PAR News - Tues, 26 Mar 2024

TOPLINE

• PM Sharif has ordered action against tax defaulters and evaders due to delays in implementing the Trace and Track System (TTS) in industries such as tobacco, sugar, cement, and fertilizer.
• The Tajir Dost Scheme by the FBR targets traders and shopkeepers with fixed businesses in provincial capitals for registration and minimum advance tax payment. The FBR set a July 1 deadline to connect professional services online with the tax machinery across Pakistan, after a four-year delay.
• From the all-time high of over $400 million in monthly imports in August 2022, palm oil imports are averaging $242 million a month in FY24, which is a big retreat.
• Rampant petroleum product smuggling has crippled Pakistan's oil supply chain, prompting urgent pleas from the oil industry for intervention, and is estimated to cause over Rs 120 billion in annual revenue loss to the government, equivalent to about $36 million/month.
• 10 power distribution companies (DISCOs) are seeking NEPRA's approval to burden consumers with Rs 2.765 trillion for tariff adjustments in the 2024-25 multi-year tariffs.
• Oil prices rose on Monday due to Russian government orders to limit oil output and attacks on energy infrastructure in Russia and Ukraine, counteracting the UN's ceasefire demand in Gaza.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Pakistan's Palm Oil Imports Plummet: From the all-time high of over $400 million monthly imports in August 2022, palm oil imports averaging $242 million a month in FY24 is a big retreat. Also ironic that Pakistan recorded some of the highest import quantities at the time of record unit prices. The dip came only after the rupee was sent packing, taking the retail prices to all-time highs – even as the international palm oil prices started to recede. [BR]
• Sindh's Kissan Card Program Under Scrutiny: The Hari Welfare Association (HWA), a non-profit organization advocating for peasant rights, has expressed concerns that the Sindh government's Kissan Card initiative may not benefit farmworkers who do not own land. HWA President Akram Khaskheli stated on Monday that peasants who primarily work as laborers for landlords on crop-sharing arrangements may not qualify for the card. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• PM Shehbaz Reviews Gas Tariff: Prime Minister Shehbaz Sharif is unhappy with the current gas tariff and plans to review OGRA's performance. He has instructed the power ministry to complete 16 tasks within one to three months, including a forensic audit of the tariff hike and addressing gas theft issues. [BR]
• Discos Seek NEPRA Approval: The country's 10 power distribution companies (Discos) are seeking NEPRA's approval to burden consumers with Rs 2.765 trillion for tariff adjustments in the 2024-25 multi-Year Tariff (MYT). LESCO leads with Rs 852.047 billion, driven mainly by Power Purchase Price (PPP) costs, followed by FESCO, IESCO, and others. [BR]
• Oil Smuggling Crisis Grips Pakistan: Rampant petroleum product smuggling has crippled Pakistan's oil supply chain, prompting urgent pleas from the oil industry to the prime minister and state agencies for intervention. Estimated to cause over Rs 120 billion in annual revenue loss to the government, equivalent to about $36 million per month, this illicit activity threatens industry survival. [Dawn]
• Sindh High Court Questions Water Committee: The Sindh High Court has given the chief secretary three weeks to report on progress after disagreeing with the government's appointment of a steering committee to address clean drinking water provision. The chief secretary submitted a notification stating the government needs Rs 150 million for resolving water issues through tube-wells and RO plants. [Dawn]
• Union Ban Sparks ILO Criticism: The government's ban on energy sector unions faces criticism as PSI seeks ILO intervention over alleged rights violations. Implemented in January 2024, the ban classified energy firms as essential services under the Pakistan Essential Services Act, halting all union activities in electricity. [BR]
• Committee Proposes Import Halt: The PBF urges a committee, led by a tariff commissioner, to halt non-essential imports for up to two years, aiming to save $8-10 billion annually and strengthen the currency. President Khawaja Mehboob ur Rehman suggests measures like imposing 100% cash margins, restrictions, high tariffs, or bans on certain imports in talks with the Solvent Extractors Association. [The News]
• CCP Awaits PTCL-Telenor Data: The Competition Commission of Pakistan (CCP) is awaiting crucial information from PTCL regarding its proposed acquisition of 100% shareholding in Telenor Pakistan. PTCL's pre-merger application, submitted on February 29, 2024, with an incorrect fee, was rectified and paid on March 6, 2024. [BR]

AGRI UPDATES & PAKISTAN POLICY

• PM Shehbaz Cracks Down on Tax Evasion: Prime Minister Shehbaz Sharif has ordered immediate action against tax defaulters and evaders due to delays in implementing the Trace and Track System (TTS) in various industries, including tobacco, sugar, cement, and fertilizer. He instructed the authorities to form a committee within seven days to identify obstacles to TTS implementation and those engaged in tax theft. [Dawn]
• FBR Launches Tajir Dost Scheme Nationwide: The Tajir Dost Scheme, 2024 targets traders and shopkeepers with fixed businesses in Karachi, Lahore, Islamabad, Peshawar, Quetta, and Rawalpindi for registration and minimum advance tax payment. The FBR has initiated a pilot project in federal and provincial capitals, starting with Karachi, Lahore, Islamabad/Rawalpindi, Peshawar, and Quetta, with plans for expansion to other cities later. Rawalpindi was included due to its association with Islamabad. [BR]
• FBR Sets Deadline for Online Tax Integration: The Federal Board of Revenue has set a July 1 deadline to connect professional services online with the tax machinery across Pakistan, after a four-year delay. Initially proposed on December 22, 2023, the plan underwent revisions through notification SRO428 of 2024, establishing a specific timeframe for implementation. [Dawn]
• PTI Urges National IMF Consultations: Muzzammil Aslam, PTI's economic head in Khyber-Pakhtunkhwa, urges national consultations on the new IMF program involving all provinces, warning of a crisis if federal decisions disregard provincial input on matters like the Benazir Income Support Programme (BISP) and the National Finance Commission (NFC) formula. [BR]
• Pakistan Seeks Exemption from US Sanctions: The newly elected government has opted to pursue exemption from potential US sanctions for Pakistani entities involved in the construction of the Pak-Iran gas pipeline. Minister for Petroleum, Dr. Musadik Malik, emphasized Pakistan's inability to afford sanctions in this project and stated that exemption would be sought to proceed without hindrance. [Dawn] [ET]
• Foreign Investment in T-Bills Rises: Stable exchange rates have heightened the appeal of treasury bills (T-bills) for foreign investors, leading to increased inflows observed during the first 15 days of the current month, as per sources in the financial sector. State Bank of Pakistan data reveals that market treasury bills attracted $13.863 million during the same period in March FY24. [Dawn]
• Government to Assist Banks with PIA Loans: The federal government plans to help two domestic banks by taking over their $88 million foreign currency loans to Pakistan International Airlines (PIA) without restructuring, unlike the 10-year restructuring plan for PIA's Rs 243 billion domestic debt. This move may burden the exchequer with high dollar interest rates and exchange rate risks for the next five years. [ET]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Israeli Genocide - Ceasefire Discussion: Israeli Prime Minister Benjamin Netanyahu announced on Monday that he would not send a planned delegation to Washington after the United States declined to veto a UN Security Council proposal for a ceasefire in Gaza. Netanyahu stated that Washington's decision represented a "clear retreat" from its previous stance and could hinder efforts against Hamas and the release of over 130 hostages in Gaza. [BR] [Dawn] [Dawn] [ET]
• Russia Terror Attack Aftermath: Russia has charged at least 7 men with "terror" charges for their alleged involvement in a concert hall massacre that killed at least 137 people. Calls to lift the death penalty moratorium for harsher sentences have been made, as 4 of the accused appeared bruised in late-night court hearings in Moscow's Basmanny district court. [Dawn]
• EU Launches Digital Markets Act Probes: The European Union launched investigations against Apple, Google parent Alphabet, and Meta on Monday under the Digital Markets Act, marking the first-ever probes under the new law. These US tech giants, along with Amazon, TikTok owner ByteDance, and Microsoft, were designated as market "gatekeepers" under the Act, obligating them to comply with its regulations from March 7. [Dawn]
• Papua New Guinea Quake Kills Five: A magnitude 6.9 earthquake in Papua New Guinea killed at least five people and destroyed about 1,000 homes. The disaster struck as the region was already facing flooding along the Sepik River, with emergency crews assessing the widespread damage. [Dawn]
• Oil Prices Surge Amid Russian Output Limits: Oil prices rose on Monday due to Russian government orders to limit oil output and attacks on energy infrastructure in Russia and Ukraine, counteracting the UN's ceasefire demand in Gaza. Brent crude futures settled at $86.75 a barrel, up $1.32 or 1.55%, while US crude futures settled at $81.95, up $1.32 or 1.64%. [BR] [The News]

PAKISTAN - REMAINDERS

• Corporate Result: Rs 2.61 billion was the profit reported by Al-Ghazi Tractors for the year ended Dec 31, 2023, up 21% year-on-year. [ET]
• Largest IT Park Approved by SIFC: The Special Investment Facilitation Committee (SIFC) has approved Pakistan's largest IT Park in Islamabad's G-10 sector, covering 3.3 acres. This marks a significant leap for Pakistan's tech sector, opening doors for innovation and advancement. [ET] [ET] [PT]
• Pakistan Prepares for Extended Eid Holiday: With Eid Ul Fitr expected to occur around April 10, Pakistanis are gearing up for potentially an extended holiday period, with six days dedicated to festivities and celebrations. Preparations for the festival are already underway, as reported by a private news channel. [ET]