Abstract
Pakistan has experienced a high level of activity in its infrastructure sector
in 2008. This has mostly been
focused on the power sector and the road
network. In addition, construction of housing has been a top
priority.
However, the global downturn is hitting Pakistan hard, and in BMI’s 2009
Annual Infrastructure
Report for Pakistan we are forecasting the
construction industry to contract by 6.31% y-o-y in 2009.
The power sector
has been the major focus in Pakistan’s infrastructure sector in 2008.
Years of
underinvestment in electricity generating and distributing
infrastructure came to a head in 2008, when
there was not enough supply to
meet demand, further exacerbated by lack of rainfall almost knocking out
Pakistan’s large hydropower sector. It is currently estimated that there
is a 3,300MW shortfall in capacity
at peak hours; as a result, load
shedding has been a common practise.
In an attempt to combat the
shortages, a US$30bn investment plan has been announced, which has seen
the development of a number of projects. Construction started in 2008 on the
969MW Neelum-Jhelum
power plant, which is being built by a consortium
comprising Chinese Gezhouba Group Company and
China Machinery Export
Corporation. Construction of the Diamer Basha Dam, which will have a
capacity of 4,500MW once completed, is expected to start in 2009.
Within
the transport sector, the roads have benefitted from the majority of attention
in 2008. This has
been the result of the National Highways
Authority’s plans to invest US$5.36bn into the sector. The plans
benefitted from a US$900mn multi-tranche loan from the Asian Development Bank.
The main project
being pursued is the National Trade Corridor, envisaged
as a main thoroughfare connecting the north of
the country to the ports in
the south; it is estimated to cost US$6.58bn.
Construction of housing has
been a major feature in 2008. Residential construction is being carried
out
under the prime minister’s ‘mega housing scheme’
which involves the construction of one million low
cost houses per
year.
Pakistan’s economy has been hit hard by the global economic
downturn and BMI’s is forecasting real
GDP growth of 2.5% y-o-y in
2009, down from 6.8% in 2007. In November, the country received a
US$7.6bn
23-month standby loan from the International Monetary Fund to ' support the
country' s
economic stabilisation programme' . The move might help boost
investor confidence in the short term;
however, it may put off investors
looking at long-term infrastructure investments. Consequently
presenting a
down side risk to our forecasts.
In BMI’s 2009 Annual Pakistan
infrastructure Report we are introducing our new project finance ratings.
The ratings provide a globally-comparative, numerically based assessment of
the risks facing major
infrastructure projects. Pakistan comes last in our
Asia project finance ratings, with a score of 32.93 out
of 100.
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