The development of power sector is immensely significant in Pakistan especially with the interest of foreign companies having invested $422 million so far on various power projects during the period of July to October in 2017.
According to statistics from State Bank of Pakistan (SBP), FDI in the power sector increased to $422.4 million during the first four months of FY18 as compared to $187.4 million FDI recorded in the same period last year.
Hence, this year the FDI is more than $235 million than higher than previous year, showing a tremendous growth of 125 percent year-on-year.
Among the under-construction power projects, coal-based power plants take the lead, attracting a huge investment of $304 million during the period of July to October 2017.
The coal-based power projects are being built mainly for the China Pakistan Economic Corridor (CPEC), backed by investors and companies of China. Besides, different companies are also pouring their investment in coal-based power plants to meet the electricity demand in the country.
Coal-based power projects are followed by Hydel and Thermal projects with FDI values of $76.4 million and $41.4 million respectively.
With prolonged hours of load-shedding and unavailability of infrastructure for power plants, Pakistan is a huge market for foreign as well as local companies backed by renowned business groups.
Besides power sector, the construction sector is also booming in Pakistan which attracted an FDI of $177 million. It was followed by telecommunication sector with $69.4 million and the oil and gas exploration sector with $57.9 million.
China is the leading investors in Pakistan with a FDI value of $ 630 million. It is followed by Malaysia with $107 million.
Net FDI Down By 49% in Jul-Oct 2017
The overall FDI has declined to $836 million during the period of July to October 2017 as compared with $1.64 billion recorded in the corresponding period of 2016, showing a massive dip of 49 percent.
This drop in FDI inflows was mainly from the bearish trend in the stock exchange, causing a significant outflow of Foreign Portfolio Investment (FPI).
According to SBP’s data, a total of $102.8 million outflows were reported in the period of July to October which offset the inflows of $ 939.7 million in the real sector totaling the net value of FDI at $836.8 million.