KARACHI: The State Bank of Pakistan (SBP) has reported that the total outstanding infrastructure finance has surged to Rs297.8 billion at the end of 2014, showing 16.7% increase against the previous year.
As per the BPS data, the increase on quarter-on-quarter basis, infrastructure finance amounted to 5.5% during the corresponding period. Infrastructure finance in power generation, petroleum, oil and gas, and road, bridge and flyover (RBF) sectors rose 2.3%, 27%, 17% and 178%, respectively, while the outstanding portfolio in the telecom sector declined 1% on a quarterly basis.
The data showed that the infrastructure investment as a percentage of the size of the economy is currently only 6% although the country needs to invest around 10% of the GDP until 2020 to close its ‘enormous infrastructure gap’.
The share of oil and gas and RBF sectors in the total outstanding portfolio of infrastructure finance is only 3.7% and 4.7% respectively.
Recent growth observed in the RBF sector is due to the modernisation of the Lahore-Islamabad motorway project added during Oct-Dec 2014. The cost of the project is estimated to be Rs36.8 billion and a syndicate of eight banks is funding the project.
Non-performing loans (NPLs) within infrastructure finance decreased 13.1% from Rs18.5 billion to Rs16.1 billion during the quarter. A significant decrease was observed in power generation and LPG (extraction and distribution) sectors.
On a year-on-year basis, the decline in NPLs clocked up at 17.3%. The major share in NPLs belonged to the power generation sector (53%) and the telecom sector (28%).
As per the SBP, the infrastructure sector requires large upfront capital investments for long-term benefits. Unlike the public sector that also takes into consideration social benefits, the involvement of the private sector in infrastructure is pinned solely on commercial returns. The SBP said appropriate incentives are required to lure private-sector investment to infrastructure finance.
Cumulative disbursements at the end of the last quarter increased 5.2% on a quarterly basis but decreased 1% on an annual basis. About Rs367 billion was the cumulative amount disbursed to all infrastructure sectors at the end of December. Around 60% of the disbursed amount belonged to the power generation sector followed by the telecom sector with a 17% share.
