Pakistan a key for regional development

In Pakistan, TUV Austria Holdings is making some investment, particularly in the oil and gas sector, to perform services for the industry and is providing management system certifications for local companies.

LAHORE: The world is very optimistic about the future and potential of Pakistan as its geographical position, coupled with huge natural resources, is a key in the eyes of many global business groups which consider the country a game-changer for the region.

However, considering Pakistan an interesting marketplace with a large population, many stress the need for policy development, especially in the oil and gas sector, along with timely completion of mega projects.

“Pakistan is an important country in the region with an ideal geographical location, so we should not underestimate its role and importance for future development of the region,” said Stefan Haas, Global Chief Executive Officer of TUV Austria Holdings, in an interview to The Express Tribune.

For Haas, the Gwadar Port and the railway and road links with China are key projects on which the future of the region depends.

“This port will really make a difference for Pakistan as currently all goods transported to this region take long routes which makes them somehow costly. Once completed, the transportation time will come down and if you are faster, then you are more connected to the markets,” he said.

He cited the example of the Port of Rotterdam, which had connected European nations. Though industrial clusters do not exist in Rotterdam, but the port is a key for European countries for a faster shipment of goods to the market.

TUV Austria Holdings has been active in the areas of occupational safety, quality and environmental protection since 1872. In Pakistan, the company is making some investment, particularly in the oil and gas sector, to perform services for the industry and is providing management system certifications for local companies.

Talking about oil and gas deposits, Haas said there were lots of oil and gas reserves waiting to be explored in Pakistan. But to tap them, a firm government policy is the need of the hour as many active oil companies are willing to invest.

“As the world is growing so is the oil and gas demand and what this tells us is that this industry will be a cornerstone for the oil producing countries and for Pakistan also.”

Haas said currently global oil prices were falling and it seemed unwise to invest in such a scenario as new discoveries might not pay off to the companies. But the expectation is that oil prices will rise significantly in the future to levels where investment will be feasible.

In Pakistan, he added, the policy did play a significant role as oil companies were getting more or less fixed prices and it depended on the price level, whether new exploration activities should be financed or not.

Talking about hurdles to doing business, Haas was of the view that the potential was much more than the impediments. “We are not thinking about the problems but the solutions and potentials at this time.”

Interestingly, he had not many complaints against the bureaucracy as he believed that bureaucratic hurdles were a global issue.

Tuwairqi Steel warns: If gas doesn’t come cheap, company will pack up

Tuwairqi Steel Mills, which is Pakistan’s first private-sector integrated steel manufacturing project, would create 5,000 jobs in Balochistan and 3,000 jobs in Karachi. PHOTO: REUTERS

ISLAMABAD: 

The top management of Saudi Arabia-based Al Tuwairqi Holding, while cautioning the government, has said that it will consider packing up if its steel mill in Pakistan is not provided promised gas at a discounted rate.

“Enough is enough, after one and a half years of bleeding, we don’t want to leave Pakistan, but when it comes to business, we have to act like a business,” said Dr Hilal Hussain Al-Tuwairqi, Chairman of Al Tuwairqi Holding, while speaking at a press conference here on Wednesday.

“If they don’t meet our demand, there is no way that we make investment here,” he said. “What you commit, you have to do.”

According to the management, the government has assured them that it will take up the matter in the upcoming meeting of the Economic Coordination Committee (ECC), but they could pull out of the country if the issue is not addressed.

In an effort to reach a settlement, the company has even offered 15% (126 million shares) in the steel mill to the government without any payment in response to gas supply at a concessionary rate. After 10 years, it is estimated that the share value would be Rs162.

The chairman said former prime ministers Shaukat Aziz, Yousaf Raza Gilani and Raja Pervaiz Ashraf had made the commitment, but when the prime minister of South Korea, whose steel giant has co-financed Tuwairqi Steel Mills, spoke to premier Nawaz Sharif, he got no response.

The ambassador of Saudi Arabia also discussed the matter with Finance Minister Ishaq Dar, but it produced no solution.

“If the Korean premier got no response, who will pay heed to me,” the chairman asked. “The government could say yes or no after a month; Al Tuwairqi has plans to make a further investment of $900 million in next phases.”

Replying to a question, he stressed that if they were denied cheaper gas supplies, they would take input and guidelines from legal advisers on what to do next.

The government, according to him, had also committed provision of water and power in a memorandum of understanding (MoU), but it did nothing. Al Tuwairqi has itself set up a power plant and laid a 19km pipeline.

He said Tuwairqi Steel Mills, which is Pakistan’s first private-sector integrated steel manufacturing project, would create 5,000 jobs in Balochistan and 3,000 jobs in Karachi. Tuwairqi Steel Country Head Zaigham Adil Rizvi said the steel complex would have a production capacity of 1.28 million tons per annum compared to Pakistan Steel Mills’ 1.1 million tons.

He pointed out that Pakistan Steel Mills was banking on imported coal and iron ore whereas Tuwairqi would rely entirely on the iron ore produced in Balochistan.

In May 2004, an MoU was signed with Pakistan, under which the government was to provide a level playing field in provision of gas as fuel and feedstock.

“It was promised that gas would be supplied at a lower tariff to enable the company to compete in the international market,” he said, adding the Ministry of Industries had recommended a tariff of Rs123 per million British thermal units for five years.

However, the Ministry of Petroleum and Natural Resources cautions that the financial impact of the reduced tariff on Sui Southern Gas Company will be about Rs5 billion, requiring a 3.3% increase in gas prices for all consumers, except for domestic and fertiliser sectors.

Tuwairqi Steel is a joint venture between Saudi Arabia’s Al Tuwairqi Group of Companies and South Korea’s Pohang Steel (Posco), who have planned to set up Pakistan’s largest steel complex.

On its part, the Ministry of Industries argues that though the mill is seeking a support of Rs4 to Rs5 billion per annum, its Direct Reduced Iron (DRI) plant will contribute to the country’s economy an estimated Rs12 billion. Apart from this, foreign investment worth Rs89 billion will be made in forward and backward linkages of the DRI plant.

After establishing the linkages, the ministry says, the mill will contribute Rs100 billion annually to the economy in import substitution.

Phase-I of the DRI plant has been completed with an investment of $340 million while capital injection in phase-II and III could be in the range of $850 to $900 million. This, however, has been linked with commercial success of the DRI plant.

Pakistan refuses to sign three multilateral pacts at SAARC summit: officials

Bhutan's Prime Minister Tshering Tobgay (L), India's Prime Minister Narendra Modi (C), Pakistan's Prime Minister Nawaz Sharif (C, standing) and Nepal's Prime Minister Sushil Koirala attend the opening session of 18th Saarc summit in Kathmandu November 26, 2014. PHOTO: REUTERS

KATHMANDU: Hostilities between India and Pakistan on Wednesday threatened to scupper efforts by South Asian leaders to boost trade among almost a quarter of the world’s people, throwing into doubt any prospect of a regional customs union.

India and Pakistan have fought three wars, and just last month exchanges of fire across the border in Kashmir killed 20 people.

The bickering spilled into a two-day regional summit in Kathmandu, and their leaders refused to meet.

Indian and Nepali officials said Pakistan declined to sign three multilateral pacts with the eight members of the South Asian Association for Regional Cooperation (Saarc).

The agreements aim to boost road trade and electricity sharing, including across Pakistan’s heavily militarised border with India.

In an apparent reference to Pakistan, India’s foreign ministry spokesman said one country had cited incomplete “internal processes” for not signing the pacts, but stopped short of naming it.

Pakistani officials did not respond to telephone calls seeking comment.

Such a refusal threatens efforts by Indian Prime Minister Narendra Modi to make South Asia a viable economic counterweight to China and limit Beijing’s role in the region.

Regional integration would happen “through Saarc or outside it,” Modi warned the summit, if the grouping failed to agree on the pacts.

Nepal’s former foreign secretary, Madhu Raman Acharya, echoed the sentiment, urging the grouping to step up “sub-regional cooperation”.

Almost all the leaders at the summit expressed dismay at Sabre’s sparse achievements since it was founded 29 years ago aiming to become a European-style union.

Despite a free trade pact since 2006, trade among South Asian nations makes up five percent of their total trade. They share few transport and power links.

China, free of the baggage that makes much of the region wary of India, has built ports and sold weapons across South Asia, where its new Asian Investment Infrastructure Bank has attracted interest, including from India.

Through Pakistan, China suggested it play a larger role in the regional grouping, but India rebuffed the proposal.

Modi met all Saarc leaders but PM Nawaz

Meanwhile, Modi held two-way talks with every leader except Prime Minister Nawaz Sharif, since neither was ready to make the first move to defuse tension.

The region’s first summit in three years follows some of the worst cross-border violence in the disputed region of Kashmir in a decade, and comes as Nato-led troops prepare to pull out of Afghanistan, intensifying the India-Pakistan rivalry for influence there.

It is also the first time the eight leaders are meeting for the first time since the election of a new government in New Delhi that is taking a more assertive stance on both China and Pakistan.

India’s Prime Minister Narendra Modi held his first talks with Afghanistan’s new President Ashraf Ghani on the summit’s sidelines on Wednesday, as New Delhi seeks to develop its involvement in a country that Pakistan considers part of its sphere of influence.

Much of the attention has focused on whether the leaders of India and Pakistan will meet on the sidelines of the summit however, PM Nawaz was reported as saying the ball was in India’s court after New Delhi cancelled talks earlier this year.

“After the recent snub from India, which cancelled foreign secretary-level talks, Pakistan is not going to take the initiative. It will depend whether Modi says he wants to meet,” Pakistani political analyst Talat Masood told AFP.

Hopes of a move towards reconciliation were raised when Modi invited Pakistan’s prime minister to his swearing-in ceremony, but his right-wing nationalist government has adopted a more aggressive policy on Pakistan than its centre-left predecessor.

Modi warned during the recent upsurge in violence in Kashmir that “times have changed and their old habits will not be tolerated”.

On Tuesday, Modi oversaw a $1 billion agreement to build a hydropower plant in neighbouring Nepal, where China has invested heavily in recent years, saying he wanted to “move forward” with deals long delayed by mutual mistrust.

But the mistrust between India and Pakistan – widely seen as the main obstacle to greater South Asian integration – is unlikely to be resolved so easily.

“Saarc’s main problem is that Saarc is basically about India and Pakistan, with the Afghanistan dimension thrown in now,” said Sujeev Shakya, chairperson of the Nepal Economic Forum.

Trade between the Saarc nations – Afghanistan, Bangladesh, Bhutan, India, Nepal, the Maldives, Pakistan and Sri Lanka – has grown from under $140 million in 2008 to $878 million in 2012, according to Saarc figures.

But it still accounts for less than five per cent of the region’s total commerce, according to the Washington-based Brookings Institution. By contrast, trade between East Asian nations accounts for nearly 35 per cent of that region’s total.

Security is also likely to be discussed after al Qaeda announced a new South Asia branch and claimed responsibility for a deadly attack on a Karachi naval yard.

Analysts said domestic political concerns would likely take precedence during the Saarc summit, with Modi eager to appear tough on Pakistan during local elections in Indian-administered Kashmir.

Authorities in Kathmandu have spent a reported $10 million on sprucing up the city, repairing its notoriously potholed streets and declaring a two-day public holiday to avert traffic gridlock.

But there is little optimism that much will be achieved.

“It’s time to develop other regional groupings instead of getting bogged down by Saarc, where the conflict between India and Pakistan is a huge obstacle to progress,” said Shakya.

In trouble: A once-flying carpet industry faces crash

Many families in rural areas rely on rug manufacturing as the sole source of income. A single piece of rug requires six months to a year’s labour. PHOTO: AFP

FAISALABAD: 

The once-booming carpet industry has taken a nosedive in the last one decade. As regional players take giant leaps and capture world markets, Pakistan’s exports of rugs have been constantly declining, falling below $130 million per year.

In the past decade, exports came down 60% as a huge potential remained untapped because of a lack of support from the government, industry people say.

In comparison, India’s carpet exports have shown a phenomenal growth. A decade ago, India and Pakistan had annual rug exports of roughly $350 million and now Indian shipments have reached $1 billion.

While most countries have adopted modern methods of manufacturing, the carpet and rug makers in Pakistan still operate like a cottage industry. Rugs are made at home in rural areas and thousands of people rely on this profession.

“It is the small-scale factories in rural areas that give a vital boost to the industry,” said an expert.

Many families bank on rug manufacturing as the sole source of income. A single piece of rug requires six months to a year’s labour.

The small-scale industry is mostly dominated by women who make carpets at home. “These traditional workers lack proper training and require financing to complete the supply chain,” the expert added.

According to industry experts and exporters, there is an absence of research and development institutes in the country that could work to strengthen the sector. The largest buyers of Pakistan’s hand-knotted rugs are the United States and Europe.

“A few years ago, China and Turkey were the leading exporters, but their industries were wiped out due to expensive labour,” said Usman Ghani, Chairman of Pakistan Carpet Manufacturers and Exporters Association (PCMEA), while talking to The Express Tribune. “Now, China has become a big importer of rugs.”

Pakistan should explore new markets for rug exports including China where the demand was quite high, said Ghani, who is also the chief executive officer of Prince Rug Palace Private Limited.

Rug exporters have met government officials a number of times, seeking state support for including rug in the Free Trade Agreement (FTA), but to no avail.

“Machine-made carpets are in the FTA list and we have asked the government several times to add handmade rugs as well.”

Ghani added any relief provided by the government would help revive the ailing industry and create employment opportunities.

He stressed that global recession and declining exports necessitated concessions and incentives for the industry like credit financing and bank loans. “The carpet industry could be one of the main exporters of the country,” he remarked.

He also suggested that the government should hold exhibitions for the promotion of the country’s products.

Investment in Gwadar: China to help build $3b LNG pipeline and terminal

The LNG pipeline will be extended from Gwadar to Iran for gas import when sanctions on Tehran are lifted. Its capacity will be one billion cubic feet per day. PHOTO: FILE

ISLAMABAD: The $45-billion worth of agreements signed by Pakistan and China earlier this month included a multibillion-dollar LNG pipeline and terminal deal, which will work as an alternative to the troubled gas import project with Iran as the pipeline will be extended to the Gulf state after international sanctions are lifted.

“The agreement was signed during Prime Minister Nawaz Sharif’s visit to China. It is a state-to-state deal and no bidding will be held for the award of contract,” an official told The Express Tribune.

According to initial estimates, the project is expected to cost $3 billion – $1 billion will be needed to lay the pipeline from Gwadar and over $2 billion will be required to construct the terminal with liquefied natural gas (LNG) handling and re-gasification facilities and to develop large storages.

China will meet 85% of the financing needs for constructing the LNG pipeline from Gwadar Port to Nawabshah.

The Ministry of Petroleum and Natural Resources is seeking the support of economic decision-makers for relaxing the Public Procurement Regulatory Authority (PPRA) rules.

“The ministry will approach the Economic Coordination Committee (ECC) to win its approval for easing PPRA rules,” the official said. “This will clear the way for direct award of a lucrative contract to a Chinese state-owned company.”

This will be the second LNG terminal in the country as a fast-track terminal is already being built by Elengy Terminal Pakistan Limited (ETPL) at the Port Qasim, which is likely to be completed in February next year.

The LNG pipeline will be extended from Gwadar to Iran for gas import when sanctions on Tehran are lifted. Its capacity will be one billion cubic feet per day.

The pipeline will have the same specifications that were proposed for the Iran-Pakistan gas pipeline including a diameter of 42 inches.

According to officials, since Pakistan has not been able to lay a 781km pipeline from the Iranian border to Nawabshah because of its failure to tap foreign finances, it has decided to build the pipeline from Gwadar to Nawabshah in partnership with China.

This will transport at least 500 million cubic feet of gas per day (mmcfd) after re-gasification of imported LNG.

Hopes were high as the US and Iran were engaged in crucial negotiations to settle the dispute over Tehran’s nuclear programme with a strong possibility that they would reach a compromise, officials say.

The economic decision-makers have already made their mind that before the curbs are removed they will not push ahead with the gas pipeline project with Iran to avoid its repercussions for Pakistani companies.

The terminal planned at the Gwadar Port will have the capacity to handle 690 mmcfd of LNG. Apart from this, large storages will be constructed at the port from where the LNG, after re-gasification, will be transported to Nawabshah, where it will be injected into the national gas network.

Debate: Should Manuel Neuer finish in the Ballon d'Or top three?

There is a big campaign in Germany pushing for the Bayern Munich goalkeeper to at least make the podium - so does the World Cup winner really deserve to make the final three?

DEBATE
By Falko Bloding and Joe Wright

No goalkeeper has won the Ballon d'Or since the iconic Lev Yashin back in 1963. Legends such as Gordon Banks, Dino Zoff, Peter Schmeichel, Gianluigi Buffon and Sepp Maier have all failed to claim the award.

Former Germany star Maier recently complained that goalkeepers are often overlooked, and sniped that it would be another injustice if countryman Manuel Neuer doesn't take the prize this time around.

"Blind people will have decided who wins the award if Neuer doesn't win the Ballon d'Or this year," Maier moaned to AZ.

These comments have been part of a big media push in Germany for this summer's World Cup hero to at the very least finish in the top three when the 2014 Ballon d'Or winner is announced in January.

So, having already been included on the 23-man shortlist, does Neuer deserve to make it onto the podium?Goal's Falko Bloding and Joe Wright go head-to-head on the issue...

"NEUER MAKES DEFENDERS AHEAD OF HIM BETTER"

By Falko Bloding

Right after Germany won the World Cup final at the Maracana, there was a famous picture circulating on social media. It showed Manuel Neuer and Lionel Messi receiving their awards for best goalkeeper and best player of the tournament. At the bottom it read: "Here you can see the best keeper and the best player at the World Cup. Next to him: Lionel Messi." The image went viral - not because it was a joke, or an exaggeration - it was the truth.

Neuer shone on the biggest stage of all in Brazil. He had memorable matches against Algeria and France in the knockouts - saving his team at crucial moments and proving he is the best in his position. He also helped transform the way goalkeepers play and is now the archetypal 'Sweeper Keeper'.

The former Schalke man makes the defenders ahead of him better. They know they can rely on him. His two head coaches, Pep Guardiola and Joachim Low, deploy an extremely high backline and Neuer's style is perfectly suited to it. You cannot underestimate how difficult his task is; he only ever faces a few shots on goal each game, but his concentration levels are fantastic. He is a leader for club and country. 

In 2014, Neuer did not only win the World Cup but also the Bundesliga and the DFB Pokal. He reached the Champions League semi-finals and was named Germany's Footballer of the Year for the second time. He also placed second in the Uefa Best Player award, behind only current Ballon d'Or holder Cristiano Ronaldo.

It is about time Fifa recognises this brilliant goalkeeper when the Ballon d'Or trophy is handed out.

"NEUER HAS TEAM-MATES WHO HAVE BEEN MORE DECISIVE"

By Joe Wright

"After some 

games

 this season I haven't needed to have a shower," Manuel Neuer confessed in 2013. "Yes, I guess sometimes it is boring being in goal."

The comment was light-hearted, but it sums up why there are more deserving candidates for the Ballon d'Or final three. Neuer simply isn't tested enough. He is protected by football's two finest teams from the past 18 months in Bayern Munich and Germany. Both sides dominate play to such an extent that Neuer is frequently seen wandering close to the halfway line in an effort to become more involved in the action. Even in the World Cup final in July, he did not have a single save to make.

Neuer is undoubtedly the best goalkeeper in the world, but he is not a God-like figure. He does make high-profile mistakes. He misjudged Gareth Bale's cross for Karim Benzema's first-leg goal in the Champions League semi-final against Real Madrid and allowed a Sergio Ramos header and Cristiano Ronaldo shot to pass right through him in the return leg. He has also conceded seven goals playing for Germany since the World Cup as Joachim Low's side struggle to cure their Brazil hangover.

Some of Neuer's team-mates have done more to join favourite Ronaldo on the podium. Philipp Lahm, reinvented as a midfielder, has captained club and country to astounding success. Thomas Muller has proved he is the ultimate big-game player and was directly involved in eight of Germany's goals at the World Cup. Meanwhile, Arjen Robben has consistently been Bayern's finest player for the past year and was 

inspirational

 in dragging an average Netherlands side to third place in Brazil.

"I'm not some guy who poses in his underpants," joked Neuer recently when explaining why his public 'image' could penalise him with the Ballon d'Or voters. But the reason Ronaldo, Lahm, Muller and Robben have hogged the limelight more than Neuer in 2014 is because they are more deserving of it.

Reus exit would be the knockout blow for Dortmund, says Kahn

The ex-Germany goalkeeper has questioned BVB's ability to bounce back if the attacker leaves them for Bayern in the summer of 2015

Oliver Kahn believes it would effectively end Borussia Dortmund's ambitions of challenging for the Bundesliga title if Marco Reus were to leave the club for Bayern Munich at the end of the season.

The Germany international has a contract with BVB until June 2017, but has a limited fee release clause that allows him to leave for €25 million in the summer of 2015 and Bayern are closely monitoring the 25-year-old's situation.

The reigning Bundesliga champions previously already signed Mario Gotze and Robert Lewandowski from Dortmund and Kahn feels it would be the knockout blow if they signed Reus, too.

"It would probably be the knockout blow if Reus would now leave Dortmund for Bayern as well," Kahn told reporters.

"It would not just hurt Dortmund on the pitch. You should not underestimate things like this. It would be a huge blow for a club like Dortmund.

"It would also affect them psychologically and leaves them wondering why they cannot hold on to their best players."

Reus picked up a serious ankle injury in his side's 2-2 draw with Paderborn at the weekend and will be out of action for the remainder of 2014.

The attacker has netted six goals in 11 appearances in all competitions so far this term.