Tuesday, January 18, 2022

Pakistan Economy "Not in a Good Place"? Atif Mian's Gloom Justified?

Pakistani-American economist Atif Mian has recently analyzed Pakistan's economy in a series of tweets. He has said "Pakistan's economy is not in a good place", adding that the nation's "per capita income has not risen in 3 years (in fact down slightly)". He has particularly mentioned the country's "exaggerated external demand driven by its rentier economy", "flawed energy policy" and "a broken economic decision system" among the main causes for poor economic performance.  Is Atif Mian's diagnosis correct? Is the official reported data Atif Mian using accurate? What is the current PTI government doing or not doing to correct the problems identified by Mr. Mian? Let's try and assess the situation. 

Economist Atif Mian's Tweet on Pakistan Economy


Per Capita Income:

Pakistan's officially reported GDP and per capita incomes are grossly understated. These are based on the last economic census that was done from April 2003 to December 2003 and published in 2005. The last agriculture census was in 2010, and livestock census in 2006, according to Dr. Ishrat Husain, former governor of The State Bank of Pakistan. The country's economy has changed significantly since then, adding several new economic activities while others have become less important.  For example, the Quantum Index of Large Scale Manufacturing (QIM) with 2005-06 base year gives a weight to textiles of 20.9% (Yarn 13.7 and cloth 7.2). But the textile industry has moved up to higher value added products as reflected in its exports. The value added textiles (non-yarn and non-cloth) now make almost 80% of the total textile exports. These changes are not reflected in current GDP calculations. 

In its 2014 annual report, the State Bank of Pakistan talked about a number of new sectors that are either under-reported or not covered at all: "In terms of LSM growth, a number of sectors that are showing strong performance; (for example, fast moving consumer goods (FMCG) sector; plastic products; buses and trucks; and even textiles), are either under reported, or not even covered. The omission of such important sectors from official data coverage, probably explains the apparent disconnect between overall economic activity in the country and the hard numbers in LSM."

Bangladesh just rebased its GDP in 2020-21 to 2015-16. This has boosted its per capita income by double digits for every year since 2015-16.  Bangladesh's per capita income for the 2015-16 fiscal year has now gone up to $1,737 from $1,465 in the old calculation. For the 2019-2020 fiscal, the per capita income has gone up to $2,335 from $2,024.  The new GDP estimate covers 21 sectors, up from 15 sectors previously.  India last rebased its GDP in 2015, a change that bumped up its per capita GDP by double digits. Nigeria's last rebasing in 2012 increased the size of its economy (GDP) by nearly 90%. Pakistan's current base year is 2005-6. Rebasing which is now long overdue will almost certainly increase Pakistan's per capita income by double digits. 

In this age of big data, it is important for Pakistan to ensure that its bureaucracy at Pakistan Bureau of Statistics (PBS) keeps the national economic data as current as possible. PBS should release the results of the Census of Manufacturing Industries CMI 2015-16 and the finance ministry should rebase Pakistan's economy to year 2015-16 to better reflect the current economic realities. This data is extremely important for businesses, investors, lenders and policymakers. 

Energy Mix:

It is true that Pakistan has relied on imported fossil fuels to generate electricity. The cost of these expensive imported fuels like furnace oil mainly used by independent power producers (IPPs) has been and continues to be a major contributor to the "exaggerated external demand driven by its rentier economy" referred to by Atif Mian. However, Pakistan has recently been adding hydronuclear and indigenous coal-fired power plants. 

Pakistan Power Generation Fuel Mix. Source: Third Pole


Construction of a 1,100 MW nuclear power reactor K2 unit in Karachi has been completed by China National Nuclear Corporation, according to media reports. A similar reactor unit K3 will add another 1,100 MW of nuclear power to the grid, bringing the total nuclear power installed capacity of Pakistan to 3,630 MW (12% of total power) by the end of 2022.  Hualong One reactors being installed in Pakistan are based on improved Westinghouse AP1000 design which is far safer than Chernobyl and Fukushima plants.  In addition, Pakistan is also generating  9,389  MW (about 28% of total power) of low-carbon hydroelectric power in response to rising concerns about climate change. 

Hydroelectric dams contributed 37,689 GWH of electricity or 27.6% of the total power generated, making hydropower the biggest contributor to power generated in the country. It is followed by coal (20%), LNG (19%) and nuclear (11.4%). 


Cost Per Unit of Electricity in Pakistan. Source: Arif Habib

Nuclear offers the lowest cost of fuel for electricity (one rupee per KWH) while furnace oil is the most expensive (Rs. 22.2 per KWH). 


Pakistan Exports Trend 2011-21. Courtesy of Ali Khizer


External Accounts Balance:

Pakistan is the world's sixth largest labor exporter with nearly 10 million Pakistanis working overseas. These workers sent home $31 billion in remittances calendar year 2021 (CY2021), up 19% from CY2020. In addition, Pakistan merchandise exports hit a new record of $28.3 billion in CY2021. Together, Pakistan's merchandise exports and overseas worker remittances added up to nearly $60 billion in 2021. 

Pakistan Textile Exports Trend 2011-21. Courtesy of Ali Khizer



Exports of textiles that make up the bulk of Pakistani exports jumped 32% from $13.1 billion in CY2020 to $17.3 billion in CY2021. The country's technology exports soared 40% to $2.5 billion in CY2021.  “So far, (the) country’s exports of non-traditional products, including information technology, have grown by 60 percent in the last four months," says Special Assistant to the Prime Minister on Commerce and Investment Abdul Razak Dawood. 

Pakistan's Higher Value Added Exports. Source: Dr. Ishrat Husain


Pakistan's textile manufacturing and exports are moving from yarn and fabric toward higher value added products like readymade garments. The value added textiles (non-yarn and non-cloth) now make almost 80% of the total textile exports, according to Dr. Ishrat Husain. 

Pakistan's Current Account Balance vs International Oil Prices. Source: Arif Habib


Recent history shows that Pakistan's current account deficits vary with international oil prices.  Pakistan's trade deficits balloon with rising imported energy prices. One of the keys to managing external account balances lies in reducing the country's dependence on foreign oil and gas. 

Summary:

Professor Atif Mian's criticism of Pakistan's economy is partially valid but his pessimism is unwarranted. He is working with flawed data based on an economic census conducted more than 15 years ago.  This data does not truly reflect current economic activities, per capita incomes and productivity. Pakistani bureaucracy needs to ensure that the underlying data for GDP and productivity is regularly updated to inform businessmen, investors, lenders and policymakers. Pakistan is also significantly boosting its foreign exchange earnings through exports and remittances from overseas workers. The issue of reliance on expensive fossil fuel imports is also being addressed by building more hydro, nuclear and renewable energy. At the same time, indigenous coal-fired power plants are also being added. Unlike Atif Mian, I do see light at the end of the tunnel. 

Related Links:


Haq's Musings

South Asia Investor Review

Pakistan Among World's Largest Food Producers

Naya Pakistan Housing Program

Food in Pakistan 2nd Cheapest in the World

Indian Economy Grew Just 0.2% Annually in Last Two Years

Pakistan to Become World's 6th Largest Cement Producer by 2030

Has Bangladesh Surged Past India and Pakistan in Per Capita Income?

Pakistan's Computer Services Exports Jump 26% Amid COVID19 Lockdown

Coronavirus, Lives and Livelihoods in Pakistan

Vast Majority of Pakistanis Support Imran Khan's Handling of Covid19 Crisis

Pakistani-American Woman Featured in Netflix Documentary "Pandemic"

Incomes of Poorest Pakistanis Growing Faster Than Their Richest Counterparts

Can Pakistan Effectively Respond to Coronavirus Outbreak? 

How Grim is Pakistan's Social Sector Progress?

Double Digit Growth in Pakistan's Energy Consumption Confirms Economic Recovery


Trump Picks Muslim-American to Lead Vaccine Effort

COVID Lockdown Decimates India's Middle Class

Pakistan to be World's 7th Largest Consumer Market by 2030

Pakistan's Balance of Payments Crisis

How Has India Built Large Forex Reserves Despite Perennial Trade Deficits

Conspiracy Theories About Pakistan Elections"

PTI Triumphs Over Corrupt Dynastic Political Parties

Strikingly Similar Narratives of Donald Trump and Nawaz Sharif

Nawaz Sharif's Report Card

Riaz Haq's Youtube Channel


40 comments:

SAMIR SARDANA said...

How can statistical data of GDP,be taken as base,when the informal GDP is 30-50% of the official GDP - and then be used,to make surmises,on Per capita ?

In such nations - per capita GDP,means nothing !

Here we need to calculate per capita expenditure,over time - and if it is rising,on certain components - it is a proxy to,per capita income.

If in 20 years,ECO-NO-MISTS say that the Per capita is the same (almost) - that is obviously bunkum - as oil and food costs,have risen by at least 2-300%,and so,incomes would have risen by 100% - as THEY ARE STILL ALIVE.

The problem is not statistics - it is the ECO-NO-MIST !

If Pakistan opens its doors to PRC Nuclear,Solar and Wind-On and Offshore,oil imports by Pakistan could be cut - drastically.

Such obvious facts are known to all - but geopolitics,has made it imperative - and that takes out the political risk,from this matrix - and that means that,the TUNNEL WILL BE FULL OF LIGHT !

EVEN PERSIAN HYDRO AND THERMAL POWER,FROM THE PERSIAN GRID,CAN CUT PAKISTAN OIL IMPORTS TO MIL.HERE AGAIN,ONCE PAKISTAN REALISES THAT, IT HAS NO FUTURE WITH THE US - THE PATH TO SALVATION WILL BE CLEAR ! REALISATION TAKES TIME !

JIYE JIYE PAKISTAN !

Riaz Haq said...

#Pakistan president calls for National #Blockchain Strategy. Dr. Alvi discusses problems Pakistan faces with #data silos across gov't functions, & supports formation of a National Blockchain Strategy for his country, starting with universities. - CoinGeek https://coingeek.com/pakistan-president-calls-for-national-blockchain-strategy-after-meeting-with-bsv-blockchain-delegation/


Leading the delegation is Founding President of BSV blockchain’s association, Jimmy Nguyen, who will spend a week in Pakistan with the delegation as part of a series of meetings in Islamabad and Karachi with senior government ministers and leaders from private business.

“This week, our Association has had the privilege of bringing a delegation of blockchain experts to Pakistan to learn how BSV can help the country harness the power of the blockchain – for its government agencies, enterprises, start-up ventures and developers,” Nguyen told CoinGeek. “Having attended sit-down meetings with the President of Pakistan Dr. Arif Alvi and the Minister of Science and Technology Mr. Shilbi Faraz on Monday, today’s Pakistan Blockchain Summit is a great chance to meet and hear from the dedicated and highly engaged blockchain community in the country.”


The meeting was broadcast in a news report on Pakistan Television Network PTV, and the president’s official Twitter account also posted a picture of the participants in a series of tweets about the issues discussed.


Dr. Alvi mentioned concerns he has with a lack of data-sharing between government departments, and discussed how blockchain could be used for digital identity and ID management. It could also make these functions more transparent and reduce corruption in both government and business, he said. The president also noted that Pakistani technology talent was driving some of the world’s largest companies, and hoped that local IT startups would continue to attract investment.

Nguyen spoke about how blockchain, and particularly BSV, could be used in various functions across the Pakistani economy, including: banking and payments, fintech, digital advertising, big data management, customs, voting, health care, as well as environmental and governance issues. He also mentioned the work BSV industry representatives are doing with other governments around the world to improve services.

Dr. Alvi stressed that a “systematic and inclusive approach” was required to transition his country’s data management to the blockchain, which included building awareness of what the technology could do and how business and government could use it to their benefit.

He also called for more training and development in other “fourth industrial revolution” technologies such as artificial intelligence and cyber security. Nguyen said his organization was willing to assist in training employees at all levels of government and the public service.

BSV blockchain’s associaiton has led a drive into South Asia, the Middle-East and Africa, meeting with several government and business representatives across the wide and populous regions. Reflecting the potential for growth in this part of the world, the association has launched a BSV Hub in Dubai led by Muhammad Salman Anjum of InvoiceMate to educate and form partnerships with business and other institutions that could benefit from BSV blockchain technology. There is also an ongoing pilot program with the government of Tuvalu that could see several government and banking functions go completely digital.

With its unbounded capacity for processing and storing massive amounts of data securely, BSV would be the most logical blockchain to choose for any organization looking to incorporate blockchain technology. BSV, using Bitcoin’s original technology and permanent protocol rules, is capable of replicating the functions of today’s internet, but in a way that timestamps and logs all information as it changes, as well as allowing users to “own” and control levels of access to their data.

Zia said...

Atiaf sahab is right

Pakistan per capital and growth have remained stagrant due to

1- lack of investment, poor savings and lack of external flows due to its juck credit rating due to multiple near defaults/IMF loans due to poor external sector(CAD)
And
2- lack of revenue mobilization due to inabaility to effectively tax and document most of the economy due to political and technical reasons

I dont see any of the above changing especially since these are widely unpopular and a new populist govt in 2023 will roll back any reforms that were tried (& mostly failed in execution) by the current govt
This is why despite huge potential foreign investors stay away from countries like pakistan & nigeria and are heading to vietnam, india and bemgaldesh

They know that public support is with elite corruption and fixing this is unlikely

Moh said...

Tax collection and digitalization of economy must be the top priority of every government.
Government approved POS system has to installed in every big and small retailers and all shops in the malls.
Government must engage district government to introduce a system to monitor basic commodities prices.
New startup initiative by current government will slowly improve economy.
New improve and robust judicial system has to be introduced to resolve cases within a month instead of years and decades.
Government must work with tourists industry/local tourists organizations to sell tour packages (transportation, room and boarding and tour guide) to foreign tourists.
Pakistan introducing PR scheme will bring investment to Pakistan.

What are the benefit of digitalization?

It will make it easy to collect tax when the whole economy is digitalized.
If the whole economy become digitalized, it will be almost impossible to do the money laundering.
It will improve our business transactions and banking sector.
Pakistan should digitalize all land record to prevent land grabbers and Kabza mafia from taking over other land.
It will make it easy to do land reform when land records are digitalized.
Buying and selling of vehicles will be easy when the ownership record is digitalized.
Easy for government to hire if the background check process is digitalized.
If the Criminal record is digitalized then it will be easy to find criminals.

Ghazi said...

Gloom is a matter of spin/perception. I read his twitter thread and felt it was objective. What he wrote about the fundementals of our economy is correct.

The Pakistani economy can be seen as glass half full or glass half empty, it's a matter of perception. As mentioned by @RiazHaq there is loads of potential and the data is flawed too.

It's the responsbility of govt to correct data and to maximise potential.

A personal pet peave of mine is our energy policy. We are hugely wasteful in terms of energy use. We should be focused massively on renewable energy, it should be the backbone of our energy requirements and fossil fuels ought to supplement the shortfall. That is the energy policy we NEED to move to NOW.

SAMIR SARDANA said...

The Mian is prophetic !

Pakistan is not in "AS GOOD A PLACE" as it should be,due to ECO-NO-MISTS !

Pakistan should NOT be a GOOD PLACE,for ECO-NO-MISTS !

The only Good place,for Pakistan ECO-NO-MISTS,is the IMF and World Bank

Economics is based on TRANSPARENT ACCOUNTING,and MACRO LEVEL thinking,and SIMPLISTIC inferences on MASS PSYCHOLOGY ! dindooohindoo

PAKISTAN HAS GREATLY SUFFERED,due to the hallucinations of Economists ! It is time to embrace,Islamic economics !

Riaz Haq said...

Pakistan's central bank chief believes the country has the capacity and financial cushion to ride out rising external account pressures being driven by a surge in global commodity prices.

https://www.reuters.com/markets/currencies/pakistan-can-ride-out-rising-external-account-pressures-says-cbank-chief-2022-01-11/


The pressure should ease soon as central banks around the world tighten monetary policy, which is likely to curb rebounding global demand, he said.

"What we have to ensure is that we have the capacity to sustain ourselves through it...I believe we do," said State Bank of Pakistan (SBP) Governor Dr Reza Baqir in an interview with Reuters on Monday.

He said the surge in global commodity prices over the past few months was being driven by a sharp recovery in demand as economies bounced back from a COVID-induced slump.

"But as central banks begin to turn hawkish, it is going to moderate global demand growth; that in turn is what is going to bring down international commodity prices," said Baqir, who previously worked at the International Monetary Fund.


"We (Pakistan) just have to get through it until this commodity supercycle ceases," he said, adding that two thirds of the rise in the trade deficit over the past few months had been driven by surging global commodity prices. "One third of our typical (import) payments on any given day are oil payments...and you have seen how much oil prices have risen."

The price of Brent crude rose 50% in 2021 and has rallied further in 2022. read more

Pakistan's imports grew 65% year-on-year to over $40 billion in the first half of this financial year, while exports rose 25% to $15.1 billion. Over the same period, the trade deficit has more than doubled to $25.4 billion from $12.3 billion.

The current account balance meanwhile turned to a deficit in the current financial year, standing at $7.1 billion in the first five months compared to a $1.9 billion surplus over the same period last year.

The rapid rise in the country's import bill has put a strain on its foreign exchange reserves. But Baqir said these were high enough to ride out the storm, while Pakistan's adoption of a flexible exchange rate in 2019 provided an additional buffer.

Pakistan's foreign exchange reserves stand at $24 billion, up sharply from $7.2 billion in 2018-19. Out of the $24 billion, $17.6 billion is currently held at the central bank.

"Our flexible exchange rate system is one of the institutional reforms that has happened in Pakistan that, in turn, will help to ensure the sustainability of our balance of payments," Baqir said.

Pakistan's central bank has lifted rates by 275 basis points to 9.75% since September to tackle a falling Pakistani rupee, high inflation and a current account deficit. The bank signalled in December that it was likely close to done with hiking rates in the near-term. The rupee has depreciated about 10% over the past six months against the dollar. read more

Pakistan's consumer price index rose 12.28% in December from a year earlier, above the central bank's upwardly revised 9%-11% target for this financial year.

"We are confident that they (inflation worries) will be suitably addressed by the measures that we have taken," Baqir said.

Riaz Haq said...

Pakistan’s GDP size expands increased by 11.3%t o $346.76 billion in FY21 showing growth of 5.37%


https://www.app.com.pk/business/pakistans-gdp-size-expands-to-346-76-bn-in-fy21-showing-growth-of-5-37/


The National Accounts Committee (NAC) Thursday approved the revised figures of Pakistan’s Gross Domestic Product (GDP) growth rate of 5.37% against the provisional numbers of 3.9% for the fiscal year 2020-21 (FY21).

According to the final numbers approved by the committee, the per capita increased to Rs 266,614 or US$ 1,666 in 2020-21 while the size of the economy reached to US$ 346.76 billion.

The Committee also accorded approval to the change of base of National Accounts from 2005-06 to 2015-16.
The 104th meeting of the NAC was held here under the Chairmanship of Secretary ministry of Planning, Development & Special Initiatives Abdul Aziz Uqaili.

Due to improved coverage and better estimation of input output structure of industries, the gross value addition has increased by Rs. 3.1 trillion in the base year 2015-16 from Rs. 27.4 to Rs. 30.5 trillion, showing an increase of 11.3% in the Gross Value Added (GVA) for the base year 2015-16.

This shows that in the previous base of 2005-06 economy was under estimated by 11.3%. Agriculture showed an increase of 8.3% from Rs. 6.7 to 7.3 trillion, industry grew by 11.9% from Rs. 5.3 to 5.9 trillion and services enhanced by 12.5% from Rs. 15.3 to 17.3 trillion.

With rebasing and level shift of economy from Rs. 29.1 trillion to Rs. 32.7 trillion in 2015-16, the GDP at market prices increased to 55.5 trillion in 2021, and Gross National Income increased to Rs. 59.3 trillion.

The per capita income increased to Rs 266,614 or US$ 1,666 in 2020-21. The size of the economy reached to US$ 346.76 billion.


According to a press release issued by the ministry of Planning, the Ministry and Pakistan Bureau of Statistics (PBS) have decided to devise a mechanism to rebase National Accounts as well as price statistics after every five years in line with the best practice adopted by the most of the countries of the world, as both go in tandem to capture more areas and activities, which have taken place in the last couple of years.

The PBS being a National Statistical Organization has to comply with the international standards while compiling national indicators of economy.

The methodology adopted in the re-basing is in line with the 2008 System of National Accounts (SNA). During 2014-15 to 2016-17, the PBS has conducted about 45 census, surveys, and studies to properly capture the economic activities in the country.

The results of these census, surveys, and studies have already been reviewed by internal and World Bank experts.
Efforts have been made to include new economic activities. Dedicated surveys and studies have been
conducted to capture the share of economic activities in the economy. Input output ratios of various
industries have been updated, which has resulted in better reflection of their contribution in the
economy.

Riaz Haq said...

Country registered 14-year high GDP growth in 2021 despite COVID-19: Asad Umar

https://www.geo.tv/latest/394351-asad-umar-claims-record-economic-growth-despite-being-hit-by-covid-19


Last fiscal year, country’s economic growth rate recorded an all-time high in 14 years at 5.7%, minister says.
Says major industries also succeed in maintaining the growth rate at 15% which is more than average.
In last two weeks, Opposition came up with two failed narratives, PTI leader says.

FAISALABAD: Federal Minister for Planning, Development, and Special Initiatives Asad Umar claimed on Thursday that despite being hit by COVID-19, Pakistan’s economy witnessed record development under the leadership of Imran Khan, Geo News reported.

Coronavirus had badly affected the world’s economy, but last year, Pakistan’s economic growth shot up as compared to the last 14 years, he said.

Talking to journalists in Faisalabad, the PTI leader shed light on the economy and said that during the last fiscal year, the country’s economic growth rate was forecast at 3.4% but it recorded an all-time high in 14 years at 5.7%.

Coronavirus has battered the world’s economy, but under the leadership of Imran Khan Pakistan’s economy is progressing toward development, he added.

The federal minister further said that the last year, the growth of industries recorded a 15-year high, while major industries also succeed in maintaining the growth rate at 15% which is more than average.

Historic increases in the production of wheat were recorded while potato, tomato, onion, and natural gas and crude oil production also shot up.

Umar also lashed out at the Opposition, saying that in the last two weeks, it came up with two failed narratives.

"I pity for them (the Opposition) as the government vanquished them in National Assembly after passing bills with a majority," he said.


Riaz Haq said...

Pakistan Quantum Index of Manufacturing (QIM) rebased

https://www.brecorder.com/news/40148481

ISLAMABAD: The government has rebased Quantum Index of Large Scale Manufacturing Industries (LSMI) from 2005-06 to 2015-16 with increasing the total 112 items with cumulative weight of 70.3 percent for computation to 123 items having total weight of 78.4 percent, where, the Ministry of Industries and Production weight has been decreased from 49.556 percent in the QIM 2005-06 to 40.54 percent in QIM 2015-16.

The Pakistan Bureau of Statistics (PBS) has released a report on the rebasing of Quantum Index of Large Scale Manufacturing Industries (QIM) from 2005-06 to 2015-16, which stated that the weights presently used for the QIM were derived from the Census of Manufacturing Industries (CMI) 2005-2006. Total 112 items with cumulative weight of 70.3 percent are being used for computation of QIM.

The production data is collected from Oil Companies Advisory Council (OCAC), Ministry of Industries and Production (MOIP) and Provincial Bureaus of Statistics (BOS).

Moreover, to keep QIM more reliable, update and to overcome the challenges, the current QIM is rebased on the basis of results of CMI 2015-16. The rebased QIM has been computed with 123 items having total weight of 78.4 percent derived from the CMI 2015-16 with all existing data sources with addition of the PBS internal data source.

It further stated that new weights have been derived at two stages, the weight at industry level have been derived on the basis of gross value added (GVA) of Large Scale Manufacturing Industries (LSMI) at the basic prices.

The total GVA for the LSMI is taken as 100 and percentage contribution of each industry has been considered as the weight of that industry.

Riaz Haq said...

Arif Habib Limited
@ArifHabibLtd
The NAC, in its 104th meeting, reviewed the change of base of National Accounts from FY06 to FY16. With this revision, the final estimates of GDPg of FY21 came out to be 5.57%.

Full report
https://arifhabib.com/r/GDPg.pdf

Riaz Haq said...

Pakistan's Energy Security

By Farrukh Saleem

Pakistan’s current energy mix is 35 percent indigenous gas, 31 percent oil, 12 percent coal, 8.7 percent LNG, 7.7 percent hydroelectricity, 2.7 percent nuclear, 1.1 percent renewables and a small fraction from imported electricity. We import more than one-third of our energy needs and this dependence on imported fuels means energy insecurity. Lo and behold, in the next four years local gas production is projected to fall from 4 billion cubic feet per day to 2 billion cubic feet per day. Lo and behold, that would translate into even greater energy insecurity.

https://www.thenews.com.pk/print/919861-energy-security

We import over $20 billion worth of petroleum products, petroleum crude, liquified natural gas and liquified petroleum gas. We import coal worth $2.5 billion a year. More than 85 percent of the oil consumed is imported and 54 percent of coal is imported. We end up spending more than 80 percent of our export earnings on importing fuel. Our fuel-related imports result in a multi-billion dollar current account deficit which we fill by borrowing from wherever we can-multilateral $60 billion; bilateral $36 billion; commercial $16 billion and bonds/sukuks $11 billion.

The consequence of fuel-related import dependence is a high degree of energy insecurity. We need to move towards ‘energy sufficiency’ and then to ‘energy security’. According to the United States Energy Information Administration (EIA), “Pakistan may have over 9 billion barrels of petroleum oil…” That is 50 years worth of consumption. According to the EIA, “Pakistan holds sizable shale gas reserves of 105 trillion cubic feet (Tcf).” That is 73 years worth of consumption.

If India has found 3.6 billion barrels of reserves just across the Pak-India border, why can’t we do the same? Here are the four things we need to do: First, an independent, professional upstream regulator. Second, a new Hydrocarbon Exploration Licensing Policy. Third, Open Acreage Licensing. Fourth, removing regulatory uncertainty caused by the 18th Amendment (these recommendations as per the EIA).

We need to do two things: Reduce the share of imported fuels and reduce the cost of energy (in order to enhance our energy security). Imagine; we currently lose more than “55 percent of the primary energy used for electricity during generation.” Imagine: generation losses in our thermal power plants range from 40 percent to 60 percent. The Asian Development Bank (ADB) has five recommendations: increase the share of alternative energy sources. Residential rooftop solar solutions. Indigenous coal mining. Invest in infrastructure to reduce energy losses and theft. Better building and insulation standards.

Our import-driven energy policy is not sustainable. Our import-driven energy policy is making us more and more energy insecure. We have a Rs3 trillion circular debt because we have an import-driven energy policy. We are going to have a $40 billion trade deficit because we have an import-driven energy policy. We are going to have a $15 billion current account deficit because we have an import-driven energy policy. Our rupee is falling because we have an import-driven energy policy. We must urgently capture the real nature of this threat to our national security – and then work on mitigation

Riaz Haq said...

Muzzammil Aslam
@MuzzammilAslam3
پاکستان کی تاریخ کی بلند ترین مشینری میں سرمایہ کاری 2021 . مسلم لیگ ن کے پہلے تین سال اور پی ٹی آئ کی پہلے تین سال سرمایہ کاری میں واضع فرق۰ الحمد اللہ!
Translated from Urdu by
Investment in the highest machinery in the history of Pakistan 2021. There is a clear difference between the first three years of PML-N and the first three years of PTI. Praise be to Allah!

https://twitter.com/MuzzammilAslam3/status/1485163856636911617?s=20

Riaz Haq said...

Riaz Haq
@haqsmusings
Replying to
@kaiserbengali
@Asad_Umar
is right! #Pakistan must grow its #exports to deal with its current account imbalances. Meanwhile, please note that Pakistan #textile exports are rapidly changing from yarn and cloth to higher value-added #garments. Also growing #tech #exports by double digits.

https://twitter.com/haqsmusings/status/1485278540568268801?s=20


Riaz Haq said...


Riaz Haq
@haqsmusings
#Pakistan PM #imrankhanPTI says #poverty has been reduced & #farmers #income are up 73%, while Pak #GDP rose by 5.37%. High global #energy & #food prices have fueled #inflation & bumped up Pak current account deficit to $20 billion. #economy #COVID19 https://dunyanews.tv/en/Pakistan/638009-I-consider-Shahbaz-Sharif-not-a-leader-of-opposition-but-a-national-crim

https://twitter.com/haqsmusings/status/1485358780766294018?s=20


ISLAMABAD (Dunya News) - Addressing the country during the Aap Ka Wazir-e-Azam - Ap Kay Saath programme on Sunday, the Prime Minister (PM) of Pakistan Imran Khan said that if he leaves the government, he will be more dangerous. If he come to the streets, his opponents will not find a way to escape. He added that it is said daily that a deal has been struck. The opposition say that they want to save the people. People of the country will not come out at their request. The government will complete its term and the next turn also belongs to it.
he does not consider President Pakistan Muslim League - Nawaz (PML-N) Shehbaz Sharif as leader of the opposition but as a national criminal.

He added that the inflation is a problem not only of Pakistan but of the whole world. Those who are asking for National Reconciliation Ordinance (NRO) make noise in Parliament, they do not let me speak. So I try to hold the sessions and interact with people of the country every month.

Prime Minister (PM) Imran Khan said that we have nothing to do with the robbers; I wanted to answer in front of people every month. In principle, questions should be answered in Parliament, but the opposition members make noise and do not allow me to speak. The Islamic welfare state is our manifesto. When it came to power, the country was on the verge of default.

PM Imran Khan said that the poverty has been reduced in during Pakistan Tehreek -e-Insaaf s (PTI) tenure. Farmers income increased by 73%, while the GDP increased by 5.37%.

Addressing the question on the culminating inflation, the premier said that inflation is not just a problem of Pakistan. Corona has hit the world economy hard. Unfortunately, we have a current account deficit of 20 billion.

With the depreciation of the Rupee, the things that are imported become more expensive. The country spent Rs 8 Billion on the people during Corona.

When the country s problems were solved, Corona came, which affected the salaried class the most. The world is in crisis because of Corona.

He further added that we will get rid of the problem of inflation very soon. I will collect Rs 8,000 Billion in taxes in Pakistan. Palm oil has become expensive all over the world.

PM Imran Khan said that the salaried class is in trouble, he will call the industrialists and ask them to increase the salaries of the salaried class, people have been given Rs 40 Billion to build houses. The government has removed the obstacles in the construction sector, 3 Million houses are being built. A record production of cotton, sugarcane, maize, rice and wheat has been done.

Earlier today, Prime Minister Imran Khan started receiving direct phone calls from general public during a programme "Aap Ka Wazir-e-Azam - Aap Kay Saath".

According to details, the Prime Minister was listening to the complaints and opinions of people and inform them about different initiatives taken by government.

People could contact with Prime Minister on telephone number 051-9224900.

Prime Minister Imran Khan has so far held four public sessions in which he responded to 86 questions asked by the public.

Out of the total 86 queries, 74 questions were asked through phone calls, while 12 queries were received on social media.

Public participation in the Aap Ka Wazir-e-Azam - Aap Kay Saath programme was categorized as Punjab 47 percent, Islamabad 15 percent, overseas 11 percent, Sindh and Khyber Pakhtunkhwa seven percent each, Azad Kashmir and Gilgit-Baltistan 2.4 percent each and Balochistan 2.8 percent.


Riaz Haq said...

Pakistan to burn more domestic coal despite climate pledge
Islamabad expands use of lignite to ease burden of expensive imported fuel

https://asia.nikkei.com/Spotlight/Environment/Climate-Change/Pakistan-to-burn-more-domestic-coal-despite-climate-pledge

Work on the third phase of the Thar Coal Block II mine expansion is set to begin this year at an estimated cost of $93 million, according to the Sindh Engro Coal Mining Company (SECMC), a public-private enterprise operating the mine since 2019 in the southeastern district of Tharparkar. The second phase of expansion is underway with the help of China Machinery Engineering Corp. and Chinese bank loans, in addition to local financing. The series of expansions will scale up the annual production of lignite from 3.8 million tons to 12.2 million tons by 2023.

The output from the second phase of expansion will feed two 330 MW coal-fired power plants being built under the $50 billion China Pakistan Economic Corridor projects, part of Chinese President Xi Jinping's flagship Belt and Road Initiative. The power plants are expected to come on line this year.

Lignite is brown coal with low calorific value due to high moisture and low carbon content.

The expansion of the Thar coalfields is aimed at curbing coal imports to ease a staggering current-account deficit made worse by soaring international commodity prices and shipping costs. Pakistan's current-account deficit ballooned to an unprecedented $9.09 billion between July and December last year, as imports continued to outstrip exports during the post-COVID economic recovery. Pakistan had to seek a $3 billion loan and a deferred payment facility on the import of petroleum products from Saudi Arabia last year to stabilize forex reserves.

In recent years, high volatility in international oil prices, soaring LNG prices and dwindling local gas reserves have spurred public-private spending, particularly Chinese investment, in Pakistan's coal power sector. Until now, four coal-fired power plants with 4.62 GW of total installed capacity have joined the grid, while another three plants with an aggregate capacity of 1.98 GW are expected to come online over the next two years -- all under CPEC. In addition, growing demand from cement factories banking on a global construction boom has tripled coal consumption over the last five years to 21.5 million tons per annum.

Consequently, the share of coal in Pakistan's import bill for the year ended June 2021 shot to 24% from over 2% in previous years, according to data from the Pakistan Bureau of Statistics. Currently, only the power plant at Thar Coal Block II is running on indigenous coal.

A spike in coal power generation is in line with global trends, where countries including China, the U.S. and India have turned to coal to meet heightened demand following the lifting of COVID-19 restrictions.

------------


Authorities contend that the expansion of Thar Coal Block II will reduce the price of indigenous coal from $60 to $27 per ton -- making it the country's cheapest power source and leading to annual savings of $420 million. Pakistan is currently importing coal at around $200 per ton.


"We are compelled to use this cheap source of energy because we cannot keep using dollars to run power plants running on expensive furnace oil and RLNG (re-gasified liquefied natural gas)," Sindh Provincial Energy Minister Imtiaz Shaikh told Nikkei Asia. "We would like to mix 20% Thar coal [in power plants running] with imported coal. Then we will move towards converting coal to liquid and coal to gas."

The cost of operating thermal plants has become punishing due to expensive fuel and the cost of diverting scarce freshwater, which leads to underutilization of the plants, said Omar Cheema, director of London-based renewable energy consultancy Vivantive.

Riaz Haq said...

What is GDP rebasing?

https://profit.pakistantoday.com.pk/2022/01/23/the-gdp-finally-rebased/

Every few years, the GDP of a country is rebased to keep up with the evolution of prices in the economy. It is the process of replacing an old base year with a more recent base year. What this means is aggregates at constant prices are recalculated in terms of more recent prices. This gives a reference point to which future values of the GDP are then compared to.

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If we put this in simple terms, let’s say an economy makes only apples. In Year 1, it produced 10 apples priced at Rs 1 per apple. That makes the GDP Rs 10. 8 years laters, let’s say the economy makes 20 apples. With the old base, the GDP would be Rs 20. However, the prices of apples have gone up to Rs 1.5 per apple making the GDP worth Rs 30. With the old base, the GDP was understated by 50%. The new base accurately presents the economy.

GDP is rebased to capture the real and reliable estimates of GDP. The Gross Fixed Capital Formation (GFCF) is done by enlarging the sphere and coverage of macroeconomic data and estimates as per the guidelines of the System of National Accounts.

Rebasing the GDP allows Pakistani policy makers to use data that is a better representation. “With these measures, economy size will be more reflective of the ground realities. After rebasing, the change in economic indicators shows a mixed picture,” says Fahad Rauf, Head of Research at Ismail Iqbal Securities.

When was this last done?

Essentially, this should be done once every five years. Moreover, the international best practice includes introducing new accounting conventions, improved methods of estimation, and revised statistical classifications every decade.

The last rebasing of GDP was undertaken in 2005-6 while President Musharraf and Prime Minister Shaukat Aziz were in office. Prior to that, rebasing was done in 1999-2000 after a period of 20 years. The first rebasing/ linking was done in 1959-1960. The second, in 1980-81, the third in 1999-2000, fourth in 2005-06.

The National Accounts Committee also devised a mechanism to rebase the national accounts every 5 years. This means, another rebasing is likely to happen soon. Earlier, the World Bank (WB) had validated the overall methodology for conducting the rebasing exercise in Pakistan and had pointed out some deficiencies that could be worked on.

Rebasing of national accounts was difficult for PBS. The PBS has conducted 42 studies on various sectors of the economy to finalize weights on the basis of the latest data compiled in the fiscal year 2015-16. In the past, consultants in the private sector would undertake these surveys and studies on behalf of the PBS, however, this is the first time the PBS is carrying it out themselves. Therefore, the time taken to go forward with the rebasing is also due to the fact that thorough scrutiny of PBS methodology and output was done before granting approval for rebasing of national accounts.

Earlier, the Pakistan Bureau of Statistics rebased the LSM index to 2015-16 from 2005-6. This allowed for the weights of various sectors to change, and for the PBS to add garments, with a weight of 6%, as a category to the index.

What really is GDP and how is it calculated?

The Gross Domestic Product of a country has been one of the most discussed topics in our everyday activities. The initial basic concept of GDP was invented in the late 18 th century. However, it was later developed by an American economist in 1934 and accepted as the primary measure of an economy soon after in 1944. Most of us have a solid understanding of GDP and what it represents. In layman terms it is the total monetary value of all final goods and services that have been produced within the geographical boundaries of a country over a selected period.

Riaz Haq said...

While jumping 29 percent to $251 million in December, IT exports surged 36 percent to $1.3 billion in the first half of this fiscal year, mostly riding a massive stream of investment pouring into Pakistan’s technology sector, data showed on Saturday.


https://www.thenews.com.pk/print/927335-it-exports-surge-36pc-in-first-half-of-fy2022


Technology exports amounted to $667 million in the second quarter. Pakistan’s total IT exports stood at $1.44 billion in FY2020, which increased to $2.1 billion in FY2021.

According to Khurram Schehzad, CEO of Alpha Beta Core, this growth will gather more momentum down the line.

“Increased investment in the startup ecosystem is helping Pakistan develop technology infrastructure, which will in turn increase IT exports growth,” Schehzad said.

However, the recent increase in foreign investments in Pakistan, especially in tech based startups doesn’t reflect in the IT exports.

But Schehzad says it has been helping develop technology infrastructure and increase job opportunities in tech-based companies, which will eventually help increase IT exports further.

“I see IT exports recording a historic high of $2.8 billion to $3 billion in the fiscal year 2022,” an IT sector analyst said.

“But it depends on if the government is willing to incentivise the sector.”

He said the government also needed to establish tech zones to help the sector grow more.

He said around 15,000 IT companies were being established and hiring fresh employees, adding, expansion of the technology sector would subsequently fuel IT exports growth.

Wajid Rizvi, Head of Strategy and Economy at JS Global, expects IT exports to grow to $2.6 billion by the end of FY2022.

“The market-based exchange rate and devaluation of rupee has also enhanced the potential of technology sector exports as the companies/individuals associated with the sector receive their payments mostly in dollars,” Rizvi said.

He added that Pakistan was a net exporter of IT services and the sector had a great potential to grow, evident from a rising trend of software and other IT exports.

Riaz Haq said...

Muzzammil Aslam
@MuzzammilAslam3
World commodities shaking economies from East to West. Bloomberg Commodity Index surged 32% YoY and 6% since January 1st, 2022. Definitely not good news for net importing countries like Pakistan. Especially energy prices.

https://twitter.com/MuzzammilAslam3/status/1486698305044180996?s=20

Riaz Haq said...

@haqsmusings
·
13h
Unfortunately,
@AtifRMian
only sees #Pakistan’s glass half empty. He refuses to even acknowledge the country’s progress on growing #export & change in #energy mix to lower imports.He ignores transitory high #energy prices causing current account deficits. https://southasiainvestor.com/2022/01/pakistan-economy-not-in-good-place-atif.html
Omer Zeshan Khan
@OmerZeshanKhan
·
8h
Export growth is low end and for limited time (a bonus). Previous Govt did a few things for localisation (car/mobile/edible oil). Haven’t seen these guys doing anything. They are just sitting and talking. Pakistan’s economy is robust enough to feed people while Govt waits.
Omer Zeshan Khan
@OmerZeshanKhan
·

·
Riaz Haq
@haqsmusings
·
3h
#ImranKhan’s #NayaPakistan housing program is a good idea, especially the incentives for small & medium mortgages for the lower middle class. It’s boosting #employment in #Construction & #manufacturing sectors as well as the housing stock http://riazhaq.com/2020/07/naya-pakistan-low-cost-home-loans-and.html
Omer Zeshan Khan
@OmerZeshanKhan
·
2h
Can you name one project under Naya Pakistan Housing?
Riaz Haq
@haqsmusings
Replying to
@OmerZeshanKhan

@Muslims4USA
and
@AtifRMian
#Housing #Mortgage financing in #Pakistan jumped 85% last year, according to the State Bank. “Financing under MPMG picked up momentum in 2021 as approvals for financing by banks grew from near zero to Rs117 billion in 2021”

https://twitter.com/haqsmusings/status/1488166329769070596?s=20&t=6qD3vPwWBkwSxAhRdxw3Tg

https://www.thenews.com.pk/amp/923033-banks-disburse-rs355bln-housing-loans-in-2021

KARACHI: Credit to the housing and construction sector increased by record Rs163 billion or 85 percent in 2021, mainly driven by the central bank’s rules to encourage mortgages and incentives and penalties for lenders with respect to achieving or failing housing finance targets.

Banks disbursed Rs355 billion housing loans in 2021, compared with Rs192 billion in the previous year, the State Bank of Pakistan said in a statement on Thursday.

Disbursement of low-cost housing loans under the Government Markup Subsidy scheme, also known as Mera Pakistan Mera Ghar (MPMG), reached Rs38 billion last year. In December, banks extended Rs9.3 billion loans to the borrowers; highest monthly disbursement since January 2021.

Analysts said tighter monetary conditions usually affect mortgages as the SBP has jacked up interest rates by 275 basis points in three moves since September. Currently, the policy rate hovers at 9.75 percent.

However, the government’s mark-up subsidy scheme looks to remain protected from an upward move in interest rates as the government is providing subsidy to the mortgage clients for the first 10 years.

Habib Bank, Meezan Bank and Bank Al Habib were the top three contributors, said the SBP.

Banks also made significant progress in the provision of financing under MPMG scheme, introduced in 2020, it added.

“Financing under MPMG picked up momentum in 2021 as approvals for financing by banks grew from near zero to Rs117 billion in 2021. The banks have received requests of financing of Rs276 billion from potential customers, which indicates that approvals and disbursements will keep growing in coming months.”

Bank Alfalah emerged as the leading bank with highest disbursement of Rs3.3 billion followed by nine banks with disbursements of over Rs2 billion each. These include Meezan Bank, Bank Islami, National Bank, Standard Chartered Bank, HBFCL, United Bank, MCB Bank, Bank of Punjab and Habib Bank, said the statement.

Financing for housing and construction and particularly under MPMG witnessed impressive growth on the back of many enabling regulatory environments introduced after extensive consultation with stakeholders, the SBP noted.

Further, the SBP said it advised the banks to increase their housing and construction finance portfolios to at least 5 percent of their domestic private sector advances till December 2021, introducing a set of incentives and penalties to ensure compliance.

Riaz Haq said...

#Pakistan begins extracting #coal from a 2nd major #mine in #Thar, #Sindh. Block 1 mine has lignite coal deposits of over 3 billion tons (5 billions barrels of crude oil) with an annual output of 7.8 million tons to generate 1320 MW #electricity. #energy https://www.dawn.com/news/1672580


Sino-Sindh Resources Ltd (SSRL) said on Monday it successfully extracted the first shovel of lignite coal at Block 1 of the Thar coalfields near Islamkot Town of Tharparkar, Sindh.

Block 1 boasts lignite coal deposits of over three billion tonnes (equivalent to over 5bn barrels of crude oil) with an annual output of 7.8 million tonnes.

SSRL, whose majority shareholder is Shanghai Electric Group, was granted a mining lease on May 24, 2012, and the project was included in the Joint Energy Working Group by the governments of Pakistan and China.

As soon as the two governments officially announced the China-Pakistan Economic Corridor, the Thar coal project was included in it as an early-harvest project.

---------

After back-to-back meetings between SSRL and the Energy Department of the government of Sindh, the first excavation took place on Jan 23, 2019, for the development of the largest open-pit coal mine in Block 1.

According to the Thar Coal Energy Board, SSRL and Shanghai Electric Group have already signed a coal supply agreement for power generation through two mine-mouth power plants of 660 megawatt each.

Financial close of the project was achieved on Dec 31, 2019. Soon after the first excavation, the SSRL management started importing mining equipment from China and by July 2020 all the required equipment was at the project site.

Speaking to Dawn, Ministry of Energy spokesperson Muzzammil Aslam said both majority (Shanghai Electric Group) and minority (SSRL) investors in Block 1 are Chinese. Unlike Block 2 where the Sindh government owns a stake of 54.7 per cent, Block I has no direct shareholding by the provincial government, he said.

“Shanghai Electric’s power plant will achieve financial close within this year. It’s a big development because the 1,320MW plant will run on indigenous fuel and produce affordable electricity,” Mr Aslam added.

SSRL officials said the development of the indigenous resource base at Thar will help Pakistan achieve its long-cherished goal of energy security and economic sovereignty.

Riaz Haq said...

Arif Habib Limited
@ArifHabibLtd
Oil marketing industry sales surged by 18.9% YoY during Jan’22 to 1.80mn tons (7MFY22: 12.91mn tons, +14.5% YoY).

https://twitter.com/ArifHabibLtd/status/1488511560565854222?s=20&t=ifmoAqCf2BMw2onQ92fGFg

-------------


https://tribune.com.pk/story/2341510/oil-sales-surge-20-to-18m-tons-in-january-2022

KARACHI:
The demand for petroleum oil products remained robust despite the uptrend in prices, as wheat harvesting, power generation through oil-fired plants and building of domestic reserves in anticipation of a further hike in international prices generated strong demand in January.

Besides, healthy industrial activities and growing car numbers on roads also contributed to the rising momentum in sales of petroleum products. Overall oil sales surged almost 20% to 1.8 million tons in January 2022 compared to 1.51 million tons in the previous month of December 2021, Arif Habib Limited (AHL) reported on Tuesday. “(High-speed) diesel had a major increase in demand among petroleum products in the wake of wheat harvesting in the country,” AHL Head of Research Tahir Abbas said while talking to The Express Tribune.

Secondly, three major power plants, located in Punjab, ran on diesel due to the widening gas shortfall during winter months. Besides, some other plants ran on furnace oil and its demand picked up as well. Thirdly, oil marketing companies (OMCs) and their dealers (petrol pumps) built inventories during the month in anticipation of a hike in prices of petroleum products in the global as well as domestic markets.

The building of reserves was aimed at making additional profits on likely increase in prices in the domestic market with effect from February 1, 2022. The government, however, decided to keep oil prices unchanged, which “had earlier been expected to increase by Rs12-15 per litre,” he said. The demand for petrol also remained robust in the backdrop of a significant growth in sales of cars and SUVs.

Car sales slowed down, but still remained significant despite the fact that the government took measures to cut imports of luxury cars and restricted bank financing for cars to control the current account deficit (CAD). Sales of diesel increased 20% to 0.74 million tons in January compared to 0.62 million tons in December.

Sales of petrol rose 6.2% to 0.74 million tons in the month under review compared to 0.70 million tons in the previous month. Sales of furnace oil surged 103% to 0.26 million tons in January compared to 0.13 million tons in December 2021. Cumulatively, in the first seven months (July-January) of the current fiscal year 2021- 22, oil sales increased 14.5% to 12.91 million tons compared to 11.27 million tons in the same period of previous year. The growth in demand is mostly seasonal given that wheat harvesting takes place

Riaz Haq said...

#Pakistan to end reliance on #IMF by boosting #exports, cutting #deficits & tapping #capital markets. #Textile exports are poised to surge 40% to a record $21 billion this year & further to $26 billion next year. Pak also incentivizing #tech exports boom.
https://www.bloomberg.com/news/articles/2022-02-02/pakistan-seeks-to-end-50-years-of-imf-debt-with-esg-bond-trade

Pakistan, which has sought almost 20 bailouts from the International Monetary Fund over half a century, wants to end its reliance on the multilateral lender by shrinking its deficits and tapping the capital markets.

Finance Minister Shaukat Tarin, who has negotiated the last leg of a current $6 billion IMF loan, plans to raise $1 billion via an ESG-compliant Eurobond in March after issuing a similar amount of Sukuk last week. He also targets to shrink the budget shortfall to 5%-5.25% of gross domestic product in the year starting July 1 from 6.1% the previous period and spur growth to 6% from 5%.


“I think this program should be enough,” Tarin, 68, said in an interview in Islamabad. “If we start generating 5%-6% balanced growth, which means sustainable growth, then I don’t think we need another IMF program.”

Prime Minister Imran Khan has been a vocal critic of IMF bailouts, saying “the begging bowl needed to be broken” if Pakistan must command respect in the world. He joins nations, including South Asian peer Sri Lanka, that prefer to maneuver with bilateral loans or commercial borrowings rather than adopt the austerity that accompanies an IMF agreement.

The first part of Tarin’s plan to halt Pakistan’s boom-bust cycle involves boosting exports. The central bank offered cheap loans to manufacturers and energy tariffs were brought in line with the region. Textile shipments -- more than half of total exports -- are poised to surge 40% to a record $21 billion in the year through June and further to $26 billion next year, according to Khan’s commerce adviser.

Pakistan also plans to extend similar incentives to the technology sector as it seeks to ride a wave of global venture-capital interest in startups. The policies could be unveiled in about a month, Tarin said.

Tarin was appointed in April 2021 and has since renegotiated some of the IMF’s financial conditions, including a smaller increase in utility prices and lower mop up in taxes than the lender had earlier insisted on.

He has adopted some of the structural conditions, which include increasing autonomy for the central bank and putting an end to deficit monetization. Like predecessors, he hasn’t been able to significantly broaden Pakistan’s tax base or sell loss-making state-run firms.

Previous governments accepted IMF conditions in the short term and, when the program ends, policy makers revert to profligate spending, Tarin said. Instead, he vowed to “control our expenses” in the upcoming budget.

“We are trying to now take those steps, which are going to put this economy on an inclusive and sustainable growth path,” said Tarin. “Once it gathers momentum and is sustainable, then I think we will probably see 20-30 years of growth.”


Riaz Haq said...

A British investor group CDC & Gul Ahmed Metro (GAM) group JV to add 500MW of #renewable power in #Pakistan with significant minority stake in Metro #Wind Power. CDC and GAM are also co-investors in Zephyr Power Limited, an operating 50MW #windfarm. https://www.cdcgroup.com/en/news-insight/news/were-partnering-with-gul-ahmed-metro-group-to-scale-renewable-power-in-pakistan/

The Metro-BII Renewables joint venture aims to add 500 megawatts (MW) low-cost renewable power to Pakistan in the medium term, increasing jobs and expanding economic opportunities
The joint venture will mitigate Pakistan’s carbon emissions, cutting 728,000 tonnes of carbon dioxide per year for the planet
Investment aligns with CDC’s ambition to invest over £3 billion of climate finance over the next five years
CDC Group (soon to become British International Investment – BII) and Gul Ahmed Metro Group (GAM), are today announcing their partnership to form the Metro-BII Renewables joint venture. The new joint venture builds on the existing partnership between the UK’s development finance institution and GAM, a Pakistani family-owned business with expertise in Pakistan’s power sector, and it will aim to develop and operate up to 500MW of renewable energy assets in Pakistan.

Metro-BII Renewables aims to add up to 500 Megawatts (MW) of primarily greenfield low-cost renewable power to Pakistan’s grid over the medium term, and has a current generation capacity of 110MW. The JV will boost clean power generation, providing electricity to over 850, 000 consumers in Pakistan. Moreover, up to 17,000 jobs will be supported across the country, as a result of the increased power capacity. In addition, Metro-BII Renewables will help the country decarbonise as the joint venture’s target capacity size will help avoid an estimated 728, 000 tonnes of carbon dioxide per year, for the planet.

This new joint venture will strengthen collaboration between CDC, which will be renamed British International Investment (BII) in April, and GAM and foster knowledge sharing from both firms’ experience within the local and regional power sector.

Under the terms of the joint venture, CDC will acquire a significant minority stake in Metro Wind Power Limited (MWPL), an under-construction 60MW windfarm project, developed by GAM, the acquisition remains subject to lender and regulatory approval. CDC and GAM are also co-investors in Zephyr Power Limited, an operating 50MW windfarm.

CDC’s capital will provide much-needed equity finance that will support the development of a clean energy platform that is bespoke to Pakistan’s needs, helping to scale power capacity in the country. The deepened partnership will help accelerate greater investments into the renewable power sector in Pakistan. This partnership further underlines CDC’s focus on the renewable sector in Pakistan, where CDC has made over US $160 million in equity and debt investments, over the past five years.

Riaz Haq said...

#CPEC II: #Pakistan, #China ink industrial cooperation agreement in #Beijing. It will increase labor #productivity, enhance #industrial competitiveness, grow exports, sustain diversification in #exports basket. #economy #Beijing2022
https://www.app.com.pk/global/pakistan-china-ink-framework-agreement-on-industrial-cooperation-under-cpec/ via @appcsocialmedia


ISLAMABAD/BEIJING (China), Feb 4 (APP): Pakistan and China on Friday inked the Framework Agreement on Industrial Cooperation under China Pakistan Economic Corridor (CPEC).

The prime minister arrived in Beijing on Thursday to attend the opening ceremony of Winter Olympics and meet the Chinese leadership.

State Minister and Chairman BoI Muhammad Azfar Ahsan and Chairman National Development & Reform Commission (NRDC) He Lifeng signed the accord.

The objective of the Joint Working Group (JWG) on Industrial Cooperation is to attract Foreign Direct Investment (FDI), promote industrialization and development of economic zones, and initiate, plan, execute, and monitor projects, both in public as well as private sector.

The engagement with China under JWG is envisaged to increase labour productivity in Pakistan, enhance industrial competitiveness, increase exports, and sustain diversification in exports basket.

During the 8th Joint Cooperation Committee (JCC) meeting of CPEC held in 2018, both sides had signed a Memorandum of Understanding that formed the basis for future engagements between the parties under the ambit of Industrial Cooperation.

As CPEC entered its second phase which primarily revolves around Special Economic Zones (SEZs) development and industrialization, the need for a comprehensive Framework Agreement became imperative.

Similar agreements have also been signed for Early Harvest CPEC Projects on energy and infrastructure.

With continuous efforts of BOI, both sides reached the consensus to elevate the existing MoU into a Framework Agreement in 2020.

After extensive stakeholder consultations and with the approval of the Prime Minister, BOI shared the Draft Framework with NDRC in November 2020, which has been formulated keeping in consideration the needs of CPEC Phase II.

The signing ceremony of the framework agreement is a significant outcome of the prime minister’s visit and a top agenda from the Chinese side as a testimony to their interest in CPEC.

Riaz Haq said...

Narratives Magazine
@NarrativesM
Veteran economist Dr. #SalmanShah challenges the perceptions that #PakistanEconomy has gone from bad to worse under the #PTIGovt, arguing that after many tough decisions, it is now on the road to recovery. #NarrativesMagazine

https://twitter.com/NarrativesM/status/1490710786204999688?s=20&t=BwFyKByaqAcuhcHFNQjiCw

On the Road to Recovery
Dr. Salman Shah

https://narratives.com.pk/thinktank/on-the-road-to-recovery/

For the record, it is instructive to note that within a few months after the ending of the last programme in September 2016, the IMF was sounding the alarm bells and cautioning the government to take actions to stop the rapid deterioration in critical economic indicators. These warnings were clearly reflected in the July 2017, Article IV, IMF consultation report that inter-alia included the following critical observations:

Exhorted the PML-N government to safeguard the macroeconomic gains of the completed programme through continued implementation of sound policies, and to continue with structural reforms to achieve higher and more inclusive growth.
Warned that foreign exchange reserves have declined since the end of the EFF-supported programme and remain below comfortable levels.
Cautioned that on the structural front, progress in electricity sector reforms has been mixed, with a renewed build-up in circular debt.
Pointed out that massive financial losses of ailing public sector enterprises (PSEs) have continued.


------------------

The banking sector under the leadership of the State Bank of Pakistan is opening up inclusive financing in new areas such as mortgage finance, agriculture finance and SME finance. The State Bank of Pakistan’s Roshan Digital Accounts are facilitating investment by overseas Pakistanis in a big way. The FDI is expected to jump manifold due to launch of phase-II of the CPEC; Chinese corporate sector investment is expected to boom. The board of Investment has been tasked to populate SEZs at a rapid pace. All impediments in the way of the FDI are being proactively reduced.

By the grace of God, Pakistan is now on the road to recovery and growth. The issuance of a global Sukuk Bonds within days of the revival of the IMF programme was well received in the international markets. Heavily oversubscribed, it is already trading at a premium. This indicates the confidence of the international financial markets in the emerging story of Pakistan; its potential and the commitment of its leadership to reform. Barring another black swan event or further escalation of global oil prices, Pakistan’s best days are here to stay. The beginnings of the long-awaited investment surge is taking shape, the stock market is poised to see the return of the foreign portfolio investor, successful completion of a few large ticket privatization transactions will catalyze direct foreign investment towards new highs. For the first time in 40 years we are enjoying relative peace on the borders and peace within. If we are able to persistently build on this momentum, the sixth largest and most youthful country in the world can rapidly progress on the road of development, lift its masses out of poverty and enable it to join the ranks of the prosperous.

Riaz Haq said...

At just 30%, #Pakistan has among world's lowest #trade-to-#GDP ratios, leaving lots of room for growth. Most of its export are textiles Pak #exports are relatively more diversified compared to #Bangladesh and #Cambodia, but less diversified than #India's https://www.adb.org/sites/default/files/publication/768386/pakistan-economy-trade-global-value-chains.pdf

https://twitter.com/haqsmusings/status/1493052397496594432?s=20&t=4tOefQ2CRak0Efy2TL9rGA

https://www.dawn.com/news/1674830

Pakistan exhibits one of the lowest trade-to-GDP ratios in the world showing at just 30 per cent. However, it is not all doom and gloom and the country has a lot of room for improvement, according to the Asian Development Bank (ADB).

One viable strategy that Pakistan can adopt to boost its growth is to further open its economy to trade. At just 30pc, Pakistan exhibits one of the lowest trade-to-GDP ratios in the world, even when taking its size into account, the ADB says in its report titled ‘Pakistan’s Economy and Trade in the Age of Global Value Chains’.

This indicates great potential for improvement. Studies have affirmed numerous benefits to economic openness, including opportunities for specialisation, access to wider markets, the inflow of know-how, and the formalisation of the economy.

Existing patterns indicate that Pakistan’s trade is currently oriented to the United States, Europe, and China. It specialises in textiles, though some of its agricultural products are sold to the Middle East. Interestingly, it does not have a significant trading relationship with its proximate neighbours in South Asia. The only economy for which it is a major market is its northern neighbour Afghanistan, the report points out.

While the vast majority of its export products fall under the textiles grouping, formal measures of export concentration suggest that Pakistan’s exports basket is relatively more diversified, especially compared with other major textile exporters like Bangladesh and Cambodia. However, its exports are less diversified than India.

The report used statistics from 2019 since 2020 was an unusual year [owing to Covid-19] portraying a snapshot of economic openness across various levels of GDP for 166 countries and economies with available data, and for economic openness of Pakistan, it says it is less open than India and Bangladesh. It is only more open than Ethiopia, Brazil and Sudan.

The ADB says Pakistan is a relatively large country, however its trade openness remains remarkably low. Citing example, it says countries that have GDPs comparable to that of Pakistan but with much higher trade-to-GDP include the Philippines, the Netherlands, and Viet Nam. India’s GDP is almost 10 times larger than Pakistan’s, yet trade plays a greater role in its economy, according to the report.

Pakistan has historically experienced uneven growth and remains among the least open economies in the world, even after taking its relatively large size into account.

What it does export is dominated by textile products and rice, though a formal measure of concentration suggests that its exports basket is on the whole quite diversified.

The dominance of textile products in Pakistan’s exports raises the issue of diversification — or potentially the lack of it. Concentrating too much on only a few sectors or products poses risks to an economy since shocks to the dominant sector can more easily cause an economy-wide recession.

Pakistan can adopt to boost its growth to further open its economy to trade. Benefits to economic openness include opportunities for specialisation, access to wider markets, and the inflow of investments, technology, and know-how. There is also evidence that trade promotes the reallocation of labour from the informal to the formal sector.

Riaz Haq said...

The landmark IGCEP document that covers a planning period of 10 years would be revised every year. It would act as a primary document for adding new capacity for power generation to meet future demand “in a scientific and systematic manner thus avoiding the boom and bust cycle which we have experienced in the past”, a statement said on Friday.


https://www.thenews.com.pk/print/895082-nepra-approves-igcep-2021-30-envisions-re-share-of-60-percent


According to the IGCEP, the energy mix of the country which was currently highly skewed towards imported fuels including coal, furnace oil and RLNG, would be substituted with indigenous resources including hydel, local coal, bagasse, wind and solar on least cost basis.

The use of furnace oil would be reduced to 2 percent only from the current usage of 19 percent. Similarly, the use of RLNG and imported coal would be decreased to 11 percent and 8 percent from their current usage of 17 percent and 11 percent, respectively.

At the same time, the document envisions massive increase in the contribution of hydropower and other renewable energy resources, including bagasse, wind and solar.

The contribution of hydel, wind and solar, which currently stands at 28 percent, 4 percent and 1 percent, respectively would be increased to 39 percent, 8 percent and 13 percent, thereby increasing the total share of RE to the tune of more than 60 percent.

It is pertinent to mention that on the recommendations of NEPRA, Council of Common Interest (CCI) has approved inclusion of hydro in the RE category, which has resulted in immediate increase in the foot print of RE of Pakistan to 34 percent.

The power regulatory authority feels extremely satisfied that proposed IGCEP was based on exploration of indigenous and RE resources for generation of low cost environment-friendly electricity.

The authority appreciates the efforts of the young engineers of the planning department of NTDC which developed the IGCEP using indigenous capability.

Further, NEPRA recognises the efforts of all other stakeholders, especially the energy departments of the provinces and Power Division of Ministry of Energy which have provided their very useful input in preparing this IGCEP and improving the same.

The authority also recognised and congratulated CCI for approving the initial assumptions for this IGCEP which paved the way for its speedy approval by the regulator.

Riaz Haq said...

In a major development for the power sector, the Senate passed on Thursday the Weighted Average Cost of Gas (WACOG) bill.

The development was announced by Federal Minister for Energy Hammad Azhar who said the bill is a "historic reform", which will ensure Pakistan’s energy security.

“WACOG bill has been passed today by Senate as well. It is a historic and long-pending reform that will ensure the energy security of Pakistan,” said Azhar in a tweet.



https://www.brecorder.com/news/40155128

The federal minister was of the view that the development would allow the government to embark upon the reform of the “gas pricing structure, remove anomalies and enhance supplies of imported gas”.

Azhar said that the reform is as significant as the approval a couple of months ago of Indicative Generation Capacity Expansion Plan (IGCEP) model for power purchase.

“Both historic reforms in power and petroleum sector have been carried out by PTI govt in the last six months,” he added.

Riaz Haq said...

What is the PPP of Pakistan?
The economy of Pakistan is the 18th largest in terms of purchasing power parity (PPP), and 43rd largest in terms of nominal gross domestic product.
...
Economy of Pakistan.
Statistics
Population 207.68 million (5th) (2017 national census)
GDP $347 billion (nominal; 2021). $1.5 trillion (PPP; Jun 2021)

Riaz Haq said...

Pakistan creating #export miracles under #imrankhanPTI. #Pakistan`s monthly exports soared by 51.23% in Feb 2022 compared to February 2021. Pakistan`s #exports witnessed an increase of 32.77% during the first 8 months of the current fiscal year from the same period last year.
http://en.ce.cn/Insight/202203/19/t20220319_37417208.shtml


Editor's note: Cheng Xizhong, Visiting Professor at Southwest University of Political Science and Law,Special Commentator of China Economic Net, former Defense Attache in South Asian countries. The article reflects the author's opinions and not necessarily the views of Gwadar Pro.

Pakistani Prime Minister Imran Khan's series of policies to encourage exports are now producing great achievements. Over the past year, despite the severe pandemic and the downturn of the world economy, Pakistan's exports of various commodities and services have increased significantly, which reflects the wise and correct decision-making of the Imran Khan administration.

According to the latest report of the Pakistan Bureau of Statistics (PBS), Pakistan`s exports witnessed an increase of 32.77% during the first eight months of the current fiscal year as compared to the corresponding period of the last fiscal year.

Among various export commodities and services, textile exports rose sharply by 26.08% during the first eight months of the current fiscal year as compared to the corresponding period of the last fiscal year. The exports of information technology (IT) services shot up by 32.63% during the first seven months of the current fiscal year as compared to the corresponding period of the last fiscal year, earning $1,486.89 million.

It was another miracle that last month, Pakistan`s exports soared by 51.23% as compared to February 2021.

In my point of view, in addition to the export stimulus policies, these amazing achievements are closely related to the Imran Khan administration's correct macroscopic equilibrium between pandemic prevention and control and economic development, export-oriented industry development, and continuous successful expansion of China-Pakistan Economic Corridor (CPEC) and Special Economic Zones (SEZs).

I have noted that in terms of specific measures, the Pakistani government has launched drastic reforms with the Asaan Karobar Programme as a historic and nationwide reform drive to improve the ease of doing business in Pakistan. In recent years, three rounds of reforms have been successively introduced. Around 167 reform measures have been taken up with federal and provincial departments, of which 115 reform measures have already been implemented involving 75 departments, benefitting more than 30 business sectors.

In order to constantly improve the business environment for expanding imports, the Pakistani Ministry of Commerce launched an online portal aimed at identifying and then removing regulatory obstacles and problems through active involvement of private sectors and business associations. The State Bank of Pakistan, Securities and Exchange Commission of Pakistan, and Federal Board of Revenue all coordinated their efforts in ensuring a business-friendly environment in the country.

I believe that the sustained and substantial increase in exports will enhance Pakistan's financial capacity for further promoting industrialization and modernization and improving people's livelihood.

Riaz Haq said...

Arif Habib Limited
@ArifHabibLtd
Cost of Power Generation down by 26.9% MoM during Feb’22

Feb’22: PKR 8.94/KWh, +89.6% YoY | -26.9% MoM
8MFY22: PKR 7.79/KWh, +77.7% YoY

https://twitter.com/ArifHabibLtd/status/1505560053415219206?s=20&t=ZjuzMeRqtMxJ5u0DZQbobA

Riaz Haq said...

#China, #Pakistan agree to enhance pragmatic ties in #agriculture, #economy and #trade, #finance and information #technology. Joint statement by #Chinese FM Wang Yi & Pak FM Shah Mahmood Qureshi in #Islamabad. #OICInPakistan #OIC #CPEC https://www.devdiscourse.com/article/international/1972202-china-pakistan-agree-to-enhance-pragmatic-ties-in-agriculture-economy-trade

During the meeting ahead of the Organization of Islamic Cooperation (OIC) on Tuesday, Wang said that China is willing to work with Pakistan to further synergize their development strategies, conduct systematic exchanges on governance experience and improve long-term cooperation plans. Noting that the Pakistan-China relations are at their best in history, Qureshi described that Pakistani Prime Minister Imran Khan's recent visit to China was very successful, and the leaders of the two countries have reached a large number of important consensus, Xinhua News Agency reported.

The Pakistan-China friendship is the cornerstone of Pakistan's foreign policy, he said, adding that as all-weather strategic partners, Pakistan and China have stood together through thick and thin, helped and supported each other, as well as stood firmly together at critical moments. The Pakistani side stands ready to work with China to implement the consensus reached between the leaders of the two countries, and expand practical cooperation in various fields including agriculture, economy and trade, finance and information technology, Qureshi said while calling for increased investment from China to help push Pakistan's industrialization process, Chinese news agency said.

It further reported that Wang said that the Pakistan-China All-Weather Strategic Cooperative Partnership is unique and time-tested, and the two countries have become good neighbours, good friends, good partners and good brothers who trust each other. The traditional friendship between China and Pakistan is rock-solid, which is a precious treasure for both sides, he added. China hopes that Pakistan will get more deeply involved in China's new development landscape with a further convergence of interests, Wang said.

China is willing to expand imports from Pakistan and support Chinese enterprises in investing in Pakistan, so as to help Pakistan enhance its capacity of independent development. Qureshi welcomed Wang who had come over to attend the 48th session of the Council of Foreign Ministers of the Organization of Islamic Cooperation (OIC), saying that the first time participation by a Chinese foreign minister in the meeting is of historical significance, which shows China's support for Pakistan and that China attaches great importance to Islamic countries.

As an OIC founding member, Pakistan is willing to push the OIC to deepen its friendly ties with China, he said, according to Xinhua News Agency. Wang arrived in the Pakistani capital on Monday to attend the 48th session of the Council of Foreign Ministers of the Organization of Islamic Cooperation. (ANI)

Riaz Haq said...

#German Deutsche Bank: “Pakistan will be in good shape” longer term, partly on rising exports, and that many multinational firms are bullish on the country and a few rank Pakistan among their top five destinations" #Pakistan #economy #imrankhanPTI #FDI https://www.bloomberg.com/news/articles/2022-03-24/deutsche-bank-says-trade-balance-to-pressure-pakistan-rupee

Pakistan’s currency could be weakened as the surge in energy and commodities prices deepens the nation’s current account deficit, according to Deutsche Bank AG’s country head, referring to the broadest measure of trade.

“That’s a key concern for the economy and for the business community,” the bank’s chief country officer, Syed Kamran Zaidi, said in an interview. “That is obviously something which the banks are also cautious about.”

The South Asian nation, which imports most of its fuel needs, saw its energy bill rise to $13 billion in the first eight months of the year that started in July, more than double the same period of the last fiscal, according to government data. Costs could increase further as oil prices have since surged above $100 a barrel amid supply concerns following Russia’s invasion of Ukraine.

A weaker rupee may be among the factors that pressure the central bank to raise borrowing costs, he added, estimating the benchmark target rate to increase between 50 and 100 basis points in the next few meetings, after being left unchanged for the previous two.


“The market has already incorporated this change as can be seen by secondary market yields of Treasury Bills and Pakistan Investment Bonds” that reflect short- and long-tenor instruments, said Zaidi.

Pakistan’s short-term bond yields have increased by at least 150 basis points in the past month, according to central bank data. Meanwhile, Pakistan’s rupee slipped for a seventh day to a record low 181.73 per dollar on Tuesday. Zaidi declined to share a forecast for the rupee.

The current account last month was a $545 million deficit, narrower than the $2.5 billion record shortfall in January, but still more than 16-times larger than the same month last year, according to central bank data.

The Frankfurt-based firm, which has been in Pakistan for 60 years, has described itself as one of the largest custodian businesses in the country and facilitates more than 40% of onshore institutional investment flows. It only offers corporate and not consumer banking in Pakistan. It has also launched a new foreign exchange trading platform for corporate clients in Pakistan.

Zaidi added that “Pakistan will be in good shape” longer term, partly on rising exports, and that many multinational firms are bullish on the country and a few rank Pakistan among their top five destinations. At least two of those companies are planning new factories in Pakistan, he said, declining to provide details as the information is private.

Riaz Haq said...

Federal Minister for Industries and Production Makhdum Khusro Bakhtyar said LSM growth grew by 8.2 percent in February 2022, mean while, it posted growth of 7.6 percent during July-Jan FY22. He added that all major industries including automobile and fertilizer industry had showed remarkable growth in this duration, said a statement issued here on Saturday.

https://dailytimes.com.pk/904514/lsm-growth-up-8-2pc-in-feb-2022-khusro/

The Minister noted that growth of LSM is imperative to enhance manufacturing base and job creation in the country.

He said recently Prime Minister of Pakistan Imran Khan announced Industrial Promotion Package which would not only revitalize industrialization in the country but also enhance our manufacturing sector. According to PBS data reported on Friday, the industry output increased by 8.2 percent during the month of January 2022 compared to the growth of January 2021 on year on year basis.

The major sectors that showed positive growth during July-January (2021-22) included textile (2.9pc), food (3.4pc), beverages (2.5pc), tobacco (21.9pc), wearing apparel (18.3pc), leather products (4.5pc), wood products (172.2pc), paper and board (8.2pc), coke and petroleum products (0.5pc), chemicals (5.4), Chemical products (15.5pc), automobiles (63.5pc), iron and steel products (17.52pc), furniture (553.pc),automobiles (63.5pc) and other manufacturing (22.2pc).

---------

LSM growth jumps 7.6 pc in 7 months

https://www.app.com.pk/business/lsm-growth-jumps-7-6-pc-in-7-months/

ISLAMABAD, Mar 18 (APP): Large Scale Manufacturing Industries (LSMI) production grew by 7.6 percent during the first seven months of the current fiscal year as compared to the corresponding period of last year, Pakistan Bureau of Statistics (PBS) reported Friday.

The LSMI Quantum Index Number (QIM) was recorded at 120 points during July-January (2021-22) against 111.5 points during July-January (2020-21), showing growth of 7.6 percent, according to latest PBS data.

The highest increase of 9.7 percent was witnessed in the indices monitored by the Provincial Board of Statistics (BOS), followed by 6.9 percent increase in indices monitored by Ministry of Industries and 0.5 percent increase in the products monitored by the Oil Companies Advisory Committee (OCAC).

On year-on-year basis (YoY), the industry rose by 8.2 percent during the month of January 2022 compared to the growth of January 2021, according to PBS latest data.

The major sectors that showed positive growth during July-January (2021-22) included textile (2.9%), food (3.4%), beverages (2.5%), tobacco (21.9%), wearing apparel (18.3%), leather products (4.5%), wood products (172.2%), paper and board (8.2%), coke and petroleum products (0.5%), chemicals (5.4), Chemical products (15.5%), automobiles (63.5%), iron and steel products (17.52%), furniture (553.%),automobiles (63.5%) and other manufacturing (22.2%).

The commodities that witnessed negative growth included pharmaceuticals (3.5%), rubber products (25.5%) and electrical equipment (1.2%).

It is pertinent to mention here that the provisional QIM is being computed on the basis of the latest production data received from sources, including OCAC, Ministry of Industries and Production (MoIP), and PBS.

Riaz Haq said...

Pakistan’s Political Crisis Has Been an Energy Crisis, Too
Successive governments have failed to back renewables, cutting the country off from the cheapest source of indigenous energy. The new prime minister could change all that.


https://www.bloomberg.com/opinion/articles/2022-04-17/pakistan-s-political-crisis-is-an-energy-crisis-too-wind-solar-would-help


The political crisis that pitched Pakistan’s prime minister Imran Khan from office wasn’t just about the failure of his anti-corruption agenda and mismanagement of an economy where inflation running at nearly 13% has driven months of opposition protests. It’s also, as with so many of Pakistan’s political crises, about energy and exchange rates.

For decades, heavy dependence on imported energy has constrained growth. To break out of its chronic pattern of stagnation, Pakistan needs more power for its industrial, household and transport sectors. Whenever that has happened in the past, however, a rising bill for imported fossil fuels has prompted one of its periodic balance-of-payments crises. The International Monetary Fund bailout that’s widely expected within months would be Pakistan’s 19th since the early 1970s.

Riaz Haq said...

Soaring prices of liquefied natural gas (LNG) and coal on the international markets have left Pakistan, the world’s fifth-most populous nation, with having to cut electricity supply to households and industry as the country in a deep political and economic crisis cannot afford to buy more of the expensive fossil fuels.

https://oilprice.com/Latest-Energy-News/World-News/High-Energy-Prices-Lead-To-Power-Cuts-In-Pakistan.html

Pakistan—whose population is the fifth largest in the world after China, India, the United States, and Indonesia—started to feel the pinch of high energy prices as early as last autumn, when it was struggling to procure imported LNG for its power plants. Pakistan’s predicament came amid a global natural gas crunch and surging prices for the fuel in Europe and Asia, months before prices shot up again as a consequence of the Russian invasion of Ukraine.

As global energy prices remain elevated and highly volatile with the Russian war in Ukraine, Pakistan—dependent on imports with relatively poor state finances—is especially hard hit.

The energy crisis, and the political crisis with last week’s ousting of Imran Khan as prime minister of the country, which has nuclear weapons, have combined to throw the Pakistani state budget and finances into disarray.

Now Pakistan cannot afford to buy more LNG and coal, on which its power plants rely to generate electricity, Bloomberg reported on Monday.

In the middle of last week, on April 13, a total of 7,140 megawatts (MW) capacity plants were shut either due to fuel shortage or technical faults, Miftah Ismail tweeted. Ismail has been picked to serve as a finance minister by new Prime Minister-designate Shehbaz Sharif.

According to Bilal Kayani, Assistant Secretary General at the Pakistani party PMLN, foreign exchange reserves at the State Bank of Pakistan (SBP) amounted to just $10.8 billion on 8 April, a day before Imran Khan was ousted through the vote of no confidence. That’s less than 2 months of import cover. Reserves declined rapidly by $5.4 billion in just 5 weeks, Kayani said.

Riaz Haq said...

Pakistan: Experts stress shifting to coal for energy needs

https://tribune.com.pk/story/2353970/experts-stress-shifting-to-coal-for-energy-needs


Power sector experts have emphasised upon Pakistan to push harder for utilisation of lignite - an economical alternative to imported furnace oil and RLNG (re-gasified liquefied natural gas) - as it is crucial for the country’s ambition to achieve higher economic growth through industrialisation.

Besides industrialisation, provision of electricity to domestic consumers by using local coal reserves could serve the purpose of generating cheap electricity and curbing the ever increasing circular debt in the power sector, they added. They were of the view that the incumbent coalition government, led by Prime Minister Shehbaz Sharif, inherited fiscally unsustainable circular debt of nearly Rs2.5 trillion and lofty subsidies on energy prices, as well as re-surging blackouts despite surplus generation capacity. Electricity at current price is not affordable for businesses and residential consumers.

According to the government, the electricity generation cost rose by over 66% in March compared to a year ago because of the surging global energy prices.

The generation cost has surged 66.2% to Rs9.22 kWh in March this year from Rs5.55 kWh a year ago owing to spike in imported fossil fuel prices.

“Pakistan should now focus on local coal reserves for power generation as an alternate to imported fuel and coal given that its cost is much cheaper than the imported coal,” emphasised Sino-Sindh Resources Deputy CEO Chaudhary Abdul Qayyum.

Talking to The Express Tribune, Qayyum said that the local coal prices were not sensitive to international price fluctuations.

“Local coal at Thar is available for as low as $40 per ton and with rise in mine scaling, its prices will fall further to $30 a ton,” he pointed out.

“The best thing is that the government has to pay the price in local currency.”

Currently, around 16 million tons of coal is being imported by Pakistan to operate four power plants, Qayyum said adding that if these plants had been running on local coal, massive amounts of foreign exchange could have been saved by the country besides generation of cheap electricity.

He underlined that the recent commodity cycle had witnessed imported coal prices going up to $420-470 a ton from $100-120 a ton, making imported coal even more expensive than residual fuel oil (RFO) for power production.

Riaz Haq said...

Global Coal Production Capacity Rose in 2021

https://earth.org/global-coal-production-capacity-rose-in-2021/


Natural gas shortage and China’s energy crisis have driven global coal plant production capacity to surge last year, undercutting global net zero efforts.



The global capacity of coal power plants rose by nearly 1% in 2021 as the world recovered from the Covid-19 pandemic and increased attention on energy security, according to a report by a US environmental group Global Energy Monitor (GEM).

The research found that global coal plant capacity grew 18.2 gigawatts to about 2,100 GW or about 0.87% last year.

“It’s up by a small number,” said Flora Champenois, a GEM research analyst. “But it comes at a time when the world needs a dramatic fall in capacity, not any rise.”

The small spike can be attributed to a number of new coal plants that opened in China, which just about offset all the coal plant closures around the world in a global effort to cut down greenhouse gas emissions and limit global warming.

China, the world’s top emitter, has pledged to carbon peak by 2030 and to achieve carbon neutrality by 2060. But the country has recently turned back to coal, the dirtiest fossil fuel, due to its domestic energy crisis. To ensure power and heating supply for its residents, China has been increasing coal production capacity and built more than triple the amount of new coal power capacity as the rest of the world combined.

At the same time, Russia’s invasion of Ukraine put the issue of energy security at the centre of the global stage, where countries including Germany have been reconsidering turning to coal again – instead of relying on nuclear power like the UK – to compensate for Russia’s natural gas.

Global demand for coal has been on the rise. In 2021, the world generated more electricity from coal than ever before, increasing 9% from the previous year, according to the International Energy Agency (IEA). Total coal consumption, which covers electricity generation and industrial uses, is also expected to grow by another 2% in 2022. The IEA projects the high levels will likely last through to at least 2024, which is at least 3 billion tons higher than a scenario reaching net zero by 2050.

The latest IPCC climate report warns that global greenhouse gas emissions must peak by 2025 and be to halved by the end of the decade for a chance to limit global warming to 1.5C.

Despite rising inflation, coal will also likely remain to be one of the relatively cheapest fuels available, according to Bloomberg. However, there has been some positive trends. The report highlighted how capacity of global coal plants being built in 2021 decreased by 13%, dropping from 525 GW in 2020 to 457 GW.

Riaz Haq said...

Pakistan Private Sector Energy Project
@PFAN_PPSE
#Pakistan can get up to 20% of total power capacity from variable renewable energy simply by focusing on existing substations, mainly resulting in a series of small solar projects - according to ⁦⁦⁦⁦
@WorldBank


https://twitter.com/PFAN_PPSE/status/1529715190018760706?s=20&t=m-2H6D6T1PemgQz3hbj-pA


https://blogs.worldbank.org/endpovertyinsouthasia/expanding-solar-and-wind-pakistan-requires-decisive-action


Rooftop solar can be delivered quickly and at a relatively low cost, while avoiding the need for additional transmission & distribution infrastructure.

Perhaps there can be a silver lining from the current load shedding--or planned power cuts due to insufficient supply--that is affecting the electricity sector in Pakistan: the immediate implementation of competitive bidding for new solar and wind capacity. For the last few years, the dominant narrative around the electricity sector has been one of “surplus capacity”, which has been used to justify postponing the procurement of new solar and wind. One of the concerns is that because the power sector must pay legacy fossil fuel generators regardless of whether they generate power (this is called “capacity payments”, for the capacity they provide to the system), adding additional capacity will further harm the financial viability of the sector. However, the current crisis illustrates the folly of such short-term thinking.

As highlighted in a report just published by the World Bank – “Variable Renewable Energy Competitive Bidding Study” – competitive bidding, whereby the government contracts for new power supplies through a reverse auction process based on the tariffs offered by different private sector developers, must start in 2022 to meet the requirements of the government’s Indicative Generation Capacity Expansion Plan 2021-2030. This envisages 2 Gigawatts of additional solar and wind capacity coming online from 2024 onwards, with further additions in subsequent years. Previous analysis published by the World Bank suggests that the IGCEP 2021-2030 targets are not ambitious enough, with scope for a more aggressive expansion of variable renewable energy. Considering the heavy reliance on expensive fossil fuels – which have dramatically increased in cost over the last few months – Pakistan would be saving money right now if it had been more ambitious in the past, even allowing for capacity payments.

Pakistan can get up to 20% of total power capacity from variable renewable energy simply by focusing on existing substations.
wind power

Implementation of competitive bidding will need to be taken forward by both the federal government (under the auspices of the Alternative Energy Development Board) and the provincial governments through a coordinated process. In addition to launching a competitive bidding process for the existing “Category 3” projects (those for which Letters of Intent have been issued under the previous policy regime), there is huge potential for quick wins by identifying substations that have surplus integration capacity and then designing a competitive bidding process involving a large number of such sites. As noted by the World Bank in our last study on this topic, the country can get up to 20% of total power capacity from variable renewable energy simply by focusing on existing substations, mainly resulting in a series of relatively small solar projects spread across all provinces.