Pakistan’s top finance official yesterday stressed his government’s ambition not to interfere with the business sector, in a plea to investors to help bolster the country’s ailing infrastructure. In an interview with Emerging Markets Omar Ayub Khan affirmed his country’s goal to move forward with a wide-ranging privatization programme, noting that the role of government is not to run businesses. “We have a whole list of companies waiting to be privatized including large companies such as Oil and Gas Development Corporation and Sui Northern Gas,” he said. About 85% of the banking industry is already in private hands with just one bank, the National Bank of Pakistan, retained in the public sector “for treasury operations,” he added. “We have no inhibitions about allowing foreign investment,” he said, adding that the “big names” such as Etisalat (UAE) and Telenor (Norway) in telecoms and HSBC, Citigroup and Standard Chartered in banking are already there. At the same time, the finance official said Pakistan must redouble its efforts to strengthen its infrastructure or face a continued squandering of its national product. The country “wastes about 4% of its GDP” because of poor infrastructure, Khan pointed out, noting that Pakistan faces three key challenges in maintaining current growth rates: “unblocking infrastructure, developing human resources and meeting our energy needs.” Pakistan’s growth rate was 8.4% of GDP in 2005 though some estimates suggest it will drop to 6.5% this year. A “massive amount of work has to be done” on infrastructure and “we are working with the ADB and World Bank to build a north-south corridor connecting Karachi to the northern parts of the country,” he said. Rural governments are being roped in to partner with the private sector to build roads, sewerage and sanitation plants while a recently launched infrastructure fund, under the finance ministry’s remit, will provide “match-making facilities” to bring the public and private sectors together to invest in roads, railways, ports and power sector. In order to feed the country’s economic engine, fuel lines have to be open, the minister pointed out. “We are negotiating with Iran for the supply of gas. Regardless of whether India wants the gas pipeline or not, Pakistan is going ahead with negotiation with Iran for the $7 billion gas pipeline,” Khan said. About 35% of Pakistan’s electricity is hydro-generated and 65% is thermal-generated. “We want to reverse that mix and for that we need large reservoirs.” The government plans to build a series of dams by 2015 to conserve as much of its water resources for the production of electricity. Rising energy costs in any oil importing country “puts a strain” on the country’s economy, said Khan. The full costs of the (global) price of diesel have not been passed on to consumers because it is used by truckers for the transport of essential commodities and the government wants to “minimize the impact on inflation”. Pakistan’s diesel prices are the lowest among oil-importing countries in the region. Amid growing concern among consumers over high petrol prices, the government did not collect the petroleum levy of almost a billion US dollars last year.
Pakistan opens door to more capital