China to help Pak build major hydro-electric project in POK
Monday, 24 March 2008
BEIJING, March 23 (PTI): Pakistan is expected to conclude soon reinsurance deals with a Chinese consortium for the strategically important Neelam-Jhelum hydro-electric project being built by it at a cost of USD 1.5 billion in Pakistan- Occupied Kashmir (POK), over which India has voiced concerns.
"The talks are in very advanced stages and close of the deal is expected by April end or early May," a senior executive of Adamjee Insurance Company, Pakistan-based insurer, who is tying up the deals, told PTI.
A consortium consisting of China's Gezhouba Water and Power Company and China National Machinery and Equipment Import and Export Corporation (CMEC) were awarded contracts by Pakistan in December last year to build the Rs 78730 milllion project in eight years.
Chinese insurance companies PICC, Ping An, China Pacific and AIG (China) have experience in insuring the works carried out by the Chinese contractors in China-based domestic projects, Zersis Rustom Birdie, General Manager (Development) of the Karachi-based insurance company, said.
"We feel they (Chinese firms) are better experienced than European-based reinsurance companies to cover the works carried out by Chinese contractors in Pakistan," he said.
Asked if the premiums from the international reinsurance companies were high because of war and terrorism-related risks, Birdie did not comment directly but said European firms were tough on terms for such a project as they did not have Chinese domestic experience directly and used PICC or Ping An in the past.
Also, Birdie said, there was "the country risk" of Pakistan and the area is in an earthquake-prone belt. "Severe earthquake of October 2005 is still fresh in memories".
"Available liquidity that is accompanied by a fixed supply of goods and services ... and the drop in the value of local currencies due to the weakening of the dollar" are the two main reasons for inflation, said the Saudi-based federation, which groups the region's chambers of commerce, industry and agriculture.
The study pointed out that the weakening greenback contributes to the "increase in the cost of GCC imports from countries whose currencies had appreciated against the dollar, like the EU, Japan and China."
"The imports of the GCC jumped from 154.5 billion dollars in 2003 to 376 billion dollars in 2007, a 143 per cent increase," the study said.
The dollar peg forces GCC central banks to follow the US Federal Reserve in setting interest rates. But while the US central bank continues cutting rates to stimulate a sluggish economy, GCC central banks are faced with expanding economies that were already overheating at the higher rates.
On Tuesday, the Federal Reserve slashed key interest rates three- quarters of a point, lowering the federal funds rate to 2.25 per cent, and most GCC central banks followed suit with cuts of their own.
Dubai-based investment bank EFG-Hermes said on the same day that the need for a "currency reform" in the GCC increases with the aggressive interest cuts in the United States and the sharp dollar weakness.
"We forecast a greater than 60 per cent probability of currency reform" in the first half of 2008 by one or more states, the bank said, without elaborating whether reform should mean currency depegging or revaluation.
"The talks are in very advanced stages and close of the deal is expected by April end or early May," a senior executive of Adamjee Insurance Company, Pakistan-based insurer, who is tying up the deals, told PTI.
A consortium consisting of China's Gezhouba Water and Power Company and China National Machinery and Equipment Import and Export Corporation (CMEC) were awarded contracts by Pakistan in December last year to build the Rs 78730 milllion project in eight years.
Chinese insurance companies PICC, Ping An, China Pacific and AIG (China) have experience in insuring the works carried out by the Chinese contractors in China-based domestic projects, Zersis Rustom Birdie, General Manager (Development) of the Karachi-based insurance company, said.
"We feel they (Chinese firms) are better experienced than European-based reinsurance companies to cover the works carried out by Chinese contractors in Pakistan," he said.
Asked if the premiums from the international reinsurance companies were high because of war and terrorism-related risks, Birdie did not comment directly but said European firms were tough on terms for such a project as they did not have Chinese domestic experience directly and used PICC or Ping An in the past.
Also, Birdie said, there was "the country risk" of Pakistan and the area is in an earthquake-prone belt. "Severe earthquake of October 2005 is still fresh in memories".
"Available liquidity that is accompanied by a fixed supply of goods and services ... and the drop in the value of local currencies due to the weakening of the dollar" are the two main reasons for inflation, said the Saudi-based federation, which groups the region's chambers of commerce, industry and agriculture.
The study pointed out that the weakening greenback contributes to the "increase in the cost of GCC imports from countries whose currencies had appreciated against the dollar, like the EU, Japan and China."
"The imports of the GCC jumped from 154.5 billion dollars in 2003 to 376 billion dollars in 2007, a 143 per cent increase," the study said.
The dollar peg forces GCC central banks to follow the US Federal Reserve in setting interest rates. But while the US central bank continues cutting rates to stimulate a sluggish economy, GCC central banks are faced with expanding economies that were already overheating at the higher rates.
On Tuesday, the Federal Reserve slashed key interest rates three- quarters of a point, lowering the federal funds rate to 2.25 per cent, and most GCC central banks followed suit with cuts of their own.
Dubai-based investment bank EFG-Hermes said on the same day that the need for a "currency reform" in the GCC increases with the aggressive interest cuts in the United States and the sharp dollar weakness.
"We forecast a greater than 60 per cent probability of currency reform" in the first half of 2008 by one or more states, the bank said, without elaborating whether reform should mean currency depegging or revaluation.