KARACHI: Private banks turned out to be the biggest contributor of the infrastructure financing in the country, providing 78 per cent of the total spending during the second quarter (Oct-Dec) of this fiscal year.

A quarterly report on infrastructure finance in Pakistan issued by the State Bank on Friday disclosed that the country’s total investment requirements across different infrastructure sectors were between $165.2 billion and $115.9bn during 10 years from 2011 to 2020.

The total amount sanctioned for infrastructure sector stood at Rs591bn ($5.9bn) at the end of December of 2014 and alone the banking sector does not seem to be in a position to provide financing.

Share in non-performing loans was 69pc during Oct-Dec 2014-15

Out of this amount, the share of private sector banks was 78pc, followed by public sector banks (14pc), DFIs (3.2pc), foreign banks (1.2pc) and Islamic banks (3.3pc).

Developing the power sector needed the highest amount, between $96bn and $64bn. The government is trying hard to bring foreign investment in this sector but no big investment is visible so far.

The development of the transport sector infrastructure required the second highest investment ($21.5bn), followed by irrigation ($14.6bn), water supply and sanitation ($14bn), telecoms ($12.4bn) and solid waste ($6.7bn).

The report said current average investment of 6pc of GDP was not enough and the country needed to invest 10pc of GDP until 2020 to fill infrastructure gap.

The SBP report said non-performing loans (NPLs) fell by 13.1pc during the quarter to Rs16.1bn from Rs18.5bn. Major decline was observed in power generation and LPG sectors. The decline was 17.3pc on a year-on-year basis.

“The major share in NPLs pertained to power generation sector (53pc) while telecoms share was 28pc,” said the report.

The private sector banks’ share in NPLs was recorded at 69pc, followed by public sector’s 13.5pc (compared to 26pc at the end of previous quarter). DFIs share in NPLs reached 17.2pc while foreign banks and Islamic banks did not report any NPLs.

Infrastructure financing portfolio of banks and DFIs increased for the third consecutive quarter since December last year. “This is a good sign for economic development. This trend needs to be continued for long-term growth,” said the report.

Additionally, there are other sectors like railways, aviation, social infrastructure and tourism where financing can be provided to commercially viable projects, said the report.

Published in Dawn, March 29th, 2015

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