FDI in Power Sector widens by 66% YoY during 1HFY21

January 19, 2020 (MLN): Pakistan’s Power Sector has received the highest net FDI worth $80.9 million in December’20, followed by the Trade and Oil & Gas Exploration sector with net negative FDI of $28.2 million and $26.5 million respectively.

Cumulatively, during 6MFY21, the Power sector remained the major recipient of the foreign inflows, as it fetched a net $434.9 million, showing an increase of 66% YoY when compared to the net inflows of $262.2 million in the corresponding period of FY20.

According to the latest data released by the State Bank of Pakistan (SBP) on total Foreign Investment received by sectors, Coal Power projects under Power Segment attracted the most of investors’ attention as it received the highest net inflows of $252.2 million during 6MFY21 compared to the net outflows of $153 million in Jul-Dec FY20. This was followed by Hydel Power Projects which attracted a net FDI of 105.7 million during the period mentioned above as against $54.6 million in the corresponding period of last year.

The detailed analysis revealed that the second sector with higher net flows in Pakistan is Financial Business. During Jul-Dec FY21, the sector fetched a net $145.9 million, which was 10% lower when compared with the net investment of $162.1 million in the same period of FY20.

The third-highest net FDI receiver is the Oil & Gas Exploration sector with net inflows of $123 million during the period under review, showing a decline of 13% YoY as the sector observed $141.5 million net foreign inflows in Jul-Dec FY20.

The next in line is the Electrical Machinery sector which fetched a net of $60.2 million, compared with the net investment of $117.8 million net in 5MFY20, showing a fall of 49% YoY.

Furthermore, the Trade sector received net inflows of $56.5 million against $19.1 million reported in the same period of last year.

Other sectors such as Construction, Automobile, and Chemicals also managed to fetch decent investments worth $24 million, $17.2 million, and $13.4 million respectively during Jul-Dec FY21.

On the other hand, the Communication sector which attracted net FDI of $432 million during 1HFY20, witnessed net divestment of nearly $1 million in 1HFY21 as the Telecommunication sector under the Communication head pulled in $27 million foreign direct investment in the first half of this fiscal year, compared to the inflows of $419.7 million during Jul-Dec FY20.

Moreover, the other sectors that saw notable foreign disinvestment during the period include; Petroleum Refining (-$11.9 million), and Mining & Quarrying (-$7.7 million).

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