rk: "India's per-capita power consumption per capita is more than twice that of Pakistan"

Not true. The BP report I referred to shows India's primary energy consumption of 700.5 millions of tons of oil equivalent (mtoe) vs Pakistan's 78.2 mtoe...

19640909rk: "Also India's power grids are much better than Pakistan's. The usage of energy will be much more efficient"

India does not even have a national grid; Pakistan does. India is among the most energy deprived country in the world, according to a World Bank report.

The detailed World Bank report identified India as the most deprived country in terms of access to energy: as many as 306.2 million of its people are still without this basic utility. The remaining 19 nations lacking access to energy, with the number of deprived people is as follows: Nigeria (82.4 million), Bangladesh (66.4 million), Ethiopia (63.9 million), Congo (55.9 million), Tanzania (38.2 million), Kenya (31.2 million), Sudan (30.9 million), Uganda (28.5 million), Myanmar (24.6 million), Mozambique (19.9 million), Afghanistan (18.5 million), North Korea (18 million), Madagascar (17.8 million), the Philippines (15.6 million), Pakistan (15 million), Burkina Faso (14.3 million), Niger (14.1 million), Indonesia (14 million) and Malawi 13.6 million).

Anonymous said...

If we go by this blog, Pakistan is superior to India in every aspect. Pity that none of the investors agree with you.

Riaz Haq said...

Ramesh: "If we go by this blog, Pakistan is superior to India in every aspect. Pity that none of the investors agree with you."

Read: Move over, India. Pakistan is the hottest equity market in South Asia

The BRICS grouping is passe and the top emerging markets are losing sheen. Brexit has battered stocks world over and currencies across economies are weakening.
In times like these, guess what’s working for the global equity markets? Pakistan.
The south Asian nation, mostly in the news for terrorism and political violence, has beaten major Asian economies this year in stock market performance. In 2016, Pakistan’s benchmark equity index, the KSE 100, has been one of Asia’s best performing. In fact, it is the fifth-best performing stock index globally. Bloomberg even referred to Pakistan as an Asian “tiger,” in a report.
In June, the American stock index firm MSCI included the KSE 100 in its emerging markets index, which represents 10% of the world’s market capitalisation.

Anonymous said...

Pls post the FDI into Pak and compare it with India.

I give it to Pakis. When it comes to delusional, no one can match them. A country which is practically non existent in anyone's mind when it comes to investment is now projected as a asian tiger.

Jonathan CBE said...

I don't know or have heard any individual make a pure play in KSE! If the blogger has done that please share the details blackening out personal info.

Sonjal said...

With all these positive or better than India statistics in energy, education and inequality of women that you so often mention, why is that Pakistan has slipped to Low Human Development from Medium Human Development? Other S. Asian countries are moving past Pakistan, Why?

Riaz Haq said...

Sonjal: "why is that Pakistan has slipped to Low Human Development from Medium Human Development?"

Let me turn the question around and ask you: So why does "Shining India" does so poorly on multi-dimensional poverty index (MPI)?

"India is home to over 340 million destitute people and is the second poorest country in South Asia after war-torn Afghanistan...In South Asia, Afghanistan has the highest level of destitution at 38%. This is followed by India at 28.5%. Bangladesh (17.2%) and Pakistan (20.7%) have much lower levels" Colin Hunter, Center for Research on Globalization

Another question: Why does "Shining" India lead the world in open defecation?

India's rivers have been turned into open sewers by 638 million Indians without access to toilets, according to rural development minister Jairam Ramesh. He was reacting a UNICEF report that says Indians make up 58% of the world population which still practices open defection, and the sense of public hygiene in India is the worst in South Asia and the world.

Riaz Haq said...

Ramesh: " Pls post the FDI into Pak and compare it with India. "

Pakistan is seeing soaring foreign direct investment (FDI) with improving security and the start of several major energy and infrastructure projects as part of China-Pakistan Economic Corridor (CPEC), according to the UK's Financial Times business newspaper.

The year 2015 was a bumper year for foreign investment pouring into Pakistan, says the Financial Times. The country saw 39 greenfield investments adding up to an estimated $18.9 billion last year, according to fDi Markets, an FT data service. This is a big jump from 28 projects for $7.6 billion started in 2014, and marks a new high for greenfield capital investment into the country since fDi began collecting data in 2003.

Riaz Haq said...

Jonathan: "I don't know or have heard any individual make a pure play in KSE!"

I wouldn't suggest to anyone to try any single emerging market pure play.

However, emerging markets like India, Pakistan and China should be a part of a balanced portfolio.

For retail investors, PAK ETF is pure play. Other index and mutual funds have various weights in Pakistani stocks.


the iShares MSCI Frontier Market ETF (FM) and the iShares MSCI Emerging Markets ETF (EEM)

There are also mutual funds like Franklin Templeton Asia Growth Fund

Sonjal said...

Yes, poverty, sanitation are fully acknowledged and discussed in the parliament. In case you miss the point it is the direction in which the country has moved. Human Development is an aggregate of many factors and yes India is lacking in one factor or two but, Pakistan overall has fallen behind!
Shining India is a political party slogan from 15 years ago and even then no one is claiming that India has become a Japan or the US.
Pakistan was a medium human development country and now it is low human development country. Why, that is the objective question?

Riaz Haq said...

Sonjal: "Yes, poverty, sanitation are fully acknowledged and discussed in the parliament. In case you miss the point it is the direction in which the country has moved. "

MPI refers to more than just income poverty. It has several dimensions: schooling, health, nutrition, clean water, access to electricity, cooking fuel, household assets, etc etc.

On this index, India does the worst in South Asia. It's only slightly better than Afghanistan.

Riaz Haq said...

#Canada Will Set Up 1 GW Of #Solar Power Plants In #Balochistan, #Pakistan #renewableenergy … via @CleanTechnica

Pakistan received a major boost in its endeavor to expand renewable energy infrastructure as Canada agreed to set up large-scale solar power projects in one of the country’s provinces.

According to media reports, the Canadian government recently signed an agreement with the government of Balochistan to set up 1 GW of solar capacity in the province.

The agreement was signed by the Baloch government itself, under special powers received through the Pakistan constitution.

As per the agreement, a Canadian company will set up 20 solar power projects of 50 MW capacity each. The projects are expected to be distributed across the province. A Canadian delegation is expected to visit Pakistan soon to finalize the various project locations.

Pakistan has seen a sharp increase in foreign investment in its renewable energy sector. Led by China, Pakistan’s renewable energy sector has seen increased interest from European governments and companies.

Foreign investors poured $3 billion over the last year into the renewable energy sector in Pakistan, officials from the Alternative Energy Development Board (AEDB) have said. The largely untapped resource potential and a feed-in tariff regime has made renewable energy an attractive investment avenue.

Earlier this year, the AEDB reported that as many as 35 solar PV projects are currently at various stages of development. These projects will have a cumulative installed capacity of 1,111 MW.

Anonymous said...

In 1940s Dalit leader Dr. Ambedkar wrote a book “Pakistan or division of India”. In this book he states that every time Hindus are told that India is not a nation, they feel like someone has taken their cloth’s off in public. Had Dr. Ambedkar lived today, he would have added praising Pakistan to that list. Every time you post something positive about Pakistan, the western neighbors feel like someone has taken their cloth’s off.

G. Ali

Riaz Haq said...

A year ago, carmakers in India were readying to go full throttle, helped by falling fuel prices, easing inflation and softening interest rates. India seemed well on the road to becoming the world's third-largest passenger car market by 2020.

But the pace of growth has slowed in recent months, with sales increasing at a meagre 6-7 per cent (most carmakers have had far worse depressing sales growth). As if that wasn't worrying enough, a couple of setbacks have further dampened industr ..

Read more at:

Riaz Haq said...

Dailytimes | #China keen to invest in #Pakistan's steel, energy sectors. #CPEC - via @Shareaholic

Islamabad: The Chinese investors have showed keen interest in the Pakistan's steel, energy, cement and other sectors for investment and
joint ventures.

A delegation of Chinese investors representing various companies including Zonergy Company Limited and Hebei Weilang Import and Export Group Co., Limited visited Islamabad Chamber of Commerce and Industry, said a press release issued on Tuesday.

The delegation said China-Pakistan Economic Corridor has generated lot of interest in Chinese investors and purpose of their visit was to study the potential of Pakistani market for investment and business collaboration.

Zonergy Company Limited (ZONERGY) was China's national high-tech enterprise which was providing resource integration services for customers in new energy and energy-saving, environmental protection industries, while it was now looking at Pakistan as a prospective country for investment and JVs.

Hebei Weilang Import and Export Group was a large-scale professional enterprise engaged in manufacturing of bicycles and offering 100 kinds of products in 10 classes including BMXs, frames, forks, BB axles, front and rear axles, brake cables and baskets to clients in Europe, the US, Australia, the Middle East, Africa, Southeast Asia and other areas. The Group was interested to explore Pakistani market for setting up bicycle plant.

While speaking, Acting President ICCI Sheikh Pervez said CPEC was a game changer for Pakistan and stressed that more Chinese investors should come to Pakistan to participate in this flagship project of historic cooperation between the two countries.

He said there was huge potential of investment in many sectors of Pakistan's economy including energy, construction, steel, marble, infrastructure development, mining, oil & gas exploration, engineering, IT and others areas while CPEC was poised to open new horizons of investment opportunities between China and Pakistan. He said China has good expertise and advanced technology while Pakistan offered attractive incentives to foreign investors. He urged that Chinese investors should harvest the investment friendly policies of the current regime by enhancing investment and joint ventures in Pakistan.

Munir said...

Yeh sab corrupted information. Berrozgadi is very high but Sharif party ka sab propaganda chal raha hai

Altaf said...

since about 1990s why did Pakistan started falling behind India. Pakistan was 50% better than India in 1970s because there were more industries like Pakistan Steel Mills which was one of the largest in the world. What are the reasons?

Riaz Haq said...

Altaf: "since about 1990s why did Pakistan started falling behind India."

Not true. It's all Indian hype aided by India's post Col War western friends.

You need to compare manufacturing value added per capita in India ($193) and Pakistan ($167) for 2012, the most recent data available from the World Bank. These are fairly close. India is ranked 142 and Pakistan 146.

From United Nations Industrial Development Organization (UNIDO):

Pakistan Manufacturing Value Added (MVA):

MVA per capita at constant 2005 prices increased from US$135.03 in 2005 to $143.84 in 2014

MVA as percentage of GDP at constant 2005 prices in US$ decreased from 18.05% in 2005 to 17.41% in 2014

India Manufacturing Value Added (MVA):

MVA per capita at constant 2005 prices increased from US$155.73 in 2005 to $168.42 in 2014

MVA as percentage of GDP at constant 2005 prices in US$ decreased from 15.10% in 2005 to 13.85% in 2014

China tops the list of world's 10 largest industrial producers. It is followed by the US, Japan, Germany and South Korea, according to United Nations Industrial Organization (UNIDO).

India ranks 6th in the world in terms of total manufacturing output in 2013, up from 9th place in 2008,

India's manufacturing value added (MVA) per capita of 161.7 in 2013 is among the lowest in the world. It's up from 131.9 in 2008.

In fact India's 2008 MVA per capita of 131.9 was lower than Pakistan's 141.1. Since 2008, Pakistan's MVA per capita has slipped to 139.1 in 2013 while India's has increased to 161.7 in this period.

Bangladesh's MVA per capita has jumped from 82.2 in 2008 to 118.3 in 2013.

On UNIDO’s industrial competitiveness index, most industrialized countries lost ground in the last three years. Among the five most competitive are four high-income countries (Germany, Japan, the Republic of Korea and the United States), along with China ranking fifth. The four are among the world’s most industrialized countries and, with China, account for 59 percent of world MVA.

Riaz Haq said...

In a report titled "From Wealth to Well Being, Boston Consulting Group (BCG) has used SEDA (sustainable economic development assessment) scores to measure how countries have translated GDP growth into their citizens' well-being.

One particular measure BCG uses is growth-to-well-being coefficient on which Pakistan scores 0.87, higher than India's 0.77 and China's 0.75.

A high-profile report prepared by the Boston Consulting Group, US, has suggested that India may have progressed well in the economic indicator (which consists of income, economic stability and employment), and investment (instructure, health and education), but its progress in sustainability (income equality, civil society, governance and environment) remains below world average.
Rating 162 countries across the world, though without ranking them, the report finds that in the overall economic progress, India's score is 45.6 (on a scale of 100), higher than the world average of 43.2; in progress in investment, the score is 54.6, with the world average being 40.1; but in progress in sustainability, its score is 50.4, below the world average of 54.4 per cent.
The report, which seeks to analyze data up to 2014-end, finds that, among BRICS countries (Brazil, Russia, India, China and South Africa), in all three indicators of progress -- economics, investment and sustainability -- China performs better than India, at 60.1, 69.1 and 52.3 respectively.
Brazil performs better in economic progress (52.7) and sustainability (54.7), but in investment it doesn't do so well (46.4). Russia does worse than India in economic and investment progress (43.6 and 39.9 respectively), but better in sustainability (53.1).
Among India's neighbours Sri Lanka does better than India in economic progress and investment, but it fails to do as well in sustainability (51.2, 53.6 and 49.6 respecively). Pakistan is way behind India in economic progress and investment, yet it is a little ahead in sustainability (37.1 34.4 and 51.3 respectively).
Nepal may be behind India in economic progress (41.8 per cent), it is way ahead of India two other indicators, investment and sustainability (61.0 and 55.4). And Bangladesh is ahead of India in economic progress (47.7), but it is behind India in investment and sustainability (51.9 and 43.8 respectively).

Riaz Haq said...

Spotlight: Construction of great corridor catapults #Pakistan into fast track - Xinhua | #China #CPEC …

With an investment of 46 billion U.S. dollars and scores of infrastructure projects, the ongoing construction of the China-Pakistan Economic Corridor (CPEC) is undoubtedly one of the largest endeavors now taking place on the planet.

Roads, energy projects, industrial parks and the Gwadar port are all included in the basket, satisfying Pakistan's immediate needs as well as helping the south Asian country get back on its feet after years of anti-terror campaigns wrecked its economy.

Three years after the initiative on the construction of CPEC was jointly announced by China and Pakistan, Xinhua has learned that the project is yielding its early fruits as new roads and power plants have put Pakistan's growth in the first gear.


Located 20 km east of Pakistan's largest city of Karachi, the Bin Qasim power plant is one of the pioneer and flagship projects of CPEC planned to begin operating at the end of next year.

For the coal-fired plant built by PowerChina, the Chinese construction company commissioned to undertake the construction of the project, two 660-megawatt generator units will be installed, which would generate 1,320 megawatts of electricity per year, more than a quarter of the 4,500-5,000 megawatts of power shortage estimated for the year 2012.

"With three more plants like this one, Pakistan would have no more energy woes," said Chen Enping, a manager at PowerChina.


For Sher Afzart, a shop owner in northern Pakistan's Hunza Valley, the Karakorum Highway is what he owes his livelihood to.

The two-lane highway, originally built by the Chinese in the 1970s and recently renovated by China Road and Bridge Corporation, connects Kashgar, a commercial hub in northwest China's Xinjiang Uigur Autonomous Region, and Pakistan.

Afzart can save days on trips to Kashgar to buy goods as the road cuts through the Karakorum mountains. There is a steady flow of business as thousands of Chinese workers labor around Hunza.

Following the completion of the Karakorum Highway renovation project, more business opportunities are created, Afzart said.

"With the convenience of road traffic, I'm thinking of opening branches in Islamabad and even in cities farther south," he said.

The Karakorum Highway is just one of the roads that falls under CPEC. The M-4 National Motorway, a strategic artery in central Pakistan, is also being paved by the Chinese.


The Gwadar port, located in the southern coast of Pakistan, is where CPEC meets the Indian ocean. From here resources can commence their journey onto the hinterlands of Pakistan and western China, and Chinese and Pakistani products can be shipped out to every corner of the world.

Viewed from above, the port is like an anchor protruding into the emerald waters, forming two natural bays that are as deep as 14.5 m, making them perfect harbors.

After the CPEC cooperation program was launched in 2013, a plan was developed in the following years to comprehensively transform the fishing town into a modern metropolis complete with industrial zones, a harbor and recreational zones.

Gwadar Port Authority Chairman Dostain Jamaldini has big ambitions for the port, eyeing Dubai, which is just across the Arabian Sea, as a model.

Near future plans for the port area include the construction of a Free Trade Zone, a Special Economic Zone, a coastal expressway, an international airport and a pipeline linking Iran, which are all part of the CPEC plan remodelling the town which will be the hinge of the corridor.

"Pakistan is ready to offer the most generous terms for companies investing in the port," Jamaldini said, "We believe the favorable policies and the superb location of the port will soon attract the interest of investors worldwide."

Riaz Haq said...

What lies behind the gates of #Pakistan's growing elite gated communities? #construction #housing #Cement #Steel

Inside the gates, the never-ending sectors and undulating roads, the scarce traffic and abundant space can be extremely disorienting. If you are a first-time visitor, you can be forgiven for thinking this expansively designed neighbourhood is Islamabad’s actual twin city, and Rawalpindi just an unplanned appendage.

Driving on Bahria Town’s carpeted tarmac is a fairly docile affair after negotiating the violent potholes and sadistically narrow roads that pervade most of Pakistan. The sculptures of farm animals dotting the roundabouts stay mercifully in place, unlike the free roaming cattle outside. These are merely the fringe benefits of buying an accommodation in what could easily be called Pakistan’s most self-sufficient and luxurious gated community.

There is a riding range for those who have always felt congested city streets do not offer enough galloping room for horses. There is a golf course for those who have never been particularly fond of stirrups and there is a cinema with reclining sofas for those who don’t even like walking. There are health clubs, hospitals, playgrounds and even a cricket stadium in Phase 8, a phase bigger than the first six phases combined. So large, in fact, that it’s possible to take a wrong turn while traversing it and end up in New York somehow. For, beyond an avenue lined with palm trees, there is a Statue of Liberty looking just as confused about being there as you might be about seeing her. There is also an imitation Eiffel Tower on the other end of the same phase. Because, well, why not?----

While Bahria Town has expanded to other cities (the one in Lahore has been functional for a while and construction has started in Karachi and Nawabshah, and is expected to start soon in Hyderabad and Peshawar), the one next to Rawalpindi/Islamabad is still the oldest and most densely populated. It claims to be housing 100,000 people as of now.

Early residents remember it largely being a jungle even 10 years back. The visual trajectory from green to grey has been rapid; one week there would be four-legged creatures running around and the next week four-wheeled vehicles.

Realtors say they primarily deal with business people or retired civil and military officials. The former because they don’t need to hit a nine-to-five job in city centres — which can be a very long commute from Bahria Town; the latter because they get service benefits which they can use or sell to buy a house in this enclave. Selling a service allotment in Islamabad, for instance, will comfortably pay for a house in Bahria Town. Property is cheaper this far away from a city — which is the entire point.

Property dealers also say they run offices abroad; Bahria Town, too, has its corporate offices in the United States, the United Kingdom and the United Arab Emirates. Expatriate Pakistanis who have accumulated a certain amount of wealth, have gotten used to a certain standard of living and now wish to keep a house in their country of origin, are inevitably attracted to Bahria Town’s lavish infrastructure and the uninterrupted supply of electricity.

Anonymous said...

I was reading World Wealth Report from Credit Suisse and while India has higher (compared to Pakistan) GDP per capita and similar wealth per adult, her median wealth per adult is dismal. Somewhere on the lines of 850 USD or so per adult while Pakistan has north of USD 2100 per adult. Now this is huge. This mean around half of Indian adults don't have more than 850 USD in assets while half of Pakistani adults have more than USD 2100. It highlights the huge inequality in India and relative equality in Pakistan.

Riaz Haq said...

Anon: "This mean around half of Indian adults don't have more than 850 USD in assets while half of Pakistani adults have more than USD 2100. It highlights the huge inequality in India and relative equality in Pakistan."

I have read the Cedit Suisse report and blogged about it. Here's an except of my post:

Average ($4,459) and median ($2,216) wealth figures for Pakistani middle class adults are higher than average ($4,352) and median ($868) wealth figures for their Indian middle class counterparts. It's a consequence of lower income wealth inequality in Pakistan compared to its neighbor. For comparison, only 1.1% of Bangladesh adult population qualify as middle class. Their average wealth is $2,201 and median wealth $1,102 per adult.

Riaz Haq said...

Bank credit rises on uptick in #Pakistan economy as interest rates hit 42-year low of 5.25%

Commercial bank credit and bank investments are on the rise in Pakistan on the back of a significant uptick in the economy.

The new monetary policy and the benchmark discount rate, expected to be announced later this week, are likely to strengthen this trend.

International financial organisations, the ministry of finance and the State Bank of Pakistan (SBP), the central bank, report that the economy is in an expansionary mode and will continue to be so in the next two years.

"We expect gross domestic product [GDP] growth to rise further in fiscal year 2017. The actual GDP growth in fiscal year 2016 was 4.7 per cent - a record high for the last 12 years despite international challenges," say economists.

According to the SBP, the government envisages a higher GDP growth of 5.7 per cent in fy-17. The banking system will gain further strength and earn larger profits as economic growth increases.

The SBP issued a review of the country's macroeconomic performance, with a specific reference to the recent monetary policy which ensured a rapidly declining benchmark discount rate and the lowest interest rate of 5.25 per cent charged by commercial banks, a 42-year low.

Finance Minister Ishaq Dar said: "All stakeholders are satisfied with the country's macroeconomic stability, but they should continue the reform process and pursue policies that will enhance and fast-track growth and include all sections of society, business and the economy."

Saeed Ahmed, acting governor of SBP, said: "The monetary performance remained satisfactory during the quarter ended June 2016. Forex reserves reached the highest level of $23 billion." It will expand exports and imports, which, in turn, will benefit banks, the financial, economic and industrial sectors.

All these stakeholders are upbeat on the economy's growth after positive reports from the International Monetary Fund (IMF), the World Bank and Manila-based Asian Development Bank.

The IMF said: "Pakistan's economy is growing at its quickest rate in eight years. Investor confidence has slowly returned to a country that was battered by the global financial crisis."

Bank investments are rising but deposits are not growing that much, reported the SBP. Credit and investments provided by banks rose in the first half of 2016 compared to the like period of 2015, it said.

"This was despite the fact that deposits saw a fall in growth in the same period. The banks provided additional funds for credit and investment from money they borrowed from SBP."

Liquidity crunch
The central bank injected Rs1.79 trillion on July 11 and Rs1.13 trillion on July 15 into banks to help overcome their liquidity crunch and expand credit to the private sector. One of the key causes of the commercial banks' liquidity crunch was "the borrowing by the government to cover its budgetary gap."

"Banks' deposit growth fell by almost 50 per cent in the first nine months from July to March of the previous fiscal year," the SBP reported.

In a report for the third quarter of fiscal year 2016, the SBP said private sector deposits increased by Rs149.4 billion during July-March, less than half the rise in deposits recorded in the like period of fy-15.

But the plus point is that banks' advances rose at an eight-year high of seven per cent in the first half of 2016 on the back of growing credit demand.

The banking sector advances-to-deposits ratio increased by 51 per cent in June 2016, up from 50 per cent in June 2015. At the same time, the investment-to-deposit ratio increased to 75 per cent in June 2016, up from 64 per cent in June 2015.

Riaz Haq said...

The ministry of planning, development and reforms would launch an economic long march on August 11 on the occasion of the second anniversary of the government's Vision 2025 programme.

A scorecard of government's achievements during the last two years as well as targets set for next 10 years would be presented.

The slogan of the economic long march would be "Lets work harder, better and smarter", a senior official said here on Friday.

The Vision 2025 was announced two years ago after complete consultation with all the stakeholders while provinces were also taken on board to make the country a model economy.

Pakistan, he pointed out, was being termed as an emerging economy and all the leading and credible international organizations were viewing us a turned-around economy.

He gave statistics regarding GDP growth which has increased from 3.7% to 4.7%, remittances have doubled to $ 20 billion, Foreign reserves have swelled from $10 billion to record $23 billion while Pakistan Stock Exchange (PSX) index has rocketed from 12,000 to nearly 40,000.

Out of US$ 46 billion under China Pakistan Economic Corridor (CPEC), projects worth more than US$ 10 billion had already hit the ground while remaining schemes were in advanced stages of the pipeline.

Giving details of power production in next few years, he said, 3600 MW electricity would be produced through LNG, Under CPEC, 1320 MW by Port Qasim and 1320 mw by Sahiwal will also come in production next year, Chashma Nuclear Plants are also expected to add 600 mw. Jamshoro Power Project being completed by Asian Development Bank, would start producing 1320 MW by year 2018.

Work was under progress on 2000 MW Thar project and 1320 MW HUBCO project which would be completed by the year 2018-19, he added.

About infrastructure development, he said, Motorway from Havalian to Thakot and Multan-Sukkur of Lahore-Karachi Motorway was being completed at a fast pace.

On the Western route of the CPEC, he said, Gawadar port would be linked with Quetta by end of this year opening enormous opportunities for Balochistan.

The road from Burhan to DI Khan would be completed by June 2018, he said and added, the Gilgit-Baltistan would be developed as a model of environmental economy.

He mentioned about the work on Dasu and Diamir-Bhasha dams and the generation of wind and renewable energy as well.

He said, Pakistan Railways was being modernized with Rs.117 billion investment while the number of PIA aircraft had been doubled.

He said, unemployment was decreased from 6.24 percent in 2013 to present 5.94 percent, adding, while the country has witnessed reduction in poverty. However, due to energy crisis it couldn't be faster. As energy situation improves, there will be more investment and jobs, which will help in fighting unemployment.

He said, government has more than doubled allocation for Higher Education from Rs 100 billion to Rs 215 billion. Pakistan is becoming hotspot for IT entrepreneurship and start ups.

He said, Rs.173 billion were allocated for improvement in the existing transmission and distribution systems to bear burden of increased electricity production in the next two years.

Riaz Haq said...

#Pakistan’s #3G #4G users doubled to 29.53 million in FY16. #mobile #Smartphones

The number of users on mobile-phone internet networks – 3G/4G – has doubled to 29.53 million in the fiscal year ended June 30 as the country moves ahead on adopting broadband technology after the spectrum auction.

The Pakistan Telecommuni­cation Authority (PTA) reported Friday that the number of 3G/4G subscribers has reached 29.53 million in June 2016, up from 14.6 million in July 2015.

3G/4G users up 3.74%, but growth slowing

“The availability of low-cost smartphones and aggressive roll-out of apps has made this possible,” said Parvez Iftikhar, an expert on information and communication technology.

The availability of social networking apps like Whatsapp and Facebook has played a significant role in attracting huge traffic on mobile internet.

Iftikhar added that introduction of 3G/4G internet services in Pakistan in 2014 has apparently helped boost the economy at length. “But to measure the real impact of 3G/4G on the economy, we need to conduct independent studies,” he said.

He said that the establishment of a number of technology incubators in the country was one example of boost to the economy through such cellular networks. Incubators have produced a number of startups, while many of them kept growing their businesses to larger scale.

Beware Pakistani mobile internet users

According to Iftikhar, the launch of online shopping portals, internet banking and roll-out of mobile money transfer by almost all cellular companies have also helped attract higher traffic on 3G/4G networks.

Besides, federal and provincial governments were also utilising mobile broadband for uplift of health, education and agriculture sectors.

PTA said that total broadband subscribers grew 92% to 32.41 million in fiscal year 2016 from 16.88 million in the previous fiscal year 2015.

The authority added that total teledensity recovered to 70.94% in FY16 from 62.9% in FY15. It peaked at 78.89% in FY14. The suspension of millions of mobile phone SIMs in the aftermath of biometric verification had reversed the growth in FY15.

Teledensity alone for cellular mobile regained to 69.12% in FY16 from 60.7% in FY15, PTA added.

The number of total mobile phone users, including non 3G/4G users, grew by 16% to 133.24 million in FY16 from 114.65 million in FY15, it added.

Sagheer Wattoo, a spokesperson at the federal ministry of information technology, credited the rapid growth in 3G/4G subscribers to the introduction of Telecommunications Policy 2015 last year.

High-speed internet: Broadband subscriptions near 30 million mark

“The policy note has made possible the sharing {cross use of} infrastructure and spectrum by telcos,” he said, adding this has resulted into attracting more subscribers.

“The growth in 3G/4G subscriber base was less than 3% before the current government in the centre came in power in 2013. This rate has accelerated to over 19% now,” he said.

Riaz Haq said...

Via @NPR: #India's Lagging #Manufacturing Sector Slows Job Creation. #Modi #Achhedin #BJP

India needs an uptick in manufacturing to employ millions who enter the labor force every year. The slow expansion is imperiling India's ability to create jobs and lift millions out of poverty.

And you often hear about India having the world's fastest-growing economy. And it is growing at 7.6 percent. But beneath that headline is another reality. Manufacturing in the country is lagging, and that's hurting India's ability to create jobs and lift millions of people out of poverty. Let's go to New Delhi and NPR's Julie McCarthy.

JULIE MCCARTHY, BYLINE: Manish Dhariwal, chief financial officer of PPAP Automotive Limited, steps onto the factory floor as a downsized second shift punches in.

MANISH DHARIWAL: Each part has a different design.

MCCARTHY: He sweeps his hand across a display case of strips that seal car doors and windows, components he sells to the largest Japanese car manufacturers. PPAP enjoys a 90 percent market share, but Dhariwal says sales are flat, and his operation is running at just 65 to 70 percent capacity.

DHARIWAL: There's a big problem because facilities are already there, and they are not, then, getting fully utilized. And the cost of manpower increases on an annual basis. So how do I find the money for that if there's no sales growth?

MCCARTHY: Dhariwal's company is hiring no new workers. That undercuts Prime Minister Narendra Modi's pet project, to make manufacturing the engine of employment. Ten million Indians enter the workforce every year. But according to the Labour Bureau, eight labor-intensive sectors, including automobiles, created only 135,000 jobs last year, the lowest in seven years...

RAJIV KUMAR: It's a ticking time bomb.

MCCARTHY: ...Meaning social instability. Rajiv Kumar adds, if you have no new jobs...

KUMAR: You don't, therefore, address poverty in any real sense. And you exaggerate inequalities in our country.

MCCARTHY: Kumar is former head of the Federation of Indian Chambers of Commerce. He says India's nearly 8 percent growth rate reflects a jump in the service sector but disguises sluggishness in manufacturing. Kumar urges the government to stop boasting about the GDP and focus on the number of jobs created.

KUMAR: Because that's what is the key. And if you have that as the key macroeconomic target, then growth will follow.

MCCARTHY: But Mihir Sharma, author of "Restart: The Last Chance For The Indian Economy," says India can unleash growth only if it becomes easier to do business. He says roads here are so bad, the bureaucracy so hidebound, it's often cheaper to fly raw materials in from overseas than to clear the hurdles within India. That includes, he says, India's labor laws, which make it hard to fire workers in shops with more than 100 employees.

MIHIR SHARMA: It might take months. It could take years. And that's to fire one person. We are not competitive because we just can't get the scale and get the flexibility that every other country in the world has.

MCCARTHY: Flexibility in the workforce is useful in the lean periods, says Vishal Lalani, whose factory churns out dashboards for commercial vehicles, a sector that tumbled. A recovery has kicked in. But Lalani says 6 to 8 percent inflation is eating at his bottom line. And Lalani echoes other entrepreneurs who say Prime Minister Modi's campaign, Make in India, is more slogan than substance.

VISHAL LALANI: That's the way I see it. And it's probably boosting India's image and giving people a feel-good factor. But there's not that much happening on the ground.

MCCARTHY: Demand in India's auto sector is picking up, but the number of new jobs created is negligible. Even in aspirational India, demand can only go so far without gainful employment. Julie McCarthy, NPR News, New Delhi.

Riaz Haq said...

#Pakistan's Storm Fiber Offers 30Mbps #FTTH Broadband for Just Rs. 3,999 in #Karachi, #Lahore … via @ProPakistaniPK

While 3G/4G mobile internet has catered to the nation’s demand for high-speed internet, it is just not viable for everyone; especially for businesses and power users who need to consume high volumes of data at very high speeds.

There’s a reason the west has resorted to FTTH and that’s mainly due to its reliability, consistency and capacity to control higher data speeds.

While FTTH in Pakistan is comparatively a new phenomenon, mainly due to its limited coverage, things have started to change now.

Storm Fiber, a Cybernet company, is offering its FTTH services in Lahore and Karachi at unbelievable prices.

For example, you can enjoy 30Mbps for just Rs. 3,999. This price includes cable TV and fixed line as well as a value addition.

Not to mention, this speed of 30Mbps is valid for both uploads as well as for downloads.

Storm Fiber said that these prices are excluding taxes, but there’s no limit on download/upload and customers can enjoy true unlimited data connections throughout the month.

Riaz Haq said...

From Wall Street Journal:

Up until a year ago, the shipping industry was ordering ships in droves. This year, orders of new vessels have fallen to a record low and companies can’t get rid of ships fast enough.

About 1,000 ships that have the combined capacity to haul 52 million metric tons of cargo will be dragged onto beaches, cut into pieces and sold for scrap metal this year. That is second only to the record amount of capacity of 61 million so-called dead weight tons that were scrapped and recycled in 2012.

The global economic slowdown is putting shipping through its most bruising period since the 2008 financial crisis. Companies including Maersk Line, a unit of Danish conglomerate A.P. Møller Maersk A/S, Germany’s Hapag-Lloyd AG and China Cosco Bulk Shipping Co. have 30% more capacity in the water than cargo. As the companies, mostly based in Europe and Asia, fight for bigger shares of the global market, freight rates have dropped so low they barely cover fuel costs.

In the five years through 2015, owners ordered an average of 1,450 ships annually. This year orders through July fell to 293 vessels, or 11.6 million tons, according to U.K. marine data provider Vessels Value.

“Given the tremendous overcapacity, it will take much more recycling and at least two to three years of no growth in capacity to see some balance between supply and demand,” said Basil Karatzas, chief executive of New York-based Karatzas Marine Advisors Co.

Two years ago, in India, Pakistan and Bangladesh were paying about $460 a ton of steel. Last year it was $300 and it is now roughly $250, shipowners say. Officials at the Alang scrapyard—one of the world’s biggest, on India’s West Coast—said prices were likely to stay low through the rest of the year, as China is flooding the market with recycled steel.

Braemar ACM expects about 550 dry-bulk ships to be recycled this year, 29% more than last year and 48% more than in 2014. About 170 container ships are likely to be scrapped this year, compared with 85 last year and 164 in 2014. The scrapping of other ship types, such tankers, car carriers, general cargo ships and fishing boats, bring the year’s total to about 1,000 vessels.

South Asian scrapyards recycle about three-quarters of all ships every year. The remainder goes to yards in China and Turkey.

Riaz Haq said...

Does China see CPEC absorbing excess industrial capacity?

The CPEC provides an additional incentive for Chinese companies to extend further afield and expand their business models. Then there is the utilisation of its excess industrial capacity, which China stands to gain from considerably; “Putting idle machinery to use in another country helps to alleviate the domestic burden of idle productive capacity”, Polk explains, “which is currently one of the major constraints on China’s growth, so removing that excess capacity by building infrastructure in other countries may help to accelerate a stabilisation in China’s industrial sector”. Given such advantages for China, it would seem that the benefactor is gaining from the project as much as the recipient, and some may argue, even more so.

Riaz Haq said... China's steel industry faces increasing trade frictions

China exported a total of 112.4 million tons of steel in 2015, the first time it reached 100 million tons, but it came with an increasing number of trade frictions. Forty-six trade remedy investigations were targeted at China's steel industry last year, an increase of 19 from the year earlier and accounting for 46.9% of all the trade remedy probes in China in 2015. Worse still, China's steel industry has been accused by some of being responsible for the steel overcapacity that has gripped the world.

Chinese industry insiders, however, have cited rapidly rising exports and the surge of trade protectionism as the real cause of the simmering trade frictions.

In late May, the United States issued hefty anti-dumping and anti-subsidy duties on corrosion-resistant steel not only from China, but also from India, Italy and South Korea. Moreover, Japan is also the target of a number of anti-dumping cases, demonstrating worldwide surging frictions in the steel industry.

"The international steel market has become a buyer's market with the steel glut worldwide. International buyers choose to buy China's steel, thus contributing to the growth of China' steel exports," said Li Xinchuang, the head of the China Metallurgical Industry Planning Association, recently. The surge in China's steel export is a result of the increasing competitiveness of China's steel products, he added.

Experts have proposed several ways of tackling the steel overcapacity and trade frictions. Lu Feng, a professor with the National School of Development of Peking University, said that expanding China's steel exports can move forward with the cooperation with developing countries.

He took the example of China and Pakistan. China's steel exports to Pakistan increased from 370,000 tons in 2011 to 2.56 million tons last year, a nearly six-fold increase in 4 years.

"The steel trade between China and Pakistan in recent years is mainly carried out in new projects under the Belt and Road initiative, thus it will not jeopardize the existing interest of other countries, but will help Pakistan better develop its economy," he said.

As a matter of fact, China's steel exports in recent years have increased significantly in countries involved in the Belt and Road initiative and developing countries. Data shows that the value of China's steel exports to Belt and Road countries has jumped from US$10 billion in 2009 to more than US$30 billion last year.

Lu Feng also said that digging deeper into China's domestic market and encouraging mergers of steel companies will also help the country's steel industry.

Riaz Haq said...

#Pakistan adds 2.2 million new #3G/4G users in July. #Mobile broadband subscribers up to 32m - The Express Tribune

In Pakistan, the number of users on mobile-phone internet networks – 3G/4G – has increased to almost 32 million.

According to the Pakistan Telecommunication Authority (PTA), in July, over 2.2 million new 3G/4G users were added by the telcos, taking the total number users in the country from 29,530,254 (2.9m) to 31,779,549 (almost 3.2m).

Pakistan’s 3G/4G users doubled to 29.53 million in FY16

The userbase increased by over seven per cent.

Leading the pack was Mobilink, which added over 1.2 million new 3G users to its network, whereas Zong attracted half a million new 3G users in addition to 109,000 4G users.

Mobilink is also leading in terms of total number of 3G/4G users with over 10.2 million 3G users – almost one-third of the total 3G/4G users in the country. It was followed by Ufone with around 8.6 million 3G users.

Beware Pakistani mobile internet users

According to the PTA, the total number of broadband subscribers have increased from over 32 million at the end of fiscal year 2016 to 34.5 million by the end of July.

Commenting on the growth of 3G/4G services in the country, Parvez Iftikhar, an expert on information and communication technology, said “The availability of low-cost smartphones and aggressive roll-out of apps has made this possible.”

The availability of social networking apps such as Whatsapp and Facebook, has played a significant role in attracting huge traffic on mobile internet, he added.

Riaz Haq said...

Why #Pakistan's Stock Market Beats #China's And #India's via @forbes

Pakistan’s equity market has been outperforming China’s and India’s markets by a big margin in recent years. In the last twelve months, Global X MSCI MSCI +% Pakistan ETF was up 20%, beating India’s and China’s comparable ETF’s by almost two to one – see table.

That may come as a big surprise to some. Pakistan has been suffering all sorts of terrorist attacks, which makes it a very unstable country to put your money in. And it has been lagging behind both India and China in key macroeconomic metrics like GDP growth rates and unemployment—see table.

Index/Fund 12-month Performance 5-year Performance
Global X MSCI Pakistan (NYSE:PAK) 20% 400%*
IShares China (NYSE:FXI) 9.80% 16.00%
iShares S&P India 50 (NASDAQ:INDY) 12.77 % 33.0%
iShares MSCI Emerging Markets (NYSE:EEM) 5.38% 1.52%
*In local currency.

Source: Yahoo YHOO +0.98%. Finance and Karachi Exchange 9/5/2016

Pakistan’s, India’s and China’s Key Metrics

Country China India Pakistan
GDP $10866 billion 2074 billion $270 billion
GDP Growth yoy 6.7% 7.1% 4.24%
Unemployment 4.05% 4.9% 5.9%
Inflation Rate 1.3% 5.05% 3.56%
Capital flows -594 HML -$300 million -$1882 million
Government Debt to GDP 43.9% 67.2% 64.8%
What does the collective wisdom of markets see in Pakistan’s markets that others are missing?

A few things. First, terrorist attacks don’t usually affect financial markets, unless they are disruptive to trade, which hasn’t been the case in Pakistan. Second, Pakistan is a frontier rather than an emerging market, and therefore, favored by the numbers game. Third, its market reform efforts have been getting a couple of votes of confidence from overseas like $1 billion in support from the World Bank – and a couple of domestic acquisitions from foreign suitors like the acquisition of Karachi’s K-Karachi by Shanghai Electric Power Co. This has all been music to the ears of foreign investors.

Riaz Haq said...

Byco oil refining capacity goes up to 155,000 barrels per day

Byco is now ahead of all refineries in Pakistan following the completion of its second unit, as its crude oil refining capacity has gone up to 155,000 barrels per day from 35,000 barrels per day.

Asad Siddiqui, Byco Chief Financial Officer (CFO) of the complex, talking to a select group of journalists here on Monday said the second unit of the refinery has completed, enhancing its refining capacity by 120,000 barrels per day, making it the country's largest refinery. He said that Byco has crossed Pak Arab Refining Company (PARCO) which has the refining capacity of 90,000 barrels per day, followed by 68,000 barrels of National Refinery, 48,000 barrels of Pakistan Refinery Limited and 45,000 barrels of Attock Refinery.

Replying to a question regarding expected removal of international sanctions against Iran, he said that if the sanctions are lifted Byco Refinery is all set to take the advantage of expected crude oil imports from Iran at discounted rates.

Byco CFO said that his company was well placed to benefit from removal of international sanctions against Tehran unlike the country's other refineries which had long term crude supply contracts.

"It is comparatively difficult for other refineries to switch over because of their long term agreements" but Byco has the potential to quickly take advantage of the emerging opportunity.

He said perhaps Iran would also offer discount on crude oil to open up its market and it would be a good omen for Pakistan.

He said Byco had completed one of the two new projects for isomerization and desulphurization and it had relatively short term crude supply agreements that provide flexibility for Iranian crude.

He said the Byco also had past experience of refining Iranian crude before its supply had suspended due to international sanctions.

He said because of consolidated business model, the company would be declaring profit for the first time for the quarter ending June 30, 2015 that would set the direction for its improved financial position in future.

He said the Byco management had decided to consolidate its refining business before going into expansion of retail outlets, adding that so far Byco was operating 250 petrol pumps across the country.

"The focus of our marketing has been on furnace oil sales and we have been able to secure furnace oil business from Nishat Chunia, K-Electric, Tapal, Liberty and Hub Power Company", he maintained.

He said Byco was facing problems because of the issue of turn over tax, but the authorities had not only understood the tax anomaly but was committed to issue an enabling clarification. He explained that refinery was set up under tax-holiday for seven years when there was no turn over tax which was imposed subsequently and the government had agreed to do away with it. He said about 95 per cent of the oil pricing was based on crude price which meant that turn over tax could simply eat away the entire profit.

He said that due to the completion of isomerization and desulphurization of within plants into a couple of months it would convert its entire Naphtha production into motor spirit that would almost double its production from 12,500 barrels per day to cut costs.

He said the government had appreciated the co-operation extended by the Byco in controlling petrol crisis early this year and now looked forward to take benefit of its location and infrastructure.

He said the company could directly provide furnace oil to Hubco next door while Pakistan State Oil was also taking full advantage of Byco's strength of its own port facility in the shape of single point mooring.

Siddiqui said all major oil marketing companies including PSO, Hescol, Caltex and Shell in that order and other smaller companies were lifting products from Byco refinery.

Riaz Haq said...

At present, the annual demand for petroleum products stands at around 23 million tons in the country and it is expected to touch 27 million tons by 2020.

Of the total volume, the demand for 10 million tons, or 44%, is met by domestic refineries whereas 13 million tons (56%) are imported.

More than two-thirds of the crude processed by local refineries is brought through imports. In financial year 2015, the refineries processed around 3.9 million tons (32%) of crude oil produced in the country and 8.2 million tons (68%) of imported oil.

PSO – the largest oil marketing company – meets energy needs of the country through a wide network of depots with a storage capacity of around one million tons, which constitutes around two-thirds of the storage capacity of all oil marketing companies.

The demand for premier motor gasoline (PMG) has shown unprecedented growth over the past many years in the country, which has increased five times from 1.15 million tons in financial year 2007 to 5.8 million tons in 2016.

Of the total PMG demand, only 1.6 million tons (28%) is produced in the country whereas 4.2 million tons (72%) are imported and handled at terminals at Karachi Port.

Piling debt: PSO receives Rs293b by power sector companies

However, according to the official, it has become extremely difficult for PSO to smoothly meet the demand and swiftly offload PMG from vessels carrying 50,000 tons or more because of lack of storages at the port. The current storage capacity is only 40,000 tons at Keamari, Karachi Port.

Moreover, due to jetty constraints at Port Qasim, the transport of PMG from Keamari to Port Qasim is also difficult.

In this scenario, he said, the supply chain of PMG and other fuels was increasingly at risk due to delay and crowding of vessels.

In an effort to tackle storage constraints which also led to the petrol crisis in January 2015, the Ministry of Petroleum and Natural Resources had asked PSO to enhance the PMG storage capacity to 150,000 tons – 100,000 tons in Karachi and 50,000 tons in the upcountry.

In response, PSO prepared a plan in July 2015 for enhancing the storage capacity to about 125,000 tons.

It asked the Ministry of Industries and Production to allow conversion of all non-dangerous product/heavy product storage tanks at Keamari Terminal-C (40,000 tons) into dangerous product tanks for storing PMG. Its approval has been received in two cases and another two are being reviewed.

Riaz Haq said...

Middle East’s Largest Air #Cargo Handler to Invest $18M to Double Capacity in #Pakistan By Dec 2017 - via @PKKHTweet

Gerry’s dnata, a 50/50 joint venture between Gerry’s and dnata, has announced its plans to invest $18 million in Pakistan.

The joint-venture, created in 1993, operates in as many as seven airports in Pakistan. Its main domain is handling cargo and luggage of 12 international airlines at Pakistan’s airports.

The company is aiming to double its working capacity by December 2017. For that purpose, they have invested $18 million. The amount will be utilized in buying ground service equipment as well as increasing storage capacity.

“We have placed Pakistan’s biggest order for ground service equipment worth $7 million and are investing another $11 million to double storage capacity of our warehouse at Karachi airport,” said Syed Haris Raza, Gerry’s dnata vice president.

Haris Raza estimates the cargo traded by air in Pakistan to about 10 percent of the total cargo. He also said that around 500,000 tons of cargo is transported by air freight in and out of the country, every year.

The Saudi Arabian Airlines, which operates over 40 flights a week to and from Pakistan, recently decided to outsource its ground handling services to Gerry’s dnata. The investment was made after taking that into consideration.

Riaz Haq said...

September 2016 gasoline (petrol) sales reach 563,000 tons in #Pakistan with rising car & motorcycle sales

KARACHI: Sales of petrol during September 2016 were recorded at 563,000 tonnes below the highest ever sales of 566,274 tonnes recorded in May 2016.

Out of 563,000 tonnes, the share of imported petrol was 422,000 tonnes while local refineries supplied 145,000 tonnes, Oil Companies Advisory Council (OCAC) CEO M Ilyas Fazil said.

He attributed brisk sales of petrol to rising sales of cars — including imported ones which are mostly below 880cc — and other petrol driven vehicles.

He said a number of car owners had switched over to petrol from CNG due to gas load shedding. Higher generator imports are also putting pressure on the higher usage of petrol.

Mr Fazil said country’s stocks of petrol now stand at 220,000 tonnes which are enough to meet the demand for next 12 days. A Pakistan State Oil tanker is currently discharging petrol at Keamari, he added.

Mr Fazil said stock movement of petrol from Karachi to upcountry supply areas continues unabated and “the country remains well supplied.”

Pakistan has achieved highest ever import of 484,207 tonnes of motor gasoline in July 2016.

Riaz Haq said...

#Renault #NISSAN to set up #automobile #manufacturing plant, create 10,000 jobs in #Karachi #Pakistan

The entry of the French automobile manufacturer Renault in the Pakistani market is being considered a good omen for the country’s automobile sector.

The entry of the world’s 10th largest automobile manufacturer, and the second largest automaker in France, would not only add fuel to the market competition but would also provide some 10,000 job opportunities in direct and indirect jobs for the Pakistanis, informed the Ghandhara Nissan Limited (GNL) to the Pakistan Stock Exchange (PSX).

"GNL is proud to join hands with Renault, one of the largest global automobile manufacturers and Al-Futtaim, UAE. The company will produce the vehicles at its existing assembly plant located at Port Qasim,” said Sheharyar Aslam, company secretary at GNL, reported local media.

The project will attract investment of around $100 million including approximately 60 percent foreign investment informed the company, calling the new auto policy “a move that will ensure an even playing field to new entrants,” added Aslam.

Previously, it was learnt that Renault is set to open its manufacturing plant by 2018, as it was announced by the government on Thursday. However, it remains to be seen how the European automaker would cope in the market dominated by Japanese titans i.e. Suzuki, Toyota and Honda.

Riaz Haq said...

The first #ElectricVehicle #charging station of #Pakistan inaugurated in #Lahore via @techjuicepk
The MENAP (Middle East, North Africa, Afghanistan, and Pakistan)’s very first ChargeNow electric charging station for hybrid cars is being inaugurated today in Pakistan. BMW ChargeNow station now available at Emporium Mall in Lahore.

Powered by Dewan Motors, the BMW importers in Pakistan, the inaugural ceremony of a electric car charging station is being held at a dedicated event here in Lahore. The Charging station is going to be the first of its kind in Pakistan, or for that matter, in the whole Middle East and Pakistan region.

The station is being launched within the ChargeNow network. The ChargeNow network is a service from BMW which is making BMW collaborate with the charge point operators from around the globe to form a network.

There are three different charging systems in the world. The CHAdeMO standard bears Asian origin. The SuperCharger standard of Tesla and the Combined Charging Standard (CCS) which is preffered by the manufacturers of US and German origin. Although it is still unclear that what system would this dock adhere to, we can anticipate that it could be a CCS system as BMW supports it. ChargeNow DC Fast charging is offered by BMW in cooperation with EVgo. Globally, BMW is also reportedly working on developing wireless inductive charging system.

For quite some time, Pakistanis are also witnessing an increasing number of electric cars. Although not fully Electric, but many hybrid fueled Prius from the Japan based manufacturer Toyota can be seen running on the Pakistani roads. BMW also offers many electric cars, driven by the BMW eDrive technology including the BMW i8.

The concept of Electric cars is relatively a new phenomenon. Although these cars have invaded developed markets and countries in huge numbers, Pakistan hasn’t seen a revolutionizing influx. As the energy crisis and the pollution levels have rose, the awareness on eco-savvy fuels have also seen a rise. Manufacturers from all over the world are putting their heads together to bring out electric cars which serve these purposes well.

Riaz Haq said...

#Pakistan eyes doubling #oil product storage capacity from 20 days to 40 days - Oil | Platts News Article & Story …

Pakistan's government is aiming to double the country's oil product storage capacity by inviting foreign and local companies to build additional facilities, a Ministry of Petroleum official said Thursday.

The country's current storage capacity equates to around 20 days of consumption at 1.2 million-1.3 million mt, and oil marketing companies typically maintain stock levels below that to minimize inventory losses due to price volatility, the official said.

The government will both invite privately-owned domestic and foreign companies to build additional storage capacity and ask oil marketing companies to increase their storage volumes, he said.

"We will provide tax benefits and companies could acquire loans at lower interest rates to hasten the process of increasing the capacity," the official added.

Pakistan's motor gasoline consumption has increased sharply in the past two years as the economy gathers pace, he said.

Consumption averaged 557,000 mt/month over July-October, up from 365,000 mt in fiscal 2015-16 (July-June) and 311,000 mt in fiscal 2014-15.

Raising storage capacity was necessary given the sharp increase in the consumption of oil products in Pakistan, especially gasoline, said Zeeshan Afzal, director of research at Insight Securities.

It would also help meet any shortfall in supply or delay in seaborne cargo arrivals, he said.

Pakistan's gasoline consumption rose 17.5% year on year to 4.385 million mt in fiscal 2015-16, while high speed diesel consumption rose 2.6% to 6.223 million mt and furnace oil sales fell 250,000 mt to 8 million mt, Oil Companies Advisory Committee data showed.

Riaz Haq said...

#SouthKorea's #Kia to start assembling #cars in #Pakistan: local partner | #automobiles #Karachi

ISLAMABAD – South Korean carmaker Kia Motor Co <000270.KS> will start assembling cars in Pakistan, according to a local partner that is planning to invest 12 billion rupees ($115 million) to set up a plant and manufacture the Kia vehicles.

Karachi-listed Lucky Cement , which is part of the vast conglomerate Yunus Brothers Group, said in a statement on Thursday it planned to set up a new company to start "manufacturing, assembling" Kia vehicles.

It was not clear how much capital Kia itself would invest in the Pakistani venture. Representatives for the South Korean company could not immediately be reached for comment.

Kia cars had been assembled by Pakistan in the past but disappointing sales led to a halt in manufacturing.

The new venture will also market and sell, besides import and export of, "all types of Kia vehicles, parts and accessories," Lucky Cement told the Pakistan Stock Exchange in a statement.

Kia's re-entry into Pakistan will boost government efforts to shake up the Japanese-dominated car market and loosen the grip of Toyota <7203.T>, Honda <7267.T> and Suzuki <7269.T>, who assemble cars in Pakistan with local partners.

Last month, French carmaker Renault agreed to invest in a new factory in Pakistan and official say they are talking to several other carmakers.

The government believes increased competition should bring down exceptionally high car prices in Pakistan, and in March it introduced a new auto policy favoring new entrants into the market by offering generous import duties.

The incentives have angered existing market players, some of whom have said publicly they should get similar terms.

Pakistan, with a population of nearly 200 million people, is a potentially huge market, but just 180,000 cars were sold in the 2014/2015 fiscal year. That compares with more than 2 million passenger vehicles a year in neighboring India.

Riaz Haq said...

#Suzuki Vitara 'game changing' light SUV launches in #Pakistan

Trailblazer in the small cars industry and producer of successful 4x4 range sports utility vehicles (SUVs), Pak Suzuki on Wednesday launched one of the lightest SUV’s named Vitara in Pakistan.

The 4th generation crossover Vitara has been introduced in Pakistan in response to the steadily climbing demand of SUVs as trends change in the local vehicle market. To this end, the top of the line Vitara GLX is available for Rs. 3,799,000 and the Vitara GL+ is available for Rs. 3,490,000

Before its launch in Pakistan, Vitara had already received an overwhelmingly positive response in Europe and has won several prestigious awards for its performance.

As far as security is concerned, Vitara also earned high ratings by credible by global inspectors.

Vitara comes with a 1.6L naturally aspirated engine which delivers a decent 118bhp at 6,000 revs. This may not sound much however the USP of this product is its weight. Weighing in at only 1185 kilos the

Vitara is one of the lightest SUV’s on offer. This not only allows it to carry more but also improves its power to weight ratio which stands in at 104 bhp/ton. Other big brands offering turbocharged engines may offer more power however the power to weight ratios remain well under 100 which clearly indicates how well the Vitara is when it comes to performance.

In addition to push start functionality, the Vitara comes standard with multi-function steering that features cruise control and audio control. The 6 speed Automatic transmission is enabled with a manual mode which allows the driver to have the manual changing sensation with the paddle shifters equipped on the steering wheel. The multifunction display shows the economy, mileage and range of the vehicle along with other variables. The air conditioning system of Vitara can be automatically controlled with input from outside temperature sensors.

The hi-spec Vitara also comes equipped with a panoramic sunroof which makes the drive even more pleasurable. Keyless entry is also enabled for the hi-spec variant along with automatic headlamps and wipers for driver’s convenience.

Riaz Haq said...

#Pakistan -An emerging market for #automobiles, #motorcycles, #auto parts, allied industries | Business Recorder

Pakistan is an emerging market for Automobile and Allied Industry. The Industry plays an important role within the large-scale manufacturing sectors in spurring economic growth having enormous investment opportunities with positive growth of 23.3% FY 2016. Pakistan is among the 40 automobile producing countries and 4 of the top 10 global car makers have plants in Pakistan.

The history of Pakistan's Automotive Industry is one of the oldest in the Asian countries. The Industry started semi knockdown production of trucks (Bedford) in 1949 by (General Motors, which marked the start of the Industry's history after the independence from British India. From this year onwards the Industry has not shown steady growth and thus lags behind and is overtaken by other countries in Asia such as China. Thailand and India which entered in the market in 1980s, consequently its positioning in the global market is also questioned.

The automobile industry in Pakistan includes companies involved in the production/assembling of passenger cars, light commercial vehicles, trucks, buses, tractors and motorcycles. The auto spare parts industry is an allied of the auto industry. The auto & allied industry form a major manufacturing sector in Pakistan.

Car sales hit to 180,079 units in 2015-2016 as compared to 151,134 units in 2014-2015, followed by a jump in truck sales to 5,550 units from 4,111 and bus sales to 1,017 from 569 units. The impressive figures of 2015-16 were backed by 50,000 units of Suzuki Bolan and Ravi sold under Punjab Taxi Scheme.

It is believed that car sales will grow at 5-year (2016-20) compound annual growth rate (CAGR) of 12 Pc due to improving law and order situation in the country, rising auto financing owing to 42-year low interest rates and increasing disposable income.

However, in the real substance, automobiles and the auto sector mean much more than this. It represents mobility, transportation and communication. It represents an industry that has a strong impact on a dozen other sectors may it be steel, vending, petrol or even employment. Hence auto sales reflect not only the basic human desire for mobility but these are also an important economic indicator. For the development of Automobile Sector Pakistan has many positive factors such as low cost of labor and access to entire Central Asia Market, but at the same time it has to address many shortcomings. Our Academia still has to look into the fact that here is not any public institute which offers majors in Automobile engineering. Moreover transfer of technology and local manufacturing of vehicle components are minimal. Although, the Automotive Parts industry has shown an active growth in the last many years and a variety of automotive parts have been developed locally but still the full implantation of deletion program has not yet been achieved due to vested interests of Vehicle Assemblers resulting the shortage of technology transfer in the vendor industry.

Pakistan has the 6th largest population while 50% of the total population is below 30 years in age. There are 90 million young potential consumers demand for cars and other passenger vehicles is being increased day by day but existing auto manufacturers and assemblers are unable to match the demand. In Automobile Sector such as buses, LCVs, trucks and jeeps & cars registered growth of 81.95%, 68.53%, 41.68% and 29.73%, respectively FY 2016. The only decline witnessed in the production of tractors which declined by 38.63%. After the oil & petroleum sector, auto industry sector in Pakistan is the second largest taxpayer in the country.

Riaz Haq said...

Energy-rich: K-P has 16 trillion cubic feet of gas deposits

Pakistan is producing only 96,000 barrels of oil per day (bpd), far lower than its demand for 400,000 bpd, which can mostly be met by energy-rich Khyber-Pakhtunkhwa (K-P) that has huge hydrocarbon reserves, says a high official of the province’s energy company.

“Khyber-Pakhtunkhwa has reserves of 16 trillion cubic feet of natural gas and 1.1 billion barrels of oil,” disclosed Nouman Akbar, Director General Human Resources, Corporate Affairs and Marketing of the Khyber-Pakhtunkhwa Oil and Gas Company Limited (KPOGCL).

Speaking to members of the Faisalabad Chamber of Commerce and Industry (FCCI), he said K-P was catering to 57% of Pakistan’s crude oil production and contributing 15% to the demand for natural gas. In addition to these, it accounts for 25% of the liquefied petroleum gas (LPG) production in the country.

Akbar said KPOGCL had been set up to step up work and explore the untapped oil and gas resources in order to make Pakistan self-reliant in energy production.

The government has allocated five blocks to the company, of which exploration work on the Lucky block is in full swing. “The Potohar region is rich in hydrocarbon resources and in many cases gas is oozing out of the soil,” he said.

Similarly, shallow digging also leads to the discovery of oil reserves. At least, 26 spots had been identified where oil and gas reserves were present in abundance and Akbar emphasised that efforts should be expedited in collaboration with the private sector to tap the resources.

He was of the view that at least $110 million were required from the private sector for development of the five exploration blocks. The amount could be made available in the form of shares, which could also be purchased by small investors, he said.

The K-P government has finished geological mapping of the province and is setting up a technical testing laboratory in Peshawar in a bid to conduct analysis of the soil data collected from various sites.

Earlier, soil samples were sent to laboratories of other countries that charged a fee in dollars, but now these tests could be conducted in the country with a nominal fee.

“Plans are also on the cards to establish a most modern refinery for the processing of crude oil. This refinery, expected to be operational within four years, will be able to cater to the needs of the country,” Akbar said.

Riaz Haq said...

Pakistan: Oil consumption, thousand barrels per day
: For that indicator, The U.S. Energy Information Administration provides data for Pakistan from 1980 to 2013. The average value for Pakistan during that period was 285.37 thousand barrels per day with a minumum of 104 thousand barrels per day in 1980 and a maximum of 434 thousand barrels per day in 2013.

Riaz Haq said...

90% of popultion in #Pakistan to have #3G, while 80% to have #4G access by 2020: GSMA #Broadband via @ProPakistaniPK

The Global System Mobile Association (GSMA) has estimated that 90% of Pakistani population will have access to 3G networks while 80% population will have access to 4G services by 2020.

Following heavy investments, 3G coverage in Pakistan — from all operators combined — reached 65% of population by the end of 2015, while it stretched to just under 75% of the Pakistani population by mid-2016, said the report that’s available with ProPakistani.

Key findings of report are:

3G coverage reached 75% of Pakistani population by mid-2016
4G coverage reached 18% of Pakistani population by mid-2016
There were 90 million unique subscribers in Pakistan by mid-2016, accounting for 47% of the population.
29% of Pakistani population use mobile internet (2G, 3G or 4G)
Mobile broadband uptake has been slow, mainly due to the fact that many citizens either cannot afford or do not know how to use the devices and services that deliver mobile broadband.
Pakistan still ranks low (as compared to neighbors) on enablers of mobile internet connectivity: infrastructure, affordability, consumer readiness and content
With time, Mobile broadband (3G and 4G) users in Pakistan are estimated to grow to 60 million by 2020
With continued investment – it is estimated that investments for 3G network expansion will reach $2.8 billion over the next four years (not including any additional spectrum costs) – and it will enable around 90% of the population with 3G access by 2020, said the report.

With only two operators, 4G rollout has expanded rather slowly and reached just 18% of the population by mid-2016. However, with Mobilink acquiring Warid and Telenor beginning 4G rollout in August 2016, 4G coverage will rapidly increase to 80% of the population by 2020.

Pakistan has an emerging digital industry, with mobile penetration and internet usage lower than many of its regional and economic peers. By mid-2016, there were 90 million unique subscribers in Pakistan, accounting for 47% of the population.

This is among the lowest penetration levels in South Asia, ahead of only India and Afghanistan. Further, less than 30% are users of the mobile internet (2G, 3G or 4G), ahead of only Afghanistan.

The report states that Pakistan has an emerging mobile industry: there are approximately 90 million unique subscribers in the country, accounting for 47% of the population. However, the enablers of mobile internet connectivity: infrastructure, affordability, consumer readiness and content, all rank low in Pakistan relative to its neighbors.

These enablers are critical to creating the right conditions of supply and demand for mobile internet connectivity to flourish. Pakistan therefore has one of the lowest penetration rates in South Asia, maintained in the report.

Riaz Haq said...

Pakistan's oil consumption in 2015 rose to 517,000 barrels of oil per day, up from 460,000 in 2014 and 438,000 in 2013, according to British Petroleum.

India's oil consumption in 2015 rose to 4.1 million barrels of oil per day, up from 3.8 million in 2014 and 3.7 million in 2013, according to British Petroleum.

Riaz Haq said...

#Pakistan #auto parts maker Loads Limited CEO more than bullish on nation's auto sector. #economy #manufacturing

Munir Bana advised many of his employees to buy the company’s shares as date of the book-building portion of the IPO neared. Many of them hesitated, but some of them opted to buy a personal stake in the auto part maker’s expansion plan.

Weeks later, many regretted their decision and those who bought the shares wished they had invested more.

After all, the share price of Loads Limited – the last listing on the Pakistan Stock Exchange in 2016 – jumped over 100% within a few weeks of trading. It is currently priced at Rs56.76 after starting on Rs34 and has also handed out 10% bonus shares and Rs1 as dividend to its shareholders.

“Our employees were hesitant to enter the stock market, but when I insisted many of them bought the company’s shares,” said Bana, the CEO of Loads Limited, one of the leading auto part makers in the country.

“Those who did not buy or purchase just a few shares now regret (their decision).”

Before offering 50 million shares through the IPO, the company first offered 2.5 million shares to its employees to engage them in the company’s future aggressive investment plans. The company eventually managed to raise Rs1.7 billion, an amount the company is now using for expansion of its production capacity.

Loads makes radiators, exhaust systems, mufflers, sheet metal components among other parts, and its clients include more than a dozen national and multinational companies engaged in the production of motorcycles, cars and heavy vehicles manufacturers.
Bullish on future growth

Bana, a Chartered Accountant, believes two developments have been positive triggers for the local auto industry — the China-Pakistan Economic Corridor (CPEC), a $55-billion investment and loan package that envisages changing the way China conducts trade, and the Automotive Development Policy (ADP) 2016-21 announced in March 2016.

Industry experts believe the auto sector would be a major beneficiary of CPEC, given the corridor’s vision of upgrading Pakistan’s road and highways network.

Officials say the country would need heavy vehicles not only during the construction phase, but also after the infrastructure projects are completed.

“New entrants and new models, as well as the increase in heavy vehicles, all speak for themselves,” he said.

Riaz Haq said...

#UK company to invest $400 million to build #cement plant in #Pakistan. #CPEC #economy

UK company, Asian Precious Minerals (APML), is to build a new cement plant in Pakistan, according to local news reports, with an investment of US$400 million.

The plant is to be built in the province of Khyber Pakhtunkwha in the northwestern region of Pakistan. The investment was announced at a meeting between APML officials, the Chief Minister of Khyber Pakhtunkwha, Pervez Khattak, and officials from the British High Commission.

“We are delighted to be investing in a new cement plant in Khyber Pakhtunkwha,” said Nadim Khan, CEO of APML. “We look forward to constructing a model, state-of-the-art and environmentally friendly cement plant.

Khan also praised the provincial government for improving the security situation in Khyber Pakhtunkwha, which borders Pakistan’s tribal region and Afghanistan, as well as its “pro-business stance and good governance policy”.

“This British investment will help create local jobs and stimulate the local economy,” said Chief Minister Khattak. “I am glad to see that the UK recognises the dramatic improvements in the province and I look forward to welcoming more British companies in future.”

Pakistan’s cement sector is currently booming with utilisation rates at cement plants reaching over 90%, according to the All Pakistan Cement Manufacturers Association. In the six months to the end of 2016, cement shipments in the country grew to 19.896 million t on the back of local demand growth of 11.07%.

“Pakistan growth is being driven by the Economic Corridor with China (CPEC),” according to cement industry analysts, IA Cement.

“The CPEC allocates US$11 billion to infrastructure projects and US$35 billion towards new power projects and has already led to a strong double-digit growth in cement demand in 2016.In 2017, many projects will either reach completion or be in the full construction phase [and] we therefore expect another year of strong growth with cement demand rising 8 – 10%.”

Riaz Haq said...

#India's #oil demand plunges the most in 13 years after #Modi's #demonetization … via @markets

India’s monthly oil demand fell the most since May 2003 as the government’s crackdown on high-value currency notes continued to reverberate through the country’s $2 trillion economy.

Fuel consumption fell 4.5 percent to 15.5 million tons in January from 16.2 million tons a year ago, the Oil Ministry’s Petroleum Planning and Analysis Cell said Friday. Diesel use, which accounts for about 40 percent of total fuel demand in India, dropped 7.8 percent to 5.8 million tons, the biggest decline since September. Gasoline consumption fell the most since June.
Expansion in the world’s fastest-growing major economy is under pressure after Prime Minister Narendra Modi in November withdrew high-value currency notes in a country where almost all consumer payments are in cash. Growth in gross domestic product may slow to 6.5 percent in the year through March from 7.9 percent the previous year, according to an Economic Survey presented by the finance minister’s advisers.

“This decline in demand is due to demonetization,” according to Tushar Tarun Bansal, director at Ivy Global Energy. “I would expect this decline to be a one off and dissipate from February. This should result in a slower demand growth for diesel in the first quarter in 2017.”

India imports more than 80 percent of its crude requirement and the International Energy Agency expects it to be the fastest-growing consumer through 2040. In most areas people are spending the same amount on fuel that they did before the money crackdown, although some rural areas and small businesses are still affected, according to Bansal.

Petcoke consumption fell for the first time in more than a year, declining about 9.9 percent to 1.95 million tons. Gasoline consumption fell 0.6 percent to 1.8 million tons. Liquefied petroleum gas use expanded 16.4 percent to 2 million tons, while jet fuel demand increased 17.8 percent to 627,000 tons.

Riaz Haq said...

An analyst said the new companies are joining the sector due to significant surge in demand for petroleum products and relaxation of conditions to become an oil marketing company in the country. The Pakistan Bureau of Statistics (PBS) reported a 50% increase in the import of petroleum products in the six months when Ogra issued new oil storage construction licences.

Pakistan has imported 11.76 million tons of refined and crude oil during July-December 2016 as compared with 7.82 million tons in the same period in 2015, according to the PBS.

Imported oil meets around 75% of the country’s demand, while the remaining is met through local production.

A local brokerage house reported the other day that oil marketing companies sold a total of 15.17 million tons in the first seven months (July 2016 to January 2017) of the current fiscal year 2017 – a year-on-year growth of 17%.

Moreover, in 2010, the then government exorbitantly relaxed the criteria for establishing a new oil marketing company. Accordingly, a new company in the making now may kick start its journey with minimum Rs100 million equity in hands and Rs500 million investment size.

Ghaznavi said Ogra has issued marketing licences to four companies since July 2016. “They have met the basic criteria of establishing storage facilities. Now, they would start opening petrol pumps in the areas and provinces where they have constructed the storage infrastructure,” he said.

Riaz Haq said...

#Pakistan's #oil demand jumps 13% on low prices, growing #economy - Oil | Platts News Article & Story. #energy …

Pakistan's oil consumption from July 2016 to February 2017 jumped 13% year on year, owing to lower petroleum product prices and higher economic activity, driven by GDP growth, foreign investment and greater political stability.

Pakistan's economy expanded 4.2% in 2016, foreign investment has continued to grow -- attracted by the multi-billion dollar China-Pakistan Economic Corridor project -- and improvements in the country's security front, following the government's efforts to combat terrorism, have also led to economic gains and additional investment.

Oil sales during the first eight months of the current fiscal year rose 13% year on year to 16.67 million mt, according to data from oil marketing companies and the Pakistan's Oil Companies Advisory Committee. Pakistan's fiscal year runs from July to June.

Motor gasoline sales increased to 4.36 million mt, up 20% year on year, while demand for high speed diesel increased 15% to 5.46 million mt, the data showed.

"Sales of both products moved north due to significantly lower prices and lower availability of compressed natural gas in the transport sector," said Muhammad Saad Ali, research analyst with Karachi-based brokerage Inter Market Securities.

The price of Pakistan's motor gasoline peaked in October 2013 at Rupees 114 ($1.1)/liter compared with Rupees 73/liter currently, while high speed diesel was at Rupees 117/liter versus the current price of Rupees 82/liter.

Sales of furnace oil also increased to 6.21 million mt from July 2016 to February 2017, up 10% year on year, driven by higher consumption by the power generation sector amid lower water levels and weak hydroelectric production.


Looking ahead, Pakistan's oil products demand is expected to see substantial growth over the next three years because of rising per capita income, higher automotive sales and growing foreign investment, according to data from energy experts and analysts.

"We believe that oil marketing companies' sales will increase in the backdrop of active transportation activity owing to projects near the China-Pakistan Economic Corridor, rising auto-financing loans and higher per capita income," said Ayesha Fayyaz, research analyst at Karachi-based brokerage Shajar Capital Ltd.

Gasoline demand is expected to increase to 10.9 million mt in the fiscal year ended June 30, 2020, from 5.8 million mt in the year ended June 2016.

The forecast is well above earlier estimates made by Pakistan's Oil Companies Advisory Committee, expecting gasoline demand to reach 8.78 million mt by 2019-20.

"Motor gasoline and high speed diesel sales will continue to be driven by improving macroeconomic factors, and rising sales of cars, bikes and rickshaws," analyst Umair Naseer of Karachi-based Topline Securities said.

"Under CPEC, there will be construction of road infrastructure and industrial units. This, we believe, will lead to an increase in transportation activity and higher gasoline and diesel demand," Naseer added.

The outlook seems less promising for furnace oil, Fayyaz said.

"We are conservative about the volumetric growth in furnace oil due to the expansion of the LNG and hydroelectric power sectors," she said.

Riaz Haq said...

#Pakistan Iron/Steel mfg output up 17.46%, electronics up 13.5%, pharma up 7.5%, autos up 6.9% in 7 months of FY17 …

In January, LSM output edged up 1.08 percent over the same month last year and rose 2.78 percent as compared to December 2016. Iron and steel production was also the highest (28.02pc) among all the main industries in January, closely followed by engineering products (27.69pc).

Engineering sector’s output, however, slid 0.54 percent in July-January, while textile sector – having the largest weight in the LSM basket – registered the lowest 0.29 percent growth during the period. Textile output marginally increased 1.23 percent in January.

The PBS data showed that electronics sector was the second after iron and steel in terms of growth in the seven months with 13.49 percent, followed by non-metallic products (7.78pc), pharmaceutical (7.57pc), automobiles (6.91pc), paper and paper board (6.61pc), food, beverages and tobacco (4.79pc) and rubber products (0.38pc).

The sectors, which posted decline in production in July-January FY17, included wood products (95.82pc), followed by leather products (17.54pc), chemicals (2.13pc) and coke and petroleum (0.67pc).

The LSM’s quantum indices are based on data from Oil Companies Advisory Committee (OCAC), ministry of industries and provincial bureau of statistics. Ministry of industries, which logs production stats of 36 items, recorded 3.78 percent increase during the July-January period of 2016/17.

The ministry recorded the highest production growth in tractors’ output. Total 25,983 were manufactured during the period, up 79.42 percent over the corresponding period last year. The second significant percentage growth (54.93pc) was recorded in production of trucks, followed by billets/ingots (29.65pc), buses (26.19pc), sugar (22.25pc) and motorcycles (20.09pc). Mills produced 2.893 million tonnes of sugars in July-January FY17 as compared to 2.366 million tonnes in the corresponding period of FY16.

Provincial bureau of statistics, which measures outputs of 65 products across the country, registered 3.48 percent rise in the period under review. Production of deep freezers jumped 52.64 percent to 53,509 units, followed by electric fans (27.94pc), refrigerators (22.59pc), woolen and carpet yarn (18.91pc), electric bulbs (16.37pc) and electric meters (15.71pc).

OCAC, which calculates production of 11 petroleum products, registered a marginal 0.29 percent increase in outputs. Production of liquefied petroleum gas rose 10.49 percent to 276.687 million litres. Motor spirits’ output soared 8.66 percent to 1.438 billion litres. Jute batching oil production increased 5.68 percent, followed by jet fuel oil (3.83pc) and high speed diesel (1.67pc).

Diesel oil production, however, fell 44.51 percent in July-January FY17 over the corresponding period of FY16, followed by solvant naptha (18.78pc), kerosene oil (13.27pc) and lubricating oil (2.49pc).

Unknown said...

Pakistan Zinda bad
Feeling proud.
Finally the best time is coming that we were waiting to many decades.i am 100% sure investment volume will increase more then 150 billion US dollars.and Growth rate will increase up to 8 % in 3 years.

Riaz Haq said...

#Pakistan: domestic demand for cement up 6.7% in Feb 2017. First 8-month FY17 domestic cement consumption up 9.12% …
Total cement sales in Pakistan in February 2017 were 3.435Mt, down by 0.41 per cent from 3.449Mt during the corresponding month of last year, according to the All Pakistan Cement Manufacturers Association (APCMA).

Domestic cement sales reached 3.181Mt, up 6.7 per cent YoY. While domestic sales rebounded in February, exports saw a 45 per cent drop. Exports reached 0.254Mt, representing a 45.7 per cent fall when compared with February 2016.

On cumulative basis, during the first eight months of the fiscal year the country dispatched 26.339Mt cement, showing an overall growth of 6.4 per cent over the corresponding period of last fiscal. During this period the domestic consumption increased by 9.12 per cent, but exports declined by 8.54 percent.

APCMA once again urged the government to take effective steps to stop the penetration of Iranian cement in Pakistani markets on the strength of significant under-invoicing and misdeclaration. A proper vigilance and accountability system needs to be put in place to stop cement smuggling into the country. Government should also increase import duty for import of clinker and cement to protect the local industry, said APCMA.

Riaz Haq said...

#India's fuel consumption grows at slower rate of 5% in FY17. #energy #oil

India's fuel consumption grew at a slower rate of five per cent in the previous financial year ended on March 31 as diesel demand slowed.

The world's third largest oil consumer saw demand for fuel and petroleum products rise to 194.2 million tonne in 2016-17, up from 184.6 mt in the previous financial year, according to the data from Petroleum Planning and Analysis Cell (PPAC) of the oil ministry.

The demand growth was slower than 11.5 per cent recorded in 2015-16 when consumption had jumped to 184.67 mt from 165.5 mt in the previous year.

Demand for diesel, the most consumed fuel in the country, grew by 1.8 per cent to 74.6 mt in 2016-17. Diesel consumption has soared 7.5 per cent in 2015-16.

Last financial year saw LPG sales move up by 9.8 per cent to 19.6 mt as government released two crore new connections for the poor.

Petrol consumption was up 8.8 per cent to 21.84 mt on the back of rise in two-wheeler and car sales. Jet fuel sales were up 12 per cent at 6.2 mt.

Kerosene demand however declined by a steep 21 per cent to 6.8 mt as government restricted supply of subsidised cooking fuel only to the identified needy. Also, LPG replaced it as a cooking fuel in many households.

During March, fuel demand fell 0.6 per cent to 17.35 mt.

Petrol sales were up 2.9 per cent at 2.1 mt but diesel consumption showed a marginal 0.3 per cent rise at 6.8 mt. LPG demand was too was up only 1.9 per cent while kerosene sales fell by a massive 26 per cent to 414,000 tonne.

While naphtha demand surged 1.8 per cent to 1.14 mt, sales of bitumen, used for making roads, was 12.2 per cent lower. Fuel oil use edged lower 23.4 per cent to 567,000 tonne in Mar

Riaz Haq said...

#China building boom to churn out #Pakistan's largest steel IPO with #steel output growing 23% in 2016. … via @markets

Agha Steel Industries Ltd. is planning Pakistan’s biggest-ever private sector initial share sale this year to help boost output as China funds more than $55 billion in infrastructure projects across the nation and a buoyant stock market spurs investor demand.

The Karachi-based company plans to raise as much as 10 billion rupees ($95 million) selling a 25 percent stake, Executive Director Hussain Agha said in an interview. The sale will be the largest since the 12-billion rupees government stake sale of Habib Bank Ltd. in 2007, the country’s largest IPO yet.

Steel and cement makers in Pakistan are expanding to meet demand as the “One Belt, One Road” trade route financed by China spurs construction. The nation’s economy has grown at about 5 percent annually since 2013, encouraging Agha’s peers including International Steels Ltd. and Aisha Steel Mills Ltd. to lift production.

“You need roads, sky rises and housing,” said Agha. “Pakistan’s steel industry is in an infancy stage and growing at a massive pace -- the whole environment will change.”

Read more: Chinese Largesse Lures Countries to Its Belt and Road Initiative

The company will use the funds for $50 million expansion that will triple output to 500,000 metric tons within two years. Production will then double to a million tons by 2023, he said. Habib Bank has been appointed financial adviser while Arif Habib Ltd. and BMA Capital Ltd. were picked as book runners for transaction.

Pakistan’s steel output grew 23 percent to 3.6 million tons in 2016, the biggest gain among 40 nations, according to the World Steel Association. Agha Steel expects construction-grade steel, such as rebars and wire rods, to grow as much as 12 percent annually for the next three years.

The construction sector expanded 13 percent in year ended June 2016, more than twice the pace in the previous 12 months, according to State Bank of Pakistan’s annual report. Rapid urbanization and rising income levels has left the nation with an annual shortfall of 500,000 homes, according to real-estate developer Arif Habib.

“Real-estate is the main engine for this growth, it has really picked up,” said Ayub Khuhro, chief investment officer of Karachi-based Faysal Asset Management Ltd., which has about 8 billion rupees in stocks and bonds. “The government is also willing to protect companies with anti-dumping measures.”

Riaz Haq said...

(Pakistan Cement) Industry data on Wednesday showed that local cement sales rose 10.4 percent to 36.4 million tonnes during the last fiscal year, while exports sharply fell 22.8 percent to 4.5 million tonnes.

Cement industry witnessed a 5.4 percent surge to 40.9 million tonnes in its sales during the last fiscal year of 2016/17 as local construction sector boomed to have broken its annual growth record of the past five years.

Analyst Nabeel Khursheed at Topline Research attributed the double digit growth in local sales for the second year in a row to ongoing residential construction projects and infrastructure development under China-Pakistan Economic Corridor (CPEC).

Khursheed said the government released Rs715 billion under public sector development programme for FY17, 90 percent of the total allocation, “which bodes well for the construction sector.”

Industry’s annual capacity utilisation reached 89 percent, a rate that was last achieved in the fiscal year of 2005/06. The capacity utilisation stood at 85 percent in 2015/16.

Construction sector reported 9.1 percent growth in FY17, while annual growth for the last five years (FY12-16) growth averaged at 6.3 percent. Credit offtake in construction sector was up 40 percent to Rs129 billion in the last fiscal year over the previous year.

Stock analyst said exports fell short of expectation due to manufacturers’ increased focus to local market, tapering export to Afghanistan, which consumes 40 percent of Pakistan’s cement outflows, and competition from the Iranian substitute.

Sales from cement factories located in north region increased 10 percent in FY17 to 29.817 million tonnes, while cement makers based in south recorded 11 percent growth in sales to 6.594 million tonnes.

Exports of north as well south cement mills decreased 16 percent to 2.889 million tonnes and 33 percent to 1.643 million tonnes, respectively.

In June, cement sales remained flat at 3.354 million tonnes as compared to the same month a year earlier, while export fell 10 percent over May.

“The decline in monthly sales figures is due to slowdown in construction activities during Ramazan coupled with the prolonged Eid holidays,” said Fatima Mohsin Ali, an analyst at Taurus Securities Ltd.

Generally, growing local demand gave a leeway to cement markers to increase prices and avert the pressure built due to high coal prices previously.

“Players were able to pass on the impact of federal excise duty (FED) by increasing prices by additional Rs15-20/bag thanks to robust demand outlook,” Khursheed said. “We believe if demand remains strong, pricing arrangement will continue.”

Government raised FED on cement to Rs1.25/kg from Re1/kg in the budget announcement for the current fiscal year of 2017/18.

International coal prices averaged $76/tonne as compared to its peak of $91/ton in November 2016.

Market researchers said cement mills based in north region factored in FED impact by pushing up prices by Rs15 to 20/bag to Rs545 to 575/bag. Prices in southern region are still hovering between Rs560 and 585/bag.

Ali expected an upward revision in cement prices by southern players too in the next one week, “settling in the range of Rs575 to 600/bag.”

Riaz Haq said...

#Pakistan #Oil Ports Face Facilities Congestion As Imports Soar

Pakistan’s oil importing facilities at Karachi Port and Port Qasim currently face congestion because of port constraints as well as traffic on roads and at sea, according to Dawn.

The situation was created by inefficiencies in port handling and trouble with onward transit to the north, according to an unnamed government official.

Constraints included handling traffic increases, limited storage at ports, inability to use an oil pier, and long oil testing and sampling times.

Pakistan's Government is discussing building a new terminal at Port Qasim, on receiving a report advising on the congestion issue.

The report uncovered a need for added tank storage at Keamari.

A ban on new tank build at Keamari as well as land availability for this magnitude of storage development is a major limitation for the port, it found.

Oil handling facilities at the Port Qasim are expected to reach capacity at 2019-20 and government should plan to build a new terminal.

Over six months, ships collectively had faced added waiting time amounting to 274 days at the outer anchorage and 63 days on berth.

Already Ministers from Malaysia and Pakistan have agreed to form a joint working group on maritime cooperation that could develop Pakistani port terminals for transhipment.

Port Quasim is expanding, however. Recently port Qasim in Pakistan inaugurated its first state-of-the-art coal, clinker and cement bulk terminal.

Riaz Haq said...

#Pakistan #cement capacity reaches 47 million tons. Utilization at 87% with shipments at 41 million tons. #CPEC

The capacity utilisation of the cement industry was high at 86.46 percent in July 2017, while the annual cement despatch capacity of the industry has increased to 46.94 million tons.

Local dispatches from units based in northern region of the country were 2.423 million tons while their export despatches were 0.338 million tons in July 2017 as opposed to 1.516 million tons local and 0.306 million tons export despatches in July 2016. The turnaround after a dismal performance in June 2017 took the industry by surprise and the sharp increase in despatches in July 2017 revived hopes for the sector. The despatches were achieved despite political turmoil in the country and unprecedented rains throughout the country which depicts the maturity of the construction sector of the country. South based mills also recorded a growth in local despatches which increased from 0.352 million tons in July 2016 to 0.483 million tons in July 2017; whereas, exports took a hit going down to 0.138 million tons from 0.159 million tons in July 2016. A spokesman of All Pakistan Cement Manufacturers’ Association said that the despatch figures for July are most encouraging. However, he said that this does not mean that the economic planners ignore the genuine difficulties faced by this sector.

He said the industry is performing in stiff regulatory environment and is only surviving because it has upgraded its technology that has provided it the strength to take any challenge head on.

Riaz Haq said...

Trafigura prompts Pakistan’s fuel retail monopoly to revamp

The government-owned Pakistan State Oil, which caters to almost half of the nation’s fuel needs, is looking to open 100 new convenience stores at some of its 3,500 fuel pumps after a successful trial programme two months ago, according to its chief executive officer Sheikh Imran Ul Haque.
Pakistan’s largest fuel retailer has a plan to entice motorists as its dominance is challenged by foreign competition: sell sugary drinks and snacks along with gasoline.
The government-owned Pakistan State Oil Ltd, which caters to almost half of the nation’s fuel needs, is looking to open 100 new convenience stores at some of its 3,500 fuel pumps after a successful trial programme two months ago, according to chief executive officer Sheikh Imran Ul Haque. PSO also wants to add as many as 70 new fuel outlets this year as companies, including Trafigura’s Puma Energy BV, enter South Asia’s second-largest economy.
“The whole game is bringing that customer in and emptying his pockets,” Haque said in an interview at the company’s headquarters in the port city of Karachi. The strategy is aimed at increasing the number of PSO customers from the current three million a day, he said.
Foreign entrants have been lured to Pakistan as a growing economy and a rising middle class creates demand for goods and services. Gasoline sales more than tripled to over 6.7mn tonnes in the fiscal year ended June since 2010, according to Shajar Capital Pakistan Pvt. With disposable income rising, the nation of more than 200mn people is also the world’s fastest growing retail market.
Trafigura’s Puma Energy plans to invest in Pakistani fuel retailer Admore Gas Pvt, while other local companies, such as Hi-Tech Lubricants Ltd and WAK Group, are planning to build gas stations for the first time. Puma, should the deal go through, will follow Vitol SA, the world’s biggest independent oil trader, which acquired a stake in Karachi-based Hascol Petroleum Ltd in 2015 and supplies most of its fuel. Vitol exercised an option to increase its stake in Hascol by a further 10% to 25% in July.
Shares rose as much as 1.6% to Rs435.99 in Karachi. The benchmark Karachi Stock Exchange was 1% higher as of 10am local time.
“We believe they are at inflection right now and hopefully going to grab market share from here,” said Suleman Rafiq Maniya, research head at Shajar Capital. “Hascol and the rest were taking the share basically the last three to four years.”
Haque, who joined PSO two years ago, is attempting to push the bureaucratic state-owned company into the future. The company expects to spend 40bn rupees ($379mn) in the next three years to add storage tanks, upgrade 200 of its oldest fuel stations – targeting those in tourist spots – while building about 70 new stations each year. In a first for the state-owned company, Haque also temporarily slashed prices to lure customers during the holy Islamic month of Ramadan this year.
Haque said PSO is now having to evaluate its fundamental sales options since half come from supplying furnace oil to power plants – a line of business that will be phased out by the end of 2019. Those plants will be replaced by gas- and coal-fired plants as Pakistan attempts to end crippling power shortages that have blighted industry and residents for decades, Prime Minister Shahid Khaqan Abbasi said in an August interview.
Haque expects industry furnace oil sales to decline by 0.5mn tonnes this fiscal year, but believes it will take about five-to-six years for the plants to go offline.
The company is also looking to get into refining in a nation that spent a fifth of its total import bill in the past fiscal year on petroleum products including petrol and diesel. Pakistan’s regulator in March approved the retailer’s plan to increase its stake up to 49% in Pakistan Refinery Ltd. The company will look at another joint venture refinery with a capacity of 250,000 barrels a day in five-to-seven years, said Haque.

Riaz Haq said...


With the commissioning of a new factory for mortar products and concrete admixtures, Sika has expanded its manufacturing capacity in Pakistan and is responding to the country's construction boom. Demand in the infrastructure and residential construction segments in particular is enormous. With its rapidly growing population of over 200 million, Pakistan is one of the world's most populous countries.

The new factory for concrete admixtures and mortars is located in Pakistan's second biggest city - Lahore, in the north of the country and one of the world's largest metropolitan regions. With the new investments and the simultaneous relocation of an existing mortar manufacturing facility from Lahore to Karachi in the south of the country, Sika is creating the basis for future growth in a booming market. It is estimated that the construction industry in Pakistan will grow on average by 12% a year between now and 2020.

Ivo Schädler, Regional Manager EMEA: "Our expansion of local production capacities is in response to existing bottlenecks. The new facility in the north and the expansion of our location in the south will enable us to continue to grow significantly faster than the construction market in Pakistan, and hence to strengthen our competitive position thanks to local production. Our focus in Pakistan is on the Concrete, Refurbishment and Flooring target markets, in which we want to continue driving forward our business activities."

Riaz Haq said...

Banks’ growing romance with car industry

Car financing in particular and consumer loans in general saw signs of resurging after a gap of several years for the first time in 2013-14 on the back of economic growth.

In July-September this year, banks’ auto loans almost doubled to Rs11.1 billion from Rs5.7bn in July-September last year.

This is just a continuation of the huge 60 per cent rise recorded in auto loans last fiscal year ending June, according to the latest data of the State Bank of Pakistan (SBP). In 2016-17, banks’ auto financing totalled Rs70.5bn against that of Rs44bn in the preceding fiscal year.

According to the Pakistan Automotive Manufacturers Association, auto sales also recorded a matching growth of 60pc, as 44,372 vehicles were sold during July-September 2017 against 27,630 in the same period of 2016.

Senior bankers say an increase in auto loans (and also in overall consumer finance) in the first quarter of the fiscal year is always good as during this period net credit to private sector businesses remains negative due to usual heavy credit retirement.

‘The acceleration in car loans is demand-driven and bulk of the demand is coming from people employing vehicles in Uber and Careem e-hailing services,’ says the head of consumer banking

During the first quarter of this year, “it’s the volume of incremental auto loans (Rs11.1bn) that is noteworthy”, says the head of a local bank.

Between July and September this year, net stock of loans to private sector businesses saw a decline of Rs2bn, latest SBP stats show.

“The acceleration in car loans is demand-driven and bulk of the demand is coming from people employing vehicles in Uber and Careem e-hailing services,” says the head of consumer banking at a local bank.

Increasing car deliveries to people associated with Uber and Careem are helping the creation of full-time jobs for some and part-time opportunities for others. That is good for the economy.

What is bad, though, is that in their quest for meeting a demand rush, car assemblers are delaying deliveries.

Or this is what bankers tell their customers after sanctioning auto loans at lightning speed and then failing in ensuring vehicle delivery from designated dealers for weeks, and in some cases for months. Failure in timely delivery, regardless of who is responsible, reflects poorly on the auto industry’s reputation.

As auto financing fever runs high, banks, in competitive frenzy, are over-committing to car loan seekers. After approving auto loans, many bank branches debit down-payments from customers’ accounts and also make these accounts operational, thus requiring borrowers to start paying loan instalments. But they leave the customers at the mercy of car dealers instead of ensuring car deliveries within the promised timeline.

Riaz Haq said...

'Spectacular' drop in renewable energy costs leads to record global boost
Falling solar and wind prices have led to new power deals across the world despite investment in renewables falling

Renewable energy capacity around the world was boosted by a record amount in 2016 and delivered at a markedly lower cost, according to new global data – although the total financial investment in renewables actually fell.

The greater “bang-for-buck” resulted from plummeting prices for solar and wind power and led to new power deals in countries including Denmark, Egypt, India, Mexico and the United Arab Emirates all being priced well below fossil fuel or nuclear options.

Analysts warned that the US’s withdrawal from the Paris climate change agreement, announced last week by Donald Trump, risked the US being left behind in the fast-moving transition to a low-carbon economy. But they also warned that the green transition was still not happening fast enough to avoid the worst impacts of global warming, especially in the transport and heating sectors.

The new renewable energy capacity installed worldwide in 2016 was 161GW, a 10% rise on 2015 and a new record, according to REN21, a network of public and private sector groups covering 155 nations and 96% of the world’s population.

The new record capacity cost $242bn, a 23% reduction in investment compared to 2015, and renewables investment remained larger than for all fossil fuels. Subsidies for green energy, however, are still much lower than those for coal, oil and gas.

New solar power provided the biggest boost – half of all new capacity – followed by wind power at a third and hydropower at 15%. It is the first year that the new solar capacity added has been greater than any other electricity-producing technology.

“A global energy transition [is] well under way, with record new additions of installed renewable energy capacity, rapidly falling costs and the decoupling of economic growth and energy-related carbon dioxide emissions for the third year running,” said Arthouros Zervos, chair of REN21.

Riaz Haq said...

Memon inaugurates Aisha Steel Mills’ expansion project
By Our CorrespondentPublished: December 31, 2017

Sindh Board of Investment (SBI) Chairperson Naheed Memon presided over a ribbon-cutting ceremony on Saturday to mark the beginning of construction on Aisha Steel Mills’ (ASM) expansion plans.

ASM, an Arif Habib Group company, has laid out plans to expand its capacity to a total of 700,000 tons per annum from its current capacity of 220,000 tons.

Addressing the ceremony, Memon said, “Initiation of expansion of Aisha Steel Mills reflects the confidence investors have in Sindh and Pakistan, strengthening our resolve to continue on this path of progress. “We are seeing expansion and new projects in almost all areas of manufacturing in Sindh,” the chairperson added, in a statement released by Arif Habib Corp.

She said that the board is committed to facilitate industrial investment in Sindh, which has the best infrastructure for setting up industries.

Also speaking on the occasion, ASM CEO Dr Munir said, “Our product mix, subsequent to the completion of expansion, will include 450,000 tons of Cold Rolled Coils (CRC) and 250,000 tons galvanised coils.”

He said, “The project is progressing on schedule and we are targeting phase-wise production to commence from the second quarter of the next financial year.”

On completion of expansion, ASM is expected to contribute over Rs10 billion to the revenues of the government.

Riaz Haq said...

Pakistan’s largest refinery project contract awarded to TechnipFMC

Pak-Arab Refinery Ltd (PARCO) has announced to award TechnipFMC the project management consultancy (PMC) services contract to carry out the management of pre-EPC activities for a grass root, fully integrated and deep conversion refinery to be constructed at Hub near Karachi, Pakistan.

The project will be managed and operated by a wholly-owned subsidiary, PARCO Coastal Refinery Limited (PCRL). When completed, the facilities will comprise a modern and deep conversion refinery with a capacity of 250,000 barrels per day, supported by associated marine loading facilities. It will be Pakistan’s largest refinery and serve the rapidly growing domestic markets for refined products.

The agreement was signed on May 16, 2018, by PCRL Chief Executive Officer Tariq Rizavi and TechnipFMC Senior Vice President – Project Management Consultancy Riccardo Moizo. Secretary Petroleum Division Sikandar Sultan Raja and PCRL chairman said, “Given the rapidly increasing energy and fuel demand of Pakistan, this project is of great importance to improve the fuel supply situation and will support the continued economic growth of the country.”

“This multi-billion dollar joint-venture project will further strengthen the relationship between our two brotherly countries. We believe, as the largest industrial project in Pakistan, it will deliver significant value for all stakeholders and provide many socio-economic benefits for the country,” said Mubadala Investment Company Executive Director Refining and Petrochemicals and PCRL Vice Chairman Khalifa Al Suwaidi.

“We understand the strategic importance of the long-term investment that PARCO is undertaking and are proud to be part of this project, which will help meet the fuel requirements of the country and contribute to the growth of PARCO and Pakistan”, said Riccardo Moizo.

Riaz Haq said...

#Pakistan domestic #cement consumption grows 13.8% in fiscal 2017-18, reaches 41 million tons. #CPEC #Housing #Infrastructure

Pakistan cement industry ended fiscal 2017-18 on a jubilant note, by posting yearly growth of 13.84 per cent with domestic consumption increasing by 15.42 per cent and exports inching up by 1.77 per cent. This is the first time in nine years that cement exports have registered a growth.

According to data released by All Pakistan Cement Manufacturers' Association (APCMA), during the fiscal year 2017-18, domestic consumption stood at 41.147Mt, an increase of 15.42 per cent from 35.651Mt in 2016-17. However, exports grew by only 1.77 per cent from 4.664Mt in 2016-17 to 4.746Mt during 2017-18.

In the month of June 2018 alone, the total cement dispatches were 2.979Mt. Out of this, local dispatches in the north were 2.158Mt against 1.897Mt in June 2017 reflecting growth of 13.77 per cent. Cement dispatches in the south amounted to 0.423Mt against 0.485Mt in June 2017, reflecting negative growth of 12.79 per cent. The exports from grinding facilities located in the north amounted to 0.183Mt against 0.223Mt in June 2017 and from the south was 0.215Mt against 0.122Mt in June 2017.

The industry dispatched 45.893Mt of cement in 2017-18 against 40.315Mt dispatched in 2016-17. This is the highest ever growth posted by the industry in its history. In fact, the past five years have been positive for the cement industry of Pakistan as annual dispatches increased by 12.46Mt from 33.43Mt in 2012-13 to 45.89Mt in 2017-18. The year 2017-18 has witnessed particularly buoyant times as dispatches grew by 5.5Mt.

The industry increased its production capacity by 6.58 per cent during 2017-18 and its capacity utilisation stood at 92.82 per cent, the highest since 1992-93 when its total production capacity was only 8.89Mt compared with 49.44Mt in 2017-18.

A spokesman for the APCMA said that the reinvigorated export activity is a welcome sign for the industry and that the decline in rupee value against the dollar is finally restoring lost competitiveness of the cement sector in the global markets. However, the APCMA said that rising input costs, especially coal and fuel prices, are hurting the local industry.

Riaz Haq said...

Pakistan’s energy-related imports increase 34% to $1.27b

Pakistan’s import bill for energy products increased 34% to $1.27 billion, which amounts to one-fourth of the total import bill in July. The rise is due to uptick in demand, global surge in oil prices and rupee devaluation.

Cumulative import of petroleum products and gases stood at one-fourth, or $947 million, in the same month of the previous year, according to the Pakistan Bureau of Statistics (PBS).

“Imports have (partly) increased due to surge in demand emerging from power houses and rising number of cars on the roads,” Sherman Securities’ analyst Sadiq Samin said in a comment to The Express Tribune.
PBC urges Asad Umar to focus on ‘Make in Pakistan’

Power production increased 10% to 13,751 gigawatt-hour (GWh) in July 2018 compared to 12,497 GWh in the same month of the previous year, according to National Electric Power Regulatory Authority (Nepra).

Similarly, the sales of locally assembled cars surged 9% to 21,344 units in July on year-on-year basis, according to Pakistan Automotive Manufacturers Association (PAMA).

Additionally, the notable rebound of 36% in international oil (Brent crude) price to $77.85 per barrel and 19% devaluation of the rupee during the last 12 months have also contributed heavily to elevating the energy import bill in July, the analyst said.

Pakistan excessively relies on energy imports in absence of local oil and gas production. It meets over 70% of its energy demand through imports, according to an estimate.

LNG import

Import of liquefied natural gas (LNG) grew significantly by 144% to $332 million in the month compared to $136.2 million in July 2017 due to inception of several mega LNG-fired power houses in the last one year, according to the PBS.

Pakistan swiftly established LNG-based power plants following the formation of the import infrastructure in the last few years. At present, two LNG import terminals (Engro Elengy and Pakistan LNG) are operational with an installed capacity of 600mmcfd each.

The projects of a cumulative installed capacity of around 4,000 megawatt-hour have also replaced a number of oil-fired power plants.

The shift in power production to gas from furnace oil and diesel also reflected in the import data. The import of refined products dropped 27%. In value terms, it reduced 4% to $556.2 million in the month on a year-on-year basis.

Industry officials including Pakistan State Oil (PSO) CEO and MD Sheikh Imranul Haque have linked the drop in import of refined products to the closure or reduction in the use of oil-fired power plants in the country.

On the other hand, demand for other refined products like petrol and diesel remained on the higher side with improved performance of large-scale manufacturing industries like fertiliser, automobile, cement and steel and increase in number of cars on the roads.

Moreover, the trend of increase in crude oil import maintained its uptrend. The import of crude oil surged 4.5% to 0.71 million tons, or 70% to $332 million, in the month.

Samin said the increase in crude’s import may be seen due to expansion of Attock Refinery.

In addition, the increase may also be linked with restoration of operations at the country’s single largest oil refinery Byco Petroleum Limited in August 2017.

The 120,000-barrel-per-day refinery had to suspend its operation after catching fire years ago.

Riaz Haq said...

#Pakistan Total Primary #Energy Consumption in 2016: 83.2 million tons of #oil equivalent (MTOE), up 7.6% from 2015. Source: BP Statistical Review of World Energy …

Riaz Haq said...

Pakistan oil consumption 588,000 barrels per day in 2017

Pakistan gas consumption 3.94 billion cubic feet per day

Riaz Haq said...

#UAE to invest $5 billion in #oil #refinery project in #Pakistan by end of 2019. #FDI #Energy

In an interview with the publication, UAE Ambassador to Pakistan Hamad Obaid Ibrahim Salem Al-Zaabi said: "We are going to launch very soon one of the biggest investments in a refinery project in Hub. It is going to be a $5 billion investment between Mubadala Petroleum Company of Abu Dhabi, Pak Arab Refinery Limited (Parco) and OMV [OMV Pakistan Exploration Gesellschaft]."

According to Arab News, Al-Zaabi said the project was a result of "extensive discussions" between Mubadala Petroleum, Pakistan's petroleum ministry as well as Parco and OMV.

"This project will show the strength of UAE-Pakistan relations and how the UAE is focusing on investment in and future of Pakistan," he was quoted as saying, adding that the two nations were moving forward on new projects and investment.

The UAE ambassador said that the two governments were "finalising the minute details of this refinery project".

"Many meetings have taken place regarding this project," he added, sharing that a UAE delegation, headed by the chief executive officer of Mubadala Petroleum, had met with the Board of Investment (BoI) chairman and the petroleum minister during a visit to Pakistan a few months ago.

"They have discussed this project in detail. We are going to launch it very soon," Al-Zaabi said.

Riaz Haq said...

Pakistan Energy Mix: Overview of Gas Sector (Upstream)
Pakistan imports almost 80% of its energy sources (oil, gas and LNG). GVS brings out a detailed report on Pakistan’s upstream sector to analyze country’s mammoth challenges. It examines how innovative policy making, better management and vision can still make a difference.

The country used 28.1 million TOE of petroleum products in FY18, with 85 percent imported. Currently, Pakistan has a total of 9 million gas consumers in the country, with an annual addition of 0.5 million consumers. Sindh by far has the country’s largest gas production at 943,644 MCFt (65%), Balochistan at 310,535 MCFt (22%), KPK at 151,178 MCFt (10%), and Punjab 53,580 MCFt (3%).

Sindh also has three of the current largest fields producing gas, Mari, Qadirpur, and Kandhkot. Sui gas field in Balochistan, discovered in 1952, was Pakistan’s first and largest gas field found so far, had around 13 TCF of gas. It currently only has one TCF remaining and is nearing the completion of its life. These five fields represent over 50 percent of Pakistan’s recoverable reserves.

Gas Consumption
Pakistan has experienced major energy crises in the past decade as a result of expensive fuel sources, suffering from chronic natural gas shortages in the winter and electricity shortages in the summer, all exacerbated by the circular debt, and insufficient transmission and distribution systems over the past several years.

Roughly, 50 percent (about 105 million people) of Pakistan’s population still use biomass for cooking because of low electricity and gas supply. Natural gas plays a significant role in the energy matrix of Pakistan. In 2018, natural gas accounted for an estimated 30 percent of Pakistan’s primary energy consumption, petroleum at 35 percent, and coal at 16 percent.

Pakistan is the 20th largest gas consumer of the world, with an established natural gas industry since the 1950s. However, ironically Pakistan’s gas consumption is nearly the same as in France, which is a developed and industrialized country [with a GDP ten times bigger than Pakistan].

Natural gas consumption has increased from 1,377,307 MMCFt to 1,454,697 MMCFt. RLNG imports have increased to 313,902,345 MMBtu. There was a time when Pakistan was self-sufficient in gas. However, increased domestic demand over time, fueled by cheap mispricing of the natural resource, creation of the CNG motor vehicle industry, lack of alternative fuels, and diminishing production have resulted in increased amounts of imported gas.

In FY18, approximately 7.7 million TOE LNG gas was imported. Currently, Pakistan has over 9 million domestic consumers of gas, and these are growing by over 8% each year. The majority of domestic consumers, around 5.4 million, are based in Punjab; that account for 60 percent of the total domestic gas consumers, Sindh has 35 percent of the country’s domestic consumers at 2.6 million.

Riaz Haq said...

With a big part of the fragmented industry operating in the informal sector, it is almost impossible to estimate the exact domestic demand and supply ratio. But the industry estimates that the per capita steel consumption, according to the Pakistan Credit Rating Agency, has increased to over 43kgs (from less than 25kgs a decade back). Yet the per capita consumption remains one of the lowest in the world against the world average of over 240kgs.

The steel demand has picked up sharply since June following the resumption of business activities after the decline in the Covid-19 infections in Pakistan. The unaudited accounts of some of the major companies listed on the Pakistan Stock Exchange (PSX) for the first quarter of the ongoing financial year to September confirm that the industry is on the path of quicker recovery from the severe pressures of the International Monetary Fund mandated economic stabilisation policies exacerbated by the negative impact of the coronavirus pandemic in the last quarter of the previous fiscal year.

The accounts show that the companies have recorded better top-line growth this year so far when compared with their performance during the corresponding period last year. The bottom lines of the steel manufacturers, who had suffered significant losses last year, are also turning green from red. The rebound in the fortunes of the steel firms is ascribed mainly to the pent-up demand unleashed by the Covid-19 economic stimulus package implemented by the State Bank of Pakistan (SBP), including the reduction of 6.25 percentage points in the policy interest rate to seven per cent, to fight off the effects.

“The impact of the construction and housing package announced by the government is yet to come on the steel industry,” Meher Kashif, the managing director of Model Steel, one of the largest steel companies with a manufacturing capacity of 600,000 ton, asserted during an interview with this correspondent. “The demand in the construction sector, which feeds into 35-40 allied manufacturing industries and services, remains subdued so far. The reasons are as clear as day: the public sector development spending has been slashed substantially; no new industrial project is being undertaken, and no large commercial project is coming up,” he elaborated.

Speaking about Prime Minister Imran Khan’s generous housing initiative, Kashif explained that the measures announced favoured the large corporate companies, which do not see much demand for housing in the market at this moment. The smaller contractors, who work with a capital of up to Rs100 million, do not find the package attractive enough because of requirements of documentation, he added.

“The developers and investors have used the construction package to purchase land but nobody has until now announced any major scheme. That’s why you see the land prices falling again. The government needs to find a solution to support the undocumented small builders who operate in the informal economy to construct one or two houses a year and inspire confidence and bridge the trust gap or the success of its housing initiative.”

The raft of lucrative policy, fiscal, and monetary measures announced to push-start construction and housing include no-question-asked-on-source-of-income-amnesty-scheme on the investments made in the construction industry before the end of 2020, and tax cuts and exemptions for real-estate developers and builders. These incentives were topped up later with cash support of Rs300,000 each on the first 100,000 housing units in the price range of under Rs2.5m (this does not include the cost of land) and subsidised mortgage finance for 10 years on the construction of 5-marla and 10-marla housing units.

Riaz Haq said...

#Pakistan’s #cement sales in the 2nd quarter of fiscal year 2020-21 touched an all-time high of 15.1 million tons, up 11% quarter-on-quarter as well as year-on-year. In the first half of FY21, cement sales rose 16% year-on-year to record 28.6 million tons

Pakistan’s cement sales in the second quarter of fiscal year 2020-21 touched an all-time high of 15.1 million tons, up 11% quarter-on-quarter as well as year-on-year, according to a report of Topline Securities.

In the first half of FY21, cement sales rose 16% year-on-year to 28.6 million tons, it revealed.

“Cement prices will register a further hike as capacity utilisation is increasing robustly,” Topline Securities’ Deputy Head of Research Shankar Talreja told The Express Tribune. “The power to influence prices is with manufacturers at present.”

Industry utilisation based on total sales came in at 91%, adjusted for closed capacities, in the second quarter (Oct-Dec) of FY21. Based on just local sales, the utilisation stood at around 77% with 86% in the northern region and 48% in the southern region.

The strong growth in cement sales could be attributed to economic recovery in the face of low interest rates, announcement of a construction package, allocation of banking sector liquidity to the construction and housing sector and beginning of construction of dams, he said. In the last three months, housing loans increased by Rs43 billion, he added.

“During the outgoing quarter, coal prices surged to an average of $60 per ton compared to $55 per ton about six months ago,” he said. “As a result, fuel cost per ton for major cement companies is expected to increase by 10% quarter-on-quarter.”

To pass on the impact to consumers, the cement producers hiked prices in December 2020 by around Rs20 per bag in the north to Rs570. JS Global analyst Arsalan Ahmed told The Express Tribune that steel prices were on the rising trend.

Pakistan Large-Scale Steel Producers (PALSP) Secretary General Syed Wajid Bukhari said due to shortage of scrap globally, its price had risen above $500 per ton and as a result, rebar rates were increasing in Pakistan. “Local companies, however, are working at margins of less than 5%,” he said.

He added that Pakistan was almost totally dependent on imported raw material for producing steel and requested the government to take urgent measures to contain the impact of price hike on the mega infrastructure projects as well as other ongoing construction projects.

The industry suggested to the government to remove sales tax for some time and reduce the cost of electricity to offset the impact of soaring raw material prices, which was a global phenomenon, he said.

However, the government did not take any measures to address the situation, he lamented.

“We believe that the steel sector has been ignored as it is not receiving much-needed attention from the government,” he said.

Recently, the demand for steel picked up but margins remained very low and most of the large units were working at 50-60% of their capacity, he said.

“In recent months, steel prices have increased by 55% in India,” he said. “In the US, prices are likely to touch $1,000 per ton, which is twice the rate being charged a few months ago.”