Friday, February 27, 2009

World's Largest Solar Deals



Sunny California is leading the way to tap solar energy. Can sunny Pakistan follow to deal with its crippling energy crisis?

California based BrightSource Energy, which already has a deal to build a series of huge solar power plants in the Mojave Desert for Pacific Gas & Electric (PG&E), announced an even larger project recently with Southern California Edison. Brightsource, with its roots in Israel, launched its first big solar project last year in the Negev desert.

The World Economic Forum voted BrightSource as a 2009 Technology Pioneer. It was the only solar company to win this year's award, and is recognized for helping industrial customers reduce their dependence on fossil fuels.

By 2016, the two companies said, BrightSource will build a series of solar-thermal power plants that will generate 1.3 gigawatts of electricity for Southern California Edison's customers. That's enough power for 845,000 homes, said Stuart Hemphill, the utility's vice president of renewable and alternative power. Talking with SiliconValley.com, he characterized the deal as "the largest set of solar agreements ever signed."

Photo-voltaic solar power panels are often used for local and distributed power generation capability, such as on rooftops of homes and buildings. It is generally on-grid but it can be off-grid for remote places. Unlike the solar panel's relying on photo-voltaic cells, solar thermal power is centrally generated from thousands of curved mirrors in the desert focusing sun's light on to water pipes to generate superheated steam which is then used to generate electricity. It is then connected to the grid and transmitted to major population centers. The first such experimental power plant was set up in California's Mojave desert in the 1980s and many of its pioneers are now helping Brightsource to go big with solar thermal.

The deal is another step toward meeting California mandates for renewable-energy generation. Investor-owned utilities such as PG&E are required to get 20 percent of their power from renewable sources by the end of 2010, and 33 percent by 2020. Even before this latest development, the state's Energy Commission was reviewing seven solar-thermal projects that could generate nearly 2.6 gigawatts worth of electricity.

California is very sunny, but so are other places such as Pakistan. In fact, Pakistan is an exceptionally sunny country. If 0.25% of Balochistan was covered with solar panels with an efficiency of 20%, enough electricity would be generated to cover all of Pakistani demand.



Solar energy makes much sense for Pakistan for several reasons: firstly, 70% of the population lives in 50,000 villages that are very far away from the national grid, according to a report by the Solar Energy Research Center (SERC). Besides, the country's creaky and outdated electricity infrastructure loses over 30 percent of generated power in transit, more than seven times the losses of a well-run system, according to the Asian Development Bank and the World Bank; and a lack of spare high-voltage grid capacity limits the transmission of power from hydroelectric plants in the north to make up for shortfalls in the south.Connecting these villages to the national grid would be very costly, thus giving each house a solar panel would be cost efficient and would empower people both economically and socially.

Pakistani blog Pakistaniat has reported practical examples of the use of solar energy as seen in some villages of Pakistan where each house has been provided with a solar panel that’s sufficient to run an electric fan and two energy saving bulbs. Prior to this arrangement, the whole village used to be plunged in darkness at night. In Narian Khorian, a village about 50 kilometers from Islamabad, 100 solar panels have been installed by a local firm, free of cost, to promote the use of solar energy. With these panels, the residents of 100 households are enjoying light and fan facilities. This would not have happened for decades as the supply of electricity from the national grid would be difficult and costly due to the mountainous terrain.

Pakistan Solar Map  Multi-year mean (2000-2012) of daily Global Horizontal Irradiance (GHI) for Pakistan in kWh/m2 [Note: preliminary, unvalidated results] Source: World Bank


In addition to renewable energy from the sun, Pakistan is also fortunate to have something many other countries do not, which are high wind speeds near major centers. Near Islamabad, the wind speed is anywhere from 6.2 to 7.4 meters per second (between 13.8 and 16.5 miles per hour). Near Karachi, the range is between 6.2 and 6.9 (between 13.8 and 15.4 miles per hour). Pakistan is also fortunate that in neighboring India, the company Suzlon manufactures wind turbines, thus decreasing transportation costs. Working with Suzlon, Pakistan can begin to build its own wind-turbine industry and create thousands of new jobs while solving its energy problems. Suzlon turbines start to turn at a speed of 3 meters per second. Vestas, which is one of the world's largest wind turbine manufacturers, has wind turbines that start turning at a speed of 4 meters per second. In addition to Karachi and Islamabad, there are other areas in Pakistan that receive a significant amount of wind.

Pakistan Wind Map Source: USAID


In only the Balochistan and Sindh provinces, sufficient wind exists to power every coastal village in the country. There also exists a corridor between Gharo and Keti Bandar that alone could produce between 40,000 and 50,000 megawatts of electricity, about twice the current installed capacity in Pakistan, says Ms. Miriam Katz who has studied and written about alternative energy potential in South Asia. Given this surplus potential, Pakistan has much to offer Asia with regards to wind energy. In recent years, the government has completed several projects to demonstrate that wind energy is viable in the country. In Mirpur Sakro, 85 micro turbines have been installed to power 356 homes. In Kund Malir, 40 turbines have been installed, which power 111 homes. The Alternative Energy Development Board (AEDB) has also acquired 18,000 acres for the installation of more wind turbines.

The village of Ghulam Muhammad Goth, north of Karachi with population of 800, about 10 km from the national power grid, now receives power from a small windfarm consisting of 18 wind turbines each capable of generating 500 watts of electricity. Installed by the state-run Pakistan Council for Renewable Energy and Technologies (PCRET), the farm produces enough to power for each home to have two low-energy bulbs, a fan and, most importantly, a television set.

In addition to high wind speeds near major centers as well as the Gharo and Keti Bandar corridor, Pakistan is also very fortunate to have many rivers and lakes. Wind turbines that are situated in or near water enjoy an uninterrupted flow of wind, which virtually guarantees that power will be available all the time. Within towns and cities, wind speeds can often change quickly due to the presence of buildings and other structures, which can damage wind turbines. In addition, many people do not wish for turbines to be sited near cities because of noise, though these problems are often exaggerated. Wind turbines make less noise than an office and people comfortably carry on conversations while standing near them.

Finally this year, Pakistan awarded a contract to a Turkish company to set up a wind farm near Hyderabad. President of Zorlu Enerji (Pvt) Ltd., Murat Sungar Bursa, who signed the agreement with HESCO (Hyderabad Electric Supply Company) in Pakistan, said that the estimated cost of 50 MW project was 120 million dollars. He added the company was also considering to further expand the project up to 250MW. He said incentives offered by Pakistan’s renewable energy policy was a major factor in the company’s decision to invest here. He said that capacity of the wind farm will be enhanced upon successful completion of 50 MW phase. Zorlu Enerji has become the first company to establish wind farm for power generation in Pakistan after signing Energy Purchase Agreement with Hyderabad Electric Supply Corporation for purchase of six MW electricity generated at the company’s facility in Jhimpir. NEPRA (Pakistan's power regulator) has awarded tariff of US cents 12.1057 Per KWH, which is cheaper than the electricity generated from thermal sources. The power generated from the first phase would be routed to the Jhimpir gird station by HESCO and would be sufficient to electrify 6,900 homes in Hyderabad region. Harnessing the strong winds coming from South West, the wind farm is first major commercial wind power project of the country, comprising five towers in the first phase with an installed capacity of 1.2MW wind turbine generator per tower.

The slowdown in the renewable energy sector is likely to be temporary. President Obama is expected to get the US Congress to approve $150b to support the US renewable energy sector with large government incentives. The US policy will likely boost the global renewable energy market as well.

As Pakistan grapples with its crippling energy crisis, it is important for the country to take advantage of its precious natural resources such as the high winds and the bright sunshine, and biofuels as byproducts of its sizable sugar-making industry. Such a strategy will lead to lower costs of generation by reducing the need to import oil. It'll also help reduce carbon emissions, a major environmental concern.

Related Links:

Huge Solar Power Project in California

Renewable Energy in Pakistan
Pakistan's Energy Crisis

Using Solar Energy in Pakistan

Pakistan's Sugarcane Biogas Plant

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Wednesday, February 25, 2009

Stimulus Triggers Lobbyists Boom in Washington


With Washington on an unprecedented spending spree to stimulate the economy, President Barack Obama has repeatedly promised unprecedented transparency. "Instead of politicians doling out money behind closed doors, the important decisions about where taxpayer dollars are invested will be yours to scrutinize," the President said in a video announcing the opening of the site called recovery.gov.

While polls indicate that most Americans support their new president in his sincere efforts to revive the US economy, it is clear that President Obama is up against the massive power of Washington's corrupt political-industrial elite that has brought American economy near collapse. And many of the same people are still in charge on the Hill.

As the stimulus package is getting the nod from the US Congress, the lobbyists on K-street say that their phones are ringing off the hook. "There was this unique opportunity that government was handing out money and anytime that happens, companies will spend what they must to get in line to get a piece of the pie", said Sheila Krumholz, Executive Director of Center for Responsive Politics in a report aired on NPR Radio today.

Washington lobbyists earned a whopping $3.2 billion last year. That's the highest amount in the decade tracked by the nonpartisan watchdog group's Sheila Krumholz. She said interest groups spent $17.4 million on lobbying every day Congress was in session last year. And with Washington on a spending spree, companies are boosting their influence on Capitol Hill.

The situation is no different on Wall Street, one of the largest contributors to the powerful politicians in America. Despite crippling losses, multibillion-dollar bailouts and the passing of some of the most prominent names in the business, employees at financial companies in New York, the now-diminished world capital of capital, collected an estimated $18.4 billion in bonuses for the year, according to a recent report in the New York Times.

That was the sixth-largest haul on record, according to a report released Wednesday by the New York State comptroller.

Massive loss of confidence in many of the US public and private institutions is largely responsible for the current global economic crisis of historic proportions. It is in the best interest of America's political-industrial elite to reform themselves in the larger interest of the nation and the world. I hope our new popular new president can get the people on the Hill as well as those on Wall Street and K Street to behave themselves in their own best interest. To accomplish this challenging task, Obama should be willing to risk going directly to the people, over the heads of the Congressmen, including his fellow Democrats, early and often to maintain his own credibility with the people.


Here is an Obama video clip promising complete transparency:



Related Links:

Will American Capitalism Survive?

China's Nuclear Option

Senator Schumer: The Champion of Wall Street on the Hill

Pay to Play is the Name of the Game in Washington

Are Jews Culprits of Collapse on Wall Street?

Keynes on Jews

Democrats and Republicans Share Blame for Financial Collapse

Jewish Network in US Congress

Jewish Power Dominates at Vanity Fair

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Sunday, February 22, 2009

Slumdog Should Spark War on Child Poverty


Decried by many as "racist poverty porn" and condemned by Bollywood superstar Amitabh Bachan in his blog for showing India as "a third world dirty under belly developing nation (sic)", the movie Slumdog Millionaire has been greeted by howls of protests in India. But it has been widely acclaimed in the West. It is sparking international interest in the vast slums of Mumbai. “Slumdog” may take in $100 million during its run in U.S. and Canadian theaters, according to Media By Numbers LLC. The low-budget movie had $43.9 million in receipts before collecting 10 Oscar nominations on Jan. 22, 2009. There have been charges of child exploitation against Slumdog producer and director which have been denied by Danny Boyle. “The actors were paid very well. We have not released any figures — either what they were paid or what they will receive when they complete their education — because it would make them vulnerable to certain elements, because they are quite large sums of money.”

Reports suggest the stars are entitled to a trust fund if they have remained in education for a certain length of time. The production company wanted to make sure the child actors would benefit from a decent education as well as the money, he said.

Slumdog is not the only Academy Award contender focusing on poverty, squalor and its effects in India. Another documentary "The Final Inch" -- which has also been nominated for an Academy Award -- takes a real-life look at India's slums. The film explores the final battle against polio, a largely forgotten disease that continues to ravage the world's poorest areas -- areas that the Hollywood feature so graphically depicts.

Poverty tours in India, Brazil and South Africa are not an entirely new phenomenon. Favela tours in Rio De Janeiro in Brazil and South African shanty town tours have attracted tourists for years. It is primarily the popular Slumdog Millionaire, nominated for 10 Oscars including Best Picture award, that is translating to more rubberneckers in the Mumbai, India, slum where it was filmed — and is re-igniting a debate over the ethics of "poverty tourism", according to USA Today. Chris Way, the co-founder of Reality Tours that operates the poverty tour of the Mumbai slum, estimates that sales are up by about 25% since Slumdog Millionaire's release. Though he credits some of the increase to a gradual rebound in tourism after terrorist attacks in Mumbai killed more than 170 people in November, publicity surrounding the film has played a big role.

The tours have come under criticism for exploiting poverty. But Way defends his tours as a way to help the poor in Mumbai. In India, "a lot of people think the movie is 'poverty porn,' " says Way, a Brit who has lived in Mumbai since 2004. But any criticism of his tours "comes from misunderstanding what we are trying to do … break down the negative image of slums, (and) highlight the industry and sense of community." Reality Tours charges $10 or $20 a person, depending on length of the tour, and pledges to donate 80% of after-tax profits to local charities. Though the business hasn't yet cleared a profit, it paid for a community center.

With the expected attendance of the slum child actors of Mumbai at the Oscars tomorrow in Los Angeles, Way's company and Mumbai tourism are likely to get a further boost in the coming months. There is speculation that Azharuddin Mohammed Ismail, 10, and Rubina Ali, 9, both of whom were plucked from their homes in a Mumbai slum by director Danny Boyle and his team, will steal the show from the big glamorous stars of Hollywood.


Child poverty is not unique to India. MSNBC recently reported that the worsening economy in Pakistan is especially taking its toll on children and some are being abandoned by their parents. The report highlighted the case of three mothers who could not afford to feed their children. "The three women came together to my center," Bilquis Edhi of Edhi Center said. "They asked me to please take their children; they could no longer feed them."

"The mothers were sobbing as they tried to leave the children and the children were crying clinging to their mothers," Edhi said. "It was heart wrenching to watch."

While the news of abandoned or begging children offers only a small anecdotal evidence of the sorry state of Pakistani children, the official data paints an equally grim picture. Ranked at 136 on a list of 177 countries, Pakistan's human development ranking remains very low. Particularly alarming is the low primary school enrollment for girls which stands at about 30% in rural areas, where the majority of Pakistanis live. In fact, the South Asia average of primary school enrollment is pulled down by Pakistan, the only country in all of Asia and the Pacific with the lowest primary enrollment rate of 68 per cent in 2005. This is 12 percentage points lower than that of Maldives, which, at 80 per cent, has the second lowest rate in Asia and the Pacific. Low primary enrollment rate and poor health of children in Pakistan raise serious concerns about the future of the nation in terms of the continuing impact of low human development on its economic, social and political well-being.

According to Asia Children's Rights report, about 8 million Pakistani children, or 40 percent of the total population of children under the age of 5, suffer from malnutrition. About 63 percent of children between 6 months and 3 years have stunted growth and 42 percent are anemic or underweight. Poor nutrition leaves these children vulnerable to diseases. Pakistan is among the few countries of the world where Polio is still endemic. Poor conditions extend to the education sector as well. Over 23 million children in Pakistan have never been to school. The International Labor Organization data shows 3.3 million children, between the ages of 5 and 14 years in Pakistan, are forced to work rather than attend school. A quarter of a million of them work as domestic servants. The most recent United Nations Human Development Report indicates that the youth literacy rate in Pakistan is an abysmal 58 percent, among the lowest in the world. Sexual abuse is another problem. Homelessness of children is quite common. Over 10,000 children below the age of 15 live on the streets and sidewalks of Karachi alone. Many of them are forced to beg for survival. Most of these children say they left home because of domestic violence and family financial problems, according to Edhi Foundation which cares for some of them. According to a report by Amnesty International, there are more than 4,500 juvenile prisoners in Pakistani jails and 66 percent of them are being tried. Juvenile detainees are kept with adults, leaving them vulnerable to sexual and physical abuse.

I hope that the growing interest in Mumbai slums goes beyond a temporary fad and a fleeting voyeuristic exercise. This extraordinary interest should translate into action to help the people of the slums escape the abject poverty and squalor that define them and their daily existence. Jeff Greenwald, executive director of EthicalTraveler.org, put it well when he spoke with USA Today. "If one takes such a tour out of a genuine desire to learn and a passion for social justice, the experience can be valuable, eye-opening, even life-changing. If one goes as a spectator, it's little different than a visit to the zoo," he said.

This opportunity of global interest in child poverty should not be wasted. Instead, it should spur the Slumdog director to set up a foundation with some of the proceeds from the film to champion the cause of poor children with UNICEF in South Asia and the rest of the world.

A recent issue of San Jose Mercury News has a pictorial about grinding poverty in India done by John Boudreau and Dai Sugano. This heartbreaking pictorial illustrates the extent of the problem that India faces, a problem that could potentially be very destabilizing and put the entire society at the risk of widespread chaos and violence.

Here's a video clip from the Mercury News story:



Here's a video clip on world poverty:



Please make your contribution to the Hunger Project or Hidaya Foundation or Edhi Foundation or UNICEF to help alleviate child hunger and poverty in South Asia.


Related Links:

Mumbai's Slumdog Millionaire

Poverty Tours in India, Brazil and South Africa

South Asia's War on Hunger Takes Back Seat

Bollywood and Hollywood Mix Up Combos

Grinding Poverty in Resurgent India

Pakistani Children's Plight

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Wednesday, February 18, 2009

WiMax Broadband Growing in Pakistan


Motorola announced in 2006 that Pakistan planned the world's largest WiMax roll-out. "The deployment is a milestone in the spread of WiMax, a superfast wireless technology that has a range of up to 30 miles and can deliver broadband at a theoretical maximum of 75 megabits per second. The 802.16-2004 standard, which is used in fixed WiMax networks, is being skipped in favor of a large-scale introduction of 802.16e, which was only recently agreed upon by the WiMax Forum," the 2006 announcement said.

Let's examine the state of WiMax deployments and subscriber growth around the world since the Motorola announcement more than two years ago.

The broadband wireless access (BWA) industry has grown significantly in the last few years due to increased availability of spectrum for commercial services and the desire to close the digital divide, according to Wimax.com. A major shift from the industry has been the migration towards standards-based products.

The largest wireless ISP in the world, Clearwire, has more subscribers than the next four BWA/WiMAX operators combined. The majority of its user base relies on the desktop modem from its former equipment subsidiary, NextNet, which is now part of Motorola's operations. PC Cards and VoIP services are now part of the portfolio. The operator is expected to launch its first commercial WiMAX network (using Motorola's 802.16e-2005 radios) in Portland, Oregon before the end of the year. Regulatory approval to form a joint venture with Sprint Nextel to launch a nationwide WiMAX service in the US is eagerly anticipated. A successful joint venture would catapult Clearwire into a unique position as the only fixed wireless network operator to transition into a mobile carrier.



According to Fierce Broadband Wireless, the largest mobile WiMAX deployments reported during first-quarter 2008 were from Korea Telecom with nearly 150,000 subscribers and Wateen Telecom (Pakistan) with more than 10,000 subscribers at the end of that quarter. Wateen is today the largest mobile WiMAX Motorola deployment. In June 2006, Wateen placed an order for 198,000 CPEs from Motorola. Motorola has shipped 60,000 CPEs so far. Wateen has told Fierce that they had 25,000 subscribers by the end of June 2008. The operator expects to complete the order of 198,000 CPEs by this year. It is expected that the gap between mobile "16e" deployments and "16d" will narrow once trials of 16e equipment are complete and certified equipment becomes widely available.

The liberalization of Pakistan's telecommunications industry started in 1997 and accelerated under former President Musharraf and former Prime Minister Shaukat Aziz. In 2004, the Pakistan Telecommunications Authority (PTA) introduced two types of licenses for ISPs – regional and nationwide, and also exempted them from Central Excise Duty. Over the past four years, the Pakistani telecom sector has attracted more than USD 5.6 billion in foreign investments. During 2007/08, the Pakistani telecoms sector alone received USD 1.44 billion in Foreign Direct Investment (FDI) – about 30 per cent of the country’s total FDI. The pace of investment is likely to slow down this year because of the global financial woes.

Pakistan's network operators are offering wide range of technologies like DSL, Cable, FTTH and WiMax. They have added 25,500 new broadband connections in the financial year 2007-08, which is around 150 percent increase compared to the previous financial year, Pakistan Telecommunication Authority (PTA) statistics reported.

At present Digital Subscriber Link (DSL) is the leading broadband service in the county with 65 percent of the market share. Major DSL providers in Pakistan are Micronet, LinkDotNet, CyberNet, MultiNet and PTCL.

Wateen is likely to see growing WiMax competition from operators including Wi-Tribe, Mobilink and LinkDotNet in Pakistan. Wi-Tribe is jointly owned by Qatar Telecom, ATTCO group and Clearwire. Motorola has signed a multi-year WiMAX contract with Wi-Tribe. Motorola has commenced deploying Wi-Tribe’s WiMAX network in the 3.5GHz spectrum. Commercial launch is expected during 2009. LinkDotNet, a subsidiary of ORASCOM Telecom, is working with Alcatel-Lucent for their WiMax deployment.

According to WiMax.com, Bharti TeleVentures, Reliance, SIFY, BSNL and VSNL (Tata Group) have all acquired licenses in 3.3 GHz range and are in various stages of trials. VSNL has announced Phase 1 pre-WiMAX deployment of Aperto gear in 60 locations, extending to 200 locations within the year. Although there is clearly insufficient spectrum to offer DSL-like service, several operators have indicated that there is still a huge market for 64 and 128 kb/s connections, which should alleviate the lack of spectrum.

Once the trials are over, analysts expect WiMax subscribers to grow to about 19m in India by 2012.

How is Wimax doing in the United States? Jon Fortt of Fortune Magazine recently visited Portland, Oregon, and saw a demonstration of it in a Lincoln Navigator while a "Knight Rider" episode streamed over the Internet to a screen mounted to the car's dashboard. Here's how Fortt sums up his findings:

"The good news is that WiMax appears to work pretty well (no latency or jitter as the KITT car was taking down bad guys), making it a potential competitor to telephone and cable companies' broadband offerings. The bad news is that most American cities may never get post-wired like Portland and Baltimore, the other city now boasting a full-fledged WiMax network."

Fortt believes that WiMax, with its ability to serve up broadband on the go, certainly could spark a fresh wave of innovation. The Obama administration's broadband measures in its latest stimulus package should help give a boost to WiMax deployments in the United States.

While the potential for Wimax in the US market looks very good, I believe the really big opportunity is in the emerging markets, such as India and Pakistan, where the mobile phone has achieved greater than 50% penetration and the PC/Internet penetration remains in single digits. South Asia is witnessing some of biggest planned deployments of Wimax with a lot of consumer interest in both fixed and mobile broadband.

According to Juniper Research, South Asia will be the driving force behind the growth of Mobile WiMax, or the 802.16e standard. The Asia and Australia regions are expected to account for more than 50% of the total WiMax deployments by 2013.

Pakistan, being among the first countries in the world to roll-out a functional WiMax service, is experiencing tremendous growth in demand after Wateen Telecom’s launch of its WiMax service and roll-out plans announced by Mobilink.

India's state-owned Bharat Sanchar Nigam Limited is rolling out a Wimax network for broadband access in response to government requirement that 20 million broadband lines be in service by 2010.

Given the growing demand for the Internet access and the ubiquity of mobile phones, Wimax roll-out will likely spur the largest adoption of mobile Internet in South Asia in not too distant future.

Related Links:

Pakistan Broadband Overview

Broadband Internet Access in Pakistan

WiMax in Pakistani Cities

WiMax Launch in Pakistan

Mobile Internet

Pakistan's Broadband Stakeholders Group

Google and Intel Boost Mobile Internet

WiMax Continues to Evolve in Pakistan

Motorola to Deploy Mobilink WiMax in Pakistan

WiMax's Last Best Hope

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Monday, February 16, 2009

Is This the End of American Capitalism?


As the modern system of capitalism faces the most serious challenge of its existence since Adam Smith, the name of John Maynard Keynes (1883-1946) is being regularly invoked by economists, politicians, bankers, and the media. And with good reason. Born in Cambridge, England, in 1883, the year Karl Marx died, Keynes probably saved capitalism from itself and kept Communists at bay. Keynesian Economics advocates the use of government monetary and fiscal policy to maintain full employment with low inflation.

Keynes described Capitalism in the following words: "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone."

A well-known anti-Semite, Keynes once said, "It is not agreeable to see civilization so under the ugly thumbs of its impure Jews who have all the money and the power and brains." As in the past financial crises, powerful Jews on Wall Street and in Washington are being held responsible by many as the culprits of the current economic collapse.

In response to a severe recession or possible depression, Keynes suggested: "The government should pay people to dig holes in the ground and then fill them up." He advocated massive spending by government to stimulate demand when all else fails.

Who was Keynes? Here is how UC Berkeley's Robert Reich described him a few years ago: "A Cambridge University don with a flair for making money, a graduate of England's exclusive Eton prep school, a collector of modern art, the darling of Virginia Woolf and her intellectually avant-garde Bloomsbury Group, the chairman of a life-insurance company, later a director of the Bank of England, married to a ballerina, John Maynard Keynes--tall, charming and self-confident--nonetheless transformed the dismal science into a revolutionary engine of social progress."

Keynes was clearly a very smart man. His ideas of modern Capitalism have created unprecedented wealth and lifted hundreds of millions of people out of poverty. And his ideas may still help save capitalism yet again. At least, that is the hope of the Obama administration and the backers of the massive stimulus package of about $800 billion recently passed by the US Congress. However, what Keynes couldn't have imagined are the new heights of avarice and wickedness of the modern political-industrial elite in America that has threatened the very foundations of the system that brought them wealth and power. During the last decade, the behavior of American capitalists and politicians has been unbelievably self-destructive.

Even Alan Greenspan, the icon of modern US capitalism, was forced to show contrition in October, 2008. The former Federal Reserve Chairman told a House committee that the banking and housing crisis is a "once-in-a-century credit tsunami." When asked if his ideology pushed him to make bad decisions, Greenspan said he found a "flaw" in his governing ideology that has led him to re-examine his thinking. There has, however, been no acceptance of any responsibility for the current crisis by the members of US Congress and powerful finance, banking and appropriations committees responsible for overseeing the US finance and economy.

The American economy continues to deteriorate rapidly with the devastating credit crunch and major loss of confidence by consumers, businesses and investors. At this point, tax cuts or just handing out cash to banks or big infrastructure projects or re-regulation are not likely to help hasten economic recovery. The Obama administration will need to take more drastic measures, including nationalization and recapitalization of major banks to ensure that the much needed credit to businesses and consumers starts flowing again. Ideological aversion to nationalization will only delay recovery and take a much heavier toll on ordinary Americans in terms of job losses, home foreclosures and loss of other basic necessities of life.

The problem that some of the the critics of the Obama economic team and their Congressional overseers, derived mainly from the Clinton administration and the hold-overs from Bush-era, point out is articulated well by Nassim Taleb, the author of Black Swan. “We have the same people in charge, those who did not see the crisis coming,” he said recently on CNBC.

The roots of the current crisis can be traced to the Reagan revolution. Beginning in the early 1980s, Reaganomics transformed the United States in fundamental ways. Since the world saw the fall of the Soviet Union and collapse of Communism, the Conservative Republican ideas of less government and more deregulation have continued to change the economic landscape in America and the rest of the world. This revolution has now lasted almost three decades under various US administrations including Bush 41, Clinton and Bush 43. The Reagan ideas have also been adopted and preached by international financial institutions like the World Bank and the International Monetary Fund.

The continued wave of deregulation engineered and supported by America's predominantly Jewish political-industrial elite has led to the creation and trading of what Warren Buffet describes as "financial weapons of mass destruction". Such newfangled, unregulated financial derivative products as some mortgage-backed securities, credit default swaps and other wildly speculative futures and commodities contracts have produced hundreds of billions of dollars worth of personal gains for the financial industry executives and hundreds of millions of dollars in political contributions for American politicians who are now grand-standing as saviors of the American and the world economy.

The fate of many new-comers from the emerging economies of the world is closely tied to the success or failure of capitalism in America. It appears that some of the countries such as Brazil, Russia, China and India, who embraced the conservative American ideas of "economic reform" and "deregulation", may already be too late for the party. However, the European and Asian nations with substantial population of savers and entrepreneurs will recover rapidly and thrive again, as long as they keep their banks and financial institutions on a tight leash. In particular, the world's top creditor nations such as China , Japan and Germany with high savings rates, massive trade surpluses and large central bank cash reserves are likely to come out ahead at the end of the current crisis. Others may not be so lucky. But all the follower nations that have essentially been copying the US model will have to develop their own original ideas with financial systems and economic models to move forward in uncharted waters. Clearly, any new models will require a deep understanding and introspection of what has worked and where has the American capitalism gone wrong.

Related Links:

China's Nuclear Option

Senator Schumer: The Champion of Wall Street on the Hill

Pay to Play is the Name of the Game in Washington

Are Jews Culprits of Collapse on Wall Street?

Keynes on Jews

Democrats and Republicans Share Blame for Financial Collapse

Jewish Network in US Congress

Jewish Power Dominates at Vanity Fair

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Sunday, February 15, 2009

Pakistan Textile Industry Hits Rough Patch


Pakistan has a diverse economy that includes textiles, chemicals, leather products, food processing, financial services, telecommunications, retail, automobile manufacturing, light and heavy armaments, agriculture and other industries. It is the 45th largest economy in the world in terms of official exchange rates ($144b) and 25th largest based on purchasing power parity ($410b PPP). Its service sector accounts for more than half of its GDP.

Pakistan’s textile industry is a major contributor to the national economy in terms of exports and employment. Pakistan holds the distinction of being the world’s 4th largest producer of cotton as well as being the 3rd largest consumer of the same. In the period July 2007 - June 2008, textile exports were US$ 10.62 Billion and accounted for 55% of the total exports.

As the economies in the US and Europe slow down, Pakistan's key exports of textiles and leather products are experiencing a slowdown in growth as well. According to APTMA, textile exports have declined by about 20 percent in 2008. The industry is bracing for more trouble ahead with continuing crises of electricity and gas, international market access, global economic slow-down,and adverse travel advisories.

According to Pakistan textile industry association, 90 percent of Pakistan's textile industry is losing money losses and facing closure. More than two months of production has been lost due to power cuts and gas shortages.

APTMA, Pakistan's textile industry Association established for the promotion and protection of the textile industry, says that the high cost of finance because of the nation's tight monetary policy has added to their continuing woes.

In order to pave the way for the IMF bailout, Pakistan's central bank raised its bank lending rate in early November by 2 percentage points to 15 percent. Since 2004 interest rates have risen dramatically. Kibor (Karachi Inter-Bank Offered Rate) has surged 261 percent. Likewise, the bank spread, on a weighted average basis, rose from 2 percent to an excessive 7.75 percent. This size of bank spread is among the highest in the world. These high rates were allowed as a policy to restrict money supply to satisfy the IMF conditions.

Federal Textile Adviser Dr Mirza Ikhtiar Baig told the News that Pakistan has a very low share of the international textile market. China tops the US market with a share of 36 per cent followed by Bangladesh 21 per cent, India 18 per cent, Morocco 19 per cent and Pakistan 13 per cent. South Korea has lost 20 per cent of the US market.

In the European market, China tops again with a share of 29 per cent, Vietnam 28 per cent, India 19 per cent and Pakistan only 1.5 per cent while the Philippines had lost 11 per cent of the market.

European buyers have told Baig that Pakistani garment manufacturers could cut their cost up to 45 per cent in sewing by improving efficiency.

“Labor productivity is very low,” said Baig. “Our regional competitors take 75 minutes to complete and produce one piece of cloth whereas we take 133 minutes for the same work. We also waste 30 per cent in finishing and 12 per cent in washing.”

According to a study of Pakistani textile and apparel sector conducted by Werner International, management consultants to the world textile, apparel & fashion industry, some of the garment units were over-staffed by 57 per cent. That was an internal negative factor whereas external factors included no duty-free market access to the EU and negative image and perception of Pakistan abroad.

Baig has asked Werner to submit a proposal for presenting a better image of the textile industry to global brands for achieving collaboration with them. In response, Werner is working on a three-year plan to help Pakistan garment manufacturers.

While Pakistan clearly needs to diversify and increase higher-value-added exports such as sophisticated machinery and high technology products and services, it is essential for it to maintain and enhance the current export levels of textiles, leather and other products for which there is an established export market. The export-oriented industries should get preferential treatment in getting access to necessary inputs of raw materials, financing and energy by government policies. Energy and communications infrastructure, in particular, need much greater focus to enable Pakistani exporters to continue to earn the much-needed hard currency.

Related Links:

Haq's Musings

Pakistan Textile Industry Report

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Saturday, February 14, 2009

Coffee, Tea or Pee?


In late 1970s when I was in graduate school in New Jersey, the late prime minister of India, Mr. Morarji Desai, was the focus of a CBS 60-minutes interview extolling the virtues of drinking urine. It provided Pakistani students an opportunity to embarrass our fellow students and friends from India. When our Indian friends showed up for a visit, my roommate politely asked them whether they would like to have "coffee, tea or pee". It was all in good fun and we all laughed it off.

Fast forward thirty years. The joke appears to be turning into reality with the expected launch of a drink "Gau Jal" in India. It is being touted as the "Hindu Nationalists' answer to Coke" by the RSS.

"Don't worry, it won't smell like urine and will be tasty too," Om Prakash of the RSS told The Times from his headquarters in Hardwar, one of four holy cities on the River Ganges. "Its USP will be that it's going to be very healthy. It won't be like carbonated drinks and would be devoid of any toxins."

Many Hindus consider cow urine to have medicinal properties and it is often drunk in religious festivals.

Since 2001, the RSS and its offshoots – which include the opposition Bharatiya Janata Party – have been promoting cow urine as a cure for ailments ranging from liver disease to obesity and even cancer.

The Hindu organization, which aims to transform India's secular society and establish the supremacy of a Hindu majority (often referred to as Hindutva), said it had not yet decided on a name or a price for the drink.

My marketing suggestion to the RSS is to brand this new concoction as "Desai Cola" in honor of the late Indian prime minister who was the first to promote the benefits of urine to the world on a major TV show. The ads for this new invention should boldly ask the prospects, "Does your Pepsi lack pep? Is your Coke not the real thing?" And then offer "Desai Cola" as the answer. In spite of its "medicinal properties" the RSS should price it competitively with other cola drinks such as Coca Cola and Pepsi Cola to rapidly gain a large market share. The RSS should also consider hiring some of the smart middle-class Indian graduates from Harvard Stanford and Wharton Business schools, kids with certifiable RSS sympathies, to give their product international recognition.

Related Links:

Hindus plan cow urine drink to rival Western sodas

Sonal Shah to Help Divide Obama's Victory Spoils

India to Launch Cow Urine Drink as Coke Alternative

Hindu Nationalists' Government in Exile?

India's Guantanamos and Abu Ghraibs

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Wednesday, February 11, 2009

Corruption Rampant in Construction Industry


On September 1, 2007, the newly constructed Sher Shah Bridge in Karachi, Pakistan, collapsed killing 14 people, and injuring many, including three police constables. The bridge was inaugurated by former President Pervez Musharraf less than a month before it fell down. Shoddy construction and corruption are suspected but the investigation has produced no results yet. Official cover-up appears to have succeeded.

In 2003, S.K. Dubey, Deputy General Manager of National Highways Authority of India (NHAI), was assassinated by unidentified gunmen after he wrote to the Prime Minister of India highlighting several instances of "loot of public money" and "poor implementation". He requested anonymity but, tragically, the confidentiality of Dubey’s letter and the identity of the ‘whistle blower’ were both violated as Dubey’s letter was passed down from file to file through the bureaucratic maze.

Earthquakes that hit China and Pakistan in the last few years have caused massive destruction. The fact that the damage was significantly disproportionate to government schools and other government buildings has raised questions about shoddy construction by government contractors supervised by corrupt officials. Majority of the victims in both nations were children.

As the need for infrastructure projects grows in both the developing and the developed nations and they commit massive funds to such projects, there is a huge concern about the waste from rampant corruption in the global construction industry. Transparency International, a nongovernmental organization that tracks corruption, reports that the construction industry is the most corrupt in the world.

A wave of government bailouts around the world and a sharp deterioration in existing infrastructure could lead to as much as $35 trillion in public works spending over the next 20 years, according to a new study by CIBC World Markets.

According to the CIBC forecasts:

* North America will spend $180 billion on infrastructure each year.
* Europe will spend $205 billion.
* Asia will spend $400 billion.
* And $10 billion will be invested in Africa annually.

Stimulus plans will figure heavily into the global infrastructure boom.

Indian Planning Commission's deputy chairman, Montek Singh Ahluwalia, recently told Reuters that his nation should be able to maintain economic growth of around 6.5-7 percent in the 2009/10 fiscal year but needs to ramp up infrastructure spending to boost growth.

While the recent US prosecution of Halliburton on corruption charges in Nigeria that resulted in a $559m settlement is welcome news, it also raises a lot of questions about how widespread and deeply rooted the corruption is in the construction industry. As a response to the deep concerns, the industry set up a Partnering Against Corruption Initiative (PACI) a few years ago. But Fluor CEO Alan Boeckmann recently told Fortune Magazine, "PACI was a cooperative effort to share best practices. But it had no teeth. We wanted to give it substance." Plenty of companies had signed on, but few had adequate programs to teach and enforce anticorruption principles.

Much of that changed four years ago, when he appointed a company lawyer, Wendy Hallgren, as the head of compliance, according to Fortune. Hallgren wanted to observe firsthand what Fluor's employees were experiencing. So she spent much of a year and a half crisscrossing the globe, talking to project managers and engineers in countries including the Philippines, Russia, and Chile.

In a Southeast Asian country (not named), Hallgren learned that local officials were demanding that Fluor hire their security details; when the company refused, the government converted the dirt road leading to Fluor's mining project into a one-way path and arrested workers as they drove home. Rather than pay up, Fluor appealed to the regional government - and then later used the story to train employees to react in the same way.

According to TI, corruption on construction projects (which includes bribery, extortion and fraud) is damaging:

* It damages the developed and developing world, resulting in projects which are unnecessary, unreliable, dangerous, and over-priced. This can lead to loss of life, poverty, economic damage and underdevelopment.
* It damages companies, resulting in tendering uncertainty, wasted tender expenses, increased project costs, economic damage, reduced project opportunities, extortion and blackmail, criminal prosecutions, fines, blacklisting, and reputational risk.
* It damages individuals, resulting in reduced morale, criminal prosecution, fines and imprisonment.

There is the potential for corrupt practices at every phase in construction projects. Research by Sohail and Cavill on corruption in construction in Pakistan describes the forms of corruption as:

* Land acquisition: land-titling arrangements land mafia or acquiring the land in illegal ways. corrupt officials within the various departments to maintain haphazard records of land and no serious effort in maintaining computerized records has been made
* Excavation e.g. bribes to police to allow heavy machinery to execute the job
* Dumping of material – bribes to dump the excavated soil
* Illegal water connection: Water is the foremost requirements for the construction. bribe paid for water tankers or by water connections e.g. to lineman of Water and Sewerage Board
* Illegal electricity connection: In the local language the illegal electricity
connection is called “Kunda”. This is pretty obvious and could be detected easily. In order for the area inspector of electricity department to turn a blind eye a bribe is paid through a middleman or agent.
* Storage of material at site: The storing of materials on site or by the roadside causes an obstruction to traffic so it is often necessary to bribe the traffic police or city government inspector.

In India, the assassinated engineer S.K. Dubey’s key complaints included:

* Tenders are called for on the basis of Detail Project Reports (DPR) by design consultants which are are badly prepared and are unreliable.
* Process of procurement ‘‘completely manipulated and hijacked’’ by the big contractors ; forged documents are submitted to justify technical and financial capabilities.
* NHAI officials are in league with big contractors and internal NHAI decisions are leaked.
*Nearly 10% of contract value is paid as ‘Mobilization Advance’ to selected contractors within a few weeks of award of work, for which the NHAI officials receive illegal gratification or “commissions”. No follow-up to ensure the actual utilization of such advances.
*Practice of subletting of contracts or sub-contracting to small petty unqualified contractors fails to ensure the requisite quality of construction.

Transparency International (TI) believes that corruption on construction projects can only be eliminated if all participants in construction projects co-operate in the development and implementation of effective anti-corruption actions which address both the supply and demand sides of corruption. These participants include governments, funders, project owners, contractors, consultants, and suppliers, and the business and professional associations which represent these parties.

TI offers a number of ideas on fighting corruption in the construction industry on its website.

Related Links:

Bhutto Convicted in Switzerland

Corruption in Pakistan

Infrastructure Corruption in India

Infrastructure Corruption in Pakistan

Transparency International Survey 2007

Is Siemens Guilty?

Fluor's Anti-Corruption Initiative

Zardari Corruption Probe

Construction, Corruption and Developing Countries

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Insurgencies in South Asia


In recent years, militant groups in the beautiful Swat valley, led by radical cleric Maulana Fazlullah, have been attacking and killing civilians as well as security forces in scenic Swat. In some 60 villages, the militants have set up a de facto "parallel government" with Islamic courts imposing sharia law. The region is effectively under militant control despite the presence of 20,000 Pakistani troops. Local opponents of the militants have been harshly critical of Pakistani civil society for its lack of concern for their plight as well as critical of the military and provincial government for their ineffective measures for controlling the tide of militancy.

Media reports indicate that the Taliban are enforcing a complete ban on female education in the Swat district. Some 400 private schools enrolling 40,000 girls have been shut down. At least 10 girls' schools that tried to open after the January 15, 2009 deadline by the Taliban were blown up by the militants in the town of Mingora, the headquarters of the Swat district. "More than 170 schools have been bombed or burned, along with other government-owned buildings."

There is widespread sorrow and outrage in Pakistan over the ongoing situation in Swat and other parts of Pakistan which are being threatened by a growing insurgency. Let us put these troubling events in perspective.

Throughout human history, there have been bloody insurgencies. The Ridda wars in the early days of Islam during the first Caliph Aboobakr's rule were fought to defeat an insurgency that threatened the existence of Islamic state soon after Prophet Muhammad's death.

For those of us living in US or UK, let’s not ignore the history of prolonged and extremely violent civil wars fought by these two nations in earlier times.

The situation today is no different in South Asia. Just look in Pakistan’s neighborhood for comparison. The beautiful island nation of Sri Lanka has had a long and bloody insurgency by a Tamil separatist group LTTE, initially created, trained and funded by Indian Intelligence agency RAW. Still very active, the Sri Lanka war marked the beginning of the suicide bombing as a tactic to rattle the government and population and it has claimed tens thousands of lives.

In India, a Maoist group calling themselves the “Naxalites” have exploited growing economic disparities in India to carve out a “red corridor” of activity that runs from the Nepalese border to the jungles of central India. Fighting in thirteen of India’s twenty-eight provinces and boasting between 10,000 and 20,000 dedicated followers, the Naxalites pose India’s biggest internal security threat. In contrast to the scattered actions of Kashmiris, the Naxalites are in every way a traditional communist insurgency. UC Berkeley Professor Chhibber has described the total absence of any legitimate civil authority in large parts of India that remind of the parts of Pakistan's FATA region. The Indian government relies on private militias to enter such Maoist-controlled areas for limited purpose and duration, when absolutely needed.

Since 1989 more than 80,000 have died in insurgencies in Kashmir and the northeastern states. Manmohan Singh himself has called the Maoist insurgency centered on the state of Chhattisgarh the biggest internal security threat to India since independence. The Maoists, however, are confined to rural areas; their bold tactics haven't rattled Indian middle-class confidence in recent years as much as the bomb attacks in major cities have, according to Indian writer Pankaj Mishra.

As the insurgencies intensify, the domestic and international critics of Pakistani military are growing louder. A large part of the criticism stems from the military's role in national affairs that has not always been in the best interest of the people. Many Pakistanis have significant grievances against the past actions of the military. But this harsh criticism is clearly not helpful in dealing with the current challenges. Among the various institutions in Pakistan, we must recognize that the military, backed by a comprehensive political strategy, is the only strong institution capable of dealing with both internal and external threats at this time in the nation's history. That is not to say that seek a purely military solution. The primary purpose of counterinsurgency operations should be to protect the ordinary citizens and neutralize the hard-core terrorists with the help of the population. It requires a strategy to win the support of the people rather than just to kill or capture the terrorists.

The best thing for Pakistanis is to have courage and patience and not give up hope in the face of extreme difficulty. Counterinsurgency is something very difficult for the conventional army of any nation, designed, equipped and trained mainly to fight conventional wars. But Pakistani military and civilian leadership are learning from their experience and they can and will eventually defeat the insurgents, if the people of Pakistan support their efforts by words and deeds. It is much easier to criticize and express dismay at these events than to actually deal with such events effectively. Despondency is our worst enemy. Let us ignore the prophets of doom and gloom and not allow ourselves to be demoralized.

Related Links:

Maoist Insurgency in India

Ridda Wars

Sri Lanka's Civil War

Obama's Kashmir Focus

Masters of Suicide Bombing

Counterinsurgency in Afghanistan and Pakistan

India's Research and Analysis Wing

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Sunday, February 8, 2009

Bollywood-Hollywood Hybrid Film Genre


Bollywood and Hollywood are joining forces to produce a whole slew of hybrid movies with money, stars and scripts flowing in both directions. The motivation is clear: Both purveyors of entertainment are looking to expand their audiences. "It's the right time for these two giants to shake hands," Mr. Vidhu Vinod Chopra, Indian writer and director, told the Wall Street Journal, adding that Hollywood stands to benefit from India's large movie audiences. "We have stars like Aamir Khan, who has more eyeballs than Tom Cruise, Brad Pitt, anybody."

Though it is dwarfed by Hollywood's $10b in sales last year, India's domestic film industry is growing much faster at 15% annually and is projected to hit $4 billion by 2012, up from $1.9 billion in 2007, according to PricewaterhouseCoopers.

Wall Street Journal is reporting a number of joint projects currently in development: Screenwriter Paul Schrader, famous for such films as "Taxi Driver" and "Raging Bull," is working on a thriller with an Indian producer. Sylvester Stallone will appear in "Kambakkht Ishq," or "Incredible Love," an action-filled comedy shot in Los Angeles and starring Akshay Kumar. Indian film mega star Shahrukh Khan is producing and starring in a superhero film that will be co-written by American and Indian screenwriters and digitally souped up by American special-effects technicians.

The critical or commercial success of such projects, however, remains a big question mark based on the reception of the recent releases of Slumdog Millionaire and Chandni Chowk. While Slumdog Millionaire grossed about $70m in America and received nominations for many of the most prestigious Hollywood awards, it was greeted by howls of protests in India. Bollywood's biggest superstar of all time, Amitabh Bachchan, scolded Slumdog producers on his blog for showing India as "a third world dirty under belly developing nation (sic)" when poverty can be found in rich countries as well. Contrast that with Chandni Chowk's miserable performance, with less than a million dollars gross in spite of being released on 125 screens, the biggest ever Bollywood release in America. Chandni Chowk was considered an average draw at the Indian box office, with Rs. 400 million in ticket sales.

American audiences may not warm to Indian-style kitschy, song-and-dance sequences and melodramatic staples. In 2007, Columbia Tri-Star funded and produced "Saawariya," which failed to capture a wide audience in India and flopped in its limited U.S. release, earning $885,574 in American theaters. Executives at Sony Pictures, which owns Columbia, declined to say how much the film made in India but noted that they more than recovered their investment.

In spite the huge gap in taste between the South Asian and American audiences, it would be hard to dismiss the new Indo-American hybrid film genre, given the amount of talent, money and serious interest by the big studios and investors in Los Angeles and Mumbai going in to make it a success. It will be very interesting to see how such a wide gap is bridged by the undeniable talent on both sides.

Here's the title track for Chandni Chowk to China:




Related Links:

India's Bid to Extend Cultural Dominance

Mumbai's Slumdog

Harry Potter Versus Hari Puttar

Amitabh Bachan Slams Slumdog

Highest Grossing Bollywood Films

Highest Grossing Hollywood Films

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Friday, February 6, 2009

Pakistani Dollar Reserves Rise


There is light at the end of the tunnel, and it is not an oncoming train.

Pakistan's dollar reserves are climbing again and its currency stabilizing, after more than a year of monthly declines. The nation's foreign exchange reserves rose by $260 million to $10.21 billion in the week that ended on Jan. 24, according to the State Bank of Pakistan.

This included $500 million Pakistan received from China to help build foreign reserves, said Syed Wasimuddin, chief spokesman for the Pakistan's central bank.

Pakistan's foreign reserves hit a record high of $16.5 billion in October 2007 but fell to $6.6 billion in November, largely because of a soaring import bill. There has been a dramatic decline in the cost of imports such as oil during the last few months, spelling relief for Pakistan and other non-OPEC developing nations. The price of oil has dropped to about a quarter of what it was last summer.

Pakistan signed a $7.6 billion loan agreement with the International Monetary Fund in November to stave off a balance of payments crisis. It received its first tranche of $3.1 billion that month. In its first assessment since November, IMF has expressed satisfaction with Pakistan's progress. “Initial developments under the program have been positive,” IMF spokesman David Hawley told a regular news briefing, according to Pakistan's Dawn newspaper. “The foreign exchange rate has appreciated somewhat and preliminary information suggests that end-December targets for net international reserves and net domestic assets at the State Bank of Pakistan were met,” he added.

Pakistan's economy deteriorated sharply over the course of 2008, as inflation surged, and the current account deficits jumped on the back of rising oil and food prices, according to a World Bank report.

The report titled ‘Global Economic Prospects 2009’ says political turmoil and ongoing security concerns have also taken a toll on Pakistan’s economy, while the global financial crisis added substantial downward pressures on its financial markets.

The general deterioration in regional trade balances has been offset by large remittance inflows, which represent a sizable, and generally increasing share of GDP: during 2007, 14 per cent in Nepal, 8 per cent in Bangladesh and Sri Lanka, 4 per cent in Pakistan, and 3 per cent in India.

Given strong underlying growth dynamics in South Asia, the negative feedback effects of the global financial crisis are expected to be temporary. A relatively rapid rebound is expected in 2010, with a projected revival of GDP growth to 7.2 per cent.

“Investing in Pakistan is investing in future,” Prime Minister Gilani recently told leading businessmen in Davos, Switzerland, on the sidelines of the World Economic Forum. Gilani said Pakistan’s sound fundamentals offered the investors an opportunity to explore the country’s economic potential in diverse fields. He emphasized the need for more foreign investment coming into Pakistan and benefit from its investor-friendly economic policies. He said Pakistan’s liberal economic regime with zero import duty on raw material provided equal opportunities for the local and foreign businessmen. He said Pakistan was confronting a number of challenges including economic crisis, however the democratic government was determined to improve the situation.

“Despite all the challenges, economy continues to be buoyant and vibrant in Pakistan,” the Prime Minister said, adding the country’s mineral and work-force resources had the great potential to be fully tapped.


Related Links:

Jinnah's Pakistan Booms Amidst Doom and Gloom

Pakistan's Foreign Visitors Pleasantly Surprised

Start-ups Drive a Boom in Pakistan

Pakistan Conducting Research in Antartica

Pakistan's Telecom Boom

ITU Internet Data

Pakistanis Join Hunt For God Particle

NEDUET Progress Report 2008

Pakistani Entrepreneurs in Silicon Valley

Musharraf's Economic Legacy

Should Pakistanis be Proud of Their Country?

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Thursday, February 5, 2009

India's Green Energy Giant Hits Rough Patch


Suzlon, India's wind power giant, has reported a quarterly loss after years of expansion and profit growth. It was hurt mainly by the ongoing global credit crunch, slowing wind turbine sales, and by rising costs and a provision to do repairs stemming from the widely reported quality problems at the wind-turbine manufacturer's overseas plants.

Suzlon reported a consolidated net loss of 589.7 million rupees ($12.1 million) for the quarter ended Dec. 31, compared with a net profit of 1.52 billion rupees a year earlier. Consolidated total revenue more than doubled to 68.93 billion rupees from 31.7 billion rupees, while consolidated total expenditure surged to 63.19 billion rupees from 28.48 billion rupees, according to media reports.

Chairman and Managing Director Tulsi Tanti said the global credit crunch is likely to hit sales growth in the wind-energy sector, which had a compounded annual growth rate of more than 34% over the past five years.

But Suzlon said it expects the industry's outlook to turn favorable by 2010 as easing credit and lower costs boost demand from the U.S., Europe, China and India.

U.S. factories building parts for Wind turbine industries have announced a wave of layoffs in recent weeks, and trade groups are projecting 30 to 50 percent declines this year in installation of new equipment, barring more help from the government, according to the New York Times.

Prices for turbines and solar panels, which soared when the boom began a few years ago, are falling. Communities that were patting themselves on the back just last year for attracting a wind or solar plant are now coping with cutbacks.

“I thought if there was any industry that was bulletproof, it was that industry,” said Rich Mattern, the mayor of West Fargo, N.D., where DMI Industries of Fargo operates a plant that makes towers for wind turbines. Though the flat Dakotas are among the best places in the world for wind farms, DMI recently announced a cut of about 20 percent of its work force because of falling sales, the NY Times reports.

Much of the problem stems from the credit crisis that has left Wall Street banks reeling. Once, as many as 18 big banks and financial institutions were willing to help finance installation of wind turbines and solar arrays, taking advantage of generous federal tax incentives. But with the banks in so much trouble, that number has dropped to four, according to Keith Martin, a tax and project finance specialist with the law firm Chadbourne & Parke.

Wind and solar developers have been left starved for capital. “It’s absolutely frozen,” New York Times quotes Craig Mataczynski, president of Renewable Energy Systems Americas, a wind developer. He projected his company would build just under half as much this year as it did last year.

The wind and solar industries are hopeful that President Obama’s economic stimulus package will help. But it will take time, and in the interim they are making plans for a rough patch.

Solar energy companies like OptiSolar, Ausra, Heliovolt and SunPower, once darlings of investors, have all had to lay off workers. So have a handful of companies that make wind turbine blades or towers in the Midwest, including Clipper Windpower, LM Glasfiber and DMI.

Some big wind developers, like NextEra Energy Resources and even the Texas billionaire T. Boone Pickens, a promoter of wind power, have cut back or delayed their wind farm plans.

President Obama has often talked about America's energy policy and dealing with its impact on climate change as a priority. He wants to create five million new jobs by strategically investing $150 billion over the next ten years to catalyze private efforts to build a clean energy future. Transformation in the way people and businesses use technology could reduce annual man-made global emissions by 15 per cent by 2020 and deliver energy efficiency savings to global businesses of over $ 800 billion, according to a new report published by independent non-profit The Climate Group and the Global e-Sustainability Initiative (GeSI). The choice of a Nobel laureate scientist, Berkeley's Dr. Steven Chu as energy secretary by Obama reflects this priority.

There were reports in 2007 that some of the wind projects in Pakistan could not proceed because of the lack of wind turbines availability, even though the land had been allocated and permits issued for this purpose. Most vendors were sold out through 2009. The contract terms in turbine supply agreements became increasingly favorable to the vendors, with less warranty, earlier and larger pre-payment requirements, and higher prices. After years of boom, the second half of 2008 saw a bust in the wind energy sector with credit being extremely tight.

Finally this year, Pakistan awarded a contract to a Turkish company to set up a wind farm near Hyderabad. President of Zorlu Enerji (Pvt) Ltd., Murat Sungar Bursa, who signed the agreement with HESCO (Hyderabad Electric Supply Company) in Pakistan, said that the estimated cost of 50 MW project was 120 million dollars. He added the company was also considering to further expand the project up to 250MW. He said incentives offered by Pakistan’s renewable energy policy was a major factor in the company’s decision to invest here. He said that capacity of the wind farm will be enhanced upon successful completion of 50 MW phase. Zorlu Enerji has become the first company to establish wind farm for power generation in Pakistan after signing Energy Purchase Agreement with Hyderabad Electric Supply Corporation for purchase of six MW electricity generated at the company’s facility in Jhimpir. NEPRA (Pakistan's power regulator) has awarded tariff of US cents 12.1057 Per KWH, which is cheaper than the electricity generated from thermal sources. The power generated from the first phase would be routed to the Jhimpir gird station by HESCO and would be sufficient to electrify 6,900 homes in Hyderabad region. Harnessing the strong winds coming from South West, the wind farm is first major commercial wind power project of the country, comprising five towers in the first phase with an installed capacity of 1.2MW wind turbine generator per tower.

The slowdown in the renewable energy sector is likely to be temporary. President Obama is expected to get the US Congress to approve $150b to support the US renewable energy sector with large government incentives. The US policy will likely boost the global renewable energy market as well.

A video clip about renewable energy in Pakistan:




Related Links:

Renewable Energy in Pakistan

The Wind Blog

Renewable Energy Businesses in Pakistan

Global Wind Turbines Market

Pakistan Council of Renewable Energy Technology

Renewable Energy for Pakistan

Pakistan Policy on Renewable Technology

Sugarcane Ethanol Project in Pakistan

Community Based Renewable Energy Project in Pakistan

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