Friday, October 30, 2015

Historic Low LNG Prices Can Help Resolve Pakistan Energy Crisis

LNG spot prices hit a new low of $4 per mmBTU as the supply continues to significantly outstrip demand. It's creating opportunities for Pakistan to get access to large supply of cheap fuel for its power generation.

With softening demand from China and 130 million tons per year (mmpta) of additional LNG supply set to reach market over the next five years, gas research firm Wood Mackenzie sees continuing downward pressure on global LNG spot prices.

LNG Price History Source: WSJ



“The entire industry is worried because it is hard to tell when China’s demand will pick up again,” said an LNG strategist at a Malaysian energy company who attended the Wood Mackenzie conference in Singapore, according to Wall Street Journal. “Rising demand from smaller countries such as Pakistan, Egypt and Bangladesh is not enough to offset the declining demand from north Asia.”

As recently as two years ago, LNG shipped to big North Asian countries like Japan and Korea sold at around $15 to $16 a million British thermal units. This month, the price has already hit $6.65 a million BTUs, down 12% from September, according to research firm Energy Aspects. It expects prices to fall further in Asia next year, to under $6 per million BTUs, as a wave of new gas supply in countries from the U.S. to Angola to Australia comes on line, according to Wall Street Journal.

Petronet LNG Ltd, India’s biggest importer of liquefied natural gas (LNG), is saving so much money buying the commodity from the spot market that it’s willing to risk penalties for breaking long-term contracts with Qatar.

This is a great opportunity for Pakistan to take advantage of historically low LNG prices to alleviate its severe load-shedding of gas and electricity.  Recently, Pakistan has launched its first LNG import terminal in Karachi and started receiving shipments from Qatar.  Pakistan has also signed a $2 billion deal with Russians to build a north-south pipeline from Gwadar to Lahore. But the country needs to rapidly build up capacity to handle imports and distribution of significant volumes of LNG needed to resolve its acute long-running energy crisis.

Here's a related video discussion:
http://dai.ly/x3ccasi



Pakistan Local Elections; Indian Hindu... by ViewpointFromOverseas


https://vimeo.com/144586144



Pakistan Local Elections; Indian Hindu Extremism; LNG Pricing; Imran-Reham Split from WBT TV on Vimeo.


https://youtu.be/LZavD-tkReg





Related Links:

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Pakistan's Twin Energy Crises of Gas and Electricity

Affordable Fuel For Pakistan's Power Generation

Pakistan Shale Oil and Gas Deposits

China-Pakistan Economic Corridor 

Blackouts and Bailouts in Energy Rich Pakistan

Pakistanis Suffer Load Shedding While IPPs Profits Surge

Tuesday, October 27, 2015

Uber Ready to Launch in Lahore, Pakistan

Uber, the rapidly growing San Francisco based behemoth known for its taxi app,  appears to be getting ready to launch its service in Lahore, Pakistan, according to media reports.

A report in Tech In Asia points to the career page on Uber website that shows openings for “general manager”, “operations and logistics manager”, and a “marketing manager,” for Lahore,  Pakistan's second-largest city.

In fact, Uber has confirmed its plans to launch in Pakistan soon, according to TechJuice.

“We can confirm we are currently recruiting for a team in Lahore, and are very excited about launching in Pakistan as we see huge potential in the way we can help people move around their city safely and reliably,” Shaden Abdellatif, communications manager for Uber’s Middle East and Africa operations told TechJuice. “We are also excited about the opportunity for economic empowerment we can bring to the drivers we partner with.”



It makes sense given the size of the Pakistan's expanding urban middle class with its fast growing mobile broadband subscriptions combined with rising smartphone sales in the country.

Pakistanis are signing up for 3G and 4G services at a rate of 1 to 2 million new subscriptions a month. In September 2015 alone, Pakistan Telecom Authority reported 2.22 million new 3G and 4G subscriptions in the country. There's corresponding increase in demand for smartphones.



With over 18 million smartphones and mobile broadband subscriptions, Pakistan is ripe for a whole range of new businesses from e-commerce to gaming to various online services like Uber that are accessed through smartphone apps.

Related Links:

Haq's Musings

Mobile Broadband Subscription Growth Accelerates in Pakistan

Pakistan Car Sales Jump 72%; Cement Consumption Up 17%

iPhone 6 and 6S Launched in Pakistan

Pakistan Government Deploys Mobile Apps

E-Commerce Taking Off in Pakistan

Haier Pakistan to Manufacture Smartphones

Monday, October 26, 2015

Pakistan's 3G 4G New Subscriptions Accelerate in September 2015

Monthly new subscriptions of 3G and 4G in Pakistan doubled to 2.22 million in September 2015, up from 1.1 million new subscribers in August 2015.  This brings the total number of mobile broadband subscribers to 18.04 million and total of all broadband subscriptions to 21.2 million since 3G-4G launch in May 2014, according to the latest data released by Pakistan Telecommunications Authority.
Mobile Broadband Subscriptions in Pakistan Source: PTA


Increasing use of the Internet is now being put to good use to deal with the tragic aftermath of the the earthquake in Pakistan.  Facebook and Google have set up special pages to help people find each other.

Demand for smartphones is also accelerating in Pakistan along with the rise in mobile broadband subscriptions. Forecasters estimate the number of smartphone sales to increase to 40 million by next year.

Overall, 3G and 4G subscriptions in Pakistan jumped 14.43 % during September 2015, the highest sequential monthly increase in the past six months. Among the carriers, Mobilink topped with 878,107 new mobile broadband customers, followed by Ufone with 637,131 new 3G users during September 2015. Telenor is number 3 with 393,969 new 3G users during the month.

Coming on the heels of data indicating 72% jump in car sales and 17% rise in cement consumption, this data on 2.22 million new mobile broadband subscriptions in September is yet another confirmation of Pakistan's ongoing economic recovery.

Related Links:

Haq's Musings

Pakistan Car Sales Jump 72%; Cement Consumption Up 17%

iPhone 6 and 6S Launched in Pakistan

Pakistan Government Deploys Mobile Apps

E-Commerce Taking Off in Pakistan

Haier Pakistan to Manufacture Smartphones

Sunday, October 18, 2015

Pakistan Economic Recovery: Car Sales Up 72%, Cement Shipments Up 16.89%

Pakistan auto industry is booming. Toyota, Suzuki and Honda factories are working around the clock in the southern port city of Karachi and eastern city of Lahore -- yet customers can still wait for up to four months for new vehicles to be delivered, according to media reports. At the same time, increased construction activity is visible everywhere in the country.


Local car sales, excluding imported cars, jumped to 54,812 units in the first three months (Jul-Sep) of fiscal year 2016, up 72% from 31,899 units in the same period of last year, according to data released by the Pakistan Automotive Manufacturers Association (PAMA).

Pak Suzuki led the pack with 33,770 units followed by Indus Motors (Toyota) 14,767 cars and Honda Motors 6,184 units. Industry analysts at Topline Securities expect local car sales to reach 203,653 units during the current fiscal year.

Car sales (excluding imported ones) in Pakistan grew at a five-year (FY11-15) compound annual growth rate (CAGR) of just 5.3% to 179,953 units. While volumes surged by 31% in fiscal year 2015 (FY15) on the back of the new model of Toyota Corolla, Punjab taxi scheme and an increase in car financing due to 42-year low interest rates in the country also helped, according to Express Tribune newspaper. “We forecast local car sales to grow at 13% in FY16 to reach 203,653 units,” Topline Securities reported on Monday.

In addition to car sales, domestic cement sales have also jumped by a phenomenal 16.89% to 4.29 million tons during July and August 2015 from 3.67 million tons shipped in the same period last year.

Car sales and construction activity are both believed to be driven by low interest rate financing available from banks and improved security situation across the country. With record low inflation, the State Bank of Pakistan (SBP), the nation's central bank, has cut discount rate to a 42-year low of 6%.

After its September meeting, the SBP said the rise in fixed investment financing in the energy generation and distribution, chemicals and services sectors signal possible increase in their productive activity in coming months. “The implementation of infrastructure development and energy projects under the China-Pakistan Economic Corridor (CPEC) will further enhance the improving investment environment. Therefore, there is anticipation of higher economic activity in 2015-16, which is expected to boost credit uptake,” it said.

Per Capita Cement Consumption Source: Global Cement


A dramatic decline in terrorist violence in the country since the launch of Pakistan Army's Operation Zarb-e-Azb and a big drop in international oil prices have helped drive economic recovery in the country in recent months.

Related Links:

Haq's Musings

Pakistan Auto Industry

Record Cement Sales Raise Hope Of Pakistan Economic Recovery

Credit Suisse Bullish on Pakistan Cement Industry

China-Pakistan Economic Corridor

Pakistan Army Acts Against Terrorists

Pakistan Middle Class Larger & Richer Than India's

Top Global Investor Bullish on Pakistan

The Role of Cement Industry in Economic Development of Pakistan

Friday, October 16, 2015

Pakistan Middle Class Larger & Wealthier Than India's

Pakistan’s middle class consists of over 6.27 million adults, according to wealth criteria used by Credit Suisse in its Global Wealth Report 2015. It represents 5.7% share of Pakistan’s total adult population of 111 million, almost twice as large as India’s middle class made up of 3% of its adult population based on the same criteria.

Source: Credit Suisse Wealth Databook 2015

Average ($4,459) and median ($2,216) wealth figures for Pakistani middle class adults are higher than average ($4,352) and median ($868) wealth figures for their Indian middle class counterparts. It's a consequence of lower income wealth inequality in Pakistan compared to its neighbor.  For comparison, only 1.1% of Bangladesh adult population qualify as middle class. Their average wealth is $2,201 and median wealth $1,102 per adult.

Pakistan Wealth Source: Global Wealth Report 2015 Via Express Tribune
Credit Suisse's report estimates Pakistan's total private wealth in mid-2015 at $495 billion, Bangladesh's at $237 billion and India's at $3.45 trillion.

Credit Suisse said Pakistan's middle class is the 18th largest and India's 8th largest in the world. The report says 14% of world adults qualify as middle class in 2015 and they own 32% of the world's wealth. 6.7 million Pakistani adults make up 0.9% of the world's middle-class adult population. China tops the list with 108.7 million, followed by the United States 91.8 million and Japan 62 million.

A little more than 90% Pakistani adults had wealth less than $10,000 in 2015. The share of Pakistani adults with wealth between $10,000 and $100,000 in 2015 was 9.8% while only 0.1% adults owned wealth in the range of $100,000 and $1 million, the report revealed.

Other studies based on income criteria of $2 or more per day put Pakistan's middle class at 55% of the population. A 2010 ADB report titled "Asia's Emerging Middle Class: Past, Present and Future" report put Pakistan's middle class growth from 1990 to 2008 at 36.5%, much faster than India's 12.5% growth in the same period. Other reports have indicated Pakistan's median per capita income is higher than both India's and Bangladesh's.

Even though Pakistan's GDP growth has been relatively low compared to India and Bangladesh in recent years, the country's middle class has continued to grow rapidly. It's explained as follows: It's not the overall GDP growth and average per capita income and wealth increases but the median per capita income and wealth growth that tells you how the GDP gains are shared among the population.

Data shows that economic gains in Pakistan are shared better than India and Bangladesh because of lower inequality. Income poverty rate (those below $1.25 per capita per day) in India is 33% and Bangladesh 43% versus 13% in Pakistan, according to WB data on povcalNet. Gini Index for India is 33, Pakistan 29 and Bangladesh 32, indicating that Pakistan has lower inequality.

Related Links:

Haq's Musings

Pakistan's Middle Class Grows to 55%

Upwardly Mobile Pakistan

Median Per Capita Incomes of Bangladesh, India and Pakistan

India and Pakistan Compared in 2014

Bangladesh-Pakistan Comparison in 2012

Modi's Superpower Delusions

Wednesday, October 14, 2015

Is US Aid Good or Bad For Pakistan?

This year's Nobel Prize winning economist Angus Deaton of Princeton University considers foreign aid to developing nations a curse like the oft-mentioned resource curse of energy and mineral-rich nations of Africa and the Middle East.

Deaton has studied poverty in India and Africa and spent many decades working at the World Bank whose charter it is to fight poverty. He argues that, by trying to help poor people in developing countries, the rich world may actually be corrupting those nations' governments and slowing their growth and hurting the poor in the process. Prof William Easterly of New York University has published a paper titled "Can Foreign Aid Buy Growth?" that supports the view that increase in foreign aid has reduced economic growth in Africa.

Source: William Easterly of NYU


In addition to being recipients of foreign aid, most African countries are also rich in resources ranging from oil and gas to diamonds and metals. Yet, their people are among the poorest in the world.  Why is it? The biggest reason appears to be their corrupt leaders who pocket most of the proceeds from mining. They also siphon off a big chuck of foreign aid left after paying the expensive western consultants employed by aid agencies.



So where does Pakistan stand in this mix? Charts published by Washington Post show that Pakistan, in spite of not being a major exporter of minerals, enjoyed an average economic growth rate of about 5% from 1970 to 2008.  This is about the same as India's but higher than Brazil's and Turkey's GDP growth rates. The economic growth rates for China and Korea are much higher than Pakistan's in this period.

Foreign aid to Pakistan has also been more effective in promoting economic growth than much of Africa. Even Dambisa Moyo, author of "Dead Aid" and a critic of western aid, acknowledges that the US aid for "the Green Revolution in India (and Pakistan) played vital roles in economic (re)construction" of the South Asian nations in 1960s and 1970s. The South Asian subcontinent could have faced starvation without this aid.

One of the key reasons for the success of Green Revolution was the ability of the human capital in India and Pakistan to absorb the technological knowhow that it brought along with money. Ms. Moyo offers the same reason for the success of Marshall Plan aid in Europe.

Foreign Aid to Pakistan as Percent of GDP Source: World Bank 


US aid to Pakistan after the Green Revolution has been much smaller as percentage of the nation's GDP and much less effective.  Total foreign aid to Pakistan has dramatically declined from a peak of over10% of GDP to less than 2% of GDP now, too little to impact economic growth even if it is utilized better.

The expected size and speed of the Chinese FDI of $46 billion in energy and infrastructure is much more likely to spur Pakistan's economic growth than the western aid has been in the recent past. It will put Pakistan on a path to rely much more on investment and trade than on aid or debt for its foreign exchange earnings.

Related Links:

Haq's Musings

Aid, Investment, Trade and Remittances for Pakistan

Declining Investment Hurting Pakistan's Economic Growth

Pak-China Industrial Corridor to Boost Investment and Trade

Pak Army Completes Over Half of CPEC Western Corridor

Pakistan Economic History 1947-2010

Top Global Fund Investor Bullish on Pakistan

Culture of Corruption in Pakistan

Tuesday, October 13, 2015

US-Pakistan Civil Nuclear Deal

"The Pakistani establishment, as we saw in 1998 with the nuclear test, does not view assistance -- even sizable assistance to their own entities -- as a trade-off for national security vis-a-vis India". US Ambassador Anne Patterson, September 23, 2009


Having failed to persuade, intimidate, bribe and sanction Pakistan to abandon its nuclear weapons program, there are credible reports that Washington is now ready to accept Pakistan as a legitimate nuclear weapons state in exchange for limiting the range of the country's ballistic missiles.

Washington is abuzz with the news of major think tank analyses and credible media reports indicating that the October 22, 2015 Obama-Sharif summit agenda includes US-Pakistan civil nuclear deal along the lines of India-US civilian nuclear deal.


According to a Washington Post report, the deal with Pakistan centers around a civilian nuclear agreement similar to the one the United States arrived at with India, in exchange for a Pakistani commitment that would "restrict its nuclear program to weapons and delivery systems that are appropriate to its actual defense needs against India's nuclear threat."

As part of such a deal,  the United States will support an eventual waiver for Pakistan by the 48-nation Nuclear Suppliers Group, of which the United States is a member. At U.S. urging, that group agreed to exempt India from rules that banned nuclear trade with countries that evaded the Non-Proliferation Treaty. This so-called “civil nuclear agreement” allowed India partial entry into the club of nuclear powers, in exchange for its willingness to apply International Atomic Energy Agency safeguards to its civilian program, according to the Washington Post's veteran columnist David Ignatius.

Prior to the Washington Post report, the Washington-based Stimson Center and the Carnegie Endowment think tanks published a 20,000-word essay on Pakistan’s nuclear program and diplomatic ambitions last week. Written by Toby Dalton and Michael Krepon and titled "Nuclear Mainstream", it recommends Pakistan to agree to meet five conditions for its nuclear mainstreaming:

(1) Shift from the full spectrum deterrence to strategic deterrence

(2) Limit production of tactical weapons or short range delivery weapons

3) Become amenable to talks on the fissile material cut off treaty (FMCT)

4) Delineate civil and military nuclear programs

5) Sign the Comprehensive Test Ban Treaty (CTBT)


Given Pakistan's growing energy needs,  the country will most likely engage with the United States to try and get a stamp of legitimacy from the NSG. However, the Washington Posts's Ignatius believes that such "negotiations would be slow and difficult, and it's not clear that Islamabad would be willing to accept the limitations that would be required." Meanwhile, the issue is being discussed quietly in the run-up to Prime Minister Nawaz Sharif's visit to Washington on October 22.

Viewpoint From Overseas host Misbah Azam discusses US-Pak Civil Nuclear Deal and other subjects with panelists Ali Hasan Cemendtaur and Riaz Haq (www.riazhaq.com).

http://www.dailymotion.com/video/x39adcl_na-122-poll-significance-ghulam-ali-s-indian-concert-us-pakistan-civil-nuclear-deal_news



NA-122 Poll Significance; Ghulam Ali's Indian... by ViewpointFromOverseas

https://youtu.be/YD25bAMc-Jo




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