Pakistan: Robust vendor industry must for efficient automobile industry

The sector experts are of the consensus that the policy governing automobile industry in Pakistan has remained ‘OEM centric’ from the day one. This includes, incentives for the new entrants, lopsided indigenization policy, nominal difference in the duty rates on CKD kits and basic raw material and above all failure of the government in containing influx of parts as ‘scrap’. As a result, the vendor-industry has been fighting for its existence.

The biggest proof is that the annual turnover of the replacement market (parts market) in Pakistan is estimated around PKR35 billion. Ironically out of this only 5% is being met by the local industry. Most of the parts are imported as ‘scrap’. High-end electronic components are being ‘smuggled’. As a result local vendor fail to achieve economy of scale.

If I peep into the history, disbanding the manufacturing of Bedford trucks and buses in Pakistan is the ‘assassination’ of the units which were manufacturing engine blocks, gear, rings and pistons. This genocide was done soon after nationalization of the unit manufacturing Bedford trucks and buses in Pakistan and commencement assembly of a Japanese brand at the facility. This also led to ‘financial demise’ of Pakistan Machine Tool Factory operating in Karachi-Sindh.

Analysts also refer to the ‘absurd’ policies of the Government of Pakistan. Lately the number of OEMs in Pakistan has exceeded 18, from around half a dozen. All the new entrants were allowed to import completely built units (CBUs) in significantly large quantities and given a long period to even commence local assembly. They were also allowed to import many parts on the premise that local vendors are incapable of producing parts as per their global standards.

A question arises, if the local vendors are incapable of producing parts of international standards, who is to be blame, OEM or vendor? Sector analysts say that the GoP facilitates the OEMs the maximum because they have brought foreign investment. However, even the tier-one parts manufacturers are not given that kind of VVIP status.

At this time headlines are appearing in local media that the OEM are facing problems in opening letters of credit, due to the limited availability of the foreign exchange with State Bank of Pakistan (SBP). However, there is little talk about problems being faced by the vendors, which mostly fall in the category of SMEs and micro-enterprises. There are approximately 2,000 vendor units, which employ nearly 100,000 people.

A points which needs to be deliberated is that OMEs have borrowed heavily from the financial institutions, whereas vendor units, particularly third-tier units having the largest population and employment have invested their own money. Any deviation/concession to the OEMs to import parts which can be produced locally renders these units economically unviable.

Although, some of the readers don’t appreciate reference or comparison with India, it must be remembered that for decades it kept of models which did not have high ecstatic value, only to support the vendor units.

Another problem faced by Pakistan is that at present no steel manufacturing plant is operating in the country. Most of the units are ‘re-melting’ units which mostly use scrap. The output is below ‘prime quality’, which also lowers the quality of the body of the CBUs.

It may not be out of context to say that the two leading tractor manufacturing units face intermittent closure, because of high inventory levels. The incumbent government has allowed import of second-hand tractors, which is highly detrimental for the local manufacturers. It is ironic because the indigenization level is more than 95%.

One also fails to understand that the GoP has fixed agri lending target of PKR 1.8 trillion. The country needs use of machinery in agriculture, and tractor is the basic machine used for ground leveling, particularly laser-guided tractors. Appropriate field leveling also helps in prudent use of water, which is in short supply in the country. 

 

 

 

Iran drills 75 oil and gas wells in a year

According to The Tehran Times, National Iranian Drilling Company (NIDC) has completed operation and drilled 75 oil and gas wells during the Iranian calendar year, ended on March 20, 2022. 

Hamidreza Golpayegani, Managing Director of the company informed that NIDC has drilled six development, five exploratory and 64 workover ones.

The official stated that 56 of the mentioned wells were drilled in the operational zone of the National Iranian South Oil Company (NISOC), 10 wells were drilled in the fields under the supervision of the Iranian Offshore Oil Company (IOOC), three in the fields under the operation of Petroleum Engineering and Development Company (PEDEC), one in the field under the supervisor of Iranian Central Oil Fields Company (ICOFC), three wells in the framework of project and two in the operational zone of the drilling management department of National Iranian Oil company (NIOC).

The official said that 76,125 meters of drilling was conducted in the mentioned wells. Collectively 44 light and heavy drilling rigs of NIDC are operating in the operational zone of NISCO, two rigs including one onshore and one offshore, in the zone of IOOC, seven rigs in the zone of PEDEC, six rigs in the zone of the drilling management department of NIOC, and one rigs in the project of using underground waters implemented by the Vice-Presidency for Science and Technology.

NIDC owns 70 light, heavy and super-heavy drilling rigs, including 67 onshore drilling rigs and three offshore rigs.

The company managed to carry out 10,182 meters of horizontal and directional drilling in 43 oil and gas wells across the country during the Iranian year 1399.

Some 654 meters of core extraction drilling was also conducted in the mentioned period which was a huge achievement for assessing the condition of the country’s oil and gas reserves.

Back in July 2021, Shahram Shamipour, Director of Renovation and Upgrading in NIDC had informed that the Company had allocated 5.2 trillion rials, about US$18 million for the renovation and upgrading of its drilling rigs and equipment in the company’s operational, technical, specialized, and logistical departments.

According to him, the renovation and upgrading operations are aimed at improving the performance of these rigs which are active in the country’s oil and gas field development projects.

Shamipour noted that the equipment going through renovation operations include fluid pumps, draw-works machinery, charting tools, pumps for cementing and acidizing trucks, tow trucks, cranes, piping machines, generators, hydrogen sulfide gas treatment systems, acid-coated storage tanks, and cement transport bunkers. 

Considering the National Iranian Oil Company’s strategies for strengthening the presence of domestic companies in the development of the country’s oil fields, NIDC, as a major subsidiary of the company, has been supporting such companies by lending them drilling rigs and other necessary equipment.

After the US reimposition of sanctions against Iran, indigenizing the know-how for the manufacturing of the parts and equipment applied in different industrial sectors is one of the major strategies that the Islamic Republic has been strongly following up to reach self-reliance and nullify the sanctions.

Oil, gas, and petrochemical industries have outstanding performances, with indigenizing the knowledge for manufacturing many parts and equipment that were previously imported.

Among different sectors of the mentioned industries, drilling could be mentioned as a prominent example in this regard.

 

Iran drills 117 oil and gas wells in first 10 months of current calendar year

National Iranian Drilling Company (NIDC) has completed drilling of 117 oil and gas wells during the first nine months of the current Iranian calendar year. Managing Director of the company, Abdollah Mousavi said the drilled wells consisted of 27 development wells, one appraisal well, 85 workover wells and four exploratory wells.

The official stated that during this period, 18 wells were drilled 326 days earlier than the schedule and handed over to the applicant company for operation, adding that the early production of the wells, rig clearance, and cost reduction, which are resulted through cooperation between the experts of NIDC and the operating company, is economically viable significantly.

After the US re-imposed sanctions on Iran, indigenizing the know-how for the manufacturing of the parts and equipment applied in different industrial sectors is one of the major strategies that the Islamic Republic has been strongly following up to reach self-reliance and nullify the sanctions.

Oil, gas and petrochemical industries have achieved outstanding performances due to indigenizing of the knowledge for manufacturing many parts and equipment that were previously imported. Among different sectors of the mentioned industries, drilling could be mentioned as a prominent example in this regard.

NIDC managed to indigenize the knowledge for manufacturing 6,000 drilling equipment in collaboration with domestic manufacturers and engineers in the previous Iranian calendar year.

Before this success, the technology for manufacturing the mentioned equipment was in the possession of a handful of foreign companies.

The equipment indigenized by NIDC includes drilling mud pumps, blowout preventers, traction motors, draw-works, drilling fluid recycling systems, mission centrifugal pumps, top drives, and drilling rig slow circulation rate pressure systems.

The company has also managed to indigenize the know-how for manufacturing 242 parts highly-applied in the drilling industry during the first half of the current Iranian calendar year.

In order to indigenize the technology to manufacture these parts, NIDC inked six research deals with domestic universities and knowledge-based companies.

At the beginning of the current Iranian year, NIDC managing director had said that his company’s performance will be more outstanding in this year, which is named the year of surge in production.

The official’s saying has already come true, as his company managed to indigenize the know-how for manufacturing some significant parts, and also in completing the digging operations sooner than the schedule.

NIDC accounts for a major part of drilling exploration as well as appraisal/development wells in Iran. It holds 70 onshore and offshore drilling rigs as well as equipment and facilities for offering integrated technical and engineering services.