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Pakistan, Russia set to sign $10b offshore pipeline deal next week

ISLAMABAD: In a major breakthrough, Pakistan and Russia are poised to sign a $10-billion offshore pipeline deal, a project planned by the latter to capture the energy market of Pakistan.

Sources told The Express Tribune that the cabinet had approved the signing of the gas pipeline laying deal and Pakistan ambassador to Russia had been authorized to ink a memorandum of understanding with Moscow.

The envoy is likely to ink the understanding in Moscow on Monday. Final cost of the project will be assessed following a feasibility study to be conducted by Russian energy giant Gazprom.

Russia has nominated Public Joint Stock Company Gazprom for implementation of the project. Pakistan’s cabinet has also permitted the company to conduct the feasibility study at its own cost and risk.

One-week deadline: Sindh warns cutting off gas supply to country

Inter State Gas Systems (ISGS) – a state-owned company of Pakistan established to handle gas import projects and is already working on gas pipeline schemes like Tapi, has been nominated by Pakistan to execute the offshore pipeline project along with Gazprom.

ISGS is also working on the $10-billion Turkmenistan, Afghanistan, Pakistan and India (Tapi) gas pipeline to connect South and Central Asia and construction work on the scheme in Pakistan will start in March next year.

These projects are called a game changer for Pakistan as they will not only lead to regional connectivity, but will also meet growing energy needs of the country.

Amid a long-running tussle with Europe and the United States over the annexation of Ukrainian region of Crimea, Russia is looking for alternative markets and wants to capitalise on the growing energy demand in South Asia.

Russia, which controls and manages huge gas reserves in energy-rich Iran, plans to export gas by laying an offshore pipeline through Gwadar Port to Pakistan and India, which are seen as alternative markets because Moscow fears it may lose energy consumers in Europe over the Crimea stand-off.

Russia has been a big gas exporter to European Union (EU) countries and Turkey since long and despite US anger the European bloc has continued to make imports to meet its energy needs.

Moscow receives gas from Turkmenistan and then exports it to EU states. Later, it has got gas deposits in Iran as well and is looking to gain a foothold in markets of Pakistan and India.

OGDC finds new deposits of oil, gas in Sindh

Pakistan has been experiencing gas shortages, particularly in winter, for the past many years as domestic production has stood static with new additions being offset by depleting old deposits.

In a bid to tackle the crisis, the previous government of Pakistan Muslim League-Nawaz (PML-N) kicked off liquefied natural gas (LNG) imports from Qatar under a 15-year agreement two and a half years ago and is bringing supplies through other sources as well.

According to a government official, after signing the MoU for the offshore pipeline, work on the feasibility study will begin in an attempt to assess viability of the project. Russia is even ready to finance the study. Russian gas exports touched an all-time high in 2017. According to Gazprom, gas flows to Europe and Turkey, excluding ex-Soviet states, hit a new daily record at 621.8 million cubic metres.

Annual exports touched 179.3 billion cubic metres (bcm) in 2016, a significant jump from the previous high of 161.5 bcm in 2013 and well above the 2015 total of 158.6 bcm.

Published in The Express Tribune, June 3rd, 2018.


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Standard Chartered Bank to play key role in second phase of CPEC

ISLAMABAD: Standard Chartered Bank (SCB) on Wednesday announced to play a key role in the second phase of the China-Pakistan Economic Corridor (CPEC), and it will provide different kinds of services including solutions to the Chinese currency RMB, hedging in RMB, currency risks, and cash management.

“After the successful completion of the first phase of CPEC where most of the funding in projects was based on Government to Government transactions, the second phase is now ready in which mainly, the private sector and financial institutions will be involved, especially in services and insurance areas,” said the SCB Head of Global Banking, Jean Lu while addressing a press briefing here today.

She said Pakistan had been a special partner to China for decades and with the launch of CPEC, the bilateral relations had further strengthened.

She informed that experts from Standard Chartered’s Greater China Region hosted road shows in Sri Lanka, Bangladesh, and Pakistan to outline the benefits of, and investment opportunities from China’s Belt and Road Initiative (BRI), together with Renminbi internationalisation.

The purpose of these roadshows was to enable our clients to take advantage of the benefits presented by the China-led BRI project, which is also bringing more opportunities for Pakistan and China, she added.

The B and R initiative, the biggest advocate of globalisation in the world today, is aiming to boost trade and growth of investment across Asia, extending to the Middle East, Africa, and Europe.

She said the total trade between China and BRI countries exceeded $3 trillion between 2014 and 2016, and the momentum has continued in 2017, despite subdued growth in global trade.

The BRI initiative has made significant headway in the past four years, and has gained support from more than 100 countries and international organisations, and more than 80 of them have signed cooperation agreements with China, she added.

Standard Chartered Pakistan CEO said that the bank was currently engaged with around 100 Chinese companies who were interested to invest in various sectors of Pakistan.

He said that with the passage of time, the trade volume will increase between the two countries and in this regard, the SCB will have a key role in providing RMB solutions to investors as they will be able to trade-in their own currencies instead of USD.

Many countries, like Pakistan, he said have robust demand for infrastructures, as they move toward further industrialization, move up the value chain, as well as absorb fast-growing populations.

He informed that the bank has been in Pakistan and China for more than 150 years.

“Our longstanding and deep-rooted presence in both countries along with 70 percent of footprint overlap with B&R countries equips us with in-depth knowledge of prevailing political, economic and cultural environments making us an indispensable partner in this extra ordinary progress,” he added.

“It is therefore incumbent upon us to assist our valued clients to capitalize on these enormous trade opportunities created through better connectivity between them and the rest of the world. This roadshow emphasize our promise to be ‘Here for good, while demonstrating our capabilities in providing comprehensive set of products, services and solutions to our existing as well as prospective clients who are looking to embark upon their growth journeys along the Silk Road”, he added



Chinese President Xi Jinping vows to open up economy

BOAO/BEIJING: Chinese President Xi Jinping on Tuesday promised to open the country’s economy further and lower import tariffs on products including cars, in a speech seen as conciliatory amid rising trade tensions between China and the United States.

While most of the pledges were reiterations of previously announced measures, Xi Jinping’s comments sent U.S. stock futures, the dollar and Asian shares higher.

Xi Jinping said that China will sharply widen market access for foreign investors, a chief complaint of the country’s trading partners and a point of contention for U.S. President Donald Trump’s administration, which has threatened billions of dollars in tariffs on Chinese goods.

The speech at the Boao Forum for Asia in the southern province of Hainan had been widely anticipated as one of Xi’s first major addresses in a year in which the ruling Communist Party marks the 40th anniversary of its landmark economic reforms and opening up under former leader Deng Xiaoping.

Xi Jinping said China would raise the foreign ownership limit in the automobile sector “as soon as possible” and push previously announced measures to open the financial sector.

“This year, we will considerably reduce auto import tariffs, and at the same time reduce import tariffs on some other products,” Xi Jinping said.

He also said, “Cold War mentality” and isolationism would “hit brick walls”.

Chinese officials have been promising since at least 2013 to ease restrictions on foreign joint ventures in the auto industry, which would allow foreign companies to take a majority stake.

Chinese Vice Premier Liu He promised at the World Economic Forum in January that China would roll out fresh market openings this year, and that it would lower auto import tariffs in an “orderly way”.

Foreign business groups welcomed Xi’s commitment to reforms, including promises to strengthen legal deterrence on intellectual property violators, but said the speech fell short on specifics.


Xi’s renewed pledges to open the auto sector come after Trump on Monday criticized China on Twitter for maintaining 25 percent auto import tariffs compared to the United States’ 2.5 percent duties, calling such a relationship with China not free trade but “stupid trade”.

Trump’s move last week to threaten China with tariffs on $50 billion in Chinese goods was aimed at forcing Beijing to address what Washington says is deeply entrenched theft of U.S. intellectual property and forced technology transfers from U.S. companies.

Chinese officials deny such charges and responded within hours of Trump’s announcement of tariffs with their own proposed commensurate duties.

The move prompted Trump last week to threaten tariffs on an additional $100 billion in Chinese goods, which have yet to be identified, and none of the announced duties have been implemented yet.

Beijing charges that Washington is the aggressor and spurring global protectionism, although China’s trading partners have complained for years that it abuses World Trade Organization rules and practices unfair industrial policies that lock foreign companies out of crucial sectors with the intent of creating domestic champions.

While China has recently expressed optimism that the two sides would hammer out a trade deal, Chinese officials in recent days have said negotiations would be impossible under “current circumstances”.



Pakistani policymakers recommend better management of CPEC

A group of policymakers on Tuesday recommended Pakistan to establish a specific China-Pakistan Economic Corridor”China-Pakistan Economic Corridor (CPEC) unit within the framework of Council of Common Interests (CCI), in order to achieve “transparency and efficiency” in the project.

On the launch of 10th Annual Report titled ‘The State of the Economy: CPEC Review and Analysis’, Shahid Javed Burki of the Institute of Public Policy opined that the Chinese-funded project had not yet been fully “defined and developed”.

“To realise its full potential, the CPEC program must have the support of all the citizens,” he said.

The CCI is a constitutional body in Pakistan, which resolves the disputes of power-sharing between the country and its provinces. The body is chaired by the Prime Minister of Pakistan.

According to the report, it stated that proper planning of the four proposed functional zones was essentially imperative for harnessing the comparative and competitive advantage of each zone based on agro and other value chains, The Express Tribune reported.

Burki claimed that the CPEC project was expected to add 2 percent growth to Pakistan’s gross domestic product (GDP) and greater integration of the country’s backward areas with the developed areas.

Stressing on the benefit of the economic corridor, Burki added, “CPEC will also link Pakistan with the global economic system from which it has remained relatively detached.”

Former State Bank of Pakistan governor Ishrat Husain who also attended the event, touted the CPEC project to help in boosting technology and human development in Pakistan.

The building of the USD 62 billion economic corridor gives China access to waterways which is about 40 percent of the world’s oil passes. When built, it will link Gwadar to Xinjiang region in China.

In response to it, a certain section of people, especially the Baloch people have harboured fears of Pakistan being colonised by the Chinese.

India against the CPEC project since it passes through the disputed Pakistan-occupied Kashmir (PoK) region. (ANI)



Pakistan has no debt fears arising out of CPEC: PM Abbasi

DAVOS: Prime Minister Shahid Khaqan Abbasi said Pakistan didn’t have any debt fears arising out of the China-Pakistan Economic Corridor (CPEC).

In an interview to the Nikkei Asian Review on sidelines of World Economic Forum (WEF) in Davos, Abbasi stated regarding loans linked to CPEC projects, an independent body would shoulder the loan majorly and it wouldn’t necessary contribute to a rise in national debt.

Also, Abbasi stressed fears of a Chinese “debt trap” were compounded and misled. He added the CPEC had two core components, one financial sustainability and second environmental conservation and all projects were being established on these two fundamental principles.

PM Abbasi noted infrastructure development under CPEC alongside improved public security would improve global trust in Pakistan and allow foreign entities not only Chinese ones to invest with confidence.

He said economic benefits would also be reaped from improvement in power generation, lower-cost transportation and added development of Gwadar Port in Balochistan would also benefit other neighbouring countries in Central Asia.

Regarding Pakistan’s economic growth during current financial year 2017-18, Abbasi stated the rate of economic growth would be higher than FY 2016-17 when it grew by 5.3 percent, the quickest in almost a decade.

Furthermore, Abbasi said exports had shown reasonable growth in last six months and despite rupee devaluation and rise in oil prices, inflation remained under control. He predicted economic growth could possibly reach around 6 percent.