PAR News - Mon, 08 Apr 2024

PAR News Bulletin - Mon, 08 Apr 2024

PAR News - Mon, 08 Apr 2024
PAR News - Mon, 08 Apr 2024
PAR News
April 8, 2024
News

TOPLINE

  • The ECC approved a Rs 274 billion Cash Credit Limit (CCL) for wheat procurement by provinces and PASSCO. Additionally, the government set a wheat procurement target at 2.5 million metric tons, 69% lower than the current year's target. Punjab farmers' union Kisan Ittehad plans protests for maintaining the wheat support price at Rs 3,900/maund.
  • The IMF has urged the government to align gas tariffs for captive power plants (CPPs) with Regasified Liquefied Natural Gas (RLNG) prices from July 1, 2024-25. IMF loan size and duration for Pakistan will be decided by the Fund, despite Pakistan's preference for a larger program, says Finance Minister Aurangzeb.
  • Pakistan's Liberty Power Holding has inked a $125 million deal to purchase the thermal energy assets of Engro Corp subsidiary, including Sindh Engro Coal Mining Company. This marks one of Pakistan's largest deals in the power sector.
  • The government plans to borrow Rs 4.965 trillion from banks between April and June 2024 to cover its budget deficit, primarily through treasury bills and bonds. The borrowing includes Rs 2.490 trillion from Pakistan Investment Bonds and Rs 2.475 trillion from commercial banks.
  • In March, global food prices rose from a three-year low, driven by increases in vegetable oils, meat, and dairy products, as reported by the FAO. The FAO's index climbed to 118.3 points from February's 117, marking the seventh consecutive monthly decline since the peak in March 2022 during the Russia-Ukraine conflict.
  • Oil prices surged above $90/barrel due to tensions in the Middle East, reduced Mexican exports, US sanctions on Russian cargoes, and Houthi rebel attacks. Despite production cuts by OPEC and allies, Brent crude may reach $100/barrel, raising inflation concerns for US President Biden's reelection and central bank decisions.

AGRI-UPDATES - COMMODITIES, POLICY & DEVELOPMENTS

  • Wheat Support Price Protests: Punjab farmers' union Kisan Ittehad plans protests after Eid Ul Fitr, criticizing the government for maintaining the wheat support price at Rs 3,900 per maund, despite rising production costs. Jamaat-i-Islami acting amir Liaquat Baloch also criticized the government, stating that it has burdened farmers by not increasing the wheat support price, demanding a raise in the support price. [Dawn] [PT] [The News]
  • ECC Approves Rs 274 Billion CCL for Wheat Procurement: The ECC approved a Rs 274 billion Cash Credit Limit (CCL) for wheat procurement by provinces and PASSCO. Additionally, the federal government set a wheat procurement target at 2.5 million metric tons, 69% lower than the current year's target due to Punjab's absence, allowing loans of Rs 275 billion for wheat purchase. [BR] [ET]
  • Wheat Procurement Updates: ECC Confusion - The finance ministry confirmed no delays in wheat procurement target decisions, with gunny bag applications via the PITB App starting on April 13. Meanwhile, the ECC's failure to approve a cash credit limit for wheat procurement was attributed to inexperience, leading to confusion over the necessity of credit covers versus market-driven operations. [Dawn] [ET] [The Nation] [UP]
  • Wheat Vessels Berth at Karachi Port: KGTML informed the Ministry of Ports and Shipping about berthing 7 wheat bulk-carrier vessels at Karachi Port's East Wharf (berths 11-17), crediting efficient operational design and technological integration, influenced by Abu Dhabi Ports Group's global experience. [Dawn]
  • Cotton Production Surges, Stock Levels Low: Cotton production surged by 71% to 8.4 million bales, but ginners have only 60,000 bales left in stock as the season ends. Despite stable local rates, a bearish trend in the international market affects business, exacerbating the textile sector's financial crisis due to the absence of a production target and delays in intervention price announcements. [BR]
  • Pakistan's US Exports Drop 10% Amid Textile Decline: Pakistan's exports to the US fell by 10.14% to $3.63 billion in the first 8 months of the current fiscal year due to a decline in textile exports. Despite this, the US remained Pakistan's top export destination in FY23. Shipments to China surged by 42% to $1.9 billion in July-February FY24. [Dawn]
  • Sugar Import: Rs 103 million was the import value of sugar in Feb 2024, up 84.6% compared to Rs 56 million in Feb 2023. [ET]
  • Leather Gloves Export: Rs 6.18 billion was the export value  of leather gloves in Feb 2024, up 15.42% compared to Rs 5.35 billion in Feb 2023. [ET]
  • Spices Import: Rs 4.59 billion was the import value of spices in Feb 2024, up 45.9% compared to Rs 3.14 billion in Feb 2023, according to the Pakistan Bureau of Statistics. [ET]
  • Readymade Garments Export: Rs 85.7 billion was the export value of readymade garments in Feb 2024, up 25.96% compared to Rs 68.04 billion in Feb 2023, according to the PBS. [ET]
  • Edible Oil Export: Rs 1.44 billion was the export value of oilseeds, nuts and kernels in Feb 2024, down 50.52% compared to Rs 2.91 billion in Feb 2023, according to the Pakistan Bureau of Statistics. [ET]

ENERGY - WEATHER, WATER & POWER

  • Raisi to Visit Pakistan Amid Gas Pipeline Project Launch: Iran's President Raisi plans to visit Pakistan on April 22, coinciding with the start of work on the Pakistan-Iran Gas Pipeline Project by the Ministry of Energy. The project, estimated at Rs 44 billion, will seek funding from the Petroleum Division in the 2024-25 budget due to limitations in funds from the Gas Infrastructure Development Cess (GIDC). [BR]
  • HOBC Price Up by Rs 10/Litre: OMCs raised the price of HOBC by Rs 10 per liter from April 1, 2024, while maintaining the Petroleum Levy at Rs 50 per liter. Despite stable international prices around $98.96 per bbl for petrol 95 Ron in the last fortnight, it had risen from $93.96 per bbl before March 16, 2024. [BR]
  • KE Proposes NDA with JPCL for Thar Coal Conversion: KE proposed signing an NDA with JPCL to maintain data confidentiality about the conversion of JPCL's 600-MW unit to Thar coal. KE sent the NDA proposal following its request for timely approval of its IGP and a recent meeting with the Ministry of Energy's Committee on April 1, 2024. [BR]
  • IMF Urges Gas Tariff Alignment with RLNG Prices: The IMF has urged the government to align gas tariffs for captive power plants (CPPs) with Regasified Liquefied Natural Gas (RLNG) prices from July 1, 2024-25. Energy Ministry officials stated that the government is compelled to increase gas prices for CPPs to match RLNG prices, as these plants, mostly installed in the Sui Southern network, operate at 30-35% efficiency. [The News]
  • CCP Inquiry Raises Concerns on Urea Pricing: A CCP inquiry into urea pricing found concerns about profitability, cost structures, and subsidies' impact on farmers. It raised questions about pricing strategies due to consistent urea prices despite variations in feed gas costs. The CCP recommends legal action against fertilizer manufacturers for allegedly pocketing billions through subsidized gas supply. [BR] [ET]
  • Liberty Power Acquires Engro's Energy Assets: Pakistan's Liberty Power Holding has inked a $125 million deal to purchase the thermal energy assets of Engro Corp subsidiary, including Sindh Engro Coal Mining Company. This marks one of Pakistan's largest recent deals in the power sector, as the company bets on its coal reserves and IMF-led reforms for success amidst the sector's long-standing challenges. [The News] [ET]
  • KE Expects Cost Reduction with 640 MW Renewables: KE anticipates a significant cost reduction in electricity generation with 640 MW from renewables in the next 2-3 years. CEO Moonis Alvi mentioned potential relief for consumers in fuel adjustment surcharges, pending government tariff decisions, with 40 companies, including twelve from Europe, China, and the Middle East, expressing interest in investment. [The News]
  • Railways Achieves Revenue Milestone: Pakistan Railways has achieved a milestone, generating Rs 66 billion in revenue in the first nine months of this fiscal year despite financial constraints. Revenue is projected to surpass Rs 80 billion by year-end, marking a 49.17% increase from the previous fiscal year. Operational readiness has improved, with a 10-day diesel stock ensuring smooth train services during peak periods. [ET]
  • Met Forecasts Rainy Season Ahead: The Pakistan Meteorological Department forecasts normal to above-normal precipitation in April 2024, especially in Khyber Pakhtunkhwa, Azad Kashmir, and the Potohar region. May 2024 is expected to have normal to slightly above-normal precipitation nationwide, followed by normal conditions in June 2024. [BR]

PAKISTAN - ECONOMICS, POLITICS & SECURITY

  • IMF Loan Size Decided by Fund, Says Minister: IMF loan size and duration for Pakistan will be decided by the Fund, despite Pakistan's preference for a larger program, says Finance Minister Aurangzeb. IMF's Julie Kozack expressed readiness for discussions to address Pakistan's challenges, noting a staff-level agreement on the second and final review under Pakistan’s Stand-By Arrangement on March 19, pending Executive Board approval. [BR] [BR]
  • MBS meets Shehbaz Sharif: Saudi Crown Prince Mohammed Bin Salman invited Prime Minister Shehbaz Sharif to an Iftar at Al-Safa Palace in Makkah during Shehbaz's visit. Shehbaz performed Umrah upon arrival and was received by Saudi Ambassador Nawaf Bin Saeed Al-Malkiy. The Iftar was attended by the Prime Minister of Pakistan and the Crown Prince of Bahrain, reported Saudi Gazette. [The News] [ET]
  • Dar, Blinken Reaffirm Bilateral Cooperation: Foreign Minister Ishaq Dar and US Secretary of State Antony Blinken reaffirmed their commitment to enhancing bilateral cooperation, including in trade and investment, during a telephone call on Friday. Both sides expressed dedication to strengthening ties across all areas of mutual interest, as per a statement from the Foreign Office. [BR]
  • Govt to Borrow Rs 4.965 Trillion from Banks: The government plans to borrow Rs 4.965 trillion from banks between April and June 2024 to cover its budget deficit, primarily through treasury bills and bonds. The borrowing includes Rs 2.490 trillion from Pakistan Investment Bonds and Rs 2.475 trillion from commercial banks through market treasury bill auctions. [The News]
  • Finance Ministry Faces Markup Payment Challenges: The Ministry of Finance highlighted challenges in managing markup payments due to strict austerity measures. During a mid-year review on March 30, 2024, the Finance Division informed the Cabinet about the requirement to present a comparison report before the National Assembly by February 28 each year, as per the Public Finance Management Act, 2019. [BR]

INTERNATIONAL - MARKET, POLITICS, SECURITY & DEVELOPMENT

  • FAO Reports Rise in Global Food Prices: In March, global food prices rose from a three-year low, driven by increases in vegetable oils, meat, and dairy products, as reported by the FAO. The FAO's index climbed to 118.3 points from February's 117, marking the seventh consecutive monthly decline since the peak in March 2022 during the Russia-Ukraine conflict, with the latest reading down 7.7% from the previous year. The index rose to 118.3 points from 117.0 points in February, which was the lowest since February 2021 and marked a seventh consecutive monthly decline. [BR] [ET]
  • WCK on Gaza Strike: World Central Kitchen founder Jose Andres raised concerns over the Israeli probe into a strike that killed seven of his staff in Gaza, calling the conflict a "war against humanity itself." While thanking the Israeli Defence Forces for a swift investigation, he emphasized the need for a deeper inquiry, stating that the perpetrator should not investigate themselves. The IDF described the incident as a "tragic mistake." [Dawn] [ET]
  • Israeli Genocide: Conflicting reports on Gaza ceasefire talks in Cairo; Egyptian media cites "significant progress," while Hamas claims Israel rejects demands. Palestinians return to destroyed homes in Khan Younis as Israeli troops withdraw. Israel's military faces global criticism for alleged war crimes. A film explores whether Israel is violating international law, questioning Western powers' silence, particularly the United States. [Al Jazeera]
  • Major Flood in Orsk, Russia; Thousands Evacuated: A major flood in Orsk, Russia, led to thousands evacuating, with Moscow declaring a "critical" situation. The Ural river overflowed, threatening Orenburg. A burst dam and heavy rain caused rising water levels. Over 4,500 people evacuated, with 6,500 homes flooded. The Kremlin warned of more floods in Siberia's Kurgan and Tyumen regions. [RFI] [ET]
  • 4.8-Magnitude Earthquake Hits Near New York City: A 4.8-magnitude earthquake struck near New York City on Friday morning, surprising residents in an area not accustomed to significant seismic activity. The quake's epicenter was in Tewksbury, central New Jersey, 64 kilometers west of New York City, occurring just after 10:20 am ET (1420 GMT) at a depth of 4.7 kilometers, according to the US Geological Survey. [Dawn]
  • Meta Implements Policy Changes for Altered Media: Meta, the owner of Facebook, announced policy changes to address digitally created and altered media ahead of US elections. It will introduce "Made with AI" labels for such content and apply separate labels to digitally altered media posing a high risk of deception. This marks a shift in approach, focusing on providing information about content creation rather than removal. [Dawn]
  • Strawberry Farming Thrives in Burkina Faso: In Burkina Faso suburbs, strawberry farming is thriving, replacing traditional crops and becoming a top export to neighboring countries. Termed "red gold" in the Sahel, strawberries earned around two billion CFA francs ($3.3 million) from 2019 to 2020, according to PAPEA. During their January to April season, strawberries fetch a higher price of $5 per kilogram, often outperforming other crops. [Dawn]
  • Oil Prices Surge Above $90/Barrel: Oil prices surged above $90/barrel due to tensions in the Middle East, reduced Mexican exports, US sanctions on Russian cargoes, and Houthi rebel attacks. Despite production cuts by OPEC and allies, Brent crude may reach $100/barrel, raising inflation concerns for US President Biden's reelection and central bank decisions. [BBG]

OPINION(S) & REMAINDERS

  • PTA to Expand Data CVAS Licenses to District Level: PTA plans to amend Data CVAS licenses to district level, aiming to generate revenue, create jobs, and expand internet access. About 5,000 individuals are interested in acquiring district-level licenses to provide internet services and boost broadband penetration. [BR]
  • Opinion: Tone-Deaf Policies & Changing Cropping Patterns - “Pakistan’s agriculture sector is witnessing a notable change in cropping patterns, driven by a complex interplay of various factors, including climate change and evolving market dynamics. However, it is concerning that the change appears to be out of sync with government planning and future development objectives set by our policymakers.” - By Khalid Saeed Wattoo [Dawn]
  • Opinion: Food Preservation via Solar Drying - “Vast amounts of produce are wasted because they do not meet appearance, size, and color standards that may be preserved using solar-drying technologies. “Pakistan is a country with a substantial agricultural sector that plays a vital role in feeding its population and exporting food to other countries. However, despite its significant contribution to the world’s food supply, Pakistan still faces challenges in ensuring food security for its citizens,”” - By Sadaf Gul Unar [Dawn]
  • Opinion: Reforming Electricity Distribution Companies - “Eliminating a national uniform tariff while allowing well-managed Discos to move towards privatization can minimize T&D losses, making electricity more affordable. The energy value chain cannot be fixed without reforming electricity distribution companies. The inability to fix the chain and make electricity more affordable will continue to keep Pakistan stuck in a low-growth trap while accelerating de-industrialization.” - By Ammar H Khan [Dawn]
PAR News - Mon, 08 Apr 2024

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