PAR News - Fri, 15 Aug 2023

TOPLINE

• The Pakistani rupee has shown improvement against the US dollar for the seventh consecutive session, settling at 297.96 in the interbank market.
• The Petroleum Division has resubmitted a proposal for up to a 50 percent increase in gas sale prices to the interim cabinet, aligning with the International Monetary Fund's (IMF) request.
• Traders in Pakistan held a sit-in protest to protest the high inflation in the country and called on the interim government to lower petroleum and electricity prices.
• Pakistan's current account deficit significantly decreased by 79 percent year-on-year to $160 million in August, primarily driven by reduced imports, as reported by the central bank.
• Oil prices reached their highest levels of the year due to expectations of tighter supply, with Brent crude at $93.62 and US WTI crude at $89.09, both hitting multi-month highs.
• China's economy saw a boost in August, with increased consumer spending and factory output.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Meat Export: Rs 9.8 billion was the export value of meat and meat preparations in July 2023, up 75.7% compared to Rs 5.6 billion in July 2022, according to the PBS. [ET]
• Larkana's Hoarding Crackdown: The local administration in Larkana district has undertaken significant efforts to recover essential commodities, including 30,000 bags of wheat from rice mills, private warehouses, and shops. Additionally, over 1,100 bags of sugar and thousands of bags of fertilizer have been seized, with the district administration also taking action against hoarding by sealing two privately owned rice mills in Badah. In total, around 60,000 bags of wheat, fertilizer, and sugar have been recovered in recent days in Larkana district. [ARY]
• APTMA & Punjab Government Join Forces Against Whitefly Pests: APTMA is collaborating with the Punjab government to combat whitefly pests in cotton crops by allocating funds for the distribution and application of MATOI, a pesticide. This initiative aims to save the cotton crop, as last year's production fell below industry requirements, leading to significant cotton imports at a cost of $2 billion to Pakistan's forex reserves. [BR]
• Pakistani Rupee Gains for Seventh Consecutive Session: The Pakistani rupee has shown improvement against the US dollar for the seventh consecutive session, settling at 297.96 in the interbank market. This marks a gain of Re0.86 or 0.29% according to the State Bank of Pakistan (SBP). Over the last seven sessions, the rupee has cumulatively appreciated by over 3%, rebounding from a record low of 307.1 reached just last week. On the previous day, it had appreciated by 0.36% to close at 298.82. [BR]
• WTO Chief Urges Ratification of Fisheries Subsidies Agreement: The Chief of the World Trade Organisation (WTO), Ngozi Okonjo-Iweala, has urged member states to ratify the fisheries subsidies agreement, making it a top priority for the upcoming Ministerial Conference. However, Pakistan may not be able to ratify the agreement due to a constitutional limitation that restricts the interim government from entering into long-term treaties. The agreement aims to address overfishing and the depletion of oceans. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Adjustment Request for Tariff Variation: The Private Power Infrastructure Board (PPIB) has requested a revision in the indexation/adjustment formula, specifically seeking a one-time adjustment of 20 percent of the bid tariff at Commercial Operation Date (COD) to account for exchange rate variations. This request was made in response to a decision by the National Electric Power Regulatory Authority (NEPRA) on September 6, 2023, aligning with the Framework Guidelines for Fast Track Solar PV Initiatives, 2022, as approved by the Federal Government. [BR]
• Pakistani Traders Stage Protest Against Inflation: Traders in Pakistan held a sit-in protest to protest the high inflation in the country and called on the interim government to lower petroleum and electricity prices. The protest, which took place outside the Nepra regional office, expressed frustration with the government's inaction despite promises to reduce fuel and electricity costs, stating that the issue is being unnecessarily prolonged. [BR]
• Gas Price Hike Proposal: The Petroleum Division has resubmitted a proposal for up to a 50 percent increase in gas sale prices to the interim cabinet, aligning with the International Monetary Fund's (IMF) request. It's expected that the interim cabinet will likely approve the new gas prices for 12 categories of consumers, both protected and non-protected, in September. [BR]
• SNGPL Cracks Down on Illegal Gas Connections: The Sui Northern Gas Pipeline Limited (SNGPL) discovered an illegal gas network in Mardan and disconnected illegal gas connections in Lahore's farm houses during a crackdown against gas theft. In this ongoing effort, the SNGPL disconnected a total of 241 gas connections in Punjab, Khyber-Pakhtunkhwa, and Islamabad, and imposed fines totaling Rs 2.7 million on account of gas theft. [BR] [Dawn]
• PLL Seeks PPRA Exemption for LNG Procurement: Pakistan LNG Ltd (PLL) has requested an exemption from the application of PPRA (Public Procurement Regulatory Authority) conditions to procure around 24 LNG cargoes from January to December 2024. PLL, mandated by the government of Pakistan to import LNG to meet the country's natural gas needs, manages LNG imports through both long-term and spot procurement contracts. [BR]
• Concerns Raised Over APTTA Misuse: Pakistan has raised concerns about the alleged misuse of the Afghan-Pakistan Transit Trade Agreement (APTTA) and has shown a willingness to engage with Afghan authorities to address these issues. The Torkham border gate has remained closed for nine days, disrupting both bilateral and transit trade between the two countries. According to the Foreign Office spokesperson Mumtaz Zahra Baloch, Pakistan has been implementing the agreement in good faith. [BR]
• Senate Committee Probes $800M Transmission Line Contract: The Senate Standing Committee on Power has accused the World Bank's Country Director and the Secretary of Power of colluding with the NTDC in awarding a suspicious $800 million contract to a German firm for a transmission line. They've instructed the Power Division and NTDC to provide their Board's final viewpoint next week, and the contract has been referred to a Procurement Committee for review. [BR]
• NTDC's Contract Irregularities: The Senate Standing Committee on Power has accused the NTDC of manipulating prequalification criteria and tender documents for a $700 million transmission line project. The committee may write a letter to the World Bank about irregularities in contracts awarded to consultants and contractors who don't meet NTDC's criteria. [BR]
• PM Urges Swift PIA Privatization: Caretaker Prime Minister Anwaarul Haq Kakar has instructed all relevant parties to promptly address the issue of privatizing Pakistan International Airlines (PIA). During a meeting, he was briefed on the progress of the privatization process and emphasized the need to expedite it to improve the airline's service quality and bring it in line with global standards. [BR]
• Punjab Secures $181M for Healthcare: The Punjab Minister for Primary and Secondary Healthcare, Dr. Jamal Nasir, has announced that international organizations, including the World Bank, will provide $181 million over four years to strengthen the primary healthcare system in Punjab. This funding will support the National Health Support Programme (NHSP) and enhance healthcare facilities and services. [The News]

AGRI UPDATES & PAKISTAN POLICY

• ECP Raises Concerns Over Caretaker Government Neutrality: The Election Commission of Pakistan (ECP) has raised concerns about the neutrality of the country's caretaker government, which is responsible for overseeing national elections. It believes the caretaker government may be aligned with opponents of the jailed former Prime Minister, Imran Khan. Khan's imprisonment and ban from contesting elections have raised questions about the impartiality of the upcoming elections. [BR]
• Islamabad ATC Grants Bail to PTI President in Riot Case: An Islamabad anti-terrorism court (ATC) has granted bail to PTI President Parvez Elahi in a case related to riots that occurred outside the Federal Judicial Complex (FJC) in March. These clashes between PTI workers and police took place on March 18 during party chairman Imran Khan's appearance at the FJC for a hearing related to the Toshakhana case. [Dawn]
• State Bank of Pakistan Keeps Policy Rate at 22%: Contrary to market expectations, the Monetary Policy Committee (MPC) of the State Bank of Pakistan has opted to maintain the key policy rate at 22 percent. This decision was influenced by the projection of a continued decline in inflation, with the latest data showing a decrease from its peak of 38 percent in May to 27.4 percent in August 2023. [BR] [Dawn] [ET]
• Pakistan's August Current Account Deficit Shrinks by 79%: Pakistan's current account deficit significantly decreased by 79 percent year-on-year to $160 million in August, primarily driven by reduced imports, as reported by the central bank. Additionally, foreign direct investment (FDI) increased by 16 percent in the first two months of the fiscal year. Notably, the current account deficit also saw a 79 percent month-on-month decrease in August compared to July when the deficit was $775 million. [BR] [Dawn] [ET] [The News]
• Federal Government Boosts NPC Returns: The federal government has raised the returns on conventional Naya Pakistan Certificates (NPCs) to attract more investment. This is the second rate increase this year, with the State Bank of Pakistan announcing higher returns effective from September 1, 2023. The new rates include 8.25% for 3 months, 8.5% for 6 months, and 9% for 12 months, while the rates for 3-year and 5-year NPCs remain at 8%. [BR]
• IT Ministry Backs FBR for Tax Base Expansion: The Ministry of IT and Telecommunication has pledged full support to the Federal Board of Revenue (FBR) in expanding the tax base through data integration and automation. This commitment was made during a meeting chaired by Caretaker Finance Minister Dr. Shamshad Akhtar, who emphasized the importance of utilizing technology to enhance revenue collection methods and stimulate economic growth following a briefing on the automation of FBR operations. [BR]
• Chinese EV Manufacturer Plans Expansion into Pakistan: A Chinese electric car manufacturing company, Xinjiang Jingyi Chen Group, has revealed plans to set up an electric vehicle (EV) plant in Pakistan along with a network of showrooms in major cities. The announcement was made by the company's delegation, led by Assistant Chairman GU Xongquan, during a meeting with FPCCI Vice President Amin Ullah Baig. Discussions centered on the investment opportunities and landscape for such ventures in Pakistan. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Europe's Mild Winter Weather Eases Gas Supply Concerns: Mild weather at the start of winter in Europe is reducing heating demand, potentially causing an oversupply of gas. Above-average temperatures are expected to continue through October and possibly beyond in Western Europe, easing supply concerns amid the region's second winter without a significant portion of Russian gas. [Bloomberg]
• Kim Jong Un's Chair Disinfection at Summit with Putin: During a summit with Russian President Vladimir Putin, North Korean leader Kim Jong Un's security detail spent several minutes disinfecting the chair that Kim sat on, as reported by Kommersant newspaper. Video footage showed a North Korean security official in white gloves meticulously cleaning Kim's black chair and spraying an unidentified substance in the area. [Dawn]
• China's Economy Surges in August: China's economy saw a boost in August, with increased consumer spending and factory output. Industrial production and retail sales exceeded expectations, and the urban unemployment rate improved slightly. The government's recent pro-growth measures, including efforts to stimulate home goods spending and relax housing restrictions, contributed to this economic upturn. [Bloomberg]
• Call for Moratorium on Sun-Dimming Climate Solutions: Former political leaders and international organization heads are calling for national moratoriums on deploying Sun-dimming technologies to combat global warming. The Climate Overshoot Commission advocates for continued research and experiments in solar radiation modification (SRM) but under international supervision and in areas with robust environmental safeguards. Currently, there is no global governance framework for SRM, and its risks remain incompletely understood. [Dawn] [ET]
• Oil Prices Reach Highs: Oil prices reached their highest levels of the year due to expectations of tighter supply, with Brent crude at $93.62 and US WTI crude at $89.09, both hitting multi-month highs. Additionally, Malaysian palm oil futures rose for a second consecutive day, supported by gains in Dalian vegetable oils and crude oil. [BR] [BR]

PAKISTAN - REMAINDERS

• Tremors Felt in Karachi: A 2.9 magnitude earthquake was reported in parts of Karachi on Thursday night. The tremors were felt in areas such as Malir, Korangi, and Ibrahim Hyderi. According to the Met office, the earthquake's epicenter was located 10 kilometers west of Malir. [Dawn]
• Pakistan's Unemployment Soars to 5.6 Million - According to the International Labour Organisation (ILO), Pakistan's labor market has not fully recovered from the Covid-19 pandemic and economic crisis. The number of unemployed individuals is expected to reach 5.6 million in 2023, an increase of 1.5 million from 2021. [Dawn]
• Pakistani Companies Expand in UAE: Two Pakistani companies, one in the pharmaceutical sector (Searle Company Limited) and another in digitization, have secured licenses from UAE authorities to expand their presence in the Middle East market. Searle Company Limited, based in Karachi, received approval from the UAE's Ministry of Health and Prevention to register its manufacturing site. [The News]
• Opinion: India's New Spice Route - “Despite its dark underbelly of divisiveness, India’s meteoric rise orchestrated by the Modi-led government is hard to ignore. No one could have imagined a couple of decades ago, even after the nuclearisation of the subcontinent, that India would land the first spacecraft on the moon’s south pole, or that it would be at the forefront of forging new pathways to enable transcontinental trade.” - By Syed Mohammad Ali [ET]