PAR News - Mon, 06 May 2024

TOPLINE

• Cotton prices continue to decline, with low business volume and a crisis in the textile sector. Rising production costs worsen the situation, and farmers express frustration over government price intervention.
• 1.3 million metric tonnes of defective wheat, worth 330 billion rupees, were imported from August 2023 to March 2024.
• Minister of State for Information Technology and Telecommunication Shaza Fatima Khawaja emphasized the crucial role of agritech in ensuring food security, applauding Syngenta Pakistan's launch of the "Crop Wise Grower" mobile application.
• Deputy Prime Minister and Foreign Minister Mohammad Ishaq Dar, alongside China's Vice Chairman Zheng Jianbang, reaffirmed commitment to completing all CPEC projects and strengthening cooperation during the OIC Islamic Summit Conference in Banjul, The Gambia.
• South African experts deem Thar Coal suitable for various applications, including power generation through gasification.
• The International Monetary Fund plans to send a mission to Pakistan this month to discuss a potential new program amidst Islamabad's annual budget-making process.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

• Khalid Hussain Batth Condemns Punjab Arrests: Khalid Hussain Batth, Chairman of Kissan Etihad Pakistan (KEP), condemned the arrest of growers and violence against civilians in Punjab, urging the immediate release of detainees. He demanded swift wheat procurement by the Punjab government at the government-set rate of Rs 3,900 per 40 kg, expressing serious concerns over the delay. [Dawn]
• Minister Praises Agritech for Food Security: Minister of State for Information Technology and Telecommunication Shaza Fatima Khawaja emphasized the crucial role of agritech in ensuring food security, applauding Syngenta Pakistan's launch of the "Crop Wise Grower" mobile application. She highlighted agritech's contribution to enhancing agricultural productivity, supporting farmers' economic well-being, and securing the country's food supply. [ET] [ET]
• Textile Crisis: Declining Cotton Prices: Cotton prices continue to decline, with low business volume and a crisis in the textile sector. Rising production costs worsen the situation, and farmers express frustration over government price intervention, which they see as causing losses rather than benefits. [BR]
• Punjab Aims for 6.5 Million Cotton Bales: During a cotton crop review meeting, Punjab's Agriculture Minister expressed confidence in reaching the target of 6.5 million bales of cotton this year. He emphasized the importance of cotton cultivation in Punjab and reiterated the government's commitment to restoring production under the directives of Chief Minister Maryam Nawaz. [ET]
• Pakistan Imports Defective Wheat Worth Billions: 1.3 million metric tonnes of defective wheat, worth 330 billion rupees, were imported from August 2023 to March 2024. The former caretaker government imported 2.8 million metric tonnes worth Rs 250 billion, while the current government imported 700,000 metric tonnes worth Rs 80 billion. Overall, Pakistan spent over Rs 330 billion or $1.1 billion on wheat imports. [BR]
• Wheat Import Discrepancy Uncovered in Pakistan: During the caretaker government, a wheat import summary for 1 million tons was prepared, but documents show 2.778 million tons were ordered. The initial summary was sent to the ECC on July 27, 2023, supervised by Food Security Minister Tariq Bashir Cheema. However, the decision was postponed by the ECC meeting chaired by Finance Minister Ishaq Dar on August 8, just before the caretaker government ended. [Samaa] [Geo]
• Cement Despatches Dip, Exports Surge: Cement despatches in April 2024 slightly decreased compared to the same month last fiscal year, with total despatches at 2.943 million tons versus 2.951 million tons previously. Local cement shipments notably declined by 7.99% to 2.328 million tons, while exports saw a significant increase of 45.96%, rising from 420,857 tons to 614,264 tons during the same period. [BR]
• Pulses Import: Rs 18.5 billion was the import value of pulses in March 2024, down 31.9% compared to Rs 27.16 billion in March 2023. [ET]
• Raw Cotton Import: Rs 8.48 billion was the import value of raw cotton in March 2024, down 79.7% compared to Rs 41.74 billion in March 2023. [ET]
• Readymade Garments Export: Rs 80.1 billion was the export value of readymade garments in March 2024, up 3.37% compared to Rs 77.46 billion in March 2023, according to the PBS. [ET]
• Fish Export: Rs 10.3 billion was the export value of fish and fish preparations in March 2024, down 32.8% compared to Rs 15.3 billion in March 2023, according to the Pakistan Bureau of Statistics. [ET]

ENERGY - WEATHER, WATER & POWER

• ADB Pledges $5 Billion for Climate, Poverty: The ADB and donors have pledged $5 billion in grants over four years to aid countries like Pakistan in addressing climate change and poverty, marking the largest-ever replenishment for ADB's grant operations, stated ADB President Masatsugu Asakawa during the 57th Annual Meeting. [ET]
• CDWP Approves 10 Projects Worth Rs 115 Billion: The CDWP approved 10 development projects worth Rs 115.458 billion, with eight projects worth Rs 17.297 billion receiving direct approval and two projects worth Rs 98.161 billion recommended to the ECNEC. The meeting, chaired by Deputy Chairman Planning Commission Mohammad Jehanzeb Khan, was attended by officials from federal ministries and provincial governments. [BR]
• Pakistan-China Renew CPEC Commitment: Deputy Prime Minister and Foreign Minister Mohammad Ishaq Dar, alongside China's Vice Chairman Zheng Jianbang, reaffirmed commitment to completing all CPEC projects and strengthening cooperation during the OIC Islamic Summit Conference in Banjul, The Gambia. Pakistan reiterated support for China's core issues and emphasized enhanced economic collaboration. [BR]
• Nepra Resolves Patrind Hydro Power Plant Review: Nepra has resolved Star Hydro Power Limited's review motion on the 147MW Patrind Hydro Power Plant, reducing the insurance component for future annual adjustments. CPPA-G was permitted to procure power from the plant in 2008, with a tariff approval in 2009. The project, set up by SHPL, is located in Azad Jammu and Kashmir. [BR]
• K-Electric Seeks Transmission Base Tariff Adjustment: K-Electric has requested a transmission base tariff of Rs 2.9871 per unit for seven years (July 1, 2023, to June 30, 2030) from Nepra. Their proposal includes adjustments for O&M expenses, deferred revenue, working capital, Return on Regulatory Asset Base - Cost of Debt (RoRB -COD), Return on Regulatory Asset Base - Cost of Equity (RoRD - Cost of Equity), and financial depreciation. [BR]
• Oil & Gas Firms Warn of Financial Default: Oil and gas exploration companies warn of imminent financial default as outstanding amounts owed by the state near Rs 1.5 trillion. The Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) emphasized the critical situation in a letter to Petroleum Minister Musadik Malik, citing over $600 million owed to foreign firms. [Dawn]
• Thar Coal Deemed Suitable for Power Generation: South African experts deem Thar Coal suitable for various applications, including power generation through gasification. Sindh Minister Syed Nasir Shah plans to send a delegation to China to inspect a modern gasification plant. These findings were based on a detailed report presented by the South African experts on coal samples from Thar Block-II. [APP]
• CCP Approves PIA Privatization Acquisition: The Competition Commission of Pakistan (CCP) has approved the acquisition of Pakistan International Airlines Corporation Limited (PIACL) by PIA Holding Company Limited (Holdco), advancing PIA's privatization. Holdco will assume all liabilities and subsidiaries, with future owners focusing on core aviation activities, as part of the government's privatization plan for PIA. [BR] [ET]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

• Pakistan's Fiscal Stability Talks: The International Monetary Fund plans to send a mission to Pakistan this month to discuss a potential new program amidst Islamabad's annual budget-making process. Pakistan seeks a longer-term program after completing a short-term $3 billion one, aiming for fiscal stability and welfare improvements, according to a statement by the IMF. [BR] [Dawn]
• Zardari Approves Governors' Appointments: President Zardari has approved the appointment of governors for Punjab, KP, and Balochistan as per the power-sharing formula after the Feb 8 elections. Saleem Haider, Faisal Kundi, and Jafar Mandokhail are appointed for Punjab, KP, and Balochistan, respectively. Meanwhile, MQM aims to retain Tessori as Sindh governor despite PPP objections. [Dawn]
• Saudi Business Delegation Visits Pakistan: A Saudi business delegation arrived in Pakistan to sign investment agreements across sectors. Federal ministers welcomed them in Islamabad. The visit aims to boost foreign investment and strengthen economic ties, following discussions during the Prime Minister's visit to Saudi Arabia. [BR] [ET]
• World Bank Recommends Tax Reforms for Pakistan: The World Bank has advised Pakistan to rationalize Personal Income Tax (PIT) slabs, streamline the GST regime, and unify tobacco taxation. It also suggests establishing a centralized regulatory body for better coordination. According to the World Bank's estimates, eliminating tax exemptions in the GST system could double tax collection. [The News]
• PM Shehbaz Sharif Aims for National Prosperity: Prime Minister Muhammad Shehbaz Sharif reiterated his commitment to national prosperity, aiming to surpass India's progress. Speaking at a ceremony in Lahore, he emphasized collaboration among politicians, bureaucrats, and organizational leaders for the country's development. [BR]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

• Israel Genocide: Talks resumed Sunday to reach a Gaza truce, with Hamas meeting Qatari and Egyptian mediators. Disagreements intensified between Hamas and Israel over war-ending demands. Israeli Prime Minister Netanyahu announced a decision to shut down Al Jazeera's operations in Israel, calling it a "criminal act." [BR] [Al Jazeera] [France24]
• Turkey Halts Trade with Israel Over Gaza Situation: Turkey declared it won't resume its $7 billion annual trade with Israel until a permanent ceasefire and humanitarian aid are ensured in Gaza, making it the first major commercial partner to take such action. Trade Minister Omer Bolat cited Israel's "uncompromising attitude" and the worsening situation in Gaza's Rafah region as reasons for halting all exports and imports. [BR]
• Xi Jinping Visits Paris Amidst Trade Disputes: President Xi Jinping hailed China's ties with France as a global model during his visit to Paris amidst rising trade disputes with the EU. Macron is expected to press Xi on trade imbalances and Russia's role in the Ukraine conflict. Jinping is set to meet Macron and European Commission chief von der Leyen on Monday. [BR] [Dawn] [BBG] [Reuters]
• China Launches Chang’e-6 to Moon's Far Side: China launched an uncrewed spacecraft, Chang’e-6, on a mission to retrieve rocks and soil from the far side of the moon, a pioneering effort in space exploration. The Long March-5 rocket lifted off from Wenchang Space Launch Center in Hainan, marking a significant milestone in China's lunar exploration program. [BR]
• Brazil Floods Claim Dozens of Lives: Raging floods and mudslides in southern Brazil have killed at least 55 people, with nearly 70,000 forced to flee their homes, civil defense officials reported. Additionally, at least 74 people were injured, 67 are missing, and two individuals died in an explosion at a flooded gas station in Porto Alegre. [BR] [Al Jazeera] [CNN] [PT]
• Afghan Diplomat Resigns Amid Smuggling Allegations: Afghanistan's top diplomat in India, Zakia Wardak, resigned after allegedly being caught smuggling nearly $2 million worth of gold into the country. Wardak, the Afghan Consul-General in Mumbai, announced her resignation on social media. She became Afghanistan's most senior representative in India following the closure of the embassy in New Delhi. [BR] [ET]

OPINION(S) & REMAINDERS

• Deadly Bus Crash in Gilgit-Baltistan: A passenger bus on the Karakoram Highway in Gilgit-Baltistan's Diamer district crashed, leaving 20 dead and 21 injured. The bus, en route from Rawalpindi to Gilgit, lost control near Gunar Farm and overturned by the Indus River around 5:30 am, according to rescue officials. [ET]
• Opinion: Inflation Expectations: Normalcy in Sight? - “The decline is particularly sharp in food inflation, especially in wheat, as inflation in Pakistan is largely food-dominated. This downward trend in food prices would help anchor inflation expectations at lower levels, which the SBP aims to achieve by maintaining positive real rates.” - By Ali Khizar [BR]
• Opinion: Redemption of the Power Sector - “There are no defaults against five distribution companies notably Islamabad Electric Supply Company, Gujranwala Electric Power Company, Lahore Electric Supply Company, Faisalabad Electric Supply Company and Multan Electric Power Company. Or to conclude these five discos can be the trailblazers; however, the government’s subsidization policy to equalize tariff makes little sense after the dismantling of Wapda and must be abandoned which in itself would save the exchequer in general and the power sector debt in particular.” - By Anjum Ibrahim [BR]