Private sector reluctant to invest in water, power projects

ISLAMABAD (February 16 2008): The government is confronting a tough time in attracting private sector's investment in water and power projects as the government has lined more than 40 development projects for Public Private Partnership (PPP). As an informal cut of around 70 billion on 2007-08 PSDP allocation has been placed, the government has speeded up the process of putting the development projects for investment from private sector both in and outside the country, sources told Business Recorder. The investors are not coming forward according to the expectations of the government in hydro-electric and water projects, especially the planned big reservoirs as the government is yet to remove certain reservations about these important projects, the sources said. The planned Basha, Munda and some other projects have been lined for PPP mode of execution. However, there are certain reservations of the private sector's investors on these projects. The government will have to give a resettlement action plan of these projects before taking these projects up with private investors, according to the sources. The sources, however, said that there was overwhelming response from private sector to fully or partially fund projects in other sectors especially the communication, water supply, sanitation, sewerage and solid waste management. Pakistan needs at least 10 percent GDP allocation for development budget, around 20 billion US dollars for one year. This is a huge amount that is actually more than the annual tax collection, which the Federal Board of Revenue (FBR) has made in the past. For the year 2007-08, the tax collection target is little over Rs one trillion and there are indications that FBR would not be able to meet the target, the sources said. In this scenario the PPP mode for taking development agenda forward is must, the sources said. The government has established an independent cell in the planning and development (P&D) division to refer almost every development projects to Infrastructure Project Development Facility (IPDF), an autonomous body to look for investors in launching development projects. The Planning Commission, according to the sources, is required to do a lot to make the projects implementation mechanism neat and clean. This will be a pre-requisite for attracting local and foreign investors in investing in the development schemes. There is a need that the government should do it swiftly in order to maintain the overall growth, Pakistan has achieved in the recent years. A recent World Bank report says that Pakistan is suffering from dearth of infrastructure in water, irrigation, power and transport sector. The report enlists corruption as one of the main reasons that hinders the development drive in Pakistan. Delays in projects' implementation, lack of skilled workforce and implementation of some development schemes on political basis are other factors for unreasonably slowing the development process. Copyright Business Recorder, 2008