The United States on Wednesday announced a $125 million contribution for the first phase of an energy program in Pakistan aimed at increasing electricity output and conserving energy. This comes as the second concrete announcement from the US on Pakistan’s energy needs. In late September, David Goldwyn was announced as US’ Energy Coordinator for Pakistan. They had also announced that the role of the Energy Coordinator would be to help bridge the gap between US investors and Pakistan and also assist in guaranteeing investments in the Energy sector through EXIM Bank and OPIC.  

The funding will be aimed at repairing generation facilities, improving the overall effectiveness of local utilities providers, replacing inefficient tube well pumps and promoting energy efficiency.

The first phase will cover six projects aimed at reducing the frequency of electricity blackouts that interfere with commerce and have plagued the Pakistani economy.

These six projects include:

1. Replacing or repairing 11,000 agricultural irrigation tubewell pumps, a major component of electricity transmission used by a majority of farmers across Pakistan. Rehabilitating, refurbishing, and upgrading targeted components of the Jamshoro, Muzaffargarh, and Guddu thermal power stations to recapture significant amounts of their lost capacity.

2. Jamshoro thermal power station: Improvements at Jamshoro thermal power station, which sits on the banks of the Indus River near the city of Hyderabad, will result in an additional 530 GWh/year of electricity for the national grid.

3. Muzaffargarh thermal power station: Improvements at the Muzaffargarh thermal power station, located on the banks of the Indus and Chenab rivers near the city of Multan, will result in 165 MW and a production of approximately 1,185 GWh/year of electricity for the national grid, saving $17 million in fuel per year.

4. Guddu thermal power station: A targeted rehabilitation project to improve the ageing and deteriorating gas turbines at the Guddu thermal power station will restore 33 to 55 MW of the power station’s lost capacity and produce an additional 237 to 372 GWh/year for the national grid. The more efficient units will save approximately $2.3 million per year.

5. Tarbela Dam hydroelectric power station: Installing higher performance insulation windings and supplying spare parts at the Tarbela Dam hydroelectric power station, located on the Indus River in the NWFP, will increase the station’s capacity to 80 MW — or 192 million kilowatt hours – of power. The funding will also provide additional training for staff.

6. Electricity Distribution Company Performance Improvement: The US will work closely with four of the nine public electricity distribution companies over the next three years, aiming to lower levels of electricity loss so they are comparable to those of well-run distribution companies in developed countries. Every one per cent of system-wide loss reduction represents $97 million in savings to Pakistani consumers and additional power for economic development.

Electric power distribution companies in Pakistan lose almost a third of the electricity they purchase, and some companies lose 50 per cent or more. These losses are due to weak management, non-payment by government and consumers for electricity consumed, and high technical losses from worn-out equipment.

These are all concrete steps which will help Pakistan in the long run. Critics like the Hamid Mirs, Talat Hussains, Mushtaq Minhas, Nusrat Javeeds and the unending list of pseudo intellectuals will begin doing programs that by giving access to the Tarbela dam, to do repair works or providing new equipment, be deemed as an attack on our sovereignty or “selling Pakistan to the US”. Let’s hope they think out of the box a little and think of things positively, for a change.

The whole opposition, media and the pseudo-intellectuals of Pakistan have been crying foul over the passage of this aid bill whose basic objective is “To authorize appropriations for fiscal years 2010 through 2014 to promote an enhanced strategic partnership with Pakistan and its people, and for other purposes.” Yesterday’s (October 7)  Corps Commander meeting’s apprehensions was just the icing on the cake.

Before I go on with my humble analysis of the Bill, let me pose a few questions to all the readers:

1. Do we not blame the US for most of our woes especially after Pakistan’s involvement in the Afghan Jihad of the 1980’s that has resulted in radicalization of our society through the creation of extremist organizations?
2. Have we not played a valuable role in fighting the Taliban and Al-Qaeda since 2001 who had grown in strength ever since the 9/11 attacks?
3. Has the struggle against Al Qaeda, the Taliban, and affiliated terrorist groups not led to the deaths of several thousand Pakistani civilians and members of the security forces over the past seven years?
4. Has the nation not given sacrifices by facing the wrath of terrorism especially since January 2007?
5. Have we not seen endless suicide bomb attacks in the country and absolute subversion of the writ of the state in a number of areas of the country?
6. Have we not seen 2.3 million Pakistanis leave their homes in Swat and Malakand districts, being made refugees in their own country and now being repatriated gradually during the last 6 months alone?
7. Has the nation not endured the cost of approximately USD 10 billion since the start of Operation Rah-e-Haq in May 2009?
8. During 2008 and 2009, the people of Pakistan have been especially hard hit by rising food and commodity prices and severe energy shortages. Is this statement incorrect?
9. Have we not been making efforts to contain possible nuclear proliferation and stopping networks that assist in such activities?
10. Have we not been striving to strengthen Pakistan’s efforts to develop a  strong and effective law enforcement and national defense forces under civilian leadership?
11. Don’t we want the people of under-developed areas have access to public, modernized education and vocational training to enable them to provide for themselves, for their families, and for a more prosperous future for their children?
12. Aren’t we striving to promote sustainable long-term development and infrastructure projects in all areas of Pakistan, that are sustained and supported by each successive democratic government in the country?
13. Finally, don’t we want democracy to flourish in Pakistan that would enable us to reestablish an independent and transparent judicial system, and working to extend the rule of law in all areas in Pakistan and more importantly stop military adventures in conquering their own country every ten years forever?

If I am correct then none of you would say no to any of the above questions? Exactly this is what the Kerry Lugar Bill talks about! The Bill which was presented in the US Congress can be viewed and read by all by clicking on the following link: http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_bills&docid=f:h3642ih.txt.pdf

Now let us look at some recent statements coming from the leading critics of the aid to Pakistan:

• “This is not Kerry-Lugar Bill, it is Kerry Looter Bill” – Chaudhry Shujat Hussain
• “This document in its current form is an insult and humiliation to the country” – Chaudhry Nisar Ali Khan. The actual statement in urdu was “Kerry Lugar bill kay har safhay par Pakistan kee toheen hay”
• “The conditions mentioned in the Kerry-Lugar bill are in fact against the national independence and sovereignty,” Jamat-e-Islami Spokesman
• Corps Commander conference has expressed ‘serious concerns’ on some of the clauses of the bill that they believe would affect ‘national security’

Question is how many people have read the bill in entirety? I guess not many, for having read the bill, I don’t find many reasons the bill to be considered against Pakistan’s National Security. Personally I feel that some of the fastidious people criticizing the bill are unhappy with some of the following provisions:

• Provision of additional USD 150 million in 2010 for the professionalization, equipping, and training of Pakistan police (Page 19). I guess on one hand we want our police to become better, however, when someone offers to help, it’s against national interest!
• For fiscal years 2010 through 2014, any direct cash security-related assistance or non-assistance payments by the United States to the Government of Pakistan may only be provided or made to civilian authorities of a civilian government of Pakistan (page 38). Also on page 40 the term ‘‘civilian government of Pakistan’’ is defined as one which does not include any government of Pakistan whose duly elected head of government is deposed by military coup or decree. So why are we fearful? Don’t we want a Civilian Government or are we waiting for another military coup?
• Along with FATA and parts of NWFP, Quetta and Muridke are mentioned as places where there are possible sanctuaries of extremist groups (page 6 and 32). Aren’t the Jaish Mohammad and Lashkar Taiba banned outfits? Isn’t the government already taking action against these organizations? Are we not looking towards closing possible terrorist camps? Till when are we going to remain in self denial?
• Regarding the nuclear program, which according to critics will be under jeopardy if this bill is accepted, the bill on page 49 says amongst other points that have to be evaluated in a report by the US Secretary of State “an assessment of whether assistance provided to Pakistan has directly or indirectly aided the expansion of Pakistan’s nuclear weapons program, whether by the diversion of United States assistance or the reallocation of Pakistan’s financial resources that would otherwise be spent for programs and activities unrelated to its nuclear weapons program”. This clause doesn’t say that Pakistan has to shut down its nuclear weapons program? If it does then maybe I can’t read things in black and white. It is also important to note that the language of the clause is markedly toned down from what was approved by the US Senate earlier.
• It may also be noted that the language of the Bill is far less prescriptive and stringent than the original version. Specific references to India as well as AQ Khan have been eliminated which were there before. So how has the Indian Lobby won in defaming Pakistan?

The above points are the apparent cause of disdain to the critics. Critics are also claiming that certifications by the US Secretary of State and US President’s Special Representative on Afghanistan and Pakistan should not have been there. It is also to be noted that there is a waiver for almost every condition. Besides, the Bill requires a waiver from  the Secretary of State and not from the President of US.  I think no country in the world is in a position to offer a cash cheque to anyone, anymore. How can we continue to live in a fool’s paradise?

I unfortunately see this criticism as a lack of attention to detail by our nation in general and the so called intellectuals in particular. Many a politicians may not have read the document and have started crying foul. If they start to cry foul, then why shouldn’t the military say the same?

The whole point is that for the first time US has listened to the needs of Pakistan to support a democratic dispensation. For the first time assistance will be focused on civilians and not to be channeled through the military. The military doesn’t have to fear anything. A strong and democratic Pakistan is the requirement of the whole world. The military will also benefit from the same. According to the editorial in today’s (October 8, 2009) Daily Dawn, “The national security–democracy debate is not an either/or issue — national security can and must be protected through the democratic process. Even by Pakistani standards, it is too soon to forget the damage caused by extra-constitutional interventions”.

Now look at the positives that has happened recently:

1. The KSE-100 index appreciated the announcement of passing of the Kerry Lugar Bill and the index went up  by nearly 200 points or 2.5% after the market resumed trading post eid holidays
2. Pakistan’s sovereign bond prices have gone up which means that the status of the bonds and that of Pakistan is being looked at as less risky. According to one commentator, Pakistan’s bond prices have gone up by 99% since October 2008. Because of improvements like these, the government is considering issuing a new bond soon. Could they have done the same at previous risk perception of Pakistan?
3. The business community has appreciated the passing of the bill as it will assist in aiding economic recovery and have demanded more assistance to help improve trade.

I would also like to question the Government in Waiting that is of PML N, that assuming the PPP government accepts the aid till the time they are in power, can the PML N commit to the nation that once they are in power, they will not look for this aid from the US?  Yes, the aid that is being offered is less than what we deserve. When last year the Pakistan President said that “Pakistan needs to be compensated with USD 100 billion” he was subjected to all sorts of jokes. This is a start and more money will pour in, which is what our nation deserves. We need money to rebuild ourselves and stand on our feet. I feel that at this point in time the only people who can defeat us are Pakistanis themselves.

UAE has overtaken both USA and Saudi Arabia to be the largest source of remittance. USA, Saudi Arabia and UK follow the UAE in rankings. If this pace continues, in FY10, Pakistan will receive USD 9.15 billion which will be 17% higher than FY09. The alternative channels of remittances that is hawala also continues to operate, though is losing steam,  where it is estimated that around USD 2.5-3 billion per year is remitted through.

These are positive signs for our country and we should show these figures to people who always have a doom and gloom scenario in mind. With portfolio investment continuing to pour in and remittances increasing, we can expect our exchange rate to stabilize or even improve. The inflow of the promised Friends of Democratic Pakistan aid which expected in FY10 and FY11, we can look forward towards further improvement of the macro economic indicators.

The government of Pakistan should capitalize on this momentum of improving remittances and begin offering overseas Pakistanis USD denominated income bonds on similar lines of the National Saving Schemes. We can for sure see further inflow of funds coming in as the way global economy continues to operate, expatriates target safety of their funds as their primary concern. Pakistan has always serviced its debt and it will continue to do so.

What do you think about this? We always hear from government functionaries requesting Overseas Pakistanis to play their role in the development of their homeland. What advice can we give them? Please write back

When the KSE removed the floor, as expected, the market came down by 48% from the floor level within one and half months time. By end of January 2009, all the selling had been absorbed by the market and then started greatest bull run the market has seen. I call it the greatest because at this time it’s a cash only market which means genuine buyers are there investing their savings and wealth. From the lows of 4815 points seen on January 26, the market has rebounded in a firm manner, and has recovered 89.68% till September 9, while on a year to date basis, the growth in the index has been an impressive 55.72% (Jan 1 to Sep 9). A lot of people are skeptical about the growth. However, there are some logical reasons for the same:

1. Bringing calm and peace into Swat region, effectively beating the Taliban into retreat
2. Support being received from the IMF in form of short and long term loans linked to the financial performance of the country
3. Reduction in interest rates which are now around 11%
4. Recovery of the forex reserves which now stand at USD 14.3 bn having fallen to USD 9.9 bn in December 2008
5. Net inflow of USD 167.6 million since 1^st July by foreign investors in the companies listed on the KSE. In PKR terms it is as much as Rs 13.82 billion which is why we see the values increasing.
6. S&P and Moody’s have improved Pakistan’s sovereign ratings and given a stable outlook

Another very important aspect is the cheap valuation on which Pakistani stocks are available. They are also offering a very high dividend yield. In the table given below, which I have taken from Financial Times, one can see that Pakistan is offering a 5.6% dividend yield which is one of the highest in the world and highest in the Asian markets while it’s Price to Earnings ratio is just 7.0x. Our grand neighbour trades at a very high 21 times while yield in India is just 1.2%.

One can expect a correction setting in the next few days as it is part of the way stock markets operate, but one thing is for sure, the Pakistani market is one of the best markets in the world and we can look forward a great new bull run in months to come.

I am an expatriate Pakistani for whom his growth is linked with his country’s growth. I am competing with various nationalities in an increasingly insecure, weak and selfish global economy. As a Pakistani, I have to absorb the propaganda that ranges from the doomsday scenario of disintegration of Pakistan to demonstration on power outages and subsequent arsonist activities of anarchists who have a regular field day in our country. Every now and then I hear a statement like “Pakistan toot jaye ga!” and my heart sinks. When closely looked at, a variety of problems are identified but seldom is a solution given. Even if a solution is given, it is all over the place and out of touch with reality.

Let us take a few examples.

Power Outages: this has roots in two problems-high demand and low power generation leading to load shedding while the unimproved distribution network compounds the difficulties of the end users. Now every now and then we see a demonstration when either sub-stations or pole mounted transformers (PMTs) are damaged by demonstrators. Can anyone ask them what will they gain out of this destruction? They are creating further delays in the restoration of electricity as well as adding to the capital costs of the power utility operating in their area. The recent burning of a train in Jhang was mind boggling. Who has given people the right to destroy government property which is created out of tax payers’ money? The media flashes these incidents without condemnation. The news gets picked by international newswires and is splashed across newspapers, blogs, bulletin boards etc. Headlines the next day reads “Angry mobs burn train – Power Shortage in Pakistan”.

The government has announced that load shedding will end by December 2009. this is mainly due to commissioning of the rental power plants. Now the media and some unrealistic politicians are harping that high tariff rates have been awarded to these rental power plants and this capacity being generated on furnace oil plants “awam kee kamar torr den gay” while also doubting transparency. Can I ask commentators on media and some politicians as to what should be the order of priority? You want power first or accountability? You have so many stakeholders in this field. Ministry of Water & Power, PPIB, WAPDA, NEPRA, the distribution companies, while the consumers await anxiously for the supply to begin. I still remember the 1994 Power Policy of the PPP government. It was branded as a corrupt policy by the opposition of that time. Organizations like Transparency International would give Pakistan the infamous rank of “2^nd Most Corrupt Country”. Ideally the IPP’s that were established between the period of 1996-1998 should have been the first to expand when the power shortage started becoming imminent from 2004 onwards. They chose not to. Have we ever pondered why considering they have been profitable companies barring a few with power purchase agreements being in place and a number of covenants in their favor? A witch-hunt in the late 1990’s against the IPPs and subsequent delays in their payments by WAPDA must have caused the investors to say “Thank you sir, no more in Pakistan!”. Instead of being welcoming to investors, we have driven them out ourselves.

Those questioning high tariff rates need to open their minds and think rationally. How can a consumer dictate terms when faced with a shortage? Is it wrong to expect the laws of demand and supply to dictate prices than the popular demand? First and foremost the demand for power and supply of power has to meet equilibrium before we can contemplate demanding better tariffs. Hopefully within 5-10 years, if proper planning is done and capacity is increased, tariffs will have to come down. Also critics have to understand that if you have power, industries will firstly run and then produce as per needs; if you have power, tube wells would run, help irrigate lands and produce for the economy; if you have power available, the services sector could focus on improving its effectiveness than to worry about having generators installed in their premises to counter load shedding. 

Size of the government: A very regular comment that one hears on TV and reads in newspapers is the huge size of the government including ministers, advisors, ambassadors-at-large etc. Critics say look at the cabinet size of USA and UK where you don’t have large cabinets. Are we USA and UK? Do we have a mature and fair electoral process? Do we have an electoral process where the election expenses are not 100% borne by the candidate? Do political parties, the state through the Election Commission and general public contributes towards the electoral expenses? No sir! A candidate has to spend a lot of his own money to take care of all sorts of expenses. Becoming a Minister is a need for satisfaction of egos as well as need to assert themselves.

Coming to the actual need of having a large cabinet is because of the division of ministries that was made in the previous government of Shaukat Aziz. For example, previously where we had a Ministry of Communications, however in 2004, it was divided into Ports & Shipping, Communication and Postal Services. Where there was a ministry being run by one federal and one state minister, we have now possibility of three federal and three state ministers. On one hand, critics are not happy in the concentration of power with one minister, neither are they happy with the division amongst three ministers. Let us come up with practical solutions on how we can have an effective cabinet. Also it is important to note that when you have a coalition government, the smaller parties are always looking for a larger share even though they do not deserve it. Case in point being JUI that has three very critical ministries namely Housing & Works, Science & Technology and believe it or not Tourism Development.

It is high time that the people of Pakistan come up with practical solutions to the problems faced by them. Criticizing is the easiest part. Solving a problem is the most difficult part especially in a nation like ours where everyone is an “expert”.  Also there has to be a will to solve the problem amongst the decision makers while we as the general public have to give time to the elected representatives. The media has to play an important role in this exercise. By just criticizing endlessly and that too in front of the glare of the world, we are doing nothing but fanning statements like “Pakistan is a failed state”. Pakistan is not a failed state. We are a resilient nation and a nation that has moved ahead slowly and steadily and InshAllah we’ll move ahead.

Recently, the US has offered to guarantee its companies looking to invest into Pakistani energy sector through OPIC and EXIM Bank. The news item which got published in Dawn, was largely ignored by other newspapers and electronic media.

This is an important point which needs to be highlighted. If one sovereign is willing to guarantee its companies in another, just goes to show the commitment of the gurantor and the potential in the guaranteed.

DAWN.COM | Front Page | US may guarantee investments in Pakistan energy sector

WASHINGTON, Aug 24: The US administration is willing to offer guarantees to private investors keen to invest in Pakistan’s energy sector to help overcome a crisis that threatens to destabilise the energy-starved country.

Official sources told Dawn in Washington that two semi-government US organisations — Export and Import Bank and the Overseas Private Investment Corporation — will play a major role in encouraging private sector investments in Pakistan.

The EXIM Bank offers guarantees for large projects and also helps private investors raise money for projects abroad. The OPIC offers similar assistance to smaller projects.

The US administration also plans to engage international financial institutions, including EXIM bank, the US Trade and Development Agency, International Monetary Fund, and the World Bank to help Pakistan overcome the crisis.

A three-member team headed by David Lipton, special assistant to the US president for international economics, is already in Pakistan. The team includes energy specialist Mary Beth Gordon.

Mr Lipton has a direct knowledge of Pakistan’s energy needs as he worked on this issue in the 1980s when he was with the IMF.

The purpose of the visit is to assess Pakistan’s energy needs, identify the problems causing the shortage and to determine how those problems can be resolved. The team will also identify policy problems that discourage private sector investments in Pakistan.

Once they complete the survey, the team will report its findings to the US government.

If Pakistan also accepts those recommendations and makes the changes the team proposes, the US administration will then use its influence to encourage investment. The team is also expecting to receive a plan from the government of Pakistan on how it wants to fix the problems responsible for an acute power shortage.

Pakistan is a land of endless opportunities. Having seen tumultuous times at birth followed by numerous political upheavels, dismemberment of one half of the country, execution of political leadership and unbelievable levels of self inflicted extremism etc, my country continues to progress despite all odds. It faces many challenges, but those challenges are more internal in nature than caused by the foreign powers.

The reason for starting this blog, is to give Pakistan it’s due credit in the world. Afterall, we are competing with the world over everything. Pakistan is creating the enabling environment for the world by fighting extremism that has plagued Pakistan over the last three decades. Will we succeed? I am very hopeful that we would. Am I over optimistic? No, our success will be supported by popular sentiment and sustainable planning.

This blog will target presenting the softer side of the country, which our mindless media forgets to present.

Will I succeed? I don’t know, but I am eternally optimistic.