A New Beginning for Pakistan This Is an Independent Publication by Upper Reach 02

A stuNNiNG eCONOmiC re - see this report at worldfolio.co.uk sPeCiAL suPPLemeNt bY COVerY

DistributeD with the times PAKI STAN A New BegiNwNeDNesiDAYN, APriL g30 2014 the 2013 landmark democratic and peaceful transition of power restores investor confidence and could position Pakistan as the ‘next big thing’ in Asia

David Cameron welcomed Pakistani Prime Minister Mohammad Nawaz Sharif to London last October

he parliamentary elections of may 2013 that is known, emphasises that “Pakistan is a strong government’s intention is to “closely coordinate boost exports significantly. Another priority is to resulted in an absolute majority for the PmL and resilient nation of 180 million people...en - with the opposition parties to tackle the enor - channel into productive investments at least 50 (N), the Pakistan muslim League (Nawaz), dowed with a wealth of human and material mous problems facing our country.” per cent of diaspora remittances from Pakistani btrought mohammad Nawaz sharif to the pre - resources.” he also highlights his country’s geo - the government’s full awareness that eco - communities overseas, amounting currently to miership for a record third time. they also marked graphic location “at the cross-roads of west, south nomic and social development is critical to achiev - $15 billion annually. the very first time in Pakistan’s 66-year history that and Central Asia, placing Pakistan at the hub of ing lasting improvement in the security situation A third area of priority action is in solving the power had been transferred peacefully from one major energy and transportation corridors.” is evident from the statement by President mam - national energy crisis, which is a huge drag on the democratically elected government to another. mr sharif is clear that the strong mandate from noon hussain, affirming the government’s com - economy, shaving up to 4 per cent off GDP, ac - this landmark in the consolidation of democracy the people, including approval of his party’s poli - mitment to the social and economic betterment cording to the Planning Commission. Pakistan in Pakistan was accompanied by top-level tran - cy of zero tolerance for corruption, empowers and of Federally Administered tribal Areas (FAtA), as has enormous natural energy resources, princi - sitions in key democratic, judicial and military in - obliges his government to act swiftly and boldly to it is conscious of the issues facing tribal people. pally in its coal reserves and its hydroelectricity stitutions. it also demonstrated to the world the achieve its goals, underlining that “economic pros - the President went on to mention specifically potential. the Prime minister states the govern - country’s political maturity and the national resolve perity for the people of Pakistan remains the prin - an investment programme to ensure the supply of ment’s two-pronged approach: firstly to optimise to peacefully tackle the challenges it faces. cipal priority of my government [with] a policy natural gas to these areas, as well as the estab - power distribution and encourage energy con - the Prime minister set out his vision for this framework based on promoting sound macro - lishment of a network of schools there through the servation, and then secondly to “diversify the en - new era for his country, saying: “Our vision is a economic policies to accelerate economic growth, Overseas Pakistanis Foundation. the Prime min - ergy mix by shifting to hydro and coal-based pow - new Pakistan – a Pakistan which is at peace with - alleviate poverty and create new jobs.” ister emphasised that the government would seek er generation.” mr sharif adds that projects en - in and peace outside, especially with its neigh - while his party achieved an absolute majority a path of dialogue in order to bring the FAtA into visaged range “from large projects of over bours...a Pakistan which is modern, progressive in the may 2013 elections, the Prime minister has the country’s political mainstream. 5,000mw to small and medium-sized projects” and forward-looking.” been careful to formulate an inclusive agenda for the government has already started to create and that “the opportunities for investment are mr sharif also outlined his belief that econom - his government, one of encouraging and putting the conditions for delivering on its ambitious pro - wide-ranging.” ic development will be key to achieving this vision in place a business environment that attracts in - gramme for national economic and social re - the new government, democratically legiti - in “a Pakistan which is business-friendly, a Pak - vestment from within the country and from over - generation. with GDP growth having increased last mate and with its strong mandate, is determined istan where foreign investors would feel safe and seas. it also aims to develop national resources year from 2.9 per cent to 5.1 per cent, the Prime and acting decisively to deliver, to create, as the secure”. the Prime minister is realistic but also in order to regenerate Pakistan’s economy, al - minister states that they are now aiming to achieve Prime minister says, “a country marching in tan - determined about the task ahead, adding: “we ways with the objective of subsequently bringing an annual rate of 7 per cent within the next four dem with the world on the road to progress and are facing many challenges, but, God willing, we about nationwide economic and social develop - years. One key target already in place is Pak - prosperity.” this country of crossroads has now will overcome them.” ment. the Planning minister and a key figure in istan’s GsP+ (Generalised system of Preferences made its clear choice: the road of democracy the ‘Lion of Punjab’ as the 64 year-old mr sharif the PmL (N), Ahsan iqbal emphasises that the Plus) status with the european union, which will and progress. A New beGiNNiNG FOr PAKistAN this is an independent publication by upper reach 02

For the last several decades, there is more to back up these initiatives than just optimism, mr Aziz insists. “think of Pakistan as a Pakistan has been used as a gateway with three portals leading to central, west - ern and southern Asia. Central Asia and west Asia pawn in the game of global have an energy surplus, and south Asia is energy de - powers owing to its geo - ficient, so if Afghanistan becomes peaceful again, FOreiGN gas and electricity can flow from there. All those re - graphical situation. Now, the gions need imports, and south Asia has a surplus in engineering technology that could be put to good use democracy is finding its feet, in either of the other two.” eager to show the world its mr Aziz recalls that within a week of taking the reLAtiONs reins of government, Prime minister sharif had a let - potential as a political and ter circulating among senior civil servants and diplo - trade equal FrOm FrieNDshiPs matic personnel in which he said “our focus from now on is economic diplomacy, which means the promotion of trade and investment. “this has led us to introduce a number of mech - tO PArtNershiPs anisms where we receive reports from the commerce eset’ is the buzzword often whispered in the sponses to the united states and the complications ministry, the finance ministry and the investment corridors of international diplomacy when re - of Afghanistan. enhancing solidarity with the world promotion and export promotion bureaus to coor - lations between countries have nowhere to islamic community is one priority, as is growing its dinate efforts at the country level. right now with ‘gor but up. Yet even when there is a mutual willing - relationship with the european union, which recent - the recession, demand for exports is not high, so ness to take that route, timing is of the essence, know - ly admitted Pakistan to its GsP Plus system of pref - we are focusing on Asia, the Far east and of course ing exactly the right moment to hit the button. For se - erential import tariffs. China. we are also encouraging middle eastern in - nior Pakistan government officials like sartaj Aziz, As mr Aziz sees it, “Our foreign policy is based on vestors to come.” the time may be approaching for constructive re-en - four priorities: First, build a peaceful and prosperous gagement with the united states, india and whoev - neighbourhood. secondly, reach out to regional and The UK connection er ends up in control of Afghanistan, because the will international partners. thirdly, focus on ‘trade, not second only to China as Pakistan’s heavyweight trad - to make it happen definitely exists. aid’. And lastly, develop a consensus-based approach ing partner is the eu, and a large percentage of that “Pakistan has been paying an unfairly high price to counter terrorism.” commerce is through britain, which shares a colo - for being the place where too many global fault lines regarding the first of those policy points, mr sharif nial past and numerous institutional similarities with converge,” argues mr Aziz, Adviser on Foreign and Na - has made it clear that he wants to see major im - Pakistan. Last year, David Cameron hosted a series tional security Affairs to Prime minister Nawaz sharif. provements in Pakistan’s historically fraught rela - of off-the-record encounters in London between mr “before 9/11, we did not have bombs or suicide at - tions with india, putting an end to decades of mutu - sharif and Afghan President hamid Karzai in Octo - tacks. but when the Americans invaded Afghanistan, al coolness, outright hostility and four wars. During ber centred on prospects for getting the Afghani tal - they pushed all the people they had trained, armed Sartaj Aziz, Adviser on Foreign and National an encounter last september with his indian coun - iban to take part in peace talks. britain and Pakistan and funded to fight the russians over here so they Security Affairs to Prime Minister Nawaz Sharif terpart, manmohan singh – the first face-to-face also hold a “regular strategic dialogue once or twice became a threat to us. it is a very serious issue.” meeting between heads of government since 1999 a year for exchanging views on security issues, where there is no use pretending that Pakistan’s ties to but the harsh rhetoric is being turned down by – the Pakistani Pm ruefully noted that “we’ve been we learn from each other,” says mr Aziz. the united states were not seriously frayed over washington and islamabad pending what may prove spending this precious money; resources we have, to his way of thinking, foreign direct investment Afghanistan, the Osama bin Laden incident and oth - to be game-changing developments in Afghanistan which should have ordinarily been spent on social sec - is not a panacea for Pakistan’s problems but it can er security issues. Nor have successive administra - following the scheduled withdrawal of us troops in tors, have been diverted to buy the F-16s, to buying certainly open a shortcut on the way to a solution tions in washington learned to live with the fact that 2014. “the question,” says mr Aziz, “is what will hap - frigates, tanks, expensive submarines” and suggest - for investment hungry sectors such as power gen - Pakistan became the world’s first muslim nuclear pen to Afghanistan now. the same thing as when the ed that it was time for both governments to rethink eration. in conclusion, says mr Aziz: “Pakistan re - power in 1998, reserving the right to carry out a ther - russians left – another civil war? their priorities. quires international support in realising its objective monuclear first strike if ever its territory were invad - “that is where we are now. Pakistan is trying to the goal, added mr sharif, is to create the climate of an economic revival, which is vital for Pakistan’s ed. For their part, Pakistani authorities are very un - create some kind of reconciliation amongst the dif - of trust and mutual respect that will allow bilateral trade socioeconomic development as a response to the happy about the continuing us drone attacks on its ferent groups, without interfering, of course. we hope to grow by several multiples from the current $2.35 ongoing militancy. the country’s foreign policy is be - sovereign territory targeting alleged terrorists. these efforts will succeed, and Afghanistan will not billion. india represents a huge potential market for ing reoriented accordingly.” “the point is, have those drones reduced extrem - slide into civil war again. People have suffered for 35 Pakistani goods, and new road and rail links between ism?” asks mr Aziz. “No. they will only escalate it. that years, over a million have been killed, and 5 million the two countries are stipulated in the south Asian is why we are telling the Americans they must please have left the country. we still have three million Free trade Area Agreement (sAFtA), which both na - try to understand that we also want to tackle the is - refugees in Pakistan. if a civil war starts, we could re - tions ratified in 2009. PROjeCt teAM: benjamin Gaviña, sue of extremism, but you cannot start killing your ceive more refugees, but i think it is a very serious it was no accident that immediately after his re - Paulina Gallardo, benjamin de own people and then think that you will eliminate the problem.” turn to office, mr sharif’s first trip abroad was to bei - molliens, Fátima ruiz moreno and problem forever.” “Afghanistan may be a threat to the west in a dis - jing, where he signed new framework documents Nicolás Yllera tant way because it is far away, but to us it is a reg - aimed at facilitating additional Chinese investment Neighbourly reconciliation ular threat – every day, every week. Our security in in Pakistan. trade between the two nations topped UPPeR ReACH Another point of contention is Pakistan’s feeling that terms of population and size is in a way more important, out at $12 billion last year and China was awarded 68 King william street, it has been made to suffer unfairly because the us- and i think the us is beginning to realise that it needs the contract it had long been seeking to operate the London eC4N 7DZ led sanctions against iran have put a decades-old to build a relationship with Pakistan.” port at Gwadar, in balochistan province. road, rail and t. +44 (0) 207 959 2424 chokehold on its access to energy – a permanent en - transport infrastructure have also been targeted by [email protected] ergy shortfall being the most acute problem and brake Pakistan’s place in the global community beijing for major investment flows; and how should on development the country has to deal with at the it need hardly be said that Pakistan’s foreign policy it be otherwise, given that Chinese exports would be #Pakistan present time. consists of rather more than a series of ad hoc re - the first to benefit from a direct route to the sea. A PArtNer iN PrOGress Disaster relief, diaspora remittances and strong trade are just some of the 300 mayors and councillors in local bodies.” in the “enhanced strategic Dialogue” signed by ties that have kept Pakistan and the trade and investment is another factor in Prime minister David Cameron during his April UK’s relations strong over the decades maintaining this sense of common purpose, mr 2011 visit to islamabad. the accord establishes mirza says, with the balance of trade running a structured forum and institutionalised tough times are when you find out who your strongly in Pakistan’s favour. britain occupies mechanism for the pursuit of joint objectives. friends really are. that old saying may be true fifth place on the list of destinations for Pakistani Other strands of cooperation covered by the esD enough, but it would be misleading to attribute exports, and is by far its largest source of foreign include economic development, culture, health the cordial state of relations between the uK and direct investment, channelling $632.2 million and education, as well as security and defence. Pakistan solely to britain’s timely and welcome into the country over the 2012-13 fiscal year. mr mirza is very emphatic that “the british assistance in dealing with the latter country’s the challenge is to grow by diversifying, since at government and its people have always stood recent run of natural disasters and terrorist the present time 78 per cent of Pakistan’s total by Pakistan in our most difficult times – both in outrages. there are reasons far more deeply exports to uK consist of textiles and leather the war against extremist terrorism and during rooted in a shared historical and cultural products. the natural calamities that struck Pakistan in the experience accounting for bilateral ties that have britain is also the largest of Pakistan’s recent past” and which drained nearly $100 seldom been warmer, more extensive or on a european union trade partners and as such, billion from the economy. more even keel, says mohammad imran mirza, played a pivotal role last year joining with by playing a proactive role in support of a Acting high Commissioner of Pakistan to the Mohammad imran Mirza, Acting High Pakistan’s other friends in the european negotiated end to the conflict in Afghanistan, united Kingdom. Commissioner of Pakistan to the UK Parliament to help the country achieve GsP Plus and taking part in the trilateral consultative Of primary importance, notes mr mirza, is the status, thereby ensuring preferential treatment process hosted by britain, the high influence of some 1.2 million people with family political influence. we have seven elected mPs, of its exports and indirectly giving a much- Commissioner has good and solid grounds for ties to Pakistan now residing in britain. six Lords, two members of the scottish needed boost to the creation of jobs for pointing out that “there exists an excellent “Our strong diaspora contributes significantly Parliament, one in the wales National Assembly, Pakistani youth. understanding at the highest political level on a to the british economy. it also has considerable and one in the european Parliament besides over trade and commerce likewise play a key role host of issues of mutual concern.”

A New beGiNNiNG FOr PAKistAN this is an independent publication by upper reach 04 this is an independent publication by upper reach A New beGiNNiNG FOr PAKistAN 05 A NEW BEGINNING FOR PAKISTAN This is an independent publication by Upper Reach 06 LIVING HISTORY IN PAKISTAN Visitors to Pakistan can witness for themselves the land of legend where ancient history lives on, whilst enjoying first-class hospitality and a vibrant culture

reathtaking geography, enchanting relics Pass, and the captivating beauty of the Karako- from ancient civilisations and a hospitable, ram Highway, which travels 800 miles beside the young and dynamic population greet visitors Indus and Hunza rivers, over high mountain pass- Bto Pakistan today. As a tourist destination, it is es into central Asia. one of the world’s best-kept secrets. Not only does Although subject to undeniable security prob- Pakistan offer some of the highest and most spec- lems in some areas, Pakistan offers a number tacular mountain ranges in the world, but it also of advantages. Tourism is minimal and much of boasts the architectural splendour of the Mughal the country remains undiscovered by international Empire, the drama and adventure of the Khyber travellers. Pakistanis are by nature a welcoming people and meet travellers with genuine interest and enthusi- l asm. Its ancient bazaars offer unrivalled shopping. The cui- sine is one of the most multi- facetted in the world and the culture and music among the most colourful to be found any- where. Located at the crossroads of South Asia, Central Asia, China and the Middle East, Pakistan’s culture reflects its rich heritage and diverse influences. The In- dus Valley civilisation, one of the oldest in the world dating back tributed to its culture over the centuries. The Mughal The historic city of Lahore is considered Pakistan’s a at least 5,000 years, flourished in dynasty that dominated the Indian subcontinent in cultural capital and showcases several outstand- the land that presently makes up 16th and 17th centuries left behind numerous archi- ing examples of Mughal architecture, such as the Pakistan. Waves of conquerors tectural treasures. British rule in the 18th century Lahore Fort and the Shalimar Gardens, both of and settlers, including Persians, had a profound impact on modern Pakistan as well, which are UNESCO World Heritage sites. The Bad- Greeks, Scythians, Arabs, where English is one of two official languages and shahi Mosque (pictured above) epitomises the Boom-boom Afridi of the national cricket team Afghans and Turks, all con- is spoken widely across the country. beauty, passion and grandeur of the Mughal era

SCHOOLS AND UNIVERSITIES HELP

LIFT PAKISTAN OUT OF POVERTY Pakistani schools and institutions

of higher learning are availing themselves of British expertise in B the sector, thus improving the country’s chances of faster socio- since 2011, whilst also raising attendance from knowledge and skills needed 83 per cent to 92 per cent (equivalent to to thrive in the current and economic development 770,000 more students in class each day). In upcoming competitive era. In Sindh province, the UK has helped get 61,000 of other words, KSBL is growing Like many developing countries striving to the poorest children in school since 2012. a community of successful foster nationwide socio-economic growth, Mr Barton adds that the British Council is future leaders and Pakistan has a mandate to improve the quality, also very active in Pakistan, organising entrepreneurs. Girls’ education is an area of strong interest and even more importantly, access to examinations that give “Pakistani young people It is the school’s belief that only premier and investment by both Pakistani and education. While the challenges are many, the internationally recognised secondary school education can strengthen the private sector international aid agencies government is receiving a helping hand from level qualifications from UK examining bodies.” and produce innovative front-runners capable both international aid agencies and from Moreover, the British Council is also helping of transforming the country. And KSBL’s Pakistan’s own private sector. build up the university sector. graduates will be especially well-equipped for fares, book expenses, etc. of the candidates According to the UK High Commissioner to “We form linkages between British and the global market, thanks to a unique strategic who successfully pass the tests. Pakistan, Philip Barton, by the end of 2015, aid Pakistani universities and we try to build up collaboration agreement it signed with the “We have reached out to what we call real P from Britain’s Department for International institutional capacity within the university University of Cambridge Judge Business diamonds, students who are capable. They are Development (DFID) “will have benefited at sector. So we are working at all levels of School in 2009. Together, the two institutions sons of gardeners, security guards, railway least 4 million primary school children in education, because we have a very designed an international curriculum tailored clerks – so they have no chance [of paying],” A Pakistan. We have a particular focus on girls, straightforward view: how the children, the for the Pakistani business environment, in explains Abdul Razak Dawood, Rector of LUMS which is important for empowerment, and young people, and the students of Pakistan are accordance with global standards of and Chairman of Descon Engineering. important for social development.” educated will determine the future of this excellence. Initially, NOP was restricted by budget By said year, DFID’s education programmes country,” says the High Commissioner. Another world-class academic institution limitations – it could only provide so many aim to build more than 20,000 classrooms in Home-grown efforts at improving higher working in Pakistan since 1986 to foster new grants. Last year, however, the scheme Khyber Pakhtunkhwa province and recruit and education are also plentiful – numerous generations of business leaders is the Lahore received an enormous boost from the DFID. train 45,000 teachers in Punjab. Pakistani institutions are working passionately University of Management Sciences (LUMS). Thanks to the PKR 1 billion (£5.7 million) Happily, the fund’s ongoing projects are to produce graduates who are truly interested Once considered an elitist institution, LUMS’ LUMS-DFID programme, more deserving building on recent successes. In Punjab in giving back to society. The Karachi School directors realised the importance of bringing in Pakistani students are able to study at one of province alone, DFID support has already for Business & Leadership (KSBL), an initiative a wider catchment of students, no matter their Southern Asia’s top universities. contributed to the training of more than envisioned by a group of private business and economic standing. In 2001, it started the “We are extremely grateful to the British 107,000 teachers and has helped increase corporate leaders, is a leading graduate National Outreach Programme (NOP), a government and taxpayers,” underscores Mr student enrolment by more than 1.25 million management school that equips youth with the scholarship that covers the tuition fees, travel Dawood. A NEW BEGINNING FOR PAKISTAN This is an independent publication by Upper Reach A NEW BEGINNING FOR PAKISTAN 0 07

lamabad, occupies some 54,000 square feet, with The Serena Khaplu Palace occupies a itage site that offers travellers the opportunity to 300 foot-high minarets and a 130 foot-high main complex of 1840s buildings tucked away in experience the restored original architecture of the prayer hall. Shaped like a desert Bedouin’s tent, it the Khaplu Valley in the far north 17th century Raja Fort Palace, while enjoying the overlooks the city and sits against the picturesque modern amenities and services of a luxury guest- backdrop of the Margalla Hills. house. Gilgit Serena is a lodge-type hotel set against Pakistan’s mountainous northern region has a backdrop of the stunning Karakoram mountains. long been a favourite for climbers, hikers and ad- Haramosh and Astore. Also in the country’s stun- Other Serena properties in Pakistan’s far north venturers. “One would forget Switzerland for in- ning northern region, Shigar is a small peaceful vil- include Hunza Serena Inn, Swat Serena Hotel and L stance, if you were once in view of K2,” the world’s lage situated on the banks of a river that shares Serena Khaplu Palace. Further south one can en- second-highest mountain, says Khawar M. Butt, its name. The valley in which it stands is one of joy Serena’s trademark quality and fine service in Chairman of Pakistan’s English Biscuit Manufac- only two routes leading into the high Karakoram its hotels in Faisalabad, Islamabad and Quetta. turers and leading businessman. “If you really want mountains, and was once a separate kingdom in In terms of cuisine, Pakistan’s enduring histo- to see heaven on earth it is our northern region.” its own right. ry has also left its mark. By around 3000 BC, Gilgit, the capital of Gilgit-Baltistan province in Nowadays, all that remains of this kingdom is sesame, eggplant and humped cattle had been and is Lahore’s most famous landmark. Capable the country’s northeast, is a flourishing town lo- the Shigar Fort Palace, which is known locally as domesticated in the Indus Valley, and spices like of accommodating 55,000 worshippers in its main cated at an elevation of 5,000 feet and is best Fong Khar and was once the palace of the former turmeric, cardamom, black pepper and mustard prayer hall and a further 95,000 in its courtyard and known for its cold weather, warm-hearted people Raja. Anyone wishing to make a stop here should were harvested. Today, these colourful and aro- porticoes, it remained the largest mosque in the and a variety of fabrics, chinaware and handi- take a look at the Serena Hotel Group’s unique matic flavours are used along with brown car- world from 1673 to 1986, when overtaken in size crafts. Gilgit is a major hub for mountaineers and properties, the Serena Shigar Fort and the Gilgit Ser- damom, green cardamom, cinnamon, cloves, nut- by the completion of the Faisal Mosque. This ele- nature lovers as it connects with popular desti- ena Hotel. Located on the route to Pakistan’s fa- meg, mace and black pepper in a wide variety of B gant landmark, located in the capital city of Is- nations like Naltar, Hunza, Nagar, Skardu, Deosai, mous peaks, Serena Shigar Fort is a unique her- dishes throughout Pakistan.

SPICE UP YOUR LIFE Roll up your sleeves and don’t be afraid to dip your fingers into the aromatic, distinct and delicious world of Pakistani cuisine Pakistanis are regarded as experts in preparing meat. Of course, being a Muslim country pork is Balti, tandoori, biryani – words now ingrained in forbidden. Meat is always Halal (meaning it is Britain’s food lexicon normally associated with procured and prepared following the guidelines of Indian cuisine – are actually of Pakistani origin. Islamic law) giving it a distinctive flavour. When From Newcastle to Brighton, every weekend a Britons go for a curry on a Saturday night, they large number Britons “head out for an Indian”, tend to prefer boneless meat. In Pakistan it is when in fact the majority of “Indian” restaurants more common to use meat on the bone, as the L across the nation are owned by entrepreneurs of meat close to the bone can be intensely more Pakistani and Bangladeshi descent. flavoursome. With the often generous use of exotic spices If vindaloo is the posterboy of curries in like cumin, turmeric, chili and cardamom, and Britain, in Pakistan it’s haleem. Often referred to herbs such as coriander and mint, Pakistani as the “the king of curry”, haleem is a true taste cuisine does inevitably draw similarities with of the country which you will find on any street Indian food, particularly in the Punjab region. corner. It is a mix of pulses, spices, grains and However influences from the Middle East (from meat which is stewed for up to eight hours in a countries such as Afghanistan and Iran where large pot to make a rich and satisfying dish. It is mild aromatic spice and less oil are used) and then served commonly with fried lemons slices, Pakistanis are proud of their varied and flavoursome cuisine even the Far East make it very distinctive. strands of ginger, fresh coriander and green chili. Indeed each region in Pakistan itself has its Haleem, like all dishes in Pakistan, is normally own distinct cuisine, from the rich fertile plains eaten with your hands and a lump of bread such Apart from meat, the sides of the oven are Like the tandoor, biryani’s roots are traced to and the sea of Sindh province to pastoral as naan or roti – the use of knives and forks is used to cook flatbreads such as roti and naan; Pakistan. The biryani is cherished across the Balochistan; but the influences of Central Asian, not common in the country, neither in the home roti is water-based bread while naan is made country and can always be found at weddings, South Asian and Middle Eastern cuisine in nor in restaurants. with yeast and usually has milk or yoghurt birthdays and other special occasions. Like Pakistani food are ubiquitous. Most halal meat is either cooked in masala added. These breads are considered an integral paella or risotto, biryani is regarded as the height One main difference between Pakistani and (curried sauces) like haleem, or in a tandoor oven. part of Pakistani cuisine. One of the great of rice cooking. The rice is cooked in spices Indian cuisine for example is that Pakistanis use Pakistan, not India, is believed to be the birthplace debates in Pakistan is whether a traditional meal separately and then layered with meat. There are much more meat while Indian dishes are often of the tandoor. Use of the cylindrical clay oven goes better with naan or rice. In Britain it is many versions but the best is said to be found in vegetable based (according to a report in 2003, quickly spread from the Punjab region to central custom for both to accompany a meal; in Sindh province. Pakistanis consume three times more meat than Asia and onto the Middle East. Temperatures in a Pakistan you are either a person who prefers rice Pakistanis are fiercely proud of their distinct Indians). Meats used in Pakistani cooking include tandoor oven can reach 480°C. The intense heat with your meal or one who prefers bread. rich culinary heritage, a heritage that spans chicken, lamb and beef, while on the coastal created by the hot coals is perfect for cooking Pakistan’s long grain basmati rice is considered thousands of years. Many of them believe it is the areas of Sindh and Balochistan, seafood is more seafood and meat in a matter of minutes, giving a the best in the world and is especially prized and best in the world; a trip to the country may predominant. distinct charcoal flavor. used in the classic biryani. convince you likewise. A New beGiNNiNG FOr PAKistAN this is an independent publication by upper reach 08 Pakistan’s ministry of Finance is already reporting promising signs for 2014, A COmPreheNsiVe thanks in part to a $6.7 billion loan package from eCONOmiC AND the imF and the very recent oversubscribed $2 billion- launch of eurobonds FiNANCiAL he three-year imF programme is designed to help the south Asian country to rebuild its reserves and prevent a crisis in the bal - atnce of payments. it seems to be paying off. Pak - istan has already seen a 20 per reViVAL cent increase in revenues in fis - cal year 2013/14, and, as part of its austerity drive, has overseen a 30 per cent fall in non-develop - ment expenditure in order to im - prove revenue. “As soon as we formed the the country has successfully government, we focused our concluded the first two reviews under its extended Fund Facility concentration over the sinking programme with the imF, and con - economy to raise it and we have fidence is growing – remittances from overseas Pakistanis reached succeeded in bringing down the an all-time high of $15 billion in dollar in the better interest of 2013, and 50 per cent of that has been converted into investments. the state” During a speech last summer, Finance minister mohammad Mohammad ishaq Dar, Minister of Finance ishaq Dar underscored the chal - lenges ahead and Pakistan’s com - the existing branch network of the banking sys - mitment to meet its longer term- tem cannot meet the rapidly expanding needs of goals: a 7 per cent rise in GDP, the country’s population, according to mr Anwar, single digit inflation and a fiscal and needs to be expanded. the total number of deficit brought down to 4 per cent. bank branches nationwide currently stands at less After a promising start of 5 per than 10,600, putting Pakistan among the countries cent in the first quarter, GDP with the highest per bank population in the world, growth dipped to 4.1 per cent in the the State Bank of Pakistan considers SMe lending, agricultural financing and housing loans to be the engines of growth with around 15,000 persons per branch. Finally, the first half of fiscal year 2013-14 – banking sector has traditionally neglected the fi - this, despite a hugely oversubscribed flotation meanwhile, Pakistan’s banking sector exempli - moody’s for the first time ever has reversed its neg - nancing needs of the micro, small and medium en - earlier this month of five- and ten-year eurobonds. fies both the country’s significant momentum as ative outlook to a positive outlook and the swiss terprises (smes) with 80 per cent of lending di - initially set at $500 million and later increased to well as its undeveloped potential. “the room for National bank has reinforced its stable outlook to rected to just 25,000 borrowers. $2 billion, this float represented Pakistan’s victo - growth is huge,” according to Yaseen Anwar, who a positive stable long term outlook,” according to the state bank of Pakistan has made ad - rious return to the international debt market af - served as Governor of the state bank of Pakistan mr Anwar. “the banks are returning excellent prof - dressing this pent-up demand a top priority. it en - ter a seven-year hiatus. from October 2011 through January this year. “it its and made bundles out of their investments. visions transforming the financial market into a inflows were also boosted when the dollar de - is untapped for anyone who has the know-how or the opportunity exists for not only banks but al - comprehensive system, providing innovative, preciated against the rupee earlier this year, the entrepreneurial spirit.” so multinationals and foreign investors.” market-based financial services to the otherwise adding PKr 800 billion (£4.87 billion) to the na - Growth and turnaround in the sector over the Despite banks’ significant gains, a sizeable mar - excluded poor and marginalised population, in - tion’s currency stockpile. last several years has been remarkable, setting nu - ket has yet to be captured. Only about 12 to 13 cluding women and young people. if put to productive use, the billions raised merous milestones. Assets have risen to £59 bil - per cent of Pakistan’s population of 193 million “sme lending, agricultural financing and hous - could translate into enormous economic growth, lion, with pre-tax profitability of £1.8 billion in 2012, currently has access to formal financial services. ing finance credit will be the engines of growth,” and of equal importance, national development. an all-time high. Deposits grew at a 17 per cent Of the remaining 88 per cent who don’t, less than according to mr Anwar. the funds – along with growing investor confi - clip, the highest rate in the last five years, while one-third take part in informal banking, while 56 “You’ve got the housing sector for the banks dence – could also, perhaps, contribute towards remittance inflows have more than doubled, reach - per cent are completely excluded. total credit to to go into, you’ve got micro, small and medium turning Pakistan into the world’s 18 th largest ing a fresh high of £10.7 billion from just over £4 the private sector makes up just 18 per cent of enterprises and agriculture. You’ve got payments economy by 2050, as predicted by economist Jim billion in 2006-07. economic output, a very small share even for an products, cash management products. You have O’Neill. “the market sentiment is now moving positive, emerging economy. a truly diversified business.” ACCeLerAtiNG the PACe OF sOCiAL bANKiNG Khushhalibank is working on the challenge of financial inclusion in Pakistan, where banking penetration chip international funds among its business opportunity. “People who have done still remains extremely low shareholders. For more than a decade, it has well in the uK market are probably the first provided a platform of financial services to the ones to be coming in and investing in Pakistan with a vision to bring financial services to the poor, while at the same time promoting and expanding so i think it is a natural ally.” less fortunate part of the Pakistani population, transparency and high quality governance. Loan the bank has a loan recovery ratio of 98 per Khushhalibank began in the year 2000 with the amounts generally range from just £98 to cent and a retention rate of almost 75 per cent. idea that microfinance could not only help £1,450, and provide a critical service not its active client base has expanded by more alleviate poverty, but also contribute to moving available from conventional banks. than 46 per cent during the past five years and Pakistan’s economy forward. taking into Originally envisaged as part of the now counts with over half a million regular account that only 12 to 13 per cent of the total Government of Pakistan’s Poverty reduction clients, many of them active savers as well as population is banked, President of strategy and its microfinance sector borrowers. “we are making a transition from a Khushhalibank Ghalib Nishtar asserts that, “we Development Programme, Khushhalibank has household to micro enterprise lending need to include more and more people so they since taken on a life of its own. “Pakistan was paradigm and that has the ability to create job can be part of the financial system. that is the nowhere on the map of microfinance back in opportunities as well as develop social key challenge and an opportunity for the 2000 but now it ranks among the top three entrepreneurialism.” banking sector of Pakistan. microfinance countries in the world consistently in terms of Khushhalibank, like Pakistan’s emerging institutions have a role which could be a game its microfinance business climate. the policy financial services industry, sees much more changer for the economy of the country.” framework has changed. the environment has potential in the future. “there is so much to headquartered in islamabad, Khushhalibank changed and that’s how the perception do,” mr Nishtar says. “we have got almost operates under the supervision of the state changed,” according to mr Nishtar. everything right, and if you access the right bank of Pakistan, and counts many of the Presently, he says, investors are beginning to Khushhalibank is Pakistan’s first licensed people and get your story across, they will country’s leading commercial banks and blue see microfinance first and foremost as a microfinance bank invest.” this is an independent publication by upper reach A New beGiNNiNG FOr PAKistAN 09 miD-siZeD bANKs ANChOr PAKistAN’s FiNANCiAL seCtOr with just over 12 per cent banking penetration, key mid-size banks address financial inclusion and seize the room for growth in the industry arge, well-established, capital-rich banks are ideally suited for riding out periods of economic turbulence and sagging markets, but a safe Lhaven from the storm is usually as far as it takes them. those same tempestuous conditions can spell opportunity for smaller, more nimble institu - tions ever on the lookout for chances to grow their business in return for assuming and managing the added risk. that is the dynamic that drives some of Pakistan’s most innovative medium-size finan - cial service performers, and it is particularly true of Nib bank. in fact, recent trends in the Pakistani financial sector show robust growth in mid-sized banks’ deposit bases, thus signalling a growing degree of NiB Bank is headquartered at the P.N.S.C. Building in Karachi. Six floors of this iconic building serve as the nerve centre of the bank's banking footprint in Pakistan both customer trust in these banks and their com - petitiveness in terms of resource mobilisation and cities, remarkable in a country where almost 90 per both executives agree that the future of bank - ing for islamic solutions so they don’t have to go provision of efficient services. As such, mid-sized cent of the population cannot or does not make use ing in Pakistan is islamic. “i see a greater oppor - to the dedicated islamic banks. Our first priority is banks find themselves well positioned to spur pri - of banks for everyday financial transactions. tunity in islamic banking within the context of Pak - that our existing customers’ requirements are be - vate sector growth. “Per capita penetration of the banking sector is istan and more importantly as a new capital op - ing met through the provision of islamic products. “the challenge for the banking sector is to see very low so i think that suggests a huge opportu - portunity for new investors,” says mr Khan. Our second priority would be more about how we the economy revive. As you can see, in the last few nity for banks to grow into,” comments mr Khan, Nib bank is one of only 16 institutions the Pak - extend our franchise strategically with a robust is - years, growth in the private sector could have been a prominent banking executive. istani government has certified as sharia compli - lamic banking proposition. faster. the banks are keen for an opportunity to be “Pakistan has the potential for a green revolu - ant. but mr Kazmi insists this is not going to trans - “the banking sector is very robust and has re - a part of the change and the shift in the economy,” tion, and by that i mean the capacity to produce form the way his bank has done business, and sisted a lot of stresses on both the internal and ex - says badar Kazmi, Nib’s President and CeO. large amounts of farm produce to support not on - sees its islamic services evolving as a division or ternal fronts. that’s a very big testament to the fact ly our own growing population but also for region - subsidiary of conventional banking. that it has the capacity and depth to move on,” al markets. unfortunately, as banks we have not “we want to be a port of call for customers look - says mr Kazmi. “The banking sector is very focused on those areas, as economic strategy we have not focused on that area, and i think we need robust and it has resisted a lot to really think of expanding it, corporatising it and of stresses both internally and taking it to the next level,” he adds. externally, and that’s a very big At Nib, mr Kazmi is clear as to the direction in which he wants the institution to evolve. “we have testament to the fact that the defined our goals in terms of where we want to go sector has the capacity and and what we want to do. so in the consumer bank - ing sector, we are looking to gain market share. in depth to move on” the wholesale banking sector we want to be involved in all big transactions with customers that matter Badar Kazmi, President and CeO of NiB to us; so, we want to be seen as an important bank for our customers who may have other banks, but we would like to be in their top three to five banks.” After the bank came under new management in the mechanisms needed to accomplish those 2012, it returned to profitability, posting unconsol - goals are already in place. “we have invested, and idated after-tax profits of PKr 38 million (£217,000), continue to do so, in technology,” says mr Kazmi. boosting revenues by 25 per cent while holding “we felt that we needed a robust payments mech - expense growth to 10 per cent. anism and also realised that, instead of creating a For the first half of 2013, the bank has announced whole infrastructure ourselves, why not work with revenue of PrK 2.96 billion, representing a 21 per those who are best in the industry. therefore we cent rise over the same period a year earlier. sin - have gone into a partnership with masterCard. we gapore-based temasek holdings has the control - launched the first chip-based debit masterCard ling interest in Nib, making it one of Pakistan’s and we think that with the sort of technology they largest foreign-owned banks. its 450,000 cus - have, we can leverage it to other areas like mobile tomers are served from 179 branch offices in 59 banking.” A New beGiNNiNG FOr PAKistAN this is an independent publication by upper reach 10 hbL: PrOuD tO be PAKistANi Pakistan’s habib bank Limited has played a major role in the country’s development for more than 70 years

n 1941, habib bank (hbL) was established in mumbai. however, the bank’s history soon was tied to Pakistan’s history, becoming the ciountry’s first commercial bank in 1947 with new headquarters in Karachi. Nauman Dar, Pres - ident and CeO of hbL, proudly highlights that “this is the bank where the founder of the coun - try, mohammed Ali Jinnah, opened his person - al account.” On January 1 1974, habib bank came under state control as part of the Pakistani govern - ment’s nationalisation programme. During pri - vatisation decades later, the Aga Khan Fund for economic Development (AKFeD) acquired ma - jority shares in the bank on February 26 2004. hbL has been recognised time and time again for its accomplishments. For example, its suc - cessful landmark transaction of Pakistan’s first hydro-electric based independent power pro - ducer won euromoney’s ‘middle east Deal of the Year Award’ in 2010. And in 2012, hbL was named as the winner of the ‘best retail bank in Pakistan Award’ during the 12 th international ex - cellence in retail Financial services programme. hbL’s today, hbL – whose long-term rating is AAA and short-term rating is A-1+ with a stable out - look – gladly serves more than 6 million cus - CLOse tomers via upwards of 1,300 Atms and 1,600 branches. with overseas branches in 24 coun - ties tO tries, including the uAe, bangladesh, sri Lanka, Oman, France and the usA, hbL efficiently reach - es the Pakistani diaspora. the uK the bank offers retail consumers current and HBL benefits from Pakistani savings accounts, personal and auto loans and HBL serves its 6 million plus customers through a network of 1,600+ branches and 1,300 cash machines diaspora’s trust in and a range of credit card products. Corporate bank - ing customers can also benefit from a variety draft limits so that they can draw funds against ed five “perpetual golden scholarships” to ben - recognition of the brand of loans and financing, foreign exchange, letters their assigned limits, allowing customers to take efit students at GC university Lahore that are of credit, letters of guarantee and corporate care of their financial needs in difficult times. experiencing financial challenges. incorporated in the uK in 2001, habib cash management solutions. the hbL Foundation, hbL’s philanthropic and hbL also seeks to educate younger children, bank uK is a 90.5 per cent owned hbL’s investment banking division is Pak - social development arm, goes beyond helping regardless of social standing, in the founda - subsidiary of hbL, with the other 9.5 istan’s most active corporate finance house in bank customers. Last year, the foundation grant - tions of personal financial management. the per cent held by Allied bank Limited. gaining, structuring and exe - bank partners with civil organisation idara- technically habib bank has two uK cuting transactions. indeed, its “This is the bank e-taleem-O-Aagahi (itA) at children’s literature subsidiaries, habib Allied international experience in managing more festivals throughout Pakistan, where hbL teach - bank PLC (trading as habib bank uK) than $18 billion in transactions where the es children about the importance of personal and habibsons bank, but as one is since 2005 is unparalleled. founder of the savings. owned by the other it is considered one in a country where nearly 90 per cent of the subsidiary. branches are located in Community involvement country, population does not have a bank account, edu - London, Leicester, birmingham, Perhaps it is its success that Mohammed Ali cating children in banking is certainly address - manchester and Glasgow. has allowed the bank to focus ing one aspect of the problem. in terms of habib bank uK serves customers on the continued development Jinnah, opened improving access, hbL has signed an agree - with products and services that target of both company and country. his personal ment with NADrA technologies Limited (a sub - their unique banking and financing hbL’s connection to the AKFeD account” sidiary of the National Database & registration needs in addition to basic banking strengthens this. For example, Authority) to offer branchless banking at 5,500 services. For example, their service the hbL’s overdraft product, Nauman Dar, NADrA e-sahulat outlets, using the name hbL called eremit allows uK residents to salaryPlus, provides holders of President and CeO express. the goal is financial inclusion, which send remittance to a beneficiary’s hbL salary accounts with over - of HBL they believe will lead to inclusive growth. account in Pakistan, Nepal or bangladesh at no charge if the remittance’s purpose is personal and the payment is made with an hbL uK debit card. “it is a small local community bank A histOriC bANK’s VisiON FOr GrOwth which provides services in a way HBL’s President and CeO, Nauman Dar, has big plans for his company’s involvement in Pakistan where people can go, and they understand the language and of course these immigrants feel what is the company’s current status intermediation. so we have the responsibility of and it must make business sense. we are comfortable,” says mr Nauman Dar, regarding customers? using their assets, which they deposit, and different than others: most commercial banks hbL’s President and CeO. we have 15 per cent of the market share. we deploying them effectively, productively for the would be talking about increasing the market Aside from having the expertise have only 6 million and plus customers in a growth of the community. shares to make more money. that happens in needed to assist import/export country of almost 180 million people. we are when we were privatised there were only 2 the end, but that is not our aim. businesses with the specialised, the largest bank with such a small percentage per cent of women [in the company]; today we complex trade finance situations they of the population being reached. i would like to have reached 10 per cent but we are not happy. How can HBL use technology to pursue its encounter, hbL uK also enjoys a strong see 25 million customers, and that is we want to take it further because in a country goals? reputation and brand awareness achievable. this big, where 50 per cent of the population are there are 100 million cell phones out there. among its customers. women, we have to take active steps to engage why can’t people be using their cell phones for “Our brand is recognised by [the] what is the bank’s growth philosophy? them in the development of the country. banking? why do they need to come to the Pakistani diaspora very easily,” mr Dar People trust us, so we have to respond to them branches? we can add so much value to the points out. “they trust this bank and in a way which makes their lives easier, where Yet HBL is also a business. people, in making their lives simpler and easier, this was there from day one, since the we get this opportunity for contributing we are a commercial organisation, and whether you make it through internet or cell country came into existence.” because we are in this process of whatever we do has to be economically viable phones or the debit cards we issue. this is an independent publication by upper reach A New beGiNNiNG FOr PAKistAN 11 KArAChi stOCK exChANGe is A GLObAL tOP PerFOrmer As the briC economies experience a deceleration, investors are driven to new markets. Kse’s soaring growth is world-class, with its Kse 100 index showing the fifth best performance worldwide in 2013

akistan’s equity markets have hardly been quiet these past five years. in 2009 there was great scepticism after the market opened to Plower checks from its fourth-month close. the scepticism lasted well into 2012, but with general elections deemed free and fair in may 2013, opti - mism has never been higher. the bull market is not just the result of a first- ever peaceful handover of political power. the Karachi stock exchange has also been boosted by global trends: as briC economies slow down, in - vestors are being driven to new markets. the soar - the Pakistani bourse received net foreign portfolio investment of $569 million in fiscal year 2013, compared to an outflow of $189 million ing growth of the Kse in the first half of 2013 – it rose by 40 per cent in local currency terms – was “every sector in Pakistan presents huge investment mr Dhedhi strongly believes in the ‘first mover with its core business in securities and con - only outperformed by the NiKKei in the same peri - opportunities, be it agriculture, industry, infrastruc - advantage’. his company was the first to launch struction, he is forward-looking when it comes od. moreover, over the past three years, 22 Kse- ture development or trading. recently, some retail a state-of-the-art online stock trading service to unexpected areas of growth in Pakistan. take 100 companies have enjoyed average annual re - initiatives have also been taken and the response to - in Pakistan and remains the leader in this are - land and housing, as just one example. turns of more than 50 per cent, while the Kse-100 wards them has been phenomenal. in this regard, i na today. “we made it easier for people to come “even now we think, at the moment, the real index rose by nearly 50 per cent last year, making would say that Pakistan offers huge opportunities into Pakistan and invest here without any dif - estate sector here in Pakistan has not exactly it the fifth best performing stock index in the world. for investors. many economies are at saturation lev - ficulties of following certain procedures, rules been as explored as it could be or has the ca - in addition, 25 of these 100 top stocks garnered to - el, but Pakistan has a need for investment in every and regulations. they can now easily invest in pacity to be. here housing is not even 1 per tal returns above 100 per cent last year. sector, and there is demand for it.” securities through online means irrespective cent mortgaged so there is still hope and a lot A third factor in the extreme growth of the exchange the key is to be a superior asset manager, while of the country they are domiciled in,” says AKD’s of scope in this sector in terms of availing op - is a 2012 amnesty policy that has allowed investors keeping risk – inherent in an emerging economy like Chairman. portunity,” explains mr Dhedhi. to buy shares – no questions asked. the aim? to Pakistan’s – at an acceptable level. encourage people with undocumented funds to in - “we understand Pakistan’s bureaucracy system vest in the market, bringing cash into the formal so we have very close and strong relationships with economy and within reach of Pakistan’s tax au - policymakers as well. we can contribute in helping thorities. Currently, only 3 per cent of the population to opening policymakers’ doors and hearing out pays taxes. the amnesty lasts until June 2014. foreign investors’ proposals,” says mr habib. two companies playing a key role in the unprece - “Foreign investors are very strong in terms of dented rise of the exchange are the Arif habib Corpo - technology and innovations but we can partner ration Limited (AhCL) and AKD securities Ltd (AKD). with them and look after the local side of their busi - Arif habib securities has been one of the best- nesses – fundraising, the capital markets, regu - performing and most profitable brokerage houses lators, policy makers, etc. we can also identify good in the country, and is the flagship company of the local partners, who also come to us for advice, Arif habib Group, which celebrates its 10-year an - and ask us to show them investment opportuni - niversary next year. the company has a diversified ties, where they can partner with us or with in - portfolio across sectors including chemical and fer - ternational players.” tilisers, financial services, construction materials, the AKD Group is another company playing a industrial metals, dairy farming and others. its suc - key role on the exchange. Led by Aqueel Karim cess can in part be attributed to the generous per - Dhedhi, the group – started in 1947 by his late fa - centage of cash dividend and bonus issues that CeO ther – operates in financial services, telecom, in - Arif habib regularly announces. frastructure, manufacturing and natural resources. while security concerns have long kept foreign AKD securities Ltd also provides equity brokerage, investors from tapping Pakistan’s potential, that is economic andsecurities research, investment changing, says mr habib, who has also served as banking and financial advisory services (and ac - the Karachi stock exchange’s elected President counts for more than 6 per cent of the average dai - and Chairman six times. ly value of the Karachi stock exchange).

“Pakistan has a vibrantly “Over the last 12 years, the expanding middle class and with Pakistani market has given an the consistent growth in per average per year return of 36 per capita incomes, the change in cent and the rupee has consumption patterns will open depreciated by 5 per cent on significant areas for average. So Pakistan’s capital investment” market has given an annual return of 31 per cent in dollar terms” Aqueel Karim Dhedhi Chairman of AKD Securities Arif Habib, CeO of Arif Habib group A New beGiNNiNG FOr PAKistAN this is an independent publication by upper reach 12 iNsurANCe LOw PeNetrAtiON meANs hiGh GrOwth POteNtiAL though the industry pre- dates the creation of the Pakistani state, insurance penetration remains below a strategy through which insurance firms can reach new clients directly at bank branches, mak - half a percentage point. ing it easier for people to be integrated into the Providers like Jubilee and system. According to Fredrik De beer, CeO of Adamjee eFu lead the market with a Life Assurance, banks have contributed some 40 jubilee Life insurance was the first to introduce banassurance in Pakistan, 11 years ago to 45 per cent of premium income since the con - vision to offer relevant, high cept of bancassurance was introduced by Jubilee bancassurance agreement signed in Pakistan was policies. Further examples of miscellaneous quality products Life insurance (JLi) just over a decade ago. between Jubilee and standard Chartered bank. products cover everything from personal acci - “Almost every life insurance company in Pak - we introduced the concept, we developed it and dents and travel to terrorism. n modern Pakistan, insurance translates in - istan has some bancassurance arrangements,” now we are working with 11 banks in Pakistan.” with such a plethora of products, it is perhaps to assurance; for foreign investors, there are says Javed Ahmed, managing Director and CeO JLi is also exploring the internet sector – there surprising that non-life insurance has been out - few prime markets as attractive as Pakistan’s, of JLi. “Life companies have worked very hard in are around 20 million connections in Pakistan and stripped (due to the success of bancassurance in iwhere combined life and non-life insurance pen - developing their retail channels and as a result re - an estimated 50 million users – offering five prod - extending life insurance to the far-reaches of the etration in 2012 stood at just 0.93 per cent of tail business has grown significantly during the last ucts already with plans to expand to around 20 by country). Not that this precludes good results in GDP, compared to nearly 4 per cent in india. few years. For life insurance, the primary reason the end of the year. the non-life segment, as noted by tamir Ahmed. Paid-up capital requirements are also among the the growth has been phenomenal is that the in - with some 60 per cent of Pakistan’s popula - During 10 years of rampant inflation in Pakistan, lowest in the region. dustry overall has done very well in developing tion associated with agriculture, it makes sense he says that JGi actually increased its market though still comparatively low, there is a steady, new distribution channels; though Jubilee Life has to provide cover for acts of God. “Over the years share from 6 per cent in 2003 to around 14 per perceivable rise in Pakistan’s insurance pene - outperformed the industry in general and has be - insurance penetration has remained low but cent in 2013. tration over the past several years, owing to the come the largest private sector insurer in Pak - changing weather conditions resulting in torren - rated the maximum AA+ with a stable out - push by various key companies to innovate and istan in terms of premium income.” tial rains and deluges cause huge economic loss - look by the JCr-Vis Credit rating Company develop significant products, whilst also facilitating “we currently control more than 50 per cent of es every year,” says saifuddin N. Zoomkawala, Limited, JGi has a strong asset base and a di - access to them. in fact, one of the main drivers the bancassurance market,” he adds. “we initiat - Chairman of eFu Group, which includes eFu Gen - verse investment portfolio. For its part, JLi leads of insurance penetration has been bancassurance, ed bancassurance in Pakistan in 2003. the first eral insurance Ltd, eFu Life Assurance Ltd and the life insurance sector with market coverage Allianz eFu health insurance Ltd – Pakistan’s of 41 per cent, according to insurance Associ - sole specialist provider of health cover. ation of Pakistan data. “this risk has been partly covered through cred - eFu General insurance, recently upgraded to it insurance of more than PKr 350 billion extend - AA+ with a stable outlook by JCr-Vis, is the mar - ed to farmers annually. with the increased par - ket leader for non-life, with over PKr 13.9 billion ticipation of the private sector and extension of (£84 million) in written premiums and after-tax credit by financial institutions to other segments profits of PKr 1.39 million, as of December 2013. of the economy, all sorts of risks likely to be faced tamir Ahmed has a final word to put poten - by the country will have to be mitigated.” tial investors’ minds at ease concerning terror - mr Zoomkawala believes that insurance com - ism. “we’ve hosted two international insurance panies in Pakistan exist to provide two key ser - conferences in Pakistan. the first one was in vices: “Number one, risk mitigation and number 2010 and attracted about 50 to 60 foreign del - two, capital formation. every year insurance com - egates. we had speakers from France, singapore, panies mobilise billions of rupees in premiums. in - sri Lanka, the uK and other countries. some of surance companies also invest a substantial por - them were here for the first time,” he recalls. tion of premium collected in the shares of listed “i’ll just share one comment made by the Lloyd’s companies. this on one hand provides liquidity to underwriter, who used to provide us with reinsur - the market and on the other hand helps in price ance support for terrorism. As he was walking out discovery. At present the benchmark of Pakistan’s of the hotel, he shook my hand and said: ‘Now, you stock market Kse-100 index is hovering around will see that the Jubilee credit ratings of terrorism 27,000 levels.” will start coming down for Pakistan.’ Products and services may be becoming in - “he was happy and felt confident about Pak - creasingly sophisticated, but insurance is no new - istan when he saw life in Karachi. he was im - comer to the Pakistani populace. eFu General in - pressed by all the hustle and bustle with all the surance was originally formed in 1932 to cater to mus - traffic, people going to their offices, students go - lims in india. Jubilee, too, is a veteran of the sector. ing to their schools and colleges, shops all open. “some insurance companies here have been Personally experiencing normal life in Pakistan operating since before the birth of Pakistan. there is quite different from the perception one gets is more than enough technical know-how of every reading negative press and sitting thousands of kind of insurance in Pakistan. thus we have the miles away in London.” knowledge and expertise to provide tailor-made insurance solutions to cater to all requirements. investors don’t have to look anywhere else,” states tahir Ahmed, managing Director and CeO of Ju - bilee General insurance (JGi). unlike the majority of insurance firms in Pak - istan, which tahir Ahmed describes as being 80 to 85 per cent reliant on three portfolios – mo - tor insurance, property and marine cargo – JGi’s ex posure to these segments is less than 50 per cent. “the remainder is what we call miscellaneous insurance. For instance, engineering insurance – i.e. insuring engineering and infrastructure projects under construction,” he notes. Also in - cluded in JGi’s sphere of operations are fire, marine, motor, liability and accident and health this is an independent publication by upper reach A New beGiNNiNG FOr PAKistAN 13 New GsP+ stAtus tO bOOst PAKistAN’s trADe with eu thanks to the recent awarding of GsP+ status the nation after the vote of confidence. “Gaining access to european markets was the top-most for Pakistan, the country’s priority of the government as part of its economic exports to the eu could development agenda.” mr sharif added that the textile industry stands potentially surpass the to earn around PKr 100 billion (£608 million) per year in light of the eu award. in turn, greater fi - $1-billion mark. Finance nancing will be required to foster small business - and trade institutions are es. that is where the expertise of habib metro - politan bank in trade finance will be paramount. rolling up their sleeves, A subsidiary of habib bank AG Zurich – rated by the banker magazine as the fifth-soundest getting ready for action bank in switzerland – habibmetro operates across Pakistan through around 500 branches and recently he approval this year of Pakistan’s entry completed an expansion programme to capitalise into the european union’s Generalised on the virgin market opportunities presented by system of Preferences (GsP) Plus club small and medium-sized enterprises in previous - htas opened the floodgates for the country’s ly untapped areas of the country. Now, with inter - products to reach a wider market. GPs+ status est rates staging a recovery, habibmetro plans to will allow almost 20 per cent of Pakistani exports fully back Pakistan’s imminent textiles tie-up with to enter the eu market free of duties and a fur - the 27 eu markets. ther 70 per cent to reach european markets at “we are a trade finance bank and therefore preferential rates. Pakistan’s GsP+ status has have extended considerable short-term trade re - been granted until 2017 and is expected to re - lated credit to the textile industry,” says President Under the gPS+ rules, nearly 20 per cent of Pakistani exports will enjoy duty-free status in the eU sult in the export of more than $1 billion worth and CeO of habibmetro, sirajuddin Aziz. “we of goods to eu markets annually. make distinct credit decisions based on the tex - ment programmes. we are in a good position to “habibmetro’s focus is organic growth through the eu’s decision, ratified in January in an tile segment in question. Credit discipline is one take advantage of the GsP Plus.” network enhancement,” said mr Aziz. “we expect overwhelming vote of confidence in strasbourg, of the primary reasons behind habibmetro’s habibmetro has been awarded the country’s this to translate into higher deposits, increased is particularly welcome news for Pakistan’s tex - sound asset quality.” highest rating by the Pakistan Credit rating transaction banking business and more valuable tiles industry; other significant producers of tex - “GsP Plus status will give us a great advantage Agency for the past 13 consecutive years and trade links.” tiles including China, india and Vietnam are not over the next two to three years. in the recent past, has developed interests in Asia, the middle east, however, mr Aziz warns that the burden of bal - eligible to be granted GPs Plus. we have experienced setbacks in the home tex - Africa, the uK and North America. Now, having ancing debt with equity cannot be understated. “the award of GsP Plus status shows the con - tiles and garments segments, particularly in the increased its volume of loans over the past two “Pakistan’s economic policy has to be strength - fidence of international markets in the excellent eu. we are positive that we will regain the ground years, habibmetro is well-positioned to achieve ened and implemented properly for private in - quality of Pakistani products,” said Prime minis - there now. Factories, and textile units, are going its national goals, in conjunction with Pakistan’s vestment to be encouraged, and for bankers to find ter Nawaz sharif in a congratulatory message to through balancing, modernisation and replace - GsP Plus aspirations. it feasible to extend funding for projects,” he notes. a new BeGinninG For PaKiStan this is an independent publication by upper reach 14 Private Sector ready to caPitaliSe on the runway oF an oPen environment

Foreign investment and private entrepreneurialism driving growth as GSP+ however, only part of the story: they were ac - companied by deregulation, liberalisation and an opens up export markets emphasis on good governance in a coherent strategy package aimed at creating a climate and ituated at a traditional crossroads of his - a structure in which the private sector could re - tories and cultures, Pakistan now finds it - spond. the targeted result was a safe and self at a turning point in its economic for - secure haven for investment that would aid in Stunes. a country with enormous unexploited tackling the national challenge of providing growth mineral resources, including coal, gas, gold, cop - and employment for Pakistan's 180 million peo - per, emeralds and uranium, its development was ple. today, the telecommunications and textiles held back for several decades by economic poli - industries are 100 per cent private, as are more cies that handicapped the private sector and than three-quarters of the banking sector, sig - discouraged foreign direct investment – the nat - nificant parts of the cement, sugar, motor vehi - ural drivers of growth for a new country so rich - cles and fertiliser industries, as well as power Pakistan’s textiles and telecom industries are 100 per cent in private hands ly blessed with resources and with a young generation, with independent power producers, population needing jobs and opportunities. or iPPs, and distribution, exemplified by the gov - of the Federation of Pakistan chambers of com - Pakistan having almost doubled its sales be - those failed policies, of a command economy ernment’s sale of the Karachi electricity Supply merce and industry (FPcci), who notes that tween 2009 and 2012, with its country chief, ian and nationalised industries, have now been left corporation in 2005. “there are 600 multinationals working in Pak - donald, noting that “the per capita consumption behind and the country is today open for busi - minister of Finance mohammad ishaq dar istan” but that he knows not a single one which of our products in Pakistan is twice as much as ness and offering sound structures of law and recognises that “a robust private sector will be has ever lost money in the country. we have in china and india”. trade to allow its private sector to display Pak - the key to economic growth in Pakistan” and the attractiveness of Pakistan as a market mohammad Zubair, the minister of State for istanis’ entrepreneurial skills and business acu - that the government assigned “a leading role to and as a business opportunity is made clear by Privatisations, notes that “domestic investment men. the overarching aim is to bring national the private sector in the country’s economic de - naved a. Khan, former ceo of Faysal Bank, who is key” but expands that concept to the Pakistani development while simultaneously providing a velopment”. the Prime minister, mohammad is sure that “if you want to come to this market, diaspora, notably that in Britain, saying “it will be welcoming environment for overseas investment nawaz Sharif, goes further, saying that “socio- you will never regret it because your yields are easier to get foreign direct investment from lon - to propel fast growth. economic development through a conducive and going to be higher and better”, while the ceo of don” since, although some Pakistanis have now widespread privatisations over the past 20 safe environment for trade and investment re - unilever Pakistan, ehsan malik, remarks that been settled in uK for many years, they still have years have brought dynamic change to great mains our focus. a pro-business investment pol - “Pakistan, with its nearly 200 million population, roots in their ancestral country and links there. swathes of the economy, with private sector cap - icy remains a central plank of our strategy”. the is simply too large and too attractive a market mr Zubair points out that “there are so many ital and initiative revitalising previously moribund opportunities for foreign direct investment are to ignore”. an outstanding example of what can British Pakistanis who come here and are look - public sector domains. the privatisations were, emphasised by Zubair ahmed malik, President be done in this business-friendly country is nestlé ing to invest in Pakistan”. with their personal

“Pakistan has one of the best PaKiStan iS an ‘oPen investment climates in this area. There is no limit on equity. Nor Field’ oF oPPortunity is there a limit on repatriation of For inveStorS capital in this country” Zubair Ahmed Malike of the Federa - Zubair Ahmed Malik, President of FPCCI tion of Pakistan’s Chambers of Commerce and Industry (FPCCI) can development of the private sector in Pakistan. What are the main economic sectors that put potential investors in touch with the question arises as to why the Pakistani could attract more capital investment? the right local partners economy has gone down. the dictatorship of energy is one. we have the third largest coal the last nine years means that we are paying reserves in the world, but they are not being through thick and thin, the FPcci has served the price today. on face value, the economy exploited. we would like companies to come in as the collective voice of the private sector was good, because the dollars were flowing in and invest in those coal reserves. they can since 1950, offering advice to the government because of the war on terror. however, specific generate energy as well. in export promotion, and in encouraging sectors were not developed over that period – we have one of the best copper mine foreign investment and stimulating greater such as energy. this is a basic requirement for reserves in Balochistan and we have the gold economic activity. the development of any industrial country. mine. we also have precious stones such as as FPcci President, Zubair ahmed malik FPcci represents the Pakistani private emeralds, topaz and other precious stones, as keeps a finger on the pulse of Pakistan’s sector. we definitely do appreciate the difficult well as the best granite and marble in the economy and is optimistic that the recent economic conditions under which this world, but we do not have the equipment to peaceful democratic transition will bring government has taken over. the private sector mine it properly. positive global attention back to his country, is willing to help the government overcome – you can have 100 per cent equity. nor is there i think Pakistan is a very open field. each and which could make greater and faster socio- these hardships, provided that there are some a limit on repatriation of capital in this country. every area offers ample opportunities. economic strides with the help of the policies. we see light at the end of the tunnel. whatever you want, you can take it away. you as it stands, remittances are the largest international investing community. they will have all our support. do not need a local partner. foreign exchange earner today. i say that you can use the best infrastructure, minus migration is the wealth of a nation. nearly Where do you see the Pakistani private sector How does FPCCI and the state help foreign energy. otherwise, infrastructure is readily one-third of naSa and microsoft technicians and the economy in general heading? investors? available here. we have specialised economic come from the sub-continent, including india this government and the previous one gave us Pakistan has one of the best investment zones where one can come and invest in and Pakistan. last year we had about $15 policies, which were very conducive to the climates in this area. there is no limit on equity industry. billion from remittances. This is an independent publication by Upper Reach A NEW BEGINNING FOR PAKISTAN 15

“Socio-economic “We have a 60 per cent “The government is “We create the domestic “Pakistan’s economy is big development through a majority of youth in our providing incentives and environment that’s going to and the world is looking for a conducive and safe population who clearly are encouraging any private fuel growth into the future place to invest. It’s a classic environment for trade and determined to bring about a sector citizen or foreigner and take the country to the example of despite all the investment remains our change and convert to participate in next level of its economic negative perception, on the focus” Pakistan into an egalitarian infrastructure ambition” ground there is a thriving society with equal development” economy” Mohammad Zubair, opportunities for all” Sultan Ali Allana, Chairman of Minister of Hussain Dawood, Habib Bank Ltd Badar Kazmi, President and State of Privatization Khawar M. Butt, Chairman of Chairman of Dawood CEO of NIB English Biscuit Hercules Corporation Manufacturers (EBM)

experiences of success in business in the UK and Biscuit Manufacturers, adds that Pakistan’s tex- “nearly 35 per cent of NASA technicians come We focus too much on the bad side – let’s talk elsewhere, Pakistanis from the diaspora could tiles exports “could increase significantly as a from the sub-continent… similar figures for Mi- about the good side.” Mr Butt adds that he is “op- contribute very meaningfully to a needed widen- result of the country having GSP+”, and “also crosoft”. Clearly, there is human potential in timistic that Pakistan has a bright future,” a rea- ing of the country's manufacturing and exports create opportunity for improvement in the coun- abundance. son why he himself has invested so much in the base beyond its present dependency on textiles, try’s socio-economic conditions”. Mr Malik, whose organisation is there to wel- country for decades. accounting at present for 46 per cent of total in- Mr Butt elaborates further on the prospect of come and guide overseas investors, emphasis- And it is the good side that has perhaps been dustrial output and 60 per cent of exports. investment and know-how from overseas to es that all the conditions are in place for suc- the untold story: of how Pakistan has been calm- An extremely important factor in increasing develop Pakistan’s barely explored coal and cessful private sector investment in Pakistan, ly recognising the changes needed in its economic even further the attractiveness of Pakistan for gas resources, mentioning in particular the US the large domestic market (the sixth in popula- and legal structures, working to create conditions foreign investors is the recent securing of EU and Germany as possible partners. He sees this tion size in the world), the access to European favourable for investment, putting right mistakes Generalised System of Preferences Plus (GSP+) potential self-sufficiency in energy as creating markets now opened by the securing of GSP+, from the past, giving opportunities to entrepre- status for exports from Pakistan, giving its in- the conditions for a “third wave of technology the security of investment conditions from the neurs and its private sector, and now offering the dustrial products easy and duty-free access to and IT” that would benefit industry and trans- legal structure now in place, the absence of any opportunity to other overseas investors to join the 27 countries of the European Union. The form the productivity of Pakistan’s oldest in- limits on profit repatriation, an independent ju- those who have already successfully taken the Prime Minister noted that “access to European dustries, agriculture and food-processing, diciary, a vibrant and dynamic media, and a plunge, and to participate in writing the story of markets was the government’s topmost priori- presenting yet more opportunities for private- young, well-educated and ambitious population. the good side – the story of future success, all ty as part of the economic development agen- sector investment. The Minister of State for Privatisations adds, while making good, long-term investments in a da”, while Khawar M. Butt, Chairman of English As an aside, Mr Malik of the FPCCI, notes that “There is a good side and a bad side to Pakistan. country of tremendous potential. PIONEER IN THE ART OF BISCUIT MAKING LEADS BY EXAMPLE EBM is Pakistan’s leading biscuit producer, one of its vote of confidence from the consumer.” It seems power generation and water treatment facilities. Be- future leaders. “The single largest asset of Pakistan biggest taxpayers and a that EBM truly has received – and retained – this ing self-sufficient in energy needs enabled EBM to is its youth. Some 60 per cent of the population is vote of confidence over the years. Brand Elections, sharpen its market edge by running its plants 24 hours below the age of 30 years. This multitude of human major investor in social an independent consumer survey carried out across per day and meeting customers’ demands. resource – if harnessed properly and provided skills initiatives Pakistan in 2013, revealed that EBM’s popular bis- In tandem with its commercial leadership, EBM in an enabling environment with technological ad- cuit brands Sooper and Rio are ranked highly by has proudly become one of the biggest investors vancement – could create an economic revolution consumers. Sooper was in fact voted the number in corporate social responsibility (CSR) in Pakistan. that would place Pakistan among the strongly or more than 45 years, English Biscuit Manu- two brand across all categories in Pakistan. The From its inception, EBM has pursued CSR as its emerging economic giants in Southeast Asia.” facturers (Pvt.) Limited (EBM) has been spear- Peek Freans brand also enjoys the internationally cultural ethos, supporting causes such as health, heading packaged biscuit manufacturing in acclaimed Superbrands status. education, community welfare and sports initiatives Khawar Masood Butt, Chairman and Managing FPakistan under the iconic Peek Freans umbrella In its early years, determined to establish itself to give back to society from what it received. Director, EBM brand. With a “never compromise on quality” ap- as the quality biscuit brand of choice, EBM gained “CSR is not charity. It is a solemn responsibil- Responsible for building one of Pakistan’s largest proach, EBM has produced some of the country’s market presence by promoting its Peek Freans ity,” states Mr Butt. “In today’s global socio- and most dynamic manufacturing concerns, Khawar best-loved biscuits and cookies and is the only bis- biscuits as healthy and nutritious “food between economic environment, it is imperative that com- Masood Butt is considered an icon in the private cuit company in the country to have achieved in- meals.” A distinctive jingle and the famous Pied panies play a key role in enhancing and shaping sector today. Hailing from a family of modest means, ternational certifications for quality control. Piper icon adapted from children’s literature were economic and social progress. Sustainability of Mr Butt transcended barriers to create a remark- The company was first established in 1965 as a employed to capture the attention of children and the environment and empowerment of the peo- able legacy combining keen business acumen with joint venture with the legendary Peek Freans of Lon- adults alike, and to instil a sense of trust, confi- ple are the core societal priori- a long-standing commitment to don, which was looking to corner the untapped dence and wholesomeness in the minds of Pak- ties and values on which a corporate social responsibility. Pakistani market. It initially launched as Peek Fre- istani consumers regarding the brand. EBM suc- healthy nation is built.” His grounded upbringing instilled ans Pakistan Limited and became EBM in 1967. ceeded in transforming Pakistanis’ perception of EBM’s Chairman has high in him the deeply-held beliefs in Since then it has consistently grown and has de- biscuits from an occasional teatime luxury to more hopes for the future of Pakistan, humanism and excellence that veloped popular new products to become the undis- of an everyday need. “EBM’s intent was not only a country that has much to offer: made him adamant on giving back puted market leader, achieving more than 45 per cent to promote its brands but also to grow the biscuit natural beauty, historic sites, huge to society at every juncture. market share. It is also categorised as one of the market as a whole, convincing consumers – es- resources and a wealth of cul- A member of several prestigious largest taxpayers in Pakistan, paying more than PKR pecially mothers – that biscuits were a genuine ture. He also sees the country’s institutions including the Insti- 2 billion (£11.5 million) in taxes to the government. ‘ready-to-eat food’,” comments Mr Butt. “The proof health tomorrow as being heav- tute of Directors (IOD), UK, Mr Butt Khawar M. Butt, Chairman of EBM, says that the of this initiative’s success lies in the fact that our ily dependent on what is invest- has remained actively involved company’s corporate philosophy has simply been production volumes have grown from approxi- ed in its youth development to- with the corporate and develop- that “the success of any business depends on the mately 14,000 tonnes per annum in the 1980s to day. As such, the company’s ex- ment sectors in Pakistan. He be- democratic process in its truest form. The consumer 110,000 tonnes per annum in 2013; a real-life ex- tremely diverse CSR portfolio in- lieves deeply in the constructive holds the veto power in his or her hand; by buying ample of how ‘The Legend Leads’.” cludes substantial educational role of corporations in the uplift a product, a consumer places their trust and con- To ensure consistency in quality and avoid being sponsorships and support, along of society, and advocates the val- fidence in it, and vice versa. The management must subject to frequently occurring electric power cuts with corporate and community ue of building strong, enduring therefore channel all its efforts into maintaining from the national grid, EBM invested significantly in partnerships to empower young institutions that contribute to a product quality in order to be truly deserving of a state-of-the-art equipment for its own independent people with skills that will shape nation’s strengths. A NEW BEGINNING FOR PAKISTAN This is an independent publication by Upper Reach 16

FAUJI FOUNDATION: EARNING TO SERVE commercial bank, power producing companies Pakistani conglomerate and we’re engaged in oil and gas drilling and ex- WELFARE SERVICES FACTS Fauji Foundation’s unique ploration besides investments in many other di- versified businesses.” EDUCATIONAL SERVICES roots have seen it expand Under the motto ‘Earn to Serve’, the Fauji Foun- dation beneficiary population is around 9 million, •102 schools & colleges both its business operations the majority of which are retired servicemen and 44, 205 students currently enrolled and its contribution to their dependents. This is almost 5 per cent of Pak- •65 vocational training centres istan’s total population. And with some 15,000 on 4,775 female trainees per annum social welfare the conglomerate’s payroll, it is a huge employer •9 technical training centres and one of the largest taxpayers in the country. 1,675 trainees per annum trainees ne of Pakistan’s largest commercial and “On the welfare side, we have the largest health •Educational stipends industrial conglomerates is also, and by care and education systems outside the govern- 46,000 students per annum no coincidence, one of its biggest social ment. We pay teachers and doctors according to benefactors.O Originally created as a trust fund the market to retain quality. Our network of health HEALTH CARE SERVICES for soldiers who fought for the British during the ranges from a very large state-of-the-art hospi- Second World War, today Fauji Foundation pri- tal with 750 beds to mobile services that cover the •115 medical facilities serving marily provides a host of welfare services for ex- rural areas – it covers over 600 locations,” says 600 locations servicemen and their dependents. These welfare Lt Gen Khan. •2.2 million patients treated annually services include free healthcare, free education, “We also have a premier system of education •574 doctors and 1,954 paramedics vocational and technical training to aid trained comprising a reputable university having a med- •Reaching out to patients’ doorsteps personnel to start their own businesses, and ed- ical college and a college of management sci- ucational stipends for deserving students. ences. In addition, we have model colleges and a Fauji Foundation’s business trajectory began large number of schools in the rural areas of Pak- in the early 1950s when it used a portion of the istan. Due to high quality of our education system, Lt Gen Khan says that Fauji Foundation is cur- fund to develop a new textile mill. After turning these school and colleges produce the best results rently considering further investment opportunities its first profit, the foundation built a 50-bed hos- Lt Gen Muhammad Mustafa Khan (Retired), in terms of grade point averages.” in new sectors as well as adding to its interests in pital in Rawalpindi. This successful model then Managing Director of Fauji Foundation Unsurprisingly, this vast level of welfare services the energy industries, all of which are designed to essentially became standard practice as Fauji requires considerable investment and Lt Gen Khan enable the organisation to continue providing for continued to grow both its business and welfare ray of companies, many of which have developed admits that companies within the conglomerate are its health and educational projects in its ‘Earn to operations across the country. into industry-leading players in the Pakistani happy to consider foreign investment. Serve’ model. Over 80 million people have been treated by economy. “We have foreign partners presently in our var- “We are very proud of these services, but for this Fauji Foundation’s health care operations to date “We are the largest producers of fertilisers in Pak- ious projects who’ve been with us for a long time. welfare we have to earn a lot of money,” adds the whilst dozens of thousands of students currently istan and the second largest producers of ce- New foreign investors prefer Fauji Foundation and Managing Director. The hope, of course, is that the make use of the educational facilities provided ment,” explains Lt Gen Muhammad Mustafa Khan there are various new companies exploring part- earning potential will benefit not just Fauji Foun- by the organisation. These services are fully (Retired), Managing Director of Fauji Foundation. nerships with us in the energy sector, coal gasifi- dation and investors, but also the beneficiaries funded by profits from the conglomerate’s ar- “We also have an oil terminal, a grain terminal, a cation, etc.,” he adds. and other stakeholders.

ROOTS OF SUCCESS

With a vow to ‘earn to serve’, the Fauji Foun- across sectors to mitigate concentration risk. phore – a joint venture with the Moroccan continue its commercial expansion enabling dation has identified and entered a variety of Some of its most important – and long-stand- government’s office Cherifien des Phosphate. it to provide better welfare services to its industries and developed into one of Pak- ing – investments have been made within the The deal secured a long-term and reliable beneficiaries in the areas of health and edu- F istan’s biggest commercial and industrial energy sector, beginning with a majority stake source of phosphoric acid for Fauji’s fertilis- cation. powers. in Mari Petroleum field in 1983. Mari Petro- er businesses and enabled the company to “As a group we would like to do some na- Today, Fauji Group operates in all major leum Company Ltd operates the second derive financial returns in a foreign curren- tional service by making our contribution in sectors of the economy such as fertilisers, ce- largest gas field in Pakistan from three main cy, further diversifying the foundation’s rev- overcoming energy and food shortages. We ment, oil and gas, port terminal operations, reservoirs. enue streams and connecting it to will continue to improve and expand our ed- banking, food, power generation and renew- The foundation’s activities in energy aren’t international business leaders. ucational system,” he says. “Presently we able energy. About 80 per cent of the con- limited to the thermal power generation sec- Having established an array of busi- have some initiatives in the consumer prod- glomerate’s profits are then pumped into a tor; it also ventured into wind energy in 2008- nesses that stretched across numerous ucts like meat, pasta and dairy, etc. In the massive welfare operation in the areas of 09 and currently has 150MW wind farms near heavy industries, the Fauji Foundation de- fertiliser sector, we have some possible ini- health and education. Karachi in the wind corridor. cided to diversify its investments further by tiatives abroad, especially in Africa.” “Since our welfare projects’ expenditure in- Fauji-owned FFBL and FFC are the con- moving into the financial service indus- Exploring these types of future business creased by about 15 per cent in a year it is our glomerate’s flagship companies and dominate tries. In June 2013 it took over a 72 per and investment opportunities has become a compulsion that we must increase our busi- the fertiliser industry. Fauji’s additional in- cent stake in Askari Bank, whose network mainstay for Fauji Foundation, as it seeks to ness also at least by the same proportion,” says vestments in the cement sector along with di- comprises 281 branches. turn a profit to fund its altruistic work. With Lt Gen Muhammad Mustafa Khan (Retired), versification in the renewable sector are now Despite such an array of business inter- 60 years of experience in the ‘earn to serve’ Managing Director of Fauji Foundation. “It’s a yielding better results. ests, the Foundation’s Managing Director is endeavour, the organisation is indeed well I very hard task but we have met this squarely.” The conglomerate’s first foreign direct in- keen to see further investments. In particu- placed to both expand its social services and Throughout its history, the foundation has vestment took place in 2005, when it took a lar, he has highlighted an interest in working target new sectors in order to guarantee its been keen to diversify its business interests 50 per cent stake in Pakistan Maroc Phos- with foreign firms as Fauji Group looks to future success. A NEW BEGINNING FOR PAKISTAN This is an independent publication by Upper Reach A NEW BEGINNING FOR PAKISTAN 1 17

Fauji Fertilizer Company Fauji Oil Terminal Company Fauji Fertilizer Bin Qasim Company

BUSINESS EXCELLENCE Pakistani conglomerate Fauji Foundation derives its welfare funds

from its business interests in a wide range of economic sectors CORPORATE PROFILE: CONTRIBUTION FAUJI GROUP TO NATIONAL ECONOMY

•Gross assets: US$7.0 billion •Highest tax payer to the National •Net worth (gross): US$2.0 billion Exchequer: US$1.12 billion (FY 2012/13) FAUJI FAUJI •Annual turnover: US$2.7 billion •60% of dividend earnings paid to private •Return on equity (ROE): 35% (avg) shareholders •Largest manufacturer of fertiliser •CSR contribution by group companies: FERTILIZER FERTILIZER •Second largest manufacturer of US$2.5 million cement •Jobs for over 21,000 employees, COMPANY BIN QASIM •Diversified portfolio: fertiliser, cement, including 5,000 ex-servicemen energy, oil & gas, sea terminals, banking •Foreign direct investment Fauji Fertilizer Company Limited (FFC) is COMPANY and food sectors in group companies the largest urea manufacturer in Pakistan and a leading national enterprise with a A renowned name in the Pakistani fertiliser global outlook, effectively pursuing multiple industry, Fauji Fertilizer Bin Qasim Limited growth opportunities and maximising (FFBL) produces top fertiliser brands optimised • returns to the stakeholders, whilst for local cultivation needs. Incorporated in remaining socially and ethically 1993 and built at a cost of $468 million in responsible. Karachi, FFBL is the country’s largest Incorporated in 1978, FFC now operates diammonium phosphates (DAP) and granular three world-scale urea plants with an urea fertiliser manufacturing complex. aggregate design capacity of over 2 million FFBL, whose vision to improve metric tonnes per annum. FFC operates the productivity and the lifestyles of millions of largest marketing network in the country, farmers nationwide, is Pakistan’s sole with more than 50 per cent market share producer of DAP and granular urea and an thanks to the nearly 3.5 million tonnes of extensive upgradation programme has fertiliser per annum it sells under its brand greatly enhanced production capacity. The Sona, which means gold in Urdu. company’s path of growth in the market The company also holds diversified compels it towards new explorations and to stakes of 50.88 per cent in Fauji Fertilizer constantly re-define business horizons. Bin Qasim Limited (FFBL), 43.14 per cent Furthermore, FFBL is firm in its commitment in Askari Bank Limited, 6.79 per cent in to observe the industry’s best practices. Fauji Cement Company Limited and 12.5 The fertiliser company is listed in all three per cent in Pakistan Maroc Phosphore SA Pakistani stock exchanges and stands (PMP). amongst the top 25 companies at KSE. In line with its strategy of diversification, However, FFBL is not one to rest on its the pioneering, Fauji-owned FFC Energy laurels. Last year, it decided to diversify by Limited is contributing 50 MW to the venturing into the food business, national grid through the country’s very incorporating two fully-owned companies first wind farm. Meanwhile, the recently – Fauji Foods Ltd (FFL) and Fauji Meat Ltd R acquired FFC Al-Hamd Foods Limited is (FML) – thus widening its footprint in setting up a state-of-the-art individually Pakistan and internationally. quick frozen (IQF) fruits and vegetables Also in 2013, FFBL took on a 21.6 per cent plant – the first of its kind in Pakistan. stake in Askari Bank Ltd, 35 per cent in FFC is listed on all three of Pakistan’s Foundation Wind Energy I, 35 per cent in bourses and stands high amongst the Foundation Wind Energy II and 1.36 per cent largest corporate entities. FFC’s securities in Fauji Cement Co Ltd. FFBL as part of Fauji are one of the most actively traded scrips Group entered into a joint venture with Office on the stock exchanges. It has figured Chereifien des Phosphore SA to incorporate prominently amongst the top 25 companies Pakistan Maroc Phosphore, Morocco, with at the Karachi Stock Exchange (KSE) and 25 per cent shareholding. has been declared first position thrice in FFBL, a member of the International the past two decades. Fertilizer Industry Association, is working with The company has also won recognition in Human Development Foundation, a US- the form of various corporate awards by Pakistani NGO engaged in community prominent local and foreign corporate forums. development activities, namely in health and In 2013, British industry analyst firm Plimsoll education. There are PKR 49.1 million declared FFC as the 13th most profitable and (£280,500) earmarked for a project to 39th largest company in the world’s top 100 transform “the under-privileged community fertiliser manufacturers. of Ghaghar Phattak, Bin Qasim Town into a Internationally FFC is well recognised as a fairly modelled village in Human Development member of International Fertilizer Industry Perspective”. Moreover, FFBL also contributes Association (IFA), Arab Fertilizer Association more than PKR 5 million annually in the form and UN Global Compact. of donations to philanthropists. a new BeGinninG For PaKiStan this is an independent publication by upper reach 18

The Dawood Foundation funds education initiatives, such as the Dawood Public School The DH Fertilizers urea fertiliser plant in Lahore the PrivileGe to contriBute “i can make a contribution. ussain dawood, chairman of dawood her - other large corporations like engro and hubco. Both in 1983 and has been growing since to provide qual - it is a privilege and honour if cules corporation, has invested in every sec - of these companies have a strong growth dynamic ity education to girls. the foundation has committed one can apply one’s mind to tor where Pakistan needs him – energy within the sectors in which they operate; however, it to some 30,000 scholarships in education. ihnfrastructure, food production and education. is critical to pick the right growth path,” says mr da - other significant contributions were made to tcF try and make an investment dawood hercules corpor ation limited (dh corp) wood. “we will be looking to provide more balanced School (in Sheikhupura), Skardu School of Science is an investment holding company with associat - direction through a strengthened and more thor - and humanities, mariam dawood School of visual decision,” says the ed business interests ranging from information ough risk analysis of future opportunities.” arts, Beaconhouse national university, lahore uni - technology and financial services to food, fertilis - Given the extreme shortage of power in the coun - versity of management Sciences and FG dawood chairman of dawood er, chemicals manufacturing and storage, and en - try, hubco has, and will continue to be, an important Public School (in muzaffarabad). hercules corporation ergy. yet, through it all, the corporation maintains player in the growth and rebalancing of fuel sources apart from this, the dawood Foundation has made one primary focus: investment opportunities. in the power sector, while food and agrobusiness, he noteworthy contributions in health related projects “the nation is screaming out for energy. it just says, “should figure prominently within engro’s port - and in disaster recovery and rehabilitation works. the so happens that we probably have the most pro - folio going forward.” foundation’s prime area of focus remains on high found energy footprint in th e energy spectrum. all Giving back is also part of the business model. amid quality leadership education, and grooming the next we need is the financing.” having all the opportunities in the world to live com - generation of business leaders. a good amount of that financing is already show - fortably anywhere in the world, mr hussain has al - all of this is part of a broader philosophy of both ing results. last July, Pakistan’s Prime minister nawaz ways believed and worked for Pakistan. giving back to the community, and helping the com - Sharif singled out mr dawood for appreciation, say - his belief in Pakistan’s potential remains undeterred munity learn to master business management. “you ing he is number one in setting up power projects in and his track record is long. community and social have got to realise that welfare, health and educa - Pakistan, according to the Pakistan observer . welfare activities have always been a priority of the tion are important for people to live a reasonable life,” “i am a business person and i am swayed by re - dawood hercules Group and it generously partici - says mr dawood. sults more than stories. if i relied on stories, i would pates in a multitude of philanthropic activities. meanwhile, mr dawood was the first Pakistani to not be around for very long. the results are there,” mr dawood is chairman of the Pakistan Pover - become a member of the world economic Forum in says mr dawood. “we are the largest producers of ty alleviation Fund – the world Bank's largest mi - 1992. his entrepreneurial ventures are among the top power in the country, and we are also the largest crofinance initiative – and the dawood Foundation, performing business houses in Pakistan and have consumers of energy. we also have the most di - formed by his family in 1961, which is one of the achieved marvellous success under his visionary versified energy footprint.” largest public charitable trusts in the country today. leadership. the dh corporation manages investments in - the foundation has contributed substantial funds “we are in solar, bio, energy, coal and wind. So cluding its fully-owned subsidiary dh Fertilizers, a for establishing schools, colleges, hospitals and we are fortunate that we also have the manpow - 48 per cent ownership of its associated engro cor - dispensaries, including the dawood college for en - er to do that, and this is another important factor Hussain poration (one of Pakistan’s largest conglomerates), gineering and technology (dcet), established by – if you have the organisational capability to be able Dawood, a 14 per cent stake in Sui northern Gas Pipelines and the foundation in 1962. it was nationalised in 1971 to take on these projects and implement them,” says Chairman of a re cent acquisition of a 17 per cent stake in the hub but continues to function to-date. mr dawood. Dawood Power company (hubco), Pakistan’s largest private in 2012, the Karachi School of Business and lead - and he has that capability. the dawood hercules Hercules sector power producer and the country’s first ther - ership (KSBl) was created with the involvement of corporation’s ongoing success with some of Pak - Corporation mal independent power producer. Karachi’s business community and with the strate - istan’s top corporations – dhc, engro and hubco – “dawood hercules corporation is the group ‘moth - gic collaboration of the cambridge Judge Business speaks not only for mr dawood, but also for the ership’ so to speak with controlling investments in School. dawood Public School (dPS) was established promising future of Pakistan.

iPPS, the Solution For PaKiStan’S Power criSiS The two corporations Engro and Hubco “it’s not the government’s job to invest in ‘green’ power plants in the country,” explains the thar coal Project kicks off we will be able are rising to the challenge of the power generation; their job is to create an muahmmad aliuddin ansari, President and to provide significant royalties over the life of National Energy Plan to revolutionise enabling environment. it is the private sector ceo of engro corporation. “Previously, owing the project followed by savings of $50 billion who should come forward and utilise the right to the lack of infrastructure this gas was due to substitution of expensive furnace oil by Pakistan’s energy mix by moving to kind of investment opportunities by creating simply being flared at the oilfields instead of affordable power generation using thar coal,” cheaper and more sustainable joint ventures with the foreign investors,” says being piped into the national gas grid. our says mr ansari. sources: coal and hydropower hubco ceo Khalid mansoor. investment in setting up a power plant on this hubco, for its part, is embarking on a project “the private sector has to make full use of gas ensured availability of electricity to the to retrofit its plants with coal-fired burners in upgrading power generation companies and this wonderful business opportunity which in national grid whilst also reducing country’s anticipation of the thar coal Project. moving towards independent power producers turn will make huge contributions towards the overall carbon footprint by over 467,000 meanwhile, its 75 per cent share in laraib (iPPs), are what analysts are calling the key development of the country. an ongoing tonnes of carbon dioxide equivalent energy’s 84 mw hydropower project – the first steps towards reducing the electricity demand interaction and consultation amongst the emissions.” of its kind from the private sector – has made and supply gap, which has risen to 4,300 mw. state and the private sector is important to with gas in increasingly shorter supply the company the first hydropower iPP in according to asian development Bank and develop appropriate policies for investment.” nationwide, however, eyes are turning to coal Pakistan. world Bank estimates, Pakistan loses out on 2 engro Powergen operates a 220 mw iPP, to power stations. engro’s subsidiary Sind according to the ministry of water and Power, to 3 per cent gross domestic product (GdP) run on permeate gas from the Qadirpur gas engro coal mining company has large stakes iPPs now comprise about 50 per cent of the due to power outages annually. field. “this power plant is one of the first in the thar desert. “we are hopeful that once country’s present installed generation capacity. this is an independent publication by upper reach a new BeGinninG For PaKiStan 19 enGro helPS Grow PaKiStan’S Power and Food Private investors are increasingly responding to the growing market for fertiliser in Pakistan, and Engro is particularly well poised to help Founded in 1965 as engro corporation them enter the market limited, its portfolio currently consists of diversified businesses, including chemical fertilisers, Pvc resin, bulk liquid chemical approximately 70 per cent of Pakistan’s terminal, foods, power generation and population is rural, living in villages with commodity trade. agriculture as their primary livelihood. yet the international community has despite the fact that the country’s domestic expressed its confidence in engro. as the food produce is the mainstay of its economic Financial times reported last november: survival strategy, this productive sector is “engro and other equally impressive local now facing the challenges of a fast-growing companies are the country’s best hope for population. growth.” the engro corporation, one of Pakistan’s But growth requires stability. engro largest companies, is already helping. as the nation’s first “Engro Corporation is fertiliser producer, it is working to boost farm yields by one of Pakistan’s modernising traditional farming largest homegrown practices. “the story of engro is one that multinational has remained intertwined with companies” the growth of the country. ever since its inception, engro has Muhammad Aliuddin Ansari, evolved into an influential CEO of Engro Corporation The January groundbreaking ceremony of the Ever Open Cast Lignite Min at Sindh Engro Coal conglomerate known for its Mining Company’s (Engro’s joint venture with the government of Sindh) Thar Block-II commitment to the highest standards, delivering excellence in every Fertilizers limited, a wholly owned engro venture with the state to mine coal from thar announced a spectacular turnaround in aspect of our business,” says President and subsidiary, is helping to stabilise fertiliser Block ii, to put to use in power generation. fortunes as the company reported a profit of chief executive officer of engro corporation prices, thus playing a huge role in enhancing engro Powergen is also exploring other ways PKr 3.83 billion (£23 million) in the first half muhammad aliuddin ansari. the use of the soil supplement by small to implement cleaner, more efficient and of 2013, compared to a loss of PKr 340 “over the course of our growth we have farmers and consequently, directly effecting cost-effective methods of power generation, million in the corresponding half of 2012. strategically made investments in sectors overall agriculture production. in 2010, the including wind, hydro and solar powered “on the operational side of the spectrum that take advantage of the country’s core company also started trial production of its projects. engro and its subsidiaries continue to economic strengths. with a market urea expansion project at daharki, the world’s engro corporation’s diversified businesses create meaningful value by focusing on the capitalisation of $484 million as of december largest single train urea-ammonia plant. represent Pakistan’s great growth potential to philosophy of ‘inclusive growth’ that creates 2012 our growth has been instrumental in in other areas, the corporation’s mining generate opportunities for sustainable value holistic and more encompassing growth for developing the local economy.” division, engro Powergen, entered into a joint for their stakeholders. the corporation our suppliers and vendors,” says mr ansari. continuity a Key huBco, a Key Player Factor at dh corP in PaKiStani enerGy The ‘mothership’ of the group The company explores existing and companies, DH Corp’s wide-ranging potential new sources of power to investments have put both corporation help fuel Pakistan’s growth and country on a strong growth path profits skyrocket a whopping 222 per cent from with no accompanying increase in power 2012. the group’s nine month consolidated generation capacity. accounts ending September 2013 show that in July of 2013, Prime minister nawaz Sharif “tackling the power crisis is top priority for Pakistani Prime minister nawaz Sharif has after-tax profits grew more than three times, inaugurated Pakistan’s first private hydropower the current government,” says mr mansoor. pledged to transform the country into a which mr Pracha says is still below potential as independent power producer (iPP): the hub “Soon after coming to power, they reached out peaceful and economically viable state. the Pakistan’s energy shortages are not fully Power Station. it was one of the first and largest to the private sector and sought their ideas as first democratic transition of power in Pakistan resolved. iPPs to be financed by the private sector in to how the strategies have to be made, has already awakened investor confidence. But, yet engro has done well with the resumption Southern asia, and one of the largest private developed and executed to address the investors are wondering, which businesses are of gas supplies to its new 1.3 million-tonne urea power projects in the newly industrialised world. country’s power crisis and so far this is not already poised to help to create this new plant, thanks to what the ceo calls “the new “Power policy is second to none for foreign just a mere intention; they have taken a step in beginning? investors, it offers 15 to 20 per cent return on the right direction by clearing the circular debt dawood hercules corporation “We’re entrepreneurs equity,” says Khalid mansoor, ceo of limited (dh corp) is the flagship hub Power company. “It is a great honour investment holding company of the at heart but Pakistanis the hub Power company dawood Group. with an investment to the core and have limited, incorporated in 1991, also for Hubco to have portfolio comprising it, real estate, owns an oil-fired power station with constructed the very energy, financial services, food, always practiced that an installed net capacity of 1,200 textiles and manufacturing, among by re-investing in mw in Balochistan and a 214 mw first IPP in the hydro- others, dh corp has a finger in Pakistan” net capacity oil-fired power station power generation every pie. in Punjab. the company also has 75 segment” “the dawood hercules Group has Shahid Hamid Pracha, CEO of per cent controlling interest in always invested in Pakistan and if Dawood Hercules Corporation laraib energy ltd, a subsidiary that Khalid Mansoor, CEO of Hub indeed we are the largest is developing a 84 mw hydroelectric Power Company conglomerate, then this has been achieved government’s commitment to resolve gas power plant. though our commitment to ethical business distribution issues more equitably.” today, the company is listed on the Karachi, soon after coming to power. hopefully, many practice and to making new, often “as this trend continues, we should be lahore and islamabad stock exchanges and its projects will soon be underway to really start groundbreaking investments in sectors which comfortably deleveraged in the next two to global depository receipts are listed on the addressing this critical issue.” have not been invested in previously,” says dh three years and can hence plan for growth,” luxembourg Stock exchange, with over 13,000 hubco got a green light with a recent corp ceo, Shahid hamid Pracha. predicts mr Pracha. Pakistani and international shareholders. liquidity injection of some $5 billion in June “this is not always easy in Pakistan, but we “our strategic partnerships are with some of For a nine-month period of fiscal year 2013 it 2013, and will invest in coal conversion understand the risk and opportunities of this the leading international names in the game posted a 49 per cent higher profit compared to projects, as part of the government’s attempt market and have built up a credibility with who only do business with people they trust. the same period in 2012: PKr 7.4 billion ( £45 to bring more efficiency into the fuel mix. the investors and business partners which enables Building business trust and capability – these million) up from PKr 4.97 billion. company plans to switch its 1,200 mw us to raise capital and mitigate risk more have been key for us and we hope through Pakistan’s population grows by about 3.8 power plant in hub from furnace oil to coal, effectively than others.” these to become a role model for the private million people a year. over 13 years that just one of the growth initiatives already in the first half of 2013, the corporation saw sector and for growth in Pakistan.” amounts to 40 million people, says mr mansoor, lined up by the company. A NEW BEGINNING FOR PAKISTAN This is an independent publication by Upper Reach A NEW BEGINNING FOR PAKISTAN 20 2

R

HUGE POTENTIAL

HYDROCARBON

RESERVES MAKE

PAKISTAN AN

INVESTOR’S

PARADISE

Whilst just one-third of the country “Many companies prefer to come and invest has been explored, Pakistan pre- in Pakistan because of the ease of working sents enormous reserves of coal here. They are happy with the investment and shale oil and gas. Moreover, climate in the oil and gas sector” the govt offers spectacular Shahid Khaqan Abbasi, Minister of Petroleum & Natural Resources incentives to investors

Pakistan sits on the periphery ing the cost of power production and better bal- of one of the most prolific oil- ancing the energy mix. producing regions in the world, “We have seen a lot of interest from foreign in- yet it is hardly known as an oil vestors in Pakistan’s energy, power, and oil and gas giant. The Asian country is sectors. For the first time we are using coal power home to estimated recover- generation and there are huge projects. We are tar- able oil and natural gas re- geting 6,600MW,” explains Mr Khaqan Abbasi. serves of over 1 billion barrels One foreign company already familiar with the and some 53.4 trillion cubic local oil and gas sector is OMV (Pakistan), which has feet, respectively, yet of its 320,000 square miles of been present in Pakistan since 1990, when it was total sedimentary area, a mere 10 to 20 per cent of originally conceived as a joint venture along with Italy’s this has been explored to date. Moreover, accord- Eni and local players Pakistan Petroleum Ltd (PPL) ing to the US Energy Information Administration In 2012, Pakistani geologists carried out a study tential, starting with licenses to explore blocks and and Oil & Gas Development Co Ltd (OGDCL). OMV’s (EIA), Pakistan is a net importer of crude oil and re- in the Federally Administered Tribal Areas (FATA, incentives for investors. In the fiscal year 2013-14, gas production of more than 110,000 barrels of oil fined products. Whereas domestic oil production has located in a semi-autonomous region in north- 110 wells are to be drilled to increase the produc- equivalent per day from the Kadanwari-Miano and been fluctuating between 55,000-70,000 barrels per western Pakistan), where they discovered seven new tion of gas. Sawan fields represents approximately 16 per cent day (bpd) over the last two decades, consumption oil and gas seepages, leading the scientists to ob- Statistics alone should suffice to incentivise in- of the total gas produced in the country. hit 440,000 bpd in 2012. serve that the FATA could compete with Dubai in vestors. The success rate for the 810 exploratory wells For its part, Eni has been directly involved in Pak- As the majority of the country’s thermal power terms of oil production in five years’ time and could drilled in Pakistan’s sedimentary basins from the istan since 2000. Last year, it discovered onshore plants run on natural gas, demand for the resource become a ‘new oil state’. 1950s until September 2012, as well as for the 252 gas in the Sukhpur Block in Sindh, where produc- is also high and growing, yet local production is lim- The government’s strong consideration to utilise oil and gas fields created around the country, is a re- tion tests found gas flowed at a rate of up to 33 mil- ited and a lack of infrastructure means that for now, shale gas and oil as well as its focused attention markable 1:3.2. Compared with the international suc- lion standard cubic feet per day (mmscfd). at least, Pakistan can’t import from neighbouring Iran. on exploration and production of domestic re- cess rate of 1:10, Pakistan would seem a safe bet. State-owned exploration company PPL is no By the end of 2012, domestic gas shortage had sources can certainly help Pakistan to overcome The country’s seemingly endless coal reserves, stranger to joint ventures with private companies. reached 1.6 billion cubic feet per day (cfd). the energy crisis. “Right now, the potential and the concentrated mainly in the Thar Desert, are also Along with Government Holdings (Private) Ltd and estimates are there, but we have to look at how turning heads. The government plans to convert Asia Resources Oil Ltd, it operates Block 2568-18 The silver lining much is technically exploitable, and how much is various power stations to run on coal, thus reduc- (Gambat South). The joint venture made two back- This tale of doom and gloom is about to end, how- commercially exploitable,” says Mr Khaqan to-back gas-condensate discoveries in the ever. The simple reason behind Pakistan’s low Abbasi. block during June and July last year. The production is not because of a shortage of re- Meeting at a March workshop organised first from well Wafiq X-1, with cumula- sources, but rather an overly passive approach by the University of Cambridge and two tive flow potential estimated at about 40 towards hydrocarbon exploration and production Pakistani institutions, the Centre for Ad- to 45 mmscfd gas and 280 to 300 bbl/d during previous governments – which has ulti- vanced Studies in Energy (CAS-E) and the condensate, and second from well Shah- mately accumulated into what is today Pakistan’s University of Engineering and Technology dad X-1 in which initial testing flowed worst energy crisis in decades. (UET), a team of experts determined that 27.8 mmscfd of gas and 337 bbl/d con- Fortunately, the current government is looking for Pakistan’s shale oil and gas resources are densate. ways to overcome the crisis. The Federal Minister sufficient to meet the country’s energy for Petroleum and Natural Resources, Shahid Khaqan needs for over half a century and would What’s in the new pipeline Abbasi, underscores the country’s strength in terms drastically cut down on the $15 billion cur- In fiscal year 2012, just under half of Pak- of natural resources. “The Sustainable Development rently spent each year on energy imports. istan’s energy needs were met by in- Policy Institute’s studies show that Pakistan’s oil Moreover, by being such a labour-inten- digenous gas, yet these reserves are and gas reserves are far greater than available re- sive industry, it could generate jobs for rapidly depleting given the country’s vo- serves in other countries of the region.” hundreds of thousands of people. racious appetite for the resource. And it Moreover, Pakistan ranks ninth in the world in The government is now formulating is gas, perhaps, that is the most coveted terms of shale reserves, ahead of Canada and In- shale gas/oil exploration policy “to at- of power resources there. According to donesia. A report by the EIA in June 2013 highlighted tract investment into these sectors and Mr Khaqan Abbasi, gas is used for do- that Pakistan has 227 billion barrels of shale oil, also to commercially exploit them,” says mestic consumption, gas-fired power out of which 9.1 billion barrels are technically re- the minister. plants, fertiliser production, industry and coverable with the best use of technology. Con- compressed natural gas (CNG). Pakistan sequently, the Ministry of Petroleum and Natural Exploration strategy currently ranks second in the world for the Resources is in the process of devising a strategy Although domestic interest is already high, number of CNG-powered vehicles on the to harness available shale oil and gas reserves – the Ministry of Petroleum and Natural Re- road and has some 3,500 CNG stations most of which are in Ranikot and Sembar, in the sources seeks to further raise international operating around the country. lower Indus basin region of the province Sindh. interest in exploiting its hydrocarbon po- Nevertheless, “the issue is that gas is A NEW BEGINNING FOR PAKISTAN This is an independent publication by Upper Reach A NEW BEGINNING FOR PAKISTAN 2 21

Recently discovered oil and gas seepages have led some industry experts to claim that Pakistan could be a new oil state in five years’ time next year, to the new Port Qasim terminal in Karachi, due to be ready by November. Substituting diesel and furnace oil with LNG in its power plants could save Pakistan $1.25 billion annually. “The import of gas is the ultimate solution. That is why the government is working on all options for imports of gas including the TAPI and imports of LNG,” says the minister.

TAPI on the horizon A vision that was born nearly 20 years ago with a memorandum of understanding signed between the governments of Pakistan and Turkmenistan is about to take root. Construction on TAPI, or the Turkmenistan-Afghanistan-Pakistan-India Pipeline, will commence at long last this year to bring natur- al gas into Southern Asia. Like the shale oil and gas industry, the building and, of course, maintenance of the pipeline is expected to generate a hefty num- ber of new jobs, especially in remote areas where poverty is at its worst. The four stakeholder nations are preparing a fast- track basis for the framework of the $8 billion pro- ject, with hopes to get it up and running by 2017. TAPI will span 1,680 kilometres and pump along 3.2 billion cfd of gas originating in Turkmenistan, one of the world’s richest countries in terms of natural scarce – we have more demand than supply,” he gas reserves. According to Mr Khaqan Abbasi, says, and that is precisely why the ministry is work- Afghanistan is showing increasing interest in finishing ing on a multi-pronged solution. Mid-to-long term the project. Whereas before it was only interested solutions include improving the supply of gas through in transit benefits, Pakistan’s neighbour is now in- indigenous production and building pipelines to im- terested in buying gas as well. port gas from Central Asia. Moreover, whilst Turkmenistan “was insisting on “The exploration success ratio in Pakistan is 3:1, developing the gas field herself, now the positive de- which is a high probability but the discoveries of velopment is that the Turkmenistanis agreed to gas are small,” adds Mr Khaqan Abbasi. So for award the contract to a third party for development now, “the short-term solution is LNG. Pakistan of the gas field and construction of the gas pipeline.” has tried in the past but not been very success- With plans under way to import LNG, continue ex- ful. We have unbundled the system now. We hope ploration and production of gas reserves, build a gas to have the first LNG cargo delivered in Novem- pipeline to connect with one of the world’s most pro- ber 2014.” lific natural gas nations and harness its own shale The South Asian country is in talks with Qatar to resources, Pakistan’s power slump could very well bring 200mmcfd of LNG, rising to 400mmcfd by be a thing of the past within just a few years’ time.

a new BeGinninG For PaKiStan this is an independent publication by upper reach 22 oPPortunity landScaPe Foreign direct investment in Pakistan’s oil and gas sector totalled $258 million between July and January. and while exploration efforts have been going at full steam, what has been discovered so far may very well be just the tip of the iceberg

hy invest in Pakistan?” asks Saeedullah Shah, Pakistan’s director General for Pe - troleum concessions. “the answer is “veryw simple. [our] investor-friendly Petroleum Poli - cy 2012 is full of incentives for e&P companies; one of the world’s best online data banks is available here; [and] Pakistan has a huge unexplored hydro - carbon potential.” one example of this is in Pakistan’s indus delta and offshore fan, which has a sediment wedge that ranges up to 12km in thickness, featuring geologic characteristics comparable to other fertile petrole - um producing fan systems in the world. despite be - ing one of the world’s largest submarine fan systems, the region is for the most part unexplored. only nine wells have been drilled since the 1970s, seven of which were drilled in water depths less than 200m. The Minister of Petroleum & Natural Resources and PPL directors mark the Gambat discoveries made in August 2013 For Pakistan, areas like the indus delta are a source of optimism – and, officials hope, a signal the financing, take some risk and get the work start - analysis suggests the find to be tight gas. PPl part - “we have partnerships with oGdcl, dhP, eni to potential investors that Pakistan is rich with op - ed. only then will people start putting their technology ners with various international e&P companies and these have been very positive partnerships portunities to form mutually beneficial partnerships and money into the exploration of offshore Pakistan. like eni and omv in exploring and develop ing over the years,” mr mirza says. “the pro-commu - with global companies. indeed, investment and de - once the discoveries are made, i promise you the dozens of blocks both in Pakistan and beyond, in nication and the positive role that Premier has velopment could close the energy gap Pakistan is exxons, the BPs and the Shells of the world will all places like yemen and iraq. played in engaging them; we have built good rela - currently experiencing, and lead to big gains for po - stand in line wanting a piece of the action. it would orion energy is also interested in bringing foreign tionships with them.” tential investors. be great to have a partner like BP to come and join investment into Pakistan for setting up a fast-track mr mirza adds that potential investors need “onshore in Pakistan from north to south, in the us in the offshore work. they’ve spent $50 million gas-based power project with not worry whether Pakistan will lower indus basin and in the Sulaiman Fold Belt understanding Pakistan, so they have a lot of knowl - PPl as a joint venture partner to “The trick in doing meet global standards for gas Basin, among others, discoveries have been made. edge.” add much-needed power to the and development. “we specially the trick in doing some accelerated work is to do “ueP is a united energy Group (ueG) hong Kong national grid. some accelerated have concessions with eni and some high quality processing and interpretation to stock exchange listed company, and is the jewel of these are not the only exam - work is to do some BhP. they have zero flaring of be able to build an inventory of drillable prospects,” the crown in the group’s portfolio,” he adds. ples of Pakistan’s successful gas and similarly all processes tariq Khamisani, President of united energy Pak - alexandar dodds, vice President of e&P at mol collaboration with international high quality we try to ensure are up to the in - istan (ueP), says. Group, also expressed his confidence that mol companies. “Parco (Pak arab processing and ternational environmental stan - companies like ueP know a good opportunity Pakistan will be able to develop tal Bloc to produce refinery ltd) also has a joint interpretation to be dards because we are working when they see it. ueP’s investments in the country even more than its current level of 300 mmcfd and ven ture with total of France, with international companies, so have risen to $300 million. “the first year with ueP 16,000 barrels of hydrocarbon condensate. mol will which is the world’s third largest able to build an we cannot have lower standards.” we drilled 31 wells, most of them exploration, and we offer farm-in opportunity to state-owned oGdcl organisation,” tariq rizavi, Par - inventory of drillable companies who are looking to made some discoveries. But before we did the wells in its international blocks, and oGdcl will provide co’s managing director says. partner with Pakistan have the we did a carpet 3d sizement, which is worth $200 farm-out opportunity to mol in its operated blocks. “we recently decided we should prospects” fluidity to build the type of agree - million, doing the sizement over a year and a half. in addition, mol will share its experience and seek this opportunity and buy Tariq Khamisani, President of ment that works best for their last year we drilled 61 wells,” explains carry out studies to enhance pro - chevron and by doing so we will United Energy Pakistan (UEP) specific venture. “State-owned mr Khamisani. duction from oGdcl's matured fields jump from 300 pump stations to companies can operate inde - in the past, ueP collaborated with using latest eor and lor techniques. 800 pump stations.” pendently or as joint ventures or as shareholdings. BP, investing $50 million a year on For Pakistan Petroleum limited Furthermore, mehran mirza, ceo of Premier oil many of our public sector companies go into risk- surveys, but eventually the British com - (PPl), 2014 is already proving fruit - (which has interests in six fields in Pakistan, where sharing shareholdings with these companies. Some - pany pulled out due to portfolio choic - ful. in late march, the company an - it’s been present since 1988) speaks highly of times we are the operators, and other times they es. mr Khamisani believes that to get nounced a gas discovery at one of Pakistan’s previous experiences in forming joint are the operators. Sometimes they are the third- more foreign expertise involved, the its exploration wells in naushahro ventures, and its future possibilities for further de - party operator,” Shahid Khaqan abbasi, Pakistan’s government must “step up and put up Firoz Block in Sindh. Preliminary velopment. minister for Petroleum and natural resources, says.

Fact, FiGureS & incentiveS With a history spanning nearly 150 studied to date suggests 3,585m barrels of oil and ● reduction in the windfall levy from 50% to 40% years, Pakistan’s oil and gas industry 66.26 tcf of gas ● renewal of a lease after expiry of the lease term ● has entered a kind of forced oil production in 2012-2013 averaged 76,277 for another five years subject to payment of an bpd, whilst gas production reached a record- amount at 15% of the wellhead value renaissance owing to energy breaking 4.259 bcfd in the previous year ● no direct state participation. instead, a sliding shortages ● the sector attracted $258 million in Fdi scale production sharing arrangement will be used between July 2013 and January 2014 ● Four-year holiday on royalties ● in total 850 exploratory wells (since inception) ● corporate tax is capped at 40% of profits/gains have been drilled till September 2013, (834 To stimulate interest, the 2012 ● royalties, marine research fees and training are onshore and 16 offshore) treated as expenses and can be put towards cost ● in total 97 wells (35 exploration and 62 Petroleum Policy and Upstream E&P recovery development) were drilled during 2012-13 Rules include the following incentives: ● the cost of oil/gas recovery limit of 85% is ● 32 concessions signed in last three years allowed during one year attracted commitment of minimum $169.56 ● increase in producer gas price from 31% to ● accelerated depreciation for investment on million in exploration phase 68% for different zones successful exploration, facilities and offshore ● according to the ministry of Petroleum & ● Sale of a 90% share of pipeline-specification platforms natural resources, an assessment of yet-to-find gas to the government of Pakistan and 10% by ● an unlimited period allowed for loss reserves at an unrisked value for all of the basins e&P companies to any buyer carryforward this is an independent publication by upper reach a new BeGinninG For PaKiStan 23 a world-claSS exPloration SucceSS rate oF 1:3 the state-owned and lSe- listed oGdcl proves transform this company to double the production in Premier oil – a partnership that in fact helped the a maximum of five years.” latter get a foothold in Pakistan 25 years ago. the Pakistan’s extraordinarily he adds that there’s greater potential for the joint venture (which also includes Kuwait Foreign high success rate, especially company by tipping into more shale gas explo - Petroleum exploration company Pakistan and Pak - ration. “the reserves were estimated at around 51 istan Petroleum ltd, or PPl) operates the Qadirpur when compared to the trillion cubic feet technically recoverable, but now Gas Field in Sindh, with 51 wells drilled, of which it has improved to 105 trillion cubic feet with 9 bil - 36 are currently producing. international rate of 1:10 lion barrels of shale crude oil. oGdcl has estab - the state-owned company also intends to jump - espite holding such vast reserves of fossil fu - lished an in-house team that has selected already start many new massive exploration projects in els, the Pakistan-based oil and Gas develop - drilled wells to go into shale missions and test ar - Balochistan Province, a mineral-rich region, in a bid ment company ltd (oGdcl) has captured eas, rather than drilling new wells.” to boost its corporate revenue stream. it has got in - sdcant attention from the global media. accordingly, mr Khan believes the company can improve their volved with bidding rounds all over the globe to tap the corporation has just embarked on a strategy to prospects by upgrading their training institute, which into more oil and gas reserves. hire more foreign oil and gas experts seeking to do is affiliated with a university in Pakistan, that offers Pakistan’s oil and gas executives believe that business here. mS degrees in Petroleum and a post-graduate diplo - more innovations would be pivotal for success. meanwhile, oGdcl has ma in ‘instrumental and “the company has changed its focus to a more chal - already engaged in nu - “In 2012-13 we made our control’. lenging area, i.e. offshore exploration and tight gas merous drilling projects and own $1bn net profit. Our goal oGdcl has launched six reservoirs,” mr Khan says. according to figures, the major drilling and exploration he adds, “we don’t have much exposure on the publicly listed london is to transform this company projects that are expected international front, we have the four provinces of Stock exchange company to double the production in a to enter into full utilisation Pakistan and now we are planning to have some has confirmed that on av - mode later this year, and is OGDCL has teamed up with various IOCs, such assets in africa, most likely the middle east, South erage, one out of its 2.8 maximum of five years” nearing completion of its as Premier Oil, MOL Hungry, OMV (Austria) and america and ciS (commonwealth of independent drills in Pakistan have Phase-ii KPd integrated de - ENI (Italy) States) countries.” struck oil as of June 2013, Riaz Khan, velopment Project. the KPd the nation’s leading energy executives are plan - which is considered among Managing Director of OGDCL field, which is located near oGdcl would be able to inject 350 mmcfd gas and ning to pursue more joint ventures and partner - the highest in the world. the company’s existing Ku - 13,000 barrels of oil per day after commissioning ships with multinational companies. yet for the oGdcl cited these nar lPG plant, holds gas po - new projects such as the KPd-tay, uch-2, San - time being, only a few world-renowned energy numbers: 118 wells were dug in the last five years, tential of 1 trillion cubic feet. jhoro and nashpa.” investors have heard about the Pakistan-based of which 45 were experimental and 16 wells were during Phase-i, oGdcl had dug 29 wells to pro - in march, the company finished laying an 80km road company, which could pose as an obstacle for fu - successful. and in the last two years, 41 were ex - duce 225 million cubic feet per day (mmcfd) and connecting the remote area of Kalchas (Balochistan) ture endeavours. cavated, whereas 13 were experimental and six, 5,100 barrels of oil per day. the gas supply would be with the main motorway, allowing oGdcl to begin international oil companies are encouraged to successful. connected to a gas gathering system and a gas pro - exploration activities in Kalchas, where natural gas take on a larger role in Pakistan, whose domestic oil Speaking about the company’s plans, riaz Khan, cessing plant that would treat 250 mmcfd of raw gas. reserves are estimated at over 22 trillion cubic feet. and gas sector is thirsty for new technical expertise managing director of oGdcl, says: “in 2012-13 we the project is scheduled for completion in august 2014. oGdcl has undertaken various partnerships and also for farm–in and farm-out opportunities in made our own $1 billion net profit. our goal is to mr Khan remains optimistic. “we are hopeful that and joint ventures, one of which is with the uK’s exploration blocks. a new BeGinninG For PaKiStan this is an independent publication by upper reach 24 natural GaS exPloration GetS BooSt From ForeiGn exPertiSe when 106 million cubic feet of natural gas was discovered meanwhile, combining British and chinese up - in Sindh last year, more stream expertise, in 2011 united energy Pakistan people started paying (ueP) was formed when china’s united energy Group (ueG) acquired the assets of BP Pakistan. attention to Pakistan and “BP is a great company; i have worked with them for about 10 years,” comments tariq Khamisani, its unearthed possibilities President of ueP. atural gas is causing quite a stir in the fossil “we learned a lot during the BP days. we still have fuel industry right now. it is a reliable, cleaner- some of the best standards and processes that we burning and relatively cheap fuel for end-users inherited from them. on the technical side, we do nthat has caught the attention of global energy in - things exactly the same way we used to do them with vestors as news of major new finds hit the headlines. BP. there is absolutely no change. on safety, secu - the discovery last year of around 106 million cubic rity, health, we follow the same principles – they are feet of natural gas in Sindh focused attentions on the embedded in the organisation; they are in our dna development potential of Pakistan’s upstream sector. and they work really well for us.” Pakistan Petroleum limited (PPl) is doing its part PPl has become a leader in the domestic e&P sec - to tap the nation’s reservoirs, contributing to over 20 tor by engaging in numerous international partner - per cent of domestic natural gas supplies, as well as ships, such as last year’s acquisition of uK-based mnd producing crude oil, natural gas liquid and liquefied e&P ltd, as well as applying a fast-track approach to petroleum gas. it operates the nation’s largest gas their technology upgrade to meet global standards. field at Sui, plus five others at Kandhkot, hala, chachar, the company has already enjoyed great success adhi and mazarani, and holds a working interest in in technological collaborations with international com - 15 partner-operated producing fields in the country, PEL has the largest exploration acreage among indigenous private sector companies panies. it has introduced canadian Stress Field de - which together pump an average of 1 billion cubic tection (SFd) technology to Pakistan to conduct aer - feet per day (cfd) of gas. a strong background in offshore drilling and the know- gas sector. with interests in six long-life gas pro - ial reconnaissance flights to identify reservoirs and regarding the company’s recent forays into natur - how to exploit natural gas resources. “the key ad - jects, Premier oil’s average production in Pakistan potential hydrocarbon traps, especially in unexplored al gas, PPl’s managing director and ceo asim mur - vantage of having transnational operations is the alone in 2013 was 14,900 boepd net. the compa - frontier regions. taza Khan says, “e&P infrastructure in the uK is ahead possibility of technology transfer and knowledge shar - ny has plans to drill five near-field exploration wells PPl has big dreams for its natural gas production of Pakistan, especially in offshore. we should be col - ing by working with huge multinationals that are not in the coming years. activities. it plans to focus on the natural gas mar - laborating more and more, exchanging technologies; present in Pakistan,” he says. “in yemen, for instance, So committed is Premier oil to Pakistan and so ket to help Pakistan overcome an over-dependence we need offshore technology here and what experi - we are partners with total, a big name in the oil and optimistic about the country’s potential, that ceo on oil imports. as the national economy is enjoy - ence and technology we have here onshore is avail - gas business. there is no way we could access their mehran mirza says, “we would actually like to see ing a rapid rise, there is a growing demand for pow - able for sharing with the uK companies.” technical know-how sitting here in Pakistan.” Pakistan becoming the administrative hub for the mid - er to maintain its long-term sustainable national he envisions a stronger influx of expertise and in - Premier oil is one British company that is lend - dle east and african region. the business in Pakistan development. hence, natural gas production could vestments flowing in from uK companies, which have ing its expertise to the Pakistani upstream oil and is here to stay.” fill in the gap.

Pel leadS uP Private e&P inveStment The first private Pakistani E&P firm operating abroad, PEL is today the can enhance its profitability and knowledge sharing largest exporter of petroleum by relying on global partnerships. “we today, in the private sector, hold the largest petroleum in the 1950s, Pakistan did not attract much foreign exploration acreage in Pakistan,” he says. “we are direct investment nor did the country’s private exploring onshore as well as offshore in Pakistan sector companies have access to substantial risk and we are exploring overseas in morocco and capital resources to undertake hydrocarbon myanmar. we are the only private sector company exploration and production projects. consequently, that is working in the deep water of Pakistan in the state-owned firms played a pivotal role in the arabian Sea.” domestic oil and gas sector. he adds, “in the group, we have a strong But times are changing as the country is professional base with work experience of oGdcl emerging into more rapid economic development. (Pakistan-based oil & Gas development co ltd), the accordingly, many local and foreign private Government of Pakistan, as well as BP and other companies now have entered this sector with foreign companies. we take advantage of the latest financial resources. technology to develop strong technical teams. we Petroleum exploration (Pvt) limited (Pel) is one also take technical advice from canadian and of the county’s largest private sector e&P British consultants.” companies, founded in 1994. it operates nine mr Zaheeruddin has pointed out that Pel is onshore and one offshore exploration licenses; five undertaking a major project which would involve the development and production leases and one mining development of a low Btu gas field and lease; and has drilled a number of exploration and commissioning of a 120 mw power generation development wells. plant at a total combined investment of $300 mr Zaheeruddin, chairman & chief executive, million. the company is financing the project disclosed that Pel has recently made a significant through collaboration with banks and investors. discovery of hydrocarbons in the southern part of “until today, we have spent over $250 million his country. a well named as ayesha-1 in Badin equity in joint ventures with partners. it is the trust South - iv Block, completed on February 14 2014 of our partners that enables us to undertake major after achieving the target depth of 2,400 metres, projects,” mr Zaheeruddin says. “there is a very flowed 11.32 mmcfd of good quality natural gas bright chance of finding hydrocarbons in the with a heating value of 967 Btu. the well also offshore of Pakistan. we are in discussions with flowed 115 barrels of 57º aPi condensate per day different companies for partnership on mutually with a wellhead pressure of 2,000 PSi. Pel has also agreed terms.” expanded its exploration activities overseas by mr Zaheeruddin contends that offshore drilling acquiring three exploration permits in morocco and offers the best opportunity to Pel and the country in two in myanmar. it is all set to drill its first the future. the deep waters of Pakistan hold rich exploratory well in morocco during first half of 2014. untapped reserves of oil and gas and accordingly, mr Zaheeruddin explains why Pel is actively partnerships with global energy players could result engaged in the e&P sector and how the company in profitable ventures. this is an independent publication by upper reach a new BeGinninG For PaKiStan 25 what’S in the PiPeline For PaKiStan’S GaS needS By early 2015, Pakistan will receive 400 mmcfd of lnG, while the proposed taPi pipeline project, once completed, will pump in an additional 1,325 mmcfd gas

urrently, Pakistan’s energy needs are being met through domestic gas which is distrib - uted via an extensive pipeline network, thanks tco two prominent, publicly listed companies: Sui northern Gas Pipelines limited (SnGPl) and Sui Southern Gas company (SSGc). over the last several years, rising consumer de - mand for natural gas has been outstripping de - creased supplies, forcing both the gas utilities to reduce supplies to compressed natural gas (cnG) outlets and industries. For instance, during the last winter season, when the mercury dropped drasti - cally, both companies were compelled to cut down their supplies to cnG stations in their respective franchise provinces. in order to rationalise con - sumption, both the utilities follow a federal gov - ernment-approved Gas load management Plan Pakistan is looking at importing more natural that puts emphasis on supplying gas to domestic gas yet needs to upgrade and expand customers first, and then to commercial, industri - infrastructure to do so al, fertiliser and finally to the cnG customers. tor – need to make a conscious effort as a team.” SSGc’s mr Siddiqui is proud of his company’s the company's state-of-the-art technology consequently, in order to fix the demand-supply For its part, SnGPl is looking to other countries success in different areas, including it, which has helped it save significant amounts of money mismatch, Pakistan is investigating possible solu - for more than just energy. Supplies for the provi - has ultimately helped it in serving its customers by implementing some it projects totally in- tions to ensure energy sustainability and security. sion of that energy may come from the uK, for ex - better. “i think we are one of the most it-enabled house instead of hiring external consultants: ample. according to arif hameed, managing di - companies in Pakistan. on the front hand we $1.8 million when upgrading the company’s en - New LPG & LNG sources rector of SnGPl, “the uK is one of the very best have an entire suite of oracle applications and terprise resource Planning and more than $2 mil - in the short term, lPG-air mix projects approved countries… in the measurement side, in electron - we have a state-of-the-art building in customer lion when in the upgrading of customer care by the economic coordination committee have ics, and in control tools.” service applications.” and Billing. the potential to meet the country’s needs. Feasi - the challenges in energy that Pakistan faces bility studies completed by SnGPl and SSGc have don’t lessen the optimism felt by SSGcl and SnG - shown that these projects are technically feasible. Pl. “i think a lot of work is being done to resolve other proposed and planned solutions for meet - the issues but obviously, you cannot do it overnight. ing Pakistan’s increasing energy demands include it will take time,” says mr Siddiqui. the construction of a new terminal at Karachi’s Port Qasim to receive lnG imports, likely to begin ar - The gas companies riving by early next year. with over 50 years of experience in the operation a fast-track lnG project dictated a $1.5 billion, and maintenance of high-pressure gas transmis - 15-year service tolling contract be executed. the sion and distribution systems, SnGPl’s trans - project is being negotiated for the purchase of 400 mission system extends from Sui in Balochistan mmcfd of re-gasified lnG. to Peshawar in Khyber lnG is a vital piece in It will be the success of PakhtoonKhawa (KPK) solving Pakistan’s energy comprising over 7,000 km puzzle. with ample room for LNG, LPG-Air Mix, LPG of transmission and around additional supply of gas in projects and of course, the 94,000km of distribution the existing infrastructure, system. it has also ex - the regasified lnG can be TAPI projects that will set panded its activities as an used to substitute more the direction for the future engineering, procurement costly furnace oil and diesel and construction (ePc) for power plants. and ensure ample supply contractor to undertake the to meet the domestic planning, designing and TAPI, answer to energy woes construction of pipelines, if lnG is a medium-term demand for power both for itself and other or - solution, the turkmenistan- ganisations. the company afghanistan-Pakistan-india (taPi) Gas Pipeline has recently embraced en iSo 9001:2008 certifi - Project is an indispensable multinational and cation for Planning, design, Procurement and con - multibillion-dollar project which may be one of struction of cross country Pipeline Projects. the answers to Pakistan’s energy woes. expected SnGPl serves nearly 5 million consumers in the to be completed around 2017, the pipeline will domestic, commercial, general industry, fertilis - transport caspian Sea natural gas from turk - er, power and cement sectors. the company’s menistan through afghanistan into Pakistan and sales from July 2012 to June 2013 were 552,272 then to india. mmcf, worth PKr 224.064 billion (£1.36 billion). For Pakistan, the gas import will be able to sup - “this has been one of the exceptionally good port some 5,000mw of power generation. For the organisations in the country,” says mr m. arif countries involved, the project stands as a bea - hameed, md of SnGPl. “you want the results, they con of hope for regional cooperation and interde - speak for themselves. the company is providing pendency. the elephant in the room is fairly loud quality services to a network spread over two and clear; this is one of the world’s more danger - provinces in an exemplary manner.” ous areas and a common goal could help settle SSGc serves over 2.5 million domestic, com - certain disputes, while the promise of a more af - mercial and industrial customers in the southern fordable energy source for the people could help provinces of Balochistan and Sindh. the compa - the governments gain popular support. ny is involved in the core business of transmis - the perception of Pakistan as a perilous coun - sion and distribution of gas as well as the design try also has an effect on potential investors. Zuhair and implementation of gas transmission and dis - Siddiqui, managing director of SSGc, explains that tribution projects. SSGc operates more than to improve the country’s image, “all stakeholders 3,492km of high-pressure transmission network – the media, the government and corporate sec - and over 42,000km of distribution network. a new BeGinninG For PaKiStan this is an independent publication by upper reach 26 downStream induStry PlayerS reinveSt in PaKiStan Parco’s refining capacity currently stands at 100,000 bpd. PSo, traditionally an oil retailer, has plans to build a 40,000 bpd refinery

ith Pakistan having now achieved the land - mark of its first true democratic transition, the national priority is economic develop - wment. as tariq rizavi, managing director of Pak arab refinery ltd (Parco), states: “we are facing a shortage of energy, which drives everything; with - out energy there is no industrial development.” re - liable, ample energy supplies are, of course, essential to create a virtuous cycle of jobs and investment and to counter the economic stagnation that can become a seedbed for social unrest. companies in Pakistan’s downstream sector are rising to the nation’s energy challenge. as they work to expand production capacity and reduce re - liance on imports, entities such as Parco and the Pakistan State oil company (PSo) are widening their capabilities through new investments and the ac - quisition of previously foreign-owned activities, as well as through partnerships with independent or foreign technology providers. Strengthening national capacity through tech - nology transfer and through partnerships with over - seas technology providers has been a continuous theme in the development of Parco, a 60:40 joint venture between the Government of Pakistan and the abu dhabi Petroleum investment company. last year it partnered with total of France in a suc - cessful acquisition of chevron’s retail network in Pakistan, comprising some 500 petrol stations. Currently, Pakistan imports around 93 per cent of oil products. PSO’s proposed refinery will help raise self-sufficiency in this area

it also has a technology agreement with uoP in range of stakeholders. “as a responsible corpo - Guildford, a technological support venture with rate citizen, we are committed to the fulfilment of omv from austria, and has purchased lPG facili - our responsibility towards internal and external ties from the dutch Shv. stakeholders. ensuring health and safety of PSo the sector’s openness to partnering with foreign employees and all those likely to be affected by companies is also evidenced by PSo’s agreements the company’s operations, observing the highest with air total of France, as well as its ventures with standards of security, and supporting deprived investors from Kuwait, Singapore and the uS. segments of society are high on our corporate agenda. the company realises that in addition to Pakistan State Oil: driving the economy being directly accountable to shareholders, it is re - PSo is one of the most important strategic assets sponsible to a wide group of stakeholders for sup - of the Pakistani economy. as the country’s largest porting sustainable development and expanding company (in terms of turnover), PSo leads the oil economic opportunity,” she stated. marketing sector, both in black oil and white oil, with an overall market share of over 63 per cent. it serves PARCO grows powerfully around 3 million customers every day across the the wider use of cleaner motor fuel is a govern - entire economic value chain with over 3,500 retail ment as well as industry objective. PSo was a pi - outlets, and controls 74 per cent of the country’s oneer in the supply of compressed natural gas oil storage capacity. it is involved in import, stor - while Parco has taken the lead in introducing in - age, distribution and marketing of a range of pe - to the market lead-free fuel compliant to euro ii troleum products including gasoline, diesel, fuel standards. with its investment of $132 million in oil, jet fuel, lPG, cnG and petrochemicals. its diesel hydro desulphurisation plant, high-speed the competitive landscape of oil marketing in diesel fuel is now produced at Parco’s mid-coun - Pakistan – an increasingly dynamic economy – is try refinery, an important step towards a greener rapidly evolving with increased growth. in the past environment. Shell and caltex were the only competitors of PSo. Following years of ongoing reinvestment, Parco, at present, PSo competes with 12 market players. for its part, has become a fully integrated energy PSo’s managing director and ceo, amjad Parvez company. it has grown from a small pipeline com - Janjua, seems cognizant of the competitive chal - pany in 1975 to the country’s strategic fuel sup - lenges as he leads the corporate development and plier today, with a refining capacity of 100,000 bar - transformation of PSo into an “entrepreneurial en - rels per day (bpd) and storage capacity of over 1 terprise capable of meeting customer demands million metric tonnes, besides a national pipeline and expectations, while supporting the govern - network now spanning 2,000 kilometres. ment’s energy sector programmes and playing the today, Parco is planning the country’s largest role of a responsible corporate citizen.” refinery at Khalifa and hopes to further widen its “we cannot afford to be complacent. we strive activities by including an independent power plant to improve our value proposition for customers in the scheme, with surplus power produced be - and investors to establish our market leadership ing sold into the national grid. on a sustainable basis,” said mr Janjua as PSo com - having public finances now in order, the gov - memorated its highest ever semi-annual prof - ernment is able to pursue clear and well-defined itability. Since mr Janjua took over as ceo in July national objectives to foster economic growth and 2013, the company’s market capitalisation has in - social development, and generate employment op - creased from PKr 98 billion (£595.4 million) to portunities. a dynamic energy supply sector is very PKr 117 billion. clearly key to achieving the country’s ambitions. elaborating on PSo’s responsible role, the com - the investments realised and those planned by pany’s head of corporate communications high - both Parco and PSo, among others, show their lighted the company’s commitment towards a wide determination to meet the challenges ahead. this is an independent publication by upper reach a new BeGinninG For PaKiStan 27 a Game-chanGinG 186 Billion tonneS oF coal the country ranks seventh in the world in coal reserves, most of which lie beneath the recently, Pakistan has embarked on building much larger coal power plants with a target of thar desert. harnessing the generating 6,600mw of electricity. this shift in the energy mix would significantly reduce power pro - resource will reconfigure duction costs; currently, many power plants run Pakistan’s energy matrix on imported furnace oil, which is twice as dear as coal and 50 per cent more expensive than lnG. he islamic republic of Pakistan is a country in turn, savings on oil imports would also reverse rich in energy and natural resources. the coun - the foreign exchange reserves crisis. try holds the potential to become a global with the thar coalfield’s deposits ranking as the tleader in the mining sector and the coal industry. nev - sixth largest coal reserves in the world, coal could ertheless, its economy remains at a developing be a real game changer for Pakistan and a lynch - stage. accordingly, foreign technology experts and pin in the government’s counterattack on the en - mining companies could enjoy greater opportuni - ergy crisis. ties and investments here. Because a recent constitutional amendment puts his excellency Shahid Khagan abbasi, Pakistan’s all natural resources, aside from oil and gas, under minister of Petroleum and natural resources, speak - provincial governments’ authority, mr Khaqan ab - ing about the nation’s current economic climate and basi recommends that foreign investors should the future of its domestic mining sector, says: “the better understand the local governments, customs Pakistani economy is fairly small today by global stan - and regulations of the provinces that they are in - dards. So there’s a lot of room to grow.” terested in, which may be more time-consuming, meanwhile, the nation’s huge reserves of gold, but worth the effort. copper and coal – especially from the thar coal - For instance, Balochistan province provides sig - field in the thar desert – would mean that an nificant copper and gold reserves, and such de - influx of foreign expertise is more essential to de - posits have already translated into 300,000 ounces velop into a more sustainable economy. of gold extracted per year, along with 350,000 ounces “thar coal is one of the largest coal reserves in of copper a year. the world, but it has some technical issues with min - additionally, the minister wants to emphasise ing. it needs heavy investment. the same with the that islamabad is sincere about promoting a ‘pro- copper and gold reserves,” says the minister. “right business’ atmosphere for foreign investors in the now, the potential and estimates are there, but we domestic mining sector. have to look at how much is technically and com - “you will also find that the government is on your mercially exploitable.” side, so the investments are safe. this is not the case however, Pakistan offers more favourable busi - in many other countries,” he says. “investors find that ness conditions for global coal operators, while the when they come up against a local issue, their in - united States and the united Kingdom have shift - vestment is not safe in other countries. we freely ed away from coal energy. allow repatriation of profits and capital.” “Subsequently, as we develop our thar coal re - serves, we will go into domestic coal fire plants as well,” says mr Khaqan abbasi. “that will further re - duce the cost of the energy mix.” “As we develop our Thar coal yet despite holding such large swathes of coal reserves, we will go into reserves, the national electric Power regulatory au - thority (nePra), which is based in islamabad and domestic coal-fired plants. That responsible for regulating Pakistan’s electricity, dis - will further reduce the cost of closed that the country had only generated 0.1 per energy” cent of its power from coal as of 2010. this com - pares to 80 per cent for australia, 50 per cent for the Shahid Khaqan Abbasi, Minister of Petroleum uS and 30 per cent for the uK for the same year. and Natural Resources