Transcript 0955 1-Ismail-DBDP_Energy_Investment_Pakistan_US_2_final

BOARD OF INVESTMENT
PRIME MINISTER’S OFFICE
GEO STRATEGIC LOCATION
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Pakistan-Home to around 1000 multinational
businesses
Deutsche Bank
Power Sector has attracted around $14 billion of FDI and 65
power projects were completed in the past two decades owing
to lucrative policy incentives offered by GOP
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ECONOMIC INDICATORS (2013-14)
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Population
15-39y old youth population
Net FDI Inflows
Exports
Imports
Inward Remittances
KSE 100 Index
• (11th May, 2013) 19,916
• (17th Sep, 2014) 30,137
188 million
39%
$3 billion
$ 25.2 billion
$ 41.7 billion
$ 15.8 billion
On road to progress: Expected to achieve annual economic growth of
over 7% within the next few years (currently over 4%)
Youth: One of the biggest youth population in the world. Educated,
skilled and trained workforce available
KSE: Stock Index was among world’s top 5 performers in 2013 – Over
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100% growth in the past 18 months.
INVESTMENT CLIMATE
Investor
Friendly
Regime
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100% foreign ownership allowed
Investor
Protection
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Protection of Economic Reform Act, 1992, protects foreign
capital entering in Pakistan
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Legal cover through the Foreign Private Investment
(Promotion and Protection) Act, 1976
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Signatory to the New York Convention; Recognition and
Enforcement (Arbitration Agreements and Foreign Arbitral
Awards) Act, 2011
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Low corporate tax and income tax rates
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Industrial estates with fully developed infrastructure
Lower
Costs
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Full repatriation of profits, capital gains and dividends
allowed
Special economic zones with exemptions on custom duty
and taxes on import of capital goods and income tax for a
period of ten years
Efficient, skilled, and low-cost labor
INCENTIVES FOR DEVELOPMENT OF
POWER PROJECTS
Exemption from Corporate Income Tax, Sales Tax and Import Tariff.
GOP Guarantees obligations of power purchaser and provinces
GOP provides protection against Political Force Majeure, change in law and
Change in duties & taxes
GOP allows 20% ROE for indigenous coal based Power Projects, and 17%
ROE on all other Power Projects (IPPs)
Tariff adjustments for variation in currency exchange rates and fuel prices
Tariff indexation for inflation (US CPI & Pak WPI)
Government ensures conversion of Pak Rupee & remittance of foreign
exchange for project-related payments
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PAKISTAN POWER SECTOR
TOTAL INSTALLED CAPACITY
Total Installed Capacity: 23,486 MW
Public
Sector
Hydel
Private
Sector
Public
Sector
Thermal
Nuclear
7
Public Sector MW
%
Hydel
6,844
29
Private Sector MW
Thermal
4,829
21
IPPs
8,630
37
Nuclear
802
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KESC
2,381
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Total
12,475
53
Total
11,011
47
%
POWER SECTOR INVESTMENTS
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Country
Distressed/Cancelled
Projects (% of investment)
Malaysia
24%
Indonesia
13%
Vietnam
8%
India
3%
Pakistan
3%
Source: World Bank PPI Database – 1990-2013
Expected International Investment Pipeline
in Hydropower IPPs
International Investment in
Hydropower IPPs (Examples)
New Bong Escape HPP – 84
MW Run of River Project
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• First hydropower IPP
commissioned in Mar 2013
• Financed by ADB, IDB, IFC,
and Proparco (France)
• Registered CDM project by
UNFCCC for carbon credits
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China International Water
and Power Company (China)
– 1,100 MW Kohala HPP
Korea Water Resource
Corporation (K-Water) and
Daewoo E&C Co (Korea) – 665
MW Lower Palas Valley HPP
China Three Gorges
International Corporation
(China) – 720 MW Karot HPP
K-Water and Daewoo (Korea)
– 147 MW Patrind HPP
DIAMER BASHA DAM PROJECT
• International Competitive Bidding will be carried out
for the services and supplies with utmost
transparency.
• Procurement of equipment and services of around $8
billion is expected in the project.
• Government is considering a Special Purpose
Investment Vehicle for the development of the
project.
• SPV will also own Ghazi Barotha Hydropower Project,
a 1,450MW ROR project commissioned in 2002 with a
cost of $2.3 billion generating over 7,000
GWh/annum.
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KEY TAKEAWAYS
• There is a board based consensus in Pakistan for
private sector to undertake all economic projects and
government to limit its role to regulation. All small
and large-scale power projects are supported by all
political and other stakeholders.
• Pakistan provides some of the highest dollar based
rate of return on power projects of at least 17%.
Compare this to our bond issue which paid 8.25%
• Government of Pakistan is open to public-private
partnerships for development of large infrastructure
projects with international investors
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KEY TAKEAWAYS
• Pakistan will be among the fastest growing economies
in the next few years
• Power, telecom and manufacturing sectors have
attracted significant investments in the past two
decades despite the regional situation
• Political stability, improved security and good
governance are putting Pakistan on the track of rapid
development and progress
Board of Investment
www.boi.gov.pk