Dominating: 65% is the share of power generation sector in total outstanding infrastructure financing, which is the largest. PHOTO: INP
KARACHI: Infrastructure project financing is gathering pace in Pakistan as its outstanding amount stood at Rs312.3 billion at the end of March, which is up 22.6% from a year ago.
According to latest statistics released by the State Bank of Pakistan (SBP), the quarter-on-quarter growth of 4.9% in infrastructure financing in January-March was mainly on the back of power generation, liquefied petroleum gas (LPG) and road, bridge and flyover (RBF) sectors.
The SBP attributed the surge in infrastructure financing in part to the continuous decline in the central bank’s discount rate and improved economic conditions.
The portfolio of banks and development finance institutions (DFIs) for infrastructure project financing has recorded a growth for the fifth consecutive quarter since December 2013, the SBP data shows.
Outstanding infrastructure financing increased in all sectors, except for power transmission. The largest share in total outstanding infrastructure financing was for the power generation sector (65%), which was followed by telecom, RBF, oil and gas exploration and petroleum sectors.
The total amount of non-performing loans (NPLs) in infrastructure financing increased 3.1% on a quarter-on-quarter basis to Rs16.6 billion in the January-March period. However, NPLs recorded a decline of 8% on a year-on-year basis as they amounted to Rs18 billion at the end of March 2014.
The major share in NPLs belonged to the power generation sector (53%) while the share of the telecom sector was 28% at the end of the first quarter of 2015. The cumulative amount disbursed as of March 30 increased 12.6% on an annual basis to Rs367 billion. About 60% of the cumulative amount disbursed was in the power generation sector followed by the telecom sector (17%).
The institutional share in the outstanding portfolio of infrastructure financing has largely remained flat with a large share for private-sector banks (77%) followed by public-sector banks (16%). The share of Islamic banks in the total outstanding amount declined from 3% in the Oct-Dec quarter to 2% in the Jan-Mar quarter.
The share of private-sector banks in NPLs now stands at 67% while the share of public-sector banks is 16%.
Published in The Express Tribune, July 12th, 2015.
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