Pakistan has been grouped in top five highest private participation investment (PPI) countries owing to a few multi-billion dollar power projects, with two hydropower plants worth $3.6 billion during the first half of 2017.
A half year update on private participation in infrastructure (PPI) published by the World Bank WB) says that Indonesia was the destination for the highest amount of PPI investment, while Pakistan and Jordan were new entrants to the top five countries, joining Indonesia, Brazil and China.
Indonesia, Pakistan and Jordan are among the top five highest PPI investment countries. South Asia’s 17 per cent share of first half of 2017 global PPI investment may mark the reversal of a regional trend of declining shares of global investment, which reached a low of 4% in 2015.
In the first half of 2017,investment in South Asia has already reached the ful lyear 2016 level, driven by the financial closure of two power megaprojects in Pakistan the Suki Kinari hydropower plant worth $1.9 billion and the Karot hydropower plant worth $1.7 billion.
The report says that the energy sector received the largest amount of global investments, accounting for almost three-quarters of global investment during Jan-Jun 2017, while transport accounted for 24%.
Water and sewage accounted for only 3%.
About 83% of the electricity generation projects were in renewables (68 out of 82 projects). By investment value, however, renewable energy projects captured only 50% of total electricity generation investment (compared to 60% in 2016, and 65% in 2015), with $11.9 billion.
The report says that PPI investments during first half of 2017 totaled $36.7 billion across 132 projects showing an increase of 24% over investments in the first half of 2016, but still significantly lower than historical levels for first half year.
The total investment recorded for first half of 2017 is 15% lower than the past five years’ first half average investment level of $43.2 billion.
In first half of 2017, greenfield projects accounted for more than two-thirds of the total investment commitment, or $24.9 billion, while brown-field projects accounted for the remaining 32%, with $11.8 billion.
There was only one management contract of $7 million for a water project in China; no divestiture transactions were recorded.
The number of divestitures has been declining over time with only three recorded in full-year 2015, but in full-year 2016 there was a slight revival recorded with seven divestitures.
Among green-field projects in first half of 2017, projects adopting a build, operate, and transfer (BOT) model account for $14.2 billion of investments, followed by build, own and operate (BOO) model projects, with investments of $8.9 billion.
Meanwhile, foreign direct investment (FDI) in Pakistan increased 56 per cent year-on-year in the first quarter of 2017-18, the State Bank of Pakistan (SBP) reported. This is in contrast to the overall trend as inflows remained largely poor during the last four years.
FDI in July-September rose to $662 million from $423m a year ago, an increase of $238.5m.
The government is under pressure because of rising current account and trade deficits. The twin deficits are making it difficult for the country to meet foreign obligations.
The other two important sources of foreign exchange remittances and exports have also shown positive signs with the beginning of 2017-18.