Day: January 26, 2022

The Board of Public-Private Partnership Authority (P3A) has rejected the consultant’s proposal for a subsidy of Rs. 533 billion for the Karachi Circular Railway (KCR) project for over 30 years, and has instead decided to pay a 40 percent Viability Gap Fund (VGF) to the concessionaire.

The 19th Public-Private Partnership Authority Board met on Tuesday under the chair of the Federal Minister for Planning Development & Special Initiatives, Asad Umar, and approved the project proposal/transaction structure for the Development and Operation of the KCR project

The total estimated cost of the KCR project is Rs. 218 billion, including civil works estimated to be around Rs. 96 billion. The level crossings have already been awarded to the Frontier Works Organization (FWO) so the total cost has been reduced by Rs. 17 billion. The project cost does not include the cost of land acquisition.

The Government of Pakistan’s VGF share is around Rs. 80 to 90 billion, an official source revealed. The final estimated cost of the KCR will be approved by the Central Development Working Party (CDWP) under the umbrella PC-I.

The consultant Transaction Advisor (TA) has proposed Rs. 533 billion, which comprises electricity, major maintenance, and operations and maintenance subsidies. However, the total annuity amounts to Rs. 1,002 billion, which also includes debt servicing, return on equity (RoE), and taxation. The proposal was rejected by the P3A board and decided to pay a lump sum of 40 percent VGF, after which the concessionaire will take care of the rest, the source said. The GoP’s share will be either funded by leasing 13 properties of the Pakistan Railways or will alternatively be funded by the federal PSDP, the source added.

The board also approved the Minimum Revenue Guarantee (MRG) in the ratio of 85:115, which means that in case of 15 percent fewer passengers traveling via the KCR, the burden will be on the concessionaire but if the deficit increases above 15 percent, it will be equally shared by the GoP and the concessionaire. Similarly, it rejected the consultants’ proposal of risk-sharing on an 80:20 basis and decided that it should be 50:50 instead.

The board reviewed the key statistics and components of the project proposal for the KCR which envisaged the project to be built on a PPP basis whereby the private sector will be responsible for the financing of the construction of the civil works, the electrical and mechanical (E&M) component (including the procurement of the rolling stock), and the operations and maintenance (O&M) of the project from its own resources under a single package contract.

The approved project Proposal/TS entailed the project to be implemented on a BOT–user charge basis and the GoP to provide Capital Viability Gap Funding to improve the financial viability and bankability of the project. To seek adequate investor interest in the project and to magnify its success prospects, the private sector will also be given a minimum revenue guarantee (MRG) for the initial operational years and the right to undertake the commercial development of the KCR stations to supplement fare and non-fare revenues incidental to the project.

The project is aimed at providing a reliable, safe, and environment-friendly public transport system to the citizens of Karachi. It entails the construction of a 43 km dual-track urban rail mass transit system that is expected to be built in three years. The project is expected to serve a daily ridership of 457,000 that may soar to one million a day by the end of a 33-year concession period. It will deploy the use of electric trains and will be operational 17 hours a day seven days a week. It encompasses the construction of 30 stations along the corridor covering the densely populated areas of the city.

The economic benefits of this project are phenomenal in terms of saving vehicle operating costs, environmental protection, accident and time savings, promoting gender equality, and the spill-over tax impact.

Chairman Asad Umar highlighted the importance of the project saying, “The project is an important part of the Karachi Transformation Plan and will play a pivotal role in providing affordable and reliable public transport system to the Karachiites’.

He added that following the approval of the KCR project by the P3A Board, the project appraisal process for the Karachi-Pipri Freight Corridor project should also be completed at the earliest as that project is also critical in terms of easing congestion at Karachi Port. The project, with its transaction structure approved by the P3A Board as mentioned above, will be brought to the market after its approval by the Executive Committee of the National Economic Council (ECNEC).

Source: Pro Pakistani

The Implementation Committee on Diamer Basha and Mohmand Dams (ICDBMD) met today at ICDBMD Secretariat to review progress on mega multi-purpose projects of Diamer Basha and Mohmand Dams, chaired by Pakistan Water and Power Development Authority (WAPDA) and ICDBMD Chairman, Lt Gen Muzammil Hussain (Retd).

The ICDBMD was constituted by the honorable Supreme Court of Pakistan way back in July 2018 for early commencement and timely completion of Diamer Basha and Mohmand Dams. Since its inception, the committee holds its meetings after regular intervals.

Welcoming the participants, Chairman WAPDA, who is also Chairman ICDBMD, said that the committee had been tremendously contributing towards the implementation of Diamer Basha and Mohmand Dams. Reiterating his commitment to completion of both projects as early as possible, he apprised the meeting that WAPDA is working hard on the construction activities of both projects to match the timelines despite the COVID-19 pandemic. Currently, construction work is under progress on 13 sites of Mohmand Dam and ten sites of Diamer Basha Dam, he added.

The Chairman also updated the participants on the problems disrupting a smooth execution of Diamer Basha and Mohmand Dams, including COVID-19, financial flows, emerging security scenario, land acquisition, and completion of a critical stretch of relocated Karakoram Highway in case of Diamer Basha Dam. Though the recovery plans are in place, the impediments, if not addressed by the quarters concerned, may adversely affect the timelines set for completion of the projects, the Chairman concluded.

Later, WAPDA Member (Finance) briefed the meeting of the matters regarding the financial close of the two projects vis-à-vis the foreign exchange component, as well as financial needs and financial flows. General Manager (Land Acquisition & Resettlement), General Manager (Diamer Basha Dam), and General Manager (Mohmand Dam) also made presentations to the participants about the progress and the issues regarding Diamer Basha and Mohmand Dams.

WAPDA started construction work on Mohmand Dam in May 2019 and Diamer Basha Dam in July 2020, which are scheduled to be completed in 2025 and 2029, respectively. The gross water storage capacity of Mohmand Dam is 1.29 million Acre Feet (MAF), and the installed generation capacity is 800 Megawatts (MW). Likewise, the gross water generation capacity of Diamer Basha Dam stands at 8.1 MAF, while the installed generation capacity of the projects is 4500 MW.

The meeting was attended by Water Resources Joint Secretary and ICDBMD Secretary, Syed Muhammad Mehar Ali Shah, Joint Secretary (Budget) Finance, Khyber Pakhtunkhwa (KP) Secretary Board of Revenue, National Highway Authority (NHA) Member North Zone, Deputy Secretary Prime Minister’s Office, Diamer Astore Commissioner, and Planning Commission Deputy Chief, WAPDA Members, Secretary and senior officers.

Source: Pro Pakistani

The Pakistani Rupee (PKR) continued its losing run against the US Dollar (USD) and posted losses in the interbank market today. It lost 25 paisas against the greenback after hitting an intra-day high of Rs. 176.5 against the USD during today’s open market session.

It depreciated by 0.15 percent against the USD and closed at Rs. 176.98 today after losing 22 paisas and closing at 176.72 in the interbank market on Tuesday, 25 January.

The rupee reported losses against the dollar for the third consecutive day after the International Monetary Fund’s (IMF) Executive Board extended the date for Pakistan’s sixth review to 2 February for the $6 billion Extended Fund Facility (EFF) program.

Initially adjourned for 12 January, the Executive Board rescheduled Pakistan’s case again for the completion of the sixth review after the Ministry of Finance formally requested the global lender to postpone the approval of the review until the end of January or early February.

On the global front, the IMF has projected worldwide growth to downshift from 5.9 percent in 2021 to 4.4 percent this year due to the various “impediments” created by the Omicron variant.

Discussing the rupee’s near-term outlook earlier in the day, the former Treasury Head of Chase Manhattan Bank, Asad Rizvi, highlighted on Twitter that the PKR is struggling to regain its footing.

He also noted that the market was worried on how the State Bank of Pakistan (SBP) will react to inflationary pressures but it managed able to keep everything in balance. He acknowledged that cut-off rates on treasury bills also surged after the central bank’s monetary policy decision to gain 50 basis points. Regardless, he remarked it is still too early to say “if the rally will be sustainable or not”.

The PKR also reversed its gains against the other major currencies and reported losses in the interbank currency market today. It lost 45 paisas against the Australian Dollar (AUD), 73 paisas against the Canadian Dollar (CAD), 69 paisas against the Pound Sterling (GBP), and two paisas against the Euro (EUR).

Moreover, it lost six paisas against the Saudi Riyal (SAR) and seven paisas against the UAE Dirham (AED) in today’s interbank currency market.

Source: Pro Pakistani

For the masses to become active participants in the real estate sector and the system to be truly inclusive, a push towards fractionalized asset ownership is visible across the globe.

The concept of a combination between real estate and blockchain is the next big talk of the decade, and there’s a lot of room for improvement.

The Financial Crisis

The financial crisis of 2007–2008 resulted in a meltdown of the global economy. The housing market crashed, stocks plunged, people lost their life savings, and billions of dollars of taxpayers’ money were spent to bail out the global financial system. This was a final blow to the trust in centralized financial institutions.

At the same time, brewing underneath the layer of this global fiasco of the economic system was a novel approach to solving the problems of this system. An internet-native cryptographic network validated by thousands of decentralized participants, to store and exchange financial value, had evolved.

The Case for Cryptos

Cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions. This decentralized and digital transaction validation protocol can perform and enable thousands of interactions each minute without the intervention of any governance body. Additionally, its robust ledger system publishes its total and individual account balances several times an hour and distributes it within the whole network just like a newspaper would, such that the ledger becomes immutable once published. Without a doubt, the monopolistic contractors of the financial system were offended.

The Scale

The push towards crypto was further fueled by the waning trust in traditional institutions from Gen Z and tech-savvy millennials, who have witnessed two economic depressions and a global pandemic in their lifetimes. Today, the combined crypto market is valued at over $2.5 trillion globally. Realistically speaking, crypto is an experiment that has shaken the world’s economic order. While this experiment has its believers and naysayers, it has proven one thing; the underlying technology that enabled this revolution, blockchain, cannot be ignored.

The Need for Proptech 3.0

Real estate assets have been one of the biggest stores of global wealth. Current global real estate assets are valued at above $280 trillion (more than 75 percent of global wealth). Additionally, it is managed, used, and owned by millions of individuals and corporations across the world and regulated by central governments – a truly decentralized ownership structure. Some in the blockchain community believe this asset class to be the pinnacle of the crypto revolution.

Using simple digital tools and the immutable ledger system, players in the property technology space are building revolutionary tools to address the challenges in the real estate system and create unprecedented ease of use. The digital ledger system enables not only the validation of existing customers but also seamlessly enables transfers of land records with the simplicity of sending a message over the internet protocol.

Real estate regulatory bodies across the world are rushing to enable such solutions, with Dubai being a frontrunner in the game with its 2020 blockchain vision. Additionally, transparent financial records, transactional history, and digital rental distribution systems are adding value for all stakeholders. With the enablement of an immutable ledger, it is increasingly difficult for independent players to use real estate for tax evasion and money laundering.

Moving forward, for the masses to become active participants in the real estate game and the system to be truly inclusive, a push towards fractionalized asset ownership is visible across the globe. Without a robust decentralized ledger, such records are almost impossible to manage.

Real estate, currently existing only as a store of value for a few in the financial arena, may become a tool for the masses and be used additionally for regular exchange of value transactions. An asset class that stores wealth, earns income and appreciation, drives industries and creates millions of jobs, and may be used for instant liquidity for its holders, fulfilling the dream of a decentralized and manipulation-free sustainable monetary regime.

The Road Ahead

It is not surprising that entrepreneurs and venture capitalists see the real estate industry to be ripe for disruption. Aiming to seize the opportunity and be a part of this disruption, the number of PropTech start-ups has grown substantially in recent years. From Zameen to Graana to Ilaan, we see a new generation of real estate entrepreneurs emerging, who claim to challenge the status quo.

One such start-up, DAO PropTech, is a revolutionary end-to-end digital platform connecting suppliers, investors, and users of contemporary real estate assets. It is utilizing blockchain technology to bring much-needed transparency, affordability, and inclusivity to the real estate sector of Pakistan. We spoke to its Co-founder & Chief Technology Officer, Abdullah Khan, about cryptos, the future of PropTech, and the real estate industry in Pakistan. He remarked,

Crypto’s Achilles heel will always be its lack of legal legitimacy. We believe this system based on anarcho-capitalism is not viable since societies currently cannot function without any governance structures at all. While cryptos will always remain at odds with the governments, as they pose a threat to the existing monetary system, they have proved blockchain technology to be the next big revolution in data recording and transparency. Backed by blockchain, real estate can not only be tokenized but transactions can be sped up, removing the high barriers to entry, and providing faster liquidity. This opens up the real estate arena to a new generation of investors; young professionals and middle-class workers, for whom real estate investing was but a dream. Real estate transactions recorded on blockchain also give a fool-proof record-keeping mechanism that cannot be tampered with, giving the power back to the people. We envision the real estate market becoming more data-driven; Investors and owners leveraging data to make informed decisions. PropTech has the potential to disrupt real estate; one of the world’s oldest and largest industries. We should expect to see many new PropTechs and PropFinTech’s emerge.

Rounding Up

Cryptocurrencies represent the dawn of a new era where all value is represented in distributed ledgers. However, it doesn’t mean that crypto is without its problems. Blockchain, on the other hand, can play a pivotal role in solving the new age problems in many industries including the real estate sector.

The first step towards this advancement is an in-depth understanding of the advantages that blockchain comes with. We are at a crossroads towards disrupting and reshaping the real estate industry by providing legitimacy and transparency in real estate transactions. By adding these core features into a digital platform, investing in real estate would be much easier, faster, and secure to the extent of providing brokers, buyers, investors, and even suppliers to track developments in real-time, paving the way for a future where real estate becomes a force for financial liberation of the masses.

Source: Pro Pakistani

Pakistan International Airlines (PIA) is interested in strategic partnerships with Pakistan-based IT companies for indigenously developing software solutions.

This is an opportunity for IT companies to not only develop software solutions for PIA but also provide software solutions to other domestic and international airlines in collaboration with the national flag carrier.

Airlines usually require software solutions for Revenue Accounting, Revenue Management, Frequent Flyer Program, and Crew Scheduling Management that are used to manage different facets of an airline’s operations such as reservation and ticketing system, departure control, and weight balance.

The Pakistan Software Export Board (PSEB) member IT companies interested in strategically collaborating with the PIA for developing airline software solutions can now duly fill and submit the relevant Application Form by February 2, 2022.

More information regarding the proposed partnerships with the national flag carrier will be relayed subsequently.

Source: Pro Pakistani