Pak looks to India for infra financing firm

In economic matters, India does impress Pakistan. The neighbouring country is understood to have shown interest in setting up a specialised institution, on the lines of the India Infrastructure Finance Company Ltd (IIFCL), in order to finance its infrastructure-expansion requirement.

On the invitation of State Bank of Pakistan Governor Shamshad Akhtar, IIFCL chairman SS Kohli and another top executive from Infrastructure Leasing and Finance Service (IL&FS) were in Pakistan a few days ago to share the Indian experience in infrastructure financing.

Both India and Pakistan face challenges on the infrastructure front. India needs $320-360 billion in five years while Pakistan requires $40 billion in the same period to develop its infrastructure.

Kohli apprised Pakistan's Infrastructure Finance Task Force, bank chiefs and the apex industry body "" Pakistan Business Council "" about India's public-private partnership initiative (PPP), viability gap funding, IIFCL's financing schemes, government policies and how funds are mobilised for infrastructure projects.

Though economic reforms started during the 1990s in both the countries, the size of PPP projects are small in Pakistan.

The country is keen to develop projects under this model for roads, bridges, highways, dams, airports and ports. Like India, Pakistan also needs to strengthen its power sector and augment supply. It also wants to diversify energy production and move away from gas-based energy system to sustain 7 per cent economic growth.

Like India, Pakistan also needs to strengthen its power sector and augment supply. It also wants to diversify energy production and move away from gas-based energy system to sustain 7 per cent economic growth.

"Pakistan does have an Infrastructure Project Development Facility. But, they feel the need for a specialised financial institution for infrastructure financing," sources said.

Development of the capital market is also an important issue that Pakistan wants to address on a priority basis to ensure adequate resources are available for infrastructure financing.

The IL&FS executive made presentations to Pakistani bankers on project financing and private sector operations in India.

This type of consultation on infrastructure financing, a first of its kind, will further enhance economic ties between the two neighbours.

As both are trying to remove various barriers to better trade, the bilateral trade has increased from $235 million in 2001-02 to more than $1 billion in 2006-07.

IIFCL was incorporated on January 5, 2006 as a wholly government-owned company and is a dedicated institution purported to assume an apex role for financing and development of infrastructure projects.

The resource-raising programme of the IIFCL has sovereign support. It has sanctioned loans amounting to Rs 8,810 crore in 2006-07 for projects on roads, power, airport and seaports.