KARACHI, Sept 8: President-elect Asif Ali Zardari is expected to visit China next week, after oath-taking on Tuesday, to seek its greater involvement in Pakistan’s energy sector.
“Qadirpur gas field privatisation, Thar coal-based electric power project, hydel power projects, and a few others are on the agenda,” a well-placed source disclosed to Dawn on Monday from Islamabad.
Mr Zardari’s visit to China is a part of a multi-pronged strategy to seek assistance from close friends to take out Pakistan from the current deep economic crisis. “We need immediately a few billion dollars to meet foreign payment obligations and our friends’ help to build up our fast depleting foreign exchange reserves,” Ikhtiar Baig, a leading denim manufacturer and exporter and member of thee PPP’s Policy Planning Cell said.
Mr Baig disclosed that a delegation from Poland was in Islamabad recently to discuss coal exploration prospects in Thar and other areas of Sindh and setting up of power projects. “A power project based on coal mining in Thar and electric power project with involvement of Chinese and Polish investors cannot be ruled out,” Baig indicated.
In Poland electric power generation is based almost entirely on coal mining and she is considered to be a leading country of the world in coal based power generation technology. A Chinese company was involved in coal mining and power project and had invested considerably but was literally chased out of Pakistan by short sighted bureaucrats in Islamabad secretariat and in Wapda on tariff issue.
Acute foreign exchange crunch is forcing the government to move ahead with privatisation on a fast track. Mr Zardari is expected to seek greater involvement of Chinese investors in disinvestment of Qadirpur gas field and a few other enterprises.
Very recently, the governor State Bank of Pakistan issued a statement on fast deteriorating foreign exchange position and had hinted at commencement of privatisation. For the last few weeks, well-placed sources in Islamabad and Karachi are indicating that the Privatisation Commission is being given a target to mop up “at least $3 to 4 billion’’ from disinvestment of public sector projects.
President Zardari is also expected to explore further strengthening of relations with China in financial sector. Pakistan’s two way trade volume with China has grown to more than 100 per cent from $3 billion in 2004 to $6.86 billion in 2007. This fast growth in trade is now luring Pakistani banks to offer their services.
Two Pakistani banks — National Bank of Pakistan and Habib Bank Ltd — are operating in China with representative offices. There is a strong desire to open full-fledged branches in China. But Chinese rules warrant a minimum asset limit of $20 billion for opening a branch in their country.
With all indications that the two-way trade volume between Pakistan and China is set to touch $15 billion by 2011, the two Pakistani banks want to get business share. Officials in NBP say that they have assets worth over $10 billion and seek permission to open a wholly or jointly own subsidiary in China.
Also on the NBP’s agenda is a joint venture with Industrial and Commercial Bank of China (ICBC) with 30 per cent stakes. The ICBC is the second biggest bank in the world with $1.11 trillion worth assets and 18,000 branches around the world.
Early this year, Indian media reported that China was actively exploring to offer relaxation in its stringent conditions to give a major ‘Pakistan specific concession’ that would facilitate opening of branches by Pakistani banks. Bankers and businessmen hope that the issue of strengthening of financial relations may figure in the discussions between two countries.
China has responded instantly and positively early this year, when ex- president Musharraf sought immediate financial relief. Despite a major earthquake that caused widespread loss and damage, the Chinese government provided $500 million relief to Pakistan. Pakistan now again needs badly urgent relief and this issue is also expected to be discussed in next few days with Chinese leaders.
“Mr Zardari has chosen to be Pakistan’s salesman to attract investment for privatisation and for new projects,” a senior business leader in Karachi remarked, who recalled that Mr Zardari was given the responsibility of investment ministry in 1995 by late Benazir Bhutto in her cabinet. In that capacity he had managed to attract considerable investment for independent power projects.