PAR News - Fri, 09 Feb 2024

PAR News Bulletin - Fri, 09 Feb 2024

PAR News - Fri, 09 Feb 2024
PAR News - Fri, 09 Feb 2024
PAR News
February 9, 2024
News

TOPLINE

  • The general polls were mostly peaceful, but credibility concerns arose due to PTI's absence and a delay in result issuance as rigging claims were rampant due to delay in the announcement of results. Tensions remain high as uncertainty persists.
  • Wheat output for the season is expected to surpass 28.86 million tons with ample water and recording planting areas helping.
  • The Cabinet Committee on Privatization (CCoP) has postponed approval of the Power Division's proposal to privatize Discos management. PIA and Roosevelt Hotel are also slated for privatization.
  • The Economic Coordination Committee approved Rs 10 billion for cybersecurity and raised gas prices for two Punjab-based fertilizer plants.
  • Oil prices surged more than 3% on Thursday amid concerns of escalating conflict in the Middle East following Israel's rejection of a ceasefire offer from Hamas.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

  • Wheat Output Expected to Boost Economic Growth: Wheat output for the season is expected to surpass 28.86 million tons, aiding economic growth. Factors like ample water supply and record planting areas contribute, but actual production hinges on growing conditions and input accessibility. Punjab expects 23.50 million metric tons, while Sindh projects 3.3 million metric tons. [The Nation]
  • Unmilled Wheat Import: Rs 25.1 billion was the import value of unmilled wheat in Dec 2023, down 25% from Rs 33.4 billion in Dec 2022, according to the Pakistan Bureau of Statistics. [ET]
  • Spices Export: Rs 3.35 billion was the export value of spices in Dec 2023, up 61% compared to Rs 2.08 billion in Dec 2022, according to the Pakistan Bureau of Statistics. [ET]
  • Readymade Garments Export: Rs 84.6 billion was the export value of readymade garments in Dec 2023, up 17.9% compared to Rs 71.7 billion in Dec 2022, according to the PBS. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

  • MPCL Enters Agreements for SEPL Interests: Mari Petroleum Company Limited (PSX: MPCL) has entered agreements with Spud Energy Pty Limited (SEPL) to acquire a 40% working interest in Zarghun South D&PL and a 27.55% working interest in Nareli Block. The acquisitions, as announced by MPCL through a notice to the PSX, are contingent upon regulatory approvals and the fulfillment of related formalities. [MG]
  • OGRA Sets Gas Price Hikes for SNGPL, SSGCL: OGRA has determined new gas prices for Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) for the fiscal year 2023-24, with SNGPL seeing a 36% average increase and SSGCL permitted a 5% increase. The decision, under the OGRA Ordinance, has been forwarded to the federal government for approval. [BR]
  • Saudi Hurdles Delay Pakistan Solar Project: ACWA Power is poised to propose a low tariff for a 600 MWp solar project in Pakistan, drawing on its success in UAE and Oman. However, bureaucratic hurdles, including the absence of a G2G framework law and tariff discovery mechanisms, have stalled Saudi investment in Pakistan's renewable energy sector, despite longstanding interest and directives from Saudi leadership. [BR]
  • CCoP Delays Discos Privatization Approval: The Cabinet Committee on Privatization (CCoP) has postponed approval of the Power Division's proposal to privatize Discos management, seeking more information and responses to queries from other ministries. The Cabinet Committee on Privatisation approved handing over management control of two power distribution companies to the private sector and increased the Privatisation Commission's budget by 175% to cover payments to financial advisors for projects like the privatization of Pakistan International Airlines and the Roosevelt Hotel in New York. [ET] [BR]
  • NEPRA Approves Bagasse FCC for IPPs: NEPRA has approved the fuel cost component (FCC) for bagasse-fired Independent Power Producers (IPPs) from October 2018 to September 2022. This decision, based on NEPRA's 2013 determination, followed careful consideration of submissions and comments, with NEPRA noting concerns about linking bagasse prices with CPI due to its varied commodity basket. [BR]
  • Pakistan's Power Sector Underperformance: According to NPERA, Pakistan's power generation and transmission systems, both public and private, are generally underperforming despite high consumer tariffs, with the exception of nuclear power plants which showed outstanding performance. Thermal plants, although eligible for capacity payments, remained underutilized due to high costs. [Dawn]
  • ECC Raises Gas Prices: Approves Cybersecurity Grant - The ECC has raised the gas price for Fatima Fertilizer (Sheikhupura) and Agritech (Mianwali) plants to Rs 1,239 Mmbtu from July 2023 onward, citing manufacturers' increase in urea prices from Rs 2,791 to Rs 3,277 per 50-kg starting July 4, 2023. Additionally, the ECC approved a Rs 10 billion TSG to enhance technical capabilities for identifying potential cyber threats on the national critical information infrastructure. [BR]
  • Chinese Support Solarizes Balochistan: Pakistan's Solar Capacity Grows - With Chinese support, Balochistan government solarized 12 educational institutions, labs, and hospitals. Pakistan's solar capacity reached 1.24 GW in 2022, up 17% from 2021, with plans to increase solar energy share. Pakistan's Solar Energy Market is forecasted to grow at a CAGR of 49.68% from 2023 to 2028, reaching 9.77 gigatonnes. [BR] [ET]
  • Sindh Objects to Federal Push for Canal Network Development: Sindh objected on Wednesday to a sudden joint effort by the federal government and the Water and Power Development Authority to push for approval of a Rs 1.1 trillion development package for canal network construction. The disagreement arose during an Executive Committee of the National Economic Council (ECNEC) meeting, as reported by Planning Ministry officials. [ET]

AGRI UPDATES & PAKISTAN POLICY

  • Elections 2024: The general polls were mostly peaceful, but credibility concerns arose due to PTI's absence and delayed result issuance. PTI-backed independents led initially, but the Election Management System malfunctioned, and mobile internet services were temporarily shut down. The US expressed interest in fostering relations with Pakistan's new government. Pakistan Stock Exchange’s benchmark KSE-100 index plunged due to political uncertainty as election results were delayed. The election was declared closed following protests, mobile service suspension, and bomb blasts. [BR] [BR] [The News] [BR] [Dawn] [ET] [Al Jazeera]
  • Government Misses Financing Target Amid Interest Rate Concerns: The government fell short of its financing target, raising only Rs 64 billion through T-bill auctions with a stabilized return rate of around 20.4%, as commercial banks demanded higher interest rates amid concerns of potential policy rate hikes in line with IMF recommendations for tight monetary policy. [ET]
  • Government Borrowing Surges Amid Fiscal Challenges: Government borrowing from banks surged in the first 7 months of the 2023/24 fiscal year, more than doubling to Rs 4.133 trillion as the government grappled with financing a widening budget deficit and increasing debt servicing costs amidst high inflation and interest rates, according to the latest data from the State Bank of Pakistan. [The News]
  • Finance Ministry Releases FY 2024-25 Budget Call Circular: The Finance Ministry released the Budget Call Circular for FY 2024-25, scheduling a budget presentation to the cabinet and parliament in June 2024. Principal accounting officers are required to submit various budget forms to the Budget Wing, Finance Division by March 11, 2024, as per the circular. [BR]
  • FBR's New Rules for International Oil Imports: The Federal Board of Revenue (FBR) issued new rules for international oil suppliers to import crude oil and petroleum products on foreign supplier accounts via customs bonded storage facilities, in accordance with Federal Government policy guidelines and ratified by the Federal Cabinet. [BR] [ET] [FBR] [ProPakistani] [Al Sadat Marketing]
  • Pakistan's Currency Stability Relies on IMF Review, Govt Transition: According to Arab News, Pakistan's currency stability and international bonds rely on the successful second review of its IMF program and a peaceful government transition post-elections. The rupee has strengthened by 9% to 279.34 against the US dollar from its low of Rs 307 in September, credited to the government's actions against illicit currency trade, IMF program completion, and inflows from various sources. [The News]
  • ECC Decisions: Cybersecurity Funds & Gas Price Hike: The Economic Coordination Committee approved Rs 10 billion for cybersecurity and raised gas prices for two Punjab-based fertilizer plants. They also required Cnergyico Petroleum Limited to settle Rs 50 billion in unpaid petroleum levy within three years with interest through a bank guarantee, warning that failure to do so would disqualify them from incentives under the new brownfield petroleum policy, potentially leading to operational closure. [Dawn]
  • FBR Prevents Data Breach from Malware Infection: The Federal Board of Revenue (FBR) prevented a significant data breach by promptly halting a malware infection transmitted through a USB device to FBR's computers. The incident originated from an infected USB drive used in FBR House (Room 571), but the high-severity malware was successfully blocked on the PC, averting any major data breach or system compromise. [BR]
  • Pakistan Bonds Surge on Election Optimism: Pakistan's US dollar-denominated Eurobonds and Sukuks are among the world's best-performing bonds, driven by optimism surrounding domestic macroeconomics amid ongoing elections. The robust rally reflects restored foreign investor confidence and anticipations of a new economic roadmap to address economic and financing crises, particularly in foreign debt repayments. [ET]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

  • Asia-Pacific Markets Mixed: Chinese Equities Drop, Nikkei Rises - Chinese equities in Hong Kong declined for a third consecutive day, while Japanese stocks, represented by the Nikkei 225 index, rose 0.3%. The Hang Seng China Enterprises Index dropped by 1%. The MSCI Asia Pacific Index is set for its third weekly gain, supported by China's stimulus efforts to stabilize the equity market. Both indexes are up for the week, driven by Tuesday's optimism regarding state support measures. [Bloomberg] [CNBC] [Barrons] [Reuters]
  • Uttarakhand Passes Uniform Civil Code, Sparks Debate: An Indian state passed a common civil code to replace religious laws, sparking debate. The Uniform Civil Code (UCC) in Uttarakhand aims to protect women's rights, including equal inheritance and divorce proceedings in civil courts, but critics fear its broader implementation by the ruling Hindu nationalist party. [Dawn] [ET]
  • ADIA to Set Up India Investment Fund in Gujarat: Abu Dhabi Investment Authority (ADIA), UAE's largest sovereign wealth fund, plans to establish a $4-5 billion fund for investing in India through a tax-neutral finance hub in Gujarat's GIFT City, according to sources. The regulatory authority at GIFT City has granted in-principle approval for ADIA to set up the fund, sources said, speaking on condition of anonymity. [Mint]
  • UN Condemns Israel's Gaza Border Building Destruction: The United Nations rights chief condemned Israel's reported ongoing destruction of buildings along the Gaza border as a war crime. Volker Turk cited reports of Israeli military operations to create a "buffer zone" by demolishing all structures within a kilometer of the border fence with Gaza. [Dawn] [ET]
  • Maersk Shares Fall on Bleak Earnings Outlook: Maersk shares dropped on Thursday due to a grim 2024 earnings outlook linked to an oversupply of container vessels and Yemeni rebel attacks in the Red Sea. The company's 2023 earnings were impacted by shipping sector overcapacity, resulting in a significant drop in net profit to $3.8 billion from $29.2 billion in 2022, with revenue declining to $51 billion from $81.5 billion. [BR]
  • West Anxious as Moscow and Beijing Strengthen Ties: Over the past two years, the West has grown increasingly anxious as Moscow and Beijing, both aiming to expand their global influence, bolster ties in trade and defense. Chinese President Xi Jinping and Russian counterpart Vladimir Putin accused the United States of "interfering" in their countries' affairs during a Thursday telephone call, according to the Kremlin. [HKFP] [WION] [MT]
  • US Natural Gas Futures Hit Three-Year Low Below $2: US natural gas futures fell about 2% on Wednesday, hitting a three-year low below $2 per million British thermal units (mmBtu), driven by ample storage, rising output, and decreased gas flow to LNG export plants. Analysts at Gelber and Associates see further downside after breaching the $2.00 support level, targeting $1.80 as the next significant support. [BR]
  • Zinc Prices Drop on Chinese Property Concerns: Zinc prices hit a five-month low on Thursday due to rising inventories and concerns about the Chinese property sector. Three-month zinc on the London Metal Exchange dropped 0.8% to $2,382 per metric ton, touching its weakest level since August 24 at $2,350. Dan Smith, head of research at Amalgamated Metal Trading, highlighted growing negativity around the Chinese property market as a worrying factor. [BR]
  • Oil Prices Surge Amid Middle East Tensions: Oil prices surged more than 3% on Thursday amid concerns of escalating conflict in the Middle East following Israel's rejection of a ceasefire offer from Hamas. Brent futures closed up $2.42 at $81.36 a barrel, while U.S. West Texas Intermediate crude climbed $2.36 to $76.22. This increase led the Brent benchmark to breach $80 a barrel and WTI to rise above $75 a barrel for the first time in February. [Reuters]

PAKISTAN - REMAINDERS

  • Government Suspends Nationwide Communications on Election Day: The government suspended internet and mobile services nationwide on Election Day due to a deteriorating law and order situation and escalating security threats following a surge in terrorist activities resulting in loss of lives. [BR]
  • Govt Proposes Customs Rules Changes for Trade Efficiency: The federal government aims to streamline trade processes by allowing the import, local sale, and re-export of petroleum products through amendments to the Customs Rules, 2001, with the introduction of the Customs Bonded Facilitation Rules, 2024. The Federal Board of Revenue (FBR) is seeking feedback from stakeholders for 15 days before enforcing the amended rules via gazette notification. [ET]
  • 12 Killed in Election-Related Violence in Country: At least 12 people, including 10 security personnel, were killed and 39 others injured in numerous militant attacks and other election-related violence nationwide as the country conducted voting to choose new leadership for the next five years, according to authorities and local sources on Thursday. [ET]
  • Opinion: Immediate Economic Priorities for the Incoming Government - “The new government should prioritize formation of a ‘price control commission’ which will highlight – on the lines done by China during the 1980s in particular, under its ‘dual-price’ policy plan – primary economic sectors for domestic production, exports, and essential commodities affecting cost of daily living” - By Dr Omer Javed [BR]
PAR News - Fri, 09 Feb 2024

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