PAR News - Fri, 26th May 2023

TOPLINE

●     Sindh HC has issued notices to the provincial food authorities in response to a petition challenging the ban on inter-district movement of wheat.

●     Palm oil spot prices have declined by 13% in the last month, marking the largest M-o-M drop since July 2022.

●     Pakistan's RRMC has suggested that petrol stations should stop accepting cash for large fuel purchases, while the govt plans to import a third of its crude oil from Russia to create an energy corridor with Central Asia. Moreover, PSO has asked for changes in taxation laws and budget allocations for LNG financial relief .

●     Imran Khan has filed a petition challenging the treatment of his supporters. Meanwhile, 16 suspects have been handed over to the military for trial in connection with the attack on the Lahore corps commander's residence. Additionally, 9 PTI leaders, including Maleeka Bukhari and Jamshed Iqbal Cheema, have left the party.

●     Germany's economy slipped into a recession in early 2023 due to high inflation, where household spending dropped by 0.5% contraction in the previous quarter.

●     Belarus's Lukashenko alleges Russia is transferring nuclear weapons to its territory, heightening tensions with the West during the Ukraine conflict.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

●     Wheat Movement Ban in Sindh: The Sindh High Court has issued notices to the provincial food authorities and other respondents in response to a petition challenging the ban on inter-district movement of wheat. The Pakistan Flour Mills Association and three flour mills in Karachi argued that they relied on wheat supply from other districts and provinces since the Karachi division is not a wheat-growing area. [Dawn]

●     Rice Exports Decline Due to Flood Damage: The abysmal state of rice exports in Pakistan during the fiscal year 2022-23 can be attributed to the devastating floods, particularly in the Sindh province, which significantly impacted the cultivation of coarse rice varieties that are primarily geared towards export markets. These varieties account for a large portion of annual rice export revenue and volume, while the destruction of the crop in Sindh dampened rice exports at the beginning of the marketing year. [BR]

●     Boosting Livestock Health in Khyber-Pakhtunkhwa: Abdul Haleem Qasuria, the Caretaker Minister for Irrigation and Livestock in Khyber-Pakhtunkhwa, has ordered the establishment of mobile vaccination centers in cattle markets across the province to tackle lumpy skin disease and other infections. Qasuria expressed concern about the non-release of funds for extension projects in fisheries and cattle breeding and emphasized the importance of timely funding for the completion of these projects to support cattle farmers and strengthen the province's agriculture-based economy. [ET]

●     Retail Cooking Oil Prices Double in Pakistan: Palm oil spot prices have declined by 13% in the last month, marking the largest month-on-month drop since July 2022, as both Malaysia and Indonesia reported increased palm oil output. Despite the decrease in international commodity prices, retail cooking oil prices in Pakistan have doubled in less than two years due to the devaluation of the rupee and higher transportation costs, with no signs of immediate relief in sight. [BR]

AGRI-INPUTS, WEATHER, WATER & POWER

●     Resettlement Plan for Displaced Families in Sindh: The Sindh cabinet has decided to construct 6,500 housing units on a 248-acre land to provide resettlement for families whose homes were displaced due to the clearing of three major stormwater drains (nullahs) in the Malir Development Authority area. Chief Minister Syed Murad Ali Shah has allocated Rs1 billion for the development of the designated area and emphasized the importance of fulfilling the directive from the Pakistan Peoples Party chairman to support the affected families. [Dawn]

●     Karachi Port Welcomes Crystal St Petersburg: The container vessel Crystal St Petersburg made its maiden call at Karachi Port, reaching the port in just 21 days. Maritime Affairs Ministerl Sabzwari welcomed the vessel, highlighting the significance of direct access to Russian markets for the trading community and the potential for strengthening business ties and exports between Pakistan and Russia, including the arrival of discounted Russian crude oil in early June. [Dawn]

●     Uninterrupted Water Supply in Rawalpindi: The Rawalpindi Water and Sanitation Agency (WASA) has developed a plan to guarantee an uninterrupted water supply to the residents of the city during the summer season. The WASA Managing Director chaired a meeting and instructed officials to adjust tube well schedules, extend their duration, and ensure attendance to address potential water supply issues. The MD also took disciplinary action against two officials for absenteeism and emphasized the importance of employee commitment and welfare. [ET]

●     Lahore LPG Dealers Violate Price Cap: Despite the price cap set by the Oil and Gas Regulatory Authority (OGRA), LPG dealers in Lahore, Pakistan, are selling cylinders at significantly higher prices, leading to public anger and frustration. The gas shortage and exploitative practices by dealers have resulted in increased prices, with customers paying extra and accusing the government of not taking action against the "LPG mafia." The Commissioner of Lahore has promised legal action against violators if LPG is not provided to consumers at the OGRA-approved prices. [ET]

●     Cashless Fuel Payments: The Reforms & Revenue Mobilization Commission (RRMC) in Pakistan has recommended that petrol stations nationwide should no longer accept cash payments for fuel purchases. The proposal aims to reduce tax evasion, undocumented transactions, and financial irregularities by encouraging customers to use electronic banking, credit/debit cards, and other digital payment methods. The RRMC suggests collaboration between the FBR, State Bank of Pakistan, and relevant stakeholders to establish a framework for implementing this recommendation and promote a more transparent and documented economy. [BR]

●     Positive Tariff Adjustment: The National Electric Power Regulatory Authority (Nepra) has approved a positive adjustment of paisa 79 per unit in electricity tariffs for Distribution Companies (Discos) for March 2023 under the monthly Fuel Cost Adjustment (FCA) mechanism. The adjustment is estimated to have a cumulative financial impact of Rs 6.7 billion. The decision was made after reviewing the information provided by the Central Power Purchasing Agency (CPPA-G) and considering the actual fuel charges for March 2023, which increased by Rs 1.1738/kWh compared to the reference fuel charges. [BR] [Dawn]

●     Diversifying Oil Sources: The Pakistani government plans to import one-third of its crude oil needs from Russia, aiming to establish an energy corridor with Central Asia to reduce energy costs and boost industrial development and agriculture. State Minister for Petroleum Mussadik Malik also mentioned the completion of an energy security agreement, a national refinery policy attracting $10 billion investment, and efforts to complete the gas pipeline project with Iran while curbing oil smuggling through increased border enforcement. [The News]

●     Enhancing Power Infrastructure: Federal Minister for Energy Khurram Dastgir inaugurated the 500-kilovolt Thar-Matiari transmission line in Matiari district. The project, completed in a record time of two-and-a-half months at a cost of Rs 20 billion, connects Thar with the national grid. Dastgir highlighted the government's commitment to cost savings and stated that the project saved approximately one billion rupees due to their integrity. [The News]

●     PSO's Budget Appeal: Pakistan State Oil (PSO) has requested amendments to taxation laws regarding LNG financial relief and the allocation of funds in the budget for the fiscal year 2023-24 due to its inability to absorb significant fluctuations in international oil prices. PSO is facing severe liquidity crises, with receivables from the Power Sector, SNGPL, and other government entities amounting to Rs 750.6 billion. The diversion of LNG to other sectors has resulted in a massive cash shortfall of Rs 106.5 billion for PSO, contributing to a total receivable amount of Rs 478.5 billion in the LNG business. [BR]

●     Pakistan's Small Industries Struggle: Small industries in Pakistan, struggling with the depreciation of the rupee, high utility tariffs, and soaring commodity prices, are facing closures and relocations due to a shortage of funds. The financial strain has pushed them into a fund crisis, as they struggle to afford high rent and escalating electricity costs, forcing many businesses to move to lower-cost properties. [ET]

AGRI UPDATES & PAKISTAN POLICY

●     Judicial Probe Sought by Imran Khan: Imran Khan, the leader of the Pakistan Tehreek-e-Insaf (PTI) party, has filed a petition challenging the treatment of his supporters and calling for the Supreme Court to declare the arrests, investigation, and trial of civilians under the Army Act and the Official Secrets Act as unconstitutional. He also requested the formation of a judicial commission to investigate the incidents of May 9 and 10, assign responsibility, and recommend actions against those involved. Another petition on the same matter had previously been filed by Advocate Gohar Khan on behalf of the PTI. [Dawn]

●     Military Trial for Lahore Attack Suspects: Sixteen suspects, including a former lawmaker, have been handed over to the military for trial in connection with the attack on the Lahore corps commander's residence on May 9. The custody of the suspects was granted by an anti-terrorism court (ATC) following an application filed by the military, stating that the suspects had committed offenses that made them subject to the Army Act and liable to be tried by military authorities. [Dawn]

●     PTI Leaders Exit Amid Protest Fallout: Nine leaders of the PTI, including Maleeka Bukhari and Jamshed Iqbal Cheema, announced their departure from the party in light of the violent protests that followed Imran Khan's arrest on May 9. Speaking at a press conference, the leaders expressed regret over the incidents and took responsibility for failing to control the party workers, with Cheema's wife Musarrat also emphasizing their commitment to a prosperous Pakistan and their family's well-being.

●     Justice & Security Measures: Prime Minister Shehbaz Sharif held meetings with officials in Khyber Pakhtunkhwa to assess the law and order situation following the attacks on civil and defence installations on May 9. He vowed that the attackers would be prosecuted under anti-terrorism laws and emphasized that no innocent person should face injustice during the process. [Dawn]

●     Pakistan's Liquid Reserves Fall: Pakistan's total liquid foreign exchange reserves have decreased by $206 million during the last week, as reported by the State Bank of Pakistan (SBP). The SBP's reserves declined by $119 million to $4.193 billion due to external debt payments, while the net foreign exchange reserves held by commercial banks also decreased by $87 million to $5.538 billion. [BR] [Dawn]

●     Economic Decision-making Forums in Pakistan: The federal government of Pakistan has scheduled meetings of the Annual Planning Coordination Committee (APCC) and National Economic Council (NEC) on June 2 and 3, respectively, to finalize the development program and set targets for macroeconomic indicators for 2023-24. The NEC, led by Prime Minister Shehbaz Sharif, is the highest economic decision-making forum and includes federal ministers and provincial members, while the APCC, led by the federal minister for planning and development Ahsan Iqbal, will review the current fiscal year's development activities and formulate the development program for the next year. [Dawn]

●     Pakistan's Neutral Stance on Bloc Politics: Pakistan has rejected speculations that it has joined any specific bloc amid the power rivalry between the United States and China. The Foreign Office spokesperson emphasized Pakistan's consistent policy of not believing in bloc politics and highlighted the country's strong cooperative partnership with China as well as its excellent relations with numerous countries worldwide, including the United States. [Dawn]

●     World Bank's Energy Efficiency Initiative: The World Bank has proposed the establishment of an energy efficiency credit line to provide affordable financing for investments in energy efficiency in Pakistan's industrial sector. The bank is currently implementing technical assistance activities, including studies on industrial energy efficiency and decarbonization, and building energy efficiency, aiming to identify sector-specific solutions and reduce carbon emissions. The World Bank is seeking feedback from the government to ensure the reports are practical and actionable. [BR]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

●     German Economy Enters Recession: The German economy entered a recession in early 2023 as household spending succumbed to high inflation, with a decline of 0.3% in the first quarter following a 0.5% contraction in the previous quarter. Finance Minister Christian Lindner expressed concern about Germany's potential for growth and aimed to avoid relegation among highly developed economies, while Economy Minister Robert Habeck attributed the recession to the country's reliance on Russian energy supply. [BR]

●     Oil Prices: Oil prices fell more than $3 at one point on Thursday, after Russian Deputy Prime Minister Alexander Novak played down the prospect of further OPEC+ production cuts at its meeting next week. Brent crude futures were down $2.85, or 3.6%, to $75.51 a barrel by 12:08 p.m. EDT (1708 GMT). US West Texas Intermediate crude (WTI) fell $2.99, or 4%, to $71.35. At their session low, both benchmarks were down by more than $3. [BR]

●     Palm Oil Prices: Malaysian palm oil futures jumped as much as 3% on Thursday, ending near a two-week high, helped by a weak ringgit and forecasts of an El Nino weather pattern hitting production next year. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange closed up 91 ringgit, or 2.67%, to 3,498 ringgit ($788.73) a tonne. [BR]

●     Bangladesh's Pledge for Free and Fair Elections: Bangladesh has stated its commitment to address and prevent unlawful practices or interference in its elections, following the United States' threat to impose visa restrictions on individuals undermining the democratic election process. The government has pledged to take necessary measures to ensure the smooth and participatory conduct of elections, including the presence of international observers accredited by the Election Commission. [Dawn]

●     Record-High Net Migration in the UK: Net migration in the UK reached a record high of 606,000 in 2022, putting pressure on the government's commitment to reducing reliance on foreign labor. Prime Minister Rishi Sunak stated that legal immigration levels were too high and expressed intentions to bring them down, with measures targeting international students and their families expected to have a significant impact. The increase in migration was attributed to various factors, including the end of the Covid-19 pandemic, Russia's invasion of Ukraine, and the UK relaxing entry rules for holders of British overseas passports due to China's restrictions in Hong Kong. [Dawn]

●     Tensions Rise with Iran's Missile Test: Iran test-launched a ballistic missile with a potential range of 2,000km, according to state media, just days after Israel's chief of armed forces hinted at possible action against Iran's nuclear program. Iran, with one of the largest missile programs in the Middle East, asserts that its weapons can reach the bases of its adversaries, including Israel and the United States, and despite opposition from the US and Europe, it intends to continue developing its "defensive" missile capabilities. [Dawn]

●     Belarus Alleges Russian Nuclear Weapons: Belarus's Lukashenko alleges Russia is transferring nuclear weapons to its territory, heightening tensions with the West during the Ukraine conflict. The United States expresses concerns but states no plans to adjust its nuclear posture, and a deal is signed between Russia and Belarus to deploy Moscow's tactical nuclear weapons in Belarus, under Russian control. The exact number of weapons in Belarus is uncertain. [ET] [TRT]

PAKISTAN - REMAINDERS

●     Sindh population may touch 95.7m by 2050, says UN report. [ET] [PO]

Opinion: Global Economic Crisis - “The Global South overall, with its traditionally weak economic institutional quality, stark market imperfections, inefficient expenditure rationalization, and frail domestic resource mobilization effort, has not been able to improve much on virtually all of these counts over the last many decades mainly due to perpetuation of Neoliberalism, and within it over-inclination towards monetary and fiscal austerity policies, diminishing role of government and regulation.” - By Dr Omer J

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