Monthly Economic Affairs March, 2014

Volume-III, Issue-III
MARCH 2014
Exclusive Interview
Energy
security &
affordability
Pages 10-11
Investors flocking to
stable policies
Shahid Khaqan Abbasi
Pages 8-9
Exclusive
EDITORIAL BOARD
Dr Ashfaq hassan Khan
Dr Abid Sulehri
Shabbir Ali Nizami
Sajid Gondal
Zubair Malik
ADVISORY BOARD
Haroon Akhtar Khan
Hamidullah Jan Afridi
EDITOR
Tausif-Ur-Rehman
Deputy Editor
Maria Khalid
Correspondents
Aamir Rizvi
Muhammad Bilal Khan
Shiraz Nizami
Marketing
Khurram Agha (Islamabad)
0334-7957571
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Pakistan: A gold mine

for investors
FEBRUARY 2014
EDITORIAL
Pages 24-25
Pakistan, making out of crisis
ad it been asked how wise would it be to invest in

an economically crippled and terrorized country? the
reply would be suicide. Unfortunately, Pakistan is a
country which could not be termed a stable country,
yet a number of opportunities are available for investors and execution on many projects is pending due to financing issues. If these projects get materialized successfully, it would pull the
country out of the darkness caused by energy crisis.
The projects of Thar coal, IP, TAPI and LNG import arent new
but under consideration for many years. The successive governments
were unable to make progress on these projects due to inconsistent
policies. Considering the much-talked-about looming energy crisis
and the oil import bill of $14 billion, earliest completion of these
projects is essential.
No doubt Pakistan has always been a great market for investment; especially its geo-strategic position has always been of big
attraction to businessmen. It hasnt been a year since the new government took charge. Its a good omen that their policies have started
showing positive signs, foreign investment has started pouring in
Pakistan, the KSE is making new records of its bullish trend, GDP is
likely to grow.
What needs to be appreciated is the enforcement of the petroleum 2012 policy of previous government which the former government couldnt. It is a good precedent that the present government is
carrying the feasible projects and policies of the last government,
addressing the short comings of those policies to make them more
liberal and result oriented. This behavior was also keenly noticed by
the international watch dogs compelling them to break the conventional ambit of their thoughts about Pakistan.
Government shouldnt take decisions in isolation but keep
the provinces and other stakeholders cognizant of all the developments.
Todays Pakistan is different and so is its future. Recent announcement from China to invest 20 billion dollars on the Pakistani
projects is a historical achievement. This will no doubt add confidence to other foreign investors and will be a very strong economic
indicator.
In order to prove that the foreign investors have made a right
decision choosing Pakistan for investment, government has to act
vigilantly to ensure that its institutions are on the same note with the
government policies to facilitate foreign as well as local investors.
Government must ensure that delays in procedure, corruption and
other ill practices are not being followed.
LNG import is a quick and good solution to gas shortage but
government should keep the process open so that it isnt hurt by
controversies like many projects in the past. We need to rationalize
prices as subsidizing gas to consumers isnt good for long term. The
prices may increase but the government should keep the supply going so that the wheel of economy keeps moving.
Pages 14-15
Pakistans energy
economics and
geo-politics
Mehmood Ul Hassan Khan
Pages 18-19
Outlook for 2014........................6-7
The adolphus
complex
Tammy Swofford
Oil and Gas..............................12-13

How to succeed in 2014..........16-17
The Ali Zafar experience...............23
Privatization; salvation or an
incomplete truth.....................26-27
Is the wolf at the door?..........28-29
Taxation reforms in Pakistan and
way forward.................................30
Stand your ground when the law
causes injustice............................31
Go green Pakistan...................32-33
Commercial agriculture in Pakistan.
................................................34-35
The cyber side of social media.....37
Pages 20-21
A fashion for
a cause
Khurram Agha
Pages 22
5th Karachi literature

festival
Afrah Jamal
http://www.economicaffairs.com.pk
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MAR 2014
MAR 2014
OIL & GAS
THE OUTLOOK FOR 2014:
t the dawn of 2014

the global oil and
gas industry faces a
host of questions about the
year ahead. To what extent
will increasing US oil and
gas production reshape
global markets? How will
uncertainty over emerging
market growth feed into
global oil and gas prices?
How severely will tougher
regulations in some markets
affect operating costs? How
will project costs affect
project approvals? All told,
while the overall outlook
remains exceedingly strong,
it is also clear that the year
ahead will demand greater
focus and discipline among
operators. This research
highlights seven key trends
for 2014.
MAR 2014
SEVEN KEY TRENDS
A confident outlook for 2014, but

with signs of caution. About nine in
ten (88%) survey respondents are
optimistic about the outlook for2014,
but several signs of caution are also
visible.
Skill gaps, rising costs and tougher

competition will define the industrys
barriers to growth in 2014. A shortage
of skilled professionals is a top worry
for all regions, but especially for North
America and Europe. In Asia, high
operating costs tops the list.
More cautious and targeted capital

expenditure will be evident in 2014.
There are more firms planning to
increase spending in 2014, than those
who will cut back, but there are clear
signs that spending will be even more
closely monitored than ever. Over
three-fifths(62%) of respondents say
they face growing pressure to extend
the life of existing assets and increase
the return on these investments.
Uncertainty over oil and gas pricing will

be more prevalent in 2014. Nearly one
in four(23%) industry professionals
think oil and gas pricing will weaken this
year, while 36% are unsure.
The industry will consolidate in 2014,

with larger organizations coming to the
fore. A majority of survey respondents
(55%) expect to see a greater focus
on larger companies, with a drive for
both greater industry consolidation and
supply chain standardization.
The US, Brazil and Australia are the

top investment destinations for 2014.
Frontier markets will also feature high
up on the list. Survey respondents
worry most about the political
challenges of new target areas, ahead
of the technical difficulties, as many
look to push into East Africa, the Arctic
and new deepwater locations.
A deeper industry safety culture

is taking root. Six in ten industry
professionals expect their firms to
prioritize a stronger safety culture
in 2014, with half (49%) noting that
their leaders will be deeply engaged
in this.
MAR 2014
INTERVIEW
that is 105 trillion cubic feet.
Are you also working to tape this
potential?
Before the start of next

winter, Pakistan will start
the import of 400mmcdf
LNG from Qatar, which
will be 25% of our
pipeline supply. Though it
will not completely fix the
gas crises, but certainly
would reduce the gas
shortage in Punjab as
witnessed now, Pakistan
Minister for Petroleum
and Natural Resources,
said in an exclusive
interview with Economic
Affairs.
Yes according to EIA, Pakistan has 9th

largest reserves of shale gas and we really want
to utilize these resource. We have engaged a
US consultant to prepare a concession policy
for shale gas. The consultant will provide the
policy draft in 6 months that includes some
attractions and incentives for those who work
to explore shale gas. Meanwhile, to attract exploration companies, we are going to offer an
attractive price for first four or five shale gas
wells. The current well head price for tight gas
is $8 per mmbtu whereas it is $10 for offshore.
The offer price for shale gas wells would definitely be more than the offer price of tight gas
and offshore.
After taking up the charge of

petroleum ministry, you have
announced that work on offshore
exploration will be started in
March this year. What is the
progress in this area so far?
Investors flocking to stable policies

We enforced that already developed policy

which has raised the investors confidence that
they would get the promised return.
What are the estimates for oil

and gas production and how
much is the shortfall?
Sajid Gondal
The oil and gas sector outlook
2014 is very encouraging. What
special measures and policies
have been adopted to attract
investment in this area?
It is almost after a decade that a proper
comprehensive petroleum concession policy
has been implemented. I want to make it clear
that we have not made any new policy. It is
the same petroleum concession policy 2012
which was developed by the previous government. Petroleum concession policies were
made in 2007 and 2009 but earlier governments remained unable to implement them.
MAR 2014
The total oil production of the country

is 90,000 barrels per day which is only 15 percent of the total consumption and the gap is
being filled by imports. The gas production is
3.7 billion cubic feet against the constrained
demand of 6 BCF. The current demand is constrained because we dont allow it to expand
by not issuing further gas connections. The
estimates for non-constrained demand for gas
are 8 billion cubic feet.
The previous government

has announced auction of 50
concession blocks out of which
leasing licenses are being issued
by your government. Does
your government have plans to
auction any new blocks?
The previous government has auctioned
50 concession blocks but they couldnt issue

leasing license to any of them.
After the 18th amendment, all the provinces became partners of 50 percent in exploration wells therefore federal government is
bound to get the consent of provincial governments for issuance of lease licenses to exploration companies for already auctioned blocks.
We took up the matter with provinces immediately and up till now we have issued licenses
to exploration companies for 28 blocks. Leasing license for 22 blocks would be issued in
few weeks. The issuance of leasing licenses
for 50 blocks will be transformed into a guaranteed investment of $450 million in the next
3 years.
Yes, we are also considering auction of
new concession blocks. We are also considering canceling the auction of such concession
blocks where the exploration companies have
not made any investments. We will re-auction
these blocks. Currently we are consolidating
the areas and new auctions will be made in
next three to four years.
According to recent estimates

of EIA of the US, Pakistan has
the highest reserves of shale gas
Yes, I was excited to start work on offshore exploration and we tried to engage the
ship to execute the work on this ultra-deep
well but it wasnt available. As you may know
that offshore exploration is not done by rigs
but it is done via specialized ships built for
these purposes which carry equipment to drill
deep in sea and there are only 4-5 such ships
available in the world.
Now the ship will be available in January 2015 and they will start work immediately
as the exploration would be needed to complete before the monsoon rains start. So the
exploration consortium will have 4 months
period to finish the job. It will be a $1000 million project and to divide the risk, four companies namely, OGDCL, ENI, PPL and UEP will
have 25 percent share in it.
The LNG is considered as

one of the shortest solution to
overcome energy crises and your
government is also working
on import of LNG from Qatar.
What is the current status for
this project?
Pakistan does not produce enough gas to
fulfill consumer demand. The exploration success ratio in Pakistan is 3:1, which is a high
probability but the new discoveries of gas are
small. The import of gas is the ultimate solution that is why the government is working on
all options for import of gas including IP gas
pipeline, the TAPI and import of LNG.

As I announced earlier, the first delivery
of LNG will hopefully be made in November
2014 from Qatar. To move fast on this project,
we have unbundled the project of LNG terminal and the import of LNG. The ECC has
approved the award of contract to Engro for
construction of LNG terminal at Karachi port
which will be signed in the mid of March.
The task to import LNG has been given
to Pakistan State Oil, which is a financially
stable organization and already involved in
import of oil. PSO will have two options to
import LNG, either it can import LNG under
PPRA rules for government to government
arrangement or it can outsource the import to
any third party. It is a decision to be taken by
the PSO Policy Board.
Critics are of view that the

import of LNG from Qatar is not
a wise decision as government
will buy it at expensive rates?
I always welcome positive criticism,
but I will request these critics not to speculate
about projects of national importance. I want
to make it clear that Pakistan will import LNG
from Qatar at market price and those criticizing the government for import of LNG have no
knowledge of international business.
Let me explain that the imported LNG
will be inserted in the SSGC gas pipeline system through the terminal being built by Engro
at Karachi port. The LNG will be supplied
by the gas pipeline system to industry, fertilizer factories, CNGs and domestic consumers.
Therefore the stability of the supply is very
important in this project. Qatar is the largest
producer of LNG and is at a distance of only 4
day shipping, so Qatar suits us most and LNG
from Qatar will be purchased at a price lower
than the international market price.
Recently, you stated that the

IP gas pipeline project would
not be followed because of US
sanctions. There is a clause
in the contract that Iran will
charge a penalty of 1 to 3 million
dollar per day if Pakistan
delayed the project?
The import of gas from Iran suits us
more as we are next door neighbors. We are
still committed to IP project and we did our
job, the designs are completed, we organized
bidding but ultimately the project was hit by
US sanctions.
I have conveyed my Iranian counterpart
that we cant work further due to sanctions on
Iran but we will definitely move on after the

relaxation of sanctions and will complete it
within 36 months after sanctions are lifted.
I want to make it clear that there is NO
pressure from USA, KSA or Dubai. Its just
that because of US sanctions we are unable to
award contract to any ABC contractor to build
the pipeline and then we also have to obtain financing for it. Every agreement has attribution
clause for issues which are beyond control.
Countries never go for penalties against each
other; there are ways to resolve these issues.
What is the future of TAPI?

Do you consider it a practical
project keeping in view the
security threats in Afghanistan?
The IP gas pipeline and TAPI are equally important for Pakistan. If allowed by the
circumstances, Pakistan will implement both
the projects.
The new development in TAPI is that
Afghanistan has shown its interest to buy gas
from the pipeline. Earlier Afghanistan was
only interested in transit benefits. You may
know that the gas field from which TAPI will
import gas has yet not developed and Turkmenistan was insisting to develop the gas field
herself.
Now, the positive development is that
the Turkmenistanis agreed to award the contract to a third party for development of the gas
field and construction of gas pipeline, However, Turkmenistan has yet not awarded the
contract to any firm.
Do you think security issues

are hampering the oil and gas
exploration?
All the oil and gas exploration projects
are associated with risk and security threat is
another risk factor like many. It just increases
the cost of the project. Around the world, exploration companies also work in threatened
circumstances such as in Africa. The oil companies go for risk assessment and make safety
arrangements to secure the project site. In
Pakistan exploration companies also hire FC
soldiers to secure their sites.
The major factor that is considered important in exploration business is the stability
in governments policies. If a country has a
stable policy, the exploration companies will
prefer to invest. Any government with inconsistent policies cannot attract investments.
The writer is a team member of
Economic Affairs. He can be reached at
gondal.sajid@gmail.com
MAR 2014
OIL & GAS
Energy Security
and Affordability
akistan is facing an unprecedented

energy crisis due to surging demand
and supply gap. Its current energy
needs are heavily dependent on
oil and gas and the demand far exceeds its indigenous supplies.
The present energy scenario suggests
that an affordable and sustainable energy
road map for the country is essential to capitalize the use of indigenous resources in countrys energy mix. Development of indigenous
energy resources such as coal, oil, gas, hydro
and alternative sources are critical for Pakistans economic growth.
Power sector
The share of hydro power was 30% of
total generation in 2012-13 as compared to
nearly 70% in the 1980s. Hydro power development suffered a slowdown due to lingering controversies about major hydro power
projects despite a large potential of hydro
power available in the country. According to
estimates, Pakistan has a hydro potential of
about 60,000 MWs, of which only 6556 MW
has been tapped. Consequently, thermal
power was relied upon, initially, as natural
gas was abundant and cheaper than oil, it was
the preferred fuel for generation. However, a
shortage of gas has resulted in a greater use
of expensive furnace oil and high speed diesel
oil. As a result, the cost of electricity has also
increased substantially.
Power load shedding continued in
recent years, around 25% of the system demand, and has led to a substantial decline in
potential economic growth. The average supply remained 12,400 MW against the demand
of 17,400 MW and the average shortfall of
5000 MWs is witnessed during summer days,
primarily due to fuel supply constraints and
low hydroelectric generation.
MAR 2014
10
Oil and gas sector

According to the last Economic Survey,
Pakistan has estimated recoverable reserves
of 27 million barrels whereas Pakistans annual oil production stands at around 4 million
tons. That is a little less than what is imported
every year to meet demand. In fiscal 201213, Islamabad spent $5.392 billion to import
6.939 million tons of oils.
During the seven-month period of current fiscal 2013-14, 4.22 million tons have
been imported against $3.3 billion, according
to Pakistan Bureau of Statistics. During 201213, the expected local crude oil production
was 74,000 barrels per day (BPD) against a
target of 69,000 BPD.
The domestic gas production is expected to be 4,200 MMCFD against the target of
4,791 MMCFD. A total of only 83 wells (30
exploratory and 53 appraisal/development
wells) are expected to be drilled against the
target of 100 wells.
Petroleum industry generally believes
Pakistans geology is gas-prone rather than
having any substantial oil potential. The fact
that companies have to drill deep wells to find
hydrocarbon reserves adds credence to this
argument.
Energy Strategy
Pakistans primary energy supplies heavily depend upon the imported crude oil and
petroleum products due to which the countrys oil import bill has exceeded US$ 14.5
billion, which is a huge burden on the economy. In order to curtail the oil import bill to a
sustainable level and to cater for the energy
needs of all sectors, the government is pursuing policies of attracting private investment
in the energy sector with greater reliance on
indigenous resources.
Pakistan has introduced Petroleum Policy, LPG Policy, LNG Policy, Tight Gas Policy to
attract investment and ensure energy security
at affordable price. Fiscal regime of new petroleum policy provides level playing field to
domestic and international companies to invest in oil and gas sector of the country.
In order to initiate work on implementation of these measures, power sector reforms,
mainly covering governance, pricing and legal
areas which were envisaged for sustainable,
affordable and reliable power supply, need to
be put in place.
The following policy measures were
taken to enhance Exploration and Production
(E & P) activities:
New Petroleum Policy 2012 has
been implemented by the current government wherein further incentives have been
provided to attract local and multi-national
companies for investment in oil /gas sector of
Pakistan.
Following the bidding of 50 blocks for
exploration of oil & gas reservoirs, new exploration licences have been issued to 28 companies on competitive basis.
Currently 126 exploration licences
for exploration of oil & gas reservoirs are being operated by various exploration & production companies.
In offshore ten (10) exploration licences have been awarded for exploration of
oil & gas reservoirs.
Tight Gas (Exploration & Production) Policy, 2011 offers 40-50 % premium
over the respective zonal price of Petroleum
Policy 2009. Moreover, an additional 10% premium would be given for those Tight Gas volumes that are brought into production within
2 years of announcement of this policy.
Low BTU Gas Pricing Policy, 2012
also has been enforced wherein additional
Pakistans primary energy

supplies heavily depend upon
the imported crude oil and
petroleum products due to
which the countrys oil import
bill has exceeded US$ 14.5
billion, which is a huge burden
on the economy.
Tausif Ur Rehaman
incentives to the investors have been given to

develop Low BTU fields as soon as possible.
Basin study has already carried out to
co-relate entire data of different basins which
would help to identify new play types.
Marginal/Stranded Gas Fields-Gas
pricing criteria and Guidelines 2013 Policy was
approved.
Shale Gas Framework for first three
pilot projects has been approved in principal
by the current cabinet.
These policies have started bearing fruit
as Pakistan has received foreign direct investment (FDI) of $523 million in the first seven
months of 2013-14. Specifically, there was a
sharp increase in FDI in January alone, as it
amounted to $106.9 million. In contrast, there
was an outflow of $40.5 million in the same
month of the preceding fiscal year.
Outlook 2014
Pakistans crude oil output is expected
to increase to 130,000 barrels per day in one
or two years, a sharp rise from the stagnant
66,000 bpd seen in the last few years. It has
already risen to all-time high of 91,000 bpd in
recent weeks, according to latest Pakistan Petroleum Institute (PPIS) statistics. That comes
months after the highest level of 84,650 bpd
was achieved.
Average oil production was at 81,000 bpd
in 2013, up to 13% over the previous year with
most of the increase coming from the wells located in Khyber-Pakthunkhwa, especially the
Tal Block. A target of 130,000 to 140,000 bpd
has been fixed to achieve in next two years.
The 130,000 bpd level appears very
much reachable because of the substantial rise
in drilling activity. Around 76 wells were drilled
last year alone.
The writer is editor Monthly Economic
Affairs. He can be reached at
editor@economicaffairs.info
11 MAR 2014
OIL & GAS
23pc More earnings

of Govt from oil and
gas sector
A
Pakistan-Iran pipeline not
possible due to Western
sanctions
akistan said that work on a pipeline to import gas from

Iran cannot proceed because of sanctions imposed by the
United Sates and the European Union on Tehran.
The Iranian side of the $7.5-billion project is almost complete, but Pakistan has run into repeated problems paying for
the 780 kilometre (485 mile) section to be built on its side of
the border.
Last year, Pakistan had asked Iran for $2 billion in financing to build its side of the controversial gas pipeline.
Iran has the second largest gas reserves in the world but
has been strangled by a Western embargo that has seen its crude
exports halved in the past year.
US officials had earlier warned that the Iran Pakistan
pipeline project would risk triggering sanctions aimed at Iran.
Pakistans federal minister for petroleum and natural resources Shahid Khaqan Abbasi informed the parliament that the
work on the pipeline was not possible because it falls under
the sanctions imposed by the US and EU. The work on the
Pakistan Iran gas pipeline project is not possible because of the
sanctions imposed by the US and EU, Abbasi said. Iranian Oil
Minister Bijan Zanganeh said that his country was ready to go
ahead with the pipeline agreement.
Iran is committed to this gas agreement but until Pakistan has not officially relayed its stance, we cannot react and
make a decision, he was quoted as saying their national news
agency.
Pakistan believed to have

record gas, oil reserves
akistan has about 105 trillion cubic feet of shale gas and over
nine billion barrels of oil - far larger untapped reserves than
previously known, according to a media report.
MAR 2014
12
bout 23 per cent increase in six oil and gas related taxes and a substantial budget surpluses by the provinces
helped the federal government contain half-yearly deficit at Rs540 billion compared with Rs624bn of same period last
year.
The countrys overall fiscal deficit was, therefore, worked
out at 2.1pc of gross domestic product (GDP) for the first six
months (July-December) of this fiscal year against 2.6pc in the
same period last year, according to details of half-yearly fiscal operations released by the ministry of finance.
The ministry said it collected Rs139bn in first six months of
2013-14 on oil and gas compared with Rs113bn of same period
last year, an increase of about 22.75pc. This does not include sales
tax that is charged on sale of all petroleum products and natural
gas at the rate of 17pc.As a consequence, the government collected
Rs51.6bn as petroleum levy in first six months of FY2014 compared with Rs57.6bn of same period last year, a reduction of about
10pc.
On the other hand, the government collected Rs29bn as development surcharge on gas compared with Rs7.5bn in the same
period last year, an increase of about 287pc.The collection on account of Gas Infrastructure Development Cess (GIDC) tumbled
to Rs6bn in July-Dec 2013-14 against Rs24.6bn collected in the
corresponding period last year because of litigation.The ministry
said the total revenue in first six months of the current year stood
at Rs1684 billion compared with Rs1462 billion of same period
last year, an increase of 15 percent.
The tax revenue in six months amounted to Rs1,172bn this
year as against Rs1,012bn the same period last year, an increase of
15.8pc.The defence expenditure stood at Rs295bn against Rs256bn
the same period last year, an increase of 15 percent.
The estimates by the US Energy Information Administration

(EIA) are greater than Pakistan's proved hydrocarbon reserves of 24
TCF for gas and about 300 million barrels of oil. The country currently produces about 4.2 billion cubic feet of gas and about 70,000
barrels of oil a day.
According to June 2013 estimates of the EIA based on surveys
conducted by Advanced Resources International (ARI), a total of
1,170 TCF of "risked" shale gas are estimated for the India-Pakistan
region, including 584 TCF in India and 586 TCF in Pakistan.Technically recoverable shale gas is estimated at 201 TCF, with 96 TCF in
India and 105 TCF in Pakistan.
The recoverable shale oil resources for the two countries estimated at 12.9 billion barrels, including 3.8 billion barrels for India
and 9.1 billion barrels for Pakistan.
The southern and central Indus basins are located in Pakistan,
along the border with India and Afghanistan. They are bounded by
the Indian shield on the east and highly folded and thrust mountains
on the west, the report said.
PSO earnings rise by 150

percent in half-yearly report
akistan State Oil after-tax earnings rose by 150% percent to Rs 15.8 billion as compared to Rs 6.31 billion
during the same period last year.
PSOs share price recorded an impressive growth, outperforming KSE 100 share index by 11% during the second
quarter ended December 31, 2013.
The Board of Management of Pakistan State Oil Company Limited was convened at the PSO headquarters, to review the Companys performance for the first half of financial year 2013-14.
The report says that PSOs revenues rose 15% to Rs 727
billion for the half year ended 31st December 2013 as compared to Rs 630 billion during the Same Period Last Year
(SPLY).
The Board expressed gratitude to customers and business partners of the company as well as the Government of
Pakistan for their unwavering support to PSO in achieving all-time best results in terms of revenue
and profitability.
GE to hike pro-environment energy

research by $10 bn
S industrial conglomerate General Electric said it would boost spending

on environmentally friendly energy research by $10 billion by 2020, including on fracking technologies and wind turbines.
The new investment extends and builds on a research and development
(R&D) program launched in 2005 aimed at finding technologies that reduce costs
and environmental impacts for GE's customers and its own operations, the company said. GE said the new investment will support research in alternative technologies to replace water in hydraulic fracturing, known as "fracking", and improve
wind turbine and power plant efficiencies. The program, "ecomagination", has
already generated more than $160 billion in revenue, and reduced GE's greenhouse gas emissions and freshwater use, said the company, whose wide portfolio
of products includes aircraft engines, power plants, geospatial systems and household appliances.
GE has invested $12 billion to date of its $15 billion commitment on the
R&D program through 2015. Jeff Immelt, GE chairman and chief executive, said
the now $25 billion program was one of the conglomerate's most successful crosscompany business initiatives. "Bold investments in ecomagination research and
development have resulted in strong returns for shareholders and improved cost
and emissions savings for our customers," he said in a statement.
Pakistan
to become
member
of SCO
energy club
s energy politics is gaining momentum across the

world, Pakistan is going
to become a member of the energy
club of the Shanghai Cooperation
Organisation (SCO), an initiative
taken by Russia for providing support to energy projects in different
countries including Pakistan.
Pakistan is expected to get
financing for gas import projects
like the Iran-Pakistan pipeline,
Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline and
LNG supplies to overcome the energy crisis.
SCO is an inter-governmental
organisation founded in Shanghai
on June 15, 2001 by six countries
including China, Russia, Kazakhstan, Kyrgyzstan, Tajikistan and
Uzbekistan. Afghanistan, India,
Iran, Mongolia and Pakistan have
been accorded observer status.
India, Iran, Pakistan and Turkey are aspiring for full membership of the SCO. Both China and
Russia have endorsed this status
for India and Pakistan.
At present, gas politics is
gaining pace across the world with
Russia and United States being
major competitors. After discovery of shale gas, the US is expected
to start exporting LNG; so many
countries are in the race to capture
the Pakistan market, which is facing acute energy shortages.
13 MAR 2014
ENERGY
Pakistans energy
economics and
geo-politics
nergy is life to economic development and Pakistans energy sector is at cross-roads. Energy
sparks the socio-economic prospects of the country
where its shortage has already spoiled our GDP (4
%) tremendously. It has also forced the closure of
hundreds of factories (including more than five hundred alone in
the industrial hub city of Faisalabad), paralyzing production and
exacerbating unemployment.
Although government of Pakistan announced new national
energy policy 2013-2018 along with so many incentives and
priorities but its overall energy economics and geo-politics is a
complicated and complex phenomenon. It has internal dynamics,
regional spillovers and international repercussions too.
Pakistans mix of energy production has been tilted towards thermal power as compared to hydro-power by successive
governments and eventually the government and as well as common people are in the line of fire, continuously facing the unbearable heat, humidity and price hike around the clock particularly
in the summer season. Expensive energy mix, circular debt and
inefficiency of distribution companies are the major reasons for
the current energy crisis in the country.
Line losses (20-35 percent due to poor infrastructure, mismanagement), lack of capacity building costing taxpayers an additional Rs2.70 per unit over and above the cost of generation
(averaging around Rs12) and theft of power supplies (20-25 %,
power theft alone amounts to more than Rs140 billion per annum) has already produced ripples in the fabric of Wapda and its
associated subsidiaries.
Geography of provinces is also not so friendly with Pakistans energy production mechanism and national requirements.
Intra-province
conflicts, confusions and confrontations have
been one of the
main reasons of
its energy resources progress
and production as
well. Moreover,
lack of strategic
visions and vested
Mehmood Ul Hassan Khan
MAR 2014
14
interests of the ruling elite badly damaged the

energy sector of Pakistan. Imbalanced national
preferences and priorities have weakened the
energy sector in all parts of the country.
It seems that unlike the global practice of producing electricity through cheapest energy sources, Pakistan is still fulfilling
its energy needs through expensive oil and
gas-based power plants, whereas in India and
China, 68 percent and 79 percent of electricity
is produced from coal respectively.
Pakistans Energy Production Mix
Thermal
36
Gas
29
Hydro
29
Nuclear
Source: Federal Ministry of Industries
Now national economy has been compromised due to energy deficit. Social development has not been up to the mark due to
looming energy shortage. Foreign reserves
(import bill up to $15-16 billion a year) have
been utilized on the make-shift arrangements
of energy production in the name of IPPs or
rental power. Pakistans energy fuel mix is not
sustainable and measures such as setting up
hydel and coal plants and replacing oil-fired
plants with coal plants to bring down the overall cost of power generation are required.
Worlds Energy Production Mix
Coal
41
Gas
21
Nuclear
13
Oil
Renewable Sources
Source: Global Energy Report (2012-2013)
For the last so many years government

has been doing its level best to import energy
from other countries in order to fulfill the gap
of energy. In this regard, so called dream gas
pipeline (Iran-Pakistan-India) confined now
to Iran-Pakistan, Turkmenistan, Afghanistan,
Pakistan and India (TAPI) and Central Asia
South Asia (CASA)-1000 have been rigorously followed. Nothing has yet been materialized.
The TAPI gas pipeline is based on mutual friendship, respect, and need. The project
will also result in the economic prosperity, regional cooperation and above all smooth and
easy availability of energy resources i.e. gas.
The availability of gas will help build economic growth, development and eventually a
stronger Pakistan.
TAPI specifications
TAPI is a 1,680-km 56-inch diameter
gas-pipeline starting from Dauletabad field in
Turkmenistan to Fazilka at the Pakistan-India
border, passing through Herat and Kandhar
in Afghanistan and Multan in Pakistan. It is
estimated that the pipeline will carry $3-5 trillion in oil and natural gas from the Caspian
Sea basin via Turkmenistan, Afghanistan, and
Pakistan. It will be profitable for investors.
The project cost was initially estimated $3.3
billion in 2004 which has now been increased
to $7.6 billion in 2008. Despite high inflationary ratios the project is still considered economically and financially viable. The Pakistan
government has already awarded the contract
for laying the TAPI gas pipeline project to the
US-based International Oil Company (IOC).
IP gas pipeline
The IP gas pipeline ($ 7.4 billion) has
apparently been finalized. It would initially
transport 60 million cubic metres of gas (2.2
billion cubic feet) daily to Pakistan. Talks
on the 2,600-kilometre (1,615-mile) IranPakistan-India pipeline began in 1994 but
have been stalled by tensions between India
and Pakistan and disagreements over transit
fee. Transit fee ranges from $400 million to
$750 million a year and Pakistan may be able
to earn, as much as $500 million a year if the
proposed gas pipeline is materialized. In fact,
Pakistan stands to earn about $14 billion in 30
years, including $8 billion in transit fee, $1 billion in taxes and $5 billion in savings.
Bitter ground realities

Call for accelerating power imports
from neighboring nations like 1,000MW from
Central Asian states, 500MW from India and
1,000MW from Iran would not easily work.
Supply of energy from Turkmenistan, Afghanistan, Pakistan and India (TAPI), Iran-Pakistan dream pipeline (IP) and even India would
badly suffer from the emerging geo-political
and geo-strategic trends in the region. Durable
peace and political stability in Afghanistan
would be crucial for importing energy from
the CIS. In case of IP, US legislations and diplomatic pressure would not be easy to crack.
Even after the lifting of sanctions from Iran,
this project would not be easily processed due
to ill designs.
Strategic policies of the

recent regime
Prime Minister Nawaz Sharif launched
the construction of the countrys biggest
The TAPI gas pipeline is

based on mutual friendship, respect, and need. The
project will also result in the
economic prosperity, regional
cooperation and above all
smooth and easy availability
of energy resources i.e. gas.
The availability of gas will
help build economic growth,
development and eventually
a stronger Pakistan.
atomic power plant. The 2,200-megawatt plant
is to be built with Chinese technical assistance
on the Arabian Sea coast at Paradise Beach, 40
kilometres west of Karachi. . Pakistan Atomic
Energy Commission engineers will work on
the project with help from the China Atomic
Energy Authority. It will make nuclear power as the biggest source of energy in Pakistan which is already operating three nuclear
plants, supplying 740 megawatts of power, in
the country for the last several years.
The fourth one is now also being built.
The new project will be the fifth one. The construction of the 2,200 megawatt plant, the fist
of the new series of six, has just been started.
This $10 billion Coastal Power Project called
K-2 and K-3 is scheduled to be completed in
six years.
Government has already started work on
wind energy generation of 2,500 megawatts,
1,000 megawatts under the Central Asia-South
Asia project, and Tarbela-Five expansion project which is to be completed by 2017. Many
Chinese, Korean, and many other countries
are visiting Pakistan in order to explore winwin situation. Many projects have already
been started with the help of China especially
in the fields of coal, solar and wind energy in
Punjab. Its biggest solar and coal projects are
being carried out in different parts of Punjab.
The government has also started work on the
Pakistan Power Park at Gaddani, on the Arabian Sea Coast close to Dubai. It consists of
10 coal-based electricity projects. Each project
will generate 660 megawatts of power.
The government also plans to import liquefied natural gas (LNG) from GCC to overcome the outages and load-shedding of natural
gas, that especially hits the countrys industry. Cooperation and collaboration with UAE
(Masdar, solar energy), Saudi Arabia (shale
gas) and Qatar (LNG) would be win-win situation for all the countries.
The writer is a research scholar,
specializes in geo-political issues of the
GCC, CIs and South East Asia. He has
keen interests in cross cultural dialogue and
conflict resolution.
15 MAR 2014
OIL & GAS
HOW TO SUCCEED IN 2014

While the outlook of 2014 remains robust overall, its clear
that greater attention is being given to soaring costs and a
greater focus on challenging new environments. Those firms
that are likely to succeed will do well to bear the following in
mind:
Find innovative cost solutions to maintain margins

Clamping down on costs will absorb the industrys attention in
2014, with efforts ranging from greater supplier competition
through to introducing more flexibility in the labour force. It
may be crucial to recognize the scope for cost savings and act
on this, since during 2014, cost will be a prime determinant
of which projects will go ahead and which wont get off the
ground. Major players can see that the dollar per ton per year
capex has the potential to be reduced considerably in over
heated markets, says Worley Parsons Sullivan.
Narrow the focus of spending
Maintain a frontier spirit

Technological advances are helping to open up new acreage
for production in in hospitable terrains, with the subsea a
particular focus of activity. The commercial success rate in the
Barents Sea is now extremely high, according to North Energys
Karlstrom, whose firm is active in that region. There is no
doubt that we are facing a breakthrough, and I think we will
see activity levels this year that we have never seen before, he
says. While these frontiers throw up complex new challenges,
they offer the potential for outsized returns for those with the
necessary risk approach and investment capacity.
Be Safe, not sorry

Successful firms will be those that make safety and HSE issues
a core part of their culture, both internally and throughout
their supply chain. They will ensure that these issues are
embedded in their leadership, and those contractors, vendors
and operators are all aligned. While its great to have the
procedures and the processes, the key to success is to have
people who are personally committed to safety and that the
corporate leadership is personally committed to executing those
systems effectively, every day, all day long, says the US Center
for Offshore Safetys Williams.
More firms are targeting their capex more carefully, such as

through more targeted deployment of capital across geographic
locations. There is also greater pressure to drive up return
on investment. Against a background of rising expenditure
amid low production growth, it should come as no surprise
that companies will be focusing their efforts on targeting
their capital expenditure far more effectively, says Statoils
Waemess.
Standardize global procurement

Growing cost-consciousness will prove a trigger for shifts
in the supply chain, with standardized procurement terms
becoming increasingly common. This is also underpinning a
move to larger, and fewer, suppliers for many companies. Fluor
Offshore Solutions Daigle says that now oil companies are
under such pressure on quality management, they should use
standardization of global procurement as a way to assist on
this. Jumping around between different vendors is not always
good if your processes require an element of quality control,
says Daigle.
MAR 2014
16
17 MAR 2014
REPORT
The Adolphus
Complex
Tammy Swofford
ethal personalities. Every professional standing army retains

leadership with lethal personalities. The doctrine of war, a
command and control environment, and need for strategic depth lock these
individuals into a trajectory of service. Within
state-mandated chain of commands which fall
under the authority of a Commander-in-Chief
and parliamentary body such men are highly
prized. But asymmetrical attack is the new
order of business. Eviscerating attacks are
targeting civilians. The urban warfare tactics create unmanageable humanitarian crises
across the Middle East and African continent.
So it becomes necessary for both soldier and
scholar to share their weapons. For the soldier,
the basic weapon is one of lethal force. But the
scholar has an equally formidable weapon. It
is the pen. Today I will profile three lethal
MAR 2014
18
personalities, who exhibit an Adolphus Complex. One document will be used for each
profile.
The first is the well-known Jihad
Against Jews and Crusaders, released on 23
February 1998. The second document is based
on an interview coming out of Chechnya in
June 2008. The third offering is recent. The
time stamp is January 2014 and makes it way
to my desk from a very active jihad portal. Enter the Intellectual Battlespace (IB) with me.
The triad model is a simple one. Let's
identify the traits.
NOBLE WOLF: Statesman

Leaders with the strength of a noble
wolf have a strong sense of destiny regarding
their place in the world. They consider themselves as both statesman and guardian of the
greater good. Their sense of guardianship of
the values and the culture require defense at
all costs. This preservation of values includes
bloodshed. When they enjoin the fight they
believe in the right of their cause, in fact, the
utter nobility of their cause. The belief in their
own moral superiority and infallibility make
them hard to subdue. They are not averse to
risk. Each new risk, runs like adrenaline in
their veins. These men display strong narcissistic tendencies. As they rise within the
chain of command they function as a magnet

for other narcissistic personalities. The noble
wolf personalities benefit chain of command
structures. A bifurcated chain of command
doctrine of nurture and cordon keeps them in
check. But the nobles wolves exist. We do not
easily note their presence outside the lair.
WOMB: Doctrine of War

Men with a strong doctrine of war value
the ideology which is invested within them.
This ideology can be self-generated, taught
in the formal classroom or formulated during the heat of battle. Out of this womb of
knowledge they show formidable leadership
qualities which draw others to join them from
quarterdeck to theater of battle, and onward....
to the grave. Men with a heavy reliance on a
doctrine of war demand unquestioning loyalty regarding their command and control of
the battlefield configuration. Good order and
discipline is mission essential. A strong doctrine of war and distinct ideological tethers are
needed to maintain mission focus.
SOLDIER'S CAMP: Art of War

Men with an ability to unify others under a banner of common cause and mission
accomplishment use a distinct skill set to build
the soldier's camp and replenish the battle
lines. These men are able to instill camaraderie. As men begin to align as part of a soldier's
camp the goal is to see the development of a
lethal fighting force. The United States Marine
Corps has a distinct training program which
first strips the individual of identity. The trainers then begin from the bottom up, and craft
the Marine to a new identity, that as a member
of the soldier's camp. Once identified with the
camp, the art of war is quickly taught.
* Analysis of Document from Chechnya: Movladi Udugov: It is war for the way
of life....
The percentiles for this document are
statistically similar to the first:
While Jihad Against Jews and Crusaders maintains a revolutionary tone, the interview of Movladi Udugov has a stronger geopolitical cadence. The noble wolf speaks with
tremendous bravado and almost a baiting tone.
Effective professional military leader- This is even noted within the doctrine of war.
ship grids efficiently corral talent pools which But the title It is war for the way of life....
include lethal personalities. When properly clearly establishes that self-determination and
identified and tasked for the needs of a nation, national autonomy continue to drive Chechen
such individuals can perform acts of great per- forces into an asymmetrical battle space. The
sonal sacrifice and cause others to follow their soldier's camp has long been established within
lead. But the stuff of greatness is not far re- the Caucasus. Chechen fighters are renowned
moved from acts of great evil, when deployed for the strong discipline within their ranks and
against innocent civilians. Let's move to docu- for hardened military prowess. So remarks
Wolf 39 %
which address the soldier's camp in Chechnya
ment analysis.
also make the jump to address the challenges
* Analysis of Jihad against Jews and and hurdles of camps outside the region.
Toward the end of the interview there
Crusaders:
is an interesting statement: Democracy has
The percentiles for this document fall appropriated the monopoly to legitimate use
of force. Everybody else is denied that right.
into a predictable range.
This calls for a response. What is a legitimate
use of force? Does it include
Soldier's
lethal acts against non-combatCamp 13 %
ants?
* Analysis of Statement
Wolf 40 %
of Abu Bakr al-Baghdadi: ReWomb 47 %,
lease date January 2014
The percentiles for this
document fall in a different
range than the prior two as
shown in below pie chart.
Dangerous. Predictably
There is a strong leaning toward the
need for credibility, hence, the voice of an
Alpha male, a dominant guardian. The noble
Soldiers
wolf speaks of crusader armies spreading like
Camp 16 %
locusts, plundering riches, attempts at annihilation of the Muslim people.
Wolf 39 %
To further strengthen the document,
ideology is used to make the words of Usamah
Womb 45 %
bin Ladin read like an authoritative mandate.
Although the percentile for the soldier's
camp (art of war) is small, the author identifies
every living Muslim as a member of the camp.
The ruling to kill the Americans and their allies civilians and military is an individual
duty for every Muslim who can do it in any unpredictable. Is there an inner circle quest
country.... This broad-based strategy was a to wrest the title of Amir from al-Baghdadi?
dangerous proposition then and continues to These are the things I ponder when reading
be a dangerous thought today. To erase the the document and crunching the numbers.
boundaries between combatant and civilian Al-Baghdadi has little concern for real issues
tramples on the work of Jean Jacques Rous- of state, or the fruit of diplomacy. His strong
seau and other philosophers who suggested ideological leanings have given him the ability
that a medieval order of military operations to harness a lethal force which is highly dewhich pillaged, raped and looted was mor- pendent on bomb-makers to inflict maximum
carnage. A wave of car bombings and targeted
ally repugnant.
assassinations attest to his war standard. But

his January 2014 statement shows a consistent
effort to both rally and unify the ranks which
serve under his command. He addresses both
the offensive and defensive posture of the soldier's camp. Does he need to bolster the ego
of his soldiers? The weeks ahead will prove
interesting in Iraq.
The Adolphus Complex is a rudimentary model. Drilling deeply into the documents
after the establishment of percentages is the
more tedious work. What voice does the noble
wolf use in defense of his arguments? What is
the nature of his doctrine of war? How is he
able to unify a command, instill loyalty, and
accomplish his mission? Of utmost importance, what part of the personality has the biggest draw for any given demographic? While
some are drawn to message, others are drawn
to mission. There are other individuals who
become soldiers of fortune because of an aching psychological lack. They want the war experience within the context of the camaraderie
of the ranks. The alarming movement of young
Muslims from the West into Syria is probably
driven by psychological lack and a poor sense
of well-being. The stable powers work with
another weapon. It is an active denial endeavor based on legal action. The individuals who
make the mad dash to war are placed on a no
fly list and stripped of legal status.
War never really makes good sense. The
toll on mankind and on the human spirit cannot be measured. But if there is to be war, let
it be confined and contained within legally and
internationally recognized chain of command
structures. Simply put, the world can be a safer
place when professional standing armies fulfill
their duties. But the world is a
more dangerous place when
men with an Adolphus Complex become non-state players
within the asymmetrical battle
space. When the commerce
of non-state players is funded
from interested national entities, the civilian population is
the ultimate prey. And it is men
with lethal personalities who
are capable to speak, instruct,
and command. The Adolphus
Complex. It exists.
https://en.wikipedia.org/wiki/Gustavus_
Adolphus_of_Sweden
http://faculty.history.wisc.edu/
sommerville/351/swedish%20invasion.html
The writer is a freelance journalist and author

of the novel Arsenal. She can be reached at
tammyswof@msn.com
19 MAR 2014
A fashion show for a cause
REPORT
good candidate for miracles is the story of this young social activist who has given these women with physical disability a way to become sole
breadwinner of the family by doing wonders out of mere paper. Touched by the massive victimization of the horrendous earthquake of 2005 and
inspired by the strength of these earthquake victims who found shelter at a village on the outskirts of Islamabad, the Rotary Club of Islamabad
Renaissance (RCIR) introduced the paper bead-making at the paraplegic centre in order to generate income. Strips of waste paper are rolled in
order to make a variety of paper beads supported by chains and strings which finally takes the form of necklace, earrings and bracelets.
To put this beautiful miracle in the picture and pull funds together, a successful fashion show was organized by Paper Miracles, in collaboration with RCIR
Renaissance and Hunar Entrepreneurs at Marriot Hotel, Islamabad. The objective of the event was to raise funds, primarily through ticket sales, to support the
beneficiaries of Paper Miracles which is a social enterprise and a flagship project of the Rotary Club, specializing in high-quality hand-crafted recycled paper
jewelry. The reach of this pioneering social enterprise continues to expand beyond Islamabad to communities in
northern and southern Pakistan, directly impacting the lives of women with limited employment opportunities
and mobility access.
The models walked in style showcasing outfits from leading designer labels: Bina N Sultan, SNS,
NAZ Collections and NZK. Tariq Amins Saloon, led by Ms. Fayeza Amin, managed the choreography,
hairstyling and make-up with great enthusiasm and sheer professionalism.
The show was finely balanced between glamour, modesty and surprise, with well-timed filler activities that allowed models time to change outfits. This included a documentary showing and a wellcoordinated mime performance that moved the crowd, along with raffle prizes from the sponsors
of the event for the lucky supporters of the movement. Generous sponsorships from RCIR member
organizations and Paper Miracles supporters ensured the seamless execution of the event.
Three paraplegic beaders who were severely injured in the earthquake were introduced
to the audience along with the Paper Miracles team that works to create the jewelry and at
the very end Ms. Elli Takagaki, the founder of Paper Miracles and president of Rotary Club,
shared the inspiration behind the movement:
Displaced from their homes and forced into wheelchairs, one would think their
spirits would be broken. But these women have demonstrated inspiring resilience and
unyielding commitment demonstrating their courage and desire to rebuild their
lives, said Elli. Regardless of experiencing immense pain and trauma, these
women continue to move forward with a positive attitude and an increased
will to lead a normal life, a miracle in itself.
The highlight of the event was when Chief Guest Peter Heyward,
the Australian High Commissioner, along with his wife, Susan Heyward,
appeared on the ramp along with the spouses of Ambassadors of the European Union, Hungary and Bulgaria to advocate for the movement. The
diplomatic and expat communities showed up in large numbers along with
other influential members of the community ranging from the field of journalism to philanthropy.
Khurram Agha
I have had a wonderful evening. I felt like a

princess in that long green dress! And it was
my privilege to support the wonderful work
of Paper Miracles. It is a great project!
Susan Heyward, Goodwill Ambassador for
Paper Miracles
MAR 2014
20
21 MAR 2014
KARACHI DIARY
Sound Check:
Afrah Jamal
MAR 2014
22
ike Ricks from Casablanca, people tend to gravitate towards the

Karachi Literature Festival (KLF). To rendezvous with authors,
(global & regional), journalists (foreign and local), diplomats,
filmmakers, celebrities, publishing giants, analysts & social media pundits. To hail divergent views and forge lifelong connections while sprinting from session to session; at author signings by makeshift book stalls, in the midst of earnest discussions, during lively Q/As
and at coffee stands.
KLF, which became a part of Karachis social scene in 2010, is a portal to a realm where discourse is welcome and diversity is celebrated.
Where elitism gets shunned, and cultural bonds are reinforced.
Those who ventured out might have come upon beloved idols sans
entourage mingling with the common folk, calmly standing by a pillar if
they couldnt find a seat; Zeb (other half of Haniya) or Tina Sani humming
to the beat of something called a Shurti box under the canopy, Shanaz
Ramzi by the sea-front bravely recreating recipes from her book on
Pakistani cuisine or Gandhis gracious grandson engaged in a diplomatic
dance after an awkward encounter with an audience member.
The 3 day event (7 - 9th February 2014) held at Beach Luxury Hotel
welcomed an estimated 70,000 visitors, despite the strike and the perpetually grim backdrop. It comes once a year and is free. Inside it mirrors
a miniaturized global village (of sorts) that uses its literary credentials to
pay homage to the arts through energizing conversations, steer free flowing ideas to safe harbour and raise the stature of regional languages.
This year, 11 nations were represented, 280 speakers hosted, and
28 books launched. Also, 3 Pakistani books were honored - with the KLF
Coca Cola Best Non Fiction (Osama Siddique), KLF Embassy of France
Prize (Uzma Aslam Khan) & the KLF Peace Prize (Akber Ahmed). KLF 2014
was sponsored by HBL, and co-sponsored by Consulate General of the
Federal Republic of Germany & the Goethe Institute. The festival, which
came to Islamabad in 2013, is the brainchild of Ameena Saiyid OBE, MD
OUP (Oxford University Press) & Asif Farrukhi. The next Islamabad Literary Festival will be held in April 2014.
The writer is a freelance journalist who blogs at htp://afrahjamal.blogspot.com. She

can be reached at afrahjh@hotmail.com and on twiter @Afrahjh
Afrah Jamal
forlorn figure making portraits in

hotel lobbies may not be newsworthy. The flash-forward of him wandering his old stomping grounds
however can make headlines. By
then he has acquired some elegant titles that go well
with stardom, while retaining a measure of humility
that keeps him grounded.
Renowned musician and actor Ali Zafar has
been in the game for a decade. His name is listed in
Wall Street Money Never Sleeps (2010) - soundtrack section. He has an array of awards under his
belt and a line-up of movies & songs to his credit.
He saunters on stage to take his place as the
star of the evening but happily shares the spotlight
- with a fan, randomly chosen for a photo-op, with
nimble footed celebrities who waltzed in and in
some cases, leapt out, and Shahbaz the surprised
looking technician who got his 5 minutes of fame in
exchange for some bottled water.
The singer scores with his generosity and endears himself to listeners by doling out mini doses
of philosophical musings inlaid with self deprecating humour. A string of surprise cameos follow.
All this takes place in the backdrop of Hum TVs
Valentine day celebrations, aptly titled Dil Jhoom
Jhoom held on 31st January, 2014 in Pearl Continental, Karachi.
The Ali Zafar experience becomes interactive
when Faisal Qureshi, of the Dr. & Billa fame now
seen in U-fone adverts, who hasnt attended a live
show in years appears on stage, full of praises, and
slightly apprehensive at what the singer might say.
Ali has a reputation of being blunt. But other than
a humorous dig at not writing a film for him, Faisal
escapes unscathed. Occasionally Ali lapses into no
woman no cry, spliced in with random political
observations. He believes that enmity between 2
warring nations gets them nowhere and advocates
talent exchange programs insisting that collaboration would solve many problems. His film, Total
Siyapaa, due for release on 7th March is reportedly
patterned after a similar theme.
Junaid Khan, with whom he performed an
impromptu little duet, believes that there are few
who have mapped their own destinies and Ali is one
of them An aspiring singer, sketch pad in hand
with no money to record a song, and no prospects
on the horizon, qualifies.
23 MAR 2014
INTERVIEW
Pakistan: A gold mine

for investors
Pakistan is a huge
consumer market
and a big attraction
for investors. To
cash this potential
of our country, the
BOI is planning to
organize an investors conference in
Islamabad in May
this year. In this
conference we will
showcase the variety of investment
opportunities to our
foreign investors.
Dr. Miftah Ismail
Dr. Miftah Ismail is a prominent industrialist and

economist who is currently serving as the Chairman,
Board of Investment. He holds a PhD degree in Public
Finance and Political Economy from Wharton School
of Business, University of Pennsylvania and worked
at International Monetary Fund as a professional
economist.
MAR 2014
24
Maria Khalid
or the year 2014,oil and gas sector could be investors heaven.

Some of major projects such as
Thar coal mining, Sindh wind
power and Gadani power project have been inaugurated while a number of
projects are in the pipeline. The government is
providing an investment friendly environment
but bringing substantial investment to finance
these projects is a Hercules task as security is
the foremost challenge being faced by investors, said Dr. Miftah Ismail in an exclusive
interview with Economic Affairs.
What investment opportunities

do you see in the oil and gas
sector of Pakistan?
As a result of these financial and structural reforms, this sector has already emerged
as one of the most attractive sector for investment in the country. Pakistan is rich in natural resources having huge sedimentary basins
stretching over 825,000 sq. kms., offering immense potential for exploration and development of natural resources with an exploration
success ratio of 1 : 3.5.
If we look at the existing options then
coal in the deserts of Sindh is like gold mines.
Every coal mine in Sindh is worth billion dollars. The largest coal reserves of Pakistan located in Thar has approximately 184.623 billion tons of coal. Furthermore, there are gold
mines along Tethyan belt of Baluchistan that
contains 25 million ounce of gold, 332 billion
pounds of copper, 25 billion tons of marble
and 1.5 billion tons of granite. Not having
seized the opportunity yet, mainly due to security issues in the region, paints a murky picture
of Baluchistan.
What are the factors hampering

investment inflows?
You may wonder that the return on investment in Pakistan is 17% and investors are
allowed to takeaway hundred percent of their
profits but still the FDI inflow are not impressive. Unfortunately, Pakistan has lost almost
all positive indicators of the Global Competitiveness Index (GCI) which measures competitiveness of an economy on the basis of 12
major indicators. On account of poor performance, Pakistan is ranked 133 out of 148 in
the global competitiveness for which I dont
want to blame the previous government. It was
mainly the energy shortfall and the law and order issues hampering investment inflows.
What measures have been taken

by the BOI to boost foreign direct
investment (FDI)?
In order to boost FDI in Pakistan, specific investment policies and procedures have
been designed for individual sectors, to create an investor-friendly environment. Various
incentives have been offered to attract FDI,
including repatriation of capital, capital gains,
dividends and profits.
Pakistan is a huge consumer market and
a big attraction for investors. To cash this potential of our country, the BOI is planning to
organize an investors conference in Islamabad in May this year. In this conference we
will showcase the variety of investment opportunities to our foreign investors.
Moreover, BOI would try to improve
Pakistan's ranking of ease of doing business
which is currently 110th among the 189 world
economies. We would like to see Pakistan at
80.
BOI is vigorously pursuing the target
of raising the investment to 20 percent of the
GDP in the next four to five years, which has
been dropped to 12 percent at present.
How is our agriculture sector

potential for foreign investors?
Our biggest sector having potential is the
agriculture sector. I think it is still unexplored
or it has not been really looked at by the real
investors who are in the agriculture business. It
is a vast area with a number of fields and businesses which can attract massive investment.
If we take the example of milk, Pakistan is the
4th largest producer of milk and 80% of our
milk is still sold loose. So it means all this 80%
requires investment. Similarly we need huge
investment in storage and warehousing. We
still store our raw materials in open storages

places. These days it is stored in silos around
the world which maintains a certain temperature and moisture for every product. Hence
exponential potential still exists in milk, meat,
rice and fruit markets.
How successful was your visit to

China?
It was the first state visit of President
Mamnoon to China. A delegation led by Chief
Minister Punjab Shahbaz Sharif was also visiting and there was JCC (Joint Cooperation
Committee) meeting to attend. During the
visit we held series of meetings with the top
leadership of China and discussed a whole
gamut of issues ranging from strategic bilateral relations to further cementing economic
and trade relations.
The purpose of this visit was to strike
agreements with China for joint energy and
infrastructure projects that includes construction of a motorway from Lahore to Karachi,
upgrading a stretch of road from China's border to Islamabad, an airport near Islamabad,
Gadani power plant, new roads in Gwadar and
to upgrade rail infrastructure between Lahore
and Peshawar.
The most focused thing during the visit
was the Pak-China Economic Corridor that
would prove to be a game-changer in ushering
a new era of socio-economic development not
only for the people of the two countries but
also for the entire region. Generously, China
agreed to extend its cooperation in all areas.
The economic corridor is a comprehensive infrastructure package worth $18-20
billion with a wide range of aspects including
Gwadar-Kashgar Highway, construction of
motorway from the eastern city of Lahore to
the southern port of Karachi, upgrading railway infrastructure between Lahore and the
northwestern city of Peshawar, bullet train,
new roads in Gwadar, fibre-optic cabling and
gas and oil pipelines. Work on these new projects will open enormous employment opportunities and generate demand for raw material
e.g. cement, steel and subsequently give a new
life to our industrial sector.
Within 3-4 years you would see roads on
ground from Chinas border to the Pakistani
capital. Thus this mutual cooperation between
both countries will be beneficial in terms of
improving our economy and will take Pak
China friendship to a next level.
The writer is the Deputy Editor of
Economic Affairs. She can be reached at
editor@economicaffairs.info
25 MAR 2014
ANALYSIS
Privatization taken as the salvation of all the woes of state-owned

enterprises, seen as a panacea for improving corporate governance, management, and performance may be an incomplete truth
and therefore, in Kevins words its like a runway that is just a
bit too short, extremely dangerous.
Privatization;
Kashif Mateen Ansari
hese days with the news of the

governments agenda of privatization, many questions are making the rounds.Why privatize?
Why might privatization fail?
What is needed to make privatization work?
To answer these questions, it is usually argued that governments intervention causes
economic inefficiencies. There are many who
support privatization and there is no dearth of
those who are protesting and arguing against
it.
The debate on the issue is raging and
both the camps are putting forward their arguments. According to PIDE
Vice-Chancellor
Dr Rashid
Amjad,
MAR 2014
26
salvation or an
incomplete truth
Policy stances which reflect our best economic interests and take into account the political
economic dimensions should be adopted. In
his view, there is a need for a refurbishment of
the system for increasing efficiency and productivity of loss making public enterprises
There are many pro-privatization experts
like, NUST Dean Ashfaq Hassan Khan, Benefits of privatization help reduce the countrys
debt burden and also help improve the allocation of resources.
State owned enterprises (SOEs) are generally considered unproductive all around the
world, primarily because they serve the political masters and the bureaucracy more than the
business and the owner (state) they represent.
The privatization of these SOEs is considered to be the solution on the premise that
the private sector is more efficient and cost
effective than the government. The role of
government should be narrowed down to
policy making and ensuring that the right
business environment exists. Efficiency
of a government in running any business can be captured in these words of
Milton Friedman, If you put the federal government in charge of the Sahara
Desert, in 5 years there'd be a shortage
of sand.
Present government has embarked on

a strategy for privatizing a number of SOEs.
Why should these organizations, like Pakistan
Steel or Pakistan International Airlines (PIA)
be privatized? They are inefficient and poorly
managed and on top of that they are a heavy
burden on the national kitty as they are costing
Rs400-Rs500 billion annually. They wear the
crown of destabilizing the budget adding burden to the national debt. How can a financially
poor country like Pakistan continue to foot the
bill of the inefficiencies of these institutions?
In the words of Margaret Thatcher The problem with socialism is that you eventually run
out of other peoples' money. Same is the case
here that we are running out of other peoples
money to fund these giant government owned
businesses.
The debate on the point of to be or not
to be; To privatize or not to privatize is
relatively simple. For this part of the debate,
it is easy to see the writing on the wall. These

SOEs cannot survive without budgetary support from the government. They are the mega
employment exchanges for the kith and kin of
the high and mighty. Do we really want to add
thousands of workers to already bankrupt institutions? For how long can we rely on our
friends and masters to help us with funding
support, debt and grants to keep these giants
afloat? Privatization is the answer to many of
these woes. But privatization as an ideology
is not the solution to all the ills that befall the
public sector.
Privatization for the sake of privatization
is not the answer. Privatization has worked in
many cases and it has failed in many other instances. According to Kevin R. McDonald who
published his article Why Privatization Is Not
Enough in Harvard Business Review; that
most newly privatized companies need dominant, experienced shareholders to compensate
for the weaknesses of managers. Without the
backing and nudging of such shareholders,
companies tend to operate in the same inefficient ways they have learnt over the years.
Kevin further noted based on his research that the positive effects of privatization
are not spontaneous. Investors earn outstanding returns only when they themselves add
value in the form of leadership, systems, experience and direction.
Privatization taken as the salvation of all
the woes of state-owned enterprises, seen as a
panacea for improving corporate governance,
management, and performance may be an incomplete truth and therefore, in Kevins words
its like a runway that is just a bit too short,
extremely dangerous.
Developing on the stories that Kevin R.
McDonald put forward through his research
in Poland, there were many success stories
like Thomson Polkolor which was a joint
venture post privatization between Thomson,
the French electronics giant that acquired
RCA in 1987, and Polkolor, a Warsaw-based
producer of picture tubes for color television
sets. Problems were the same as we see in
our SOEs, very big payroll and no cash to pay
the employees. There was urgent requirement
of capital, better management, better work
attitudes, and an injection of basic business
skills and procedures. The main sources of
operational difficulties were the lack of sense
of responsibility in the employees and lack of
motivation to improve productivity.
Nevertheless, the Thomson Polkolor
joint venture achieved impressive financial results in first 16 months of operation. Its sales
doubled, the joint venture generated an operating profit in the same period. It started paying
taxes, whereas the former state-owned enterprise paid no taxes at all.
An example of privatization gone wrong
is Krosno Glass Works (Krosnienskie Huta

Szkla). Krosno was privatized in November
of 1991. Important aspect of this privatization
was the way the ownership was distributed
between the government, employees, development bank and general public. After the government which held 35% of the shares; 28%
of the shares were widely dispersed among the
public. The remaining shares were held by the
employees, bank and another company purchasing the products from Krosno.
Krosnos revenues fell dramatically after privatization. One of the reasons was the
worldwide recession but that was not the only
reason. The management of the company
failed to respond to the falling sales and was
unable to exploit the only profitable business
of hand-blown glass.
Managements failure to exploit their
profitable line of business hurt the company.
Unfortunately, there was no dominant investor
with sufficient experience to turn this around.
Replacing the company president twice in two
years was the boards response to this problem. The inadequacy of the corporate governance revealed itself and the dispersed share
ownership was seen as the reason behind this
lackluster performance. Contributing reasons
were no market-oriented governance; board
members lethargic participation, government
nominated members failing to attend the key
board meetings. This pointed to one big flaw
that there was no strong third voice in the shape
of strong sponsor guiding the management.
In various other studies it has been pointed out that certain positive effects are evident
from all privatizations, many of these related
to sales effort. But the overall performance is
more linked to a dominant shareholder whose
intervention is the key to improving corporate
performance and governance.
Privatization as an ideology that has to
be followed for the sake of it would not work.
Also the experience of privatization has given
out mixed results all across the globe. Evidence suggests that privatization which results
in distributed and fragmented share holding
has less chances of success as compared to
the instances where we have a strong, capable
shareholder in the form of a local or foreign
business house with sound expertise and exposure in the same sector.
So the debate is not about privatization
Managements
failure to exploit
their profitable
line of business
hurt the company.
Unfortunately,
there was no
dominant investor
with sufficient
experience to turn
this around.
itself, rather it is about how we do it. Privatization is more akin to selling the family silver.
We can do it once. It will surely give us the
much needed funds but we must do it right the
first time. Otherwise the future generations
will find neither the silver nor the benefit of
the funds. Privatization can energize the economy and put right many institutions that were
once great. We may find PIA again training
the leading twenty plus airlines in the world or
we may find Pakistan Steel turning the wheel
of our infrastructure and economy.
In the words of top manager of one of
the privatized entities in east Europe, Privatization alone is like throwing a person into the
water and calling it a swimming lesson.
Privatization alone is not the answer. We
have to be very careful about the process and
the results both. Just throwing the share holding away to scattered shareholders may result
into a change in the ownership but it will not
result into a change in the performance of
these institutions. Privatization must be done
in a manner that results into new management
thinking and active board governance by the
new shareholders. Otherwise our institutions
will remain rudderless and drift away on the
currents of economic distraction one after the
other.
The writer is the CEO of a power project and
can be reached at kashifmateenansari@post.
harvard.edu
27 MAR 2014
ENERGY
Energy Crises:
Is the wolf at
the door?
he life-style of 20th-century man

has been influenced more by oil
and gas than any other natural
resource, and indications are
that oil and gas reserves will increase in importance during the remainder of
this century. Oil and gas production provides
inexpensive portable energy and supplies
feedstock to an international petrochemical
MAR 2014
28
industry that manufactures

synthetic textiles and medicines and supports world agriculture. Crops are planted,
cultivated, treated with pesticides, fertilized, harvested,
moved to market, and cooked
with oil and/or gas. Wars have
been fought to ensure petroleum
availability, and reserve estimates
have dictated actions of governments,
entire industries, individual companies,
lending institutions, and private investors.
Almost all applications of oil and gas reserve
estimates require, in the final analysis, an economic evaluation that considers the predicted
production capacity and the capital and operating cost estimates.
Examining the reform experience and
lessons in the developing countries it is obvious that they have to consider technically and
financially less efficient electricity sectors
than developed countries with less resources
and weaker institutions. Private participation
and key reform steps such as restructuring,
competition, and regulation would be significant. The role of contextual factors such
Dr. Fawad Kaiser

as system size, institutional endowment, and
international organizations become important
and it is then argued that there is a need for
redefining the role of the state rather than a
full withdrawal from the sector and that many
countries like Pakistan should adopt simpler
reform models and gradual implementation.
During the past one-and-a-half decade,
Pakistan has introduced varying mixes of institutional reforms into the electricity sectors.
The emerging international evidence suggests
that the standard reform model, privatization,
vertical and horizontal unbundling, and the
introduction of performance-based regulatory
mechanisms, if implemented correctly, can
lead to significant improvements in several dimensions of operating performance.
When examined there is often a poorly
explored link between power sector reforms
and wider institutional reforms in the economy

across different groups of developing countries. Research shows that when panel-data
econometrics based on bias corrected dynamic
fixed effect analysis (LSDVC) was used to assess the impact of reforms on macroeconomic
and power sector outcomes. The results indicated that power sector reform is highly interdependent with wider reforms in other sectors of the economy. These findings indicate
that failure to harmonize inter-sector reforms
leads to power sector reform measures being
ineffective. Hence it can be concluded that the
success of power sector reforms in developing countries largely depend on the extent to
which they synchronize inter-sector reforms in
the economy.
How real and long lasting is the current
energy crisis? There is reason to believe that
domestic fossil fuels will not continue to be
available, due to slowly declining reserves
and no alternate energy resources found in
adequate amounts to support total anticipated
energy consumption in Pakistan. Worryingly,
if energy sources take an increased proportion
of the load, the fossil fuels will not last correspondingly longer. Thus, the current energy
crisis, although very real, should be viewed as
a transient perturbation of the long term trajectory of our energy economy. Estimates of
energy resources and projections of future energy consumption show that the country has
limited fossil fuel reserves. The energy problem is more political than economic in nature,
and underlying political differences must be
understood in order to appreciate the effects
on world-wide interdependence of petroleum
supplies and prices.
Energy future studies can be a useful tool
for learning about how to induce and manage
technical, economic and policy change related
to energy supply and use. The private sector
has successfully deployed them for strategic
planning, examining key parameters such as
markets, competition and consumer trends.
However in public policy, most energy future studies remain disconnected from policy
making. One reason is that they often ignore
the key political and institutional factors that

underpin much of the anticipated, wished-for
or otherwise explored energy systems developments.
We know that institutions and politics are
critical enablers or constraints to technical and
policy change. It is critical to examine how analytical insights into political and institutional
dynamics can enhance energy future studies.
It requires developing an approach that combines technical systems change scenarios with
political and institutional analysis. Using the
example of a back casting study dealing with
the long term low-carbon transformation of a
national energy system, it applies two levels of
institutional and political analysis; at the level
of international regimes and at the level of sectoral policy. This study examines how future
systems changes and policy paths are conditioned by institutional change processes and
finds that the systematic application of these
variables significantly enhances more useful
back casting studies of energy futures.
Nowadays, ambitions of a comprehensive energy policy make developing counties
one of the most interesting regions with regard
to energy security. However, not only the European Union (EU) but also the International
Atomic Energy Agency (IAEA) and the North
Atlantic Treaty Organization (NATO) are or
will be relevant actors in the global struggle
for affordable, sustainable, and sufficient supplies of energy. All three have developed more
or less distinctive instruments to secure their
members access to energy. Nevertheless, there
are three problems that prohibit the Europeans
from being important players in global energy
politics. First, the EU Member States do not
have sufficient indigenous reserves of energy
and thus are dependent on foreign suppliers.
Second, Europe and its partners lack, as of yet,
a comprehensive strategy for dealing with the
external aspects of energy politics, including
supply security as well as the political and
economic challenges of import dependency
and energy cut-offs. Third, the problem of energy security can be resolvable only if innerEU coherence and later on, regional and global
energy governance can be established.

Energy security has again become an
important public issue amid concerns about
high energy prices and the occurrence of regional supply shortfalls. An assessment of
the current state of oil security indicates that
the risks of supply disruption have not diminished. The oil market outlook for the next two
decades suggests an even greater need for oil
security protection. With growing significance
of global gas demand and trade, gas security
is also becoming increasingly important. In
conclusion, although no global energy crisis
appears to be on the horizon, some serious
security concerns do exist and will likely intensify in the future. This means that there is
no room for complacency on energy security.
The existing oil emergency measures need to
be extended to cover the developing countries
and other energy sources.
World conventional oil supply will soon
be at physical risk. The Middle-East countries
have only little spare operational capacity, and
this will be increasingly called upon as oil
production declines elsewhere. Large investments in Middle-East production, if they occur, could raise output, but only to a limited
extent. A partial exception is Iraq, but even
here, there would be significant delays before
prospects can be confidently confirmed. If demand is maintained, and if large investments
in Middle-East capacity are not made, the
world will face the prospect of oil shortages
in the near term.
Even with large investments, resource
limits will force Middle-East production to
decline fairly soon, and hence also global
conventional oil production. The date of this
resource-limited global peak depends on the
size of Middle-East reserves, which are poorly
known, and unreliably reported. Best estimates put the physical peak of global conventional oil production between 5 and 10 years
from now. The world contains large quantities
of non-conventional oil, and various oil substitutes but the rapidity of the decline in the
production of conventional oil makes it probable that these non-conventional sources cannot make fast enough to fully compensate. The
result will be a sustained global oil shortage.
For conventional gas, the world's original endowment is probably about the same, in energy terms, as its endowment of conventional
oil. Since less gas has been used so far compared to oil, the world will turn increasingly to
gas as oil declines. But the global peak in conventional gas production is already in sight, in
perhaps 20 years, and hence the global peak of
all hydrocarbons (oil plus gas) is likely to be in
about 10 or so years.
The writer works as a consultant forensic
psychiatrist with the HUNTERCOMBE Group
UK.
29 MAR 2014
REPORT
Taxation reforms in
Pakistan and way forward
Muhammad Hamza Abbas
he matter of appropriate
sources for additional sources
of revenue is of central importance to many developing
countries including Pakistan.
Under the International Monetary Fund
(IMF) agreement, Pakistan has also agreed
to undertake tax reforms, with one percent
rise in tax to GDP ratio every year to get
additional $6.6 billion under 3 years of Extended Fund Facility (EFF).
Some might argue that in terms of tax
to GDP ratio, we are at the same level as
India, Bangladesh and China, but for these
economies, other sources of income are
much higher than Pakistan. In the global
tax payers index, Pakistan is ranked 162.
Huge burden of debt and with the current
IMF loan facility, debt to GDP ratio is going
to rise above 60% this year. The question
arises, from where are we going to fund this
whole debt with ever rising unemployment
and poverty.
In a policy symposium organized by
MAR 2014
30
Sustainable Development Policy Institute

(SDPI), three major issues related to tax regime were highlighted by the experts in the
tax collection system of the country, which
are i) Exemptions, concession and preferential treatments under SROs, ii) Narrow Tax
Base and, iii) Malfunction Tax Administration System.
Exemptions, concessions and preferential treatments result in huge loss to the
economy. Huge amount of customs tariff
lines are affected by SROs that leads to revenue leakage of 3-4% which amounts to Rs.
600-800 billion every year. Government has
the authority to issue these subsidies without an approval from the parliament. Resultantly no legal requirement to report the
value lost due to these exemptions, concession and preferential treatments.
Secondly there comes the issue of narrow tax base. No efforts have been made so
far to improve them over the years. There
are only 0.7 million tax payers in the country. According to the recent report issued by
Mr. Omer Cheema (Investigative journalist),
legislatures are among the major defaulters
of tax. With few tax payers in the country,
this leads to average tax rate to be higher
than other South Asian countries.
Thirdly, inefficient, fragmented and
rent seeking behavior in tax administration
system is putting the system of tax collection to a standstill. It takes 560 hours for filing tax returns which is a huge loss of time
for our tax payers. According to a survey
conducted by SDPI, 68% of people said that
tax system is not fair, 60 % firms said that
corruption is the biggest issue, 10% said

new sectors need to be held accountable for
and 4 % said that filing tax is a very difficult job.
FBR had recently highlighted 176,000
people, those who have multiple bank accounts, houses and international travelling
but they arent paying any tax. Now this list
has expanded to 3.2 million people. At the
first stage, FBR intends to send notices to
100,000, but the irony is the current system
of FBR, it is going to take 32 years.
Having said this, let us now come to
some short-term measures that are going to
save our tax system and economy. There is a
dire need to revisit SRO regime and it must
be subjected to an approval from the parliament. Complete autonomy must be given to
FBR and provincial revenue collection departments must be strengthened. If FBR is
thinking towards moving to increase VAT,
it must inform the business community at
the earliest. Government must take steps
towards accountability from the informal
sector that is rapidly expanding in the country. It is undeniably not a good omen for a
country like Pakistan. Now it is time to reconsider taxing agriculture income, property
and capital gains in stock exchange. Nonetheless, trained and well capacitated human
resource in FBR is a prerequisite for additional tax collection which will also help in
improved accountability and transparency.
The writer is a researcher at Sustainable
Development Policy Institute (SDPI),
Islamabad.
Stand
Your
Ground
Sabria Chowdhury Balland
aws are supposed to solve problems, not create them. Laws

are supposed to provide clarity
and objectivity, not create ambiguous uncertainties leading
to questionable justice. Laws are meant to
provide practical guidelines to the society for
living together peacefully and harmoniously,
not to create discord among racially and ethnically different people in society. In all these
respects, it is clear that Stand Your Ground
Laws are a failure.
A Stand Your Ground Law states that
a person may use deadly force in self-defense
without any obligations to retreat when faced
with a reasonable perceived threat. These last
three words are operative in understanding
the illogical aspects of this law, not to mention the abusive ways in which it has been applied. More than half of the states in the United
States have some sort of stand your ground
law in the books.
Controversies stemming from stand
your ground laws reached a boiling point
in the shooting of a 17 year old Florida teen,
Trayvon Martin, by a neighborhood patrol
watchman, George Zimmerman. The latter
had perceived Martin to be armed and a potential threat, even citing that he was attacked
"If a law is unjust, a man is not only right

to disobey it, he is obligated to do so."
Thomas Jefferson
When the law causes injustice
by the teen, therefore applying the stand your

ground law, shooting and killing Martin.
However, at the time of his death, it was found
that Martin was far from being armed. In fact
what was perceived to be a weapon was actually a bag of candy and iced tea. Martin lost his
life at the age of 17 due to this. Zimmerman
was acquitted of his crime. Justice?
Once again, the controversy and irrationality of stand your ground laws has been
seen in the shooting of another 17 year old
Florida teen, Jordan Davis by Michael Dunn.
In this case, Dunn shot and killed Davis, after an altercation over the loud music Davis
and his friends were playing. There are no
accounts of Dunn being attacked by Davis or
any of his friends, no threats and no questions
of self-defense. What resulted however due to
the Dunns application of stand your ground
laws was the murder of an innocent teenager.
To add to the injustice of the case, Dunn was
recently convicted on three counts of second
degree attempted murder for a clear case of
murder!
Both Martin and Davis were African
American teenagers. Should it be surprising
that the African American community fears
that the law does not protect young males of
color when in a confrontational situation with
white people? This once again opens a can of
worms and creates discord among races in society rather than what a law is clearly expected
to doto create harmony and provide justice.
That is a far cry from what the definitions of
a law entails.
The basis of stand your ground laws
is that individuals should be able to use deadly
force when they believe that they are confronted with a dangerous situation and remove
themselves from harms way. In fact, it appears
more often than not that stand your ground
laws encourage acts of retaliation through
the use of deadly force. Having said that, in
the case of Trayvon Martin, the circumstances
leading to his death are hazy and in the case
of Jordan Davis, there was clearly no basis for

any application of this law by all accounts as
he and his friends did not present any danger
to Michael Dunn.
Therefore, what stand your ground
laws imply is that a person merely imagines
or believes that he or she is in danger. However, believed perceptions of being in danger
are arbitrary and rely on a persons subjective
reasoning. Permitting this line of reasoning
to use deadly force clearly demonstrates that
stand your ground laws are clearly flawed
and unfortunately increase the potential for increasing violence leading to wrongful deaths
based on misunderstandings, miscommunications and racial prejudices. Is it therefore legally and morally responsible for an individual
to assume a situation of danger and act as the
judge, jury and executioner? It would lead any
sane person to question this principle of shoot
first and ask questions later.
According to the police and prosecutors,
stand your ground laws have allowed countless individuals to literally get away with
murder by claiming self-defense, using deadly force in situations that have led to unnecessary deaths. Furthermore, such absurd lines of
reasoning, for lack of a better word, have resulted in unjust rulings such as the acquittal of
Gorge Zimmerman and that of attempted murder charge against Michael Dunn (attempted
murder for having committed murder).
Clearly, when both these very tragic incident occurred, had the state of Florida not
have these stand your ground laws in place,
two seventeen year old boys would still be
alive today, not to mention the countless number of other individuals who have lost their
lives in vain due to these laws.
The writer is an English and French professor
residing in the US. She is a columnist on
American political and legal issues for
several international publications. She
can be reached at scballand@gmail.com,
Twitter: @SabriaBalland
31 FEB 2014
ENVIRONMENT
hen I was a child, I often heard my elders saying,

Do a good deed. A good deed is akin to planting
a tree in heaven. The elders are no more, the priorities have changed, and so have the slogans. Everything that is environment friendly, everything
that involves the people in owning their country in form of steps that
help them integrating as a nation has gone flying out of the window.
In its stead are sectarian divides, attacks and criticism between parties.
When calls are given by parties for its supporters; its to protest against
this or that. When was the last time they came together to do something
positive for the country? Or for their province? Or even for the area
representatives live in?
Unfortunately our leaders are not investing in our biggest asset:
our children. There is a lack of vision, a lack of sense of direction one
observes at every level.
But then, I use the term leader. A leader influences people to
work towards and achieve a certain goal. A leader does not work from
the back benches. He (or she) leads from the front, letting others follow
his example. The leader must also have the vision; to view an organization or his country at different year-benchmarks down the road.
Jack Welch Chairman and CEO of General Electric for two decades
talks about being a leader to be, Before you are a leader, success is all
about growing yourself. When you become a leader, success is all about
growing others.
Tree plantation is one such method of being productive on ground.
To our pride; Pakistan set

the Guinness World Record
for tree planting, 541,176
young mangroves trees
planted by 300 volunteers
from the local fishermen
communities just in one
day, the country broke
the previous 447,874
record held by historical
rival India, according
to a report published in
June 2009 on the official
website of WWF Global.
Literally. According
to a local newspaper,
the floods in 2010 and
heavy rains of 2011
damaged thousands
of trees. An absorbing article by the Sunday Herald Scotland
states, If Pakistans
authorities continued
to allow the countrys
timber mafia and a
Yasmeen Aftab Ali
benighted and oppressed peasantry to
strip the countrys forests at a faster rate than anywhere else in Asia, as
is happening; floods of Biblical proportions would be inevitable. They
would not be acts of God but man-made catastrophes. Published August 29, 2010 it goes on to say, Trees felled by so-called illegal loggers
an infamous timber mafia that has representatives in the Pakistan
Parliament in Islamabad and connections right to the top of government and the military are stacked in the innumerable nullahs [steep
narrow valleys], gorges and ravines leading into the main rivers. From
there they are fed into the legal trade, earning the mafia billions of dollars yearly. But this month the mud and water deluge cascaded off the
tree-bare mountains and hills with exceptional force and barreled down
PAKISTAN
MAR 2014
32
towards the plains in mammoth fury. These mountains, gorges and

gulley are the usual areas of upper Indus River track, meaning thereby
the Kohistan, Hazara and lower Gilgat-Baltistan regions. Traditionally,
the riverine forests have always been a check on floods but unfortunately, in the last two decades or so, massive deforestation has taken
place. Once dense forests are now totally denuded giving pathway to
floods and devastation. The article quoted expounds, Relief workers
said bridges, homes and people were destroyed and swept away by the
hurtling and swirling logs before the waters spread on to the plains below, engulfing an area of more than 60,000 square miles, more than
twice the land area of Scotland.
On the flip side, there have been campaigns for tree plantation. In
June 2013, the Pakistan Reconstruction Program of the United States
Agency for International Development (USAID) held one for planting
trees. Though many laws exist both on the national and provincial level
to protect the environment but the degree of their implementation is
questionable. To quote one example only; Sindh Plantation, Maintenance of Trees and Public Parks Ordinance of 2002 states, no person
shall remove, cut, damage, or displace any plant, shrub, tree or a branch
at any public place, including parks. A local newspaper on the other
hands comments, The data collected by the International Union for
Conservation of Nature, which according to their website, is the oldest
global environmental organization since 1948, states that only about 2.5
per cent of Karachi is green. (Published April 18, 2013)
To our pride; Pakistan set the Guinness World Record for tree
planting, 541,176 young mangroves trees planted by 300 volunteers
from the local fishermen communities just in one day, the country broke
the previous 447,874 record held by historical rival India, according
to a report published in June 2009 on the official website of WWF
Global.
Trees are important for many reasons. Trees prevent soil erosion; they strengthen the soil thereby reducing the impact of rain and
wind, they protect the banks of streams when floods come. They give
out oxygen while absorbing carbon dioxide. According to a report by
the Intergovernmental Panel on Climate Change (IPCC) eleven of the
last twelve years (1995 to 2006) rank among the 12 warmest years in
PAKISTAN
Unfortunately our leaders are

not investing in our biggest
asset: our children. There
is a lack of vision, a lack
of sense of direction one
observes at every level
the instrumental record of global surface temperature (records since
1850)". These changes in Earth's temperature have correspondingly
been associated with increased atmospheric carbon dioxide (as well as
methane and nitrous oxide) levels in the atmosphere, states Steve Nix
a professional forester and natural resource consultant.In places having snow fall, trees can have a noticeable reduction on snowdrifts. In
warmer climates, trees help reducing temperature; this in turn can reduce electricity costs. In urban areas, beautifully laid out residences and
residential areas enhance the value of the property.
Due to increasing urbanization, more and more trees are being cut
away to provide space for expanding population needs. They are being
cut also to provide much needed firewood in extreme cold. Increasing
population has led to increased consumer demand; demand for furniture is one.Wood consumption for industries is another reason. In any
case, these trees are not being replaced with more trees being planted.
Chanting slogans, promising the sun, moon and stars to the people who
entrusted the winning political candidates and made them successful
is just not good enough. They want change. Change is not just related
to passing resolutions in the National Assembly for Protecting Pakistan but the will to do so must be reflected in actions and not in words
alone.
Government can support and promote tree plantation in many
ways. It can encourage multinationals and local organizations to promote plant a tree campaign in given areas. The government may offer
incentives to the organizations involved in tree plantation.
The companies can hold a Tree Plantation Day, which can
be used as a sales promotion springboard offering excellent publicity opportunity and product(s), service awareness their company offers. Company giveaway kits can be
given to participants. The government can start a website
as done by the Billion Tree Campaign by United Nations
to growing a billion (1 000 000 000) trees all around the
world during 2007. Pictures of people planting trees can be
sent and posted on the website.
What is needed for the government is not to keep
the initiative at the political level alone. But to involve
companies, organizations, people at mohalla levels to get
involved. Earth Day may be a great time to organize Tree
Plantation events around the country. It can be turned into
an exciting national activity.
I am reminded here of Franklin D. Roosevelt, A
nation that destroys its soils destroys itself. Forests are
the lungs of our land, purifying the air and giving fresh
strength to our people.
The writer is a lawyer, academic and political analyst. She
has authored a book, A Comparative Analysis of Media
and Media Laws in Pakistan.
33 MAR 2014
REPORT
NEED TO MOVE TOWARDS
COMMERCIAL
AGRICULTURE
In Pakistan
Akram Khalid
akistans agriculture sector is a

major contributor to the countrys
economy in terms of GDP, foreign
exchange earnings, employment
generation, raw material for manufacturing industry (primarily textile) and the
national food security. Despite its overall importance, this sector has for years been ignored
by the policy makers. This mind-set prevailed
for decades and notwithstanding the progress
made in enhancing production, the sector remained to a great extent neglected nurturing
several inefficiencies. The farming community on the whole remained under-privileged
and financially constrained that gave rise to
numerous problems that Pakistans agriculture
MAR 2014
34
is facing today.
The country has a vast natural resource
base and diverse ecological zones that help
producing a variety of agricultural crops in a
stretched seasonal window starting from south
to the north. Majority of the farms are fairly
small and out of 22 million hectares of cropped
area in Pakistan, about 79% farms are below
20 hectaresof which 53% farms are below the
size of 5 hectares. The small farm size coupled with resource stretched condition of the
farming community has made the use of good
quality inputs and machinery out of reach of
the farming community in general. This also
restricts the farmers ability to adopt new techniques, diversification to high value crops and
social networking. He is therefore forced to
continue with the subsistence farming.
There are numerous challenges that impede development of a competitive agriculture
sector, most important of these are briefly explained below:
Subsistence agricultural farming

is one of the numerous challenges of the sector. The main reason for subsistence agriculture is fragmented small-scale farming units
who are resource constrained and remain in the
production process only to cater to the family
needs. Traditionally every farming household

keeps 2 to 5 milk animals; mostly buffalos,
cows, goats and in some regions camels or a
mix of these animals (in addition to cultivation of crops) for its domestic needs. The crops
produced are mostly consumed by the family
and depending upon the size of the farm, after
storage of crop for own needs, the balance is
sold in the local market or to the middleman.
These farmers are poorly organized and they
do not have bargaining capacity in marketing
their produce. The focus of the government as
well as donor agencies is mostly on capacity
building of farmers. However marketing of
their produce or linking farmers to the markets has always remained unattended. There is
therefore need to develop a sustainable model
by linking a group of farmers to a processor/
buyer, and if possible, also to a donor agency.
Under this model, the group of farmers would
be facilitated in opening their individual bank
accounts and getting loan facility against
mortgage of land. The buyer / processor would
provide inputs to farmers and present invoice
to the bank for payment through disbursement
of loan amount booked in the name of each
farmer in the group. The farmers will produce
the crop and the buyer would purchase the
entire crop by making payment into the bank
and showing bank receipt to each farmer. The

loan would be repaid and the balance available
in the bank account of each farmer would be
his profit. The entire transaction would be secured by way of a contract to be signed by the
buyer / processor and each farmer. The role to
be played by the donor would be (a) capacity
building of farmers and processors; (b) helping in establishing a certified nursery; (c) connecting farmers to the research and extension
personnel.
Access to Finance by farmers is a big

hurdle that does not allow them use of good
quality inputs. The banking system comprising of 34 commercial banks, 4 specialized and
9 micro finance banks disbursed PKR 231 billion to agriculture sector during current year
which is hardly 6 percent of total lending by
the countrys banking system and around 30
percent of the sectors credit requirement,
thus leaving a huge gap to be filled by the
middleman who undertakes timely provision
of inputs to farmers and yet exploits them
by taking away the output at his own terms.
The cost of utilizing middlemans services
is estimated to go beyond 60 percent per annum. Yet the farmer is inclined to fulfill his
requirements from the middleman as the system allows convenient and hassle-free access
to resources as compared to banks. Due to his
short term profit mind set, the middleman is
also least concerned about the qualitative and
quantitative improvements in the sector. It is
therefore necessary to substitute middleman
with a system that is equally or more efficient
but non- exploitative. There could be the following three possibilities of substituting the
middleman system.
a) Establishing Non-Banking Financial
Institutions (NBFIs) to work on the pattern of
middlemen. State Bank of Pakistan should
develop regulations for such NBFIs and the
middlemen who become compliant could also
be given license of NBFI. The middlemen who
are not compliant should be brought under the
ambit of a separate set of regulations of State
Bank of Pakistan (to be formulated) by issuing
them license. The regulations to be developed
by State Bank of Pakistan should ensure that
the exploitative role is completely wiped out.
b) Introducing a partial credit guarantee
scheme for banks to raise their comfort level
in agricultural lending. Capacity building of

banks would be necessary for understanding
the agriculture system, its credit requirements
and development of innovative financial products.
c) Introducing and promoting community based Venture Capital Fund concept to
make financing available to farmers on a collective/cluster basis.
Agriculture Supply Chain is full of

issues, impeding development of the sector.
There are no checks over seed companies with
regard to the seed quality; there are issues in
pesticides quality and usage; fertilizers have
become out of reach due to high prices; irrigation facilities are decrepit and inefficient; land
degradation is on the increase with over 16,000
hectares of land becoming redundant owing to
salinity problem without any tangible remedy; quality control testing facilities for soil,
inputs and produce are non-existent; storage,
logistics and markets are inefficient and insufficient; power supply is unreliable and expensive; growers outreach to markets, market information systems and marketing networks is
limited; formal credit availability is restricted;
crop insurance is nearly non-existent; relevant
laws are outdated; government departments
role is non-supportive; farm mechanization
is insufficient; research facilities are supply
driven and extension is inefficient. Although
factors influencing the supply chain of each
commodity may slightly differ, improvement
can be brought in by promoting:
a) Contract farming
b) Corporate farming
c) Cooperative farming
These however require legislation and
its enforcement to create a win-win situation
for everyone.
Research & Development as well

as extension in Pakistan is responsibility of
the government and the system lacks capacity both in terms of manpower and finances.
The funding level is among the lowest in the
world that works out to 0.2% of the National

GDP. The system is supply driven and does
not have the capacity to cater to the present
day requirements of the sector. Majority of
the research institutions face serious capacity
constraints not being able to meet the dynamic
requirements of the world whereas continuity of R&D is essential for development of
agriculture sector. Private sector involvement
in research can be made possible upon enactment of Intellectual Property Rights. Other
possibility could be through provision of financial support for R&D to non-profit organizations having linkages with international
research organizations. Priorities should be set
for conducting research, for example, wheat,
rice, maize and sugar cane are essential food
items and should be given priority in food
crops segment and to cotton as a value crop
due to its importance for the export industry.
In horticulture citrus, mango, potato and onion
may be given priority over other crops as out
of more than 30 fruit crops grown in Pakistan.
Citrus and mango cover more than 56 % of
the production and area and of more than 40
vegetables grown in Pakistan; more than 55%
is covered by potato and onion. If such a priority is set, it would make R&D much more
efficient both with regard to food security and
export enhancement. In addition, a technology
foresight exercise must be conducted at intervals of 5 years to make an assessment of technological needs. The extension system is also
deficient in resources and does not serve the
sector well. It requires structural administrative changes backed by use of technology such
as radio, television, cell phone and printed material.
The much needed development in agriculture can be achieved by making it attractive for the domestic and foreign investors and
that can be attained only by making the sector
commercially viable.
The author is an agribusiness, investment
& banking professional who worked for 30
years in senior management positions in
Pakistan and abroad. He is currently working
as a freelance consultant.
35 MAR 2014
WORLD
The cyber side of social media
Muhammad Bilal Khan
he growing use of social

media as a tool for spreading hateful messages and
graphic details of gory incidents is fuelling the fire
of Pakistani extremism.
Such messages, according to academics
and communication analysts, can warp young
readers, particularly those who already have
an aggressive attitude.
Dr. Erum Irshad, chairwoman of the University of Peshawar Psychology Department,
says that the Negative information can affect
their minds because they don't understand the
underlying meanings of such messages.
Modern communication tools can contribute to society, but these networking sites
are being used to promote negative messages,
which can increase psychological problems,
says Irshad.
According to Peshawar-based social activist and academic Adil Zareef , Pro-Taliban
elements and others who want to spread extremist ideology rely on social networking
websites such as Facebook and Twitter.
For one, the Tehreek-e-Taliban Pakistan
(TTP)'s media wing posts videos, pictures and
pamphlets on such sites. Former TTP spokesman Ihsanullah Ihsan, who was fired in June
but refused to stay silent, has been known to
operate a Facebook page.
But the message of hate doesn't appeal
MAR 2014
36
to everyone.
Rukhsana Jamil, 36, a housewife and
Facebook user, said "The moment I come
across such a video or a picture, I quickly
scroll down to avoid ruining my moments of
pleasure [socialising with friends and family
on Facebook].
Others try to use settings on their computers to block such content. "I don't bother
'liking' or commenting on or sharing them [extremist messages] in any way,"Ayaz Abbasy,
a Pakistani migrant in Jeddah, Saudi Arabia,
said, "and the friends who do share extreme
stuff, I observe for a while and then I just hide
their notifications."
The militants, however, have ways of
forcing their message on readers.
Naushad Khan, an Islamabad-based
spokesman for a public sector development
project, for example, said he tried to keep his
Facebook friends from posting extremist content on his Facebook "wall," but some messages slipped through his stringent privacy
settings anyhow.
"I just don't want to be associated with
anything that does not go with my thoughts,"
he said. Khan removes his name from such
material whenever it appears on his Facebook
wall, he added.
Observers are concerned about social
media users who don't try to block hate-filled
content. For instance, the TTP posted a video of former TTP chief Hakimullah Mehsud
(who was killed in North Waziristan earlier
in November) fatally shooting an elderly hostage, Col. Imam, in January 2011.
"The clip of the colonel's slaying has
been shared by 1,396 people," an Islamabadbased IT consultant Qazi Abid said and 206
Facebook users "liked" the video.
"But that doesn't mean everyone approves of this ghastly act," he said, because
Facebook doesn't have an option for viewers
to express "dislike."
However, an all-out assault on such messages is a dicey proposition, because there are
those who contend that some good can come
out of extremist postings.
"Individuals with mature minds and serious thinking can benefit from such messages
as they can adopt strategies to safeguard themselves from these messages' adverse effects,"
Irshad said, citing efforts to protect one's
personal safety as an example. Although officials would have to walk a fine line between
protecting vulnerable people and infringing on
free speech, observers say Pakistan could use
cyber laws to stop the hate-mongering.
The Pakistan Telecommunication Authority (PTA), a regulatory and monitoring
agency, is authorized to remove "unwanted"
material it finds on the internet, either on its
own or through complaints from citizens.
PTA has an inter-ministerial committee that reviews complaints and recommends
blocking of objectionable sites, Mohibullah
Kakakhel, a senior Peshawar-based lawyer,
said.
"Anything that is offensive to people's
religious ideologies or ignites hatred or causes
religious extremism, PTA will move to block,"
Kakakhel said, adding, "It has blocked numerous Web pages, including YouTube."
And while the Pakistani government is
capable only of blocking an entire site, Facebook can shut down pages, as it did with Ihsan's page this month, Kakakhel said.
Kakakhel in the past has gone to court
to challenge Islamabad's blocking of the YouTube site. But he conceded that Pakistan,
which has battled insurgents for years and has
signed several international pacts on fighting
terrorist messaging online, had to protect its
cyber space from that threat.
"Pakistan is vigilant about its cyber
space it receives a lot of unwanted Web
material, so it keeps a close watch and blocks
unwanted material," Kakakhel says.
37 MAR 2014
MAR 2014
38
39 MAR 2014
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Phone: 051-2830461-63
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MAR 2014
40
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Monthly Economic Affairs March, 2014

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Volume-III, Issue-III

Shahid Khaqan Abbasi

Flat # 5, Block # 23, PHA Apartments

Pakistan: A gold mine

Pakistan, making out of crisis

ad it been asked how wise would it be to invest in

Outlook for 2014........................6-7

Oil and Gas..............................12-13

5th Karachi literature

OIL & GAS

THE OUTLOOK FOR 2014:

t the dawn of 2014

SEVEN KEY TRENDS

A confident outlook for 2014, but

Skill gaps, rising costs and tougher

More cautious and targeted capital

Uncertainty over oil and gas pricing will

The industry will consolidate in 2014,

The US, Brazil and Australia are the

A deeper industry safety culture

Before the start of next

Yes according to EIA, Pakistan has 9th

After taking up the charge of

Investors flocking to stable policies

We enforced that already developed policy

What are the estimates for oil

The total oil production of the country

The previous government

The previous government has auctioned

50 concession blocks but they couldnt issue

According to recent estimates

The LNG is considered as

pipeline, the TAPI and import of LNG.

Critics are of view that the

Recently, you stated that the

Iran but we will definitely move on after the

What is the future of TAPI?

Do you think security issues

OIL & GAS

akistan is facing an unprecedented

Oil and gas sector

Pakistans primary energy

incentives to the investors have been given to

OIL & GAS

23pc More earnings

akistan said that work on a pipeline to import gas from

Pakistan believed to have

The estimates by the US Energy Information Administration

PSO earnings rise by 150

GE to hike pro-environment energy

S industrial conglomerate General Electric said it would boost spending

s energy politics is gaining momentum across the

Mehmood Ul Hassan Khan

interests of the ruling elite badly damaged the

Source: Federal Ministry of Industries

Source: Global Energy Report (2012-2013)

For the last so many years government

Bitter ground realities

Strategic policies of the

The TAPI gas pipeline is

OIL & GAS

HOW TO SUCCEED IN 2014

Find innovative cost solutions to maintain margins

Narrow the focus of spending