Boston, MA -- (SBWIRE) -- 01/28/2014 -- We remain bearish towards the outlook for Pakistan's construction sector despite the change towards a more economically conservative government in 2013. This is because Pakistan continues to present several characteristics that are not conducive for construction growth - namely non-conducive monetary conditions, poor fiscal position, as well as considerable business environment and security risks.

However, should Pakistan be able to resolve the weaknesses in its investment climate, the country's strong fundamentals - favourable demographics, good strategic location and high infrastructure deficit - do present considerable scope for construction activity.

Key developments include:

- Pakistan's Ministry of Water and Power's National Energy Policy 2013-18 aims to reduce the country's dependence on expensive thermal fuel generation and improve the power transmission and distribution system. It claims that 25-28% of power generated is lost due to poor infrastructure, mismanagement and theft of electricity. The policy further aims to shift Pakistan's energy mix towards low cost sources such as hydropower, natural gas, coal and nuclear generation. The government is also looking to set up energy cities and corridors to attraction private sector partnership for coal and hydropower projects, within a competitive and transparent market. Other goals include the revision of the tariff and competitive bidding processes for the wholesale market, as well as a revamping of the regulatory authorities.
- The third port, the Gwadar port, was scheduled to become fully functional by the end of Q114, according media reports. As of October 2013 around 60% of the site's development work has been completed, as was confirmed by shipping minister Kamran Michael at the 2013 International Conference and Exhibition on Shipping, Logistics and Supply Chain Management. Michael has stated that the completion of the port will provide a significant boost to the country's immediate economic growth prospects. 'This port will connect the Gulf region and the Middle East to South East Asia and is equally vital for national growth and in securing the economy of Pakistan,' said the minister.
- In November 2013, a consortium comprising China Railway Engineering Corporation (CREC) and Sinotec had offered to build Pakistan's Gwadar-Khunjrab rail link within four years, at an estimated cost of PKR250bn (US$2.3bn) on soft-term loan. The project will link Central Asian Republics with Pakistan Railways network. The cost includes PKR160bn (US$1.47bn) for infrastructure and PKR90bn (US $829.20mn) for locomotives on electric traction basis. The offered loan, to be payable for seven years, may be professional, commercial or in the form of a grant.

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