Pakistan’s ‘wrong perception’ abroad a challenge to new investment: OICCI

ISLAMABAD: The major hurdle in the way of foreign investment in Pakistan is the country’s ‘wrong ‘perception, developed over time abroad, investors said on Thursday.

Overseas Investors Chamber of Commerce and Industry (OICCI) in its economic recommendations stressed on the government to liberalise and deregulate various sectors that were still under the clutches of the state.

The chamber urged the government to revitalise the country’s investment promotion agency to facilitate and bring more investment into the country.

“Every country has issues, no one is perfect. It was the ‘wrong perception’ regarding Pakistan on international front that is a challenge and affecting the inflows,” said M Abdul Aleem General Secretary of OICCI, while briefing media persons.

“Pakistan should leverage the global resolve to combat climate change and take benefit of the pool of funds available for investment in RE (renewable energy), such as GCF (Green Climate Fund), to underwrite debt issued by local/foreign banks, that will eventually encourage more investments and grow the RE footprint resulting in lower cost of power. Furthermore, increasing power generation from RE is also critical for achieving net zero carbon emission by 2050 as per the Paris Climate Agreement,” Aleem said.

During the media briefing, the overseas investors’ chamber proposed liberalisation and transformation of the monopolistic power market into a multi buyer-seller marketplace considering that the exclusivity to sell/distribute power for DISCOs was scheduled to terminate in 2023.

“This will create options for power purchasers as well as producers to enter bilateral deals i.e., energy sale via business to business mode through a fair and transparent wheeling regime.

OICCI, also unveiled the salient features of its “OICCI Energy Recommendations 2021” that include separate proposals for Power, Upstream, Downstream, LNG, and Renewable workstreams.

It focuses on implementing an efficient and cost-effective energy supply chain, while increasing the share of green energy sources to meet the environment and sustainability milestones.

Highlighting the key elements, Ghias Khan, OICCI Vice-President, emphasised that OICCI’s proposed recommendations were the collective view of leading energy sector professionals associated with OICCI members.

“Amid local gas resources are fast depleting, LNG demand may increase up to 70 percent by 2030 and we shall import that to meet our demand. For this development of infrastructure from now will be needed.

He said work on North-South gas pipeline should be expedited, as it might affect industries in Punjab. “There are proved tight gas and shale gas reserves in the country,” Khan said adding that policy should be introduced to encourage investment in it, as reliance solely on imported fuel would create problems in future.

They recommended to the government to introduce power demand creation measures and transition from single buyer to multi-buyer model, ensuring reduced tariff for export-oriented sectors.

The chamber officials suggested the government should appoint energy experts from private sector on the board of director of the power distribution companies, cut line losses, reduce billing and collections.

“In Pakistan’s case, power plays an important role in our international trade position. Our fuel imports are around $2-3 billion annually. Rupee devaluation and supply shocks also lead to increased cost of power generation. Already in Pakistan, electricity is around 30 percent costlier than regional competing countries making our products less competitive.”

The chamber recommended that that downstream policy framework and structure should be revised to exhaustively cover all aspects of governance including, but not limited to, review of the price structure by moving towards price deregulation, supply chain management focusing on the issues with logistics infrastructure including the existing port constraint due to insufficient unloading capacity, long waiting time, vessel planning, import dependency, and need for building strategic stocks by increasing storage capacity.

On a priority basis, the chamber said, there should be a mutually agreed mechanism for periodic revisions in the downstream price structure, more specifically margins, to ensure it remains reflective of actual costs to the oil marketing companies.

It should be followed by the complete deregulation of petrol and high-speed diesel that constitute about 80 percent of total petroleum products consumption, the OICCI officials said.

On energy, the OICCI recommended development of LNG sector, by fast-tracking all projects that would create additional pipeline capacity for new LNG terminal developers and/or existing terminals looking to expand.