Boston, MA -- (ReleaseWire) -- 03/01/2013 -- Uncertainty at the macro-economic level continues to impact investor confidence in Pakistan's construction and infrastructure sector. Despite economic headwinds the country's energy sector continues to drive growth. Industry growth is expected to slow over 2013 - year on year growth is forecast to be 2.79%, down from 4.70% in 2012. Industry value of US$5.5bn is expected for 2013. This low growth trend is expected to continue across the forecast period, with y-o-y growth averaging 3.6% up to 2020, when the industry value will reach US$10.4bn.
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Key developments include:
- Pakistan's Inter State Gas Systems (Private) Limited (ISGS) and Indian state-owned utility GAIL (India) Limited signed gas sale and purchase agreements with Turkmenistan for the Turkmenistan-Afghanistan-Pakistan-India (TAPI) pipeline. The pipeline will supply up to 90mn cubic metres per day of natural gas. The 1,800km pipeline is estimated to cost US$7.6bn, with the supply of gas through the pipeline to fulfil the increasing energy demand in India and Pakistan.
- The state government of Punjab in Pakistan signed a memorandum of understanding (MoU) with German firm AEG for help with the country's solar energy sector. The agreement was signed on October 30 2012 by AEG representative Karsten Weltzien and Energy Secretary Jehanzeb Khan. The agreement will be implemented expeditiously, according to Punjab chief minister Shahbaz Sharif.
- Benazir Bhutto International Airport (BBIA) in Islamabad was scheduled to become operational in 2014. The 3,200-acre airport is likely to have a passenger handling capacity of 9mn in 2014. This capacity is expected to increase to 15mn passengers by 2019 and 25mn passengers by 2024. The airport, which will be Pakistan's first Greenfield airport, entails an investment of more than PKR60bn (US$653.92mn).
With general elections scheduled to be held in early 2013, we believe that the ruling Pakistan People's Party (PPP), which heads up the present coalition government, faces an uphill struggle for re-election. The PPP is already facing a tough political environment, with the public's discontent near all-time highs. As we describe below, the government's handling of the economy and its relationship with the US are likely to be its key political liabilities.
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