Chapter 09
EXTERNAL DEBT AND
LIABILITIES
9.1 Introduction
High and rising external debt burden constitutes a
serious constraint for development; a major
impediment to macroeconomic stability and hence,
to growth and poverty reduction; a discouragement
to foreign investment because it creates a high risk
environment and exchange rate depreciation; and a
discouragement for government to carry out
structural reforms in the various sectors of the
economy. Empirical evidence suggests that
external debt slows growth only if it crosses the
threshold level of 50 percent of GDP or in net
present value terms, 20-25 percent of GDP.
Pakistan has experienced serious debt problems in
the recent past and accordingly witnessed
deterioration in the macroeconomic environment,
leading to deceleration in investment rate and
economic growth and the associated rise in the
incidence of poverty.
Borrowing from within and outside the country is a
normal part of economic activity. Developing
countries, like Pakistan, would need to borrow to
finance their development; however, they need to
enhance their debt carrying capacity as well. In
other words, the borrower must continue to service
its external debt obligations in an orderly and
stable macroeconomic framework. Furthermore,
the borrowed resources must be utilized effectively
and productively so that it generates economic
activity. Prudent debt management is therefore,
essential for preventing debt crisis.
Fiscal indiscipline is the root cause of rising debt
burden leading to macroeconomic imbalances. A
large fiscal deficit worsens current account deficit
by strengthening aggregate demand which, in turn,
is translated into higher imports. Fiscal discipline
is therefore, vital for preventing debt crisis and
maintaining macroeconomic stability – a critical
element for promoting growth and poverty
reduction.
Pakistan has pursued a sound fiscal policy and
maintained financial discipline until 2006-07 and
reaped the benefits of strong economic growth,
declining debt burden, rising foreign exchange
reserves, growing confidence of domestic and
foreign investors, stability in exchange rate and
continuous improvement in its credit ratings by the
international ratings agencies. The hard earned
macroeconomic stability which was underpinned
by pursuing a sound fiscal policy appears to have
been lost just in a space of one year (2007-08) of
financial indiscipline. The macroeconomic
imbalances have increased, the debt burden which
was on a downward footing until recently, is likely
to be reversed this year, both investment and
growth have decelerated, foreign exchange
reserves have declined and the exchange rate has
come under severe pressure. Pakistan has paid a
heavy price for financial indiscipline in the past
and is likely to pay the same in the coming years
unless sharp adjustment is made on the fiscal side
quickly to regain the macroeconomic stability.
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Pakistan Economic Survey 2007-08
Table 9.1: External Debt and Foreign Exchange Liabilities ($ Billion)
End June End
Item 1990 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 *
1. Public & Publicly Guaranteed Debt 18.2 28.35 25.431 28.2 27.5 29.2 29.9 31.1 32.9 35.3 40.7
A. Medium & long term (Paris Club,
Multilateral & other Bilateral 14.7 25.4 25.301 25.6 27.3 28.0 28.7 29.2 30.5 32.4 37.2
B. Other medium & long term (Bonds,
Military & Commercial) 2.7 1.6 2.3 1.0 1.2 1.6 2.2 2.9 2.9
C. Short term (IDB) 0.8 1.3 0.13 0.3 0.2 0.2 0.0 0.3 0.2 0.0 0.6
2. Private Non-guaranteed Debt 0.3 3.4 2.842 2.5 2.226 2.0 1.7 1.3 1.6 2.3 2.5
3. IMF 0.7 1.8 1.550 1.5 1.939 2.1 1.8 1.6 1.5 1.4 1.4
Total External Debt (1 through 3) 19.2 33.6 29.82 32.1 31.6 33.3 33.4 34.0 36.0 39.0 44.6
4. Foreign Exchange Liabilities 1.3 5.3 5.664 5.0 3.132 2.1 2.0 1.8 1.6 1.5 1.3
5. Total Debt and Liabilities (1 through 4) 20.5 38.9 35.487 37.2 34.8 35.4 35.3 35.8 37.6 40.5 45.9
6. Official Liquid Reserves - - 0.989 1.679 4.329 9.5 10.6 9.8 10.8 13.3 11.1
* Provisional Source: State Bank of Pakistan

9.2. Historical Perspective the country’s debt burden by ensuring that the
The total stock of external debt and foreign growth in EDL should remain far less than the
exchange liabilities (EDL) in Pakistan declined nominal GDP growth. Consequently, the burden of
from 51.7 percent of GDP at end-June 2000 to 28.1 the debt has declined substantially during the same
percent by end-June 2007, and further declined to period.
26.9 percent of GDP by end-March 2008. The
9.2. I: External Debt and Liabilities
EDL grew at an average rate of 1.2 percent since
2001 to 2007, however, during the last nine months External debt and liabilities (EDL) at the end of
(July-March 2007-08) the EDL grew at an March FY08 stood at US$ 45.9 billion. This
unprecedented pace of 13.3 percent — the highest represents an increase of US$ 5.4 billion,
ever in almost one decade. The debt management indicating a 13.3 percent increase over the stock at
efforts during 2001-07 were supported by a rise in the end of FY07 [See Table 9.1]. Borrowing from
foreign exchange earnings. For example, the EDL multilateral and bilateral lenders accounts for 80
as a percentage of foreign exchange earnings percent of outstanding debt, and are mostly in the
which stood at 297.0 percent in 1999-00, declined form of medium and long-term debt [See Table
to 127.1 percent by end-March 2008 [See Table- 9.2]. The share of short-term debt, on the other
9.3]. Notwithstanding this improvement, the hand, is extremely low at 1.3 percent. Pakistan
current fiscal year remained the most difficult year took advantage of an earlier Paris Club
for external debt management. This year has rescheduling to re-profile its debt at a more
witnessed a sharp deceleration in non-debt creating favourable term.
inflows to finance the highest ever current account Table 9.2: Structure of EDL (End Mar 08)
deficit in recent economic history, therefore the
Component % Share
recourse to debt creating inflows or drawdown on
Paris Club 31.6
foreign exchange reserves were the only viable
Multilateral 46.9
options. The external debt situation in a historical
Other Bilateral 2.6
perspective is documented in Table-9.1.
Short-Term 1.3
This rise in the external debt burden reinforced the Private Non-Guaranteed 5.4
need for prudent debt management. Following a IMF 3.1
credible strategy of debt reduction based upon Other 6.2
principle of sound debt management over the last Forex Liabilities 2.9
several years, Pakistan has succeeded in reducing Source: SBP

156

It is important to note that from a policy
perspective, a critical appraisal of the external debt
and liabilities should not be entirely focused on the
variation in the absolute stock but, instead, it
should focus on the incidence of the debt burden.
The external debt and liabilities (EDL) declined
from 51.7 percent of GDP at the end of FY00 to
26.9 percent of GDP by end-March 2008.
Similarly, the EDL were 297.2 percent of foreign
exchange earnings but declined to 127.1 percent
during the same period. The EDL were 19.3 times
of foreign exchange reserves at the end of FY00
but declined to 3.4 times by end March 2008.
Interest payments on external debt were 11.9
percent of current account receipts but declined to
2.5 percent during the same period [see Table 9.3].
The maturity profile also showed an improvement
External Debt and Liabilities
which is registered with the State Bank of Pakistan
(SBP) and finally benefits from a foreign exchange
convertibility guarantee from the SBP. Pakistan’s
total stock of external debt and foreign exchange
liabilities grew at a compound average rate of just
1.2 percent per annum during 2001-07 – rising
from $ 37.2 billion in 2001 to $ 40.5 billion by end
June 2007. However, in the first nine months of
fiscal year 2007-08, the stock of external debt and
liabilities grew by 13.3 percent [See Table-9.1].
Fig-9.1: External Debt & Liabilities
(% of GDP)
55
5 1. 7 5 2 . 1 5 1. 0
50
45 4 3 .0

over the last eight years as short-term debt was 3.2 40

3 6 .1
percent of EDL but declined to 1.3 percent during
35 3 2 .7
the period under review.
2 9 .5
30 2 8 .1
2 6 .9
9.2.2 Outstanding External Debt and Liabilities
25

Pakistan’s external debt and liabilities (EDL) is 20

comprised of all Government debt denominated in
FY00

FY01

FY02

FY03

FY04

FY05

FY06

FY07

FY08*
foreign currency, loans contracted by enterprises
with Government ownership of more than 50.0%, * End M arch
as well as the external debt of the private sector

Table 9.3: Trends in External Debt Sustainability Indicators, FY00-FY08

Year EDL/ GDP EDL/ FEE EDL/ FER STD/EDL INT/CAR
(Percent) Ratio (Percent)
FY00 51.7 297.2 19.3 3.2 11.9
FY01 52.1 259.5 11.5 3.7 13.7
FY02 50.9 236.8 5.8 1.4 7.8
FY03 43.1 181.2 3.3 1.2 5.3
FY04 36.7 165.0 3.0 0.6 4.9
FY05 32.7 134.3 2.7 0.8 3.9
FY06 29.4 121.6 2.9 0.4 3.1
FY07 28.1 124.1 3.0 0.1 3.4
FY08* 26.9 127.1 3.4 1.3 2.5
Source: EA Wing and SBP Bulletins.
* End March 2008
EDL: External Debt and Liabilities, FEE: Foreing Exchange Earnings, FER: Foreign Exchange Reserves, STD: Short-
term Debt, INT: Interest Payments and CAR: Current Account Receipts

The EDLs have once again started to rise at a much
faster pace, firstly on account of additional
borrowing for the earthquake-related spending.
Secondly, the growing external imbalances
particularly, over the last two years have also
necessitated large borrowing. Finally, and most
importantly, the weakening of the dollar with
respect to leading currencies like the Euro and
Japanese Yen have contributed to the surge in
EDL, particularly over the last two years but more
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Pakistan Economic Survey 2007-08
so in the current fiscal year. The EDL grew by 5.0
percent in 2005-06, 7.7 percent in 2006-07 and
13.3 percent during July-March FY08. Since end-
June 1999, the EDL stood at $38.9 billion but the
stock in absolute terms started declining until
2003-04. The stock of debt started rising but
thereafter grew at a much faster pace in the last
two years. The current year witnessed even higher
levels of stock at $45.9 billion by end March
FY08. Notwithstanding, the rise in EDL in
absolute number, the burden of the debt has
declined on account of faster growth in nominal
GDP. As can be seen in Table 9.3, EDLs as
percentage of GDP have declined from 51.7
percent in FY00 to 28.1 percent in FY07 and
further to 26.9 percent of the GDP by end-March
2008. However, EDL as percentage of GDP is
likely to rise further by end-June 2008 and
expected to be at last years level.
The single largest increase in the stock of debt was
seen from multilateral donors with a change in
stock of $ 4.8 billion or 13.1 percent. The foreign
exchange liabilities showed a decline of $ 200
million (13.3 percent) but this was more than
compensated for by fresh borrowing from the
multilateral lenders as well as on account of the
valuation effect at the back of a depreciating dollar
vis-à-vis major currencies. Interest payments on
EDLs were $ 1.6 billion and the amortization
payments stood at $ 946 million.
Fig-9.2: EDL to Fore ign Exchange Earnings Ratio
300
2 75
2 50
225
200
17 5
15 0
12 5
10 0
* End M arch
During the first nine months (July-March) of FY
08 the bulk of the increase in stock of EDL came
158
from public and publicly guaranteed debt, as it
increased by US$ 5.4 billion (15.3 percent) while
the external liabilities continued on their
downward trend, declining by $US 0.2 billion
(13.3 percent). The major chunk of increase in
public and publicly guaranteed debt came from the
weakening of the dollar. The stock of EDL
increased to $ 45.9 billion by end-March 2008 as
against $ 40.5 billion by end-June 2007, showing
an increase of $ 5.4 billion in the first nine months
of the current fiscal year.
As mentioned earlier, the real incidence of the debt
burden should be given more importance from a
policy making perspective and not on the variation
in the absolute stock of external debt and
liabilities. There are a number of different
indicators which are commonly used by the
international community and financial institutions
to determine the debt carrying capacity and the
amount of risk associated with a particular country.
These indicators include the stock of external debt
and liabilities as percent of GDP, export earning,
foreign exchange earning, foreign exchange
reserves, and debt servicing as percentage of
current account receipts etc. Figure 9.2 shows a
declining trend in the EDL to foreign exchange
earnings ratio since FY00. It is evident that the
ratio declined sharply until 2005-06 but thereafter
it exhibits a muted rising trend.
9.2.3 Impact of Exchange Rate Fluctuations
Pakistan’s external debt is contracted and thus
denominated in multiple currencies but for
accounting purposes, it is reported in equivalent
US dollar. Thus shifts in cross exchange rates
among various currencies, especially against dollar
are translated into changes in the dollar value of
the outstanding stock of external debt. The change
in the outstanding stock of the external debt is
normally explained through new disbursements
adjusted for amortization plus revaluation impact
of non-US dollar debt. During July-March 2007-08,
total disbursements amounted to $ 2.065 billion
and repayment of principal was amounting to
$ 878 million. The net impact of these two factors
increased the stock of public and publicly
guaranteed debt (PPG) by $ 1.187 billion. The rest
of the net addition of $ 4.163 billion in the total
addition in the external debt stock of $ 5.4 billion
 External Debt and Liabilities
was the result of depreciation of US $ against hard March 2007-08, US dollar depreciated against
currencies like Japanese yen (JPY), Euro, SDR and Japanese yen, Euro and SDR by 18.7 percent, 14.9
others. percent and 8.2 percent, respectively. Thus the
exchange rate movements during the period have
Pakistan benefited from the exchange rate caused changes in the reported US dollar
fluctuations for many years in the past, particularly equivalent amount of $ 4.2 billion while net new
when major currencies were depreciating against disbursement impact was just $1.2 billion. The
the dollar. Unfortunately, in the current fiscal year, outstanding stock in yen alone witnessed a rise of
Pakistan was on the receiving end of the valuation $2.2 billion because of massive appreciation of yen
impact. For the period July-March 2007-08, the against US dollar. The exchange rate variation in
exchange rate applied was of end-June 2007 and Euro cost an additional $915 million to the external
end-March 2008. During reporting period July- debt [See Table-9.4].
Table-9.4: Translational Exchange Rate Loss
($ Million)
Exchange Exchange
Outstanding Rate as on Equivalent Rate Equivalent
Currency Balance in BC 31.03.2008 US$ 30.06.07 US$ Difference
1 2 3 4=2/3 5 6=2/5 7=4-6
Euro 3,865 0.633 6,110 0.744 5,195 915
JPY 1,189,625 99.555 11,949 122.48 9,713 2,237
SDR 5,900 0.607 9,715 0.661 8,930 785
US $ 10,479 1 10,479 1 10,479 0
Others 2,438 2,211 226
Total 40,691 36,528 4,163
BC: Base Currency Source: EAD & Staff Calculations

9.3 Composition of External Debt and
Liabilities
Public and Publicly Guaranteed Debt
The contribution of Paris Club debt stock in total
public and publicly guaranteed debt was declining
since FY04, when its share in the EDL stood at
45.4 percent and by end-March 2008, its share has
declined to 35.9 percent. Between FY06 and FY07,
the stock of Paris club debt fell by another $ 100
million, but in the first nine months (July-March)
of the current fiscal year saw a huge increase of
US$ 1.8 billion dollars in its outstanding stock.
Since a large chunk of Paris Club debt is
denominated in Euro and Japanese yen, the recent
weaknesses of the US dollar against these
currencies had a significant impact in raising debt
to the tune of $1.8 billion. This increase can be
attributed to the exchange rate depreciation of the
U.S dollar in terms of other major currencies over
the course of the year. This re-evaluation impact
has adversely affected Pakistan’s Paris club debt
stock. The US$ 182 million rise in the stock of
other bilateral debt was principally due to higher
receipts from China. The major projects for which
these loans were acquired include: the Gwadar
deep water port project (US$ 36.8 million) and the
acquisition of railway locomotives (US$ 23.95
million).
As of end-March 2008, medium and long-term
public and publicly guaranteed debt amounted to
US$ 40.08 billion, of which almost 53.7 percent or
US$ 21.5 billion is owed to multilateral creditors
and 36.3 percent, or US$ 14.5 billion, is owed to
Paris Club official creditors. Medium and long-
term public and publicly guaranteed debt also
included US$ 1.2 billion owed to official creditors
that are not represented in the Paris Club, as well
as US$ 2.7 billion of international bonds and US$
124.0 million of commercial bank loans. Public
and publicly guaranteed short-term debt amounting
to US$ 614.0 million was owed to the Islamic
Development Bank.
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Pakistan Economic Survey 2007-08
Multilateral Debt
The borrowing from multilateral agencies, mainly
from the World Bank and the Asian Development
Bank (ADB) has outpaced the borrowing from the
Paris Club since 1999-2000. Its share in total
public and publicly guaranteed debt has increased
from 37.5 percent in FY 1999-00 to 52.9 percent in
Jul-March FY 2007-08. The stock of debt from
multilateral agencies amounted to $21.4 billion by
end-March 2008. A detailed analysis of recent
developments in commitments and disbursement in
respect of bilateral and multilateral external
assistance is given in the subsequent section.
Short-term-IDB Loan
After declining substantially during 2003-04, the
stock of IDB loans rose during 2004-05 but again
started to decline. The short-term IDB loans are
obtained largely for financing oil and fertilizer
imports and the rise is a consequence of the
termination of the Saudi Oil Facility (a grant that
covered a major share of oil imports) in 2003-04,
which coincided with the extraordinary rise in
crude oil prices in the international market.
Resultantly, the stock of short-term debt rose from
$ 22 million in 2003-04 to $ 271 million in 2004-
05 but declined drastically to $ 25 million by the
end of FY 2006-07. However, by end-March
FY08, it has shot up to $ 614 million.

Table-9.5: Pakistan: External Debt and Liabilities

FY02 FY03 FY04 FY05 FY06 FY07 FY08*

(In billions of U.S. dollars)
1. Public and Publically Guaranteed debt 29.24 29.20 29.94 31.08 32.90 35.35 40.69
A. Medium and long term(>1 year) 29.05 29.01 29.91 30.81 32.73 35.32 40.08
Paris club 12.52 12.59 13.63 13.01 12.79 12.69 14.53
Multilateral 14.33 14.95 14.35 15.36 16.82 18.69 21.52
Other bilateral 0.43 0.47 0.69 0.81 0.92 1.00 1.18
Euro bonds/Saindak Bonds 0.64 0.48 0.82 1.27 1.91 2.71 2.68
Military debt 0.82 0.26 0.20 0.19 0.13 0.08 0.05
Commercial Loans/credits 0.31 0.25 0.22 0.18 0.17 0.15 0.12
B. Short Term (<1 year) 0.18 0.19 0.02 0.27 0.17 0.03 0.61
IDB 0.18 0.19 0.02 0.27 0.17 0.03 0.61
2. Private Non-guaranteed Debt (>1 yr) 2.23 2.03 1.67 1.34 1.59 2.25 2.49
3. IMF 1.94 2.09 1.76 1.61 1.49 1.41 1.41
Total External Debt (1 through 3) 33.40 33.32 33.37 34.04 35.97 39.01 44.60
Of Which Public 29.9 30.6 31.3 32.1 33.9 36.5 41.3
4. Foreign Exchange Liabilities 3.13 2.12 1.95 1.80 1.59 1.47 1.33
Total External Debt & Liabilities (1 through 4) 36.53 35.44 35.32 35.83 37.56 40.48 45.93
(of which) Public Debt 29.9 30.6 31.3 32.1 33.9 36.5 41.3
Official Liquid Reserves 4.34 9.53 10.56 9.81 10.77 13.35 13.37

(In percent of GDP)

1. Public and Publically Guaranteed debt 40.8 35.4 30.6 28.4 25.8 24.6 23.8
A. Medium and long term(>1 year) 40.5 35.2 30.5 28.1 25.7 24.6 23.5
B. Short Term (<1 year) 0.3 0.2 0.0 0.2 0.1 0.0 0.4
3. IMF 2.7 2.5 1.8 1.5 1.2 1.0 0.8
Total External Debt 46.6 40.4 34.1 31.1 28.2 27.1 26.1
4. Foreign Exchange Liabilities 4.4 2.6 2.0 1.6 1.2 1.0 0.8
Total External Debt & Liabilities (1 through 4) 51.0 43.0 36.1 32.7 29.5 28.1 26.9
Official Liquid Reserves 6.1 11.6 10.8 9.0 8.5 9.3 7.8
Memo:
Exchange Rate (Rs./U.S. dollar, Period Avg.) 61.4 58.5 57.6 59.4 59.9 60.6 61.3
GDP (in billions of U.S. dollars) 71.7 82.4 98.0 109.5 127.4 143.9 170.8
* End March Source: State Bank of Pakistan

Private Sector Debt. The stock of private sector
non-guaranteed debt had been declining from
FY00 till FY05. The stock of private non-
guaranteed debt started to rise during the last few
years, and by FY07 it had reached $ 2.2 billion;
160
and further increased to $ 2.5 billion by end-March
2008. Medium-and long-term private sector debt
registered with the SBP (and benefiting from an
SBP foreign exchange convertibility guarantee)
amounted to U.S. $964.0 million. No short-term
 External Debt and Liabilities
private sector debt has been registered with the share of non-project aid declined from 77.4 percent
SBP. The stock of private non-guaranteed loans to 61.9 percent in the same period. The quantum of
also contains $250 million and $ 275 million worth the project aid has declined to $ 869 million in
of private sector’s bonds for FY 07 and FY 08, absolute terms during July-March 2007-08 as
respectively. compared to $ 924 million in the last year. The
Non-project aid reduced to $ 1,410 million during
Foreign Exchange Liabilities July-March 2007-08 from $ 3,170 million during
Foreign exchange liabilities have shown a steady 2006-07. Since 2003-04, no food aid received;
decline since FY99 from as high as $ 5.7 billion in therefore, the non-project aid has also been
1999 to $ 1.5 billion by 2007. It further declined to reduced. Overall, a reduction in both Project as
$ 1.3 billion by end March 2008. This decline is well as non-project aid has been recorded during
largely due to the encashment of various bonds (on July-March 2007-08 as summarized in Table-9.6.
maturity) and Foreign Currency Accounts (FCA).
During the first nine months (July-March) of the
9.4 Composition of Foreign Economic current fiscal year, total commitments stood at $2.3
billion with earthquake relief assistance of $ 0.5
Assistance Commitments
billion. The aid inflows for budgetary/BOP support
The declining trend in annual average level of has nose-dived from $2.1 billion in 2006-07 to just
commitments of foreign aid continued in the first $557 million during July-March 2007-08.
nine months of the current fiscal year (July-March Earthquake relief assistance is also gradually
2007-08). However, the share of project aid declining since its peak level of $1.9 billion in
increased to 38.1 percent during July-March 2007- 2005-06. Quantum and composition of
08 as against 22.6 percent in 2006-07 while the commitments is documented in Table 9.6.
Table-9.6: Commitments of Aid by Use* (US$ million)
(July-Mar)
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
I. Project Aid 860 1,233 1,965 1,021 924 869
II. Non-Project Aid 1,188 960 1,117 3,261 3,170 1,410
a) Food Aid 22 12 0 0 0 0
b) Budgetary Support/ (BOP) 1,158 943 1,115 1,330 2,152 557
c) Relief Assistance for Afghan Refugees 8 5 2 1 413 303
d) Earthquake Relief Assistance 0 0 0 1,930 605 550
Total (I + II) 2,048 2,193 3,082 4,282 4,094 2,279
P= Provisional Source: Economic Affairs Division
* Excluding IDB Short-term, Commercial Credits and Bonds.

Disbursements of the project aid stood at $471 million in the first

nine months (July-March 2007-08) which was $
The disbursement of external assistance
808 million for the full year of 2006-07.
maintained its pace at around $2.4 billion per
Disbursement of Non-project aid was recorded at $
annum during the 1990s. It has risen to $3.2 billion
2,032 million during July-March 2007-08 which is
during 2006-07 mainly because of massive inflows
slightly lower than the full year figure of $2,424
on account of aid inflows for budgetary support/
million during 2006-07. The aid inflow on account
BOP. Total disbursements stood at $ 2.5 billion in
of budgetary support/ BOP was again on the top of
the first nine months of the current fiscal year as
the recipient sector while disbursements on
against $3.2 billion worth of inflows in 2006-07.
account of project aid have declined substantially
Contrary to commitments, the share of project aid
during the current year. Disbursements on account
in overall disbursements declined from 25 percent
of earthquake relief assistance bounced back after
to 18.8 percent while the share of non-project aid
remaining subdued in 2006-07. The summarized
has increased from 75 percent in last year to 81.2
distribution of disbursements of foreign assistance
percent in the first nine months. The disbursement
among various sectors is given in Table-9.7.
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Pakistan Economic Survey 2007-08
Table-9.7: Disbursements of Aid by Use* ($ million)
(July-Mar)
2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Project Aid 705 525 741 878 808 471
Non-Project Aid 848 745 1,534 1,985 2,424 2,032
a) Food Aid 10 0 0 0 12 0
b) Budgetary Support/ (BOP) 830 741 1,532 1,069 2,007 1,016
c) Relief Assistance for Afghan Refugees 8 4 2 1 380 516
d) Earthquake Relief Assistance 0 0 0 915 37 500
Total (I + II) 1,553 1,270 2,275 2,863 3,232 2,503
P= Provisional Source: Economic Affairs Division
* Excluding IDB Short-term, Commercial Credits and Bonds.

Sources of Aid The composition of assistance from bilateral

sources has declined over the year and the share of
The major sources of foreign economic assistance
economic assistance from multilateral sources is on
to Pakistan have been through the aid to Pakistan
the rise. During July-March 2007-08, the
Consortium (Paris Club Countries and Multilateral
commitments for aid from bilateral sources has
Institutions), Non-Consortium (Non-Paris Club
increased from 24.4 percent of the total in 2006-07
Countries) and Islamic Countries. Among these,
to 34.7 percent and according the share of
the Aid-to-Pakistan Consortium, formulated in
committed amount from multilateral sources has
1960 and now renamed as the 'Pakistan
declined accordingly. However, the share of actual
Development Forum' (including assistance from
disbursements in overall disbursements from
Consortium sources but outside Consortium
bilateral sources has marginally declined while that
umbrella arrangements), is the largest source of
of multilateral has increased. The multilateral
economic assistance to Pakistan. There are two
institutions has committed an amount of $1.5
major sources of foreign aid; bilateral and
billion and disbursed $1.9 billion in July-March
multilateral source. Multilateral sources comprise
2007-08, whereas, the commitment and
of multilateral institutions like the World Bank,
disbursements were $ 3.1 billion and $2.4 billion,
Asian Development Bank etc. has gained much
respectively in 2006-07. Source-wise commitments
more importance in recent times as providers of
and disbursements are summarized in Table-9.8.
development assistance to Pakistan.
Table-9.8: Sources of Foreign Aid* $ Million
Commitments Disbursements
2007-08 2007-08
2006-07 (July-March) 2006-07 (July-March)
Particulars Amount % Share Amount % Share Amount % Share Amount % Share

I) Bilateral 998.1 24.4 791.6 34.7 819.9 25.4 613.7 24.5

II) Multilateral 3,096.2 75.6 1,486.9 65.3 2,412.1 74.6 1,889.2 75.5

Total (I+II) 4,094.3 100.0 2,278.5 100.0 3,232.0 100.0 2,502.9 100.0
* Excluding IDB Short-Term, Commercial Cedit and Bonds Source: Economic Affairs Division

Project Vs Non-Project Aid million during July-March 2007-08. The non-

The share of project aid in the total disbursement
has exhibited a fluctuating trend over the years.
Project aid in the 1990s averaged at $1,589 million
per annum, but declined substantially to $471
project aid averaged at $626 million per annum
during the 1990s and increased substantially to
$2,032 million during the first nine months of
2007-08 [See Table-9.9].

162
 External Debt and Liabilities
Table-9.9: Disbursement of Project and Non-Project Aid*
(US$ million)
Project Aid Non-Project Aid Total
Year Amount % Share Amount % Share
1990's 1,589 71.7% 626 28.3% 2,215
2000-01 247 28.1% 633 71.9% 880
2001-02 1,113 32.5% 2,311 67.5% 3,424
2002-03 860 42.0% 1,188 58.0% 2,048
2003-04 1,233 56.2% 960 43.8% 2,193
2004-05 1,965 63.8% 1,117 36.2% 3,082
2005-06 1,021 23.8% 3,261 76.2% 4,282
2006-07 808 28.9% 1,985 71.1% 2,793
2007-08 (Jul-Mar) 471 18.8% 2,032 81.2% 2,503
Source: Economic Affairs Division
* Excluding IDB Short-term, Commercial Credits and Bonds.
@ Non-Project aid includes Non-food, food, program loans/budgetary grants, earthquake and Afghan
Refugees Relief Assistance.

Similarly, the share of project aid has declined of the Earthquake relief assistance. The grant
compared to non-project aid over the period. The element in agreements signed with multilateral
share of project aid in the decade of the 1990s sources was $ 63.2 million during 2006-07 but
averaged 71.7 percent per annum with strong apart from the amount of $ 1.4 million assistance
fluctuation ranging between 55 and 84 percent. for Afghan refugees, no grant agreement has been
The share of non-project aid during the same signed by multilateral sources during July-March
period fluctuated in a much wider range of 16 to 45 2007-08.
percent with an average of 28.3 percent. The share
Table-9.10: Debt Servicing and Net Transfers (US$ million)
of non-project aid has increased substantially at the Net NT as % of
expense of project aid since 2004-05. During the Gross Debt Transfers Gross
*
first nine months of the current fiscal year 2007-08 Year Disbursements Servicing** (N.T) Disbursements.
1990-91 2045 1316 729 36
(July-March) the project aid accounted for 18.8 1991-92 2366 1513 853 36
percent stake while non-project aid share was 81.2 1992-93 2436 1648 788 32
1993-94 2530 1746 784 31
percent of overall external assistance inflows. The 1994-95 2571 2042 529 21
share of project aid is at its lowest level in the last 1995-96 2555 2136 419 16
two decades while the share of non-project aid is 1996-97 2231 2265 -34 -2
1997-98 2800 2353 447 16
the highest ever in this period. The rising demand 1998-99 2440 1638 802 33
for resources because of the earthquake related 1999-00 1426 1778 -352 -25
expenses is but one reason for this structural shift. 2000-01 1599 1546 53 3
2001-02 2316 1190 1126 49
2002-03 1553 1327 226 15
Composition of External Assistance 2003-04 1270 2978 -1708 -134
2004-05 2275 1461 814 36
The composition of external assistance over the 2005-06 2863 1572 1291 45
2006-07 3232 1748 1484 46
years has undergone considerable change from 2007- 2503 1413 1090 44
grants and grant-like assistance to hard term loans. @ July-March Source: Economic Affairs Division
The share of grant and grant-like foreign economic * Excluding relief assistance for Afghan Refugees and Earthquake (2005-06)
** Excluding debt servicing on short-term borrowings, IMF Charges and Euro Bonds
assistance in total commitments continued to up to the year 2003-04. From the years 2004-05 onwards debt servicing in respect
of short-term borrowings and Euro Bonds is included.
exhibit a declining trend over the years. It declined
to 13 percent in 2002-03 from 32 percent in 2001- Debt Service Payments and Net Transfers
02. However, it increased to 23 percent during
2004-05. During the first nine months (July- Foreign economic assistance is primarily directed
March) of the fiscal year 2006-07, the share of to upgrade the productive capacity of resource
grants declined to 19.5 percent mainly on account starved economies. However, debt servicing

163
Pakistan Economic Survey 2007-08
liabilities of the economy have become an various years, debt-servicing and net transfers is
important component with the accumulation of documented in Table-9.10.
debt. The increased liability of debt service
payments has squeezed the net inflow of foreign Debt Servicing of External Debt and Liabilities
resources. The net transfers of aid actually depicted Pakistan’s economy has got much strength and
the net resource inflow in the economy. For confidence from a strong build-up in foreign
instance, in the 1990s, the net inflows of resources exchange reserves during the last few years. In FY
averaged at US$ 534 million per annum but 2000 Pakistan paid $ 3.8 billion on account of debt
declined in subsequent years by a considerable servicing and $ 4.1 billion worth of payments were
extent. Net transfers turned negative by the end of rolled over. This shows the strength of the debt
the 1990s and it reached negative $1,708 million in carrying capacity of the economy at the end of the
2003-04 due to lower disbursements and ever 1990s. The combination of re-profiling of Paris
increasing debt servicing liabilities on external Club bilateral debt on a long-term horizon, the
debt. substantial write-off of the US bilateral debt stock,
the prepayment of expensive debt worth $ 1.1
Debt-servicing of external medium & long-term
billion and the relative shift in contracting new
loans amounted to $1,413 million during July-
loans on concessional term has begun to yield
March, 2007-08 which include $779 million
dividend. The annual debt servicing payments
principal repayment and $635 million interest
made during the period 1999-2000 to 2003-04
payments. Making Adjustments for gross
averaged just above $ 5 billion per annum. This
disbursements worth $2.5 billion, the net resource
amount has drastically come down to around $ 3
inflow amounted to $1.1 billion.
billion in FY07. An amount of $ 2.2 billion has
Table-9.11: Pakistan’s External Debt and Liabilities been paid during July-March 2007-08 and the
Servicing amount rolled over declined from $ 4.1 billion in
($ Million)
Actual Amount
1999-2000 to $ 1.3 billion in July-March 2007-08.
Years
Amount Paid Rolled Over Total The trend is not likely to persist in the medium-
1999-00 3756 4081 7837 term because of rising stock of external debt as
2000-01 5101 2795 7896 well as pressure on current account deficits in
2001-02 6327 2243 8570 coming years. The gradual improvement in the
2002-03 4349 1908 6257
external liquidity position, leading to a build up in
2003-04 5274 1300 6574
2004-05 2965 1300 4265 foreign exchange reserves the actual paid amount
2005-06 3115 1300 4415 continued rising until FY 04 but for the last three
2006-07 2977 1300 4277 years the amount actually paid has declined which
2007-08 * 2202 1300 3502 is reflection of lower stock of debt and lower
* July-March Source: State Bank of Pakistan
interest rate. The amount rolled over remained
Over reliance on external resources have constant for the last five years. [See Table-9.11 &
implications for the debt-servicing problem. A Fig-9.3].
higher level of debt-servicing is tantamount to net Fig-9.3: Se rvicing of Exte rnal De bt & Liabilitie s
transfer of the external resources. Net transfers 6500
Actual Amount Paid
have declined substantially in the past for higher 5500 Amount Rolledover

incidence of debt servicing. Net transfers as 4500

percentage of total disbursements were 25% for the
$ Million

3500
decade of 1990’s. For the last seven years, net
transfers were negative for only one year i.e. 2003- 2500

04 and that was mainly because of prepayments of 1500

the expensive loans owed to the ADB. For July- 500
March 2008, the net resource inflow accounted for
1999-00

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08 *

44 percent of the gross disbursement. A

summarized position of the disbursements for

164

9.5 Dynamics of External Debt Burden
The dynamics of external debt burden is well-
documented in Table 9.12. The real cost of foreign
borrowing which includes the interest cost, as well
as the cost emanating from the depreciation of the
Pak-rupee (or capital loss on foreign exchange)
was on average, 3.4 percent and 2.7 percent per
annum in the 1980s and 1990s, respectively.
During the 1990s, rising real interest rate and along
with sharp depreciation of exchange rate, led to a
substantial rise in real cost of borrowing. However,
the pendulum swung to other extreme during 2000-
04, when real cost of borrowing declined to an
average of 1.3 percent per annum on account of
benign interest and inflation rates and more so,
with the appreciation of the Pakistani rupee. The
period 2004-08 witnessed a further decline in the
real cost of borrowing, which turned negative
mainly because of higher inflation and some
depreciation of the rupee value.
Table 9.12: Dynamics of External Debt Burden
Non-Interest
Current Real Growth in Foreign Real Growth
Account Deficit/ Real Cost of of External Exchange
Surplus Borrowing Debt*
Period (% of GDP) (%)
1980s -1.2 3.4
1990s -2.7 2.7
1990s-I -2.7 -3
1990s-II -2.8 5.5
2000-04 3.8 1.3
2004-08 # -3.2 -4.4
Source: SBP & Debt Office, Finance Division
* Unit Value of imports of industrialized countries at 2000=100 is used as deflator
# Up to March
As a result of the sharp fluctuation in the real cost
of borrowing, the dynamics of external debt burden
have also changed over the time. The changing
dynamics of external debt burden as documented
in Table 9.10 shows that external debt burden. The
debt burden declined sharply in real terms during
the period 2000-04 because the external debt
witnessed negative growth of 2.6 percent while
foreign exchange earning have risen in real terms
by 9.9 percent and thus debt burden was actually
reduced by 12.5 percent. The reduction in debt
burden continued in the last four years (2004-08)
in general and last two years in particular, was
moderated to a decline of 6.2 percent mainly
because of slight correction in growth of foreign
exchange earnings to 7.2 percent as well as
External Debt and Liabilities
positive real growth of 0.9 percent in external debt.
The growth in external debt has risen significantly
during the last two years (FY 07 and FY 08).
However, it did not immediately lead to a sharp
increase in external debt burden because the debt
carrying capacity (real growth in foreign exchange
earnings) of the country was rising at a healthy
rate. The prospects for external debt management
are becoming a real challenge because real growth
in foreign exchange earnings has slowed
substantially for the last two years, and on the
other hand the sharp real depreciation in exchange
rate is raising the real cost of borrowing. It may
also be noted that Pakistan maintained a non-
interest current account surplus (surplus in primary
balance) to an average of 3.8 percent per annum
during 2000-04, which helped reduce the country’s
debt burden at a relatively faster pace. During the
last four years (2004-08), the non-interest current
account balance again followed the historical
pattern by turning into negative 3.2 percent and
real growth in foreign exchange earnings slowed to
Real Growth
7.2 percent, mainly because of the depreciation of
of External
Earnings* Debt Burden
currency and a rise in the value of the deflator.
(%) (%) (%) However, the real cost of borrowing nosedived to a
6.4 4.7 1.7
6.5 5.5 1.0
negative 4.4 percent, during 2004-08.
7.1 6.6 0.5
6 4.4 1.6 The analysis of dynamics of the external debt
-2.6 9.9 -12.5
0.9 7.2 -6.2 burden provides a useful lesson for the policy-
makers to manage the country’s external debt.
Firstly, the gap in the current account should be
minimal so as to limit external borrowing.
Attempts should be made to finance the current
account deficit primarily from non-debt creating
inflows (foreign investment, grants and assistance
etc.) Secondly, stability in exchange rate is critical
for prudent debt management. Thirdly, if there is
need to borrow, the interest cost should be
minimal. One way to keep interest rate low is to
avoid going to bilateral and multilateral donors for
large scale borrowing. Finally, the pace of foreign
exchange earnings must continue to rise to increase
the debt carrying capacity of the country. Centre to
the prudent debt management is the pursuance of
prudent monetary, fiscal and exchange rate
policies.
165
Pakistan Economic Survey 2007-08
9.6 Pakistan’s Link with International Capital
Market
International capital markets have witnessed one of
the most turbulent years in recent history. With the
financial crisis instilling a sense of distrust amidst
the market, access to financing has been restricted,
with spreads widening for both developed and
emerging economies alike. Given the negative
sentiment surrounding capital markets, and a
domestic economy with substantial
macroeconomic imbalances and political
uncertainty, Pakistan has not issued any new
instruments in FY 08. However, the country is still
pursuing a comprehensive external borrowing
strategy consistent with borrowing constraints such
as the saving/investment gap, amortization
payments, keeping adequate reserves and most
importantly the government’s medium-term
development priorities. The government plans to
continue to tap the global capital markets, when
conditions are more favorable, through regular
issuance of bonds (conventional and Islamic) to
ensure a steady supply of Pakistan’s sovereign
paper, establish a benchmark for Pakistan and to
keep Pakistan on the radar screen of global
investors. This will keep spreads on Pakistani
paper low, give more borrowing options to
Pakistani borrowers including the government and
ensure that Pakistan is covered by various
investment research products.
Eurobond 2017
Continuing the credible debt policy, Pakistan
successfully issued a US$ 750 million 10 year note
at a fixed rate of 6.875% in May 2007. This was
the largest 10 year deal to date, beating the
previous deal of US$ 500 million. The transaction
priced at an impressive UST (US Treasury) +200
basis point which is 40 bps (basis points) tighter
compared to last year’s deal that priced at UST
+240 basis points. The deal priced at the tight end
of a revised price guidance of 6.875-7.00 percent.
The issue was highly oversubscribed with the
largest ever order book amassed for Pakistan. The
order book of US$ 3.7 billion meant an
oversubscription of over 7 times on the original
166
deal of US$ 500 million. The resounding demand
allowed Pakistan to upsize the deal by 50% to US$
750 million.
Eurobond of 2017 and 2036
On March 23, 2006, Pakistan successfully issued
US$ 500 million new 10-year Notes and
US$300mm new 30-year Bonds in the
international debt capital markets. This transaction,
which represented the first international 144A
bond issued by Pakistan since 1999, raised
significant interest amongst US QIBs and
international institutional investors. The 10-year
notes were priced with a coupon of 7.125% to
yield 7.125%, framing a spread of 240bps over the
relevant 10-year US Treasury benchmark and
187bps over the US$ mid-swap rate. The 30-year
bonds were priced with a coupon of 7.875% to
yield 7.875%, framing a spread of 302bps over the
relevant 30-year US Treasury benchmark and
256bps over the US$ mid-swap rate. Pakistan was
able to achieve spreads on both the new 10 and 30-
year bonds that were tighter than its previous 5-
year issues. The issue was over 2.5 times
oversubscribed.
Recent Performance of 2017 and 2036
Eurobond
The present year has seen increased volatility in
international credit markets. The fallout from the
sub-prime crisis and the ensuing credit crunch
gripping the world has impacted Emerging Market
debt significantly. Spreads have been increasing
across the board and access to financing has
decreased. Pakistan is no exception, with spreads
on its 2017 and 2036 trading at higher spreads than
last year, translating to a higher cost of financing.
Worsening imbalances in the domestic economy
and political uncertainty have also played a part in
widening the spreads on Pakistan sovereign debt.
Pakistan's credit rating was cut for the first time in
nine years by Moody's and Standard & Poor’s
rating agencies, which cited ``growing economic
imbalances and renewed political difficulties.'' As
compared to the issue spread of UST + 200bps, the
2017 bond is trading currently at a spread of UST
+629 bps.
 External Debt
D and Liabbilities
Table-9.133: Selected Seccondary Mark
ket Benchmarrks (as of 23 May
M 2008)
Ratings Details Spreead over UST Bid - Yield
Y
Issuer
(Mooody’s/S&P) (Coup pon/Maturity) (bps) (%))
Colombia Ba2/BB 7.875%/Jan 2017 +199 5.580
Turkey Ba3/BB-
B 7.0000%/Mar 2016 +309 6.630
Venezuela B2/BB- 8.500%/Oct 2014 +684 10.0660
Philippiness B1/BB- 8.0000%/Jan 2016 +223 5.660
Pakistan B2/B 6.8755%/Jun 2017 +629 10.1442
Indonesia B1/BB- 7.2500%/Apr 2015 +298 6.290
Indonesia B1/BB- 6.7500%/Mar 2014 +305 6.030
Indonesia B1/BB- 6.8755%/Mar 2017 +289 6.500
Source: Bloommberg
The 2036 bond, as commpared to thee issue spreadd of curve to
t 30 years in i just 2 yearrs. Most emeerging
UST + 3002bps, is trad
ding currentlyy at a spread of markett sovereign issuers have taaken longer time to
UST + 5007 bps, about 69% higher. The 2036 boond extend their yield cuurve from 5 to t 30 years. Itt took
was the longest
l ever tenor achieveed by Pakistan. Philipppines 4 years and Brazil and Turkey 3 years
Both the 10 and 30 year offerinngs were debbut to extennd their yieldd curve to 30 years.
y
offerings for Pakistan
n which exteended the yieeld
Table-9.144: Selected Seccondary Mark
ket Benchmarrks (as of 23 May
M 2008)
Ratings Details Spreead over UST Bid - Yield
Y
Issuer
(M
Moody’s/S&P) (Coup pon/Maturity)) (bps) (%))
Colombia Ba2/BB 7.375%/Sept 2037 +195 6.480
Turkey Ba3/BB- 6.8755%/Mar 2036 +315 7.630
Philippiness B1/BB- 7.7500%/Jan 2031 +245 6.730
Philippiness B1/BB- 6.3755%/Jan 2032 +211 6.681
Pakistan B2/B 7.875%%/Mar 2036 +507 9.640
Indonesia Ba3/BB- 8.5000%/Oct 2035 +315 7.726
mberg
Source: Bloom

Fig-9.4: Pakistan
P Risk
k Premium

Source: Bloomberg

167
Pakistan Economic Survey 2007-08
Since early 2007, Pakistan bonds have been
underperforming (much more than the peer group),
due to the combined impact of the global credit
crisis and investor concern over Pakistan’s political
environment. Figure 9.4 gives a chronological
account of local political and economic instability
and the widening of spreads that followed. A sharp
increase in the spreads can be seen starting in July
2007. The month saw local political tensions rise
to the forefront and military action being taken
against the Red Mosque. Grim news from the
financial markets of the developed world regarding
a deepening of the financial and credit market
crisis also caused a jump in spreads. A widening of
168
spreads for other developing countries like
Indonesia, Turkey, and Philippines was also
witnessed in July 2007, with credit markets
showing signs of wariness and hesitation due to the
international financial environment. Spreads
continued to widen for Pakistan, with only a brief
respite around October 2007 with the re-election of
the President. However, a string of bomb blasts
and violence around the country followed by
declaration of a state of emergency halted the
tightening of spreads. Political uncertainty and
violence kept spreads at high levels and general
elections held in February have so far failed to
bring spreads back down to lower levels.
TABLE 9.1
PUBLIC AND PUBLICLY GUARANTEED MEDIUM AND LONG TERM EXTERNAL DEBT
DISBURSED AND OUTSTANDING As on 31-03-2008
(US $ million)
S.No. Country/Creditor Debt Outstanding
as on 31-03-2008
I. Bilateral
a. Paris Club Countries
1 Austria 87
2 Belgium 74
3 Canada 534
4 Finland 6
5 France 2,554
6 Germany 2,159
7 Italy 238
8 Japan 6,262
9 Korea 520
10 Netherlands 138
11 Norway 31
12 Russia 126
13 Spain 81
14 Sweden 158
15 Switzerland 116
16 United Kingdom 13
17 USA 1,550
Sub-Total I.a. Paris Club Countries 14,648
b. Non-Paris Club Countries
18 Bahrain 12
19 China (including Defense) 908
20 Kuwait 89
21 Libya 5
22 Saudi Arabia 96
23 United Arab Emirates 66
Sub-Total I.b. Non-Paris Club Countries 1,176
Total I. (a+b) 15,824
II. Multilateral & Others
24 ADB 9,157
25 EIB 74
26 IBRD 2,122
27 IDA 9,589
28 IDB 350
29 IFAD 179
30 NORDIC Development Fund 19
31 NORDIC Investment Bank 11
32 OPEC Fund 20
Total II: Multilateral & Others 21,520
III. Bonds
33 Eurobonds 2,650
34 Saindak 3
Total III: Bonds 2,653
IV. Commercial Banks 124
Grand Total (I+II+III+IV) 40,121
Source:Economic Affairs Division

EDUCATION
10.1. Introduction
Education is central to socio-economic
development of a country. It plays a critical role in
building human capabilities and accelerates
economic growth through knowledge, skills and
creative strength of a society. Education also
creates awareness, tolerance, self esteem and
confidence which empower people to defend their
rights. The positive outcomes of education include
reduction in poverty and inequality, improvement
in health status and good governance in
implementation of socio-economic policies. The
benefits of education are not only confined to the
national economy but individual also benefit from
it. It has been found that every year of additional
schooling increases individual’s wages by 10 per
1 Census revealed a growth rate of 1.07% per annum
cent globally . The multifaceted impact of
education makes it an essential element for policy
framework. Developing countries, where majority
of the world’s population resides, need to redesign
educational policies for promoting productivity in
different sectors of the economy by developing
highly skilled manpower and addressing their
development needs for rapid industrialization.
The government is making serious efforts to
improve the quantity and quality of education by
enhancing educational facilities within the
minimum possible time. Appropriate strategies
have been devised for the growth of this sector,
however, expansion of education is dependent on
fiscal resources. Government has decided to
double the education budget (as percentage of
GDP) as visualized in Fiscal Responsibility and
Debt Limitation (FRDL) Act, 2005. This means an
extra spending of 1.8% of GDP over and above the
existing funding will be on hand during the next
five years. Availability of reliable, comprehensive
and update educational data is a pre-requisite for
1
World Bank Report
Chapter 10
informed decision making, policy formulation and
implementation. In this regard, Academy of
Educational Planning and Management (AEPAM)
conducted the first National Educational Census
(NEC) in 2005.
10.2. LITERACY:
Literacy rate plays a vital role in the development
of any nation by transforming into socio-economic
prosperity. Literacy rates in developed countries
hover around the 100% mark, but such is not the
case with developing countries. About two decades
ago, Pakistan had only 34% literacy rate (age 10
and above). Population Census 1972 and 1981 data
shows that in the 1960s and 1970s, literacy rate
improved by 0.5% per annum. However the 1998
during 1981 to 1998 when the literacy rate (10
years and above) of population rose from 26.2% to
43.9%. In the current decade, the four indicators;
Literacy Rate, Enrollment Rate, Gross Enrollment
Rate (GER) and Net Enrollment Rate (NER) have
improved at a moderate pace.
According to Pakistan Social and Living
Measurement (PSLM) Survey data (2006-07), the
overall literacy rate (age 10 years and above) is
55% (67% for male and 42% for female) in 2006-
07 compared to 54% (65% for male and 42% for
female) in 2005-06. Literacy remains higher in
urban areas (72%) than in rural areas (45%) and
more in men (67%) compared to women (42%).
When analyzed provincially, literacy rate in Punjab
stood at 58% followed by Sindh (55%), NWFP
(47%) and Balochistan at 42%. The literacy rate of
Punjab and Balochistan has improved considerably
during 2004-05 to 2006-07 (Table 10.1). Adult
literacy rate (age 15 and above) has also increased
from 50% in 2004-05 to 52% in 2006-07.
169
Pakistan Economic Survey 2007-08
Table 10.1: Literacy Rate 10+, GER & NER Trends in Pakistan & Gender Parity Index (GPI)
REGION/ Literacy rates
GER Primary (age 5-9) NER Primary (age 5-9)
PROVINCE (10 years & above)
2004-05 2005-06 2006-07 2004-05 2005-06 2006-07 2004-05 2005-06 2006-07
Pakistan Male 65 65 67 94 94 99 56 56 60
Female 40 42 42 77 80 81 48 48 51
Both 53 54 55 86 87 91 52 53 56
rural 44 44 45 79 80 84 48 47 52
urban 71 71 72 104 106 106 64 65 66
GPI 0.62 0.65 0.63 0.82 0.85 0.82 0.86 0.86 0.85
Punjab Male 65 66 67 100 98 106 60 60 64
Female 44 47 48 89 89 95 55 53 59
Both 55 56 58 95 94 100 58 57 62
GPI 0.68 0.71 0.72 0.89 0.91 0.90 0.92 0.88 0.92
Sindh Male 68 67 67 84 88 88 53 54 56
Female 41 42 42 65 71 68 42 47 43
Both 56 55 55 75 80 79 48 50 50
GPI 0.60 0.63 0.63 0.77 0.81 0.77 0.79 0.87 0.77
NWFP Male 64 64 67 93 93 96 53 51 56
Female 26 30 28 65 70 67 40 42 41
Both 45 46 47 80 83 82 47 49 49
GPI 0.41 0.47 0.42 0.70 0.75 0.70 0.75 0.82 0.73
Balochistan Male 52 54 58 83 79 89 44 39 49
Female 19 20 22 49 50 52 29 27 32
Both 37 38 42 67 65 72 37 34 41
GPI 0.37 0.37 0.38 0.59 0.63 0.58 0.66 0.69 0.65
Source: Pakistan Social & Living Standard Measurement Survey 2006-07

According to the PSLM Survey data 2006-07, the
overall school attendance (age 10 years and above)
is 57% (69% for male and 44% for female) in
2006-07 compared to 55% (68% for male and 42%
for female) in 2004-05. Province-wise school
attendance (age 10 and above) for 2006-07 as
against 2004-05 shows Punjab to be on the top
(60% Vs 58%) followed by Sindh (56% Vs 56%),
NWFP (50% Vs 48%), and Balochistan (39% Vs
37%) to be at the lowest level. School attendance
(age 10 years and above) remains higher in urban
areas (73%) than in rural areas (48%) and more in
men (69%) compared to women (44%) (Table
10.2).
Nationally, the GER, sometimes refered to the
participation rate, is the number of children
attending primary school (age 5-9 years) divided
by the number of children who ought to be
attending. The GER shows a remarkable increase
from 87% to 91% between 2005-06 and 2006-07.
Punjab and Balochistan has shown noticeable
increase in the respective period (Table 10.1).
Similarly, GER at the middle school level (age 11-
13) has increased from 54% to 59% between 2005-
06 and 2006-07. Province-wise data (age 11-13)
for 2006-07 as against 2004-05 shows Punjab to be
on the top (62% Vs 55%) followed by NWFP
(60% Vs 56%), Sindh (55% Vs 51%) and
Balochistan (43% Vs 36%) to be at the lowest
level.
The Net Enrollment Rate (NER) refers to the
number of students enrolled in primary school of
primary school age divided by the number of
children in the age group for that level of
education. The NER as a whole in 2006-07 is 56%
compared to 53% in 2005-06. All the provinces
have shown a rising trend, interestingly, rural areas
exhibited higher rates in comparison to urban areas
(Table 10.1).
The Gender Parity Index (GPI) is the ratio of
females’ enrolment to the males’ enrolment. A GPI
of more than one indicates that, in proportion, for
every male in the school, there is more than one
female. The GPI for Pakistan as a whole in 2006-
07, is 0.63 compared to 0.62 in 2004-05. Province-

170
 Education
wise GPI is high in Punjab (0.72) followed by and Balochistan calls for immediate attention by
Sindh (0.63), NWFP (0.42) and Balochistan (0.38), the policy makers at both federal and provincial
respectively (Table 10.1). The lower GPI in NWFP levels.

TABLE 10.2: POPULATION THAT HAS EVER ATTENDED SCHOOL- BY PROVINCE & REGION
Percentage of the Population (10 Years and Older)
REGION and
PROVINCE 2004-05 2005-06 2006-07
Male Female Both Male Female Both Male Female Both
URBAN AREAS: 80 63 72 80 64 72 80 66 73
PUNJAB 81 67 74 82 67 75 81 69 75
SINDH 80 62 72 79 64 72 81 65 74
NWFP 80 49 65 78 49 63 78 49 64
BALOCHISTAN 74 41 59 73 38 57 75 41 60
RURAL AREAS: 62 31 47 61 33 47 63 32 48
PUNJAB 64 38 51 63 39 51 66 40 53
SINDH 57 18 39 55 19 38 54 17 37
NWFP 66 25 45 68 31 48 68 26 47
BALOCHISTAN 47 13 32 40 12 27 49 13 33
OVERALL: 68 42 55 68 44 56 69 44 57
PUNJAB 69 47 58 70 49 59 71 50 60
SINDH 69 41 56 68 43 56 68 43 56
NWFP 69 29 48 70 33 51 70 30 50
BALOCHISTAN 52 18 37 48 18 34 55 20 39
Source: Pakistan Social & Living Standard Measurement Survey2006-07

According to Academy of Educational Planning Fig. 10.2: GPI Index for Primary and Secondary
and Management (AEPAM), 11.23 million females Enrolment
were enrolled at primary schools as compared to 2.00
5.8 million males in 2006-07. This shows higher Primary
enrollment of females in 2006-07 with GPI Index 1.50 High
of value 1.9. However at middle and high class,
1.00
GPI fell to 0.70 (Figure 10.1). At the national level
GPI for youth literacy (15-24 years) is 0.72. 0.50

Fig. 10.1: GPI Index (2006-07) 0.00

1992

1994

1996

1998

2000

2002

2004

2006
2.5
1.9
2.0 Source: Pakistan Education Statistics, 2007
1.5
1.0
1.0 0.8 0.7 0.7 0.7
10.3: Education Sector in Pakistan: An
0.5 Overview
0.0
According to the Pakistan Education Statistics
High

Universities
Pre-Primary

Primary

Middle

Inter Colleges

2007, a total of 7,242 new institutions were added

in a year which has raised the total number to
231,289 in the country (other than technical,
Source: Pakistan Education Statistics, 2007 professional, vocational, polytechnic institutions,
NFBE schools and deeni madaris). Out of total
There is an improvement in GPI Index overtime at institutions, 164,579 are in public sector and
primary and secondary level, but a sharp increase 81,103 in private sector (Table 10.3).
in GPI for primary enrolment is noted during 2002-
03 to 2006-07 periods (Figure 10.2).
171
Pakistan Economic
E Surrvey 2007-088
Table 10.33: Educationall Institutions by
b Sector and
d Provinces (inn 2006)
Area Total P
Public Private
Pakistan 245,682 164,5779 (67) 81,103 (33)
Punjab 115,311 66,7700 (58) 48,5541 (42)
Sindh 59,312 46,7388 (79) 12,5574 (21)
NWFP 40,706 29,4300 (72) 11,2276 (28)
Balochistann 11,492 9,742 (85) 1,7550 (15)
FATA 5,344 4,704 (88) 6400 (12)
FANA 4,366 1,505 (34) 2,8661 (66)
AJK 7,803 5,092 (65) 2,711 (35)
ICT 1,348 598 (44) 7500 (56)
Percentage
e Share in Pare
entheses Source; Pakistan Educcation Statisticss 2007

Fig. 10.33: % Distribtuion off Educational Instittutions by

The daata further revveals that rolee of public secctor is
Provincees (2006-07) more dominant in i promotinng educationn as
8%
comparred to the priivate sector. About 67% of o the
4.7% educatiional instituttions in the country aree run
47%
16.6% publiclly relative to only 33% in the private sector.
s
The shhare of publicc sector is allso higher in rural
areas (79%)
( with reemaining in the private sector.
s
Provincce-wise disttribution, hoowever, show ws a
comparratively highher share of private secttor in
24%
% Punjabb, FANA, andd ICT, while there is a neeed to
encourrage the privvate sector inn other provinces.
Punjaab Sindh NWFP Balochistan Others The roole of private sector shoulld be enhanced by
providiing incentivees and introdducing innovvative
When segregated
s provincially, about 477% schemees such as edducation voucchers etc. Thiis will
institutionns of all categories
c a
are in Punjab, encourrage healthy competition
c b
between publiic and
followed by 24% in Sindh,S 16.6%
% in NWFP and a privatee sector, and thus improvee the quantityy and
4.7% in Balochistan
B (Figure
( 10.3)). About thrree
qualityy of educationn.
forth of thhe institutionss are in rural areas and samme
trend is seeen on a provincial basis (F Figure 10.4).

Fig. 10.4: % Diistribution of Educational Insttitutions by Loccation and Provvince (2006)

120

80

rural
40
urban

0
Punjab

Sindh

FATA

FANA

AJK
Balochistan
NWFP

ICT

Source: Pakistan
P Education Statistics,
S 2007

172
 Education
10.3.1: Education by Level: Education, the overall enrollment in these
institutions is recorded at 34.84 million with
Pakistan follows three tier education system which
teaching staff of 1.307 million. Out of total
includes Elementary Education (8 years),
institutions, there are 50% primary schools, 16%
Secondary Education (4 years) and Higher
middle, 10% high, 4.95% Deeni Madaris and 1.2%
Education (4 years). According to the Ministry of
Vocational Institutions (Table 10.4).
Table 10.4: Number of Mainstream Institutions, Enrolment and Teachers by Level
Enrollment Institutions Teachers
Year
2005-06 2006-07 P 2005-06 2006-07 P 2005-06 2006-07 P
Pre-Primary 7,135,447 8,322,620 -- -- -- --
Primary+ Mosque 16,834,417 17,043,460 157,526 158,378 443,973 447,890
Middle 5,262,323 5,576,010 39,370 42,918 310,753 334,554
High 2,133,008 2,244,147 22,909 25,177 362,188 390,612
Higher Sec./ Inter 853,535 907,704 2,996 3,332 69,425 73,273
Degree Colleges 325,993 324,988 1,135 1,371 20,568 23,676
Universities. 424,012 424,271 111 113 37,509 37,536
Total 32,968,735 34,843,200 224,047 231,289 1,244,416 1,307,541
Source: Pakistam Education Statistics 2005-06 & 2006-07, EMIS- MoE Islamabad.
P: Provisional data by EMIS- MoE, Islamabad.

It transpires from above that the access gap
between primary and middle schools has declined.
In 2005-06, there was one middle school for every
4 primary schools and one higher secondary school
/ Inter College for every 7.65 high schools. This
gap slumped to one middle school for every 3.7
primary schools and one higher secondary school /
Inter College for every 7.56 high schools in 2006-
07. These new institutions have been instrumental
in raising the number of teachers and students.
The increase in enrollment has been outstanding
i.e. 1.187 million in year 2006-07, with middle and
primary level showing additional enrolments of
313,687 and 209,043 respectively.
The public sector dominates in education sector at
primary level. There are 86% primary schools in
the public sector as compared to 14 % in the
private sector. At the middle level, only 37%
schools are in the public sector in comparison to
63% in private sector. Share of private sector is
even higher (70%) at Vocational/Polytechnics
level as compared to the public sector. In case of
Deeni Madaris, almost all (97%) of them are in the
private sector (Figure 10.5).

public
Fig. 10.5: % Distribution of Educational Institutions by Level and Sector (2006)
private
100

80

60

40

20

Source: Pakistan Education Statistics, 2007

173
Pakistan Economic
E Surrvey 2007-088
The perceentage distrib
bution of stuudents in pubblic 33 for ICT. The PTR P of femalle at middle level
sector shows that 67% students are in primaary educatiion ranges froom 9 in Punjaab to 20 in IC
CT. At
schools, 20%
2 in midd a only 4% in
dle schools and seconddary educationn, overall PTRR is 6 while it is 4
higher seccondary schoo
ols (Figure 100.6). for feemale (Figuure 10.8). In I public sector
s
instituttions, there are
a 140 studeents per instittution
Fig. 10.6: % Distribution of Students
S in Public Sector
S againstt 159 in privaate sector.
(2006) Prrimary
Middle Fig. 10.8:
1 Pupils Teacheers Ratio by Level and
a Province
Seecondary (20066)
9% 4% Hiigher Secondary 60
20% Primary
Middle
67%
% Secondary
40

20

0
Source: Pakistan Educationn Statistics, 2007

Soource: Pakistan Eduucation Statistics, 2007

Among prrimary school teachers, 788% are in pubblic
sector whhere as 22% % are in priivate sector, at
middle leevel, 36% in n public sectoor and 64% in 10.3.2:: Gender Differences
D in
n the Educcation
private seector, at secondary level , 46% in pubblic Sector:
sector andd 54% in priv vate sector. Similarly
S out of
Womenn have an enormous
e imppact on the well-
total highher secondary school teachhers, 56% aree in
being of their fam milies and soocieties. How wever,
public secctor and 44% % are in private sector (FFig-
their potential has not
n been fullyy realized beecause
10.7).
of discriminatory soocial norms, missing
m incenntives,
and leegal impedim ments. In Paakistan, statuus of
Fig. 10.7: % Teaching Staff by
b Level, and by Seector
(2006)
womenn has improvved in recent years, but gender g
100
inequallity remains pervasive.
p Thhis inequality starts
early within
w the family
f and keeps womeen at
80 disadvaantageous poosition throuughout their lives.
60 Due too parental ignnorance, misaapplied dogm ma and
obscuraantist beliefs,, girls are morre likely to bee kept
40
out of school and to receive leess educationn than
20 boys. This
T discriminnation is aggrravated due too lack
0
of acceess to educaational instituutions, educaational
expensses and househhold duties.

public Pakistaan is comm mitted to thee achievemennt of

private Source: Pakistan Educationn Statistics, 2007 Millennnium Deveelopment Goals G inclluding
eliminaation of disparity at all leevels of educcation
by the year 2015. The Medium TermT Developpment
The national Pupils Teacher Ratio R (PTR) at Framew work 2005-110 (MTDF) makes a seerious
primary education
e is 40, ranging froom 29 in FATTA effort to
t include geender concernns in its strattegies
to 47 in Punjab.
P The naational PTR for
f female is 36.
3 and ovverall sectoraal programs. Massive finaancial
At middlee level, PTR is 16 for whole country anda supporrt is required to build eduucational and other
only 10 foor female. The ratio rangess from lowestt of infrastrructure and trained stafff to achieve these
12 for Balochistan, FA ATA, and AJK K and highestt of goals. Diverse programs and strategies,
s raanging
from compensatory
c y programs suuch as stipennds at
174

primary, middle and secondary levels, free text
books and nutritional support to school girls are
also required for enhancing the educational status
of women.
According to the Pakistan Education Statistics
2007, out of total institutions, 21% are for girls,
26% for boys, and 53% are mixed institutions. The
distribution of institutions by gender is almost
Education
same in Sindh, FANA, AJK, and ICT while in
other areas males’ institutions are higher in number
than females’ institutions (Figure 10.9). To provide
equal opportunities to women, more educational
institutions should be established to improve
females’ participation and to reduce the gender
gap.

Fig. 10.9: % Distribution of Educational Institutions by Gender and Province (2006)

80
Male
Female

60 Mix

40

20

Source: Pakistan Education Statistics, 2007

The proportion of female teachers at primary and
secondary levels is increasing continuously.
Currently there are 51 percent female teachers in
the education system of Pakistan at national level.
Figure 10.10 shows that number of female teachers
in primary schools increases over time but remains
almost stagnant during 2004 and 2006, the period
when massive enrollment of girls was noted at
primary level.

Fig. 10.10: Number of Female Teachers in Primary Schools (000)

220

190

160

130

100

Source: Pakistan Education Statistics, 2007

175
Pakistan Economic Survey 2007-08
Pakistan’s overall record in promoting and
delivering gender equality is weak. However in the
current decade;
• The GPI at all levels of education has
improved.
• The ratio of literate female to male has
risen.
• The share of women in urban employment
has improved marginally.
• The role of women in national decision-
making has improved appreciably.
Fig. 10.11: % Distribution of conditions of Building in Provinces (2005)
80
60
58
47 47
40
38
20
5
0
Punjab
Satisfactory Need Repair
Out of total institutions, 12,737 (almost all in
public sector) have been reported as non-
functional. The Sindh province has reported the
largest share of non-functional institutions (58%).
About 37.8% schools in public sector are without
boundary wall, 32.3% without drinking water,
56.4% without electricity, 40.5% without latrine
and 6.8% without building. It is to be noted that
majority of the institutions are located in rural
176
10.3.3. Physical Infrastructure:
National Education Census 2005 has provided the
latest state of physical infrastructure of educational
institutions. The census has revealed that 83.3% of
the public schools are in government buildings
followed by 5.7% rent free. The private institutions
are predominately housed either in rented (43.1%)
or owned (42.8%) buildings followed by 11.6% in
rent free accommodations. About 51.6% buildings
of all institutions are in satisfactory conditions and
42.7% need major or minor repair. However, 5.7%
buildings have been reported in dangerous
condition. Province-wise, buildings in Punjab are
in a satisfactory position while in Balochistan,
most buildings fall in dangerous condition (Figure
10.11).
61
50
44
30
6 6 9
Sindh NWFP Balochistan
Dangerous Source: Pakistan Education Statistics, 2007
areas and with a higher percentage of population
residing there, the availability of basic facilities are
inadequate (Table 10.5 & Figure 10.12). It is
therefore imperative to make educational
institutions more functional in rural areas by
providing missing facilities. Furthermore, there is a
need to reduce the current imbalances of school
facilities existing at different levels in different
provinces.
 Education
Table 10.5: Educational Institutions by Availability of Building Facilities (2005)
Facilities Available Facilities Not Available
Building Facilities
Overall Rural Urban Overall Rural Urban
Library 30,793 12,004 18,789 163,313 125,880 37,433
Computer Lab. 22,474 5,104 17,370 141,924 108,044 33,880
Combined Lab. 16,658 6,537 10,121 31,083 20,104 10,979
Student Hostel 7,700 3,498 4,202 134,278 94,838 39,440
Electricity 138,651 82,676 55,975 89,140 84,770 4,370
Boundary wall 152,176 100,495 51,681 60,455 53,539 6,916
Drinking Water 174,644 118,285 56,359 53,147 49,161 3,986
Latrine 152,464 97,574 54,890 62,356 57,798 4,558
Play Ground 76,790 52,977 23,813 133,123 99,117 34,006
Source: National Education Census 2005

Fig. 10.12: % Distribution of Facilities not Available in Educational Institutions

100
90
80
70
60
50
40
30
20
10
0

Rural Urban Source: National Education Census, 2005

10.4. Important Recent Milestone iii) To institutionalize sustainable monitoring

The government has undertaken a number of
reforms to widen access to education and raise its
quality in the country. Major reforms and
initiatives have been summarized below: -
10.4.1. National Education Assessment System
(NEAS)
National Education Assessment System (NEAS)
was launched to improve and assess the quality of
education at elementary level, with the following
main objectives:
i) To measure learning achievements of students
in grade IV and VIII with a view to raise
the quality of education.
ii) To develop assessment capacity, and
system.
National Curriculum Council (NCC) has prepared
comprehensive review of school curriculum to
make it relevant to student needs. So far, NCC has
notified revised curriculum of 23 core subjects
(classes I to XII), while work on other 24 subjects
is in progress. The government has provided free
textbooks in all public schools up to primary level.
Furthermore, to promote female’s participation at
primary level, the government has endowed
incentive to female students in the shape of
scholarship (Rs. 200 p.m). Education Management
Information System has been launched to strength
the informations from national to grassroots level.
The government has opened 4,402 new basic
schools and trained 2,276 teachers under the
project “Establishment and Operation of Basic
Education Community Schools”
177
Pakistan Economic Survey 2007-08
10.4.2. Formulation of a National Textbook and
Learning Materials Policy
National Textbook and Learning Materials Policy
(2007) has been prepared to prop up the quality of
education at all levels through better quality
textbooks at affordable prices and other learning
materials for promoting Pakistan as a knowledge
based society. According to this policy, the
Examination Boards will not test the students from
a particular text book but instead do so from the
recommended multiple text books. Ministry of
Education is helping in establishing five Resource
Centres one in each Textbook Board for up-
grading the capacity of small publishers and also of
the authors in writing the textbooks and improving
quality. Furthermore, controversial materials
pertaining to cultural, religious and ethnic practices
shall not be included in textbooks.
10.4.3. National Commission for Human
Development (NCHD)
NCHD, a public-private partnership, aims to
improve public sector delivery mechanisms to
achieve the targets of Millennium Development
Goals (MDGs). NCHD intends to help the
government to achieve Universal Primary
Education (UPE) upto 2010 and Education For All
(EFA) upto 2015. NCHD also aims to improve
quality of education through budgetary measures,
and eliminate gender disparity at primary and
secondary level by 2015.
10.4.4. Strengthening of Teachers Training
The government has taken several substantial
initiatives for teacher’s education and professional
development. During fiscal year 2007-08, 20,660
elementary school teachers have been trained in
the country costing Rs. 135 million. At higher
level, HEC has provided training services to 3,726
faculty members of different universities. Under
Canadian International Development Agency
(CIDA) Debt- Swap initiative, the Executive
Committee of National Economic Council
(ECNEC) approved a project, costing Rs. 669.556
million for the promotion of teacher training and
capacity building of teacher training institutes in
ICT, FATA, FANA and AJK. Similar projects
were also approved for the provinces of Punjab,
Sindh, NWFP and Balochistan at a capital cost of
178
Rs. 3,137.752, Rs. 1,261.773, Rs. 1,035.319 and
Rs. 588.407 millions respectively. National
Institute of Science and Technical Education
(NISTE), Islamabad will train teachers in Science
and Technical Education throughout the country.
10.4.5. Technical & Vocational Education:
Technical & vocational education (TVE) produces
skilled manpower needed in the industry.
Unfortunately, little attention has been paid to this
type of education in past. The present technical &
vocational education is supply-oriented rather than
driven by labor market demand. At present, there
are only 1,522 TVE institutions in the country;
1,140 under government while 382 are registered
as private institutions. The overall enrollment is
recorded at 314,188 with teaching staff at 17,409.
The quality of output is low due to lack of
relevance of curriculum to job market requirement,
poorly trained faculty, weak linkages between
institutions and industry and lack of coordination
at various levels.
Realizing the role of skilled and technically
educated manpower for the economy, the
government has established the National
Vocational & Technical Education Commission
(NAVTEC) in November, 2006. The Commission
is mandated to facilitate, regulate, and provide
policy direction for technical education and
vocational training to meet national and
international demand for skilled manpower.
Similarly Technical Education and Vocational
Training Authority (TEVTA) Punjab has chalked
out a short term demand driven programme for
training 100,000 skilled workers under TEVTA
Special Training Programme every year. The
government has established four Polytechnics in
Balochistan and one in Gilgit at a cost of Rs. 760
million
10.4.6. Reforms in Deeni Madaris:
There is a large number of Deeni Madaris enrolling
thousands of students. To bring the formal
education and Deeni Madaris close to each other,
Madaris reform programme has been initiated with
the introduction of formal education in 8,000
Madaris. Madaris will be mainstreamed through
provision of grants, salaries to teachers, cost of text
 Education
books, teacher training and equipment. Recently in the near future. Foreign Faculty Hiring Program
TEVTA Punjab has planned to train this huge has been launched to reduce faculty deficiencies by
reservoir and has established Government recruiting highly-qualified faculty members from
Technical Training Institutes (GTTIs) at 27 Deeni abroad. About 364 foreign faculty members have
Madaris including 20 for male, 5 for female, and 2 participated in this program since July 2004-05.
mixed in 13 popular demand driven trades. Such
initiatives must be taken in other provinces as well. In view of spreading higher education to every area
of Pakistan, over the past three years, 17 new
10.4.7. Human Resource Development (HRD): universities have been granted Charters, with the
majority opened in areas where higher education
Pakistan has been blessed with highly talented
opportunities were previously unavailable. 23 new
manpower, but due to insufficient research and
and advance disciplines were launched.
development (R&D) activities, a large number of
Furthermore, 11 foreign institutions were allowed
highly educated and trained persons leave for
to operate in Pakistan through
better career in developed countries. To address
franchising/collaborative arrangements with local
these challenges, the government has taken several
institutions of higher education.
steps to improve faculty, promote
access/participation and excellence in learning and
The government has established four universities
research at higher level.
of Engineering, Science and Technology in
Pakistan (UESTP) with the collaboration of
Availability of scholarships plays a vital role in
Germany, Austria, France and China at a total cost
promoting Human Capital. Therefore, the
of Rs. 164.869 Billion. Three additional
government has launched scholarship programs at
universities are to be established in other regions of
Federal and Provisional level. Currently, 3,237
the country.
scholars are studying (under PhD Scholarship
Program) in HEC recognized universities in the
In order to support the conduct of truly world-class
past four years.
research, more than 20 Central Research
Laboratories have been established in major
The foreign scholarship programs have been
universities. Improved facilities are supported by
geared towards improving research in key areas,
sophisticated IT-based solutions to cater to the
particularly in areas relating to engineering,
research needs of researchers. The HEC Digital
applied and pure sciences. HEC has sent 2,600
Library now provides access to over 25,000
scholars for studies abroad under PhD scholarship
leading research journals and 50,000 e-books,
program upto 2007-08. 69 scholars proceeded
covering approximately 75% of the world’s peer-
abroad under Cultural Exchange Programme in
reviewed scientific journals; 81,540 books were
year 2007-08. In addition, HEC in collaboration
provided to 52 universities under the Book Bank
with the Cuban Government, has sent 366 students
Scheme; 28 universities have been connected
for undergraduate medical studies (MBBS
through video conferencing facility in two years to
equivalent) in year 2006-07 with 20% seats
promote interactive distant learning, interactive
allocated to earthquake affected areas. Another
meeting and interviews, international
group of 644 students will be proceeding to Cuba
e-conferences and live events.

179
TABLE 10.3

NUMBER OF TEACHERS IN EDUCATIONAL INSTITUTIONS IN PAKISTAN, BY KIND, LEVEL AND SEX

Primary Schools Middle Schools High Schools Secondary Voca- Arts and Science Professional Universities
(Thousands) (Thousands) (Thousands) tional Institutions Colleges Colleges (Number)
(Number) (Number) (Number)
Total Female Total Female Total Female Total Female Total Female Total Female Total Female
1992-93 332.5 122.5 119.0 66.3 165.6 68.1 9,153 2,605 25,485 9,138 8,269 3,058 5,728 747
1993-94 359.1 138.6 132.8 78.2 217.4 88.5 7,965 1,603 27,666 9,825 8,754 3,178 5,217 918
1994-95 375.2 146.7 144.6 80.9 227.6 102.6 6,949 1,708 29,843 10,515 9,128 3,264 5,316 939
1995-96 377.5 145.1 159.1 85.0 217.6 89.8 7,291 1,799 32,898 11,729 9,969 3,657 5,417 927
1996-97 374.3 151.7 156.7 91.4 224.7 98.8 7,422 1,845 32,190 11,690 9,950 3,660 5,162 919
1997-98 397.0 164.7 168.4 101.0 252.9 112.9 6,923 1,870 39,267 15,767 10,930 4,105 5,515 976
1998-99 422.6 173.8 178.5 108.2 231.6 107.5 7,133 1,858 35,187 14,298 10,777 4,139 4,911 837
1999-00 402.4 169.8 193.9 117.6 247.8 115.8 9,253 1,959 39,268 15,764 11,065 4,221 5,914 1,174
2000-01 408.9 183.6 209.7 127.8 260.3 125.3 9,441 1,959 48,054 21,506 11,019 4,218 5,988 1,302
2001-02 413.9 183.5 230.1 139.3 270.2 126.1 7,192 1,863 55,146 23,016 10,598 4,164 5,160 1,247
2002-03 433.5 191.7 236.3 145.8 278.0 131.9 7,273 1,623 57,681 24,146 11,164 4,410 6,180 1,375
2003-04 432.2 195.3 239.4 146.6 276.9 134.2 8,535 1,957 57,881 24,190 11,245 4,505 37,428 -
2004-05* 450.1 206.5 246.7 151.5 282.1 138.6 11,521 4,481 57,661 24,366 12,399 5,192 37,469 -
2005-06 444.0 201.0 310.8 201.6 362.2 197.4 14,565 4,658 69,425 33,959 20,568 10,485 37,509 -
2006-07(P) 447.9 202.9 334.6 219.9 390.6 218.5 17,364 - 73,273 37,215 23,676 12,478 37,536 -
P: Provisional R: Revised A: Actual - not available
Note 1: All figures includes Public & Private Sector data.
Note 2: Mosque Schools are included in primary schools
Source 2: Figures of Universities data from 1992-93 to 2002-03 is based on Federal Bureau of Statistics.
Source 3: Figures of Primary, Middle, High, Arts and Science Colleges, and Professional Colleges data of 1992-93 to 2006-07 is based on
AEPAM, Islamabad
Source 4: Figures of Universities data from 2003-04 to 2006-07 is based on Annual Pakistan Education Statistics Reports,AEPAM, Islamabad.
Source 5: Figures of Secondary Vocational Institutions data of 2005-06 is based on Annual Pakistan Education Statistics Reports,AEPAM, Islamabad.
Source 6: Figures of Secondary Vocational Institutions data of 2006-07 is based on NAVTEC survey (2006)

HEALTH AND NUTRITION
Good health defined in terms of state of complete
physical, mental and social well being is a
prerequisite for a nation to be productive. This is
because ill health not only covers disease but also
hunger, exclusion, isolation, insecurity and
powerlessness which consequently prevent
individuals from realizing their full potential. Good
health, in contrast is not only valued in its own
right, but it also raises the human capital of a
country, thereby positively contributing to the
economic and social development. Enabling the
human beings to realize the true potential they
possess and achievement of well being of each and
every citizen of a nation is first and foremost
requirement of human development. Along side
the intrinsic importance of health in social,
economic and human development and as a
dimension of welfare, poor health can directly
influence an individual’s opportunities, his or her
earning capacity, participation in community
activities, and so on. This important instrumental
function of health implies that inequalities in
health often translate into inequalities in other
dimensions of welfare.
The importance of health is also reflected in
specific measurable targets declared at UN
Millennium Declaration of September 2000. The
Millennium Development Goals (MDGs) represent
a vision based on an internationally agreed set of
time bound goals for reducing extreme poverty,
extending gender equality, and advancing
opportunities for health and education. These
goals serve as a benchmark of progress toward the
vision of Millennium Declaration, guided by basic
values of freedom, equality, solidarity, tolerance,
and respect for nature and shared responsibilities.
Pakistan is also a signatory to UN Millennium
Declaration and is fully committed to extend the
agenda of providing basic right of health to all of
Chapter 11
its citizens. The Government of Pakistan has taken
several policy and program initiatives to fulfill its
commitment regarding the MDGs. The Medium
Term Development framework (2005-10) is
constructed with a view to establish a just and
sustainable economic system for reducing poverty
and achieving MDGs. The health vision as
reflected in the National Health Policy, 2001
envisage health reform as basically a means of
poverty reduction.
The Health Policy 2001 identifies ten specific
areas for reform ranging from control of
communicable diseases especially T.B, Malaria,
HIV/AIDS and the EPI cluster. The reforms also
address inadequacies in primary and secondary
health services and propose improvements in
district health system, including removal of
professional and managerial gaps and distortions.
These elements will continue to be important, but
in the context of a paradigmatic shift from
healthcare reform to wider health sector linkage
with social development. It is now widely
recognized that without a strong nexus with social
determinants of health and inter-sectoral bridges, it
is difficult for the populace to overcome poverty.
Government’s firm stance on health related issues
is further reflected in the Poverty Reduction
Strategy Paper, which recognizes the need to
substantially increase financing and to enhance
efficiency of spending through organizational and
management reforms. Pakistan Social and Living
Standard Measurement Survey (PSLM), an
implementation mechanism for PRSP, provides a
set of district level representative and population
based estimates of social indicators and their
progress under the PRSP.
PRSP health expenditure during FY07 increased
by 35.6 percent to Rs. 53 billion. Out of this Rs. 53
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Pakistan Economic Survey 2007-08
billion, largest increase was observed in Punjab
(53.3%), followed by NWFP (49.5%), Federal
government (23.4%), and Sindh(18.1%) . Contrary
to same period last year when health expenditure in
Balochistan declined by 6.6%, health expenditure
during FY07 increased by 14%.
PSLM report 2006-07 presents the results
pertaining to health indicators during FY07. The
report includes sickness/injuries, immunization,
diarrhea, and the use of pre and post natal services.
The indicator of sickness/injuries with a prevalence
rate of 6.27 percent shows an improvement over
7.10 percent during 2004-05. In the category of
fully immunized one year old children, the record
of immunization given to children shows a slight
rise from 49 percent to 50 percent during FY06
and FY07. However, full immunization rates based
on recall and record shows significant increase in
coverage from 71 to 76 percent. There has been
decrease in the proportion of children under five
suffering from diarrhea i.e., from 12 percent to 11
percent but Sindh has shown significant increase
from 8 percent to 12 percent which may be
attributed to shortage of clean water. The use of
Oral Re-hydration Solution (ORS) to treat children
with diarrhea has increased from 72 percent in
2005-06 to 76 percent in 2006-07. Prenatal
consultation has moderately increased compared
from 52 percent in 2005-06 to 53 percent in 2006-
07. Besides this, 56 percent of pregnant women
received Tetanus Toxoid injection in 2006-07
compared to 62 percent in 2005-06.
11.1: A SNAPSHOT OF THE HEALTH
STATUS
The demographic and epidemiological transition
through which a nation passes also affects the
health status of the nation. With reference to
demographic transition Pakistan stands in the list
of world most populous countries with population
of 161 million. Although the annual population
growth rate has declined from over 3 percent in
1960s and 1970s to present level of 1.8 percent per
annum; it still remains high. As far as
epidemiological transition is concerned an equal
burden of disease can now be attributable to
infectious viz-a-viz non-communicable diseases.
(See fig 11.1). A high burden of communicable
viz-a viz non-communicable disease is evident
182
from the fact that current incidence of tuberculosis
is 177 per 100,000 populations, prevalence of
Hepatitis C in general population is 5.3%; more
than 24.3 % of the population over the age of 18
years has high blood pressure, 10 % of the adult
population suffers from diabetes; 1 % of
population is blind; and 34 % suffers from
depressive disorders. The large burden of
infectious diseases in Pakistan is known to be
closely related to the lack of sanitation facilities
and safe sources of potable water. Water –borne
diseases constitute nearly 12.5 percent of the
diseases burden in Pakistan.
Fig-11.1: Burden of Disease
Other Non-
Communcable
diseases
19%
Neuro- Communicable
Psychatric Diseases
3% 38%
Injuries
11%
Cardio-Vascular
diabetes
11% Reproductive
Nutritional/ health
Endocrine 12%
6%
Notwithstanding the health issues discussed above,
some of the key health indicators in PSLM 2006-
07 present a healthy picture which shows an
improvement over the previous fiscal year. But
when viewed in a regional context, Pakistan human
welfare indicators still lag behind (See table 11.1).
The Government is fully aware of the challenges of
communicable vs non-communicable diseases and
other structural problem in the health sector. The
Ministry of Health and the provincial departments
are already engaged in bringing improvements in
health sector through better provision of health
facilities, improvement in infrastructure and human
resource, and implementation of various health
programs. Beside this, Service delivery is being
organized through preventive, promotive, curative,
and rehabilitative services. The Ministry of Health
is also planning to conduct second National Health
Survey of Pakistan. Due to these concerted
efforts, social indicators as reported in Human

Development Report 2008 and key health
indicators (PSLM 2006-07) show some
improvement. However, in regional context
Pakistan still lags behind other c ountries and a lot
Health and Nutrition
more needs to be done to track the functioning of
the health system and to support the existing
Health Management and Information system in
order to uplift the health status of general public.

Table–11.1: Social Indicators

Population Avg.
Life Expectancy Infant Mortality Rate Mortality Rate under
Annual (%)
Country Year 2005** per 1000** 5 per 1000
Growth
Year 2005 Year 2005**
2000-06***
F M
Pakistan 64.8 64.3 70^ 99 1.8*
India 65.3 62.3 56 74 1.5
Sri Lanka 75.6 67.9 12 14 0.4
Bangladesh 64.0 62.3 54 73 1.9
Nepal 62.9 62.1 56 74 2.1
China 74.3 71.0 23 27 0.6
Thailand 74.5 65.0 18 21 0.9
Philippines 73.3 68.9 25 33 1.8
Malaysia 76.1 71.4 10 12 1.9
Indonesia 71.6 67.8 28 36 1.3
^ Pakistan Social and Living Standard Measurement Survey (PSLM) 2005-06
*Population growth for Pakistan is estimated at 1.8 percent (National Institute of Population Studies).
**Source: Human Development Report 2008
***Source: World Development Report 2008

11.2- HEALTH EXPENDITURES: have more than doubled during the last seven
years; from Rs. 25 billion in 2001-02 to Rs. 60
Registering an increase of 20 percent in fiscal year
billion in 2007-08. However, health expenditure as
2007-08, total expenditure on health has increased
a percentage of GDP does not present a
from Rs. 50 billion to Rs. 60 billion, of which,
satisfactory picture as it has remained stagnant at
Rs. 27 billion have been allocated for development
almost 0.6 percent during the entire period of
expenditure while Rs. 33 billion for current
2001-02 till 2007-08. (see Table 11.2).
expenditure. Health expenditures in absolute terms
Table 11.2: Health & Nutrition Expenditures (2000-01-2007-08) (Rs.billions)
Public Sector Expenditure (Federal and Provincial) Percentage Health
Fiscal Years Total Health Development Current Change Expenditure as
Expenditures Expenditure Expenditure % of GDP
2000-01 24.28 5.94 18.34 9.9 0.58
2001-02 25.41 6.69 18.72 4.7 0.57
2002-03 28.81 6.61 22.21 13.4 0.59
2003-04 32.81 8.50 24.31 13.8 0.58
2004-05 38.00 11.00 27.00 15.8 0.57
2005-06 40.00 16.00 24.00 5.3 0.51
2006-07 50.00 20.00 30.00 25 0.57
2007-08 60.00 27.22 32.67 20 0.57
Source: Planning and Development Division

11.3 - SERVICE DELIVERY to the differences in incentives in the public viz—a

–viz the private sector. As a result the role of the
Pakistan has one of the largest Public Sector-
private sector has been increasing in the provision
owned Service Delivery infrastructure in the
of services. As opposed to this, there is no
world. However, dual jobholding is common due
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Pakistan Economic Survey 2007-08
regulatory framework in place for the private 11.4.1- Health Infrastructure:
sector. Efforts are underway to address the
The state attempts to provide healthcare through a
currently prevailing service delivery challenges by
three-tiered healthcare delivery system and a range
developing alternative service delivery and
of public health interventions. The former includes
financing options at the basic health care and
Basic Health Units (BHUs) and Rural Health
hospital levels. Provincial governments have
Centers (RHCs), forming the core of the primary
focused on restructuring the mode of primary
healthcare structure. Secondary care including first
healthcare delivery by revitalizing BHUs and
and second referral facilities providing acute,
RHCs. The government of Punjab has taken a lead
ambulatory and inpatient care is provided through
in this area by developing models of
Tehsil Headquarter Hospitals (THQs), and District
subcontracting and other models where service
Headquarter Hospitals (DHQs) which are
delivery has been incentivised within the existing
supported by tertiary care from teaching hospitals.
system; reform of directly managed services in
Punjab is currently operational in 23 districts. The There are seven hospitals under the control of
measures introduced included fresh merit- based Federal Government located in Islamabad,
recruitment of doctors, increase in salary packages Rawalpindi and Karachi. There are tertiary care
by 100 %, the introduction of additional perks such hospitals in all the provinces including those with
as motorbikes to enhance mobility, increased the status of teaching hospitals, which are under
availability of drugs and equipment and the administrative jurisdiction of provinces.
investments to upgrade infrastructure including However, recently four hospitals in NWFP and
ambulances. This program is being implemented three in Sindh have been granted autonomous
and financed through Provincial Devolved Social status. Throughout the country, the vast network of
Services Program and Punjab Health Sector health care facilities include 945 hospitals, 5349
Reform Program. Through reform of directly BHUs and Sub- Health Centers , 562 RHCs, 4755
managed services, Minimum Service Standards are Dispensaries, 903 MCH Centers and 290 TB
also being introduced in Punjab; these are likely to Centers. These healthcare facilities show an
have a major impact on the quality of services. improvement over the previous year as the total
number of healthcare facilities during 2006-07 was
Efforts are also underway to enhance regulatory
12,726. During 2007-08, these healthcare facilities
capacity within the country. In 2006, approval was
have increased to a total of 12804. The detail about
given to create a Drug Regulatory Authority, the
the human resource available within the country up
work on which is currently underway to establish it
till 2007 is provided in Table12.4. There has been
.The Ministry of Health is also working to develop
a gradual improvement in the number of doctors,
a framework for the regulation of the private sector
dentists and nurses over the years. A cursory look
healthcare.
at Table 11.3 is sufficient to see that doctors,
dentists, nurses and LHVs have doubled in the last
11.4- CONFIGURATION OF PAKISTAN’S
one decade and accordingly population per doctor,
HEALTH SYSTEM
per dentist, per nurse etc. have all registered a
Constitutionally, health is a provincial subject in significant improvement.
Pakistan with clearly demarcated roles,
responsibilities and prerogatives at each level of 11.4.2- Physical Targets and Achievements
the government. The Federal Government is during 2007-08:
mandated with policy-making, coordination,
The targets for the health sector during 2007-08
technical support, research, training and seeking
included the establishment of 13 Rural Health
foreign assistance. The provincial and district
Centers (RHCs), 43 Basic health Units (BHUs) and
departments of health are responsible for the
upgradation of 65 existing RHCs and 950 BHUs.
delivery and management of health services. The
The manpower target included the addition of 4500
devolution of administrative powers under the
new doctors, 400 dentists, 3350 Nurses, 4900
Local Government Ordinance 2001 has devolved
paramedics and 450 Traditional Birth Attendants.
service delivery to the district level.
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 Health and Nutrition
Under the preventive program, about 8 million million packets of Oral Rehydration Salt (ORS)
children were targeted to be immunized and 24 were to be distributed during 2007-08.
Table 11.3: Human Resource Available from 1995 till 2007
Years* 1995 2000 2003 2004 2005 2006 2007
MBBS Doctors 70,692 92,824 108,151 113,295 118,098 123,125 127,859
Dentists 2,747 4,165 5,531 6,128 6,743 7,438 8195
Nurses 22,299 37,528 46,331 48,446 51,270 57,646 62,651
Midwives 20,910 22,525 23,318 23,559 23,897 24,692 25,261
Lady Health Visitors(LHVs) 4,185 5,443 6,599 6,741 7,073 8,405 9,302
Population per doctor 1718 1473 1350 1316 1274 1251 1225
Population per dentist 44223 32819 26389 24320 22306 20702 19121
Population per Nurse 5448 3642 3150 3076 2935 2671 2501
Population per midwife 5810 6068 6260 6326 6297 6235 6203
Population per LHVs 29027 25113 22119 22108 21274 18318 16845
* Year as on Ist January
Sources: Pakistan Medical and Dental Council (PMDC) and Pakistan Nursing Council(PNC), Islamabad

The health program during the current fiscal year (89 percent). The sub- sector wise achievement of
has realized, on average, 90 percent of its physical program has been recorded as 84 percent for RHCs
targets (up to March 2008). The highest and 91 percent for BHUs. It is encouraging to note
achievement of 94 percent has been obtained in the that the achievements obtained so far are in the
immunization category followed by the provision close vicinity of the targets.
of ORS (92 percent) and health human resource
Table 11.4: Physical Targets and Achievements During 2007-08
Targets Estimated Achievements
Sub-Sector (Numbers) Achievements (%)
(Numbers)
A. Rural Health Programme
i. New Basic Health Units (BHUs) 50 43 86
ii. New Rural Health Centres (RHCs) 15 13 86
iii. Upgradation of existing RHCs 80 65 81
iv. Upgradation of existing BHUs 1000 950 95
B. Beds in Hospitals/RHCs/BHUs 5500 4300 78
C. Health Manpower Development
i. Doctors 5000 4500 90
ii. Dentists 450 400 89
iii. Nurses 3500 3350 96
iv. Paramedics 5500 4900 89
v. Training of TBAs 500 450 90
vi. Training of LHWs 96000 80000 83
D. Preventive Programme
i. Immunization (Million Nos) 8 7.5 94
ii. Oral Rehyderation Salt (ORS) 24 22 92
(Million Packets)
Source: Planning and Development Division

11.4.3- National Programs are led by the federal government with

implementation arms at the provincial and district
Pakistan has an extensive public health
levels. Some of the programs described are
infrastructure, which consist of a network of more
disease-specific such as the respective programmes
than 12,000 first level heath care facilities and a
on HIV/AIDS, malaria, tuberculosis, non-
range of disease-specific vertical public health
communicable diseases and hepatitis. Others are
programs. Most of the program based interventions
specific to the lifecycle domain which include
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Pakistan Economic Survey 2007-08
maternal and child health, the National program for National EPI program. (Table 11.5).
family planning and primary health care, and
Table 11.5: Various Public Health Programs
Federally-led national program The National Program for Family Planning and Primary Health Care
The Expanded Program for Immunization
The National HIV/AIDS Control Program
The National Tuberculosis Control Program
The National Malaria Control Program
The National Nutrition Program
Newly launched program in the The National Program for Prevention and Control of Blindness
public sector (2005-08) National Program for the Prevention and Control of Hepatitis
National Neonatal, Maternal and Child Health Program

The details about the various national programs immunizing children of the age of 0-11 months and
regarding health sector are as under: women of child bearing age.

a. National Program on Family Planning & EPI Programme’s target is to immunize children of
Primary Health Care 0-11 months against seven EPI target diseases and
pregnant mothers with Tetanus Toxiod. During the
The program was launched in 1994 as the Prime
year 2007, 6.061 million children of 0-11 months,
Minister’s Program for Family Planning and
5.833 million children of 12-23 months and 7.033
Primary Health Care. Its name was changed to the
million pregnant ladies were targeted for the
National Program for Family Planning and Primary
programme. However, 82% children of 0-11
heath Care (NP-FPPHC) in 2001.Ths Program
months, 85% children of 12-23 months and 47%
focuses on delivering essential primary healthcare
pregnant mothers were immunized during 2007.
services to the communities at doorstep through
After inclusion of Hepatitis B Vaccine into the
female community health workers, thus creating a
National EPI Vaccination Schedule in 2002 the
link between the health system and the grassroots
programme is also introducing a new vaccine
level, providing services to women who for
Haemophilus Influenzae Type B (Hib) from the
cultural reasons cannot leave their homes.
July 2008 which will be delivered as a combination
Currently there are about 93,978 Lady Health
of 5 vaccines in one (Pentavalent).
Workers and plan is underway to increase their
number to 100,000. These LHWs had a significant
Besides improving the routine immunization
impact on important outputs such as immunization
coverage, the National EPI Programme has
coverage, prenatal care, attendance at delivery and
launched measles catch-up campaign in phases,
contraceptive prevalence.
targeting over 64 million children of 9 months to
below 13 years of the age. More than 97 %
b. Expanded Program on Immunization
coverage has been achieved after implementation
The Expanded Programme on Immunization (EPI) of the campaign during 2007-08. The programme
was launched in 1978. It aims at protecting has also planned to launch high risk area approach
children by immunizing them against Childhood to immunize child bearing age women (CBAs)
Tuberculosis, Poliomyelitis, Diphtheria, Pertussis, with assistance of WHO and UNICEF in two
Hepatitis B, Measles and also against Neonatal districts as a piloting for the year 2008-09.
Tetanus by immunizing pregnant women. The
Programme has significantly progressed during the c. National AIDS Control Program (NACP)
period of time in terms of immunization coverage
Pakistan is a signatory to the MDGs; Goal 6 of
and disease reduction. The objective of the
which states that Pakistan will “Halt and begin to
programme is to reduce mortality and morbidity
reverse the spread of HIV/AIDS” by the year
resulting from the seven EPI target diseases by
2015.The primary objective of National AIDS
Control Program (NACP) programme is to seek
186

such a halt and reversal. To contextualize the
project seeks to contain the epidemic among the
most at risk group where it has established and
prevent it from establishing among the bridge
groups and the general population.
Presently NACP and its provincial counterparts
(Provincial AIDS Control Programmes in Punjab,
Sindh, Balochistan, NWFP and AJK) are
implementing the interventions throughout the
country. The principal components of the NACP
are: (i) the interventions for target groups; (ii) HIV
prevention for general public; (iii) prevention of
HIV transmission through blood and blood
products and; (iv) capacity building and
programme management. In addition, the NACP
with Canadian support has established HIV and
AIDS Second Generation Surveillance System
(SGS) to track HIV epidemic in Pakistan.
The reported cases of HIV are about 4000 HIV,
and around 1400 AIDS patients have been
registered with AIDS treatment centers across the
country since 1987. Out of these AIDS cases, 500
are on Antiretroviral therapy and are also receiving
treatment for AIDS related infections i.e.
opportunistic infections and Tuberculosis etc.
Preventive Measures to Halt the HIV Epidemic are
under implementation since 2003 and considerable
achievement has been made since the adoption of
preventive measures.
d. National Tuberculosis Control Program
The National TB Control Program is responsible
for overall TB control activities in the country i.e.
policy guideline, technical support, coordination,
monitoring and evaluation, and research, where as
the Provincial TB Control Programs are
responsible for the actual care delivery process
including program planning, training of care
provides, case detection, case management,
monitoring and supervision. The overall objective
of NTP is to reduce mortality, morbidity and
disease transmission so that TB is no longer a
public health problem. The National targets are in
line with the Millennium Development Goals
(MDGs) i.e. to cure 85% of detected new cases of
sputum smear positive pulmonary TB and to detect
70% of estimated cases once 85% cure rate is
achieved. A steady progress has been made from
Health and Nutrition
2000 onwards to improve the case detection and
treatment success rates. The commitment resulted
in rapid expansion of the DOTS strategy from
2000 to 2005, reaching DOTS-all-over in May
2005. Since then free diagnostic and treatment
facilities for TB patients are available all over the
country within the public sector health care
delivery network. Presently, more than 1200
diagnostic facilities and more than 5000 treatment
facilities are available throughout the country. NTP
has treated more than 800,000 TB patients since
2001 and 234100 TB cases were treated through
the DOTS strategy last year. CDR (Case Detection
Rate) has increased from 7% in 2001 to 69% in
2007; whereas TSR (Treatment Success rate) has
increased from 77% in 2001 to 87%.
e. Malaria Control Program (MCP)
In Pakistan, malaria has been a major public health
problem, threatening the health of the people due
to prevailing socio-economic conditions and
epidemiological situation. The transmission has
been described as a combination of stable and
unstable malaria with low to moderate endemicity.
There is a tendency for epidemic break-outs of
Malaria over a large area, particularly in Punjab
and Sindh. The disease is now emerging as a
prominent health problem in Balochistan and
FATA, particularly along the international border.
Malaria is the disease that inevitably affects the
poor segments of the population living in hot and
humid far flung areas. These areas also lack good
health care facilities and functioning diseases
surveillance system, thus morbidity and mortality
in most of the instances go unreported. Each year
about half a million people suffer from malaria.
Malaria control was initiated in Pakistan in 1950s
and has passed through several evolutionary
phases. In 1975, a malaria control strategy was
adopted with provincial commitment to
implementation and in 1998, Pakistan joined the
global Roll Back Malaria (RBM) initiative. This
led to the development of a five year RBM project
in 2001 as part of which efforts were intensified in
the 28 high –risk districts. More recently, a
Strategic Plan for 2005-10 based on the RBM
strategy has been developed and a number of steps
have been taken for its implementation. The
program has shown process level success.
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Pakistan Economic Survey 2007-08
f. National Program for Prevention & Control
of Blindness
The National Programme for Prevention & Control
of Blindness (NP-PCB) was launched by the
Federal Ministry of Health, Government of
Pakistan in year 2005. The Programme is in line
with “VISION 2020” the global initiative of WHO
for elimination of preventable causes of blindness
by the year 2020. The total budget for the
programme is Rs. 2775 million and it will be
completed in year 2010. The key targets of the
program include
• Establishment of 07 Centers of Excellence
in Ophthalmology.
• Strengthening and up gradation of 20
Tertiary Teaching Hospital (TTH) Eye
Departments.
• Strengthening and up gradation of 63
District Eye Units (DHQ Hospitals).
• Strengthening and up gradation of 147
Tehsil Eye Units (THQ Hospitals).
• Training of 50,000 primary health care
workers in primary eye care.
Latest data uptill 2007-08 on these key indicators
show that an achievement of 100 % in
Establishment of 07 Centers of Excellence in
Ophthalmology, 65 % in Up Gradation Of Tertiary
Teaching Hospitals (TTH), 71 % in Up gradation
of District Headquarters Hospitals (DHQ) and
zero % in Up gradation of Tehsil Headquarters
Hospitals (THQ) has been made so far.
According to the National Blindness Survey (2002
– 2004) the prevalence of blindness was found to
be 1%, which means that at least 1.5 million
Pakistanis are blind in both eyes. Fortunately,
about 80% of the prevalent causes of blindness in
Pakistan are either avoidable (i.e. they are either
preventable or treatable) or can be helped with
optical devices (spectacles or low vision aids).
About 0.62 million patients have been treated at
the Up graded Eye Departments throughout
st
Pakistan till December31 2007:
188
g. National Program for Prevention and
Control of Hepatitis:
Launched in 2005 as the Prime Ministers initiative,
the program was a response to the high prevalence
of hepatitis B and C (estimated at 3 % in the
general population and 5-22 % in the high risk
group). The program focuses on mandatory
vaccination of all children less than one year of
age, vaccination of high-risk groups, promotes safe
blood diffusion, disposal of syringes, sterilization
of medical devices and availability of safe water
and disposal of sewage. Currently the baseline for
this program is being established.
h- National Maternal Neonatal and Child
Health (MNCH) Program
The National Maternal, Neonatal and Child Health
(MNCH) Program aims to improve the Maternal
and Child Health indicators in the country in line
with our International obligations regarding
MDG’s. The Goal of the National MNCH Program
is to reduce Maternal, Neonatal & Child deaths and
illnesses by improving their health status,
particularly of the poor and the marginalized. The
key objectives are to improve the accessibility of
high quality and effective RH services for all,
particularly the poor and the marginalized, through
development and implementation of a sustainable
MNCH program at all levels of healthcare delivery
system. The areas of focus in this program are
strengthening the Public Health facilities (DHQ’s,
THQ’s RHC’s and in BHU’s residents of LHV,s)
with regards to enhanced incentives for Human
Resource, Provision of essential equipment,
Capacity Building through trainings and
availability of essential medicines with regards to
providing comprehensive EmONC services. The
program has been launched with following
objectives in line with our international obligations
with regard to the MDGs:
Š To reduce the Under Five Mortality Rate to
less than 65 per 1000 live births by the year
2011 (MDG target for 2015:45/1000)
Š To reduce the Newborn Mortality Rate to less
than 40 per 1000 live births by the year 2011
(Target for 2015: 25/1000)

Š To reduce the Infant Mortality Rate to less
than 55 per 1000 live births by the year 2011
(Target for 2015:40/1000)
Š To reduce Maternal Mortality Ratio to 200 per
100,000 live births by the year 2011 (Target
for 2015: 140/100,000)
Š To increase the proportion of deliveries
attended by skilled birth attendants at home or
in health facilities to 90% (Target for 2015 :>
90%)
Š Increase in Contraceptive Prevalence Rate
from 36% (2005) to 51% in 2010 and 55% in
2015
i- Health Information and Surveillance Systems
1. Health Management Information System:
The Ministry of Health has been implementing a
Health Management Information System (HMIS)
for first care level facilities (HMIS/FCLF) since
1992. The objectives of the HMIS are to improve
coverage and quality of care for priority health
interventions, disease surveillance and epidemic
control, and monitor availability of essential PHC
commodities.
In last seven years, the HMIS has been extended to
116 districts for which approximately 20,000
health workers were trained in data collection
procedures. Most districts are now sending
monthly reports with regularity around 86%. A
number of organizations, both government and
international are now using this data for looking at
disease trends, resource allocations and planning.
A National Feedback Report – 2007 has been
developed. This is the fifth National Report of its
kind. The main features of the report include
analysis of four years’ HMIS data, reporting from
117 districts and 9, 326 First Level Care Facilities
with reporting regularity of 87%.
2. District Health Information System (DHIS)
To improve the functioning, coverage and the
scope of the existing HMIS, the Ministry of Health
with the technical support of JICA has completed
the review of HMIS structure, functions,
indicators, data collection tools and the software.
The objective was to expand the scope of the
Health and Nutrition
current system from first level care health facilities
to secondary care hospitals and the private sector.
Based upon comprehensive situation analysis and
the information needs a list of revised indicators,
data collection tools and mechanisms have been
developed in the context of devolution.
This updated system has also been pilot tested in
four pilot districts i.e. Swabi, Khanewal, Thatta
and Quetta. A National Plan of Action has recently
been approved both by the Federal Ministry of
Health and the Provincial Health Departments to
implement the plan.
3. Disease Surveillance System
Communicable diseases remain the most important
health problem in Pakistan. The most common
causes of death and illness in the country are acute
respiratory tract infections, diarrhoeal diseases,
malaria, tuberculosis, and vaccine preventable
infections. Epidemic-prone diseases such as
meningococcal meningitis, cholera, hepatitis and
viral hemorrhagic fevers are also prominent health
threats in the country. A functional disease
surveillance system is thus needed for priority
setting, planning, resource mobilization and
allocation, prediction and early detection of
epidemics and monitoring and evaluation of
intervention programs.
With a view to respond to this need, the Ministry
of Health conducted an assessment study in 2004
to explore the existing situation of data collection,
analysis, processing, its use and response for
supporting both the communicable and non-
communicable Disease Surveillance. The study has
revealed a number of deficiencies in Public Health
Surveillance in the country. Therefore, an inter
provincial process was initiated to develop a
Disease Surveillance System through which a ten
year National Plan has been developed. It covers
both communicable and non communicable
diseases and is response/ action oriented, which
will integrate all existing surveillance activities of
the disease control programs.
Together, the state’s healthcare infrastructure and
the programs are helping the government to meet
Pakistan’s health sector goals – those that are part
of the Millennium Development Goals (MDGs)
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Pakistan Economic Survey 2007-08
and others articulated in the Poverty Reduction
Strategy Paper and the Medium Term
Development Framework 2005-10 (MTDF).
11.5- STRATEGIC POLICY DIRECTION:
ESTABLISHMENT OF NATIONAL HEALTH
POLICY UNIT
The National Health Policy Unit (NHPU) was
established in end 2005 under National Health
Facility (NHF). The mandate of NHPU is to enable
the government to respond to evolving health
policy challenges. The task of the Policy Unit is to
provide policy advice on strategy and resource
allocation, monitoring and evaluation of health
strategies across the health sector and ensuring that
the national policies and strategies are responsive
to the emerging needs.
The NHPU has prepared four strategy papers on
the following: Health System Strengthening,
Human Resources for Health, Performance-based
Monitoring and Evaluation of Health Policy
Implementation, Financial and Resource
Allocation Strategy for Health Sector. These
strategy papers have been shared with the
provincial health departments to develop
consensus and finalization. In addition to that
NHPU has also completed studies and reports on
the following key aspects during 2007-08.
1 Public Expenditure Review: Understanding the
profile of the average users of public ally
funded Hospital care System (In collaboration
with World Bank).
2 Identification of areas of collaboration and
coordination between health and population
sectors
3 Comparative analysis of pre- and post-
devolution allocation and expenditure on
health sector at district level
4 Public Expenditure Review: The role of public
investment in increasing the immunization
coverage in Pakistan
Furthermore, NHPU has undertaken a unique study
for Poverty Reduction Support Credit-III. This is
the study on ‘Health System Performance
Assessment’ and involves ranking of districts
based on their performance for evidence-based
190
decision making. The report has been published by
the Ministry of Health. Another study titled ‘Fact
Book on Health and Population’ has also been
prepared, which will be very useful for policy and
decision-makers, planners, parliamentarians,
researchers, donors and partners. An amount of
US$ 76.85 million is expected to be made
available through GAVI Health System
Strengthening (GAVI HSS) over a period of five
years and NHPU will be responsible to undertake
Health System Strengthening activities throughout
the country.
11.6- CANCER DIAGNOSIS AND
TREATMENT:
PAEC has been playing a vital role in the health
sector since 1960 by using the nuclear and other
advanced techniques for diagnosis and treatment of
cancerous and allied diseases and is also involved
in the national cancer awareness, prevention, and
diagnosis and treatment programs.
Presently, 13 Nuclear Medicine & Oncology
centres equipped with excellent facilities are
working under PEAC and serving as non profit
public sector organizations with continuously
integrate programs in diagnosis of different kinds
of cancer/allied diseases and their treatment has
received considerable acclaim in the public.
Six new Nuclear Medicine & Oncology Centres
are in different phases of construction at Gilgit,
Swat, Bannu, D.I. Khan, Gujranwala and
Nawabshah. During the period July to December
2007, utilizing the maximum capacity of the latest
and state-of art equipment available at PAEC
Nuclear Medicine & Oncology Centres, more than
205,000 patients were attended.
Throughout the country, major disciplines
available and operative in different PAEC nuclear
medical centers include the disciplines of Nuclear
medicine; Clinical Oncology; Surgical Oncology;
Clinical Laboratories; Radiology; Medical Physics;
Bio Engineering; Research and Development;
Teaching and Training ; Cancer Awareness and
prevention; Cancer Registry& NCRC. About
11,154 patients in the field of nuclear medicine and
86,119 in the field of clinical oncology have
benefited during July- December 2007. Besides

management of the operations of major disciplines
in different PAEC nuclear medical centers,
Directorate General of Medical Sciences, PAEC
Headquarter is also working on ‘Human Resource
Development Programme”. This will provide
trained and expert personnel in each field of cancer
diagnosis and treatment. Keeping in view the
future requirements of the cancer hospitals under
PAEC, the development of human resource is
mandatory
11.7- DRUG ABUSE IN PAKISTAN
Drug Abuse is widespread in our society and has
affected Pakistan in many ways. It contributes to
crime, adds to the cost of our already over
burdened health care system and to the financially
strapped social welfare system. According to
National Assessment Study on Drug Abuse – 2006
conducted in Pakistan, there were about 628,000
opioid users which include 484,000 heroin addicts
and 125,000 injecting drug users. The most
commonly used drug is cannabis or hashish
followed by sedatives, opium and heroin.
A new Drug Abuse Control Master Plan (2008-
2012) has been prepared to meet the growing
challenges. Expenditure under this plan is expected
to be Rs.10869.43 million. Objectives have been
defined and achievable targets set with emphasis
on both supply and demand reduction activities.
Lessons learnt from the implementation of the last
Master Plan have been addressed. The Master Plan
takes into account the impact of the worsening
drug situation in Afghanistan during 2006 and
2007 resulting in an unprecedented increase in
poppy cultivation/opium production.
11.7.1 Drug Demand Reduction
Under Sections 52 & 53 of Control of Narcotic
Substances Act, 1997, Provincial Government
have been directed to register drug addicts and
establish treatment and rehabilitation centers at
provincial levels. However, at Federal level two
new Model Addiction Treatment and
Rehabilitation Centres (MATRC) have been
established at Islamabad and Quetta with the cost
of Rs.39.017 million each during the current year.
Both are 45 bedded centers providing free
treatment, food, boarding and rehabilitation to drug
Health and Nutrition
addicts. Efforts are also being made for their job
placement. Additionally, another (100 bedded)
MATRC for the treatment and rehabilitation of
drug addicts in Karach is being established. This
would enhance our capacity in the field of
Treatment and Rehabilitation for drug addicts.
Besides these Treatment & Rehabilitation Centres
another project titled “Treatment Programme for
Injecting Drug Users (IDUs) is also being
implemented at a Cost of Rs.19.700 million, for
providing treatment facilities to the injecting drug
users and street children involved in solvent abuse.
Two other projects namely “Community
Participation in Drug Demand Reduction” and
“Creating Mass Awareness against Drug Abuse”’
at a total cost of Rs.71.427 million are also being
implemented in Pakistan. These programmes aim
to create awareness amongst the masses,
particularly high-risk groups and involve the civil
society in prevention as well as treatment and
rehabilitation drug addicts.
11.7.2 Seizure of Narcotics Drugs
The details about the seizure of narcotic drugs in
Pakistan, cases affected and defendants arrested
during the fiscal year 2007-08 are given in Table
11.6.
Table 11.6- Seizure of Drugs
No. of cases 23436 (Nos)
No. of defendants 23256 (Nos)
Opium 11483.164 (Kgs)
Heroine 2719.854(Kgs)
Hashish 43128.27(Kgs)
Cocaine 5.929(Kgs)
Poppy Straw 6880.00(Nos)
Source: Ministry of Narcotics Control
11.8- FOOD AND NUTRITION
Nutrition is an essential element for development
of full physical and mental potential of an
individual and an important indicator of
development. Lack of balanced food and its
unavailability leads to malnutrition, which affects
individuals’ health, intellectual maturity, labor
productivity and consequently socio-economic
development of the country.
In spite of adequate production of food grains
during the year the availability and access to
191
Pakistan Economic Survey 2007-08
major food items was disrupted in the country due
to international price hike and mis-management in
stock maintenance. This resulted in low and erratic
food availability and consumption of marginalized
groups. However, adequate food availability to
meet national requirements was envisaged during
2007-08 by taking some immediate measures. The
production of major food items has been
professionally estimated to arrange food deficit in
time, to increase food supply and nutritional intake
average caloric availability per day form 2466 in
2006-07 to 2529 in 2007-08 per capita/day and
protein from 69 to 70 gms per capita/day. The
availability of essential items of consumption is
briefly given in table 11.7.

Table 11.7: Food Availability Per Capita

Items Year/
49-50 79-80 89-90 99-00 03-04 04-05 05-06 06-07 (E) 07-08 (T)
Units
Cereals Kg 139.3 147.1 160.7 165.0 150.7 142.0 150.0 160.0 168.0
Pulses Kg 13.9 6.3 5.4 7.2 6.1 6.8 7.6 7.2 8.4
Sugar Kg 17.1 28.7 27.0 26.4 33.6 27.0 29.8 32.2 28.7
Milk Ltr 107.0 94.8 107.6 148.8 154.0 155.7 162.6 170.1 176.3
Meat Kg 9.8 13.7 17.3 18.76 18.8 19.6 19.1 20.0 20.6
Eggs Dozen 0.2 1.2 2.1 5.1 4.6 4.7 4.6 4.8 4.9
Edible Oil Ltr 2.3 6.3 10.3 11.1 11.3 12.4 12.8 12.9 12.8
Caloric & Protein Availability (Per Capita)
Calories per day
(Number) 2078 2301 2324 2416 2381 2271 2423 2466 2529
Protein per day
(Gms) 62.8 61.5 67.4 67.5 67.8 65.5 69.6 69.5 70.0
E:Estimates, T: Targets Source: Planning & Development Division

Nutrition as development concern is multi-sectoral
and spread across the sectors. Nutritional
interventions in the MTDF envisaged multi-
disciplinary approach by coordinating and
integrating nutrition activities effectively to
achieve the objectives. Therefore, a joint forum,
National Nutrition Committee has been established
in the Planning Commission to analyze and discuss
nutrition concerns across sectors, seek approval of
all nutrition interventions before implementation
and oversee the preparation of Nutrition Master
Plan aligned with MDGSs.
A supporting activity, National School Nutrition
Programme, has been formulated as a social
safety net and incentive to improve the nutritional
status of primary school going children especially
girls in rural areas with aims to reduce gender
disparity in enrolment and drop-out rates.
Specific interventions in Agriculture and Health
sectors have been implemented such as food
security & food safety, promotion of iodized salt
and breast-feeding, iron supplementation, wheat
flour fortification and nutritional awareness.
Nutrition through Primary Health Care (PHC):
The Primary Health Care integrated interventions
consisting of nutrition activities viz micronutrient
supplementation for anemia control, vitamin A
supplementation to children under five years of age
and micro nutrient to women of child bearing age,
growth monitoring, and counseling on breast
feeding and weaning practices and awareness
through Lady Health Workers (LHWs) were
implemented.
Reference Laboratory for Food Quality Control
System has been strengthened at Nutrition
Division, National Institute of Health, Islamabad.
Micro Nutrient Deficiency Control Programme:
The Major Micro Nutrient deficiencies i.e. Iodine,
Iron and Vitamin-A., were addressed by Nutrition
Wing, Ministry of Health: through donors’
assistance:
a) Iodine Deficiency Disorder Control (IDD):
Iodized salt production in private sector
was strengthened in 53 districts and supply
increased to 65% and awareness material

192
 Health and Nutrition
distributed among the stakeholders. Legislation notified. The quality assurance and control
for USI has been drafted. system has been developed.

b) Wheat Flour Fortification to control iron c) Policy for Infant Young Child Feeding (IYCF)
deficiency has been started in 50 flour mills has been formulated. Health staff on Baby
and Millers trained to operate the micro- Friendly Hospital Initiative (BFHI),
feeders and carry out quality tests. Quality breastfeeding counseling, IYCF and trained in
standards for fortified wheat flour have been 11 districts.

193
TABLE 11.2

REGISTERED MEDICAL AND PARAMEDICAL PERSONNELS AND EXPENDITURE ON HEALTH

(Progressive Numbers)
Regis- Regis- Regis- Register- Register-
tered tered tered ed Mid- ed Lady Population per Expenditure(Mln. Rs)^
Year* Doctors Dentists Nurses wives Health Develop- Non-Deve-
** ** ** Visitors Doctor Dentist Nurse ment* lopment
1990 52,884 2,068 16,948 15,009 3,106 1,993 50,967 6,219 2741.00 4997.00
1991 56,567 2,184 18,150 16,299 3,463 1,910 49,469 5,953 2402.00 6129.65
1992 61,039 2,269 19,389 17,678 3,796 1,845 49,630 5,808 2152.31 7452.31
1993 63,998 2,394 20,245 18,641 3,920 1,805 48,262 5,707 2875.00 7680.00
1994 67,189 2,584 21,419 19,759 4,107 1,763 45,859 5,532 3589.73 8501.00
1995 70,692 2,747 22,299 20,910 4,185 1,718 44,223 5,448 5741.07 10613.75
1996 75,222 2,933 24,776 21,662 4,407 1,655 42,445 5,025 6485.40 11857.43
1997 79,458 3,155 28,661 21,840 4,589 1,605 40,428 4,449 6076.60 13586.91
1998 83,682 3,434 32,938 22,103 4,959 1,561 38,020 3,964 5491.81 15315.86
1999 88,102 3,857 35,979 22,401 5,299 1,515 34,607 3,710 5887.00 16190.00
2000 92,824 4,165 37,528 22,525 5,443 1,473 32,819 3,642 5944.00 18337.00
2001 97,247 4,612 40,019 22,711 5,669 1,437 30,304 3,492 6688.00 18717.00
2002 102,632 5,058 44,520 23,084 6,397 1,392 28,244 3,209 6609.00 22205.00
2003 108,151 5,531 46,331 23,318 6,599 1,350 26,389 3,150 8500.00 24305.00
2004 113,295 6,128 48,446 23,559 6,741 1,316 24,320 3,076 11000.00 27000.00
2005 118,098 6,743 51,270 23,897 7,073 1,274 22,306 2,935 16000.00 24000.00
2006 123,125 7,438 57,646 24,692 8,405 1,251 20,702 2,671 20000.00 30000.00
2007 127,859 8,195 62,651 25,261 9,302 1,225 19,121 2,501 27228.00 32670.00
Source: (1) Ministry of Health. (2) Planning & Development Division.
* Year as on 1 st January
^ Expenditure figures are on fiscal year basis
** Registered with Pakistan Medical & Dental Council and Pakistan Nursing Council.

POPULATION, LABOUR FORCE
AND EMPLOYMENT
Introduction
Pakistan, with a population of 160.9 million in mid
2008 is the 6th most populous country in the world.
The population of the area now constituting
Pakistan has increased ten-fold since 1901; half
added during the post independence period. In
absolute numbers; almost 128 million persons have
been added to the population during the last 58
years (1951-2008). Annual growth rates have risen
from 1 percent in the first three decades of the
country to around 2 percent in the next three
decades after peaking over 3 percent in the 1960s
and 1970s and then below 3 percent in the 1990s.
The country’s population is estimated to double in
the year 2045 if it continues to grow at 1.8 percent.
The population density has increased to 203
persons per square kilometer today from 42.5
persons per square kilometer in 1951 which is
almost a four time increase. Movement of
population to urban areas, attributed to well known
“pull” and “push” factors continues and as a result
the urban population has increased from 6 million
in 1951 to today’s 57 million. Thus, putting an
enormous pressure on the available infrastructure
like housing, transportation, electricity, water,
sewerage, sanitation, health and educational
facilities.
Such a rise in the size of population is indeed
termed as an important constraining factor for
achieving the overall national development goals
and sustained economic growth. It is imperative to
stabilize population so that the ever-increasing
burden on existing infrastructure is minimized and
reward of economic growth is not diluted by rapid
increase in population.
Chapter 12
According to Federal Bureau of Statistics (FBS),
the total fertility rate has declined to 3.8 children
per women. Contraceptive prevalence rate is
around 26 percent but a large unmet need for
family planning still exists. It is estimated that
about one-fourth women - capable of reproduction
and who either want to postpone childbearing for
two or more years or want to terminate
childbearing altogether - are not using any kind of
contraception. The reasons expressed are: social,
psychological, accessibility / availability /
affordability as well as a weak desire for avoiding
pregnancy. Concerted efforts are required to hasten
fertility transition and achieving the target of
replacement level fertility by 2020. Collaborative
efforts involving full potential of the public and
corporate sectors and NGOs together with
improving the quality of services are crucial.
The consensus reached at the International
Conference on Population and Development
(ICPD) in Cairo in 1994, stressed that early
stabilization of population would make critical
contribution towards achievement of sustainable
development and poverty reduction. Nevertheless,
wide spread poverty remains a major challenge to
development efforts. Poverty is often accompanied
by unemployment, malnutrition, illiteracy, low
status of women, exposure to environmental risks
and limited access to social and health services
including family planning and reproductive health
services. All these factors reinforce the vicious
cycle of high levels of fertility, morbidity and
mortality, which lead to low economic productivity
and consequent poverty.
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Pakistan Economic Survey 2007-08
Fig 12.1 : Trend in Total Fertility Rate,
1970-2006
7
6.3
6 reproductive behavior. The focus of this Program,
6 5.4
5 4.5
4 lives of individuals, families and communities in
3 With the commencement of the new millennium,
1970-75
1984-85
1986-91
1992-96
12.1 Population Overview
12.1.1 Population Indicators
The Crude Birth Rate (CBR) and Crude Death
Rate (CDR) are statistical values that can be
utilized to measure the growth or decline of a
population. The CBR and CDR are both measured
by the rate of births or deaths respectively among a
population of 1000. The Crude Birth Rate is called
"crude" because it does not take into account age
or sex differences among the population. CBR of
more than 30 and less than 18 per 1000 population
are respectively considered high and low. The
global CBR in 2005 was 20.15 per 1000; it was as
low as 8.33 in Germany and as high as 51.33 in
Niger. The CBR in Pakistan is estimated at 26.1. It
is worth mentioning that health statistics in
Pakistan are gradually improving; mortality rate is
declining and was 7.1 (per thousand) in 2005-06;
the decline is attributed to the elimination of
epidemic diseases and improvement in medical
services. Despite a considerable decline in the total
mortality in Pakistan, infant mortality remains high
at 76.7 per thousand live births in 2005-06. The
major reasons for high mortality rate include
diarrhea and pneumonia. While maternal mortality
ratio ranges from 350-400 per hundred thousand
births per year, the contraceptive prevalence rate
(CPR) is estimated at 26 percent and total fertility
rate (TFR) has exhibited a decline from 4.5 percent
in 2001-02 to 3.8 percent in 2005-06 (see Table -
12.1).
196
12.1.2 Population Welfare Program
The Population Welfare Program aims to bring the
country's social and economic development
through rational choices about family size and
5.4 launched in 1965 through Family Planning Council
in the Centre and Family Planning Boards in the
provinces, is to consistently improve and enrich the
3.8
accordance with the Reproductive Health Program.
1997-00
2005-06
the Population Welfare Program has also taken a
turn for the better. This turn in policy is a shift
Source: FBS from the focus on fertility towards a more
comprehensive approach of integrating family
planning with reproductive health and also
addressing wider range of concerns, especially
economic status, education and gender equality.
The Pakistan Population Policy 2002 calls for a
sustained political commitment and the need for
mobilization of broader support from all
stakeholders in the public and private sectors. The
policy aims for a swift demographic transition to
achieve population stabilization through declining
fertility as its ultimate goal.
Five Year Plan (2003-08)
The current Population Welfare Program is a
continuation of the on-going social development
endeavor, within the framework of nationally
accepted population and development policies. The
program during the 9th Five Year Plan (1998-2003)
was based on positive elements of the strategies of
the previous plans, ensuring continuity and
consolidation of gains. The current Program
focuses on strengthening outreach through
enhanced and improved service delivery strategy
with special attention to rural areas. A broad-based
reproductive health approach is being pursued in
the light of International Conference on Population
and Development (ICPD) 1994 with emphasis on
family planning, mother care and child care in the
social context of the country.
Main activities of the Program during the year
(2007-08) covered areas such as: expansion in
service delivery; social marketing of
contraceptives; contraceptives requirement and

distribution; advocacy and information, education
and communication (IEC); population education;
capacity building (technical/non-technical);
research; monitoring and evaluation and public-
private sector cooperation.
The first and the foremost factor which can
catapult any population program to reach its
objectives quickly and decisively is if it succeeds
in harnessing public support for the policies.
Population, Labour Force & Employment
Therefore, public awareness programs form the
basis of any progressive population welfare
program. In case of Pakistan as well, the
Population Welfare Program in keeping with
modern times is employing various means of
communication to further advance its policies and
to raise awareness among the general public. The
communication strategy employed towards this
end is stated below:

Box-12.1: Time Use Survey

A novel exercise in the guise of Pakistan Time Use Survey has been recently jointly conducted by the
United Nations Development Program (UNDP) and the Ministry of Finance (MoF), GoP. The primary
focus of the Time Use Survey is to estimate what people do at different times of the day and week, in
particular, how much time is spent on gainful employment, unpaid care work, leisure activities, learning
and personal activities so as to ensure that Government spending addresses the needs of men and women
equitably and attends to the needs of the poor. The Survey aims mainly at:

• Collecting detailed, nationally representative information about how men, women, girls and boys
spend their time
• Analyzing information regarding the quantum and distribution of paid and unpaid work as a
means to infer policy and program implications from the perceptive of gender equality
• Providing feedback as to what extent standard instruments such as the labour force survey are
successfully capturing all forms of economic work
• The Pakistan time use survey utilized a diary-based approach, in which selected respondents were
asked as to what activities they performed in each half-hour of the preceding day.

The Survey is currently in the final stages of completion and efforts are underway to make the Survey
public by the end of the current fiscal year 2007-08.

Source: UNDP & MoF

Communication Strategy and posters, forms, reproductive health handbooks

for doctors are being distributed to the subordinate
The crux of this year’s communication strategy
units for onward distribution. Colored posters of
focuses on advocacy (especially in rural areas),
current population and contraceptive leaflets,
with the help of local influential, religious and
family planning in Islam, Family Welfare Center
opinion leaders, policy makers and the media. This
addresses, satellite camps schedule and annual
campaign is relying on the mass media for creating
planner are also being produced. To help create
awareness with focus on increasing visibility of
awareness, audio-visual shows have been arranged
service delivery points. People are becoming aware
in rural areas at all districts.
of family planning choices through filed units.
Press is playing its part by providing coverage
12.1.3 Service Delivery Infrastructure
through advertisements, editorials and special
articles in order to create awareness in the The service delivery comprises program outlets
community about family planning facilities on and service units of Provincial Line Departments
national occasions in various News Papers. Printed (PLDs), public corporate sector institutions, private
materials such as pamphlets, leaflets, brochures sector undertakings and civil society initiatives.
197
Pakistan Economic Survey 2007-08
The planned program network consist of 2,739 6,000 active private service providers and
Family Welfare Centres (FWCs), 176 110,0000 retailers, etc. The Social Marketing
Reproductive Health Services (RHSs) “A” centres operations are supported through grant assistance
and 292 Mobile Service Units (MSUs). Through provided by the donor community and is making
these service delivery outlets Population Welfare 30 percent contribution to the National Program in
Program offers a wide range of family planning terms of couple year protection (CYP). During
services including motivation, counseling, full 2007-08 social marketing intensified with
choice of contraceptives and contraceptive surgery. programmatic focus and increased attention on
The responsibility of providing services at the interpersonal communication (IPC).
grass root level is being envisaged to be handled
by male workers especially with regard to male Table-12.2: Service Delivery Infrastructure
involvement in the population welfare program Service Delivery Outlets Planed Achieved
which will be increased to 6,498 by June 2008 (see 2007-08 as on
Table 12.2). 31-12-2007
1. Family welfare centres 2849 2739
Table-12.1: Selected Demographic Indicators (FWC)
2. Reproductive Health 223 176
Indicators Latest Available “A” centres
Total Fertility Rate (TFR) 3.8 3. Mobile service units 292 292
2005-06 4. Male Mobilizers 6498 4071
Crude Birth Rate (CBR) 26.1
Source: Ministry of Population Welfare
2005-06
Crude Death Rate (CDR) 7.1
2005-06 Information and Advocacy
Population Growth Rate 1.8
The overall goal for the communication
Infant Mortality Rate 76.7
(IMR) (2005-06) mobilization and advocacy strategy is to ensure
Maternal Mortality Rate 350-400 delivery of correct cultural and easy to understand
(MMR) (2004-05) massages about family planning and reproductive
Life Expectancy at Birth Male: 64 Years health in order to encourage informed decision-
(2005-06)* Female: 66 Years making about and adoption of positive family
Source: Federal Bureau of Statistics planning reproductive health behavior. In this
*Planning & Development Division regard the message in the media campaign was
blended into educational and recreational
The emphasis of the program is to reach the programs, such as: drama series, comedy shows,
desirous couples for meeting their service needs. melodies, panel discussions and interviews on TV,
The MoPW is collaborating with Ministry of radio and FM, as well as seminars and workshops,
Health (MoH) and provincial Health Departments meet the press sessions, and orientation programs
for functional integration of Health and Population for community, policy makers and youth. In
Welfare Services. A forum of Inter-Ministerial addition ground activities like musical concerts,
meeting co-chaired by Federal Ministers of Health street theatres, and messages on direction boards
and Population Welfare is in place as a mark of have also been launched to have direct contact with
Political Commitment for strengthening the masses.
coordination between the two Ministries.
12.1.5 Directorate of Population Education
12.1.4 Social Marketing of Contraceptives Directorate of Population Education has continued
Population Welfare Program is supplemented by its activities in the scenario of its broader role
social marketing intervention providing a complete calling a shift in its strategy to bring it inline with
range of contraceptive at subsidized rates with the broader MoPW objective of population
focuses on low and middle income groups of stabilization under the new holistic approach to
population in the urban and semi-urban areas Population and Development. The focus of these
indicating a reasonable presence involved through activities was to sensitize the policy and decision
198

makers of the National Building Departments as
well as to initiate the public private partnership for
the adoption of small family norms and to enhance
the quality of life of the employees of their
organizations. In this context, the following
activities were carries out by the Directorate during
the year 2007-08:
Presentations Skill Development The Directorate
of Population Education as part of youth
sensitization and orientation/education of other
categories of the target audience under Population
Education Component launched a series of
workshops. In this regard, as planned 2 four days
workshops on Presentations Skill Development for
mid-level program managers were carried out.
Clinical Training Component has played an
important role in the Population Welfare Program
since its inception; it is also recognized as a core
ongoing activity. With the introduction of multi-
sectoral approach massive training activities are
designed and implemented to ensure that program
personnel and those connected with it are equipped
with the required knowledge and skills to perform
their jobs effectively in the delivery of family
planning and reproductive health services. Clinical
activities include 24 months basic training of 315
Family Welfare Workers, 3-6 months advance
training of 35 Field Technical Officers/Assistant
Sister Tutors/Family Welfare Counselors, Pre-
service training of 35 Family Welfare Assistants
(3-months), refresher training of 550 paramedics
(1-2 & 4 weeks) and training of 2,500 non-
program personnel. Non-Clinical Training
activities are conducted through the Population
Welfare Training Institute (Lahore and Karachi).
These institutes are capacity building machinery
and provide in-service, pre-service and refresher
training to update knowledge and understanding of
population issues and objectives of the Population
Welfare Programs and develop skills of the
program personnel and service providers at district
level. During 2007-08 training for 2,840 program
personnel was arranged. Monitoring and
Supervision of the implementation of Program
activities in the field has been intensified through
review sessions, inter-provincial review meetings,
desk monitoring and field visits. During April-
Population, Labour Force & Employment
December 2007, 23 districts - all four provinces,
AJK and Northern Areas - were visited to observe
Program implementation in the field.
12.1.6 National Trust for Population Welfare
(NATPOW)
The Non-Governmental Organizations (NGOs) are
partners in the efforts for community uplift and
socio-economic development. Their advantages
like, autonomy, flexibility, voluntary contributions
and standing in the community are clearly
recognized. Community based organizations also
have better understanding and enjoy trust of
community, which is critical when dealing with
difficult and sensitive subjects. The trust
(NATPOW) was designed to provide an effective
framework to build effective partnership among
GoP, NGOs, CBOs, donors and private sector
organizations for implementation of national
population and development program. Its role is to
help NGOs and private sector in the fold of
population welfare by activating existing
institutions and by bringing into the fold new
institutional support, strengthen and increase the
contribution of NGOs and CBOs for population
welfare and other social sector activities; promote
institutional reforms through decentralized
programs to serve as a forum for making grants to
the beneficiaries; carry out assessment studies, etc.
to the extent required for fulfilling the purpose of
the Trust. Overall, some 264 NGOs with 479
outlets, operating throughout the country, have
been registered with NATPOW till date (see Table
-12.3).
The population profile in Pakistan reveals that in
order to achieve sustainable development and to
control overpopulation, empowerment of women,
effective use of resources, efficient family
planning and popularization of small family norm
are imperative. Furthermore, slowdown in
population growth rate, wider coverage of
reproductive health services, education of women,
and effective steps to eradicate poverty are
prerequisites for sustainable development in
Pakistan.
1.2 Labour Force and Employment
Growth in national income was once considered as
the ultimate standard of development but now the
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Pakistan Economic Survey 2007-08
issue of poverty has taken the center stage of
development agenda across the globe. This
concern is well documented in Millennium
Development Goals (MDGs), one of which is to
reduce poverty by half to 2015. The countries
around the world have recognized that the
reduction in the poverty has to be the central
element of the development agenda. The
experience of the countries closer to achieving this
goal shows that sustainable and high economic
growth rate play the central role in this process.
However, it is also evident that growth alone is not
important rather the patterns and sources of growth
along with how the benefits are distributed are
equally important.

Table 12.3: Progress Report of NATPOW, FY07 & 08

2006-07 2007-08 (Mid-Year)
No Beneficiaries No Beneficiaries
Human Resource Development (HRD) Training/ Workshops
Seminar/Conference 06 941 01 125
Training for Service Providers 9 34 02 55
Orientation Workshop for Staff 01 14 - -
Mobile Medical Camps 14 6,509 09 3,123
Community Mobilization Workshops 14 558 03 124
Orientation Workshop for Service Providers 1 25 - -
Technical Backstopping Visits 70 NGO - -
Total 106 8,081 15 3,427
Source: NATPOW

The Medium Term Development Framework through sustainable economic growth, the Poverty
(MTDF) 2005-10 is the first MTDF prepared in Reduction Strategy Paper (PRSP) targets, policies
line with the Vision 2030. Laying stress on poverty and programs, and human developments targets of
reduction and the achievement of the MDGs the MDGs.

Fig-12.2: Skill Development Pyramid

Advance Skills

General & specific Skills

(e,g., computer literacy)

Basic Skills
(Analytical Skills)

Foundational Skills
(Literacy, Numeracy, Citizenship)

Source: Pakistan Employment Trends, 2007

200

Generating decent employment and human
development are well integrated in the overall
economic development framework. Indeed, the
Labour Market Indicators receiving increasing
attention include: generation of productive and
decent employment, improvement in working
conditions, strengthening social safety nets,
increasing vocational and technical competence of
the workforce, and design and implementation of a
labour market regulatory framework that ensures
safer and remunerative working conditions
including decent minimum wages. Fig-12.2
identifies four levels of competencies and suggests
that foundational and basic skills are mandatory
and should be available to all. They address social
rights and are the foundation of a productive work
force as they concern primary and secondary
education. The more general and specific skills
address training to meet occupational standards
and are met through vocational and technical
schools as well as training institutes and
apprenticeships among others. The advanced
technical and professional skills involve substantial
investment and are often specific to occupations,
but can be transferable to a range of jobs.
The labour market in the country is confronted
with various challenges, including: unemployment,
underemployment, poor working conditions,
predominance of informal economy, low literacy,
poor level of skills, and mis-match between the
demand and supply of educated and trained
manpower. Women and youth - comprising half of
the population - are at a disadvantaged position as
well; they are also vulnerable to the ups and downs
of the economy.
Historically the issues of vocational and technical
training did not receive adequate attention given its
importance to generate decent employment.
Attempt has been made recently to provide skills to
unskilled workers according to market needs under
the auspicious of NAVTEC, TAFTA etc. (details
on these issues are discussed in later pages).
Additional step taken in this direction is the recent
establishment of a Policy Planning Cell (PPC) in
the Ministry of Labour, Manpower and Overseas
Pakistanis to prepare national policies in the areas
of employment, overseas migration and human
resource development as well as to launch a project
Population, Labour Force & Employment
under the title of “Labour Market Information and
Analysis (LMI&A)”. The PPC, has prepared the
draft National Employment Policy (NEP) after due
consultation with all the stakeholders. The PPC has
also published two reports; the first report entitled
“Pakistan Employment Trends” analyses the key
labour market indicators and the second report
focuses on the skill gap issues that exist in the
country today and points towards additional
reforms in the technical and vocational training
system.
According to the Labor Force Survey (LFS) 2006-
07, total labor force stood at 50.3 million out of
which 47.7 million is employed (see Table 12.4).
Of the total employed, 20 percent are females
which points towards the serious issue of gender
gap prevalent in the labour market. Although the
unemployment rate is declining over the years, a
careful look at the employment pattern does
indicate the widening gap of decent work. As
mentioned above, the youth and females are the
most under-utilized albeit important segment of the
labour market which points to the fact that effort
should be made to mainstreaming the gender and
youth through targeted programs and government
interventions. The draft NEP laying great stress on
gender and youth mainstreaming has developed
targeted programs and interventions in this regard.
The draft NEP addresses the issue of
unemployment keeping in mind the other critical
aspects like under-employment, gender gap in the
labour market, youth unemployment, etc.
Recognizing the fact that education and skill
development are the pre-requisites for improving
productivity which is vital for sustaining higher
economic growth, the draft NEP has indicated
numerous skill and HRD gaps. The policy also lays
stress on incorporating the concept of skill
development in the formal middle and secondary
school education system. According to LFS, 2006-
07, the illiterate working age population is 50.17
million and out of this, 62.6 percent are females. It
should be the endeavor of the government to
improve the opportunities for educational
attainment and skill development of the work so
that they get decent employment.
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Pakistan Economic Survey 2007-08
12.2.1 Labour Market Trends resource development, gender gap, creation of
opportunities for young people, improvement in
According to LFS 2006-07 the estimated
the educational attainment of the labour force, etc.
population of Pakistan is 158.17 million. The labor
This will require the improved linkages between
force of the country is 50.33 million which has
policy objectives and labour market monitoring
been increasing over the years (see Table-13.4).
and assessment. The NEP is indeed targeting the
Along with the increasing participation of the
comprehensive Labor Market Information System
population in the labor market, the employed
(LMIS) with a focus on generating detailed and
labour force has also exhibited rising trend. As far
dis-aggregated employment and labor market
as the over all labour market is concerned, several
related information as well as providing services of
developments may be pointed out over the last
employment counseling and vocational guidance at
couple of years. A significant improvement is
the district level.
evident in terms of employment, unemployment,
and labour force participation rate. A significant
12.2.2 Labour Force Participation Rate (LFPR)
decline in the unemployment rate over the last
decade is also noticeable in the midst of increasing The labour force participation rate is an important
labour force participation rates, which suggests variable which indicates the supply of labour in the
strong absorptive capacity of the economy. The economy and the composition of the country’s
quality of employment nevertheless continues to human resource. Labour force analyses also helps
raise concerns. in policy formulation for employment, human
resource development, determination of training
Table-12.4: Civilian Labour Force, Employed needs, etc. In addition this indicator of labour force
and Unemployed for Pakistan (in millions) is helpful in assessing the labour market behavior
2001- 2003- 2005- 2006- for different segments of population, especially for
02 04 06 07 youth. The working age (10 years & above)
Labour Force 41.83 45.50 50.05 50.33 population is estimated to be 111.39 million. The
Employed 38.37 42.00 46.95 47.65 labour force participation rate, though
Unemployed 3.46 3.50 3.10 2.68 demonstrating an increasing trend in recent years,
Source: Labour Force Survey, is nevertheless lower than the global or regional
2001-02, 2003-04, 2005-06, 2006-07
rates (see Table-12.5). The increasing trend in
labour force participation witnessed in the recent
years can be attributed to rising employment
Although the labour market indicators in general opportunities owing to robust growth and lowering
have improved in recent years, much more needs of socio-cultural barriers for females to enter the
to be done in terms of decent employment, human job market.
Table- 12.5: Population, Labour Force and Labour Force Participation (LFP) Rates
Year Population Labour Force LFP Rate
(million) (million) (percent)
Total Working age * Total Increase Crude Refined
1996-97 126.90 84.65 36.30 -- 28.6 43.0
1997-98 130.58 88.52 38.20 1.90 29.3 43.3
1999-00 136.01 92.05 39.40 1.20 29.4 42.8
2001-02 145.80 99.60 42.39 2.99 29.6 43.3
2003-04 148.72 103.40 45.23 2.84 30.4 43.7
2005-06 155.37 108.79 50.05 4.82 32.2 46.0
2006-07 158.17 111.39 50.33 0.28 31.8 45.2
Source: Labour Force Surveys 2001-02, 2003-04, 2005-06 & 2006-07
* Population 10 years and above is considered as working age population

202
 Population, Labour Force & Employment
Total provincial LFPR (both sex) has however, participation rate in Punjab is 48.5 percent
witnessed a decline in all the four provinces in the followed by Sindh (42.7%), Balochistan (43.6%)
year 2006-07(see Table 12.6). and NWFP (36.3%).

Table-12.6: Provincial Labour Force 12.2.3 Employment Trends

Participation Rates (%)
During the period 1999-2000 to 2005-06, 11.33
2005-06 2006-07
million work opportunities were created, due
Punjab 48.9 48.5
Sindh 42.9 42.7 mainly to the strong economic growth. However,
NWFP 39.7 36.3 in the subsequent year i.e. 2006-07, only 0.70
Balochistan 45.2 43.6 million employment opportunities, of which the
Source: Labour Force Survey 2005-06 & 2006-07 bulk was created in the rural areas (0.62 million)
compared to only 0.08 million in the urban areas
The most pronounced reduction has been noted for (see Table 12.7). Thus indicating a weaker labor
NWFP (from 39.7% to 36.3%). Province-wise market situation, especially in the urban areas of
break up of refined participation rates suggest that Pakistan.
against the national average of 45.2 percent, the

Table-12.7: Employment Trend and Changes 1996-97 and 2006-07 (million)

Year Pakistan Rural Urban
Employed Changes Employed Changes Employed Changes
1996-97 34.13 - 23.87 - 10.78 -
1999-00 36.32 2.19 25.55 1.68 10.77 -0.01
2001-02 38.88 2.56 26.66 1.11 12.22 1.45
2003-04 42.00 3.12 28.81 2.15 13.19 0.97
2005-06 46.95 4.95 32.49 3.68 14.46 1.27
2006-07 47.65 0.70 33.11 0.62 14.54 0.08
Source: Labour Force Surveys 2001-02, 2003-04, 2005-06 & 2006-07.

12.2.4 Employment by Sector employed in these four sectors (see Table-12.8).

As against 2005-06 the shares of agriculture and
Agriculture employs 43.61 percent work force in
services in employed workforce marginally
Pakistan followed by trade (14.43%), services
increased in 2006-07 while those in manufacturing
sector (14.41%) and manufacturing (13.54%). In
and trade registered a marginal decline.
other words, over 86 percent of work force is

Table-12.8: Employed Labour Force by Sectors ( % )

Sector 2005-06 2006-07
Total Rural Urban Total Rural Urban
Agriculture 43.37 59.87 6.32 43.61 59.90 6.52
Manufacturing 13.84 9.00 24.71 13.54 9.22 23.38
Construction 6.13 6.23 5.91 6.56 6.54 6.61
Trade 14.67 9.30 26.71 14.43 8.83 27.16
Transport 5.74 4.64 8.22 5.39 4.25 7.99
Services 14.35 10.06 24.00 14.41 10.16 24.10
Others 1.89 0.89 4.13 2.06 1.10 4.24
Total 100.0 100.0 100.0 100.00 100.00 100.00
Source: Labour Force Survey 2005-06 & 2006-07

There has occurred a shift in employment in major remains the dominant source of employment in
sectors of the economy; however, agriculture still Pakistan. In 1999-00, the share of agriculture in
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Pakistan Economic Survey 2007-08
employment was 48.42 percent, while in 2006-07 Table-12.9: Employment Shifts by Sector and
this has reduced to 43.61 percent. Targeting of Area (%)
labor intensive livestock and dairy sectors can be Change
from
an important strategy for employment 1999-00 2006-07 1999-00 to
augmentation in rural areas. These are 2006-07
complemented by public sector funded small area Agriculture 48.4 43.6 -4.8
Urban 5.68 6.52 0.83
development schemes. These strategies have
Rural 65.85 59.90 -5.95
successfully expanded rural employment, Mining 0.1 0.1 0.0
particularly at the local level. Agriculture is Urban 0.07 0.04 -0.02
followed by wholesale and retail trade, community Rural 0.07 0.14 0.07
and social services and manufacturing sector. Manufacturing 11.5 13.5 2.1
These sectors employ 14.43 percent, 14.41 percent Urban 23.78 23.38 -0.40
Rural 6.46 9.22 2.76
and 13.54 percent workforce, respectively (see
Electricity 0.7 0.8 0.1
Table-12.9). An increase in the share of Urban 1.32 1.24 -0.08
manufacturing sector (2.1%), over the last seven Rural 0.45 0.54 0.09
years, is an indication that employment Construction 5.8 6.6 0.8
opportunities are being created in both rural and Urban 6.31 6.61 0.30
urban regions of the country. Trade (0.9%), Rural 5.57 6.54 0.98
construction (0.8%) and transport (0.4%) are Trade 13.5 14.4 0.9
Urban 27.04 27.16 0.12
supplementing employment generation as well. Rural 7.98 8.83 0.85
The policy of deregulation, privatization and Transport 5.0 5.4 0.4
liberalization helped in increasing the participation Urban 7.92 7.99 0.08
of private sector in the economy. As a result, Rural 3.85 4.25 0.40
significant number of work opportunities is being Finance 0.8 1.1 0.3
generated in urban areas. The capital intensity of Urban 2.34 2.86 0.51
Rural 0.19 0.39 0.19
the industrial sector, however, limits its
Services 14.2 14.4 0.2
employment generating capacity. Urban 25.53 24.10 -1.42
Rural 9.57 10.16 0.58
12.2.5 Employment Status Others 0.0 0.1 0.1
The composition of employment by status Urban 0.01 0.10 0.09
Rural 0.00 0.03 0.03
undergoes changes with the industrialization
Total 100.00 100.00
process. However, these shifts in the employment Urban 100.00 100.00
status are not as sharp and clear as in case of Rural 100.00 100.00
sectoral employment, especially in countries with a Source: Labour force Survey, 1999-00 &2006-07
large informal economy, both in industrial and
services sector. Women are less likely to benefit from new
opportunities for wage employment. In each of the
Currently, the employees constitute 17.83 million
employment status category except for unpaid
or 37.42 percent of the total employed labor force, family helpers, the female share is quite low as
followed by self employed with 34.52 percent (see compared to males. Their share in unpaid family
Table-12.10). The unpaid family helpers form helpers is rising even in absolute terms (see Fig-
quite a significant portion i.e. 12.98 million in 12.3). In 1999-00, the female share in the unpaid
2006-07. This segment of employed work force family helpers was 32.79 percent while in 2006-07
has registered an increase of 5.84 percentage points it has risen to 45.46 percent. No significant change
of employed work force since 1999-00. However, has been observed in other categories. This trend is
the largest shift in employment status has taken not quite the same for males whose majority are
place for unpaid family workers (12.98 million Vs employers (40.6%) followed by self-employed
7.77 million) (see Fig-12.4, a & b). (39.8%) and then unpaid family helpers (18.6%).
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 Population, Labour Force & Employment
Only about 1.0 percent of all males represent employers (24.6%), self employed (13.4%) and 0.1
employees. A higher percentage of male workers percent of employees. The extremely meager
are engaged in the categories of self employed and figure of 0.1 percent for female employees shows
employees, while females are dominant in the the still prevalent conservative/traditional norms of
unpaid family helpers’ category. An increase in the the society where women are still discouraged to
employees and unpaid family helpers category has actively join the work force rather they are heavily
been noted for males, while decrease is noted in involved as family helpers especially in the agri-
self-employment category. For females, unpaid based rural families.
family helpers (61.9%) forms the bulk followed by
Table-12.10: Employment Status by Region (Millions)
1999-00 2006-07
Total Urban Rural Total Urban Rural
Employers 0.28 0.24 0.04 0.39 0.27 0.12
Self employed 15.34 3.56 11.77 16.45 4.59 11.86
Unpaid family Helpers 7.77 1.05 6.73 12.98 1.62 11.37
Employees 12.92 5.67 7.25 17.83 8.06 9.77
Total 36.32 10.52 25.80 47.65 14.54 33.11
Source: Labour Force Survey, 1999-00 &2006-07

Fig 12.3: Gender-Wise Employment Status (%)

61.9
60
50
37.4 40.6 39.8
40 34.5
Total
24.6 27.2
30 Male
18.6
20 13.4 Female

10
0.8 1 0.1
0
Employers Self Employed Unpaid Family Helpers Employees

Source: LFS, 2006-07

The increase in unpaid family helper category for
both men and women is an indication of the
expansion of economic activities within the
household, especially in rural areas. The boom in
the livestock and dairy sectors has created demand
for additional workers in the family that led to the
increase in the unpaid family helpers’ category.
The targeting of the livestock and dairy as leading
employment augmenting sectors in rural areas has
been quite rewarding.
12.2.6 Employment by Formal and Informal
Sectors
The informal sector retains an important position
in employment creation, production and income
generation. Presence of a large informal sector is in
a way a challenge to policy makers to consider the
improved working conditions, legal and social
protection of the people employed in the informal
economy, implementation of the appropriate
regulatory framework, developing training and
skills, etc.

205
Pakistan Economic Survey 2007-08

Fig 12.4 (a) Distribution of Employed by Employment Fig 12.4 (b) Distribution of Employed by Employment
Status, 1999-00 (Million) Status, 2006-07 (Million)

Employers, Employers,
Self
Employees, 0.28 Self 0.39
Employees, Employed,
12.92 Employed, 17.83 16.45
15.34

Unpaid Unpaid
Family Family
Helpers, Helpers,
7.77 12.98

Source: LFS 1999-00 & 2006-07

As shown in Table-12.11 and fig 12.5, the share of
agriculture in total employed workforce stood at
48.4 percent in 1999-00 but declined to 43.6
percent in 2006-07. The share of non-agricultural,
accordingly increased by 5.8 percentage points to
56.4 percent in 2006-07. Within non-agriculture,
two-third belonged to informal sector in 1999-00
which increased to almost 72.0 percent in 2006-07.
The share of formal sector in non-agriculture
registered a decline in the same period.

Fig-12.5: Employment by Formal and Informal Sector (%)

15.85
40.54

Agriculture
Formal
Informal
43.61

Source: Labour Force Survey, 2006-07

Table-12.11: Employment by Formal and Informal Sector (%)

1999-00 2006-07
Sectors
Total Urban Rural Total Urban Rural
Agriculture 48.4 5.7 65.9 43.6 6.5 59.9
Non-Agriculture 51.6 94.3 34.1 56.4 93.5 40.1
Formal 17.7 34.1 10.9 15.8 27.4 10.8
Informal 33.9 60.2 23.2 40.5 66.1 29.3
100.0 100.0 100.0 100 100 100
Source: Labour Force Survey, 1999-00& 2006-07

12.2.7 Unemployment were: a) without work i.e., were neither in paid or

self employment not employed as unpaid family
Unemployment is defined as all persons ten years
helpers, b) currently available for work i.e., were
of age and above who during the reference period
206

available for paid employment or self-employment,
and c) seeking work i.e., had taken specific steps in
a specified period to seek paid or self-employment.
According to this definition, which is consistent
with International Labour Organization’s (ILO)
definition of employment/unemployment, about
2.68 million people were unemployed during the
fiscal year 2006-07 as compared to 3.10 million in
2005-06.
Population, Labour Force & Employment
It is important to highlight that the rising trend of
unemployment has not only been arrested but it has
also started declining since 2001-02. The
unemployment rate in rural areas is lower than that
of the urban areas. The urban unemployment rate
has decreased by 3.14 percentage points during
2002-07 (Table-12.12).

Table-12.12: Unemployed Labour Force by Areas

Unemployed Labour Force Unemployment Rate
Years (In millions) (%)
Total Rural Urban Total Rural Urban
1996-97 2.26 1.33 0.94 5.93 5.02 7.98
1999-00 3.08 1.92 1.15 7.82 6.94 9.92
2001-02 3.46 2.15 1.31 8.27 7.55 9.80
2003-04 3.50 2.08 1.41 7.69 6.74 9.70
2005-06 3.10 1.84 1.26 6.20 5.35 8.04
2006-07 2.68 1.64 1.04 5.32 4.72 6.66
Source: Labour Force Surveys 2001-02, 2003-04, 2005-06 & 2006-07.

Female unemployment rate declined in rural as because of "discourage phenomenon". It thus

well as urban areas while for males a modest
decline was observed in both rural as well as urban
areas. The decline in female unemployment in both
rural and urban areas can be attributed to two
reasons. Females were able to get job opportunities
or they withdrew from the labour force mainly
appears that female unemployment reduced
primarily due to expansion in job opportunities for
females. Micro-finance facilities focusing on
women particularly in rural areas may be the major
contributing factor in female unemployment rate.

Fig 12.6 Unemployment Rate by Gender (%)

17.3
18 16.5

16
12.7
14
12
9.3 Total
10 7.8 6.1 8.3 6.7 8.38
7.7 6.6
Male
8 6.2 5.4
5.3 4.5 Female
6
4
2
0
1999-00 2001-02 2003-04 2005-06 2006-07

Source: Labour Force Surveys 2001-02, 2003-04, 2005-06 & 2006-07.

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Pakistan Economic Survey 2007-08
12.2.8 Age Specific Unemployment Rate younger age groups is the result of aggressive
education campaign of the present government.
The age specific unemployment rate shows a
Increasing enrolment in schools is reducing not
typical U shaped pattern (see fig-12.7); higher rate
only the incidence of child labor but their
for younger and older groups and lower for the
unemployment as well. The goal of universal
prime age persons (those who fall between 25-49
primary education towards with achieving other
years) (see Table-12.13). The interesting
Millennium Development Goals (MDGs) is
observation, however, is a visible fall in the
expected to contribute significantly in the
unemployment rate in all age-groups in 2006-07 as
withdrawal of working children from the labor
compared to 2005-06 except for 10-14 and 60+ age
market, thus reducing unemployment.
bracket. The decline in unemployment in the

Fig-12.7: Age-Specific Unemployment Rate (%)

18 2005-06
15 2006-07
12
9
6
3
0
10-14

15-19

20-24

25-29

30-34

35-39

40-44

45-49

50-54

55-59

60 yrs & above

The area of concern, however, remains the Table-12.13: Age-Specific Unemployment Rates
incidence of unemployment in the older age (%)
groups, where the rates are significantly high. 2005-06 2006-07
Age Group
Though, a number of facilities and social services Total Total
are being extended for senior citizens, absence of Ten Years & Above 6.20 5.32
an adequate institutional mechanism of social 10-14 7.89 9.10
protection is greatly felt. 15-19 9.98 8.38
20-24 7.37 6.67
25-29 4.88 4.07
The age specific unemployment rate shows that
30-34 2.85 1.97
unemployment rate starts declining from the age 35-39 2.37 1.50
group of 15-19 years till the age group of 55-59 40-44 2.68 1.76
and again start rising from the age group of 60+. 45-49 2.87 2.60
The highest unemployment rate is observed in the 50-54 6.32 4.78
age group of 10-14 i.e. 9.10 percent mainly due to 55-59 8.35 7.39
lack of employment opportunities available to 60 yrs & above 11.62 13.71
young children. Source: Labour Force Survey, 2005-06 and 2006-07

208

12.2.9 Youth Labour Force
Youth are a vital segment of the population
especially in developing countries. Despite
decreasing fertility rates, almost 89 percent of
world’s youth were living in developing countries
in 2005. This segment of the labour force is
extremely important because it guarantees higher
returns on investment in education and training by
remaining economically active for a long period of
time. On the flip side of the coin, youth also
constitute the most vulnerable segment of the
society due to limited labour market openings for
them and lack of experience.
Fig-12.8: Province Wise Youth Labour Force (%)
NWFP, 14%
Balochistan, 4%
Sindh, 24%
In Pakistan, youth aged 15-24 are a growing
segment of the labour market. According to LFS
2006-07, the share of youth in working age
population is 28.69 percent and in the labour force
it is 28.09 percent with 44.2 percent labour force
participation rate. The youth labour force
participation rate has been on the rise over the
years. However, labour force participation rates for
young women continues to be lower than that of
young men, reflecting cultural barriers and the lack
of opportunities for women to combine work and
family duties. The gap between the participation of
young men and women has decreased from 59.1 to
50.7 percent since 1999-00, but remains far above
the regional average gap in South Asia of 34.6
Population, Labour Force & Employment
In recent years, youth unemployment has become a
global phenomenon and creating decent
employment and sustainable jobs for this particular
segment has, therefore, become a challenge
worldwide. This is the very reason that youth
employment has become a major focus of the
Millennium Development Goals (MDGs) which
has been reaffirmed by the Economic and Social
Council (ECOSOC) in its 2006 session, wherein, it
was committed that strategies will be developed
and implemented to find full and productive
employment and decent work for the youth.
Punjab, 58%
Source: LFS, 2006-07
percent in 2006. 1 The youth labour force
participation declined by 1.7 percentage points in
2006-07 as compared with 2005-06. Of this, a 0.2
percentage point was observed in young women
and 0.3 percentage point in young men. At the
provincial level, male participation declined in all
the four provinces, however, female participation
increased in Balochistan and Sindh (see Table
12.14 & Fig-12.8). On the other hand it has
declined more for the rural areas of the country as
against the urban parts of Pakistan.
1
Global Employment Trends (Geneva, ILO, January
2008)
209
Pakistan Economic Survey 2007-08
Table-12.14: Youth Labour Force Participation Rate* (%)
Change 1999-2000
Pakistan 1999-2000 2001-2002 2003-2004 2005-2006 2006-2007
to 2006-2007 (%)
National
Both sexes 40.5 43.4 43.6 45.9 44.2 3.7
Male 69.3 70.2 70.5 72.2 69.2 -0.2
Female 10.2 14.8 16.1 18.6 18.4 8.2
Urban
Both sexes 36.6 39.2 37.6 39.2 37.6 1.1
Male 60.3 63.3 62.5 64.3 62.8 2.5
Female 10.0 11.1 10.3 11.8 10.0 0.1
Rural
Both sexes 42.8 45.9 47.3 49.9 48.2 5.5
Male 74.7 74.5 75.6 77.1 73.2 -1.5
Female 10.3 16.8 19.4 22.6 23.3 12.9
Provincial
Punjab 43.9 47.0 47.1 49.1 47.4 3.6
Male 74.4 73.0 72.8 73.1 70.2 -4.2
Female 11.4 20.1 21.6 25.0 25.0 13.6
Sindh 33.8 39.0 39.7 42.8 42.3 8.5
Male 58.2 66.6 68.1 72.0 71.0 12.8
Female 6.8 6.5 7.8 8.1 8.5 1.8
NWFP 36.0 36.1 37.3 38.6 34.6 -1.5
Male 63.5 64.4 66.6 67.9 61.8 -1.7
Female 10.5 7.0 9.2 12.1 8.9 -1.6
Balochistan 37.0 41.7 39.6 47.6 44.9 7.8
Male 66.1 70.3 65.9 74.3 68.0 1.9
Female 7.2 7.3 9.6 11.1 13.9 6.7
*Refined Source: Employment Trend Report, 2007

12.2.10 Employment Promotion Measures: Small and Medium Enterprises --- A large
number of SMEs are also being financed under
The Government has taken several measures in
“Hunarmand Pakistan Scheme” for promoting self
order to facilitate and generate employment,
employment. Up to 31st January, 2008 the SME
directly and indirectly as well as through targeted
Bank has disbursed loans amounting to Rs.5.16
programs and skill development of labour force in
billion and generated employment for 47,213
order to enable them to capture decent
persons. The number of SMEs financed during the
employment.
same period is 6,745 establishments.
Sustaining Growth Momentum--- Higher
Khushhali Bank --- In order to open new avenues
economic growth on a sustained basis is sine quo
of self-employment, the Government is providing
non for employment generation. Pakistan has
micro finance to the people at grass root level
maintained an average growth of 7.0 percent per
through Khushhali Bank. Up to 31st July, 2007 the
annum over the last five years to 2006-07 and
bank has disbursed loans amounting to Rs. 11.71
succeeded in reducing unemployment as discussed
billion and generated employment for 1118,502
earlier. Going forward, a growth of 6-8 percent
persons.
must be ensured to continue to generate
employment opportunities.

210

President’s Rozgar Scheme --- The solution of
Pakistan’s major socio-economic problems
primarily lies in the development and growth of
micro businesses. These will not only provide
employment opportunities to the ever-growing
population but will also become the catalyst for
breaking the vicious circle of poverty. In this
regard, National Bank of Pakistan has developed a
full range of products under the President’s Rozgar
Scheme with a brand name of “NBP KAROBAR”.
Under this scheme an average loan size of
Rs.100,000 is given for a maximum period of five
years with a grace period of three months.
National Internship Program ----The National
Internship Program (NIP) of one year duration has
been launched by the Federal Government for
fresh post graduates and graduates who have
completed 16 years of education in the year 2005
and 2006. The internees are paid monthly stipend
of Rs. 10,000 during the internship period. The
main objectives of this Program is to provide
financial relief to young degree holders, to improve
the public sector performance by providing young,
fresh and motivated human resource as well as to
enhance the capacity and employability of fresh
graduates for their better professional future.
During the first phase of the program 20, 000
internees have been inducted in various
government departments so far.
Labour Market Information System----A Project
“Labour Market Information System and
Analysis” has been launched by the Labour and
Manpower Division. Its objective is to develop and
consolidate the collection and usage of Labour
Market Information (LMI) in Pakistan. The system
will yield regular statistics and information about
employment, under-employment and
unemployment and make analysis based on key
indicators of the labour market. The policy
linkages will be made to cater to the problems of
unemployment in the country.
Policy Planning Cell ---Policy Planning Cell has
been established in the Labour and Manpower
Division. Its tasks include: i) development of
national policies in the areas of: employment,
overseas migration, and human resource
development, ii) rationalization and consolidation
Population, Labour Force & Employment
and classification of labour laws as well as
fulfillment of international obligations relating to
labour issues, iii) development of best practices in
the areas of: management of pension/workers’
welfare funds, simplification of procedure in
collection of taxes/fees, and iv) formulation of
guidelines for development of welfare schemes for
workers including development of feedback
mechanism.
Technical and Vocational Training --- National
Vocational and Technical Education Commission
(NAVTEC) has been established at the Federal
level with a view to overcoming the problems of
lack of standardization, skill gaps, non-availability
of proper curricula, poor quality of instructional
staff, inadequate accreditation/certification and
poor infrastructure. The Commission will
encourage private sector to enhance technical
education and vocational training capacity in order
to bring harmony and develop linkage between
technical education and vocational training. Being
a regulatory body, the Commission will be
responsible for long term planning in this
particular field. It will also be responsible for
setting standards for formulating the syllabus,
accreditation, certification, trade testing, etc.
During the year 2007, 23844 trainees were trained
under NAVTEC and presently 42923 are under
training. The target for the year 2008 has been set
at 200,000 trainees.
Skill Development Councils (SDC) --- In order to
develop skilled labour force on modern lines and
effectively integrate the private sector in design
and implementation, the Labour and Manpower
Division supported the establishment of five Skill
Development Councils (SDCs), one each at
Islamabad, Karachi, Lahore, Peshawar and Quetta.
The SDCs assess the training needs of their
geographical areas, prioritize them on the basis of
market demand and facilitate training of workers
through training providers in the public and private
sectors. These Councils – led by the
representatives of the industry - have met the
diversified training needs of the industrial and
commercial sectors. So far 46,674 workers have
been trained.
211
Pakistan Economic Survey 2007-08
Overseas Employment ---- The Ministry of
Labour, Manpower & Overseas Pakistanis is
making efforts to boost overseas employment. In
this regard, four MoUs with Kuwait, Malaysia,
Korea and UAE have been signed while with
several other countries are under process. The
number of persons going overseas for employment
in 2007 was 287,033 persons. In the first quarter of
2008, over 100,000 workers have been sent for
overseas employment. The increase in overseas
migration is the result of aggressive marketing by
the Government for the export of manpower. The
under preparation National Migration Policy is
expected to provide guidelines for safer and greater
migration of Pakistani workforce.
IT Sector --- Information Technology has
enormous potential to create jobs for the educated
unemployed in the country. The development of
IT and Telecom sector has created enormous
212
employment opportunities, directly or indirectly,
for the educated in a wide range of areas like call
centers, telecom engineering, telecom sales,
customer services, finance, accounting, etc. This is
one of the fastest growing sectors of the economy.
An allocation of Rs.3.30 billion was made for this
sector for the year 2007-08. This would further
accelerate its activities in the next couple of years,
creating more business and employment
opportunities in the country.
As a result of implementation of the above
programs and projects, a large number of work
opportunities would be created which would help
in reducing unemployment in the country,
specially the un-employment of educated and
trained youth.
TABLE 12.12

PERCENTAGE DISTRIBUTION OF EMPLOYED PERSONS OF 10 YEARS AGE AND ABOVE BY MAJOR INDUSTRY 2006-2007
(Percentage)
Major Industry PAKISTAN BALUCHISTAN NWFP PUNJAB SIND
Division Total Rural Urban Total Rural Urban Total Rural Urban Total Rural Urban Total Rural Urban

Total 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
1) Agriculture Forestry,
Hunting and Fishing 43.61 59.90 6.52 54.41 64.66 11.70 38.86 45.29 5.59 45.28 59.91 7.52 39.39 68.67 4.66
2) Mining and Quarrying 0.11 0.14 0.04 0.95 1.02 0.66 0.17 0.19 0.07 0.05 0.06 0.03 0.07 0.13 0.01
3) Manufacturing 13.54 9.22 23.38 2.13 1.16 3.19 7.51 6.46 12.95 15.31 11.75 24.51 13.86 4.77 24.65
4) Electricity, Gas
and Water 0.75 0.54 1.24 0.67 0.46 1.57 1.27 1.25 1.34 0.59 0.41 1.05 0.96 0.50 1.50
5) Construction 6.56 6.54 6.61 6.43 6.13 7.67 11.03 11.18 10.27 6.23 6.33 5.98 5.45 4.19 6.93
6) Wholesale, Retail Trade,
Restaurant and Hotels 14.42 8.83 27.16 14.57 11.27 28.29 14.77 12.49 26.58 13.44 8.17 27.05 16.76 7.86 27.33
7) Transport, Storage
and Communication 5.39 4.25 7.99 5.63 4.82 9.00 6.87 6.32 9.76 4.87 3.88 7.44 6.01 3.92 8.50
8) Financing,Insurance,
Real Estate and
Business Services 1.14 0.39 2.86 0.60 0.31 1.80 1.07 0.73 2.82 0.95 0.35 2.51 1.77 0.31 3.50
9) Community, Social and
Personal Services 14.41 10.16 24.10 14.62 10.18 33.10 18.37 16.00 30.60 13.24 9.12 23.87 15.61 9.63 22.71
10) Activities Not
Adequately Defined 0.05 0.03 0.10 - - 0.02 0.07 0.08 0.02 0.04 0.03 0.04 0.10 0.01 0.20
.. not available Source : Labour Force Survey, 2006-2007, Federal Bureau of Statistics
* Provisional
c

POVERTY
Poverty and Income Distribution
Introduction
With a dramatic surge in food prices during the
current fiscal year 2007-08, it will be naive for
policy-makers and economic managers to ignore or
downplay the likely impact of this on Pakistan’s
poverty dynamics. According to estimates, a 20
percent increase in food prices would add 100
million people below the absolute poverty line of
one dollar a day around the world. With South
Asia being home to 30 percent of the world’s poor,
the economic managers of the country have to face
the challenge of protecting the poor from
contagion of the recent spike in the food prices
around the world. Poverty alleviation gains made
from 2001 to 2006 through sustained higher
economic growth and tremendous rise in
development expenditure have to be protected.
In the short-run with rising food prices
internationally, the policy options remained limited
but were fully exploited in the form of a)
administrative measures to control and discourage
hoarding within the country and smuggling of food
grains across the border, b) raising the support
price of wheat to Rs.625 per 40 Kg bag, c)
allowing import of wheat and other food stuff
through public and private channels and d)
increasing the supply and access to subsidized food
through Utility Stores (urban areas) and food
support programs (rural areas).
The double-digit food inflation of more than 15
percent during July-April 2007-08 is likely to be a
major contributor to eroding the gains of poverty
reduction. Whether the incidence of high inflation
and the performance of key macro indicators
during the current fiscal year will have any bearing
(and to what extent) on the poverty profile in the
country in 2007-08 will only be known once the
Chapter 13
results of latest round of Pakistan Social and
Living Standard Measurement (PSLM) Survey
data are available in the last quarter of 2008-09. In
case of a negative impact, combined with medium-
term persistence and lagged effects of global food
and energy price shock, the MTDF target of
poverty headcount of 21 percent for 2009-10,
believed to be within reach only a year ago, can
only be realized with focused and effective
interventions, including enhanced allocations for
poverty reduction.
In Pakistan, as in few other developing countries,
household surveys are conducted at irregular
intervals, depending on the availability and
approval of funding for statistical agencies. From
a poverty assessment angle, there are merits and
demerits in following a consistent policy on
periodicity of surveys. At times, consecutive
surveys and estimates specifically in case of
poverty headcount are unlikely to reveal much,
with the data showing minor variations and
numbers which may not be very different
statistically. Still they serve a useful purpose of
monitoring and assessing the sensitivity or
robustness of estimates to changing economic
conditions and over time a long time series helps to
build and reveal a more ‘structural’ relationship
between poverty and other dimensions of the
economy.
Till the first half of 2007-08, the latest estimates
available to gauge poverty situation in the country
related to the fiscal year 2004-05. Being an
exceptionally good year, both in terms of
agriculture and manufacturing growth and their
contributions to GDP, these estimates indicated an
improvement in poverty headcount to 23.9 percent
from the previous estimates of 34.5 percent in
2000-01, the latter being the second year of
persistent drought in the country. Only recently the
213
Pakistan Economic Survey 2007-08
estimates calculated from the Household Survey
(known as PSLM 2005-06), conducted by the
Federal Bureau of Statistics (FBS) in the year
2005-06, have been finalized. They serve as useful
guide and benchmark to poverty monitoring. The
estimates of poverty from the Household Survey
for the period 2005-06 would depict the socio-
economic conditions that prevailed during the
fiscal year 2005-06. These estimates will have little
semblance to the current ground realities which
have been impacted by the surge in food and fuel
prices, poor agricultural performance and slower
economic growth.
The survey on household income provides quality
information and closely resembles PIHS of 2000-
01 rather than PSLM 2004-05. Thus it is much
more amenable to comparison of income
inequalities. The information in other modules
(consumption, demographics etc) is almost
identical to the pattern of earlier surveys. The
sample size is about the same as in the last survey,
i.e., around 15,000 households covering rural and
urban areas of all provinces and based on scientific
sampling methodology followed by FBS. The
methodology of producing poverty estimates is
identical to the methodology adopted in producing
previous estimates. The salient features are i)
updating the poverty line based on 2350 calories
per adult equivalent per day with the consumer
price inflation during 2004-05 and 2005-06, ii)
constructing spatial price index for all food and
energy items (around 89) and adjusting household
Table-13.1: Consumption expenditure b/w PIHS 2000-01, PSLM 2004-05 & PSLM 2005-06
(At the prices of 2001)
Quintile PIHS 2000-01 PSLM 2004-05
Mean Median Mean
Poorest 20% 508 524 555
Second 690 690 775
Third 845 843 961
Fourth 1070 1060 1238
Richest 20% 1908 1582 2327
All 1004 843 1171
Comparing the share of major food and non-food
items in total expenditure across the three points in
time provides another perspective on the stability
of consumption behavior and reliability of the data.
Table-13.2 gives the percentage expenditure share
of major items in the monthly per adult equivalent
214
expenditures to provide consistent consumption
welfare measure across all 1100 primary sampling
units in the country and during the year of the
survey, iii) following a cleaning protocol
consistent with the one adopted for data set of
2004-05 and iv) adopting adult equivalent
measures for consumption to adjust for number of
children.
Consumption Profiles: 2004-05 and 2005-06
Table-13.1 compares the mean and medium of real
monthly consumption expenditure per adult
equivalent for the three periods. The last column
gives the growth rate in mean consumption
expenditure during 2004-05 and 2005-06. At 2001
prices, the average real consumption of the
population increased by 3.07 percent, with lowest
20 and top 20 percent quintiles consumption
growing at nearly two and half times more than the
rest of the 60 percent of the population.
Comparing the inter-survey period growth rates,
the consumption expenditure of bottom 20 percent
increased by 9.25 percent in a four year period
during 2000-01 and 2004-05 giving an average
annual rate of 2.3 percent, its growth was twice the
rate during 2004-05 and 2005-06. The top and
bottom 20 percent exhibit greater divergence in
consumption expenditures as the mean and median
are different for both groups. Had the consumption
demand growth of the richest 20 percent been
made more in line with the middle income
quintiles (3 & 4), the price pressures for essential
commodities would have been relatively alleviated.
PSLM 2005-06 Growth
Median Mean Median (Mean exp.)
557 580 601 4.5
775 790 792 1.94
959 978 975 1.77
1227 1255 1237 1.37
1912 2431 1938 4.47
960 1207 975 3.07
expenditure. Notable increase in shares between
the two periods is observed in fuel and lighting,
transport and medical care. Food records a decline
of a full percentage point between 2004-05 and
2005-06, while the share of education also
continues to maintain its downward slide. Literacy
 Poverty
In the case of education, this may reflect and better targeting of expenditures on education at
substitution by households of own expenditure the provincial level.
with that provided by the government via increase
Table-13.2: Percentage Share of Per Adult Equivalent Monthly Consumption
Expenditure (By Commodity Group)
PIHS PSLM PSLM
Commodity Group 2000-01 2004-05 2005-06
Food 49.5 49.1 48.1
Fuel and lighting 8.1 8.0 8.8
Personal care articles/services, laundry cleaning,
paper articles 3.9 3.8 3.9
Personal transport and traveling expenses (not
commercial) 3.7 4.9 5.2
Other misc. household exp. on goods and
services(e-mail, internet etc) 3.9 5.2 4.4
Clothing, clothing material/services 5.7 5.0 5.0
Medical care 4.5 4.0 4.5
Education 3.5 3.0 2.6
House rent 12.0 11.9 12.2
Other remaining expenditures 5.1 5.1 5.3
Total 100 100 100

Table-13.3 compares the growth rate in per adult double-digit increase in personal transport and
equivalent monthly consumption expenditure on rent. The phenomenal increase of 60 percent in the
few commodity groups of bottom 20 percent with former category during the two consecutive years
the top 20 percent of the population for the years is due to greater ownership of personal means of
2004-05 and 2005-06. Expenditure on health, transport by the poor, or increase in fares of public
education, house rent and personal transport for the transport, and/or increase in distance traveled by
richest 20 percent grew in double-digits during the the poor on account of jobs.
one year interval. The poorest experienced a
Table-13.3: Comparison of Per Adult Equivalent Monthly Consumption Expenditure between PIHS 2000-01, HIES 2004-05 and
PSLM 2005-06 at 2001 Prices
(By Commodity Group And Quintile)
Commodity Group Poorest 20% Richest 20%
2000-01 2004-05 2005-06 Growth 2000-01 2004-05 2005-06 Growth
Food 288.5 322.0 316.6 -1.7 799.8 951.8 866.8 -8.9
Fuel and lighting 47.3 50.0 54.1 8.2 140.6 169.9 184.7 8.7
Personal care articles/services, laundry 22.6 22.3 23.0 3.1 66.9 82.8 80.5 -2.8
cleaning, paper articles
Personal transport and traveling expenses (not 11.0 16.6 26.9 62.1 92.1 153.4 184.9 20.5
commercial)
Other misc. household exp. on goods and 14.3 16.4 19.0 15.9 101.0 165.3 180.8 9.4
services(e-mail, internet etc)
Clothing, clothing material/services 33.1 32.4 32.6 0.6 93.5 101.4 97.7 -3.6
Medical care 19.3 22.1 22.5 1.8 93.4 87.7 116.2 32.5
Education 9.0 7.8 7.7 -1.3 96.5 108.0 147.6 36.7
House rent 39.3 43.0 48.7 13.3 313.2 365.7 493.1 34.8

National Poverty Status: 2004-05 and 2005-06 Survey Evidence

Poverty estimates are highly sensitive to a variety updated; which welfare measure is adopted,
of factors, like how a poverty line is estimated and household expenditure or income; how the scale of
215
Pakistan Economic Survey 2007-08
household is controlled for, per capita or per adult
equivalent; and how spatial price differences are
controlled, etc. Each methodology or choice has
advantages and limitations. Also, poverty estimates
and the trend vary substantially depending on what
methodology is selected. This very nature of
poverty estimation suggests that the validation
exercise needs to be designed carefully. For
example, it is not constructive to simply point out
the difference between the CRPRID/ Planning
Commission’s poverty estimates and those based
on a conceptually different methodology.
Table-13.4 gives a comparative snapshot of
poverty status during 2004-05 and 2005-06. The
latest estimate of inflation-adjusted poverty Iine is
Table-13.4: Trends in Poverty Indicators
Headcount
Year Urban Rural Pakistan Urban
1998-99 20.9 34.7 30.6 4.3
2000-01 22.7 39.3 34.5 4.6
2004-05 14.9 28.1 23.9 2.9
2005-06 13.1 27.0 22.3 2.1
Another observation is that the poverty estimate in
urban areas became less than half the rural
estimates in 2005-06 for the first time since 1998-
99. Statistically speaking, taking into account the
margin of error in the estimates, the estimates of
the two years are not different from each other.
Two observations are in order from even these
marginal and statistically insignificant
improvements. First, the rate of poverty reduction
slowed in 2005-06 and began to taper off to a more
long-run level of around one percentage point a
year. This is evident while comparing the normal
years of 1998-99 with 2005-06. Ignoring the
irregular years of 2000-01 and 2004-05, a
reduction of 8.3 percentage points in headcount
over the period of 8 years, from 30.6 to 22.3
percentage points is observed. Notwithstanding
any reversal of observed trends, even if this slower
speed of poverty reduction combined by closing
the urban-rural poverty difference in a consistent
manner for the next nine years, the Millennium
Development Goal (MDG-1) and Human
Development principle of equitable growth can be
within sight. Secondly, the smaller improvement in
rural areas can be traced to dismal growth in the
216
Rs.944.47 per adult equivalent per month, up from
Rs.878.64 in 2004-05. Headcount ratio, i.e.,
percentage of population below the poverty line
has fallen marginally from 23.94 percent in 2004-
05 to 22.32 percent in 2005-06, an improvement of
1.62 percentage points.1 Poverty in rural areas
declined from 28.13 percent to 27.0 percent,
showing an improvement of 1.13 percentage points
between 2004-05 and 2005-06. Poverty in Urban
areas also registered a decline from 14.94 percent
to 13.1 percent during 2004-05 and 2005-06,
thereby, depicting an improvement of 1.84
percentage points in the period. The improvement
in poverty headcount in percentage points terms at
1.9 percent in urban areas was nearly twice that of
rural areas.
Poverty Gap Severity of Poverty
Rural Pakistan Urban Rural Pakistan
7.6 6.4 1.3 2.4 2.0
8.0 7.0 1.4 2.4 2.1
5.6 4.8 0.8 1.8 1.5
5.0 4.0 0.5 1.4 1.1
Source: PSLM
crop sector (-2.9%) in 2005-06 as compared to
manufacturing (8.7%) and services (6.5%) sectors,
which are mainly urban based. The other two
indicators, poverty gap and severity of poverty are
aggregate measures of ‘spread’ of the poor below
the poverty line, i.e., they aggregate the distance
(proximity or remoteness) of all poor individuals
from the poverty line. A lower value indicates that
most of the poor are bunched around the poverty
line. In line with the improvement in headcount,
both the poverty gap and severity of poverty were
also reduced in the country between the two
consecutive years.
The estimation of poverty line enables the policy
makers to further identify and group the population
1 A technical exercise carried out by the World Bank supports the
accuracy of CPRID/Planning Commission poverty numbers for PIHS
2000-01, PSLM 2004-05, and PSLM 2005-06 using the official
methodology and data cleaning protocol. The World Bank also carried out
various sensitivity analyses to ensure the reliability of the estimates, and
found that the poverty estimate at the national level declined slightly
between 2004-05 and 2005-06, but the reduction was not statistically
significant. Furthermore, the PSLM 2005-06 data including the
Consumption Module are available with the Federal Bureau of Statistics
(FBS) for researchers or any body who has interest in poverty estimates.
 Poverty
into various ‘poverty bands’ such as extremely to 36.3.percent. The section of population defined
poor, vulnerable and non-poor etc. Table-13.5 as ‘vulnerable’ at 20.5 percent remains almost the
presents a comparative profile of 2000-01, 2004-05 same and any negative macro or personal shock
and 2005-06 for the six groups. Notably the can easily shift these households into the category
percentage of ‘extremely poor’ consuming less of ‘poor’. Combining ‘poor’ with ‘vulnerable’
than 50% of poverty line expenditures, halved segments of the population, i.e., the poverty status
from 1 to 0.5 percent of the population. Similarly of 36.9 percent (unchanged from 2004-05) of the
there was an improvement of 1 percentage point in population is likely to fluctuate with the growth
the proportion of ultra-poor from 6.5 to 5.4 performance of agriculture and food inflation in
percent. At the other side of the spectrum, the the country.
proportion of ‘Quasi non-poor’ increased from 35
Table-13.5: Population under various Poverty Bands
(% of Population)
2000-01 2004-05 2005-06
Poverty Line = Rs. 723.40 Poverty Line = Rs. 878.64 Poverty Line = Rs. 944.47
Extremely Poor 1.10% Extremely Poor 1.00% Extremely Poor 0.50%
<50% that is <Rs.361.7 <50% that is <Rs.439.32 <Rs.472.23
Ultra Poor 10.80% Ultra Poor 6.50% Ultra Poor 5.40%
>50%<75% that is >50%<75% that is is
Rs. 361.7 – Rs.542.55 Rs. 439.32 – Rs.658.98 Rs.708.35
Poor 22.50% Poor 16.40% Poor 16.40%
>75%<100% that is >75%<100% that is is
Rs.542.55 – Rs.723.40 Rs.658.98 – Rs.878.64 Rs.944.47
Vulnerable 22.50% Vulnerable 20.50% Vulnerable 20.50%
>100%<125% that is >100%<125% that is that is
Rs.723.40 – Rs.904.25 Rs.878.64 – Rs.1098.30 Rs.1180.59
Quasi Non-Poor 30.10% Quasi Non-Poor 35.00% Quasi Non-Poor 36.30%
>125%<200% that is >125%<200% that is that is
Rs.904.25 – Rs.1446.8 Rs.1098.3 – Rs.1757.28 Rs.1888.94
Non-Poor 13.00% Non-Poor 20.50% Non-Poor 20.90%
>200% that is over Rs.1446.8 Rs.1757.28 over Rs.1888.94

Consumption Inequality Coefficient takes on a value between 0 and 1. The

higher the value of Gini Coefficient, the higher
The results available from the latest household
will be the inequality.
survey, 2005-06 also provide an opportunity to
update the analysis of consumption inequalities in
Table-13.6 shows the value of Gini for Pakistan
the country. Though a one year interval is too short
and rural-urban divide obtained from the three
a period (statistically the difference may be
Surveys, i.e., PIHS 2001, HIES 2004-05 and
insignificant) to make conclusive judgment on
PSLM 2005-06. Starting from the beginning of the
inequalities, trends and changes however small or
decade, the secular rise in Gini values continues at
insignificant act as signal for policy interventions.
the national level and urban areas, indicating that
Inequality based on consumption expenditure is
consumption inequality continues to increase
generally lesser than inequality based on income as
during the period, particularly for the middle
variations in consumption are less and it is based
quintiles 3 & 4 in urban areas. Between 2004-05
partly on a subset of homogenous (in terms of
and 2005-06, consumption inequalities further
quality and price) food items. The consumption
increased from 0.2976 to 0.3018. This increasing
inequality is measured by the Gini Coefficient and
trend in inequality is the opposite of the declining
ratio of highest to the lowest quintile. The Gini
217
Pakistan Economic Survey 2007-08
trend observed in absolute poverty in the previous indicate that consumption inequality in urban
sections. One also observes that in a matter of a Pakistan is higher than in rural Pakistan. Moreover
year the Gini of rural areas declined from 0.2519 in urban inequality increased faster than overall
2004-05 to 0.2462 in 2005-06. The estimates inequality during 2005-06.
Table-13.6: Gini Coefficient and Consumption Shares by quintiles
PIHS 2000-01 HIES 2004-05 PSLM 2005-06
Urban Rural Pakistan Urban Rural Pakistan Urban Rural Pakistan
Gini Coefficient 0.3227 0.2367 0.2752 0.3388 0.2519 0.2976 0.349 0.2462 0.3018
Consumption share by Quintile
Quintile 1 5.3 12.8 10.1 4.8 12.6 9.5 4.5 13.5 9.6
Quintile 2 8.1 16.9 13.7 7.6 17.1 13.2 8.2 16.8 13.1
Quintile 3 12.1 19.5 16.8 11.6 19.7 16.4 11.1 20.1 16.2
Quintile 4 19.4 22.4 21.3 18.3 23 21.4 17.8 23 20.8
Quintile 5 55.1 28.4 38 57.7 27.6 39.4 58.4 26.6 40.3
Ratio of Highest to lowest 10.4 2.22 3.76 12.02 2.19 4.15 12.98 1.97 4.2

The Gini Coefficient is a broad single aggregative
measure. It suppresses the profile of the
distribution. Table-13.6 also reports the trends of
percentage share of consumption expenditure by
quintile for overall Pakistan as well as the rural and
urban regions for the three time periods under
study. Comparing 2004-05 with 2005-06, a
miniscule improvement in the share of the lowest
quintile is observed at the national level. For this
group, the significant improvement in rural areas is
offset by a worsening in urban areas. The
consumption shares are stable between the two
years for the next two quintiles. The decline in the
share of quintile group 4, i.e., between 60 and 80
percent is offset by further increase of 1 percentage
point in the share of the top quintile. The ratio of
the highest to the lowest quintile which measures
the gap between the rich and the poor also
deteriorated from 4.15 in 2004-05 to 4.2 in 2005-
06 at the national level, indicating an increased
rich-poor divide over the period. Consistent with
increasing share of the poor in rural areas in 2005-
06, the rich-poor gap narrowed in 2005-06 as the
ratio declined from 2.19 in 2004-05 to 1.97 in
2005-06.
Pro-poor Expenditures
Although the PRSP-I (2003-06) culminated
successfully in FY06, and PRSP-II has yet to be
officially launched, the on-going pro-poor
expenditures retain the flavor, legacy and
framework of PRSP-I. Government’s commitment
to follow a sustained poverty reduction strategy
and adhere to Fiscal Responsibility and Debt
218
Limitation Act stipulation of allocating a minimum
of 4.5 of GDP to social and poverty related
expenditures is clearly reflected in the allocations
as given in Table-13.7. Expenditures on pro-poor
sectors in 2006-07 at 5.7 percent of GDP were well
above the requirement under the Law. These
expenditures are projected to grow in nominal
terms by roughly 20 percent over the 2006-07
levels and be 6.0 percent of GDP in 2007-08. If the
entire subsidy of Rs.40 billion on imported wheat
during the current year is considered as pro-poor
expenditure, and off-setting cuts are not made in
education and health, the final figure is expected to
be even higher than the projected one.
Ignoring the unanticipated wheat subsidy
expenditure, and its impact on other line items, a
comparison of actual 2006-07 expenditure and
projected expenditure for 2007-08 indicates the
following: - a) expenditures on human
development (education, health, population
planning, social security & welfare) are expected
to increase by over 36 percent, with doubling in
Population Planning and Social Security and
Welfare, albeit from a small base. b) expenditures
under safety nets are set to increase by 32 percent
even under a ‘business-as-usual’ scenario. c) The
growth in expenditure on community services,
rural development and governance show only a
modest and routine increase, partly due to
consolidation and throw-forward effect of rapid
investments made in earlier years. Assuming a
permanent regime shift to higher food and fuel
prices, the expenditures on safety nets need to be
scaled-up significantly in order to facilitate the
 Poverty
poor in gradual adjustment to this new era of expenditure heads need to be re-defined and more
higher food and fuel prices. From a policy closely aligned with direct impacts on the poorer
perspective, as we head into PRSP-II phase, sections of society.

Table-13.7: Social Sector and Poverty Related Expenditures (Rs. in Billion)

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08
Actual Actual Actual Actual Actual Actual Projected
Community Services 11.0 16.6 28.5 41.7 63.6 76.6 82.5
i. Roads, Highways & Buildings 6.3 13.2 22.8 35.2 53.3 60.0 69.1
ii. Water Supply and Sanitation 4.6 3.4 5.8 6.5 10.3 16.6 13.4
Human Development 90.7 105.8 134.1 155.8 217.9 231.8 316.3
i. Education 66.3 78.6 97.7 116.9 141.7 162.1 224.7
ii. Health 19.2 22.4 27.0 31.4 39.2 53.2 62.3
iii. Population Planning 1.3 3.1 4.7 4.6 10.2 7.0 13.3
iv. Social Security & welfare 3.7 1.3 4.1 2.0 7.6 4.5 9.8
v. Natural Calamities 0.2 0.4 0.5 0.9 19.2 5.0 6.2
Rural Development 24.3 34.2 44.5 59.7 78.5 101.8 101.9
i. Irrigation 10.1 15.5 22.5 37.9 59.8 74.8 77.6
ii. Land Reclamation 1.8 1.8 2.0 2.1 2.7 2.3 3.5
iii. Rural Development 12.3 16.9 18.6 15.4 15.0 22.2 19.5
iv. Rural Electrification 1.4 4.4 1.0 2.5 1.3
Safety Nets 8.3 13.8 12.3 8.4 9.4 9.2 12.2
i. Food Subsidies 5.5 10.9 8.5 5.4 6.0 5.5 7.8
ii. Food Support Program 2.0 2.2 2.8 2.7 3.1 3.5 4.0
iii. Tawwana Pakistan 0.8 0.6 0.6 0.1 0.0 0.0 0.0
iv. Low Cost Housing 0.1 0.4 0.3 0.3 0.3 0.4
Governance 33.0 38.5 41.8 50.5 65.2 78.1 84.6
i. Administration of Justice 2.0 2.3 2.4 3.1 5.6 5.1 7.3
ii. Law and order 31.0 36.3 39.4 47.4 59.6 73.0 77.3
Total 167.3 208.8 261.3 316.2 434.6 497.5 597.5
As % of GDP 3.8 4.32 4.6 4.8 5.6 5.7 6.0
Source: Finance Division

An Update on Social Indicators from PSLM services and living standard indicators. Although
2006-07 Survey PIHS 2001-02 results are based on sample size of
only 14,000 households, it provides a reasonable
Since the late nineties and early part of this
interval to assess improvements since the
Millennium, Pakistan followed a two-pronged
beginning of the twenty-first century. In
strategy: - a) reduce income and consumption
interpreting the results one needs to be aware that
poverty and b) to increase access to education,
in contrast to macroeconomic indicators that vary
health and better quality of living. The second part
within intervals of month/quarter/year, social
of PSLM surveys, i.e., CWIQ (Core Welfare
indicators may not exhibit similar changes even
Indicator Questionnaire) surveys are specifically
with a gap of two years. In many cases the ratios
designed to monitor the progress of social
may remain stable. However, over the medium to
indicators at the district level. The first large scale
longer-run the success of any
survey of 77,000 households was conducted in
intervention/investments should translate into
2004-05. Its findings were reported in the
discernible improvements.
Economic Survey 2004-05. The results from the
second survey of its kind based on approximately
Table-13.8 compares the living conditions in 2004-
74,000 households and conducted in 2006-07 are
05 and 2006-07. Broadly speaking they have
compared with its exact earlier counterpart to
remained unchanged, except in case of large
provide short-term assessment of government’s
households. Population living in houses with 5 and
success in improving population’s access to social
more rooms has declined from 7.1 to 6.6 percent.
219
Pakistan Economic Survey 2007-08
In interpreting these numbers we need to be aware
that housing standards of a population change very
slowly, as they are guided by demographics,
migration and internal working of housing markets
in cities, towns and villages. On average, the
livings conditions are marginally better as the
consumption, investment in immovable assets
might also have declined as population owning
housing units has declined from 86.6 to 85.9
percent.
Table-13.8: Comparison of Living Conditions PSLM
2004-05 & 2006-07

share of population living in households with 2-4 PSLM PSLM

Major Indicators 2004-05 2006-07
rooms inched up from 68.7 to 69.1 percent in two
Housing Units with one room (%) 24.2 24.3
years; however, population living in houses with
Housing Units with 2-4 rooms (%) 68.7 69.1
five and more rooms has declined from 7.1 to 6.6
Housing Units with 5 & more rooms (%) 7.1 6.6
percent. The population’s access to electricity also Owned Housing Units 86.6 85.9
improved significantly from 83.9 in 2004-05 to Electricity (as source of lighting) (%) 83.9 86.6
86.6 percent in 2005-06. Due to higher Gas (as cooking fuel) (%) 29.5 30

Table 13.9: Comparison of Selected Social Indicators (%)

2000-01 2004-05 2006-07
Indicators PIHS PSLM PSLM
Major Source of Drinking Water (Tap Water) 25 34 36
Types of Flush used by households
- Flush 45 54 58
- Non- Flush 12 20 15
- No Toilet 43 26 27
Population Ever Attended school 51 55 57
Gross Enrolment at Primary level (5-9 Years) 72 86 91
Net Enrolment at Primary level ( 5-9 Years) 42 52 56
Gross Enrolment at Middle level(10-12 years) 41 46 51
Net Enrolment at Middle level(10-12 years) 16 18 18
Gross Enrolment at Matric level(13-14 years) 42 44 48
Net Enrolment at Matric level(13-14 years) 9 11 10

In Table-13.9 trends of selected social indicators at significant improvements took place in literacy
three points in time, i.e., 2000-01, 2004-05 and across gender and regions. However as in the case
2006-07 are compared. In a longer term of enrolment, the pace of improvement
perspective, comparing 2001 and 2007, most of the considerably slowed during last two years as
indicators show discernible improvement, e.g., compared to previous four years, even on an
access to drinking water through taps, use of flush average annual basis. The gender and urban-rural
and gross enrolments for most levels of schooling. divide also failed to close if one compares 2001
However, the rate of improvements has slowed with 2007.
down in the last two years as compared to speed of
Table-13.10: Literacy and Adult Literacy
improvements achieved during 2001-2005. In case PIHS 00-01 PSLM 2004-05 PSLM 2006-07
of net enrolment in middle schools and at matric i) Literacy Rate(Aged 10 years and older)
level, there has been no improvement in the last Overall 45 53 55
Male 58 65 67
two years. The trend of rising gross enrolments Female 32 40 42
with almost very marginal improvements in net Urban Areas 64 71 72
Male 72 78 79
enrolment indicate rising tendencies in dropout rate Female 56 62 65
at least at the middle and matric level. This Rural Areas 36 44 45
Male 51 58 60
reinforces the need for improving targeting of and Female 21 29 30
expending the size of pro-poor expenditures. ii) Adult Literacy (15 years and older)
Overall 43 50 52
Urban Areas 63 69 70
Table-13.10 profiles the trends in literacy rates of Rural Areas 34 40 41
population 10 years and above and 15 years and Source: Federal Bureau of Statistics
above. Over the longer period 2001-2007,
220
 Poverty
Since 2001, health indicators, specifically in the investments are needed for per unit improvement
area of child health and in rural areas, have in indicators along with more effective governance
improved significantly as indicated by estimates and implementation.
from various surveys given in Table-13.11.
Significant improvements in immunization, and Table-13.11: Health Indicators
PSLM PSLM PSLM
treatment by ORS took place during the period
2000-01 2004-05 2006-07
2001-2007. At the national level immunization
i) Children Aged 12-23 Months Immunized.
coverage went up from 53 percent in 2001 to 76
Overall 53 77 76
percent in 2007. In rural areas it improved faster, Urban Areas 70 87 85
thus reducing the urban-rural gap from 24 to 12 Rural Areas 46 72 73
percentage points during the period. Similarly in ii) Treatment of Diarrhea in Children 5 years and Under
the percentage of cases where a Practitioner was Cases where a Practitioner was consulted
consulted went up from 81 to 93 percent in rural Overall 82.4 90.9 93.7
areas, closing the urban-rural gap from 6.5 to 1.2 Urban Areas 87.3 92.2 94.5
percentage points. Rural Areas 80.7 90.1 93.3
Cases where ORS was given to Child
A common thread that runs in the short-term Overall 53.6 77.8 76.4
assessment of social indicators is the slow down in Urban Areas 57.0 78.2 80.0
the rate of improvement. This phenomenon Rural Areas 52.4 77.5 75.0
suggests that at higher levels of indicators, greater

221

TRANSPORT AND
COMMUNICATIONS
Infrastructure is both a cause and a consequence of
economic growth. The role of infrastructure in
integrating countries into the global economy by
providing transport and telecommunication
services is well known. Infrastructure can also
raise the quality of human capital, which is a key
factor in achieving high and sustainable levels of
growth. Improvements in the quality and quantity
of infrastructure have a disproportionately positive
impact on the poor, and thus play a vital role in
reducing income inequality.
A well performing Transport and communication
structure is vital for a country’s development.
Investment in a country’s infrastructure directly
affects economic growth as producers find the best
markets for their goods, reducing transportation
time and cost, and generating employment
opportunities.
Pakistan, with 161 million people, has a reasonably
developed transport infrastructure. The country
generates a total domestic transport load of around
239 billion passenger kilometers and 153 billion
tonne kilometers annually. The growth in demand
for transportation services is considerably higher
than the growth in GDP. Road transport is the
backbone of Pakistan's transport system. The 9,574
km long National Highway and Motorway network
- which is 3.65 percent of the total road network -
carries 80 percent of Pakistan's total traffic. Over
the past ten years, road traffic – both passenger and
freight - has grown significantly faster than the
national economy. Currently, it is accounting for
91 percent of national passenger traffic and 96
percent of freight. However, neglect of other
modes of transportation in favor of improvement
Chapter 14
of the road infrastructure has been a prevalent
problem in the country’s transportation sector.
Recent initiatives and developments in sectors such
as shipping, railways, and aviation are a welcomed
step towards mending this bias.
Port traffic in Pakistan has been growing at 8
percent annually in recent years. Two major ports,
Karachi Port and Port Qasim, handle 95 percent of
all international trade. Gwadar Port, which was
inaugurated in March 2007 and is being operated
by Singapore Port Authority, is aiming to develop
into a central energy port in the region. In addition,
14 dry ports cater to high value external trade.
Pakistan Railways (PR) has a broad gauge system
(with a small network of meter gauge in the South
East). The network consists of the main North –
South corridor, connecting the Karachi ports to the
primary production and population centers in
Pakistan. The track is in good condition with an
axle-load of 23 tons and maximum permitted
speeds of 100/110 Kilometers per hour.
There are 36 operational airports. Karachi is
Pakistan's main airport but significant levels of
both domestic and international cargo are also
handled at Islamabad and Lahore. Pakistan
International Airlines (PIA), the major public
sector airline, though facing the competition from a
few private airlines, carries approximately 70
percent of domestic passengers and almost all
domestic freight traffic.
The transport and communications sector accounts
for about 10.0 percent of the country’s GDP, and
22.0 percent of Gross Fixed Capital Formation in
223
Pakistan Economic Survey 2007-08
FY07/08. It provides over 2.3 million jobs in the
country (6% of all employment) and receives 12 to
15 percent of funds from the annual Federal Public
Sector Development Program (PSDP). Apart from
being a significantly large source of budgetary
expenditure, the transportation sector imposes huge
demand on Pakistan’s energy supply, absorbing
approximately 35% of total energy annually.
Infrastructure development has been a priority area
for Pakistan as evident from a number of projects
completed or in progress. In the long term, the
transport system is likely to experience tremendous
improvement with the implementation of the
National Trade Corridor (NTC) program.
The telecommunication sector of Pakistan
witnessed a robust growth over the last few years
with its share in total GDP increasing every year.
Teledensity of the country has crossed 57% which
has placed Pakistan’s telecom sector among those
of the rising East Asian economies.
I. TRANSPORT
Pakistan’s transportation network, albeit not as
modern and efficient as that of developed
countries, is considerably more efficient than it
was a decade ago. Users of the network have a
wider range of modes to choose from. Pakistan
Railway is still the only enterprise providing rail
service in the country, but the Airline industry has
greatly benefited from the competition provided by
private sector players such as Air Blue, Shaheen
Air and Aero Asia. The road network has been
expanding constantly. New motorways and
expressways made throughout the country have
significantly reduced the time it takes for goods
and people to reach their destinations. The
successes of service providers such as Daewoo
have provided consumers with benefits of choice
and affordability. New initiatives like the
establishment of Gwadar Port and the construction
and upgradation of new airports around the country
and a further expansion of the highway network
hold promises of a brighter future.
While visible progress has been made in the
transportation sector, key issues and challenges
224
remain. A comprehensive and holistic National
Transportation Policy that covers all modes of
transportation for both Urban and Rural transport
is yet to be implemented. Urban traffic congestion,
lack of quality public transport, environmental
pollution and other negative spill-overs from the
transportation sector, along with safety (especially
road safety) are all matters that need to be
addressed if Pakistan’s transportation is expected
to perform efficiently and provide the benefits of a
modern, well functioning and fully equipped
transportation network.
i. Road Transport
Pakistan’s transport system is primarily dependent
on road transport, which makes up 90 percent of
national passenger traffic and around 96 percent of
freight movement. Over the past several years,
road traffic – both passenger and freight – has
grown much faster than the country’s overall
economic growth. The National Highway and
Motorway network, which stretches an impressive
10,849 km, contributes 4.2 percent of the total road
network and carries 90 percent of Pakistan’s total
traffic.
Road density (Total length of road/ Total area), is a
common indicator for the development of a
country’s road system and concurrently used as an
index for prosperity, economic activity and
development. It is unfortunately low in Pakistan,
especially when compared to other developed and
developing countries. This fact is revealed in Fig-
14.1. Pakistan, with a population of 161 million
people, has a reasonably developed transport
system, but still intends to double its current road
density of 0.32-km/sq. km to 0.64-km/sq. km
gradually over the next 10 years.
a) Road Network
Pakistan is gifted with a naturally geo-strategic
location. It is at the peripheral of South Asia on
one side, and Central Asia on the other. In the
south, the Arabian Sea forms a gateway to the vast
Eurasian hinterland. It is here that cultures of
Central, West and South Asia crisscross. This ideal
location makes Pakistan one of the most attractive
 Transport and Communications
and shortest routes for transit to the Central Asian economies in the recent past has also necessitated
Republics (CARs). Indian trade to that region, in the establishment/effectiveness of operations
an economical/convenient manner, is also regarding the transcontinental transport links,
dependent on the availability of passage through warranting the development of land transport
Pakistan. The rapid development of Asian corridors to facilitate trade flows.

Fig-14.1 Road Density Comparisons

3.5
Road Length / Sq. Km of Area

3
2.5
2
1.5
1
0.5
0
Japan

France

Hungary

UK

Italy

India

USA

Spain

Malaysia

Pakistan

Brazil

Indonesia

China

Argentina
Source: National Highw ay Authority

This fact has been recognized by the United percent since 1996-97. A sizable and continuous
Nations Economic & Social Commission for Asia improvement of the high type road network can be
& Pacific (UNESCAP) by designating different observed from 2001 to 2007, where the network
routes passing through various Asian countries as grew at an average rate of above 3 percent. The
the Asian Highway Network (AHN). A number of continuous improvement and rehabilitation of the
inter-provincial national highways of Pakistan are existing roads reflects the government’s enhanced
a component of AHN. focus on infrastructure. As a result of an emphasis
on high type roads, many low typed roads were
Pakistan’s road network is vital for the movement
converted to high typed roads during this period.
of people and goods and plays an important role in
There are many ways by which availability of
integrating the country, facilitating economic
improved and wide spread modern road networks
growth and reducing poverty. The total road
can facilitate economic activity. For example, they
network is about 260,000 km of which around 60%
could help alleviate poverty by providing access to
is paved. Road density is 0.32 km/km2 which is
far flung rural areas, create more jobs by
low and compares unfavorably with other South
supporting economic activity along the network
Asian countries (Bangladesh-1.7 km/km2, Sri
and provide numerous small-scale investment
Lanka-1.5 km/km2 and India-1.0 km/km2). The
opportunities. In addition, introduction of Khushal
Government intends to generate/ mobilize all
Pakistan Programme, has helped to rehabilitate and
possible resources to double road density to 0.64
modernise rural road network along with
km/km2. Total roads, which were 229,595 KM in
implementation of wide ranging development
1996-97, increased to 264,853 KM by 2007-08 ―
activities through various district governments
an increase of 15.4 percent. During the out-going
under the devolution programme. The annual
fiscal year, the length of the high typed road
growth of roads in Pakistan between 1996-97 and
network increased by 3.2 percent but the length of
2007-08 is given in Table-14.1 and Fig-14.2
the low type road network declined by 2.8 percent.
Extent of high type roads have increased by 41.5
225
Pakistan Economic Survey 2007-08
Table 14.1: Length of Roads (Kilometres)
Fiscal Year High Type Low Type # Total
Length %Change Length %Change Length % Change
1996-97 126,117 6.5 103,478 3.6 229,595 5.2
1997-98 133,462 5.8 107,423 3.8 240,885 4.9
1998-99 137,352 2.9 110,132 2.5 247,484 2.7
1999-2000 138,200 0.6 110,140 0 248,340 0.3
2000-01 144,652 4.7 105,320 -4.4 249,972 0.7
2001-02 148,877 2.9 102,784 -2.4 251,661 0.7
2002-03 153,225 2.9 98,943 -3.7 252,168 0.2
2003-04 158,543 3.5 97,527 -1.4 256,070 1.5
2004-05 162,841 2.7 95,373 -2.2 258,214 0.8
2005-06 167,530 2.9 91,491 -4.1 259,021 0.3
2006-07 172,891 3.2 88,930 -5.6 261,821 0.1
2007-08 178,423 3.2 86,430 -2.8 264,853 1.2
* Estimated Source: Ministry of Communications
# : The percentage change in low type roads can be negative as many of these roads are being converted to high
type roads.

Fig-14.2: Length of Roads

0
00 00
50 70 90 110 130 150 170 190
0 0
Kilometers

00 00
0 0
00
0
00 00 00
0

1999-2000
1996-97

1997-98

1998-99

2000-01

2001-02

2002-03

2003-04

2004-05

2005-06

2006-07

2007-08
0

High Type Road Low Type Road

b) National Highway Authority (NHA) employment of local workers on various projects,

better access to health care and other social
The responsibility for development, operation,
services, as well as strengthening of local
maintenance and preservation of the national
economies.
highway network has been assigned to the National
Highway Authority. Its objective is to secure the
The NHA is currently the custodian of nearly all of
delivery of an efficient, reliable, safe and
Pakistan's major inter-provincial road links called
environment-friendly national highway network
the national highways, including the motorways
with a view to improving the quality of life in
and strategic roads. This network represents the
Pakistan.
main transport corridors linking ports to population
centers and providing linkages to Afghanistan, the
The Authority plays a major role in all-weather
Central Asian Republics, China, Iran and India.
reliability, reduced transportation costs and
These roads comprise of only around 4 percent of
increased access to markets for local produce and
Pakistan's total road network but carry 80 percent
products, access to new employment centres,
226

of the country’s commercial traffic. Consequently,
the network is under pressure and its importance
from a development perspective cannot be over
emphasized. The province wise breakup of NHA
network is given in Table.14.2.
Table:14.2 Province Wise Break-up
Province Km % Share
Punjab 2659 23.16
Sindh 1604 13.96
NWFP 1651 14.38
Balochistan 4629 40.30
NA/AJK 942 08.20
Total 11485 100%
Source: NHA
The total NHA network of 11,485 km primarily
consists of “low capacity” roads. About 75 percent
are 2-lane (6.1m single carriageway), 20 percent
are 4-lane divided highways (7.3m dual
carriageways) and only 5 percent 6-lane highways
(11m dual carriageways). Approximately 25
percent (or 2500 km) of the NHA network is in
need of rehabilitation. This results in very low
number of travel trips, slow speeds and an un-safe
driving environment. Commercial traffic running
speeds are between 35-45 kph, and average trip
speeds are around 25kph; 1/3rd of the average trip
speeds in developed countries.
The present highway network is under strain
because of rising traffic flow and a slow pace of
increase in capacity. Consolidation, preservation
and improvement of the existing highways are
needed on an urgent basis. A Gradual extension of
the network is also equally important to develop
remote areas and to better connect major economic
and social centers of Pakistan. The details of some
selected major projects for the next five years are
shown in Table.14.3.
Operation & Maintenance: The NHA is giving
special emphasis to the preservation of the existing
highway infrastructure and on highway safety. Its
endeavors to operate and maintain the network in a
safe condition at an optimum cost while ensuring
user satisfaction is limited by immense traffic and
insufficient resources to meet the growing needs of
the sector. Since O&M activities are dependent on
toll, special attention is being accorded to enhance
the efficiency of tolling systems and revenue
Transport and Communications
management through installation of Electronic Toll
and Traffic Management Systems (ETTMS) under
a phased program. Under the Annual Maintenance
Plan 2007-08, NHA incurred an expenditure of Rs
5951 million for operation & maintenance of 9098
km of its network. The breakdown of this
expenditure is given below:
Description Km Rs in Millions
Rehabilitation 114 1417
Structural Overlay 287 1638
Functional Overlay 514 1676
Routine Maintenance 8183 810
Highway Safety N/A 410
Total 9098 5951
Providing adequate capacity is one of the key aims
of the NHA presently. Pakistan’s primary traffic
movements are concentrated along the Karachi-
Lahore-Islamabad-Peshawar links which serves
domestic needs. This also links Punjab and the
northern parts of the country with ports and
commercial hubs in the south. The main artery
along this corridor is the 1819 km long N-5 which
serves 80% of Pakistan’s urban population and
carries over 65% of intercity traffic. The other
main corridor is the Indus Highway (N-55). N-5 is
an access-free, 4-lane divided facility with a
capacity of 66,000 Passenger Car Units (PCUs).
The current traffic volumes range from 7,000 to
40,000 vehicles per day which is 35% to 93% of
existing capacity. Presently, 50% length of N-5 is
in poor condition. Karachi - Lahore (1260 km)
travel time is 48 hours and Karachi - Peshawar
(1700 km) is 72 hours. Moreover, the average
commercial operating speed is only 23 to 26 kph.
The Government’s goal of sustaining 7-8%
economic growth would double traffic demand by
2017 but the N-5 will not be able to support this
projected transport demand.
The NHA’s portfolio cost is Rs 705.48 billion with
a “throw-forward” of Rs 570.84 billion. The ratio
of throw-forward to annual allocation is 31,
meaning that at current funding level of Rs 29
billion; approximately three years are needed to
complete the ongoing portfolio. Due to limited
fiscal space and an increase in yearly allocation
being rather unlikely, NHA is looking towards new
and innovative methods of financing. A new
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Pakistan Economic Survey 2007-08
business plan is currently under finalization for shall be completed by Dec 2008 & the remaining
approval by the Government. 188 km by Jun 2009. Program includes
reconstruction and upgradation of Lahore -
Initiatives and Future Outlook: The Government Gujranwala Section from 4 to 6 lanes. A complete
of Pakistan has planned 50 mega projects for list of on-going and future projects is given in the
provision of better quality highways, expressways tables below.
& motorways throughout the country during the
next few years. Some of the planned initiatives The National Highway Authority plays a vital role
include: construction of major new motorways, in the efficiency and productivity of Pakistan’s
modernization of trucking fleet with newer, more transportation sector. In order for the country to
efficient, and environment friendly vehicles; reap the benefits of a truly efficient road network,
promotion of industrial clusters along highways/ efforts must be made to maintain the existing
motorways, establishment of warehouses by the network in optimal condition. An increase in the
private sector along the network. NHA is also network is required to facilitate the increase in
implementing a major National Highway traffic and movement of goods in the future.
Improvement Program (NHIP) in phases at a cost Innovative methods of financing, private sector
of Rs 20.25 billion. Out of a total length of 836 km participation, and environmental aspects must be
to be reconstructed / rehabilitated, work on 380 km taken into consideration while adding to the
has been completed. Out of the balance, 268 km existing network.
Table:14.3 Selected Major Planned Projects for the Next Five Years
S.No. Project Length (KM)
1. Improvement/Widening of KKH (Khunjerab-Raikot Section) 335
2. Realignment of KKH (Raikot-Sazin Section) 120
3. Improvement/Widening of KKH (Sazin-Manshera Section) 258
4. Manshera-Abbottabad-Hasanabdal Expressway 97
5. Peshawar-Torkhum 51
6. Peshawar Northern Bypass 34
7. Underpass at Wah Gate No.1, Taxila-Hasanabdal Section -
8. Wazirabad-Pindi Bhattian Expressway (E-3) 100
9. Hiran Minar Interchange (M-2) with link road -
10. Faisalabad-Khanewal Expressway (E-4) 184
11. Khanewal-Lodhran Expressway 100
12. Lodhran-Sukkur Expressway 385
13. Ratodera-Sehwan (N-55), ACW 200
14. Karachi-Hub-Dureji-Dadu Motorway (M-7) 270
15. Karachi-Hyderabad Motorway (M-9) 136
16. Jand-Kohat Notional Highway (N-80) 46
17. Noshki-Dalbadin Section (N-40), Balochistan 165
18. Gujranwala-Dina Expressway 100
19. Chakdara-Dir, Kalkatak-Chitral (N-45) 120
20. 4 Bridges over River Indus in Punjab & Sindh -
Source: NHA

ii. Pakistan Railways traffic movement both for passengers and freight in
addition to providing a safe, economical, and
An efficient transportation system plays a vital role
environment friendly mode of transport.
in the economic development of a country. The
government vision for economic growth and
Throughout world history, rail traffic has played an
poverty reduction requires massive investment and
important part in the development and economic
development of infrastructure for sustainable
prosperity of nations. Railways are a valuable
economic growth. Pakistan Railways has a definite
source of employment while generating large
edge over roads for long haul and mass scale
228
 Transport and Communications
amounts of revenue to the benefit of the economy. positive growth trend for the past seven
An effective railway system facilitates commerce consecutive years can be attributed to the wide
and trade, reduces transportation costs (monetary range of improvements made by the Pakistan
and non-monetary), and promotes rural Railways through completion of a number of
development and national integration while development projects and better policies aimed at
reducing the burden on commuters. Pakistan modernization of PR. The fall in growth rates for
Railways was the primary mode of transportation passenger traffic this year can be attributed to the
in the country till the seventies. However, owing chaos, political strife, and rioting that the year
primarily to a diversion of already scarce resources 2007-08 has seen. Many parts of the railway track
towards the expansion of the road network, the have been destroyed with immense damage being
performance and condition of Pakistan Railway caused to the property of Pakistan Railways. The
declined and it’s share of inland traffic reduced service remained closed for a substantial amount of
from 41 percent to 10 percent for passenger and 73 time following the violence witnessed in the
percent to 4 percent for freight traffic. country in December 2007 after the assassination
of one of its political leaders. Some estimates put
During the last seven years (2000-2007), Pakistan the loss suffered by Pakistan Railways at the
Railways has shown improving trend in both expense of this year’s disturbance at Rs 10 billion.
passenger and freight traffic, registering an average
increase of 5.2 percent and 5.8 percent per annum, Pakistan Railways has introduced 9 new train
respectively. A reduction in passenger traffic has services in order to facilitate passengers as well as
been seen for this year with a negative growth rate freight customers. (See Table.14.5). PR has also
of -12.5 percent whereas freight traffic has grown improved the quality of its services, timeliness and
by 18 percent over the same period last year. The cleanliness. This trend is reported in Table.14.4.
Table 14.4 Trend of Passengers Traffic and Freight Traffic (Road vs Rail)
Passenger Traffic (Million passenger Km) Freight (Million Ton KM)
Fiscal Year
Road %Change Rail %Change Road %Change Rail %Change
1996-97 163,751 5.9 19,114 1.1 84,345 5.6 4,607 -9.3
1997-98 173,857 6.2 18,774 -1.8 89,527 6.1 4,447 -3.5
1998-99 185,236 6.5 18,980 1.1 95,246 6.4 3,967 -10.8
1999-00 196,692 6.2 18,495 -2.6 101,261 6.3 3,753 -5.4
2000-01 208,370 5.9 19,590 5.9 107,085 5.7 4,520 20.4
2001-02 209,381 0.5 20,783 6.1 108,818 0.2 4,573 1.2
2002-03 215,872 3.1 22,306 7.3 110,172 1.2 4,820 5.4
2003-04 222,779 3.2 23,045 3.3 114,244 3.7 5,336 10.7
2004-05 232,191 4.2 24,238 5.2 116,327 1.8 5,532 3.6
2005-06 238,077 2.5 25,621 5.7 117,035 0.6 5,916 6.9
2006-07 26,446 3.2 5,453 -7.8

Jul-Mar
2006-07 191,057 20,921 88,032 3,786
2007-08* -- -- 18,296 -12.5 ---- -- 4,488 18.5
* Estimated Source: Ministry of Railways & Ministry of Communications

In order to continue improvements and to
consolidate reforms, Pakistan Railways has
prepared a business plan for 2005-11. The plan
places emphasis on encouraging private sector
participation in order to increase its
competitiveness, responsiveness and efficiency.
Pakistan Railway is planning to take a series of
interlinked initiatives, which will enable it to
compete efficiently in the fast growing transport
sector in Pakistan.
Pakistan has awarded a contract to an international
consortium to carry out a feasibility study for
establishing a rail link with China. A rail link could
further boost trade relations between the two
countries by facilitating the already growing trade
with China and operations of Gwadar Sea Port.

229
Pakistan Economic Survey 2007-08

Table: 14.5 New Trains

S.No Trains Section Date of Commencement
i) Thar Express Karachi-Zero Point 18-02-2006
ii) Margala Express Lahore-Rawalpindi 22-05-2006
iii) Marvi Express Mirpurkhas-Khokhropar 07-06-2006
iv) Sindh Express Lahore-Karachi 24-07-2006
v) Buraq Express Rawalpindi-Karachi 14-08-2006
vi) Peshawar Express Peshawar-Rawalpindi 15-12-2006
vii) Pakistan Express Rawalpindi-Karachi
(Via Hafizabad, Faisalabad And Multan) 16-12-2006
viii) Jinnah Express Karachi-Rawalpindi. 08-01-2007
ix) Sir Syed Express Rawalpindi-Karachi 08-03-2007
Source: M/O Railways

The PDSP allocations for the Railway sector were • Doubling and Realignment of track between
increased from Rs 3. billion during 2000-01 to Rs Golra Sharif-Peshawar.
11.642 billion in 2007-08. Major development
schemes include track renewal of 240 KM of rails The earning of Pakistan Railways since 1998-99
and 220 KMs of sleepers planned for main line are given in Table.14.6.
from Karachi- Khanpur. Additionally, 20 units of
locomotives in CKD condition received from Table-14.6 : Earnings of Pakistan Railways
China will be manufactured at the Pakistan (Rs. Million)
Locomotive Factory in Risalpur. This will Year Earnings % Change
complete the scheme for Procurement. 1998-99 9,310 --
Manufacture of 69 DE locomotives. The scheme 1999-2000 9,889 6.2
for recomissioning of 55 DE locomotives will be 2000-01 11,938 20.7
completed in the year 2007-08 as well. 655 CKD 2001-02 13,046 9.3
2002-03 14,812 13.5
wagons received from China will be manufactured 2003-04 14,636 -1.2
at Pakistan Railway Workshop in Moghalpura thus 2004-05 18,027 23.2
completing the scheme for 2005-06 18,184 0.9
Procurement/Manufacture of 1300 high capacity 2006-07 19,194 5.5
wagons. Rehabilitation of 400 old coaches is July-Mar
underway with 130 coaches expected to be 2007-08 13,954
rehabilitated in this fiscal year. Another on-going Source: Ministry of Railways
development project is the next phase in the
doubling of tracks from Khanewal- Lahore (246 iii) Civil Aviation Authority (CAA)
KM).
Civil aviation plays an important role in the
In addition to these development projects, the development of a country’s economy by providing
following feasibility studies have also been fast and efficient access between different parts of
sanctioned to explore future prospects and the country as well as different destinations around
initiatives: the world. Private participation on this front has
been encouraged through concessions and
• High Speed Double Track between Lahore and incentives for development of airports and airlines
Rawalpindi. to increase the availability of air transport services
both domestically and internationally. It is
• Rail link from Havelian to Pak-China Border. important to construct and maintain airports in the
country to facilitate economic activity in an
• Doubling of track and realignment between
increasingly globalized world. The construction of
Shahdara-Rawalpindi.
the new Islamabad international airport (NIIA) is
expected to play a major role in the national
230

aviation sector. The airport will be developed by
the Civil Aviation Authority (CAA) on a self-
finance basis with an estimated cost of Rs. 30
billion on 3200 acres of land, and is expected to be
completed by December 2010. The project has
been designed with all the essential facilities to
handle an annual traffic of 9 million passengers as
well as 100,000 metric tons of cargo.
To supplement the growth and development of
Balochistan, the CAA is going to construct the
New Gwadar International Airport (NGIA)
through the Public Sector Development
Programme (PSDP), at a total estimated cost of Rs.
3.6 billion. The airport will be developed as a
major hub for all aviation activities in the region,
and it is expected to be completed by November
2010. The upgrading of Multan and Peshawar
International Airports have also been initiated with
estimated costs of Rs. 2.6 billion and Rs. 0.6
billion respectively.
a) Pakistan International Airlines (PIA)
The year 2007 turned out to be an exceptionally
difficult year for PIA. The Airline experienced a
series of financial, operational and marketing
problems during the past year that severely
hampered its performance. In the early part of the
year, an operating restriction was placed on PIA
flights by the European Union. Apart from
providing a negative image for the Corporation,
this translated to a loss in market share as well as
growth in business which made the situation
exceptionally difficult. An unprecedented increase
in oil prices adversely impacted PIA’s bottom line
and neutralized recovery efforts. Attempts were
made to contain the impact of a rising fuel bill by
reducing the utilization of older and fuel in-
efficient planes. The airline was also mired by
increases in pay to certain categories of personnel
and a depreciation of the Rupee against the Dollar.
Ever increasing competition and entry of new
operators in certain key markets reduced the level
of traffic for PIA. Yields were increased despite
the added competition but revenues remained static
for the year. The financial position of the company
remains under strain as financial costs increased by
almost 50 percent, negating a reduction in
operating expenses of Rs 2.6 billion.
Transport and Communications
The restrictions imposed by the EU were lifted
near the end of 2007 as PIA was able to
satisfactorily address the issues highlighted by the
Air Safety Committee. A route rationalization plan
was implemented whereby services to some non-
performing sectors were discontinued while
capacity on other routes were realigned with
available traffic. These and various cost reducing
measures taken by the management did not result
in profits for the airline, but was effective in
reducing the magnitude of the losses suffered.
Despite these financial difficulties, the airline
remained on track on its fleet modernization plan
and by December 2007, the average age of PIA;s
fleet was reduced to 13 years.
The total international passenger traffic to and
from Pakistan increased by 5.7 percent over the
last year, but due to EU restrictions on PIA flights
and the damage to its image, PIA’s international
passengers declined by 4.2 percent. Thus against
an international market share of 48 percent in
2006, PIA’s market share dropped to 43.5 percent.
In the domestic market, despite an overall traffic
decline of 6.4percent, PIA was able to retain its
market share at 69.4 percent. On a system-wide
basis, PIA’s market share was 51.2 percent against
54.9 percent last year. In terms of capacity
utilization, the System Passenger Seat Factor
(excluding Haj) was 69 percent against 70 percent
last year while with the Haj inclusion, the System
Seat Factor was 67.4 percent against 68.5 percent
last year. Though the airline faced shortfall in
ASKs (Available Seat kilometres) by 8 percent in
2007 as against 2006, it registered an increase of
Rs 1.1 billion in passenger revenue as compared to
2006. PIA’s cargo traffic in terms of RFTKs
(Revenue Freight Tonne Kilometers) was
significantly down by 17.9% over last year
Pakistan International Airlines’ revenue passengers
carried for the year 2007 was 5.415 million as
compared to 5.732 million passengers in the same
period of last year, showing a decline of 5.5
percent. The airline’s revenue was Rs. 70,480.73
million in 2007 as against Rs. 70,587.15 million
generated in the corresponding period of 2006,
registering a marginal decrease of 0.2 percent.
During 2007, cargo traffic was 350.76 million
231
Pakistan Economic Survey 2007-08
Revenue Freight Tonne Kilometre (RFTKS) as
against 427.01 RFTKS in the same period last year
thus registering a decline of 17.9 percent. The
unprecedented hike in oil prices over the course of
the year adversely impacted PIA’s bottom line and
neutralized the efforts for recovery. PIA, however,
made efforts for containing the fuel bill by
reducing utilization of older fuel-inefficient fleet.
The total number of aircrafts in PIA’s fleet to stood
at 42.
iv) Ports & Shipping
a) Karachi Port Trust (KPT)
The steady and continuous progress made by KPT
has helped boost the national economy over the
years with international trade ever-increasing in a
globalized world. The KPT had an annual cargo
handling size of 30.8 million tons during 2006-07,
showing a slight decrease of 4.4 percent over last
years record cargo handling of 32.3 million tons.
However, there has been a rise in activity during
the first seven months of the current fiscal year,
showing remarkable increase in all types of cargo
handling including bulk, Break bulk and
containers. Figures show that during the first seven
months of the current fiscal year, already 20.5
million tonnes of cargo has been handled. Statistics
of cargo handled during the last ten years are given
in Table 14.7

Table 14.7 : Cargo Handled at Karachi Port (000 Ton)

Year Imports %Change Exports %Change Total % Change
1996-97 18,362 -1.9 5,113 5.2 23,457 -0.4
1997-98 17,114 -6.8 5,570 8.9 22,684 -3.4
1998-99 18,318 7 5,735 3 24,053 6
1999-2000 17,149 -0.9 5,613 -2.1 23,762 -1.2
2000-01 20,064 10.5 5,918 5.4 25,98 9.3
2001-02 20,330 1.3 6,362 7.5 26,692 2.7
2002-03 19,609 -3.5 6,273 -1.4 25,852 -3.1
2003-04 21,732 10.8 6,081 -3.1 27,813 7.6
2004-05 22,100 1.7 6,515 7.1 28,615 2.9
2005-06 25,573 15.7 6,697 2.8 32,270 12.8
2006-07 23,329 -8.77 7,517 12.24 30,846 -4.41
(July-Jan)
2007-08 15,090 - 5,455 - 20,545 -
Source: KPT

The existing port facilities appear to be inadequate
to handle the growing cargo at the port. In order to
address these constraints, the KPT has launched a
number of projects that are at different stages of
execution. A number of these projects have been
formulated for phased implementation on a BOT
basis, covering various activities in port operations.
The KPT has commissioned the project titled
“Karachi Interval Container Terminal (KICT)”.
The project is already operational at the west wharf
and it has annual capacity of 350,000 twenty equal
units (TEU). An additional $ 65 million was
invested to enhance its capacity upto 525,000
TEU. The 3rd phase of the project was launched on
March 7, 2005, with an investment of US$ 55
million to extend the capacity up to 700,000 TEU.
In addition, KPT has awarded a contract for a
second container terminal on BOT basis with
232
estimated cost of US$ 75 million. To ease
transportation problem between the port and the
factory, the KPT has pledged to contribute over
Rs.2.8 billion for reconstruction of roads. As the
new generation of container ships come on board,
KPT is taking initiatives to be able to cater to the
even higher capacity fifth and sixth generation
ships. This involves the development of 10 deep
draught berths with the total cost of US $ 1,087
million. Furthermore, a Cargo Village and
Industrial Park in the Western backwaters of
Karachi Port has also been proposed. Finally, to
provide connectivity between the Pakistan Deep
Water Container Port and the Cargo Village, KPT
is planning to construct a Cable Stayed Bridge
across the channel, which will also connect Clifton
with Manora and Hawksbay.

b) Port Qasim
Port Qasim is the first industrial and commercial
port of Pakistan operating under landlord concept.
Today it caters for around 40% of shipping
requirements of the national economy. During the
last financial year 2006-07, PQA handled a record
volume of 24.3 million tonnes cargo showing an
impressive growth of around 13% over
corresponding period. However, from July to
March of the current financial year, 2007-08, PQA
handled 19.76 million tonnes of cargo depicting a
growth rate of 10% over the same period last year.
Cargo volume also surpassed the budget targets by
3% during the same period under review.
There has been a vast improvement in cargo
handling over last five years. Average annual
growth has been around 13.5% over the last five
years which calls for development of new
berths/terminals for capacity enhancement. The
current handling capacity of the port, with ten
berths, is 34 million tonnes per annum. To meet
the ever growing requirement of capacity
enhancement, PQA has chalked out an ambitious
development plan. As against 3 private sector
projects, 9 private sector projects which include
Liquid Cargo Terminal, 2nd Container Terminal.
Grain & Fertilizer Terminal, Coal &
Cement/clinker Terminal, Gasport LNG Floating
terminal, Granada LNG Terminal, 2nd IOCB, 2ND
Oil Jetty and Mashal project by Sui Southern Gas
Company are being implemented by the private
sector with the completion of these terminals
expected by 2010. With the projects in the
pipelines, the PQA aims to increase its handling
capacity to 85 million tonnes per annum, an
increase of 150%.
PQA is committed to the objectives laid out under
the National Trade Corridor, i.e. capacity
enhancement, deeper draught berths, competitive
tariffs and uninterrupted flow of cargo. PQA plans
to deepen its navigation channel at a cost of US$
100 million.
The Port Authority is also pursuing the
development of industrial zones. Plans are in the
pipelines to spend more than Rs. 13 billion on
infrastructure facilities in various industrial zones.
Transport and Communications
Currently 104 projects are already operational
while 179 are in construction phase. The
completion of these will not only accelerate
industrialisation in the country, but will also be a
valuable source of employment generation.
During the last 3 years a marked improvement has
also been witnessed in revenue growth. The
revenue generation over the last five years was
increased from Rs. 2 billion to Rs.3.4 billion. The
PQA is currently pursuing a large number of
projects for capacity enhancement and
industrialization, attracting foreign direct
investment (FDI) and simultaneously undertaking
major infrastructure development to enhance its
efficiency. The port has already attracted US $ 1.5
billion of FDI.
c) Pakistan National Shipping Corporation
(PNSC)
PNSC fleet comprises of 14 vessels with a total
capacity of 536,821 dwt. The fleet consists of 10
multi-purpose cargo vessels, 3 Aframax crude oil
tankers and one Panamax bulk carrier vessel which
were acquired through PNSC’s own resources. The
three Aframax oil tankers are participating in
national and regional crude oil trade. PNSC has
carried crude oil cargoes for India, Bangladesh and
Sri Lanka. During fist six months of the current
fiscal year, the PNSC has lifted 5.87 million tonne
of liquid cargo and 1.3 million tonne of dry cargo.
The Corporation is continuing with its efforts to
add more vessels. The share of lifting cargo has
increased from 10.55% in 2001 to 17.47% in 2007.
PNSC is expected to increase its fleet in 2007-08
by acquiring 3 new ships. A loan agreement has
been signed with a foreign bank for this very
purpose for an amount of US$ 135 million. For the
first six months of the current fiscal year, the
PNSC group has generated Rs 7,471 million in
revenue, a 11 percent increase from the revenue
earned during the same period last year. For FY
2007-08, PNSC has posted a before tax profit of
1,957 Rs million, an increase of Rs 100 million
from profits in the same period last year. The
Corporation also witnessed a healthy increase of
9.1 percent in earnings per share.
233
Pakistan Economic Survey 2007-08
d) Gwadar Port
Gwadar, a district of Balochistan enjoys a strategic
position on the coastline with immense trade
potential for not only Pakistan, but also for the
region in general. The purpose of developing a port
at Gwadar is to stimulate economic growth in the
western and northern parts of Pakistan, utilizing
the available coastline resources of the country and
also providing and outlet for land-locked Central
Asian Countries and Afghanistan through transit
trade and offering trans-shipment facilities. With a
fully equipped and well-functioning port at
Gwadar, Pakistan will be able to promote trade and
transport with Gulf States, China, Europe, Africa
and Central Asian Countries; unlock the
development potential of hinterland; divert the
influx of human resources from upcountry to
Gwadar instead of Karachi; provide a socio-
economic uplift of Gwadar, the province of
Balochistan and the country in general; establish
shipping related industries; reduce the congestion
and dependency on existing ports; and serve as a
regional hub for major trade and commercial
activities.
Work on Gwadar Port started in 2002 with major
construction having been completed in early 2007
and the official inauguration on 20th March 2007.
The total cost of Phase I of the Gwadar Deep
Water Port Project was Rs. 17.3 billion with
generous support from the Chinese Government,
who not only provided financial support but also
technical expertise.
To facilitate the growth and development of
Gwadar Port, the Government of Pakistan has
granted special waivers and tax exemptions on
construction equipment, machinery, corporate
income and provisional and local taxes.
A deep sea port like Gwadar is already attracting
global attention, and once it is fully developed with
all supporting facilities required to handle trans-
shipment and trade, Gwadar will become one of
the important gateways to the region. In order to
achieve the objectives of the Gwadar Deep Water
Project and enhance the economic development of
Pakistan, the operations and management of the
port was handed over to the Port of Singapore
Authority (PSA) under a 40 year agreement. PSA
234
is a global leader in port operations, and is already
operating 19 ports in 11 different countries. They
have the plans and capacity to turn Gwadar into a
regional hub through their strong links in the
Maritime world and their contacts with various
shipping lines.
e) Future Outlook
National Trade Corridor
In 2005, the Government of Pakistan launched
major initiatives around the National Trade
Corridor Improvement Program (NTCIP) to reduce
the cost of trade and transport logistics and bring
the quality of services offered to international
standards. The aim being a reduction in the cost of
doing business and ultimately enhance
industrialization and the competitiveness of the
Pakistani economy
The word “corridor” is a vestige of the initial
Peshawar-Karachi (North-South) focus of this
initiative, but at present NTCIP has evolved into a
national program to improve the overall cost and
efficiency of all links in the chain (infrastructure
and services) that support trade logistics. The
NTCIP also aims to meet increased demand
through both improved infrastructure and more
efficient services, while keeping costs under
control. It is a medium term program that
eventually links to the Government’s Vision 2030.
With a reform agenda supplemented by a strong
investment program, NTCIP has become,
essentially, the medium term development
framework for the transport sector. Policies have
been developed to meet NTCIP’s challenges: (a)
modernize and streamline trade and transport
logistics practices and customs; (b)improve port
efficiency, reduce the costs for port users and
enhance port management accountability; (c)
create a commercial and accountable environment
in Pakistan Railways and increase private sector
participation in operation of rail services; (d)
modernize the trucking industry and reduce the
cost of externalities for the country; (e)sustain
delivery of an efficient, safe and reliable National
Highways system; and (f) promote and ensure safe,
secure, economical and efficient civil aviation
operations and boost air trade.
 Transport and Communications
committee under the NTCIP task force led by the
Tele-densities of Regional Countries (%) Infrastructure Projects Development Facility; (x)
finalizing the overall transport policy document for
Pakistan with ADB and World Bank collaborating
Pakistan
on its development and a road map being laid
Sri Lanka 57
60
down by the Planning Commission for its
India 51 finalization; (xii) Port Qasim Authority preparing
50
Bangladesh its first Business Plan which is now in the system
45
40 Nepal for approval; (xiii) the discussion of the first draft
37 of the revised Afghanistan- Pakistan Transit Trade
30
29 24
Agreement; (xiv) the procurement of Pakistan
26
23 Automated Customs Community System.
20 20 19
17
15
12 12
13 10 Telecom Sector
10 9 9
7 7
4
6
5
3 4
Telecom sector continued to show stellar growth in
2 2
0 last few years. Tele-density in the country has
2003-04

2006-07
2002-03

2004-05

2005-06

2007-08

jumped from a mere 6% to 57% (Mar- 08) in few

years. Pakistan was far behind in terms of telecom
penetration few years back compare to its peer
• Teledensity includes fixed, WLL and mobile countries like India and Sri Lank however; its tele-
• Bangladesh 2007-08 (Estimated)
• As of Dec 2007 execpt Pakistan Mar 08
density crossed both of these countries in last two
Source: Websites of Telecom Regulatory Authorities years. Prudent policies of the government and
concrete steps by the regulator have placed
Pakistan telecom sector among rising economies
like Malaysia and Singapore. Pakistan telecom
Since the launch of the NTCIP, some early gains of sector has emerged as the fastest growing sector in
the program have already been achieved: (i) the world where the infrastructure and subscriber
reduction of port entry charges by 15 percent at growth patterns are unmatched all across the
Karachi and Port Qasim; (ii) reduction of port region. On average, more than 2 million
transit times from nine to four days and reductions subscribers are being added on cellular mobile
of customs clearance times from four to less than networks per month which is an exemplary growth
one day for containers; (iii) increase in daily in the region. Currently, the total subscription base
freight express trains on the main north-south of cellular mobile companies is about 80 million
corridor from 1 to 5, reducing up-country container while the WLL subscribers are 2.2 million. WLL is
travel times by 10-20 percent; (iv) reduction of a latest technology introduced in Pakistan
import tariffs on new trucks; (v) the approval of especially to cover the digital divide between rural
the first Trucking Policy (covering the overall road and urban areas.
freight industry) followed by an organized effort to
start preparation and implementation of this policy; Telecom Sector Overview
(vi) the approval of the new civil aviation policy
after a long series of consultations (including the Fixed Tele-density has slightly declined from 3.1%
Government seeking public comments for the first in 2006-07 to 2.9% in 2007-08 (Mar-08). Major
time in the history of civil aviation in Pakistan); reason behind this decline is the churn of
(vii) the approval of the trade facilitation policy for subscribers from fixed line to wireless based
Pakistan;(viii) Pakistan Railways preparing the services like WLL and mobile services. WLL
very first draft “Network Statement” which is a sector is performing well and its tele-density has
key step towards movement on track access; (ix) reached to 1.48% in 2007-08 (Mar-08). Total
main-streaming of Public Private Partnership in the subscribers of WLL in Pakistan crossed 2.3 million
NTCIP effort by the setting up of a specific sub- in March 2008 which has boosted tele-density in
the country.

235
Pakistan Economic
E Surrvey 2007-088
Sub
bscriber Wisee share in moobile markett
(2005-06)
( (Mar-08)
Pakktel
Warid 3%
% Warid
Instaphonee
14% 17.4%
1% Mobilink
38.5%
%
Telennor
10%%
Telenoor
20.2%%

Mobilink Instaaphone
50% 0
0.4%
Ufone Ufone
Paktel
22% 20.8%
2.6%

Cellular Mobile
M towns and
a villages have
h mobile networks
n by one
o or
all operrators.
Pakistan has become one of the fastest growiing
mobile markets
m amoong the emeerging telecoom
Long Distance
D and
d Internation
nal
markets. This year the sector grew by 800%
whereas average
a growtth rate in last 4 years is moore The Long
L Distannce and Intternational (LDI)
than 100% %. Today tottal subscriberr base standss at segmennt has evolvved after thee deregulatioon of
82.5 milllion (Mar 2008) whereaas it was 344.5 Pakistaan telecom seector in 2004. PTA awardded 14
million inn 2006 and 12.7 millionn in 2005. This licensees for Longg Distance and Internaational
tremendouus growth is attributed too many internnal servicees till 2007. Out
O of these 14 LDI liceensees
and exterrnal factors starting from m deregulatiion only Multinet
M has noot started its services.
s 3 ouut of 6
down to implementation of Mobile M Numbber cellularr operators haave also acquuired LDI liceenses.
Portabilityy. The goveernment andd regulator are a The LD DI operators are performing aggressiveely in
trying theeir best to facilitate
f the sector and area the loccal market byy offering afffordable tarifffs for
making every
e effort to
t provide mobile
m access to large number
n of coountries. PTC CL also reducced its
every cornner of the cou
untry. tariffs at the end of o 2006 and now internaational
direct dialing
d facilitty is availablle on every PTCL
P
Cellula
ar Subscriberrs connecction and calll booking is no more required.
Similarrly internationnal dialing faacility from mobile
m
90 82.5
number has also revvolutionized thhe LDI segmeent.
80
70 62.3 The seector witnesssed bloominng health whherein
60 telecomm consumers enjoyed interrnational dialiing as
Million

50
40 34.5
5 low ass Rs. 1/- minnute (to specific countriees by
30 Wateenn). Due to thhis aggressivee competitionn it is
20 12.7
becomiing increasinngly difficuult for ineffficient
10 2.4 5
0 operatoors to sustaiin their finaancial healthh and
growinng pressures from the market.
m Comppanies
'Mar -
2002-

2003-

2004-

2005-

2006-

08
03

04

05

06

07

have started
s lookinng for foreiign investmeent to
survivee in the markket e.g. Worlddcall has soldd 65%
of its shares
s to Omaan telecom, also
a 30% sharres of
Out of thee total populaation of Pakisttan, almost 900%
Burraqq have been acquired byy Qatar Teleecom.
of populaation is coverred with mobbile networks in
These changes in thhe market alsso show increeasing
addition to
t availability y of fixed andd WLL servicces
inertestt of Mid-Easst based teleccom companies in
to this percentage.
p All
A operators are increasiing
the teleecom market of Pakistan.
their netw
works to numb ber of cities/ towns/ villagges.
Upto December 2007 7 more thann 7,011 citiies/
236

Fixed Local Loop Services
Fixed-line telephony in Pakistan is one of the
difficult areas where the incumbent operator,
PTCL, holds monopoly with share of more than
98% of the total Fixed-line subscribers. Fixed
Local Loop (FLL) growth remained about half
percent during the previous year, slow growth is
due to the cumbersome activity of laying cables.
However, new operators are gaining momentum in
fixed-line telephony though their services
remained localized in main cities by targeting
businesses in the first place. FLL subscribers
reported 4.6 million and tele-density is 2.9% at the
end of March 2008.
Fixed Line Connections (2004-2007)
6.0
5.2 5.24
4.5
5.0
3.7 4.0
4.0
Million
3.0
2.0
1.0
0.0
2002
2003
2004
2005
2006
Wireless Local Loop
Wireless Local Loop services were introduced in
Pakistan after deregulation of local loop sector in
2004. The Authority auctioned frequency for
commercial operations of WLL services. A total of
17 companies won WLL licenses, out of which six
operators obtained WLL license in all 14 telecom
regions after winning the frequency. Out of these
17 WLL companies 7 (PTCL, Worldcall, Telecard,
Great Bear, Burraq, Wateen and Mytel) are fully
operational. The recent development is the
introduction of WiMax technology by WLL
operators, which will make available high quality
broadband data/ Internet services.
Total WLL subscribers have reached 2.3 million
and the tele-density is 1.48. The sector has
witnessed 65% growth in subscribers during 2006-
07. PTCL is currently leading the WLL market as
well with maximum share of 53% followed by
Transport and Communications
26% share of Telecard. In addition, the WLL
operators are also providing Payphone facilities to
the general public. There are a total of 225,980
wireless PCOs in Pakistan.
WLL Subscribers
2,500,000
1,702,098
2,356,081
2,000,000
1,025,328
1,500,000
1,000,000
264,828
17,391
500,000
0
'Mar - 08
2003-04
2004-05
2005-06
2006-07
4.8 4.6
Value Added Services
Value added Services have been deregulated since
1990 in Pakistan and private operators are
providing these services to consumers. In 2005
PTA introduced Class Value Added Service
2007
'Mar - 08
(CVAS ) regime where most of the CVAS licenses
have been merged into one single license. Some of
the services have been exempted by the Authority
from obtaining license and the process of simple
registration has been established for convenience
of operators and telecommunication services users.
Since the introduction of CVAS licensing regime
in October 2005, PTA has issued 224 CVAS
licenses and 4 Class Value Added Registrations
(161-Voice Class Value Added Services licenses,
67-Data Class Value added services Licenses). Out
of 161 “Voice TYPE” CVAS licenses, 153
Licenses have been issued to CPP operators
Payphones
All over the world, payphones are regarded as the
poor man’s telephony. They provide easy access to
people who can not afford to have telephone access
at home. It is also a source of self employment in
developing countries. Card payphone service in
Pakistan was deregulated in 1990s.
237
Pakistan Economic Survey 2007-08
Internet Services
Payphones in Pakistan
Internet service is becoming an integral part of life
in Pakistan particularly in urban areas where large
500,000 471,410
portion of populace using it for different purposes.
450,000
400,000
387,490 Most Airlines including PIA and Air Blue have
353,194
350,000 started e-ticketing through Internet to provide
279,320
300,000 better and efficient services to its customers.
250,000 Internet is also being used for educational and
184,920
200,000 entertainment purposes and its use is increasing
150,000 127,910

100,000
very fast. Major reason for rapid growth of the
50,000 service is low cost of the service which make
0 service affordable to poor strata of the population.

Dec-07
2004-05*

2005-06*

2006-07*
2002-03

2003-04

Almost 70 companies are providing Internet

service all across the country.
*Including Payphones of FLL, WLL and Mobile companies According to estimates by the Internet Service
Providers Association of Pakistan (ISPAK),
During the last one and a half year a number of currently there are about 3.5 million internet
new companies have applied for Voice Class subscribers all across in Pakistan where total users
Value Added services license. Now, these crossed 17 million marks. Currently around 3,008
companies are joining hands with mobile cities are connected to internet cities.
Companies to establish Mobile PCOs rather than
fixed line PCO. Mobilink, Telenor and CMPak Internet Subscribers (Millions)
(Paktel) have started providing Mobile PCOs after
obtaining the permission from PTA. Similarly, 3.5
some old players of CPP industry themselves got 3.5
licenses for WLL and now they are offering 3.0
services on their WLL networks. 2.4
2.5
2.0 2.1
Total payphones reached to 471,410 at the end of 2.0
1.6
December 2007. Currently, more than 121,358 1.5
Fixedline, 262,116 WLL and 57,939 Mobile PCOs 1.0
1.0 0.8
are working all across the country.
0.5
Broadband Services
0.0
2001

2002

2003

2004

2005

2006

2007

Pakistan's broadband market has been slow despite

the fact that services have been available since
almost five years. Currently there are a total of
almost 12,689 Broadband subscribers which Telecom Economy
provide dismal picture when compared with other
similar economies. Telecom regulator is trying Foreign Direct Investment (FDI)
hard to improve broadband penetration in Pakistan; Government has created a conducive and investor
however, factors like lack of education, IT friendly environment in the telecom sector by
equipments are main hurdles in the way of its
awarding licenses in a fair and transparent manner.
growth. To make the service affordable for
Award of cellular mobile licenses increased
common man, PTA has already reduced
Bandwidth charges tremendously. Foreign Direct Investment considerably.

238
 Transport and Communications
During 2007-08 (July-March), an FDI inflow of
US$ 811.6 million has come in the telecom sector
FDI in Telecom Sector
which is almost one third of the total FDI in the
country during the period. This trend has continued 1905.1
2000 1,824.20
and during Jul 07-Dec 07, US$ 653.4 million FDI
inflows came in the telecom sector and it is
expected that during 2007-08 this will be increase 1500

US$ Million
further.
1000
653.4
Contribution to Government Revenues
500
Telecom sector is a major contributor in generating
revenues for the Government. During 2006-07 0
total revenue collected by the Government in the
2005-06 2006-07 Jul-Dec 07
form of taxes, duties and regulatory charges was
more than Rs. 100.5 billion. The government
collected total of Rs. 36.6 billion against Employment
GST/CED, it is expected that this collection would
grow exponentially in the coming years. The The telecommunications sector liberalization in
Pakistan has created huge employment
government also collects activation tax on new
opportunities (direct and indirect) in the country. It
mobile connections @ Rs.500. During 2006-07
is estimated that over one million job opportunities
total amount collected in the form of activation tax have been created since the liberalization of the
was Rs. 17.6 billion. Similarly PTA also deposited sector in 2003.
Rs. 7 billion to the national exchequer [Table 14.8].
Table-14.8: Telecom Contribution to Exchequer (2007) (Rs. in Billions )
Period GST Activation Tax PTA Deposits Others Total
2001-02 8.9 0.12 0.04 0.99 10.05
2002-03 11.5 1.91 0.47 15.75 29.63
2003-04 12.1 4.02 0.69 21.59 38.40
2004-05 20.5 7.53 17.72 21.38 67.13
2005-06 26.8 11.40 17.38 21.55 77.10
2006-07 36.28 17.58 9.72 36.95 100.55
Source: Central Board of Revenue and Pakistan Telecommunication Authority. Others include custom duties, WH
Tax and other taxes.

Regulatory Steps for Promoting Telecom in each Rabta Ghar owner is being provided with a
Pakistan comprehensive training from the GID.
Rural Telephony
Technical Solution to Counter Illegal Telecom
PTA Launched a project of Tele-centres (Rabta Traffic
Ghar) across Pakistan to provide basic telecom
PTA had taken several regulatory measures to
facilities to the people who cannot afford such
counter the grey (Illegal) traffic in the country
telecom facilities at their own. PTA planned to set
which is causing huge losses to the national
up 400 Tele-centres (Rabta Ghars) free of cost.
exchequer and to the operators in Pakistan who
The first phase of Rabta Ghar scheme has been
have invested heavily in telecommunications
launched during the year where 353 Rabta Ghar
infrastructure. PTA has estimated that
are being established. Each Rabta Ghar is being
approximately US$ 50 million (Rs 3 billion
equipped with a PC, one Wireless PCO, One
approx) loss accrued per annum to national
Internet enabled Wireless set, Printer, scanner,
exchequer due to international traffic leakage. To
copier and fax (4 in 1 machine). In addition to that
239
Pakistan Economic Survey 2007-08
control this leakage, PTA has acquired technical
solution to detect/block all illegal traffic
bypassing legitimate gateway exchanges in
Pakistan. To overcome this menace, Pakistan
Telecommunication Authority (PTA) has signed an
agreement with “Inbox Business Technologies” to
acquire and deploy Technical Solution [See Table-
14.9].
The Technical Solution has been developed by
NARUS, Inc, a US based company which is also
the leader in carrier-class security for the world's
largest Internet Protocol (IP) networks. It is a
production proven solution which is currently
being used by various telecom operators across the
globe. The list includes AT&T, Telecom Egypt,
Saudi Telecom and Brazil Telecom, to name a few.

Table-14.9: Direct and Indirect Employment in Telecom Sector of Pakistan

Sector 2003-04 2004-05 2005-06 2006-07
Cellular Mobile 130,770 242,026 516,760 743,025
Direct 6,000 9,000 10,000 12,000
Indirect 44,296 84,087 188,754 273,779
Induced 80,474 148,939 318,006 457,246
Local Loop 12,898
WLL 1,318 2,303 2,917 2,500
LDI 99,231 106,942 112,943 117,666
Broadabnd 345 462 623 746
Payphones 231,150 349,150 441,493 484,363
Equipment vendors/suppliers 3,254 4,485 4,996 5,500
TOTAL 466,068 705,368 1,079,732 1,366,698
Source: Telecom Engineering Consulting House and PTA estimates

PTA check on Unauthorized Sale of SIMS
Pakistan Telecommunication Authority (PTA) has
started checking the unauthorized sale of new
SIMs for the last few years to ensure that new
mobile connections are issued after proper scrutiny
of documents. PTA had earlier directed that
franchisees must acquire the copy of the
Computerized National Identity Card (CNIC) of
the customer while issuing mobile telephone
numbers. Various teams of PTA Zonal offices at
Karachi, Lahore, Muzaffarabad, Peshawar, Quetta
and Rawalpindi carried out surprise checks and
recommended sealing the franchisees found selling
cell phone SIMs without appropriate procedures
and records. PTA has taken number of steps to
deal with this issue and has directed cellular
mobile companies to ensure that new SIMs are
sold only through its franchisees or their
authorized sale points. PTA and cellular service
providers have simultaneously embarked on an
awareness raising campaign employing the media
to encourage the general public to get their
connections transferred in their names if they have
not done so already.
240
Quality of Service Survey of Mobile Companies
Services of the operators are continuously
monitored in order to ensure quality as per the
license conditions. Previously, PTA conducted
four manual comprehensive Quality of Service
(QoS) surveys of Mobile Operators. Fifth QoS
survey of mobile operators was conducted by PTA
Zonal Offices located at Peshawar, Rawalpindi,
Lahore, Karachi and Quetta from September to
November 2007, using recently procured state of
the art monitoring equipment. The services of five
GSM operators i.e. Ufone, Mobilink, Telenor,
Warid, and CMPak were checked in selected major
and small cities. Service parameters including
Network Accessibility, Service Accessibility,
Access Delay, Voice Quality and SMS were
checked with the automated monitoring tool.
3 G Licensing
The Mobile Cellular Policy 2004 provides
framework for the award of 3rd Generation (3G)
Mobile Licensing/spectrum auction. Similarly,
Cabinet Committee on Regulatory Bodies decided
that three 3G mobile licenses/spectrum shall be
auctioned amongst existing mobile operators in
Pakistan. PTA therefore was required to award 3G

licenses after vacation of the 3G bands by FAB.
Consequently Frequency Allocation Board was
tasked to vacate frequency spectrum identified for
the 3G auction and the Authority prepared
Information Memorandum for 3G spectrum
auction/licensing The draft IM was circulated to all
stake holders including mobile operators for their
opinion and input. The industry strongly
recommended delay in the licensing of 3G
services. The industry is of the view that the
mobile data market in Pakistan is insignificant, the
base price is very high and the local market is not
ready for it. The Authority therefore considering
operators (who are the main stake holders)
viewpoint, has forwarded industry’s concern and
its own viewpoint to the government of Pakistan.
The industries is worried about the cost of the
spectrum and are interested that instead of auction
the spectrum should be given to all of the operators
at reasonable price. FAB is still working on the
vacation of the band and as soon the same is
cleared, PTA would issue IM and initiate process
for 3G spectrum auctions.
III. Electronic Media
a) Pakistan Electronic Media Regulatory
Authority (PEMRA)
PEMRA was setup under an Ordinance in March
2002 to oversee and regulate private broadcast
media affairs in the country. For more than five
decades since independence, people have had very
limited access to information, education and
entertainment. The environment was never as
conducive for the private media to flourish. It was
for the first time that electronic media was opened
up to the private sector in 2002. Complete freedom
and facilitation served as a catalyst for the
unprecedented growth of electronic media in a
short span. Today there are nearly 50 private TV
channels transmitting information, entertainment
and education to all nooks and corners of the
country against none, five to six years ago. This
has also opened new vistas for investment and
employment.
Within a few years, Pakistan has developed a
modern media network encompassing all mediums
such as Satellite TV, Mobile TV, IPTV, FM Radio
Transport and Communications
Stations, MMDS, and Cable networks etc etc. free
and widespread access to media has kept large
portions of the nation up to-date with national and
international developments, and disseminated
information and education at an unprecedented
level.
PEMRA has issued IPTV licences to two
mainstream companies making Pakistan the sixth
country in the region to adopt such technology.
This service is due to be rolled out in the fiscal
year 2008-09. Telenor and Mobilink have also
attained Mobile Tv licenses from PEMRA.
During the last three years, PEMRA has issued 33
new licenses for Satellite TV stations with the total
reaching 36 by December 2007. 24 new satellite
TV licences have been issued in the year 2007-08.
The introduction of “Landing Rights” has brought
foreign channels under the regulatory province of
PEMRA. To date, 33 foreign channels have been
granted Landing Right permissions, including 8
new channels in the fiscal year 2007-08.
PEMRA has maintained its efforts to reach the
milestone of having at least one FM radio station
in each district of the country. 51 new FM radio
licences have been issued so far through an open
and transparent bidding process. Total number of
FM radio licenses issued to date is now 106, with
14 for Universities teaching Mass
Communications. Of these 82 FM stations are
already on air. 6 FM licenses have also been
granted for the AJK, a first for the area. Radio
licenses have been awarded to 3 new stations
during July 2007- March 2008.
State of the art broadband wireless point-to-
multipoint technology is also being encouraged by
PEMRA, with a total of 6 MMDS licenses having
been issued throughout the country.
Cable TV remained the fastest growing sector in
the national electronic media area. To date,
PEMRA has issued 1874 licenses to cable
operators.
241
Pakistan Economic Survey 2007-08
b) Pakistan Television Corporation Limited Presently 8 FM Stations are broadcasting FM 101
(PTV) Service. In addition to FM-101 and 93, other FM
stations have also been established in 12 important
This year, PTV played a significant role in
cities of Pakistan which besides National circuit
covering and conducting the Elections of 2008 for
programs radiate regional services emphasizing on
the National Assembly as well as the Provincial
community issues and matters related to local
Assemblies. In this regard, PTV had made extra
populations.
ordinary arrangements by providing a live telecast
all over the world, with a marathon transmission
PBC News is the biggest source of dissemination
that lasted 72 hours. PTV was also efficient in
of news in the country. Its General News room in
providing the latest positions of the Election 2008
Islamabad and attached units are presently putting
results for the public as soon as they received the
on air 136 news bulletins daily. PBC is now
information from their correspondents that were
accessible to audiences around the world through
placed across the different constituencies of the
Internet and Asia SAT-3.
country.
PBC took an active role in fostering motivation
PTV also imported four Drive Away Digital
and awareness about the local elections held this
Satellites News Gathering (DSNG) units that are
year among the general population. Equitable and
installed in the vans and also handed to the
equal opportunities were provided to all political
respective centres for live coverage of news,
parties to air their point of view.
current affairs and sports. Besides this, PTV
procured a number of electronic equipment for An amount of Rs. 483,953 million has been
their TV centres as well as Satellite Video phones allocated in the PSDP of current fiscal year, for the
and BGAN equipment for efficient news reporting. implementation of 10 on-going/ new development
projects. An additional amount to the tune of Rs 50
PTV is now operating five channels in the country,
million has been sanctioned by the Planning
namely: PTV Home; PTV News; PTV Bolan; PTV
Commission for establishment of 15 FM Radio
National; and PTV Global (for UK, USA). For
Stations. Out of the allocated amount, a sum of Rs
this, it installed Satellite Earth Stations for all five
120.988 million was released in November, 2007
channels, digitalization of two studios at all five
for the first quarter, and has been fully utilized. A
TV centres and the provision of one main OB Van
sum of Rs 76.2 million was released in April 2008
each for the five TV centres.
for the second quarter. The following development
projects are under way:
c) Pakistan Broadcasting Corporation (PBC)
Radio is the fastest, mobile and cheapest electronic • Completion of 100 KW MW Transmitting
media which is capable of reaching the masses far Station and Broadcasting house at Turbat.
and near. With its varied and wide ranging
programmes, PBC is catering to all segments of • Balancing & Modernization of Equipment
society. PBC has 31 Broadcasting Houses, 33 Phase-V
medium wave transmitters, 8 short wave • Commissioning of 100KW SW Transmitter
transmitters and 21 FM transmitters which installed at HPT-COMPLEX, Rawat.
transmitted programmes for listeners at home and
abroad. Programmes in 21 national and regional • 8 FM transmitters for the radio coverage of
languages are broadcast on the medium wave in G.T Road between Rawalpindi and Lahore.
Home Service and 16 foreign languages in the • 10 FM transmitters for coverage of M-1 and
External Service for foreigners and in national M2 motorways.
language in the World Service for Pakistanis living
abroad. The network of Radio Pakistan covers 98 • Establishment of 47 FM radio stations
percent of the population and 80 percent of the
total area of the country.

242
 Transport and Communications
• Establishment of satellite up-linking stations at & Trace System (EMTTS); Electronic Money
PBC Islamabad, Lahore, Karachi, Peshawar, Transfer; Computerized Military Pension Payment
and Quetta. System; Computerization of Postal Life Insurance;
and Computerization of the office of the Chief
Pakistan Post Office Controller Stamps (CCS).
Pakistan Post Office is a dedicated state enterprise
Pakistan Post is also involved in international
that provides a wide range of postal services and
postal services and has mail links with all countries
products. For a vast country like Pakistan, an
except Israel. The mail exchange with these
efficient postal system is essential for cohesiveness
countries takes places under the Universal Union
of a large population. Its commitment is for
Rules & Regulations. Accounts with foreign postal
serving every one, every day and every where. It
administrations are settled under these regulations.
provides postal facilities through a network of over
The net earnings of the Pakistan Post Office in
12, 343 post offices strategically placed across the
foreign exchange services during July-March 2008
country. In compliance with Government welfare
stood at Rs. 81.6 million. Foreign remittances in
policies, the Pakistan Post Office is providing a
the form of money orders totalled Rs. 8.22 million
variety of services on behalf of both Federal and
during the same period. Furthermore, keeping in
Provincial Governments and
view the difficulties faced by the general public for
autonomous/corporate entities.
depositing their utility bills, Pakistan Post has
started collecting PTCL, Electricity and Gas bills
Pakistan Post has also taken various measures to
throughout the country while WASA bills are
streamline the post office system on more modern
collected in Hyderabad, Faisalabad, Karachi,
lines. One major area of improvement is the
Lahore, Multan, Quetta and Sialkot. It earned a
introduction of information technology, where a
healthy Rs. 483.47 million from these utility bills
number of projects have already been completed
collection in the shape of commission for the
and a few more in the pipeline. These projects
period of July-March 2008.
include: Counter Automation; Express Mail Track

243
TABLE 13.1

TRANSPORT
(Contd.)
Gross Earnings (Million Rs)
Shipping Pakistan Pakistan
Fiscal Cargo Handled at No. of Dead Railways National
Year Karachi Port (000 tonnes) Vessels Weight Shipping
Total Imports Exports Tonnes Corp.
1990-91 18,709 14,714 3,995 28 494,956 6696 3,865.0
1991-92 20,453 15,267 5,186 28 494,956 8236 4,063.0
1992-93 22,170 17,256 4,914 29 518,953 9031 3,137.0
1993-94 22,569 17,610 4,959 27 595,836 9134 3,302.0
1994-95 23,098 17,526 5,572 15 264,410 9224 4,311.0
1995-96 23,581 18,719 4,862 17 290,353 8365 6,962.0
1996-97 23,475 18,362 5,113 15 261,817 9394 7,761.5
1997-98 22,684 17,114 5,570 15 261,836 9805 4,597.0
1998-99 24,053 18,318 5,735 15 261,836 9310 3,707.0
1999-00 23,761 18,149 5,612 15 261,836 9572 3,483.0
2000-01 25,981 20,063 5,918 14 243,802 11938 5,458.7
2001-02 26,692 20,330 6,362 14 243,749 13346 4,555.5
2002-03 25,852 19,609 6,273 13 229,579 14810 5,405.0
2003-04 27,813 21,732 6,081 14 469,931 14635 6,881.9
2004-05 28,615 22,100 6,515 14 570,466 18027 7,860.0
2005-06 32,270 25,573 6,697 15 636,182 18184 7,924.6
2006-07 30,846 23,329 7,517 15 636,182 19195 ..
(Jul-Mar)
2007-08 20,545 * 15,090 * 5,455 * 14 636,182 13954 # 7,471.0
Source: (i): Ministry of Railways
.. Not available (ii): National Transport Research Center
* Till Jan-08 (iii): Karachi Port Trust
# Estimated (iv): Pakistan National Shipping Corporation

ENERGY
Energy is essential for the maintenance and
development of the quality of human life as well as
for economic activities. To maintain accelerated
growth momentum, the economy needs reliable,
uninterrupted and affordable supply of energy. The
per-capita consumption of energy is viewed as an
important indicator of economic development of
any country. Countries with higher Human
Development Index (HDI) have higher per capita
energy consumption.
The world is facing a daunting task to meet the
growing energy demand that is likely to double in
the next twenty years. Pakistan is among those
developing countries where the need to tackle the
challenge is greatest. Its energy demand is
projected to reach 129 million tones of oil
equivalent (MTOE) in the next 15 years. Ensuring
availability of usable and affordable energy is
therefore, the bedrock of Pakistan’s current and
future developments. In recent years, the energy
demand has increased sharply in Pakistan owing
mainly to strong economic growth and the
attendant rise in per capita income. The supply of
energy, on the other hand, has remained far too
short to match growing demand because the
existing energy resources could not be sufficiently
explored and exploited. Consequently, the energy
supplies remained deficient to offset the growing
demand of domestic, industrial, commercial and
power generation needs. Despite being a high
priority item on the economic agenda of the
government, the growth of the energy sector
remained slow due to a host of factors such as
Chapter 15
inadequate institutional framework, financial
constraints, sky-rocketing oil prices, high risks,
low interest of private sector, heavy costs and
complex character of hydrocarbon development.
To address the issue of demand-supply gap, the
government is working on many fronts, including
the import of electricity and gas from Iran,
utilization of 185 billion reserves of coal,
development of small hydro projects, promotion of
efficient use of energy, and acceleration of current
programmes of alternative energy development.
Energy Consumption Mix:
a. Global
Total energy consumption mix is changing
globally over the years. Oil has been losing its
share; gas and coal has been gaining importance;
while the share of nuclear energy has remained
stagnant (See Figure 15.1). The International
Energy Outlook (IEO) has projected a 50 percent
increase in the demand for oil by 2030. Although
growth in the energy consumption was 3 percent in
2004, the annual increase of only 1.6 percent
would lead to a 50 percent growth in consumption
by 2030. There is a growing demand for oil in Asia
due to higher economic growth and it is expected
that the oil consumption of the Asian region will
exceed the North America by 2010; and by 2020
its demand will become nearly half of the world’s
total demand for oil. The rising demand for oil and
its limited supply has created deep concern
throughout the world as it is believed that nearly
all the largest oil fields have already been
discovered and are being exploited.
245
Pakistan Economic
E Surrvey 2007-088

Fig. 15.1: World

d Total Energy Consumption, High Oil Pricess Case (% Share)

Liquids Gas Coal Nuclear Other

40.0

30.0

20.0

10.0

0.0
1990 2003 2004 2
2010 20115 2020 2025 2030
Source: Internnational Energy Outllook (IEO) 2007

b. Pakistaan percentt in 1996-97 to 29 percentt in 2006-07 while

the shaare of gas haas risen from m 29 percent to 41
There hass been a conssistent changge in the enerrgy
percentt in the sam me period (Fiigs. 15.2 & 15.3).
consumpttion mix in Pakistan
P sincee 1996-97. The
T
This drrastic changee in energy coonsumption mixm is
major chaange in energ
gy mix has takken place in the
t
partly attributed
a to increasing oiil prices and partly
p
share of oil
o and gas coonsumption. TheT share of oil
to explloration of gass and coal.
in energyy consumptionn mix has drropped from 48

F 15.2: Energy Consumption

Fig C by So
ource Fig. 15.3: Energy Consumption by
b Soruce
(19996-97) (2006-07)

LPG
1% Electricity LPG
Elecctricity, 15% 16% 2%
Coal O
Oil
12% 299%
Coal
6%

Oil
Gas 48%
29%
Gas
41%

Source: Hydrocarbon
H Deevelopment Instittute of Pakistan (HDIP)

Pakistan Energy Direectory: percentt per annum, respectively. Table 15.1 shows
s
that a structural shhift is takingg place in energy
e
15.1. Eneergy Consum
mption
consummption since 1997-98 onnwards. Whille the
During thhe last ten yeaars (1997-98 to
t 2006-07), the
t consummption of petrroleum produucts is by andd large
consumpttion of petrolleum productts has increassed exhibitting a declinning trend, particularly since
at an averrage rate of 1.2
1 percent peer annum, whhile 2000-001, the connsumption off gas, coal and
the consuumption of gaas, electricityy and coal haave electriccity are showiing a rising trrend.
increased by 7.6 perrcent, 5.5 peercent and 9.2 9

246
 Energy
The consumption of petroleum products, gas, increased by 10.1 percent, 2.8 percent, 5.7 percent
electricity and coal during the first nine months and 11.9 percent, respectively over the
(July-March 2007-08) of the current fiscal year corresponding period of last year (See Table 15.1).
Table 15.1: Annual Energy Consumption
Petroleum Products Gas Electricity Coal
Fiscal Year Tones Change (mmcft) Change (Gwh) Change M.T* Change
(000) (%) (%) (%) (000) (%)
1997-98 16,624 607,890 44,572 3,158.7
1998-99 16,647 0.1 635,891 4.6 43,296 -2.9 3,461.4 9.6
1999-00 17,768 6.7 712,101 12.0 45,586 5.3 3,167.9 -8.5
2000-01 17,648 -0.7 768,068 7.9 48,584 6.6 4,044.7 27.7
2001-02 16,960 -3.9 824,604 7.4 50,622 4.2 4,408.6 9.0
2002-03 16,452 -3.0 872,264 5.8 52,656 4.0 4,889.9 10.9
2003-04 13,421 -18.4 1,051,418 20.5 57,491 9.2 6,064.5 24.0
2004-05 14,671 9.3 1,161,043 10.4 61,327 6.7 7,893.8 30.2
2005-06 14,627 -0.3 1,223,385 5.4 67,603 10.2 7,714.0 -2.3
2006-07 16,847 15.2 1,221,994 -0.1 72,712 7.6 7,894.1 2.3
Avg. 10 years 1.2 7.6 5.5 9.2
July-March
2006-07 12,114 929,516 52,246 5,414
2007-08 (e) 13,342 10.1 955,625 2.8 55,208 5.7 6,059 11.9
e: estimated for coal Source: Hydrocarbon Development Institute of Pakistan
*Million Ton

a). Petroleum Products cheaper fuels such as coal, natural gas and LPG as
well as surge in their prices. On the other hand,
During the first nine months of the outgoing fiscal
consumption in the agriculture sector shows a
year 2007-08, the consumption of petroleum
massive increase due to higher demand in this
products increased by 10.1 percent. The
sector and less availability of electricity in the last
consumption of petroleum products declined by
two years in particular. Similarly, consumption in
29.7 percent in industry, but registered an increase
the power sector increased due to non-availability
in household, agriculture, transport, and power
of alternative sources of energy. The annual
sector by 2.5 percent, 29.9 percent, 19 percent and
growth in the consumption of petroleum products
10.4 percent, respectively (See Table-15.2).
by major sectors and their relative shares during
Overall, the consumption of petroleum products
1997-98 to 2007-08 are provided in Tables 15.2 &
has been declining in the household sector for two
15.3, respectively.
decades, mainly due to accessibility of alternative
Table 15. 2: Consumption of Petroleum Products (000 tones) (Percentage Change)
House Change Industry Change Agriculture Change Trans- Change Power Change Other Change Total
Year
holds (%) (%) (%) port (%) (%) Govt. (%)
1997-98 499 2,081 245 7,364 6,054 381 16,624
1998-99 493 -1.2 2,140 2.8 249 1.6 7,864 6.8 5,526 -8.7 376 -1.3 16,648
1999-00 477 -3.2 2,116 -1.1 293 17.7 8,308 5.6 6,228 12.7 346 -8.0 17,768
2000-01 451 -5.5 1,924 -9.1 255 -13.0 8,158 -1.8 6,488 4.2 372 7.5 17,648
2001-02 335 -25.7 1,612 -16.2 226 -11.4 8,019 -1.7 6,305 -2.8 464 24.7 16,960
2002-03 283 -15.5 1,604 -0.5 197 -12.8 8,082 0.8 6,020 -4.5 266 -42.7 16,452
2003-04 231 -18.4 1,493 -6.9 184 -6.6 8,464 4.7 2,740 -54.5 309 16.2 13,421
2004-05 193 -16.5 1,542 3.3 142 -22.8 9,025 6.6 3,452 26.0 317 2.6 14,671
2005-06 129 -33.2 1,682 9.1 82 -42.3 8,157 -9.6 4,219 22.2 359 13.2 14,627
2006-07 106 -17.7 1,596 -5.1 97 18.3 7,982 -2.1 6,741 59.8 325 -9.1 16,847
July-
March.
2006-07 80 1,224 67 5,730 4,762 252 12,114
2007-08 82 2.5 861 -29.7 87 29.9 6,816 19 5,255 10.4 243 -3.6 13,342
Source: Hydrocarbon Development Institute of Pakistan

247
Pakistan Economic Survey 2007-08
The transport sector is the largest user of petroleum sector (39.4 percent), industry (6.5 percent),
products accounting for 51.1 percent of agriculture (0.7 percent) and household (0.6
consumption, on average, followed by power percent).
Table 15.3: Consumption of Petroleum Products (Percentage Share)
Year Households Industry Agriculture Transport Power Other Govt.
1997-98 3.0 12.5 1.5 44.3 36.4 2.3
1998-99 3.0 12.9 1.5 47.2 33.2 2.3
1999-00 2.7 11.9 1.6 46.8 35.1 1.9
2000-01 2.6 10.9 1.4 46.2 36.8 2.1
2001-02 2.0 9.5 1.3 47.3 37.2 2.7
2002-03 1.7 9.7 1.2 49.1 36.6 1.6
2003-04 1.7 11.1 1.4 63.1 20.4 2.3
2004-05 1.3 10.5 1.0 61.5 23.5 2.2
2005-06 0.9 11.5 0.6 55.8 28.8 2.4
2006-07 0.6 9.5 0.6 47.4 40.0 1.9
Avg. 10 years 1.9 11.0 1.2 50.9 32.8 2.2
July-March
2006-07 0.7 10.1 0.6 47.3 39.3 2.1
2007-08 0.6 6.5 0.7 51.1 39.4 1.8
Source: Hydrocarbon Development Institute of Pakistan

b). Natural Gas Table 15.4 depicts the annual change in the
consumption of gas by various users during 1997-
Natural gas has been gaining immense substance
98 to 2007-08. During July-March 2007-08, the
around the world due to its quality of being a
consumption of gas in transport sector increased by
cleaner fuel compared to coal and oil. Pakistan
27.8 percent, while household consumption grew
depends heavily on its natural gas reserves for
by 11.6 percent followed by fertilizer (3.5 percent).
different sectors of the economy. Because of its
However, the consumption of gas declined in
importance as an alternative and relatively cheaper
commercial sector (-7.1 percent), cement (-5.1
fuel, the share of gas in total energy is on the rise.
percent) and power sectors (-1.2 percent).

Table 15.4: Consumption of Gas (Billion cft) ( Percent change)

Transport
House Change Comm- Change Change Ferti- Change Change Indus-
Year Cement Power Change (%) (CNG)P Change (%)
hold (%) ercial (%) (%) lizer (%) (%) trial
mmcft
1997-98 134 19 12 148 179 115 490
1998-99 131 -2.2 21 10.5 8 -33.3 167 12.8 184 2.8 121 5.2 2,182 345.3
1999-00 139 6.1 22 4.8 9 12.5 177 6.0 227 23.4 135 11.6 2,426 11.2
2000-01 141 1.4 21 -4.5 7 -22.2 175 -1.1 281 23.8 139 3.0 4,423 82.3
2001-02 144 2.1 22 4.8 7 0.0 178 1.7 315 12.1 151 8.6 7,369 66.6
2002-03 154 6.9 23 4.5 3 -57.1 181 1.7 336 6.7 165 9.3 11,320 53.6
2003-04 155 0.6 24 4.3 8 166.7 185 2.2 470 39.9 193 17.0 15,858 40.1
2004-05 172 11.0 27 12.5 13 62.5 190 2.7 507 7.9 226 17.1 24,443 54.1
2005-06 171 -0.6 29 7.4 15 15.4 198 4.2 492 -3.0 279 23.5 38,885 59.1
2006-07 186 8.8 31 6.9 15 0.0 194 -2.0 434 -11.8 307 9.9 56,446 45.2
July-
March
2006-07 155 28 9 144 324 229 40,459
2007-08 173 11.6 26 -7.1 9 -5.1 149 3.5 320 -1.2 227 -0.9 51,700 27.8
P: Provisional Source: Hydrocarbon Development Institute of Pakistan

The relative share of gas consumption by end users followed by the industrial sector (23.8 percent),
during the last ten years is documented in Table household (18.1 percent), fertilizer (15.6 percent),
15.5. At present, the power sector is the largest transport (5.4 percent) and cement (0.9 percent).
user of gas accounting for 33.5 percent share

248
 Energy
Table 15.5: Consumption of Gas (Percentage Share)
Transport/
Year Households Commercial Cement Fertilizer Power Industrial
CNG
1997-98 22.0 3.1 2.0 24.3 29.4 18.9 0.1
1998-99 20.6 3.3 1.3 26.3 28.9 19.0 0.3
1999-00 19.5 3.1 1.3 24.9 31.9 19.0 0.3
2000-01 18.4 2.7 0.9 22.8 36.6 18.1 0.6
2001-02 17.5 2.7 0.8 21.6 38.2 18.3 0.9
2002-03 17.7 2.6 0.3 20.8 38.5 18.9 1.3
2003-04 14.7 2.3 0.8 17.6 44.7 18.4 1.5
2004-05 14.8 2.3 1.1 16.4 43.7 19.5 2.1
2005-06 14.0 2.4 1.2 16.2 40.2 22.8 3.2
2006-07 15.2 2.5 1.2 15.9 35.5 25.1 4.6
Avg 10 Year 17.4 2.7 1.1 20.7 36.8 19.8 1.5
July-March
2006-07 16.7 3.0 1.0 15.5 34.9 24.6 4.4
2007-08 18.1 2.7 0.9 15.6 33.5 23.8 5.4
Source: Hydrocarbon Development Institute of Pakistan.

c). Electricity 07 has increased by an average rate of 5.5 percent

per annum and 5.7 percent during the first nine
Table 15.6 and Table 15.7 exhibit the consumption
months of the fiscal year 2007-08. Electricity
of electricity during the last ten years. The
consumption grew in all economic sectors during
consumption of electricity during 1997-98 to 2006-
the last five years.

Table 15.6: Consumption of Electricity by Sectors ( (Percentage Change)

House hold Commercial Industrial Agriculture Street Light Other Govt.
Year GWH Change GWH Change GWH Change GWH Change Change GWH Change Total
Gwh
(000) (%) (000) (%) (000) (%) (000) (%) (%) (000) (%)
1997-98 18.8 2.3 12.3 6.9 387 3.9 44,572
1998-99 19.4 3.2 2.4 4.3 12 -2.4 5.6 -18.8 224 -42.1 3.6 -7.7 43,296
1999-00 21.4 10.3 2.5 4.2 13.2 10.0 4.5 -19.6 239 6.7 3.6 0.0 45,586
2000-01 22.8 6.5 2.8 12.0 14.3 8.3 4.9 8.9 213 -10.9 3.5 -2.8 48,584
2001-02 23.2 1.8 3 7.1 15.1 5.6 5.6 14.3 212 -0.5 3.5 0.0 50,622
2002-03 23.7 2.2 3.2 6.7 16.2 7.3 6 7.1 244 15.1 3.4 -2.9 52,656
2003-04 25.8 8.9 3.7 15.6 17.4 7.4 6.7 11.7 262 7.4 3.7 8.8 57,491
2004-05 27.6 7.0 4.1 10.8 18.6 6.9 7 4.5 305 16.4 3.8 2.7 61,327
2005-06 30.7 11.2 4.7 14.6 19.8 6.5 7.9 12.9 353 15.7 4 5.3 67,603
2006-07 33.3 8.5 5.4 14.9 21.1 6.6 8.2 3.8 387 9.6 4.4 10.0 72,712
July-March
2006-07 23.5 3.8 15.5 6 284 3.1 52,246
2007-08 25.2 7.2 4.1 7.9 15.7 1.3 6.5 8.3 321 13 3.4 9.7 55,208
Source: Hydrocarbon Development Institute of Pakistan

A study of the sectoral consumption of electricity 15.2. Supply of Energy

by economic groups identifies domestic sector as
the largest consumer of electricity for the past
many years. During the current fiscal year (July-
March 2007-08), the consumption pattern
remained more or less the same with the share of
domestic consumption at 45.6 percent, industrial at
28.4 percent, agriculture at 11.8 percent, and
commercial at 7.4 percent (See Table 15.7).
Primary energy refers to energy sources at the
beginning of energy conversion chains. During the
last ten years (1997-98 to 2006-07), the supply of
crude oil has increased by an average rate of 6.9
percent per annum, while the supply of gas,
petroleum products, coal and electricity has
increased at an average rate of 10.2 percent, 1.4
percent, 9.3 percent and 5.8 percent per annum,
respectively. The supply of crude oil, gas,

249
Pakistan Economic Survey 2007-08
petroleum products, coal, and electricity during the percent, 7.4 percent, 13 percent and 4.4 percent,
first nine months (July-March 2007-08) of the respectively over the corresponding period of last
current fiscal year increased by 6.5 percent, 2.7 year (Table 15.8).

Table 15.7: The Share of Consumption of Electricity by End-Users

Year Households Commercial Industrial Agriculture Street Light Other Govt.
1997-98 42.2 5.2 27.6 15.5 0.9 8.7
1998-99 44.8 5.5 27.7 12.9 0.5 8.3
1999-00 46.9 5.5 29.0 9.9 0.5 7.9
2000-01 46.9 5.8 29.4 10.1 0.4 7.2
2001-02 45.8 5.9 29.8 11.1 0.4 6.9
2002-03 45.0 6.1 30.8 11.4 0.5 6.5
2003-04 44.9 6.4 30.3 11.7 0.5 6.4
2004-05 45.0 6.7 30.3 11.4 0.5 6.2
2005-06 45.4 7.0 29.3 11.7 0.5 5.9
2006-07 45.8 7.4 29.0 11.3 0.5 6.1
Avg 10 Year 45.3 6.1 29.3 11.7 0.5 7.0
July-March
2006-07 45.0 7.3 29.7 11.5 0.5 5.9
2007-08 45.6 7.4 28.4 11.8 0.6 6.2
Source: Hydrocarbon Development Institute of Pakistan

Table 15.8: Composition of Energy Supplies

Petroleum
Crude Oil Gas Coal Electricity
Year Products
Million Chang Change (Mln. Change Change Change
(bcf)* Mln.T) (000Gwh)(a)
Barrels e (%) (%) T.) (%) (%) (%)
1997-98 50.4 700.0 17.0 4.1 62.1
1998-99 52.6 4.4 744.9 6.4 17.2 1.2 4.4 7.3 65.4 5.3
1999-00 53.3 1.3 818.3 9.9 18.5 7.6 4.1 -6.8 65.7 0.5
2000-01 73.6 38.1 857.4 4.8 18.9 2.2 4 -2.4 68.1 3.7
2001-02 75.1 2.0 923.8 7.7 18.7 -1.1 4.4 10.0 72.4 6.3
2002-03 76.0 1.2 992.6 7.4 18.0 -3.7 4.9 11.4 75.7 4.6
2003-04 80.3 5.7 1,202.7 21.2 15.4 -14.4 6 22.4 80.9 6.9
2004-05 85.3 6.2 1,344.9 11.8 16.8 9.1 7.9 31.7 85.7 5.9
2005-06 87.5 2.6 1,400.0 4.1 17.0 1.2 7.7 -2.5 93.8 9.5
2006-07 85.4 -2.4 1,413.6 1.0 19.4 14.1 7.9 2.6 98.4 4.9
Avg. 10 Year 6.9 10.2 1.4 9.3 5.8
Jul-March
2006-07(e) 62.0 1,062.1 13.6 5.4 71.0
2007-08(e) 66.0 6.5 1,090.6 2.7 14.6 7.4 6.1 13.0 74.1 4.2
*: Billion cubic feet Source: Hydrocarbon Development Institute of Pakistan.
a: Giga Watt hour
e: Estimated for coal and electricity

The supply of primary energy has increased by
49.5 percent in the last 10 years. The primary
commercial energy supplies increased by 4.3
percent during 2006-07 to 60.4 million tones of oil
equivalent (MTOE) from 57.9 MTOE in 2005-06.
The slower growth during 2006-07 can be
attributed to (i) lower consumption of oil
250
(HOBC, Kerosene, LDO and Furnace Oil) (ii)
negative growth (-2 percent and -21.3 percent)
in the import of High Speed Diesel (HSD) and
Low Sulphur Furnace Oil, respectively, a
marginal increase (0.7 percent) in the import
of High Sulphur Furnace Oil. The per capita
availability of energy grew by 2.61 percent in
 Energy
2006-07. The supply of energy however, grew ten years. The annual trends of primary energy
strongly by 10.03 percent in the first nine months supplies and their per capita availability; measured
(July-March) of the current fiscal year and in TOE from 1997-98 to 2007-08 are given in
consequently, the per capita availability registered Table 15.9 and Figs. 15.4 & 15.5.
an increase of 7.7 percent -- the highest in the last
Table 15.9: Primary Energy Supply and Per Capita Availability
Year Energy Supply Per Capita
Million TOE Change (%) Availability (TOE) Change (%)
1997-98 40.40 0.31
1998-99 41.72 3.26 0.31 2.62
1999-00 43.19 3.51 0.32 1.28
2000-01 44.40 2.82 0.32 0.63
2001-02 45.07 1.50 0.32 -1.25
2002-03 47.06 4.41 0.32 2.86
2003-04 50.85 8.06 0.34 5.25
2004-05 55.56 9.26 0.36 6.45
2005-06 57.88 4.18 0.37 2.48
2006-07 60.39 4.33 0.38 2.61
Jul-Mar
2006-07 45.35 0.29
2007-08 49.90 10.03 0.31 7.68
TOE- Tons of Oil Equivalent Source: Hydrocarbon Development Institute of Pakistan.

Figure 15.4: Energy Supply (Million TOE)

65.00

60.00

55.00

50.00

45.00

40.00

35.00

Source: Hydrocarbon, Development Institute of Pakistan

a). Crude Oil: period under review, 31,378 (44.72 percent)

The balance recoverable reserves of crude oil in
the country as on January 1st 2008 have been
estimated at 339 million barrels. The average crude
oil production during July- March 2007-08 was
70,166 barrels per day as against 66,485 barrels per
day during the corresponding period of last year,
showing an increase of 5.54 percent. During the
barrels per day were produced in Northern region
and 38,787 (55.28 percent) barrels per day in
Southern region, as against 28,507 (42.87 percent)
barrels and 37,978 (57.12 percent) barrels
produced per day, respectively in the same period
last year. During July-March 2007-08, production
of crude oil has increased by 10.1 percent from

251
Pakistan Economic Survey 2007-08
Northern region whereas production increased in
Southern region by 2.1 percent, in comparison to
the production in the same period of last year,
resulting in an increase of 5.54 percent oil
production in the country. The company wise
details of production of crude oil during July-
March 2007-08 and corresponding period of the
last fiscal year is given in Table 15.10.

Figure 15.5: Per Capita Availibility (TOE)

0.40

0.38

0.36

0.34

0.32

0.30

Source: Hydrocarbon, Development Institute of Pakistan

Table 15.10: Production of Crude Oil

July-March July-March
Region 2006-07 Change (%)
2006-07 2007-08
Northern Region 29,361.6 28,507.3 31,378.3 10.07
Dewan - - 89.9 -
OGDCL 13,250.8 12,273.5 16,556.5 34.9
OPI 544.6 550.2 458.8 -16.6
POL 8,852.3 9,111.6 6,713.7 -26.3
PPL 4,865.9 4,892.2 5,071.4 3.66
MOL 1,848.0 1,679.9 2,487.9 48.1
Southern Region 38,076.0 37,977.8 38,787.2 2.13
OGDCL 23,081.3 22,623.8 24,571.5 8.6
BP (Pakistan) 11,028.7 11,377.1 9,558.3 -16.0
PPL 130.0 138.9 137.8 -0.77
BHP 2,005.6 2,039.2 2,537.3 24.43
OMV 84.2 91.9 90.8 -1.23
OPII 1,320.6 1,276.9 1,490.5 16.73
ENI 342.5 343.2 334.2 -2.6
Petronas 82.9 86.9 66.9 -23.0
Total: 67,437.6 66,485.1 70,165.5 5.54
Source: Ministry of Petroleum & Natural Resources

b) Drilling Activities
During July-March 2007-08, a total of 52 wells
have been drilled, including 14 wells in the public
sector and 38 in the private sector as against 45 in
the same period last year, registering an increase of
15.6 percent. Total investment of US$ 836 million
252
has been made in the outgoing fiscal year in the
upstream sector. Table 15.11 provide the details of
drilling activities of the public and private sector,
engaged in the exploration and development of
wells, with achievements during July-March 2007-
08 and 2006-07.
 Energy
Table 15.11: Drilling Activities (Achievements) (No. of Wells)
July-March July-March
Sector 2006-07 Change (%)
2006-07 2007-08
Public Sector (OGDCL) 41 18 14 -22.22
i) Exploratory 19 9 5 -44.44
ii)Appraisal/Dev 22 9 9 0.00
Private Sector 36 27 38 40.74
iii) Exploratory 17 13 15 15.38
iv) Appraisal/Dev. 19 14 23 64.29
Total: 77 45 52 15.60
Source: Ministry of Petroleum & Natural Resources

c). Natural Gas: 15.6). This forecast is based on expected annual

Natural gas is a clean, safe, efficient and
environment-friendly fuel. The Energy Security
Action Plan of the Planning Commission estimated
that Pakistan will be facing a shortfall in gas
supplies rising from 1.4 Billion Cubic Feet (BCF)
per day in 2012 to 2.7 BCF in 2015 and escalating
to 10.3 BCF per day by the year 2025 (Figure
GDP growth rate of 6.5 percent and average annual
gas price delivered to the consumers at US$ 4
/Million British Thermal Units (MMBtu). In order
to bridge the demand-supply gap, the government
is working on many fronts, which includes Iran-
Pakistan-India (IPI) gas pipeline project which has
reached at fairly advanced stage.

Figure 15.6: Pakistan Natural Gas Supply- Demand Balance (MMcfd)

14,000

12,000 Demand

10,000
Indigenous

10.3 Bcfd
8,000 Supply

5.8 Bcfd
2.7 Bcfd
6,000

4,000

2,000

0
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY20 FY25

As on January 1st 2008, the balance recoverable
natural gas reserves have been estimated at 31.266
trillion cubic feet. Consumption of natural gas
from July 2007- March 2008 is anticipated to
increase from 3,352 million cubic feet per day
(mmcfd) (2006-07) to 3,474 mmcfd, while the
average production of natural gas during July-
March 2007-08 was 3,965.9 mmcfd as against
3,876.4 mmcfd during the corresponding period of
last year, showing an increase of 2.31 percent.
Natural gas is used in general industry to prepare
consumer items, produce cement, fertilizer and
generate electricity. Additionally, it is used in the
transport sector in the form of CNG. Currently 27
private and public sector companies are engaged in
oil and gas exploration & production activities.
The company wise position reveals that the
production of gas increased by 15.79 percent by
BHP followed by 9 percent increase by OGDCL
(See Table 15.12).

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Pakistan Economic Survey 2007-08
Table- 15.12: Production of Natural Gas (mmcfd)
July-March July-March
Company 2006-07 Change (%)
(2006-07) (2007-08)
BHP 305.3 310.8 359.9 15.79
ENI 384.9 389.1 378.7 -2.69
Dewan - - 19.2 -
MGCL 472.5 473.4 468.2 -1.10
OGDCL 849.8 834.1 909.4 9.03
OMV 535.0 539.7 520.8 -3.51
OPI 100.5 103.7 81.6 -21.27
POL 42.2 43.6 36.0 -17.34
PPL 830.3 828.6 832.8 0.5
Tullow 3.0 2.5 17.8 617.97
PEL 31.4 31.8 30.9 -2.84
BP 229.1 229.3 224.0 -2.28
Petronas 26.6 27.1 23.5 -13.11
MOL 62.4 62.9 63.2 0.53
Total: 3,872.8 3,876.4 3,965.9 2.31
Source: Ministry of Petroleum & Natural Resources

(i) Liquefied Petroleum Gas (LPG)
Liquefied Petroleum Gas (LPG) is a colourless,
odourless and environment friendly mixture of
inflammable hydrocarbons. Its contribution is
about 0.5% of country’s total energy supply mix.
The use of LPG as a domestic fuel is being
encouraged to slow the on-going deforestation in
the areas where supply of natural gas is technically
not viable. As a result of the government’s
investment-friendly policies, LPG supplies have
been increasing at annual rate of 12.6 percent
during the last few years with supply of 648,572
Metric Ton in 2006-07. Government has allowed
the use of LPG in automotives under the safety
framework being regulated by Oil & Gas
Regulatory Authority (OGRA). The primary aim
of the LPG Policy is to ensure enhanced
availability of the product at competitive price. The
LPG marketing companies have imported around
23,362 MT during July 2007-08.
(ii) Compressed Natural Gas (CNG)
The Government is promoting the use of
Compressed Natural Gas (CNG) to reduce
pollution caused by vehicles using motor gasoline
and to improve the ambient air quality. A large
number of vehicles have been and are still being
converted to CNG mainly due to the fact that price
of CNG is just 40 percent of the petrol price. There
are about 2,068 established CNG stations in the
country and approximately 1.7 million vehicles are
using CNG. Pakistan has become the largest CNG
consuming country among Natural Gas Vehicle
(NGV) countries.
The government’s policy of de-dieselization is in
place to switch vehicles currently running on diesel
to CNG by providing adequate incentives. The
provincial governments are working on this policy
to encourage the use of CNG, which will
ultimately cut down the cost of diesel oil import. In
its first phase the diesel engine in intra-city urban
public transport is being phased out (which include
buses, mini-buses and wagons) in Karachi,
Hyderabad, Lahore, Faisalabad, Peshawar, Quetta
and Islamabad/Rawalpindi. This program will have
a major impact on air quality of urban areas and
will improve health standards as well.

254

Salient Features of CNG Policy 2007
The main objectives of the CNG Policy 2007 are;
• To encourage CNG as a substitute of liquid fuel to reduce import bill.
• To provide cheaper and environmental friendly fuel.
• To discourage mushrooming growth of CNG outlets, with the announcement that there should be at least one
km distance between two CNG stations.
• Enforcing better industry discipline & safety culture in the CNG sector.
• Introducing CNG technology for import of natural gas.
• Using CNG for town gasification where supply of pipeline gas is not viable.
(iii) Liquefied Natural Gas (LNG)
Augmenting gas supply through LNG import is an
important element of the government’s energy
security strategy. The government is encouraging
LNG import by the Private sector and announced
Phase I 3.5 Million Ton per annum
Phase II 3.5 Million Ton per annum
Besides Pakistan Mashal LNG Project, Pakistan
Gas Port Limited (PGPL) is pursuing their LNG
import project at their own cost and risk without
any off-take commitment from the government.
The PGPL has signed an Implementation
Agreement with Port Qasim Authority for
establishment of an off-shore LNG Import
Terminal at Port Qasim, Karachi having a capacity
of 3 million tones/annum (400 mmcfd).
15.3. Performance of Major Oil and Gas
Companies
The operational performance of the three major oil
and gas companies in the public sector is reviewed
as follows;
a). Oil and Gas Development Company Limited
(OGDCL):
During current fiscal year upto March 2008, the
company’s average oil and gas production
remained at 41,128 barrels per day and 909 MMcft
per day, respectively. This reflects an increase of
18 percent in oil and 10 percent in natural gas over
Energy
its first-ever LNG policy in 2006. The Sui
Southern Gas Company Limited (SSGC) has been
mandated to facilitate the “Pakistan Mashal LNG
Project” and will act as a project vehicle company
for implementation of the project through private
sector in the following two phases:
500 MMCFD 2010-11
500 MMCFD 2012-13
the same period of last year. LPG production
during July-March 2007-08 was 285 metric tones,
showing a decline of 8 percent, while Sulphur
production was 71 metric tones per day, showing
an increase of 9 percent over the same period last
year (See Table 15.13)
OGDCL had drilled 94,426 meters upto July-
March, 2007-08 as compared to 79,412 meters in
the same period last year. During the period under
review, two gas and condensate fields named
Moolan Exploratory Well No. 1 and Pasakhi East
Well No.1 were discovered. Both wells are located
in Hyderabad, Sindh. Moolan Well produced 64
BPD of condensate and 4.44 MMscfd of gas at
Well head flowing pressure of 900 Psi at 32/64”
choke size. Pasakhi East well produced 155 BPD
of condensate and 10.7 MMscfd of gas at Well
head flowing pressure of 2140 Psi at 32/64” choke
size. OGDCL has drilled 14 wells (5 exploratory
and 9 development) during July-March 2007-08, as
against 18 wells (9 exploratory and 9 development)
in the same period last year.
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Pakistan Economic Survey 2007-08
TABLE 15.13: Physical Performance of OGDCL
S. July-March July-March Change
Name of Activity
# 2006-07 2007-08 (%)
1 i Exploratory Wells 9 5 -44.4
ii Development/Appraisal Wells 9 9 0.0
2 Production
i Oil (US Barrels) 9,559,822 11,310,177 18
(34,763) (41,128)
ii Gas (MMcft) 227,367 250,070 10
(827) (909)
iii LPG (Tonnes) 85,011 78,476 -8
(309) (285)
iv Sulphur (Tonnes) 17,886 19,543 9
(65) (71)
3 Drilling Meterage (Meter) 79,412 94,426 19
(Figures in bracket show daily average production) Source: OGDCL

b). Sui Northern Gas Pipelines Limited c). Sui Southern Gas Company Limited:
(SNGPL): (SSGC)
By end March, 2008, SNGPL, was supplying gas By end March 2008, Sui Southern Gas Company
to 1,060 towns/villages of Punjab, NWFP and Limited was supplying gas to 1,615 towns/villages
AJK/Federal areas. During the period under of Sindh and Balochistan. During the period under
review, the Company connected 642 industrial, review, SSGC provided new connections to 275
2,817 commercial and 161,490 domestic Industrial, 1,263 Commercial and 70,427 Domestic
consumers bringing the total number of consumers consumers bringing the total number of consumers
to 3,121,273 (5,126 industrial, 48,084 commercial to 2,011,106 (3,448 industrial, 22,192 commercial
and 3,068,063 domestic consumers). During July- and 1,985,466 domestic consumers). During July-
March 2007-08, the Company carried out March 2007-08, the Company carried out
development work for extension of gas net work to
development work for extension of gas network to
the tune of Rs. 435 million on transmission project,
the tune of Rs. 1,552 million on transmission
Rs. 2,230 million on distribution projects and Rs.
project, Rs. 3,357 million on distribution projects
25 million on other projects under Khushal
and Rs. 487 million on other projects (See Table Pakistan programme with the collaboration of
15.14). During next fiscal year 2008-09, the District Governments (See Table 15.14). During
Company plans to invest Rs. 13,514 million on the next fiscal year the company plans to invest Rs.
transmission, distribution and other projects. 7,500 million on transmission and distribution
projects.
Table 15.14: Physical Performance of SNGPL & SSGPL
July-March July-March
S. No Name of Activity 2007-08 2007-08
SNGPL SSGPL
1 Sector-Wise Gas Consumption (mmcf)
Power 103,293 88,614
Fertilizer 33,531 19,589
Cement 7,631 1,986
CNG/Transport 39,380 12,229
General Industry 133,095 93,904
Commercial 17,838 7,541
Domestic 119,743 53,090
Total 454,511 276,953

256
 Energy
Table 15.14: Physical Performance of SNGPL & SSGPL
July-March July-March
S. No Name of Activity 2007-08 2007-08
SNGPL SSGPL
2 New Connections
Domestic 161,490 70,427
Industrial 642 275
Commercial 2,817 1,263
Total 164,949 71,965
3 Addition in Distribution Network (KMs)
Mains 3,514 1,327
Services 720 265
Total 4,234 1,593
4 Investment in Gas Sector (Rs. Million)
Transmission Projects 1,552 435
Distribution Projects 3,357 2,230
Others 487 25
Total 5,396 2,690
Source: SNGPL, SSGPL

15.4. Power Sector: (MTDF-2005-10), out of which only 14 percent

Pakistan’s power generation capacity stood at
60MW at the time of independence with a per
capita consumption of 4.5 units for its 31.5 million
population. Power infrastructure development
gained momentum in 1970 and within five years,
the installed capacity rose from 636 MW in 1970
to 1,331 MW in 1975. In the year 1980, the system
capacity touched 3,000 MW and thereafter it
rapidly grew to over 8,000 MW in 1990-91.
At present, Pakistan’s total installed generation
capacity from Hydroelectric, Thermal, Independent
Power Producers (IPPs), and Nuclear sources
stands at 19,566 MW. The existing capacity of
thermal power generation in Pakistan stands at
12,630 MW, which is almost two-third (64.6
percent) of country’s total generation capacity.
Although, the thermal power plants are relatively
quicker to set up, they are relatively most
expensive due to sky-rocketing oil prices. Hydel
energy is the second largest source of electricity
and accounts for 33.1 percent of total power
generation in the country. Hydel power is both
cheap and environment-friendly. Pakistan’s total
identified hydel generation potential is 46,000 MW
(6,474 MW) has been exploited so far. In the long
run, Hydel is one of the major economic energy
supply options in Pakistan for increasing the
energy security of the country.
Electricity consumption in Pakistan has been
growing at an elevated pace due to higher
economic growth, increasing urbanization,
industrialization and rural electrification over the
past few years. The demand for electricity is
growing at an average rate of 9.5 percent per
annum over the past four years. A stagnant power
supply and growing demand has created severe
power shortage in the country, ranging between
4,000 to 5,000 MW.
Going forward, the demand for electricity is
projected to grow by 8.7 percent per annum (on the
basis of average growth for the period 2003-07)
while the supply of electricity, as envisaged by the
Pakistan Electric Power Company (Pvt.) Limited
(PEPCO), and assuming 75 utilization of installed
capacity, still forecast demand surpassing the
supply in the range of 2,000 MW to 3,000 MW
(See Figure 15.7).

257
Pakistan Economic Survey 2007-08

Fig. 15.7: Available Capacity and Computed Demand (in MW)

23000
Available
21000
Demand
19000
17000
15000
13000
11000
9000
7000
1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011
Source: PEPCO

To overcome the growing shortage of electricity;
gas, oil and coal-based power generation can help
Pakistan to meet its requirements in the short-to-
medium-term. Because of escalating oil prices and
shortage of gas supply, coal-based electricity
generation is the best option as Pakistan possesses
185 billion tones of coal reserves. The government
has signed an agreement with Iran to import 1,100
MW electricity which would help partly in
bridging the gap. The government has planned for
transmission of an additional 2,200 MW within a
period of 12 months by April 2009. These projects
comprise 81 MW of hydel and 1,427 MW of
thermal power in the public sector and 1,020 MW
in the private sector. The government has also
launched effective conservation measures which
include distribution of 10 million energy saver
bulbs to consumers. These measures are expected
to save about 1,000 MW at peak hours. In the
medium term, small hydro dam projects can make
significant contribution to the national energy
supply, while in the long run, hydel power
generation and alternative renewable energy can
solve these problems. As a first step, Alternative
Energy Development Board (AEDB) has been
established to facilitate development of renewable
energy i.e. solar energy, wind energy, and bio-
fuels. Table 15.15 shows the future power
generation plan in Pakistan.

Table 15.15: Power Generation Plan

Nuclear Hydel Coal Renewable Oil Gas Total Cumulative
Existing 400 6,460 160 180 6,400 5,940 19,540
(2005)
Addition
2010 - 1,260 900 700 160 4,860 7,880 27,420
2015 900 7,570 3,000 800 300 7,550 20,120 47,540
2020 1,500 4,700 4,200 1,470 300 12,560 24,730 72,270
2025 2,000 5,600 5,400 2,700 300 22,490 38,490 110,760
2030 4,000 7,070 6,250 3,850 300 30,360 51,830 162,590
Total 8,800 32,660 19,910 9,700 7,760 83,760 162,590
Sources: Planning Commission of Pakistan

The total installed capacity of WAPDA stood at Table 15.16). Of this, hydel power accounts for
11,363 MW during July-March 2007-08 which 55.6 percent and thermal accounts for 44.4 percent.
accounts for 59.6 percent of total capacity (See The total installed capacity of IPPs is 5,760 MW
258
 Energy
(29.4 percent) followed by KESC’s (1,690 MW) percent while private sector accounts for 29.4
and nuclear power (462 MW). Of the total installed percent.
capacity, the share of public sector is about 70.6

Table 15.16: Total Installed Generation Capacity (MW)

Power Installed Capacity Share (%) Installed Capacity Share Change
S.No
Company 2006-07 2007-08 (%)
1 WAPDA 11,363 58.5 11,654 59.6 2.6
Hydel 6,463 56.9* 6,474 55.6* 0.2
Thermal 4,900 43.1* 5,180 44.4* 5.7
2 IPPs 5,859 30.1 5,760 29.4 -1.7
3 Nuclear 462 2.4 462 2.4 0
4 KESC 1,756 9 1,690 8.6 -3.8
Total 19,440 100 19,566 100 0.65
* Share in WAPDA system Source: Hydrocarbon Development Institute of Pakistan

Supply Sources of Electricity: a). Electricity Generation

15.4.1. WAPDA
WAPDA owns about 59.6 percent of the country’s
total power generation capacity and serves about
88 percent of all the electricity customers in the
country, which amounts to 17.7 million customers.
Out of total WAPDA capacity, the hydro power
capacity accounts for 55.6 percent and thermal
accounts for 44.4 percent.
The electricity generated by WAPDA during July-
March 2007-08 was 64,569 Gwh, as against 63,020
Gwh during the corresponding period last year,
thus registering an increase of 2.5 percent due to
higher generation through thermal (7 percent). The
composition of electricity generation shows that
hydro potential has not been fully utilized. During
fiscal year 2007-08, the hydro generation
accounted for 33.5 percent of the total generation.
The trend of hydro-thermal electricity generation
for the last 10 years is given in Table 15.17.

Table 15.17: Electricity Generation by WAPDA (GWh)

Year Hydro Share (%) Thermal Share (%) Total
1997-98 22,060 41.4 31,199 58.6 53,259
1998-99 22,448 41.8 31,235 58.2 53,683
1999-00 19,288 34.3 36,585 65.5 55,873
2000-01 17,259 29.5 41,196 70.5 58,455
2001-02 19,056 31.3 41,804 68.7 60,860
2002-03 22,350 34.9 41,690 65.1 64,040
2003-04 27,477 39.8 41,617 60.2 69,094
2004-05 25,671 34.9 47,849 65.0 73,520
2005-06 30,855 37.5 51,370 62.5 82,225
2006-07 31,942 36.4 55,895 63.6 87,837
July-March
2006-07 22,863 36.3 40,157 63.7 63,020
2007-08 21,606 33.5 42,963 66.5 64,569
Includes purchase from IPPs and imports Source: PEPCO

b) Growth in Electricity Consumers
The number of consumers has increased due to
rapid extension of electricity network to villages
and other areas. As of March 2008, the number of
consumers has increased to 17.73 million. See
Table 15.18 for a snapshot of the rising trend in the
number of consumers over the last ten years.
259
Pakistan Economic Survey 2007-08
Table 15.18: Consumers by Economic Groups (Thousands)
Year Domestic Commercial Industrial Agriculture Others Total
1997-98 8,455 1,397 187 171 8 10,218
1998-99 8,912 1,517 190 173 8 10,800
1999-00 9,554 1,654 195 175 8 11,586
2000-01 10,045 1,737 196 180 8 12,166
2001-02 10,483 1,803 200 184 8 12,678
2002-03 11,044 1,867 206 192 9 13,318
2003-04 11,737 1,935 210 199 10 14,092
2004-05 12,490 1,983 212 201 10 14,896
2005-06 13,390 2,068 222 220 10 15,911
2006-07 14,354 2,152 233 236 11 16,987
July-March
2006-07 14,069 2,132 230 233 11 16,675
2007-08 15,026 2,214 240 243 11 17,734
Source: Water and Power Development Authority

c) Power Transmission d) Village Electrification

The total length of transmission lines has increased The village electrification programme is an integral
to 49,676 circuit KMs by the end of June 2007. In part of improving the lives of the people of
order to ensure uninterrupted and stable power Pakistan, particularly in rural areas. The number of
supply to the consumers as well as integrity of the electrified villages has increased from 117,456 on
grid supply system, the augmentation of the 30th June 2007 to 126,296 by the end of March
transmission network is a continuous process. In 2008. The trend of village electrification during
addition to the various on-going secondary past 10 years is provided in Table 15.19.
transmission lines and grid-stations programme,
new transmission lines/substations are being
envisaged.
Table 15.19: Village Electrification (In Number)
Year Addition During the Year Progressive Total Growth (%)
1997 1,383 65,951
1998 1,232 67,183 1.9
1999 1,109 68,292 1.7
2000 1,595 69,887 2.3
2001 1,674 71,561 2.4
2002 2,246 73,807 3.1
2003 7,193 81,000 9.7
2004 9,467 90,467 11.7
2005 12,764 103,231 14.1
2006 14,203 117,456 13.8
July-March
2006-07 10,374 113,605
2007-08 8,840 126,296 11.2
*Including FATA Source: Water and Power Development Authority

e) Electricity Consumption by Economic many years. Even during July- March 2007-08, the
Groups consumption pattern almost remained the same
with the share of domestic consumption at 43
The sectoral consumption of electricity by
percent, industrial at 26.1 percent and agricultural
economic groups identifies the domestic sector as
at 12.7 percent (See Table 15.20).
the largest consumer of electricity for the past
260
 Energy
Table 15. 20: Electricity Consumption by Economic Groups (% Share)
Public Bulk Supply to
Year Domestic Commercial Industrial Agriculture Traction
Lighting Supply KESC
1997-98 41.5 4.5 26.0 17.5 1.37 6.07 0.04 2.9
1998-99 43.6 4.7 25.6 14.3 0.41 6.72 0.04 4.65
1999-00 46.3 4.9 26.3 11.0 0.37 6.54 0.04 4.5
2000-01 46.1 4.9 27.1 11.3 0.34 6.07 0.03 4.17
2001-02 45.5 5.1 28 12.3 0.33 5.89 0.03 2.94
2002-03 44.0 5.3 28.4 12.6 0.35 5.54 0.02 3.8
2003-04 44.0 5.6 28.1 12.9 0.37 5.43 0.02 3.58
2004-05 43.5 5.8 28.1 12.5 0.41 5.17 0.02 4.54
2005-06 43.3 6.0 26.6 12.6 0.45 4.86 0.02 6.15
2006-07 43.0 6.4 26.09 12 0.47 4.84 0.02 7.27
July-
March
2006-07 42.4 6.2 26.5 12.1 - - 0.02 -
2007-08 43.0 6.5 26.1 12.7 0.5 5.1 0.02 6.0
Source: Water and Power Development Authority

f) Power Losses power losses and increase in revenue. Other

measures such as renovation, rehabilitation,
The National Transmission & Dispatch Company
capacitor installation and strengthening the
(NTDC) and DISCOs (Distribution Companies)
consumer-end distribution supply network are part
have invoked various technical and administrative
of a continuous process for controlling/reducing
measures to improve operational and managerial
wastage power/energy. The transmission and
efficiency to reduce power losses. These measures
distribution losses for the last ten years are given in
have given positive signs resulting in reduction of
Table 15.21.
TABLE 15.21: WAPDA Power Losses (In Percent)
Year Auxiliary Consumption T&D Losses* Total
1997-98 2.0 24.0 26.0
1998-99 1.7 25.8 27.5
1999-00 2.2 24.6 26.8
2000-01 2.0 23.8 25.8
2001-02 2.2 23.6 25.8
2002-03 2.1 23.9 26.0
2003-04 2.0 23.5 25.5
2004-05 2.5 22.3 24.8
2005-06 2.2 21.9 24.1
2006-07 2.1 21.1 23.2
July-March
2006-07 2.1 20.0 22.1
2007-08(e) 2.0 20.3 22.3
* T&D = Transmission and Distribution Source: Water and Power Development Authority
(e): Auxiliary consumption estimated

15.4.2. Karachi Electric Supply Corporation
Ltd (KESC)
During the current fiscal year upto March 2008,
the installed capacity of KESC’s various
generating stations remained at 1,690 MW, against
the maximum demand of 2,365 MW. KESC’s own
generation has increased by 5.1 percent from 5,867
Million Units (kWh) in July-March 2006-07 to
6,164 Million kWh in July-March 2007-08. This
increase in generation is due to the better “Planned
Maintenance Outages” undertaken in the winter of
2006-07. The maximum Supply-Demand gap of
261
Pakistan Economic Survey 2007-08
675 MW was bridged by different sources 15.22 shows the details of KESC’s operating
including purchase of 1,315 Million KWh from results including purchase of electricity from
“Independent Power Producers” and 3,415 Million different sources.
kWh from WAPDA, KANUPP & PASMIC. Table
Table 15.22: KESC Operating Results (Units in Million kWh)
July-March July-March Change
S. No Description
(2006-07) (2007-08) (%)
1 POWER PURCHASE
KANUPP 75.0 303.9 305.0
PASMIC 32.4 75.5 133.5
TAPAL 514.4 604.0 17.4
GULAHMED 578.5 660.5 14.2
WAPDA 3,605.6 3,035.6 -15.8
ANOUD POWER 40.5 18.7 -53.8
DHA COGEN - 33.3 -
INTL. INDUS. LTD - 21.0 -
Total 4,846.3 4,752.4 -1.9
2 Units Available for Distribution 10,246.3 10,437.2 1.9
3 Unit Sold 6,079.7 7,221.1 18.8
4 Trans. & Dist. Losses 4,166.6 3,216.1 -22.8
5 Installed Capacity (MW) 1,756.0 1,690.0 -3.8
6 Peak Demand (MW) 2,222.0 2,365.0 6.4
Source: KESC

The total energy made available to KESC system,
after taking into account the imports from various
agencies, stood at 10,437 million kWh during July-
March 2007-08 as against 10,246 Million kWh in
the same period last year, thus registering a growth
of 1.9 percent. The T&D losses have decreased
from 41 percent to 31 percent during the same
period. KESC has made considerable progress on
its comprehensive rehabilitation programme for the
restoration of its generating capacity. Besides
“Annual Maintenance” of all the six units at Bin
Qasim Power Station, critical equipment related to
the improvement of “Condenser Performance” was
installed at units 1 and 5. High Pressure Feed
Water Heaters were restored/ replaced at units 3, 4,
and 5. These measures will improve overall
efficiency of the units and stations output. The
increase of 5.1 percent overall generation of KESC
was the result of the 11.5 percent rise in the
generation of Bin Qasim Power Station.
KESC plans to bring two new generating plants as
part of its capacity enhancement program. The first
one is a Combined Cycle Power Plant at Korangi
which is in the erection/commissioning phase, and
would result in adding up of 220 MW of installed
capacity to the existing generation. The second
262
planned generation expansion is a 560 MW
Combined Cycle Power Station at the existing Bin
Qasim Power Station Site. Technical &
Commercial evaluation of the project has been
completed and the contract to the selected bidder
will shortly be awarded.
15.4.3. Nuclear Power Energy
Pakistan Atomic Energy Commission (PAEC) is
responsible for planning, construction and
operation of nuclear power plants. Presently, two
nuclear power plants; Karachi Nuclear Power Plant
(K-1) and Chashma Nuclear Power Plant unit-1
(C-1) are in operation, while construction of a third
plant, Chashma Nuclear Power Plant unit-2 (C-2),
is in progress. K-1, a CANDU type plant, after
completing its designed life of 30 years is
operating at 90 MWe. K-1 generated 342 million
kWh of electricity, while C-1, a PWR type plant
with a gross capacity of 325 MWe, has generated
1,977 million kWh of electricity during July-
March 2007-08. The construction of C-2 is
progressing well and its commercial operation is
planned in 2011.
The Government has chalked out a comprehensive
plan to expand nuclear power generation capacity
 Energy
to 8,800 MW by the year 2030. Studies are in independence, the share of coal in overall
progress at six new sites for installation of commercial energy consumption was about 60
additional nuclear power plants. To minimize percent, but this utilization gradually trimmed with
capital costs, PAEC is planning to build multiple the discovery of gas in 1952. Currently the share of
units on the same site. For manufacturing of coal in the overall energy mix is only 7.4 percent
nuclear fuel of PWR type nuclear power plants, while in India, the share of coal is more than 50
PAEC is establishing Pakistan Nuclear Power Fuel percent in the total energy mix. Presently, about 53
Complex (PNPFC). Negotiations are in progress percent of total coal production in the country is
with China National Nuclear Corporation (CNNC) being utilized in brick kilns industry and the
for setting up two additional 325 MWe units at second major coal consumption industry is cement.
Chashma and for starting design studies of 1,000 Due to high furnace oil prices, about 80 percent of
MWe units at Karchi. cement industry has switched over to coal from
furnace oil, which has generated a demand for 2.5 -
15.4.4. Coal
3.0 million tones coal per annum.
Pakistan has emerged as seventh in the list of top
A brief review about the consumption of coal in
20 countries of the world after the discovery of
different sectors is given in the Table 15.23. The
huge lignite coal resources in Sindh. Pakistan has
production of coal has remained stagnant (See
been blessed with huge coal resources amounting
Table 15.24) with no significant market demand
to 185 billion tones which include 175 billion tones
has been created.
of Thar coal. At the time of Pakistan’s
Table 15.23: Consumption of Coal (Percentage Share)
Year Household Power Brick Kilns Cement
1997-98 0.1 11.0 89.0 -
1998-99 0.0 12.0 88.0 -
1999-00 0.0 11.0 89.0 -
2000-01 0.0 5.1 70.2 24.7
2001-02 0.0 5.7 58.5 35.9
2002-03 0.0 4.2 53.3 42.5
2003-04 0.0 3.0 42.7 54.2
2004-05 - 2.3 49.5 48.2
2005-06 - 1.9 54.7 43.3
2006-07 0.0 2.1 41.5 56.4
Jul-March
2006-07 (e) 0.0 1.8 55.7 42.5
2007-08 (e) 0.0 2.2 53.2 44.6
- not available Source: Ministry of Petroleum Natural Resource
e: Estimated Hydrocarbon Development Institute of Pakistan

Table 15.24: Production of Coal (000 tones)

Year Imports Production Total
1997-98 960 3,159 4,119
1998-99 910 3,461 4,371
1999-00 957 3,168 4,125
2000-01 950 3,095 4,045
2001-02 1,081 3,328 4,409
2002-03 1,578 3,312 4,890
2003-04 2,789 3,275 6,064
2004-05 3,307 4,587 7,894
2005-06 2,843 4,871 7,714
2006-07 4,251 3,643 7,894
Jul-March
2006-07 (e) 2,825 2,589 5,414
2007-08 (e) 3,500 2,559 6,059
e: Estimated Source: Ministry of Petroleum Natural Resource
Hydrocarbon Development Institute of Pakistan

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Pakistan Economic Survey 2007-08
15.4.5. Private Power and Infrastructure Board
(PPIB)
PPIB acts as a window facilitator to the private
investors in the field of power generation. PPIB is
currently processing 51 multiple fuel (oil, coal, gas
and hydel) power projects having a cumulative
capacity of 13,335 MW which are expected to be
commissioned during 2008 to 2016. These include
20 hydel projects of 4,478 MW, 14 oil based
projects of 2,919 MW capacity, 5 pipeline quality
dual fuel/LNG projects of 1,050 MW capacity, 6
dedicated gas projects of 1,338 MW capacity and 6
coal based power projects having cumulative
capacity of 3,550 MW. Out of these, Letters of
Intent (LOIs) have been issued to 38 projects with
a cumulative capacity of 10,433 MW; Letters of
Support (LOSs) have been issued to 14 projects
totaling 2,590 MW, while Implementation
Agreements (IAs) have been signed with 12
projects of 2,337 MW. Besides these, two more
projects based on imported coal of 2,000 MW are
also being processed.
15.4.6. Alternative sources of Energy
To resolve the energy challenges, renewable
energy resources can play an important role. More
importantly, renewable energy can take electricity
to remote rural areas, where power transmission
becomes too expensive. The importance of
alternative sources of energy e.g. wind, solar and
bio-fuels, has risen due to rocketing oil prices, fast
energy demand and geographic location of
Pakistan. The coastline of 1,046 km provides
ample opportunity for the installation of wind
turbines. Similarly, two-third of Pakistan’s area
receives sufficient sunlight which provide
incredible opportunity for solar power generation.
Despite this bestowed potential, Pakistan’s
renewable generation capacity stands only at 180
MW.
The government has established the Alternative
Energy Development Board (AEDB) to foster the
development of renewable energy sources and has
set a target of at least 5 percent renewable energy
of the total electricity generating capacity of the
country (9,700 MW) by the year 2030.
264
(i) Wind Energy
Wind energy is environment-friendly and cheaper
than natural gas even. Pakistan has been blessed
with an enormous potential of Wind Energy. The
1,046 Km coastline of Sindh has been identified as
having wind power potential of 50,000 MW. The
government has assigned AEDB to ensure
installation of 700 MW wind power in coastal
areas of Pakistan by the year 2010. AEDB has
issued LOIs to 93 national and international
investors for 50 MW wind power projects each and
one LOI for 5 MW wind project. 33,976 acres of
land (19,807 aces in Gharo and 14,169 acres in
Jhimpir) has so far been provisionally allocated to
21 investors.
(ii) Solar Energy
Pakistan has so far not used its solar potential to
save on conventional energy sources. The solar
potential exists in central and southern parts of the
country where it receives 2,142 kWh of solar
irradiation/m²/year. The government has assigned
AEDB to electrify 7,874 remote off-grid villages in
Sindh and Balochistan using alternative
technologies particularly solar energy under
‘Roshan Pakistan Programme’. AEDB has
electrified 1,762 remote off-grid homes in 31
villages in all the four provinces. Another 3,000
remote off-grid homes in District Tharparker,
Sindh are in process of electrification using solar
energy, out of which 700 homes have already been
electrified. The entire 100 villages are expected be
electrified by June 2008.
(iii) Bio-fuels
Bio-fuels (ethanol and bio diesel) are strong
contenders for provision of efficient and
sustainable energy. Pakistan has started work on
both the bio-ethanol (sugar-ethanol) and the
cellulose biomass- bacteria route. AEDB has
initiated the projects for bio-fuels in Pakistan. A
pilot project of using Ethanol as an alternative fuel
for vehicles has been launched in cooperation with
HDIP and PSO. Furthermore, pilot project for
production of bio-diesel has been successfully
implemented and using local agriculture bio-diesel
has been produced and used for village
electrification.

Government has also introduced “The National
Policy for Power Co-Generation by sugar
industries (the Co-Gen Policy). Co-Generation is a
highly-efficiency energy system that produces both
electricity (mechanical Power) and valuable heat
Energy
from a single fuel source. Pakistan has a potential
of generating more than 3,000 MW of electricity
through co-generation from its existing sugar
industry.
265
TABLE 14.6

(Rs/mcft)
/ Category 1.12.2004 2-2-2005 1-7-2005 1-1-2006 1-7-2006 1-2-2007 1-1-2008
DOMESTIC (Slab)
i Upto 1.77 MCUFT / Month 73.95 73.95 73.95 80.98 85.03 78.38 78.38
ii 1.77 to 3.55 111.42 120.61 127.62 147.41 89.03 82.07 82.07
iii 3.55 to 7.1 178.25 192.96 204.17 235.84 162.07 149.4 149.4
iv 7.1 to 10.64 231.88 251.01 265.59 306.79 259.29 239.01 239.01
v 10.64 to 14.20 (MCFT/M) 337.30 310.92 310.92
vi All over 14.20
COMMERCIAL 204.88 221.78 234.67 271.07 298.03 268.23 283.05
General Industry 182.09 197.11 208.56 240.91 264.87 238.38 251.55
Cement 209.78 227.09 240.28 277.55 305.15 305.15 335.67
CNG Station 182.09 197.11 208.56 240.91 264.87 238.38 291.36
Pakistan Steel 182.09 208.56
Captive Power 208.56 240.91 264.87 238.38 251.55
FERTILIZER
SNGPL'S SYSTEM
(i)For Feed Stock
Pak.Americal Fertilizer Ltd.PAFL 36.77 36.77 36.77 36.77 36.77 36.77 36.77
F.F.C Jorden 36.77 36.77 36.77 36.77 36.77 36.77 36.77
Dawood Hercules/ Pak Arab 73.99 73.99 83.24 83.24 91.52 91.52 91.52
Pak china/ Hazara 78.52 78.52 88.34 88.34 97.11 97.11 97.11
(ii)For Fuel Generation 182.09 197.11 208.56 240.91 264.87 238.38 251.55
Dawood and Pak Arab
FOR MARI GAS CO. SYSTEM
(i)For Feed Stock
(a) Engro Chemical 72.94 72.94 82.06 82.06 90.22 90.22 90.22
FFC 72.94 72.94 82.06 82.06 90.22 90.22 90.22
(b) Pak Saudi 72.94 82.06
(ii)For Power Generation 182.09 182.09 208.56 264.87 238.38 251.55
POWER Stations
SNGPL & SSGCL'S SYSTEM 182.09 197.11 208.56 264.87 238.88
Liberty Power Ltd. 235.76 262.03 303.25 303.25 467.52 445.98 443.06
GAS DIRECTLY SOLD TO
WAPDA'S GUDDU POWER STATION
SUI FIELD (917 BTU)
KANDHKOT FIELD (866 BTU) 175.90 190.41 201.47 232.72 255.86 230.28 243.00
MARI FIELD (754 BTU) 171.08 185.19 195.95 226.34 248.85 223.96 236.34
SARA/SURI FIELD 171.08 185.19 195.95 248.85 223.96 236.34
Source : Hydrocabon Development Institute of Pakistan
Billing/pricing system changed from Rs. Per thousand cubic feet to Rs. Per million btu w.e.f.1-1-2002
 Chapter 16

ENVIRONMENT
I. Introduction The latest red-list of endangered species in
Pakistan, released by the World Conservation
Pakistan and other developing countries around the
Union (IUCN), includes the Blue Whale, Fin
world are increasingly becoming conscious of the
Whale, Hotson's Mouse-like Hamster, Indus River
fact that, the pursuit of growth and development
Dolphin, Markhor, Urial, Snow Leopard, Woolly
places a heavy burden on sustainability for now
Flying Squirrel, Brown Grizzly Bear, Western
and for the foreseeable future. Development, sans
tragopan, Hobara Bustard, Siberian White Crane,
environmental aspects is counter productive in
Olive ridly turtle, Green turtle, Marmot, Blackbuck
sustaining the pace of progress. The Government
and Sand Cat. The Government of Pakistan has
of Pakistan believes in the creation of opportunities
recognized the need to conserve biodiversity by
for the present generation without compromising
taking several tangible steps including the
on the potential of future generations to meet their
fulfillment of its commitment to international
developmental needs. This notion is easy to define
protocols and conventions. Pakistan became a
but difficult to implement.
signatory of National Conservation Strategy and
Environmental degradation is fundamentally linked Convention on Biodiversity (CBD) in 1994.
to poverty in Pakistan. Approximately less than Developing the Biodiversity Action Plan for
one-fourth of the country’s population, like in most Pakistan, 2000 has been the most significant step
developing countries, is poor and directly in addressing the biodiversity loss in the country.
dependent on natural resources for their The National Council for Conservation of Wildlife
livelihoods—whether agriculture, hunting, (NCCW) has played a significant role in
forestry, fisheries, etc. Poverty combined with a encouraging the Provincial Wildlife Departments
rapidly increasing population and growing for better management of protected areas
urbanization, is leading to intense pressures on the particularly national parks of the country.
environment. This environment-poverty nexus
Critical issues including air and water pollution,
cannot be ignored if effective and practical
ozone depletion, deforestation, land degradation,
solutions to remedy environmental hazards are to
lack of waste management, desertification and
be taken. In Pakistan, the deterioration of
vanishing biodiversity, have resulted in life
environment continues to affect livelihoods and
threatening ecological imbalances all over the
health thus increasing the vulnerability of the poor
world. There is an increasing realization that many
to disasters and environment-related conflicts. The
of these issues are further compounded by climate
current cost of environmental degradation is
change. In line with the increasing global
considerably high. According to a recent
commitments towards environment protection,
assessment made by the World Bank (WB)1 , the
Pakistan has promptly demonstrated a great deal of
cost of environmental neglect and degradation to
resilience and seriousness not only in ratifying
the economy has amounted to Rs. 365 billion
almost a dozen of Multilateral Environmental
during the current year.
Agreements (MEAs) but has also initiated various
national environment programmes aiming at
Biodiversity in Pakistan is also under serious threat
protection of environment. During the last decade,
due to excessive depletion of natural resources.
Pakistan has made diligent progress in
strengthening the institutions responsible for
1
Pakistan: Strategic Country Environment Assessment by WB (Sep, 2007)
267
Pakistan Economic Survey 2007-08
environmental management at the national level
such as:
• Pakistan Environment Protection Agency,
and Provincial Environment Protection
Agencies/Departments
• Environment Section of Planning &
Development Division as well as civil
society organizations
• The promulgation of Environmental
Legislation
• Establishment of policy framework
including formulation of conservation
strategies for NWFP, Balochistan and
Northern Areas as well as for a few
districts
• Establishment of Environmental Tribunals
• Formulation of Sanitation Policy and
Energy Conservation Policy
The realization that environmental concerns
required urgent attention and needed to be
addressed in a focused and effective manner at the
national level prompted the Government to adopt a
comprehensive initiative in the form of The
National Environment Action Plan (NEAP). This
multifaceted programme was launched in 2001,
and mainly aimed to achieve environmental
sustainability and poverty reduction in the context
of economic growth. The key policies and
programmes that have stemmed from NEAP are;
Air and Water Quality Monitoring, Clean Drinking
Water for All, Pakistan Wetlands Programme,
National Sanitation Policy, Sustainable Land
Management to Combat Desertification in
Pakistan, Environmental Rehabilitation and
Poverty Reduction through Participatory
Watershed Management in Tarbela Reservoir etc.
The United Nations Development Programme has
been supporting the implementation of this
initiative though the NEAP Support Programme
(NEAP-SP). In March 2007, NEAP-SP programme
entered its second phase. NEAP Phase-I
successfully achieved the following four targets:
268
1. National Environmental Policy
2. National Sanitation Policy
3. Clean Development Mechanism Strategy
4. National Forest Policy and Energy
Conservation Policy
The Programme appraised more than 300 project
proposals submitted by various stakeholders, while
the core team of NEAP-SP prepared more than 60
project concepts. This also included preparation of
projects for Public Sector Development
Programme (PSDP) e.g. Clean Drinking Water
Initiatives, Clean Drinking Water for All, Activity-
based Capacity Development, National Bio-Safety
Center and Rehabilitation of Rangelands of
Potohar Tract of Punjab through participation of
local communities.
A wide range of technical, institutional and
economic interventions in terms of different
projects were grouped under NEAP-SP Phase II
that mainly proposed the following three
initiatives:
1. Pollution Prevention and Control
2. Climate Change; Ecosystem and Natural
Resources Management
3. Environmental Governance, Advocacy,
and Partnership
These programmes, in addition to pursuing their
technical objectives, will strengthen the
institutional capacities of relevant Government
institutions. Moreover, the proposed programme
will promote equal participation of women and
sustainable grassroots projects through its
Grassroots Initiatives Programme for Local
Environmental Management (GRIP).
With a view to combating environmental pollution
in various sectors and at various levels on the
national front, the Government of Pakistan has
already enhanced allocation for the Environmental
projects in PSDP. Overall, an allocation of Rs. 8.0
billion has been made for the environment sector
projects in the federal PSDP 2007-08. There are
about 52 projects under implementation, which fall
in the brown, green and capacity building

components/sub-sectors of environment such as:
mass awareness, environmental education and
environment protection; preparation of land use
plan; fuel efficiency in road transport sector;
protected areas management; forestry; biodiversity;
watershed management; hospital waste
management; environmental monitoring; capacity
building of environmental institutions; natural
disaster early warning and mitigation;
improvement of urban environment; etc.
Utilization of funds till January 2008 is less than
25% of allocation; however, the same may
considerably improve during the remaining period
of the fiscal year. Awareness, knowledge
dissemination, adaptation and research on climate
change issues are underway in Pakistan through
different collaborating agencies i.e. government
and non-government. Data collection on
environment and environmental economics has
also been initiated for sound planning.
Realizing the importance of environmental
protection, the Government of Pakistan has
substantially increased the Medium Term
Development Framework (MTDF) for
environment (2005-10) compared to the past.
Working group on Environment has been notified
to operationalize Vision 2030 in Pakistan. Capacity
building of environmental institutions at federal,
provincial and local levels and mass awareness
would be given high priority to realize
implementation of Vision 2030 on sustainable
basis. Project Advisory Committee (PAC) of
Environmental Fiscal Reforms (EFR) at the
Federal Government level has also been
established.
At the international level, Pakistan has also shown
its commitment to numerous non-legally binding
instruments and MEAs such as; The United
Nations Convention on Biological Diversity
(CBD), Convention on International Trade in
Endangered Species of wild flora and fauna
(CITES), United Nations Convention to Combat
Desertification (UNCCD), United Nations
Framework Convention on Climate Change
(UNFCCC), Convention on Migratory Species
(CMS), Ramsar Convention on Wetlands, Basel
Convention on the Control of Trans-boundary
Movement of Hazardous Wastes and their
Environment
Disposal, Rotterdam Convention on the Prior
Informed Consent for Certain Hazardous
Chemicals, Pesticides in International Trade and
the Montreal Protocol, Kyoto Protocol on
controlling Green House Gas (GHG) Emissions.
Pakistan has also prepared the National
Implementation Plan for Persistent Organic
Pollutants (POPs) to ratify the Stockholm
Convention. Necessary measures for accession to
the Kyoto Protocol regarding the Green House Gas
(GHG) emissions have been effectively taken by
the Government.
II. Millennium Development Goals (MDG) and
Medium-Term Development Framework
(MTDF) Targets
Pakistan has effectively dedicated itself to
achieving the Millennium Development Goals
(MDGs) as adopted by the UN member states in
the year 2000. Goal number 7 of MDG aims at
ensuring environmental sustainability. The
environmental targets (MTDF 2005-10) and MDG
targets 2015 have been listed in Table 16.1.
The specified figures give a comprehensive picture
regarding the extent to which Pakistan has
achieved MDG and MTDF Targets so far. The
Forest Cover including state and private
forests/farmlands (%age of total land area) stood at
5.2% during the current fiscal year. The targeted
area was 5.2% for MTDF 2009-10 and 6% for
MDGs 2015 confirming that the country is doing
well in terms of achieving the signified target. It is
disquieting to know however that according to
international organizations such as IUCN and the
World Wide Fund for Nature (WWF) it is feared
that Pakistan is experiencing the world’s second
highest rate of deforestation. This destruction is
leading to the wholesale disappearance of trees,
shrubs and ground flora, together with the
vertebrate and invertebrate fauna they normally
support. The loss of forest habitat has had a severe
impact on Pakistan’s biodiversity, and has serious
implications for the nation’s natural and agro-
ecosystems. The protected area for conservation of
wildlife (%age of total area) was estimated at
11.3% while the targeted levels were 11.6% and
269
Pakistan Economic Survey 2007-08
12.0% according to MTFD and MDG targets, to conserve wild life have been very effective so
respectively. The given figures indicate that efforts far.

Table 16.1: The Environmental Targets: Medium-Term Development Framework (MTDF) 2005-10 and
Millennium Development Goals (MDG) 2015 Targets
MTDF MTDF MDG Achievement of
Name of Sector/Sub-Sector 2004-05 2009-10 Targets Targets
Targets Targets 2015 July-Mar 08
Forest cover including State and private 4.9% 5.2% 6.0% 5.2%
forests/farmlands (%age of total land area)

Protected Area for conservation of wildlife 11.3% 11.6% 12.0% 11.3%

(%age of total area)

GDP (at constant factor cost) per unit of energy as a 27,000 27,600 28,000 N.A
proxy for energy efficiency

No. of petrol & diesel vehicles using CNG fuel 380,000 800,000 920,000 1,700,000

Access to sanitation (national)% 42 50 90 44

Access to clean water (national)% 65 76 93 65

Number of continuous air pollution monitoring 0 4 -- 7

stations

Number of regional offices of Environmental 0 8 16 6

Protection Agencies

Functional Environmental Tribunals 2 4 -- 4

Source: Planning Commission of Pakistan (Planning and Development Division)

The number of petrol & diesel vehicles using CNG
fuel stood at 1,700,000 for the current fiscal year
whereas the targeted levels were estimated at
800,000 in case of MTDF and 920,000 in case of
MDGs. The actual number of vehicles is therefore
almost double the number of what was targeted.
Therefore, Pakistan has already met its MDG
target well in advance. This achievement has been
made possible because of the tremendous growth
in the number of vehicles that are converting to
CNG due to the Government’s resolve regarding
the development of the CNG sector as a cleaner
and economical energy alternative.
the targeted level was 76% in case of MTDF and
93% in case of MDG, implying that the targets will
be achieved in due course if the current trend
continues.
The number of continuous air pollution monitoring
stations and regional offices of Environmental
Protection Agencies stood at 6 and 4 respectively
for the current year which implies that the targeted
levels might be achieved if consistent efforts are
made. In addition to this the number of functional
environmental tribunals was 4 which already meets
the targeted level for MTDF 2009-10.

Access to sanitation (national) was calculated to be According to MDG Target 10 of environmental

44% for the current fiscal year. Its targeted levels
were set at 50% for MTDF 2009-10 and 90% for
MDG 2015. The Government therefore needs to
accelerate its efforts in this regard. Access to clean
water (national) stood at 65% in 2007-08, while
sustainability : “the proportion of people who are
deprived of sustainable access to safe drinking
water and basic sanitation, must be halved by
2015” whereas target 11 is concerned with
improvement of the lives of slum dwellers. In

270
 Environment
Pakistan, this target has been adapted to mean transport. The resulting urban congestion is
proportion of katchi abadis that have been straining the capacity of the Government to resolve
regularized. Target 11 poses a challenge to the the urban transport and as a consequence, urban
Government, as the current proportion of areas of Pakistan are experiencing deterioration in
regularized slum settlements is 60 percent, which air quality.
has to be increased to 95 percent by 2015
according to MTDF target. In addition to this new passenger car registrations,
which have soared since 2001, are expected to
III. State of the Environment continue to rise further. The surge in the demand
for cars originated from the increasing affordability
III.1. Air
of cars on the one hand and availability of car
The key factors responsible for air pollution in financing from the banking system on the other.
Pakistan include: Amongst these vehicles, those of serious concern
are diesel vehicles using crude diesel oil and
ƒ Rapidly growing energy demand due to motorcycles and rickshaws. Due to overloading,
relatively higher population growth rates faulty injection nozzles and weak engines, diesel
ƒ A fast growing transport sector and vehicles emit excessive graphitic carbon (visible
unplanned infrastructure creating hazardous smoke). Furthermore, motorcycles and rickshaws,
atmosphere in cities due to their two-stroke engines, are the most
inefficient in burning fuel and thus, contribute
ƒ Widespread use of low-quality fuel, most to lethal emissions.
combined with a dramatic expansion in the
number of vehicles on roads Replacement of liquid petroleum fuels with CNG
ƒ Alarming levels of nitrous oxide and sulphur is a major step towards protecting environment
combined with increasing proportion of dust especially in urban areas where air pollution is fast
have further aggravated the situation. becoming a menace. Environmentalists
recommended fuel switching from liquid fuels to
Air pollution levels in Pakistan's most populated natural gas as a strong measure to protect
cities are among the highest in the world and are environment. CNG is a lead-free fuel with no
likely to still climb further, causing serious health sulphur and particulate emissions and releases
issues. The levels of ambient particulates - smoke 1/10th level of carbon monoxide emissions as
particles and dust, which cause respiratory diseases compared to petrol. It also produces much lower
- are generally twice the world average and more carbon dioxide emissions as compared to petrol
than five times as high as in industrial countries and diesel oil thereby helping in mitigating
and Latin America (Energy Information warming effect caused due to greenhouse gas
Administration, 2004). Although Pakistan's energy emissions of carbon dioxide.
consumption is still low by world standards, lead
and carbon emissions are increasingly becoming Table 16.2: Growth in CNG Sector
major air pollutants in urban centers such as CNG Converted
As on
Station Vehicles*
Karachi, Lahore, Rawalpindi and Peshawar.
December, 1999. 62 60,000
December, 2000, 150 120,000
The country has been benefiting from steady December, 2001. 218 210,000
economic growth over the last few years. This has December, 2002. 360 330,000
been accompanied by rising urbanization, higher December, 2003. 475 450,000
income and affluence, and an increase in the December, 2004. 633 660,000
private ownership of motor vehicles. In the December, 2005. 835 1,050,000
absence of any urban transport policies and December, 2006. 1190 1,300,000
sustained investments in public transport, most 16th May, 2007 1450 1,400,000
urban citizens rely either on their private motor February, 2008. 2063 > 1,700,000
vehicles or the informal transport sector for urban * Estimated figures Source: HDIP

271
Pakistan Economic Survey 2007-08
The Government of Pakistan has offered a number
of incentives for encouraging the use of CNG in
the country. This has on one hand considerably
boosted industrial growth while on the other has
posed harmful consequences for the environment,
although less lethal than petroleum emissions. The
government of Pakistan has promoted the use of
CNG in a big way. This has led to an
unprecedented growth of around 60% per annum
in the CNG industry during the last few years.
Pakistan is the largest user of CNG in Asia and has
become the third-leading country in the world to
use CNG to fuel vehicles after Argentina and
Brazil. Presently, more than 1.7 million vehicles
are using CNG as fuel and 2063 CNG stations are
operational in different parts of the country 2 (see,
Table 16.2). Use of CNG as fuel in transport sector
has observed a quantum leap, replacing traditional
fuels. This has consequently helped a lot in
lowering the pollution load in many urban centers.
An investment of around Rs.90 billion has so far
been made in this sector while Rs.20 billion is in
pipeline. The CNG industry has created an
estimated 85,000 new jobs.
The government has planned to offer incentives to
investors to introduce CNG buses in the major
cities of the country. In line with a Cabinet
directive, the Federal Government is providing
incentives in the form of payment of the markup
(either complete or partial) of the loans required to
purchase new CNG vehicles. In this regard, the
cities of Karachi, Hyderabad, Lahore, Rawalpindi,
Islamabad, Peshawar and Quetta are phasing out
diesel vehicles in favor of CNG buses for intra-city
transportation. All new buses, mini buses and
wagons will be CNG based or dual fuel vehicles.
Provincial governments are also taking initiatives
to promote CNG conversions. For example, the
Punjab Government is giving 20 percent of the
capital cost for purchasing new CNG vehicles. For
the last five years, the use of coal in the power
sector has been decreasing mainly because a large
number of plants have been converted to natural
gas. Likewise, there has been a considerable
reduction in coal usage for domestic purposes.
After the successful CNG programme for petrol
replacement, the government is now embarking
2 as on February, 2008
272
upon a programme to replace the more polluting
diesel fuel used in road transport.
Policies and Programmes
To address the various challenges mentioned
above, the Government is implementing various
policies and programmes; many of which have
come out of the National Environment Action
Programme of the Ministry of Environment.
With increasing industrialization taking place in
Pakistan, there is an urgent need to ensure that its
harmful impact on the environment be minimized.
Realizing the issue, Pakistan Environmental
Protection Council (PEPC), an apex body for
setting up environmental policies in the country,
established National Environmental Quality
Standards (NEQS) which prescribes the
maximum discharging limits of emissions and
effluents. Pakistan Environmental Protection
Agency (Pak-EPA) is the designated authority to
implement NEQS in an effective manner without
compromising the interests and profits of the
industrialists. Section 11 of Pakistan
Environmental Protection (PEPA, 1997) provides
“no person shall discharge or emit or allow the
discharge or emission of any effluent or waste or air
pollutant or noise in an amount, concentration or
level which is in excess of the National
Environmental Quality Standards or, where
applicable the standards established under sub-
clause (i) of clause (g) of sub-section (1) of section 6.
a) To achieve this goal, a Self Monitoring
and Reporting tool (SMART) was developed in
consultation with the stakeholders to conduct the
analysis of industrial emissions/effluents on their
own and provide the same to the concerned
Environment Protection Agency (EPA). Reliable
self-monitoring is essential to ensure the integrity
of data for decision-making. Besides, this policy
instrument fosters transparency and easy access to
monitoring data of different industries; and it can
help demonstrate the existence of ‘Eco-Friendly
Industrial Units’. This information is required to
assess the compliance of the industry with the
NEQS. The nationwide launching of SMART was
held on 8th March, 2006.

The benefits of SMART are multifaceted and
extremely important for maintaining the Air
quality. Compliance is of tremendous value both
from an environmental standpoint and health &
safety perspective. Secondly, self-audits can
identify where additional pollution mitigation
measures are required. Implementation of
appropriate pollution prevention measures results
in waste minimization, which can provide
significant cost savings associated with waste
management. Thirdly, industries that are proactive
in ensuring compliance with regulations may
develop a competitive advantage, as consumers,
customers and investors today look for products
from companies that have clearly demonstrated a
commitment to minimizing their impact on the
environment.
b) Under the NEAP-SP, Green Industry
Programme was launched in the year 2006 by the
Pakistan Environmental Protection Agency (EPA)
for the promotion of SMART program, with the
support of the UNDP, to make the industries
responsible for systematic monitoring and
reporting of their environmental performance. The
key attribute of this programme is the “nation wide
reductions in the pollution levels” by providing the
flexibility to the industries to choose cost-effective
environmental solutions and by promoting
pollution control measures and assisting in the
identification of regulatory and non regulatory
impediments.
III.2. Water and Sanitation
Per capita water availability in Pakistan has been
decreasing at an alarming rate due to increase in
population that puts Pakistan in the category of
‘high stress’ countries in terms of limited water
resources. In 1951, per capita availability was 5300
cubic meters, which has now decreased to 1090
cubic meter just touching water scarcity level of
1000 cubic meter. In addition to this the fact that
Pakistan is an agrarian economy accentuates its
dependence on water from its rivers for various
purposes ranging from agriculture to power
generation. According to an estimate, the Indus
River irrigates 80 percent of the 21.5 million ha of
agricultural land. Over the years, various pressures
on the River Indus, the most important being water
extraction for irrigation purposes, has led to
Environment
substantial pressures on Pakistan’s water resources.
The increased groundwater utilization for domestic
and agricultural use has adversely affected
groundwater quality particularly in the irrigated
areas with almost 70 percent tube wells now
pumping hazardous sodic water.
In light of growing population pressures, rapid
urbanization and increased industrialization and
extended periods of drought, it has been estimated
that an additional 48 Billion m3 water would be
required to meet the growing demands of
agriculture and the country’s economy by the year
2011. This will likely have a profound impact on
the generally arid nature of Pakistan's climate, 10
percent (780,000 ha) of the total surface area of the
country is covered by wetlands which are of global
importance. There are about 225 significant
wetlands in Pakistan identified to date, out of
which 19 have been recognized as being of
international importance by the Ramsar
Convention. The diverse assortment of natural
freshwater and marine wetlands that occur within
Pakistan support many unique combinations of
biodiversity. Due to growing population pressures
and habitat loss induced by climate change, the
wetlands are facing increasing pressures. It is
feared that these wetlands may not be able to take
on much additional pressure and their productivity
needs to be preserved, enhanced and sustained.
The quality of freshwater is also deteriorating due
to losses in the movement of the water from the
canal heads to the croplands. The existing water
resources are under threat due to rapid degradation,
soil erosion deforestation and untreated discharge
of municipal and industrial wastes to rivers and
other water bodies. Municipal water is treated only
in two cities viz. Karachi and Islamabad though the
capacity of these treatment plants is much less than
the actual quantum of wastewater. Over-fishing
and polluted water are reducing the productivity of
the marine and inshore fisheries. This situation is
precarious, in particular, for mangroves in the
coastal zone and certain aquatic wildlife, such as
the Indus freshwater dolphin. All of these activities
are contributing to the destruction of habitats and,
more specifically, to a loss of biodiversity.
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The Human Development Report 2006 points out,
“the scarcity at the heart of the global water crisis
is rooted in power, poverty and inequality”. Target
10 of MDG 7 deals with sustainable access to safe
drinking water and basic sanitation. Even though
there has been an improvement in water supply
coverage from 53 percent in 1990 to 66 percent in
2005, however, the MDG target of 93 percent
poses a considerable challenge. The National
Sanitation Policy resolves to meet the MDG targets
whereby the proportion of people without
sustainable access to improved sanitation will be
reduced by half, by the year 2015 and 100 percent
population will be served with improved sanitation
by 2025. Currently, only 44 percent of the
population of Pakistan has access to safe sanitation
and 65 percent to safe drinking water, whereas the
targets for 2015 are 90 percent and 93 percent,
respectively.
Policies and Programmes
a) Realizing the importance and role of
sanitation in the improvement of environment as
well as the commitment to achieving the MDG
sanitation goals, the Ministry of Environment
undertook preparation of the National Sanitation
Policy in collaboration with major stakeholders. It
involved extensive consultations with communities
and other stakeholders at the provincial, district
and local levels. The National Sanitation Policy of
Pakistan was placed before the Cabinet soon after
the Second South Asian Conference on Sanitation
held in Islamabad on 20-21 September 2006 and it
was approved on 4th October 2006.
The primary focus of sanitation for the purpose of
this Policy is on the safe disposal of excreta away
from the dwelling units and work places by using a
sanitary latrine and includes creation of an open
defecation free environment along with the safe
disposal of liquid and solid wastes; and the
promotion of health and hygiene practices in the
country. The Policy resolves to meet the
Millennium Development Goals (MDGs) and
targets whereby the proportion of people without
sustainable access to improved sanitation will be
reduced by half, by the year 2015 and 100 per cent
population will be served by 2025 with improved
sanitation.
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The provincial governments, AJK, Northern Areas
and FATA shall formulate their own strategies,
plans and programmes in line with the National
Sanitation Policy. It will also be the responsibility
of the provincial governments to ensure that city
governments and Tehsil Management
Administrations (TMAs) follow the Hospital
Waste Management Rules 2005 of the Ministry of
Environment and the provisions of the Basel
Convention on Management of Hazardous Wastes
and their disposal.
b) In addition to these developments the
Ministry of Environment has also prepared a Draft
on National Drinking Water Policy in
collaboration with UNICEF through an extensive
stakeholder consultation process both at the federal
and provincial levels. The final draft has been
circulated to the concerned Ministries/Divisions
and provincial local government and public health
engineering departments for their views and
comments. The Draft of National Drinking Water
Policy would be finalized and submitted to the
Cabinet for approval in the near future.
A major MTDF initiative taken in this regard by
the Government is the provision of clean drinking
water to almost entire population of the country.
Government of Pakistan is committed to supply
safe drinking water to its people and many emptive
as well as preemptive measures have been
proposed in the MTDF 2005-10 and national
environmental policy to ensure supply of safe
drinking water. In this regard Clean Drinking
Water for All Programme has been launched,
whereby; water filtration plants are being
established and operationalised in all the Union
Councils of Pakistan to provide clean drinking
water to people costing around Rs. 15 billion by
the end of 2009. This programme is one of the
biggest initiatives related to water to come out of
the NEAP. The Clean Drinking Water Programme
was initiated in two parallel phases. The first is the
“Clean Drinking Water Initiative” (CDWI)
project whereby 544 plants are being installed one
in each district and tehsil; and ii) Clean Drinking
Water for All (CDWA) project whereby filtration
plants shall be installed one in each union council
and villages. The programme was approved by the
Central Development Working Party (CDWP) at a

cost of Rs. 115.09 Million in July 2004 and was
included in the Medium Term Development
Framework 2005-10. The Clean Drinking Water
for All is now a Sub-Programme of Khushal
Pakistan Programme and a high level task force
has been notified for overall supervision and
monitoring of the programme.
c) Various bilateral and multilateral
donors/aid/lending agencies have shown their
willingness to support government's endeavor in
facilitating the accessibility of public to clean
drinking water. MTDF 2005-10 is underway to
extend the coverage of clean drinking water
through water supply schemes to 75 percent by
2010 and sanitation to 45 percent in the same
period. It is targeted to provide 93 percent of
population with access to clean drinking water by
2015 and 90 percent of the population with access
to sanitation. The United Nations officially
declared 2008 as the International Year of
Sanitation (IYS) to accelerate progress for 2.6
billion people world wide who are without proper
sanitation facilities. The launch of IYS, which
runs through 2008, was organized by the UN
Department of Economic and Social Affairs
(UNDESA) in collaboration with the UN-Water
Task Force on Sanitation.
d) Pakistan formulated a draft Wetlands
Action Plan that was formally adopted by the
Government of Pakistan (GoP) in 2000. In
providing an overview of the scope and condition
of Pakistan’s wetlands, this document highlighted
poverty and ignorance as the prime factors
contributing to the degradation of wetland
resources. The plan presented a list of
recommendations for action to be taken by key
stakeholders. Through its support for international
conventions, Pakistan has demonstrated its
commitment to biodiversity conservation in
general and wetlands conservation in particular.
The adoption of a Wetlands Action Plan recently
has further demonstrated the GoP’s recognition of
the importance of wetlands and the need to find
sustainable solutions for their conservation.
Environment
The Pakistan Wetlands Programme (PWP)
funded by the UNDP and the Global Environment
Facility (GEF) aims to promote the sustainable
conservation of freshwater and marine wetlands
and their associated globally important biodiversity
in Pakistan. This initiative was taken by the
Ministry of Environment and is being implemented
by the World Wide Fund for Nature, Pakistan since
July, 2005, for seven years. For this purpose a two
pronged strategy was devised:
1. The first will provide the required policy,
institutional, technical and financial framework
and generate positive public support essential
for the mainstreaming of wetlands
conservation.
2. The second involves the design and
implementation of sustainable, participatory
management plans for four independent
Demonstration Sites, each chosen to be
representative of a broad eco-region in
Pakistan. It includes specific mechanisms to
secure financial sustainability and enhanced
replication and proliferation of viable wetlands
management interventions in a nation-wide,
on-going wetlands conservation initiative.
The general objective is to conserve the globally
important wetlands biodiversity in Pakistan while
alleviating poverty. It is a US$11.792 million
programme funded by a consortium of national and
international donors.
A key component of the PWP is to create
awareness on all issues related to wetlands
conservation. In this regard, the Programme has
reached out to all sections of the Pakistani
community through trainings, educational
activities, conferences, carnivals, school-events
and other conscious raising activities. The
traveling wetlands carnival toured four of the
country’s major cities. It is a means of reaching out
to the public to raise their understanding for the
need to conserve, protect and manage Pakistan’s
wetlands resources. It stressed the valuable
scientific and social roles they occupy within the
country and region.
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The PWP has conducted a number of surveys for
creating awareness regarding the significance of
wetlands in the country. In the Salt Range
Wetlands Complex (SRWC) a Baseline
Ornithological Survey of the Salt Range took place
in December 2006. The assessments of five lakes
yielded significant populations of terrestrial and
wetland birds and it was estimated that more than
40,000 birds were present. Along the Indus Rivers
a Flood Season investigation was carried out to
establish that, in the majority of cases, the Indus
Dolphin could only pass downstream during
periods of flooding. This observation has provided
useful insight into the realities underlying the
current distribution of dolphin in the mainstream of
the Indus River and will aid in understanding
genetic distributions within the species. Recently,
under the PWP, an environmentally significant
coral reef thought not to exist in Pakistani marine
waters has been discovered. The coral reef is
situated on the northern side of Astola Island along
the Makran coastline. Coral reefs among other
precious assets are deteriorating due to
anthropogenic threats, most of which are a direct
product of poverty, but many of which are
exacerbated by ignorance and negligence of people
who need to be guided and trained.
III.3. Land
One of the principal natural resources that Pakistan
is endowed with is ‘arable land’. About 28% of
Pakistan's total land area is under cultivation and is
watered by one of the largest irrigation systems in
the world. In addition to this, out of a total land
area of 79.6 million hectares, only 16 million
hectares are suitable for irrigated farming in
Pakistan. Hence, majority of the people depend on
arid and semi-arid areas to support their
livelihoods through agro-pastoral activities.
Persistent Water logging, Salinization and Sodicity
is continuously reducing the productivity of fertile
soil in the country. It is estimated that about 38
percent of Pakistan's irrigated land is water logged,
14 percent is saline and the application of
agricultural chemicals has increased by a factor of
almost 10 since 1980.
276
Land degradation is mainly due to four major
causes: water erosion, wind erosion,
salinity/sodicity and water logging. Pakistan like
most of the developing world, is faced with the
challenges of being affected by land degradation
and desertification, which are causing
environmental problems, including soil erosion,
loss of soil fertility, flash floods, salinity,
deforestation and associated loss of biodiversity
and carbon sequestration.
As mentioned earlier the Forest Cover including
state and private forests/farmlands (%age of total
land area) stood at 5.2% during the current fiscal
year, whereas both environmental and economic
standards necessitate that the country should have
at least 20-25 percent area under forests. The
MDGs however, are not so ambitious and suggest
forest cover of 6 percent. About 11.2 million
hectares, mostly northern mountain regions, are
affected by water erosion. According to an
estimate, about 2 million hectares are affected by
water logging and around 6 million hectares by
salinity and sodicity. Wind erosion is another issue
concerning land degradation in Pakistan. About 3-
5 million hectares of land is affected by wind
erosion in arid regions of Punjab (Cholistan),
Sindh (Tharparkar), and Balochistan (Chagai
Desert and sand areas along the coast).
Policies and Programmes
Despite the generally arid nature of Pakistan's
climate, the region supports an estimated 780,000
ha of wetlands that cover 9.7% of the total surface
area of the country. The diverse assortment of
natural freshwater and marine wetlands, that exists
within Pakistan, support unique combinations of
biodiversity. The same resource, however, also
sustains an estimated 144 million permanent
human residents and 3-4 million displaced persons
from adjacent countries. The wetlands of the
region are, therefore, generally degrading under a
broad spectrum of anthropogenic threats that are
mainly rooted in poverty but exacerbated by lack
of knowledge and mismanagement.
The Ministry of Environment with the financial
support of the GEF-UNDP has launched a full-
scale project on Sustainable Land Management

(SLM) to Combat Desertification in Pakistan.
The programme is to be implemented for a period
of two years from 2008-2009. The overall goal of
the project is to combat land degradation and
desertification in Pakistan in order to protect and
restore ecosystem and essential ecosystem services
that are key to reducing poverty. The project will
depend upon strong commitment of the
Government of Pakistan and the involvement of
key stakeholders, in particular those at the
community level. The project will be implemented
in two phases, with the first phase focused on
creating an enabling environment for SLM and
piloting innovation, and the second phase drawing
lessons learned to deepen the policy and
institutional commitment to SLM and completing
demonstration projects that can later be scaled up
and replicated.
III.4. Forestry
Relatively high population growth contributed to
the depletion of forestland from 9.8% of Pakistan's
total area in 1947 to 4.5% by 1986, despite the
forest conservation measures mandated by the
Forest Act of 1927. Pakistan lost 14.5% of its
remaining forest and woodland between 1983 and
1993. Deforestation has contributed to increased
soil erosion, declining soil fertility, and severe
flooding.
Currently Pakistan has only 5.2 percent of total
land area covered with forest which amounts to
0.03 ha of forest per capita, placing Pakistan
among countries with Low Forest Cover. Of the
total forest area, commercial forest is just one-third
(32.8%) while the rest (67.2%) is utilized for the
purpose of soil conservation, watershed protection
and climatic functions. The country’s forest area is
divided into State-owned forests, Communal
forests and Privately owned forests. Major forest
types existing in Pakistan are Temperate and
Subtropical Conifer Forests, Scrub Forests,
Riverine Forests 3 (irrigated plantations), Liner
Plantations (roadside, canal-side), and Mangrove
3 Riverine forests are disappearing rapidly because of reduced flow of water,
unchecked practice of illegally cutting down trees and encroachment upon
forest lands in Hyderabad.
Environment
Forests. Besides these categories, a significant
proportion of private farmlands are abundantly
covered with trees.
The existing forest resources in the country are
under severe pressure to meet the fuel-wood and
timber needs of a rapidly growing population. In
addition to this the wood-based industries
including housing, sports, matches, boat making
and furniture are continuously growing in number
and capacity.
The MTDF (2005-10) has given significant priority
to expand forest covered areas in Pakistan, for
which the Government has allocated ample
financial resources. Pakistan is committed to
increasing forest cover to 5.7 percent by 2011 and
to 6 percent by the year 2015 (see table 16.3). An
increase of 1.2 percent implies that an additional
1.051 m.ha area has to be brought under forest
cover within the next ten years. This will include
all state lands, communal lands, farmlands, private
lands and municipal lands. In 2001, out of a total
of 86.7 m.ha land area of Pakistan including Azad
Jammu Kashmir (AJK), 3.317 m.ha was under
contiguous forest cover and 0.781 m. ha farmland
area was under tree cover which was taken as a
baseline for fixing the Millennium Development
Goals.
The area protected for conservation of wildlife
(%age of total area) was estimated at 11.3% while
the targeted levels were 11.6% and 12.0%
according to MTFD (2005-10) and MDG (2015)
targets respectively. Pakistan is therefore making
committed efforts to improve protected areas
established to conserve rapidly declining wildlife
species in their natural environment, and enhance
its existing network of protected areas in terms of
quality and quantity.
Policies and Programmes
a) Forest covered area is being lost every
year, and Balochistan's Juniper forests, unique in
the world, continue to be cut beyond their capacity
to regenerate. A project on ‘mainstreaming
biodiversity in Juniper forest ecosystem’ has
been jointly launched by the UNDP and the IUCN.
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The total funding allocated for the project is USD
2.51 million.
b) Forestry, watershed management and
biodiversity projects in Mangla and Tarbela
Watersheds have been initiated to reduce
sediment load, create employment opportunities,
alleviate poverty, conserve the natural resources
and rehabilitate the degraded land resources -
through nurseries and plantations, construction of
check dams, soil conservation, establishment of
community organizations and terracing, etc. In this
regard a five year project of Management in
Tarbela Reservoir is being undertaken by the
Ministry of Environment and being implemented
by the Forest Department, Government of NWFP
at a cost of Rs. 532.457 million. The project aims
to contribute to sustainable resource management
in the Tarbela reservoir catchments through
consolidating and expanding the social forestry
activities in the programme area. Besides
replanting over 10,000 acres, the project envisages
afforestation over an additional area of 70,000
acres of privately and community owned denuded
marginal lands.
The recently initiated mega forestry projects
amounting to approximately Rs. 12 billion have
been approved by the Executive Committee of the
National Economic Council (ECNEC) and will be
implemented by all the Provincial Governments
including AJK and Northern Areas. The Provincial
Governments are implementing these projects with
the involvement of all stakeholders including
farmers, local communities, forest owners and
right holders, civil society organizations & private
sector companies.
To achieve the MDGs targets of vegetation cover
of 6% by 2015, Planning Commission proactively
interacted with the Ministry of Environment and
the Provincial Forest Departments to come-up with
project for afforestation/reforestation to meet the
MTDF and MDGs targets. As a result of timely
and effective measures, 5 projects of forestry
resource development costing Rs. 11.5 billion have
been approved by Executive Committee of the
National Economic Council (ECNEC), after more
than a year’s efforts. Once implemented, these will
contribute greatly towards achievements of 6%
278
vegetative cover target. In addition to this various
tree planting projects are under implementation as
a result of which the tree cover in the country (state
and privately owned) has increased to 5.17%.
The Ministry of Environment’s Forestry Wing has
devised a strategy in accordance with targeted
MDG goals for the next 10 years starting from
2005. The Forestry Wing is responsible for
coordination and monitoring of forestry sector
developments in the country through the office of
the Inspector General Forests. It deals with the
formulation of forest policy, planning,
international coordination, education, training and
research in the field of forestry. On the other hand,
the implementation of forestry projects comes
under the purview of the provincial governments.
At the institutional level, the linkages of the
Federal Forestry Wing and Provincial Forest
Departments will be strengthened with Highway
Departments, Irrigation Departments and Pakistan
Railways for establishing linear plantations.
Further, District Governments and Municipal
Administrations will be encouraged with
incentives to bring maximum lands under forest
cover. Measures adopted for this purpose have
been listed below;
Measures to Enhance Forest Cover:
Mass Tree Plantation Campaigns: In order to
enhance tree cover in the country, tree planting
campaigns are held each year. During the tree
planting campaign all the government departments,
private organizations, defense organizations and
NGOs were involved in planting activities.
Federal Forestry Board: The central Forestry
Board was constituted in 1954 to provide a
platform for the improvement of Forest Policy, but
remained dormant for the most part. The board was
therefore reconstituted and renamed as “Federal
Forestry Board”. The purpose of the board was to
develop policies and strategies related to the
Forestry Sector and also to monitor the activities of
the Provincial Forest Departments including the
forest cover changes.
c) Pakistan Mountain Area Conservation
Project (PMACP), funded by the Global
Environment Facility (GEF) in collaboration with

the Balochistan Forest Department, NWFP and
Azad Jammu and Kashmir (AJK) Wildlife
Departments, aims to introduce sustainable park
management with improvement in park operations,
park habitat, wildlife survival and park
infrastructure. World Wide Fund (WWF) for
Nature, - Pakistan is providing technical assistance
in Machiara and Chitral Gol National Parks. The
programme is a successor of the earlier 7-year
project titled “Mountain Areas Conservancy
Project (MACP)” and would build on its
achievements. Its primary objective is the
conservation of the unique and rare biodiversity
species of global significance and would cater for
the conversion of MACP into a programme by
furthering its successful interventions. This will be
crucial in reaching the MDG target of 12 percent
protected land areas. The programme is in line
with the overall objectives of biodiversity
conservation as envisaged in the Medium Term
Development Framework 2005-2010 for
addressing the green environment issues in
Pakistan.
d) Presently, three research and development
projects sponsored by the Government of Pakistan
are being executed by the Institute namely,
Forestry Sector Research and Development Project
(FSR&DP) and Strengthening of Forest Products
Research (SFPR) and Upgrading and
Reconstruction of Pakistan Forest Institute (PFI)
Field Station, Shinkiari for Forestry Research,
Education and Training. Forestry Sector
Research and Development Project has been
initiated for a period of seven years, having a total
cost of Rs. 193.5 million. The main objectives of
the project include assessment of existing forest
type cover by using Geographic Information
System and Remote Sensing techniques and to
monitor the changes for subsequent management
plans; determination of optimum water
requirements of important tree species to enhance
wood production; identification, testing and
preservation of forest insects, pathogens and their
natural enemies for optimum pest management;
human resource development and dissemination of
research findings to field foresters and
communities through electronic and print media,
publications, brochures and pamphlets etc.
Environment
IV. Climate Change
Since the industrial revolution (about 150 years
ago) the increasing anthropogenic (human
induced) Greenhouse Gas (GHG) 4 emission is
having a noticeable effect on the earth's climate,
through the burning of ever greater quantities of
fossil fuel in industrial processes and various other
means to meet growing demands of people and
their energy intensive lifestyles. In addition to high
rate of industrial revolution that occurred in the
past century, the problem is also inextricably
linked to world’s population which is growing
exponentially. The increasing concentration of
GHGs is warming the earth’s atmosphere and
changing the climate of the planet. This
phenomenon is called “Climate Change” or
“Global Warming”. No issue merits more urgent
attention or more immediate action than this
challenge because it is directly a quest for future
survival.
The phenomenal changes in weather and climate
are already evident in the form of increase in
extreme weather events, more frequent and
powerful cyclones and hurricanes, more frequent
and floods, droughts, powerful storms, hotter and
longer dry periods, reduced winter season, early
spring and rapidly increasing desertification.
Climate change is also obvious from the fact that
the ten hottest years on record have all occurred
since the beginning of the 1990s. How the world
deals with climate change today will have direct
bearing on the human development prospects of a
large section of humanity. Failure will consign the
poorest 40 percent of the world’s population some
2.6 billion people to a future of diminished
opportunities. It will also exacerbate deep
inequalities within countries which might be a
potential cause for future conflict. Climate change
is different from other problems facing humanity
and it challenges us to think differently at many
4 Gases like carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O),
hydro- fluorocarbons (HFCs), per- fluorocarbons (PFCs) and sulphur
hexafluoride (SF6) etc. are called Greenhouse Gases. These gases surround
the atmosphere and function like a blanket around the earth by capturing the
infra-red solar radiations and consequently making the earth warmer than it
would otherwise be.
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levels. Above all, it challenges us to think about
what it means to live as part of an ecologically
interdependent human community.
The work of Intergovernmental Panel on Climate
Change (IPCC) over the last decade has confirmed
that average global temperatures are increasing
since the industrial revolution, mainly as a result of
an increase in concentration of GHGs in the
atmosphere and that future global temperature rises
of 2.0– 4.50C are almost inevitable in the 21st
Century. According to the IPCC, the global world
temperature has increased by 0.60C over the last
100 years and is expected to rise further by 1.4 to
5.80C before the end of the present century. Last’s
year IPCC report highlighted the construction
sector as that with the most potential to reduce
GHG emissions, and in the most cost effective
way. The increases in global temperatures and the
associated changes in precipitation, glacier melt
and sea level rise is expected to have considerable
direct and indirect impacts (both positive and
negative) on various socio-economic sectors, such
as water, agriculture, health, forestry, and
biodiversity. Global warming is evidence that we
are overloading the carrying capacity of the Earth’s
atmosphere. Stocks of GHGs that trap heat in the
atmosphere are accumulating at an unprecedented
rate.
The regions that are likely to be hurt the most by
climate change include Africa, South and
Southeast Asia, and Latin America. India and
Europe are exposed to catastrophic risk from a
change in monsoon patterns and the reversal of the
Atlantic Thermohaline Circulation5 respectively. In
contrast, China, North America, advanced Asian
countries, and transition economies (especially
Russia) are less vulnerable and may even benefit at
low degrees of warming (for example, from better
crop yield). A Greenpeace report confirms that if
the current trend of rise in temperatures continues
it might lead to mass migration from India,
Pakistan and Bangladesh.
5 The term Thermohaline circulation (THC) refers to the theoretical hypothesis
of global density-driven circulation of the oceans. Derivation is from thermo-
for temperature and -haline for salt, which together determine the density of
sea water.
280
IV.1. Impact of Climate Change in Pakistan
Climate change raises serious concerns for
developing countries like Pakistan, with its
tremendous social, environmental and economic
impacts. The richer industrialized countries are
primarily responsible for GHG emissions, but it is
the poorer developing countries who would most
heavily bear the costs of climate change due to
their increased ‘adaptation vulnerability’.
Developing nations are more at risk mainly due to
weak governance, lack of required infrastructure
and technology, prevailing scale of poverty and
most importantly, the lack of vision and
commitment to address this mounting threat.
The agricultural productivity in Pakistan will be
affected due to changes in land and water
resources. Dry land areas, including arid and semi-
arid regions are most vulnerable to these changes,
as these regions are already facing significant
water shortages and high temperatures. The bio-
physical relationships could also be altered due to
seasonal changes in cultivating crops which will
consequently lead to changing irrigation
requirements, altering soil characteristics, and
increasing the risk of pests and diseases, thereby
negatively affecting agricultural productivity. In
the Pakistani context, this vulnerability is
particularly high because of its large population
and economic dependence on primary natural
resources, being basically an agrarian economy.
Water demands of Pakistan mainly depends upon a
single river system of Indus, that is fed by glacier
systems in Hindukush and Himalayas, which are
believed to be receding over the last few decades
as a result of Global Warming. This has had a
profound impact on the composition of the upper
Indus Basin, effecting people living not only in
nearby areas but in all areas of Sindh and will
result in water shortages for millions of people in
the country. Sindh coast had an average of four
cyclones in a century however the frequency and
intensity has increased manifold and the period
between 1971-2001 records 14 cyclones 6 . The
recent decades have witnessed a massive decline in
mangroves forest in Sindh due to shortage of water
6 (A Review of Disaster Management Policies and Systems in Pakistan for
WCDR, 2005)

th
flows to Indus Delta. Till 19 Century the delta
would receive annually some 150 MAF water from
the river system. This amount has gradually been
reduced due to a series of upstream dams and
barrages.
The aquatic life existing in River Indus will also be
adversely subjected to the far reaching effects of
climate change. One of the world’s rarest
mammals which happen to be an indigenous
inhabitant of River Indus is the blind Indus River
Dolphin. The construction of Pakistan’s extensive
irrigation system has led to a significant loss in the
number of this specie and its population has shrunk
in size to the extent that it is now considered one of
the world’s most endangered mammals. If the
current trend continues and no substantial
measures are taken to preserve the Indus River
Dolphin, then the coming years might have to
witness its extinction.
Studies suggest that climate change has adverse
impacts on forest resources and natural ecosystems
of the country. Forest lands in the northern
mountainous areas of Pakistan would shift from
one biome to another, which would also result in
an increase in the total potential Coniferous Forest
area decreasing the productivity of this precious
resource.
Scientific evidence of human interference with the
climate first emerged in the international public
arena in 1979 at the First World Climate
Conference. In 1988 the United Nations General
Assembly adopted a resolution proposed by the
Government of Malta, urging: “… protection of
global climate for present and future generations
of mankind.” In the same year, the governing
bodies of the World Meteorological
Organization (WMO) and of the United Nations
Environment Programme (UNEP) created a new
body, the Intergovernmental Panel on Climate
Change (IPCC), to marshal and assess scientific
information on the subject. In 1990 the IPCC
issued its First Assessment Report, which
confirmed that the threat of climate change was
real. The Second World Climate Conference, held
in Geneva called for the creation of a global treaty.
The General Assembly responded by passing
Environment
resolution and formally launching negotiations on
a Convention on Climate Change.
Pakistan has actively participated in the following
Climate Change related initiatives:
• United Nations Framework Convention on
Climate Change (UNFCCC) was adopted in
1992 at Earth Summit at Rio de Janeiro to
meet the challenge of climate change.
UNFCCC aims at stabilization of Greenhouse
Gas (GHG) concentrations in the atmosphere.
The convention was signed by 154 states.
Pakistan signed the UNFCCC as Non Annex- I
Party in June 1994 and it became effective for
Pakistan, as Party, on 30th August 1994.
• The Kyoto Protocol was adopted under the
UNFCCC at the 3rd Meeting of the Parties held
in Kyoto, Japan, which entered into force on
16th February 2005. Under the Protocol,
developed countries (Annex-1 parties), agreed
to reduce their combined Greenhouse Gas
emissions by 5.2% below the 1990 level
during the period 2008-2012. Pakistan adopted
the Kyoto Protocol in 1997 and acceded to it
on 11th January 2005. The Protocol introduced
Clean Development Mechanism (CDM) in
order to achieve sustainable development goals
in developing countries of the World.
• Pakistan has submitted to the Initial National
Communication to UNFCCC in which national
GHG inventory was updated and strategy for
addressing climate change was defined.
• A high level National Committee on Climate
Change, chaired by the Prime Minister of
Pakistan has been formed to review policies
and monitor progress on climate change
initiatives in the country.
• An autonomous Global Change Impact Studies
Centre has been established that is engaged in
research on impacts and adaptation to climate
change in the country.
• Clean Development Mechanism in Pakistan:
The Government of Pakistan after its accession
to the Kyoto Protocol of the United Nations
Framework Convention on Climate Change
(UNFCCC) in January 2005 has declared the
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Ministry of Environment as the Designated
National Authority for Clean Development
Mechanism under the Protocol. A Clean
Development Mechanism (CDM) Cell in the
Ministry of Environment was established in
August 2005 to promote CDM in Pakistan. A
National Operation Strategy for CDM was
approved by the Prime Minister in February
2006. Several awareness raising workshops
were conducted with public and private sectors
to enhance understanding about CDM in the
country. The CDM Cell has now been
strengthened to ensure institutional
sustainability of the Cell in the Ministry
through the Public Sector Development
Programme (PSDP) Fund with a total cost of
Rs. 38.93 million for a period of three years
(July 2006- June 2009). The project aims at
strengthening of the CDM Secretariat and
enhancing the capacity of CDM staff and
project proponents in developing, managing
and approval of the CDM projects.
To further promote the development of CDM
projects in Pakistan, the Ministry of
Environment has received a Japanese Policy
and Human Resource Development (PHRD)
Grant of US$ 0.57 million though The World
Bank. The project will further strengthen the
institutional framework for CDM in the
country by creating an enabling environment
and promoting public and private participation
in the fast emerging carbon market in Pakistan.
These efforts will bring foreign investment in
sustainable development projects in the area of
alternate/renewable energy production, waste
management, industrial pollution/effluent
management, agriculture and forestry which at
the same will help in effectively participating
in global efforts to reduce greenhouse gas
emissions to mitigate climate change.
The Designated National Authority (DNA) has
so far approved the following four CDM projects:
1. Catalytic Nitrous oxide Abatement and Tail
Gas End of Pakarab Fertilizers Multan: The
projects aim at catalytic break down of Nitrous
Oxide gas equivalent to 1.3 million tones of
CO2 per year. This project will bring
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investment of US$ 15 million and will earn
Certified Emission Reductions/ Carbon Credits
worth millions of dollars. The project has been
registered with CDM Executive Board and its
implementation is already underway.
2. Management of Cattle Waste in Landhi
Cattle Colony, Karachi was granted approval
on 2nd April 2007. The project will bring
foreign investment of US$ 102.15 million.
Under this project cattle waste of about 4
million tonnes will be converted into valuable
organic fertilizer along with generation of 25
MW of clean electricity to be connected to the
KESC main grid. Additionally the project will
reduce around 1.53 million tones of CO2
emissions per year which will bring additional
income of US$ 15 million from the sale of
carbon credits every year.
3. The 84 MW New Bong Escape Hydropower
Project, AJK was granted approval on 3rd May
2007. The project will bring foreign
investment of US$ 148.55 million and aims to
generate 84 MW electricity, in order to
sufficiently supply the national grid using
clean, renewable and sustainable hydropower.
Additionally, the project will reduce 0.22
million tones of CO2 emissions per year which
will bring additional income of US$ 3.3
million from the sale of carbon credits every
year.
4. Pakarab Fertilizer Cogeneration Power
Project, Multan was granted approval on 28th
January 2008. The project will bring foreign
investment of US $35 million. The project
aims to generate power through gas turbines
with upstream Heat Recovery Steam
Generators (HRSG) for supply to fertilizer
complex using clean, renewable and
sustainable cogeneration technology.
Additionally the project will reduce around
0.11 million tones of CO2 emissions per year
which will bring additional income of US$
1.61 million from the sale of carbon credits
every year and will improve local
environmental conditions and sustainable
development in the area. A number of other
projects for preserving renewable energy,
waste management and improving industrial
process are in the pipeline.

Apart from the above mentioned initiatives, a
number of CDM projects are in the pipeline at
various stages of development in sectors like waste
heat recovery, co-generation, waste management,
forestry and alternate energy (wind and hydro-
power).
• Technical Advisory Panel (TAP) on Climate
Change:
The lack of an enabling policy, regulatory
framework and vulnerability assessments plus
inadequate capacity to reduce impact and risks
of Climate Change, particularly to livelihoods
of the poor, are some of the challenges that
need to be urgently addressed in Pakistan. To
achieve the above mentioned goals the
Government in collaboration with various
concerned organizations has recently initiated
the Technical Advisory Panel (TAP) on
Climate Change. TAP is expected to provide
the requisite input to the government to combat
the threat of climate change.
The official launch of the TAP was held on
February 15, 2008, Funded by the Royal
Norwegian Embassy and the Department for
International Development, U.K., and TAP is a
joint initiative of the Ministry of Environment,
Government of Pakistan, and The World
Conservation Union (IUCN). The panel brings
together different organizations working on
climate change on a single platform to provide
active support to government in addressing
climate change challenges. The panel is also
mandated to undertake capacity building and
awareness raising activities among
stakeholders and the general public. Currently,
TAP comprises six organizations: Ministry of
Environment, Global Change Impact Studies
Centre, Pakistan Agriculture Research
Council, Pakistan Meteorological Department,
Asia Pacific Network and IUCN, the last also
serving as the TAP secretariat.
IV.2. Economic Initiatives to Cope with Climate
Change
Addressing Climate Change and the economic
challenge it will likely bring presents policy
makers with a dilemma. The benefits of policy
Environment
action are uncertain and would accrue largely to
future generations, whereas the costs of policies
run the risk of being more immediate and
extensive. To shed light on how mitigation policies
would affect the countries’ economies, the IMF
recently undertook a study comparing alternative
policy designs---taxes on GHG emissions,
emissions permit trading, and hybrid schemes
combining elements of both policies. The analysis
shows that climate change can be addressed
without either hurting the macroeconomic stability
and growth or putting an undue burden on the
countries least able to bear the costs of policies. In
other words if policies are well designed their
economic costs could be manageable.
The economy of a country will, to a large extent,
determine the ability to adapt and resist the various
effects of Climate Change. The adaptation
measures that can be taken in this regard are as
follows:
ƒ Economic and Institutional Development:
Development helps countries diversify away
from heavily exposed sectors; improves access
to health, education, and water; and reduces
poverty. High-quality institutions also
strengthen countries’ abilities to adapt to
climate change.
ƒ Fiscal self-insurance: Government budgets
must allow for adaptation expenditures, and
social safety nets must be strengthened,
especially in countries whose domestic
resources are far short of what are needed----
on this front, the UN has just launched an
effort to provide financing, a step in the right
direction. The world needs public finance
economists to consider what role fiscal
instruments---- notably, taxation and public
spending--- have to play in dealing with
climate change. Environmentally related
taxes, more commonly known as green
taxes7, are also levied in some parts of Asia.
In China a tax on wooden chop sticks is
charged in order to protect forests. The
7
The Green Tax Commission was appointed in Norway in the year 1994,
and assessed how to change the tax system away from taxation on labor and
towards activities that imply increased use of resources and harmful
emissions in a long term perspective.
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possibility of whether such taxes can be
implemented in Pakistan needs to be
meticulously looked into. Apart from raising
the cost of production the green taxes not only
generate additional revenue but also protect the
environment. The developed countries are
increasingly adopting this trend.
ƒ The choice of the Exchange Rate Regime,
Labor Market and Financial Sector
Policies: These choices can encourage firms to
adjust to the abrupt shocks (such as extreme
whether events) that are likely to accompany
Climate Change. A flexible exchange rate
regime and financial and labor market reforms
that make capital and labor more adaptable
may help reduce the macroeconomic cost of
extreme weather shocks. Such shocks typically
destroy capital investment and disrupt
production and adjusting to them requires
moving people and capital across and within
sectors.
ƒ Financial Markets: These markets can reduce
the macroeconomic costs of adapting to
Climate Change by generating price signals
that create incentives for people to move to
lower-risk areas and reallocating capital to
newly productive sectors and regions. The
financial markets’ capacity to diversify costs
and spread the risks to those most willing and
able to bear them will also help to reduce the
social cost of adaptation.
V. Concluding Remarks
According to various classification systems,
Pakistan is divided into 9 major ecological zones
which are very divergent in nature, ranging from
the depths of Arabian Sea to the towering
mountains of the western Himalayas, Hindukush
and Karakoram. Dramatic geological history
284
combined with a significantly advantageous
location, has blessed Pakistan with a remarkable
number of the world’s beneficial ecological
regions.
Human interference has led to increased ecological
imbalances causing significant damage to natural
resources all over the world. Like most developing
countries, Pakistan faces critical challenges in
conservation of existing natural resources and their
further enhancement to meet the demands of an
ever increasing population. The rapidly shrinking
wetlands, some of which are of international
significance, the wondrous juniper forests
inhabited by numerous forms of fauna and flora are
in danger of extinction due to rapid deforestation,
discharge of sewage and industrial effluents into
marine and aquatic ecosystems, increase in both
wind and water erosion due to reduction in
vegetation cover etc. are only some of the crucial
challenges facing the country.
The Government of Pakistan is fully aware that
these natural resources need to be protected at all
costs to ensure future survival at the global as well
as the local level. For this purpose numerous
international and national projects are in the
process of execution and various innovative
initiatives have been planned for future
implementation. The key policies and programmes
that have stemmed from NEAP overlook almost all
areas of environmental conservation including Air,
Water and Sanitation, Land, Forests and
Biodiversity. In addition to this, the worldwide
phenomenon of Climate Change has further
compounded the overall situation and needs to be
addressed at the international level. Pakistan has
taken significant initiatives in collaboration with
international agencies to counter all complex issues
responsible for environmental degradation. It is
hoped that these measures will be able to yield
timely and desired results in the years to come.