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$75 Billion investment for Pakistan


Several multinationals are eyeing the lucrative energy sector of Pakistan. The world bank and international consortiums are already funding the mega project which include the Bhasha Dam, the Iran Pakistan gas pipeline, the Gwader Port, the Windfarms, and the Pakistan-Tajikistan highway. There are unprecedented investment flows from the overseas Pakistanis as evidenced by the substantial increase in funding. The Reconstruction Opportunity Zones (ROZ) will increase the exports to the US and the EU which are opening up their markets for Pakistani products. Pakistan vision 2020/

ISLAMABAD — Pakistan expects to attract 75 billion dollars investment over the next five years, helping to overcome a crippling energy crisis and Taliban violence, a cabinet minister said Friday.

“Our target is to attract a total of 15 billion US dollars per year through foreign and local investment,” said minister for investment Waqar Ahmed Khan, unveiling a draft policy.

“Our country has immense opportunities for both foreign and local investment and we have drafted this policy to cash them,” he said, hailing recent military operations against the Taliban for improving Pakistan’s image abroad.

The Pakistani army launched an offensive to dislodge Taliban guerrillas from the northwestern districts of Buner, Lower Dir and Swat after rebels flouted a peace deal and thrust further south towards the capital Islamabad in April.

“People around the world are satisfied after our military offensive against the Taliban and we hope this policy will provide us good results,” said Khan.

Pakistan faces a catastrophic energy crisis, able only to produce 80 percent of the electricity it needs, suffocating industry, making life unbearable in extreme winter and summer, and causing widespread civil disturbance.

But Khan said the government expected “huge investment” in the power and gas sector.

“Qatar has assured us cooperation in the gas sector and there are so many other opportunities,” Khan said. Various foreign companies had also invested heavily in 3,500 megawatt electricity projects to meet demand, he added.

Khan said Pakistan was also engaged in talks with the United States and other powers to establish rehabilitation opportunity zones (ROZ) in the North West Frontier Province and tribal areas bordering Afghanistan.

“We have a rough idea of establishing 10 zones in the northwestern belt with the support of US and other foreign friends,” he said. Pakistan eyes $75 bln investment: minister. (AFP)

The Pakistani stock market was the number one stock market in the world according to the World Bank. Its phenomenal growth this year is not an anomaly but rather capstones ten years of unprecedented growth. The US ambassador made some positive comments about the stock market of Pakistan. Arab investment is pouring in and the Chinese investment is ready to break the dam. Local entrepreneurship is the main engine behind the growth of the stock market.

AGRICULTURE: Food for UAE from Pakistan: Investros set up agri bank to help farmers. Agriculture remains a bed of great opportunity. UEA buys $5 Billion worth of farms in Pakistan to ensure food supplies from Pakistan and avoid food shoartage in the Gulf States. Horticulture and agriculture profits are ripe for the picking (http://rupeenews.com/2008/05/09/got-milk-pakistan-gulfs-food-granery/). The Gulf states recognize the potential of Pakistan. They have identified a policy and are implementing a food security plan for the Greater Middle East. Pakstani labor, land and resources are a major part of the policy.` The Gulf region imports $200 bilion of food. Pakistan is poised to grab a major share of that market.

COAL Coal mining and generation of electricity is a huge opportunity for investors because Pakistan has the worlds 4th largest coal reserves (http://www.dawn.com/2004/09/20/ebr10.htm).

Pakistan’s Thar Desert contains the largest coal reserves discovered to date, covering an area of 10,000 square kilometers. The Thar Coal Field, should it be developed, will yield over 200 billion ton of coal used to produce electricity, it will yield sufficient power to make Pakistan self-sufficient in Electrical power.http://www.pakistaneconomist.com/issue2001/issue34/i&e1.htm

BULLET TRAINS: There is also great opportunity is setting up bullet trains and railway projects. Investors can also take advantage of the booming Call Centers in Pakistan as well as off-shore factories in software. The Software industry in Pakistan is set to reach about 11 Billion Dollars in the next few years. Labor rates are low, and with China setting up 6 new industrial zones, manufacturing will take off. In the entertainment industry, there is a lot of local talent for movies as well as music which has been very successful.There are some exceptions to the gloom, particularly in “frontier” markets like Egypt and Pakistan that aren’t on the radar screen of the average investor. Shares in Egypt and Pakistan have risen 7.7% and 7.4%, respectively. Heidi Moore of the Wall Street Journal put a very unattractive picture in her article which is really disgusting. This shows the basic prejudice of the author.

Opportunities for growth for Pakistan

STRUCTURAL REFORMS IN AGRICULTURE: (http://rupeenews.com/2008/05/09/got-milk-pakistan-gulfs-food-granery/) Pakistan needs structural reforms in agriculture to raise the per hectre yields. High quality seeds, fertilizer, tractors and combine harvesters could totally revolutionize agriculture and become a export powerhouse. A lot of agricultural products are lost in the supply chain from the field to the supermarket creating food shortages and increase in prices. According to some estimates more than 50% of Pakistani agricultural goods are lost in the archaic Indus Valley era supply chain. Refrigerated cargo trucks could ship vegetables and fruits to refrigerated ships to their destinations in Europe and American. Pakistan could ship roses, and flowers kept at almost zero degree temperature and get Billions of Dollars during Valentines Day.

Just the GCC buys more than $200 billion of agricultural products from Denmark and Europe. Pakistan is the 4th largest producer of milk. It should be inundating the gulf with Pakistani milk and dairy products and halal meat form Pakistani farms.

If you were a smart investor, you would invest in a country with a track record of performance. Last year the stock market set many records and kept on going up. While many stock markets showed turbulence and weaknesses, the investors in Pakistan’s Stock Market kept on raking in the profits. After being stung by the Dubai Ports fiasco, many Middle Eastern and Asian investors have been heavily investing in the Pakistani infrastructure as well as the telecommunication industry. As others jump on the bandwagon, there are a lot of possibilities which need to be tapped into.

If one could travel from Karachi to Pindi in 5 hours, what would this do to the economy of Pakistan? Agricultural goods could be exported instantly, and the congestion on the roads would be reduced dramatically. People could travel with ease. Cost? About $2 Billion. the ROI on this would be very short. Mr. Sharif is the only politicians who has talked about this for decades, and done nothing to make it happen. Pakistan’s Rail system has to be linked up to the world. Its pathetic situation cannot be improved by simply renaming old trains and taking credit for the new ones. Pakistan has had the technology to build railway tracks. It has had this technology for 40 years. There is no excuse not to have all major cities linked dup by double tracks and built on international bot old British guages..

Pakistan had the technology to build roads for 4 decades. The roads should be built to all nooks and corners. Though much has been said about freeways, a lot of them are on paper only and the network should be ring roads around the entire country.

Baluchistan is Pakistan’s largest province, and only a fraction of the province is used. All government land in the province should be opened up to settlers of Pakistani origin who have Pakistani citizenship. Top priority should be given to the Baluch. LIke the wild wild west of America, the land should be given to all those who can stake it out and promise to live on the land in the harshest conditions. Those who cannot make it must forfeit the land back to the government. Millions will pour into the province from Punjab Sindh and elsewhere and build the province. Canals will be dug, underground water found and desalination plants running on solar and wind energy will be making life in the 22nd century easier for the new settlers.

END OF ARTICLE

APPENDIX 1: US AMBASSADOR’S SPEECH

Pakistan stock market has huge potential: US ambassador Staff Report

KARACHI: US Ambassador to Pakistan, Anne W Patterson, Thursday visited Karachi Stock Exchange (KSE) and held a meeting with its management and board of directors.

US Consul General Kay L Anske and Press Attache Elizabeth O Colton were also present on the occasion.

Speaking on this occasion, she said that Pakistan stock market has a ‘huge’ upside potential and she was keen to be at the premier stock exchange of Pakistan.

“I was preparing for the job and I picked up the Wall Street Journal one day and there was a front page article on ‘terrorism in Pakistan’ and on the business page there was a story on KSE being the most successful stock exchange in the world. So I wanted to visit this stock exchange (KSE) which is the symbol of Pakistan’s growth and of hopefulness in the economy”, she said.

“I had also heard a lot about the distinguished and impressive management the stock market had here,” she said. Earlier, Managing Director KSE, Adnan Afridi, gave a presentation on country’s economy, stock market and performance of Pakistan’s premier bourse.

He said Pakistan has experienced a sustainable growth and can continue on the path provided there is continuity and longevity of economy policies. “It is one of the most open investment regimes in the world with 100 percent repatriation of profits that has helped in attracting investment,” he said.

Adnan pointed out that financial services and telecom sector were deregulated with the help of strong, professional regulators adopting global practices and benefiting from favourable demographics.

He said KSE was the top performer in the emerging stock markets of the world with a growth of 8.73 percent during 2008. Taiwan is the second with 5.69 percent followed by Bangkok and Singapore.

He said the growth rate of KSE is over 35 percent per annum for the last ten years as its market capitalisation has grown to $75 billion.

He said KSE was heading for de-mutualization which will make it a member of developed stock markets of the world.

Responding to a question about the prospects of long-term investment in the backdrop of security concerns, Adnan pointed out that despite ups and downs and political uncertainty in the country, foreign investment has continued to flow in.

Other members of the board of directors told US Ambassador that there were big upside expectations, once the security situation is improved. What they (fund managers) are worried is the falling rupee and lack of economic road map.

US Ambassador was told that KSE has the average multiple of 10 to 11 whereas neighboring markets including India has 17 while Bangladesh 23.

APPENDIX 2: INFORMATON ON PAKISTANI COAL RESERVES

Pakistan’s Thar Desert contains the largest coal reserves discovered to date, covering an area of 10,000 square kilometers. The Thar Coal Field, should it be developed, will yield over 200 billion ton of coal used to produce electricity, it will yield sufficient power to make Pakistan self-sufficient in Electrical power.

Pakistan’s biggest coalfield lies in Thar (Sindh) where the coal reserves are estimated to be over 175,506 million tons. Seven other coal fields in Sindh have 8,617 million tons of coal reserves. These include Lakhra, Sonda-Thatta, Jherruck, Oagar, Indus East, Meting Jhimper and Badin with reserves of 1,328 million tons, 3,700 million tons, 1,323 million tones, 312 million tons, 1,777 million tons, 161 million tons and 16 Million tons respectively.

Other major fields in the country contain reserves of over 533 million tons. These include Khost-Sharig-Harnai, Sor-Range-Degari, Mach-Abagum, Duki and Pir Ismail Ziarat in Balochistan with reserves of 76 million tons, 34 million tons, 23 million tons and 12 million tons respectively; Salt Range and Makerwal-Gullakhel in Punjab with reserves of 234 million tons and 22 million tons respectively; and Hangu in NWFP with a reserve of 81 million tons. In addition to these major fields, there exist minor coal deposits at Badiuzai, Bahol, Bala Chaka, Bhalgor, Johan, Kachh, and Margot in Balochistan; Cherat in NWFP; Choi in Punjab; Khilla (near Muzaffarabad) and Kotli in Azad Kashmir.http://jang.com.pk/thenews/jan2008-weekly/busrev-07-01-2008/p2.htm
The total Sindhi coal reserves are estimated at 185.5 billion tonnes in the country as Sindh province has the bigger share of 184,623 million tonnes that mostly exists in Thar. However, coal reserves also located at Lakhra, Sonda, Meeting Jhimpir, Indus east and Badin. In Balochistan coal reserves are estimated at 217 million tonnes in Sor-rangi, Much, Dhuki. Coal reserves in Punjab stand at 233 million tonnes at places of Salt Range and Makarwal. Coal reserves in NWFP are 91 million tonnes and AJK accounts for 9 million tonnes. Small power plants up to 25 MW can be set up at coal reserves in Balochistan and in Punjab power plants up to 80 MW can be set up to generate electricity by coal-fired power plants.

A recent speech by the US ambassador listed coal as a major area of cooperation

Just do your own google search. http://www.google.com.pk/search?source=ig&hl=en&rlz=1G1GGLQ_ENPK275&q=coal+reserves+in+Pakistan&meta=

http://www.pakistaneconomist.com/database2/cover/c2001-41.asp

Pakistan’s coal resources
By Engr. Abdul Waheed Bhutto

Coal plays an important role as a primary and an inexpensive source for power generation. In 2003, the USA produced 1,069 million short tons of coal and consumed during the same period 1,090 million short tons.

The electric power sector accounted for over 90 per cent of the US coal consumption. In 2003, the USA generated 3,691 billion kwh of electricity from electric power sector, out of which coal-fired plants accounted for 53 per cent of generation, nuclear 21, natural gas 15, hydroelectricity seven and oil three per cent.

In many other developed countries coal is being used as the primary source for power generation. In Pakistan, coal currently makes up merely one per cent of the electric power generation.

Coal is primarily classified into four major categories, or ‘ranks’: lignite, sub-bituminous, bituminous and anthracite. One of the most valuable content of coal is its carbon content which supplies most of its heating value.

However, various other factors as moisture content, ash content and sulphur are also important in determining the rank of a particular coal. Anthracite, is top ranked coal, with highest carbon content that ranges between 86-98 per cent and has a heat value of nearly 15,000 BTUs (British thermal units) per pound.

Bituminous and sub-bituminous ‘ranks’ of coal are inferior to anthracite. The bituminous variety is used primarily to generate electricity and to make coke for the steel industry.

The discovery of coal in Balochistan during the late 18th century led to its commercial utilization mainly by the North-Western Railways during the colonial regime. At present, our total coal reserves are estimated around 184.5 billion tonnes. which include the lately discovered deposits of low sulphur coal at Thar.

The local coal falls in the lignite and sub-bituminous categories. Coal from Lakhra and Sonda fields of Sindh has relatively higher moisture, sulphur and ash contents.

As opposed to this, Thar coal having an estimated reserves of 184.6 billion tonnes is much superior in quality due to low sulphur content and higher heating value. Well-developed coal-fields are located in Punjab, Balochistan and Sindh.

SINDH: The Sindh province has total coal resources of 184 billion tonnes. The quality of coal is mostly lignite-B to sub-bituminous A-C. Brief description of two major deposits is given as under:

THAR: A large coal-field, having a resource potential of about 175 billion tonnes, has been discovered at Thar in the eastern part of the province, about 400 km South East of Karachi.

The coal-field extends over 9,000 sq km area out of which 356 sq km area has been studied in detail by the Geological Survey of Pakistan proving nine billion tonnes coal in four blocks.

The main coal bed thickness ranges from 12 to 21 meters at an average depth of 170 meters, upper 50 meters being loose sand. The quality of coal has been determined on the basis of chemical analyses of more than 2,000 samples. The rank of the coal ranges from lignite-B to sub-bituminous-A.

LAKHRA: The Lakhra coal-field in Dadu District, lies 16 km to the west of Khanot railway station on the Kotri-Dadu section of the Pakistan Railways. It covers approximately an area of about 200 sq km. It is well connected with Karachi and Hyderabad through roads and railways. Mining in the area is done underground.

Three coal seams are established in the field but generally only the middle seam is known, as Lailian bed possesses the necessary persistence and thickness for consideration in large-scale mining. It shows a variation in thickness from 0.75 meter to 2.5 meters.

Average thickness is 1.5 meter. Coal from Lakhra has an apparent rank of lignite A to sub-bituminous C. The coal is dull black and contains amber resin flakes and about 30 per cent moisture. Although it can be extracted in large lumps, it dries to a moisture content of about 8 per cent when brought to surface.

It tends to crumble on longer exposure to atmosphere and is often susceptible to spontaneous combustion. Based essentially on the results of the initial exploratory work done by the GSP, more detailed exploration has been subsequently undertaken by PMDC, JICA, Wapda and the USAID.

The total reserves of the deposit have been estimated to be 1328 million tonnes with 244 million tonnes measured, 629 indicated and 455 tonnes inferred. Average annual production of coal from Lakhra is over one million tonnes. Most of this production is used in the WAPDA power plant at Khanote, Sindh and in brick kiln industry.

SONDA-JHERRUCK: Over one billion tonnes reserves of lignite quality coal have been assessed in Sonda- Jherruck coal-field. Owing to favourable location and developed infrastructure, two Chinese companies have expressed interest to conduct feasibility study for commissioning of 500 mw power generation units.

In case the feasibility study justifies commissioning of project, an investment of $500 million would be made by the Chinese consortium for establishment of coal fired power project of 500 mw. A quantity of two million tonnes coal annually would be mined to cater for the requirements of power generation units.

Balochistan: The coal seams in Balochistan are found in Ghazig formation of Eocene age. The quality of the coal is sub-bituminous A to high volatile B bituminous. The coal-fields mostly lie around Quetta in Balochistan however the following are significant:

SOR-RANGE; DEGARI; SINJIDI: Sor-Range-Degari coal-field lies 13 to 25 km south east of Quetta covering an area of about 50 sq km and is easily accessible through metalled road from Quetta.

The northern half of the field is known as Sor Range, Degari is situated at the southern end of the field. The thickness of the coal seam varies from 1.0 meter to 2.0 meters but in Sor-Range seam sections up to 5.0 meters have been encountered. The coal is of better quality with low ash and sulphur content. The quality of the coal is high sub-bituminous A to high volatile B bituminous.

CHAMALANG: These are the newly discovered coal-fields which need development. Preliminary work done by GSP in these areas has indicated that it has a good potential.

The quality of coal is also better as compared to the rest of Balochistan. The rank of the coal ranges from high volatile C bituminous to high Volatile A-bituminous with a total resource of 6 million tonne. Its heating value is +12000 BTU/lb.

PUNJAB: The Punjab’s coal fields comprise the eastern, central and western Salt Range between Khushab, Dandot and Khewra while Makerwal coal-field lies in Trans-Indus Range (Sanghar Range). The rank of the coal is sub-bituminous A to high volatile bituminous.

SALT RANGE: The Salt Range coal-field covers an area of about 260 sq km, between Khushab, Dandot and Khewra. The entire coal producing area is well connected with roads and railways.

The top seam varies in thickness from 0.22 meter to 0.30 meter while the middle seam is up to 0.60 meter thick. The lower seam is up to one meter thick and is relatively of better quality.

It is being mined in Dandot, Choa-Saiden Shah and adjoining areas. The Punjab Mineral Development Corporation and several private companies are operating the mines in the area. Reserve of the deposit is 235 million tonnes.

MAKERWAL/GULLAKHEL: Makerwal/Gullakhel coal-field is situated in Sarghar Range (Trans-Indus Range). The coal-field extends from about 3.2 km west of Makerwal to about 13 km West of Kalabagh covering an area of about 75 sq km, in Mianwali district. The quality of Makerwal/Gullakhel coal is better than that of Salt Range coal and is preferred by the consumers. Total reserves of the deposit are 22 million tonnes.

Lignite, the indigenous coal mostly found in Pakistan is a comparatively young coal geologically speaking and has the lowest carbon content of just 25-35 per cent and also the lowest heat value of only 6,000-10,000 BTUs per pound.

However, lignite, which is called ‘brown coal’, can be used for electric power generation. Lignite found in Thar has comparatively lower sulphur content, makes it more suitable for power generation after the washing process and an appropriate plant design.

The local production of coal is estimated at 3.21 million tons out of which presently over 80 per cent is being utilized by bricks makers, while the rest are being consumed by the cement industry to blend it with the imported coal to reduce the production cost, and only one per cent by the coal-based power stations.

It is reported that around 85 per cent of the cement industry has shifted on low-priced coal from relatively more expensive natural gas and furnace oil. The conversion has small impact on the local coal production because cement units are using high rank imported coal as the indigenous coal is of low quality.

Indigenous coal is blended with imported coal in small proportion, which is necessary for smooth operation of the plant. During the 2002, the cement industry utilized one million tons of imported coal from South Africa, Austria and Indonesia. Imported coal cost Rs3150 to Rs3510 per ton while local coal cost Rs1300 to Rs2500 per ton.

Use of coal as fuel in sugar industry can save around 9 million tons bagasse, which can be utilized to produce medium density fibreboard, excellent replacement of furniture-making wood and consequently saving our fast depleting forests.

Coal is also an important raw material for the production of several chemicals. Refined coal tar can be used in the manufacture of a range of chemicals including pitch, creosote oil, naphthalene, phenol, pyridine, benzene, toluene, xylene, ethylene, propylene, polyesters, plastics, synthesis gas, acetic acid, acetic anhydride.

Numerous chemicals and fuels can be manufactured from the gasification of coal. In late 1950’s, Pak-American Fertilizers, Iskandarabad, Daudkhel was based on gasification technology supplied by Lurgi to produce ammonia and ammonium sulfate fertiliser.

Sasol of South Africa has developed the processes for production of petrochemicals from coal, with high ash content by gasification. Coal under pressure and high temperature, in the presence of steam and oxygen is converted to raw gas.

Condensation and subsequent cooling of gas, yields co-products such as tar and oil. Nitrogenous compounds (Ammonia), sulfur and phenolic compound are also recovered. The purified synthesis gas after cooling is made available for conversion to synthetic fuels and or chemical production. Sasol acquired the technology from Lurgi (Germany).

South African coal reserves are largely bituminous with relatively high ash content (about 45%) and low sulfur content (1%). The advantage of SASOL process is that it can process low-grade coal and a number of high value chemicals are produced along with synthetic fuels. It is understood that Sasol or similar technology can be adopted for our coal reserves.

It’s time to explore coal and develop coal-fired power plants to not only lessen dependence on imported fuel but also to cut the cost of power production for the benefit of the industries, trade and individual consumers.

The government should also consider the utilization of indigenous coal for coal gasification, to produce high value petrochemicals, for which suitable technologies are available in the world.

Table – 1
Coal Production (Thousand Tonnes)
Year Pakistan Punjab Sindh NWFP Balochistan
2002-03 3609.3 502.3 1049.1 266.2 1791.7
2001-02 3511.8 515.2 993.0 237.4 1766.1
2001-02 3285.7 401.3 1005.6 191.3 1687.5
1999-00 3164.3 454.5 981.9 46.3 1681.5
1998-99 3377.9 479.1 1233.1 53.2 1612.5
1997-98 3144.5 365.6 1178.3 59.1 1541.5
1996-97 3496.4 425.3 1093.0 55.7 1922.0
1995-96 3465.1 514.9 1088.1 43.6 1818.5
1994-95 3009.6 416.0 1046.2 55.7 1491.5
1993-94 3214.4 465.4 1093.8 67.0 1588.1
Table-2
COAL RESOURCES
Coal Resources
(million tonnes)
Province/
Coal field Measured Indicated Interred Hypothetical Total

SINDH
Lakhra 244 629 455 – 1,328
Sonda- Thatta 60 511 2197 932 3,700
Jherruck 106 310 907 – 1,323
Others 82 303 1881 – 2266
Thar 3,407 10,323 81,725 80,051 175,506
Sub- Total 3,898 12,076 87,165 80,983 184,123

BALOCHISTAN
Kohst-Sharig-Harnai 13 – 63 – 76
Sor-Range/Degari 15 – 19 16 50
Duki 14 11 25 – 50
Mach-Abegum 09 – 14 – 23
Pir Ismail Ziarat 02 02 08 – 12
Chamalong 01 – 05 – 06
Sub-Total 54 13 134 16 217

PUNJAB
Eastern Salt Range 21 16 02 145 235
Central Salt Range 29 – –
Makerwal 05 08 09
Sub-Total 55 24 11 145 235
GRAND TOTAL 4,008 12,113 87,189 81,144 184,575

COURTESY: RUPEENEWS

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