PAR News - Thurs, 25th May 2023

25/04/23 - Wheat Auction, Palm Oil, Pak Energy Security, Electricity Tariffs, PTI Ban, GDP Growth Rate, US Default

PAR News - Thurs, 25th May 2023
PAR News - Thurs, 25th May 2023
PAR News
May 25, 2023


●     PASSCO plans to auction over 44,784 MMTof damaged wheat, with an estimated value of Rs 3.285 billion.

●     Palmoil spot prices have declined 13% in the last month.

●     Pakistan'senergy security plan involves the arrival of discounted Russian oil via vesselsat its ports in early June. Pak has requested assistance from the US in eitherconstructing a gas pipeline for purchasing gas from Iran or covering thepotential $18 billion penalty if the project remains unfinished by March 2024.Moreover, Pak's oil sector is seeking the reimbursement of Rs 10 billion in PDCwhich has been pending since 2008.

●     Neprahas approved an increase in electricity rates by Rs 1.25 per unit for theperiod of Jan-March.

●     DefenseMinister Khawaja Asif stated that a ban on PTI is being considered. While,several prominent members of PTI, including Fawad Chaudhry and Asad Umar, haveleft the party.

●     NAChas approved a provisional GDP growth rate of 0.29% for fiscal year 2022-23,compared to 6.1% in the previous year.

●     TheIMF Chief expressed that the US govt debt showdown was unnecessary for theworld economy and believed a default could be avoided.

●     RussianWagner mercenaries suffered heavy losses in the battle for Bakhmut with approx20,000 troops killed. Meanwhile, the Chinese President expressed support forRussia's core interests, and the Russian PM signed agreements with China tostrengthen their ties amid Western criticism during the Ukraine crisis.



●     Pulses Import: Rs 17.3 billion was the import value ofpulses in April 2023, up 119% from Rs 7.9 billion in April 2022, according tothe PBS. [ET]

●     Diversifying Mango Trade:The Pakistan China Joint Chamber of Commerce and Industry (PCJCCI) emphasizesthe need for collaboration between China and Pakistan to tap into the potentialof the mango sector. To meet the evolving preferences of Chinese consumers,there is a shift towards prioritizing quality over price, requiring Pakistan todiversify its mango varieties and produce high-quality mangoes. The PCJCCIplans to establish a Pak-China Trade Portal and explore three-dimensionaltransportation channels to facilitate rapid delivery of mangoes, while alsoproposing the establishment of large warehouse supermarkets in major Chinesecities to cater to the growing demand. [ET][The News][The Nation][Dunya]

●     Pak Army Land Request:Pakistan Army has asked the Punjab government to provide 30,000 acres of stateland situated in Cholistan for the allotment to next of kins of martyrs, warwounded persons and deserving military personnel under Army Welfare Scheme. Thedocument also showed that the military had proposed a “profit sharingmechanism” for corporate farming in Punjab. As per the formula, 20% of profitswill be used for research while the remaining will be divided 50-50 between thearmy and the government of Punjab. [Daily Pakistan]

●     Auction of Damaged Wheat:Pakistan Agriculture Storage and Services Corporation Limited (PASSCO) plans toauction over 44,784 metric tons of damaged wheat, with an estimated value of Rs3.285 billion. The wheat stock was affected by heavy rains and floods, and thedamaged quantity will be sold through a transparent auction process, resultingin a differential cost loss of approximately Rs 37.476 million. [BR]

●     Palm Oil Spot Prices Plummet:Palm oil spot prices have experienced a significant decline, dropping 13% inthe last month, attributed to increased palm output in Malaysia and Indonesiaas well as Asian buyers reducing their inventories. Despite the decrease ininternational commodity prices, retail cooking oil prices in Pakistan havedoubled in less than two years due to the devaluation of the rupee and highertransportation costs, and it is unlikely that retail prices will decrease despitethe decline in international spot rates. [BR]

●     Sindh HC Notices on Wheat Movement Ban:The Sindh High Court has issued notices to the provincial government and otherrelevant departments in response to a petition requesting the lifting of a banon inter-district movement of wheat, particularly in Karachi. The petitioners,including the flour mills association, argued that since Karachi relies onwheat supply from other districts and provinces, the ban has affected theiroperations and they are unable to meet the fixed procurement target set by thegovernment. [The News]

●     Muhammad Abid's Wheat Challenge Triumph:A young man named Muhammad Abid walked 15 kilometers with a 50-kilogram wheatsack on his head/shoulders to win a Rs 100,000 cash prize. Abid, who used towork as a laborer at a food grain market, had made the claim to a commissionagent in his village and was accompanied by friends and village mates whocelebrated his journey. [The Nation]



●     Heatwave Hits Northern Pakistan:The upper and central parts of the province are currently experiencing aheatwave due to a westerly wave, while the Meteorological department haspredicted partly cloudy, warm, and windy weather for Karachi over the nextthree days. [Dawn]

●     Crackdown on Plastic Bags:During a meeting chaired by MNA Nuzhat Pathan, the parliamentary committee onclimate change directed the Ministry of Climate Change to close down allplastic bag manufacturing factories and provide a list of shops and factoriesthat have violated environmental laws. The committee also instructed theEnvironment Protection Agency to take strict action against shop owners usingpolythene bags in the federal territory and called for an effective mediacampaign to enforce the ban on plastic bags in the capital city. [Dawn]

●     Rawalpindi's Flood Relief Plan:The Rawalpindi district administration has implemented a flood relief plan toaddress the potential damage caused by flooding in Nullah Leh and other raindrains during the monsoon season. The plan includes the establishment of fiveflood relief camps, the declaration of 12 low-lying areas as sensitive anddangerous, and a ban on waste dumping and building material in the stormdrains. Efforts will be made to shift affected residents to safe locationsbefore the flood season begins. [ET]

●     Discounted Russian Oil:The Pakistani government's energy security plan includes the arrival of vesselscarrying 100,000 tons of discounted Russian oil at Pakistan ports in earlyJune. State Minister for Energy, Musadik Malik, stated that the oil would betransported from Oman to Pakistan within seven to ten days, where it would be refinedand mixed with light Arabian oil to reduce the price. [BR]

●     Pakistan's Request for Gas Pipeline Support:Pakistan has reportedly requested the US to either allow it to build a gaspipeline for purchasing gas from Iran or assist in paying the expected $18billion penalty if the project is not completed by March 2024. The request wasraised by Petroleum Minister Musadik Malik during his visit to Washington, andwhile the request is under review by the US, experts suggest that the Bidenadministration may be cautious about aiding any country's commercialcooperation with Iran due to the strained US-Iran relations. [Dawn]

●     Pakistan Railways' Challenges:The Pakistan Railways has experienced a 20% decline in revenue due to thecountry's current economic situation, with both passenger train and freightrevenue being affected. The decline in freight revenue is particularly notable,including the transportation of coal to the Sahiwal power plant. The NationalAssembly Standing Committee on Railways expressed concern over the situationand suggested analyzing the feasibility of transporting fuel, gypsum, and othermaterials via freight trains to boost revenue. [BR]

●     Investment Impediments:Qatar has urged the Pakistani government to address obstacles that are impedingits investment in the Energas LNG terminal. The consortium owning the terminalis seeking pipeline capacities from both the Sui Southern Gas Company (SSGC)and Sui Northern Gas Pipelines Limited (SNGPL), but the approval for pipelinecapacity from SNGPL is still pending, and incomplete documentation related tothe Third Party Access (TPA) is causing further delays. This issue is alsoaffecting the Tabeer LNG terminal owned by Japan's Mitsubishi, which isawaiting resolution of the same issues before proceeding with its construction.[The News]

●     Nepra Approves Electricity Rate Increase:The National Electric Power Regulatory Authority (Nepra) has approved anincrease in electricity rates by Rs 1.25 per unit for the period ofJanuary-March. This increase will provide about Rs 46 billion in additionalrevenue to the ex-Wapda Distribution Companies (Discos) to cover capacitycharges, transmission charges, market operator fees, and other operationalcosts. The adjustment will be applied uniformly to all consumers except forlifeline users, and the increased rates will help clear outstanding bills owedto independent power producers (IPPs). [Dawn][ET]

●     SNGPL Fertilizer Plants Granted Permission:The Economic Coordination Committee (ECC) of the Cabinet has granted permissionto Sui Northern Gas Pipeline Limited (SNGPL)-based fertilizer plants, FatimaFertilizer (Sheikhupura) and Agritech, to continue operating on indigenous gaswithout government subsidies until August 31, 2023. The decision was madeduring an ECC meeting chaired by Finance Minister Ishaq Dar, where discussionsalso took place on urea fertilizer requirements for 2023 and the participationof Sindh's Mangroves projects in voluntary carbon markets. [BR]

●     Security Incident at MOL Pakistan Field:Pakistan Oilfields Limited (POL) reported that the plant and fieldinstallations of MOL Pakistan Oil and Gas Company in Hangu district remained safeafter an armed attack by militants on May 22. While six personnel lost theirlives in the attack, the rest of the wells and production of hydrocarbonsremained unaffected, with only a temporary curtailment of approximately 4million cubic feet per day of gas and 24 barrels per day of oil from thetargeted wells. [BR]

●     Revamping Pakistan's Refining Sector:Pakistan is preparing to introduce an oil refining policy for existingrefineries, known as brownfield sites, which will offer incentives for them toupgrade their machinery with better technology. The policy aims to meet thecountry's increasing demand for petroleum products and will be accompanied byoffshore sites for oil and gas exploration, as well as a new Greenfield oilrefining policy to attract foreign investment in the petroleum sector. Thegovernment plans to designate the locations of new refineries as specialeconomic zones and provide tax exemptions and incentives to foreign investors. [The News]

●     OGDCL & PRL Forge Partnership:The Oil and Gas Development Company Limited (OGDCL) and Pakistan RefineryLimited (PRL) have signed a Memorandum of Understanding (MOU) to establish astrategic cooperation relationship in the energy industry. The MOU outlinestheir commitment to explore potential areas of collaboration, including OGDCL'sequity investment in PRL, and sets the framework for future negotiations andagreements between the two companies. [The News]

●     Pakistan's Oil Sector Seeks Reimbursement:The oil sector in Pakistan is seeking the reimbursement of Rs 10 billion inprice differential claims (PDC) on petroleum products, which have been pendingsince 2008. The Oil Companies Advisory Council (OCAC) has requested therepayment of the outstanding amount, highlighting the prolonged delay and lossof value for the industry. The sector has urged the government to address thisissue in the next budget to alleviate further burden on the industry, althoughthe chances of recovery appear dim. [The News]

●     Illicit Goods Seized:Over the past 20 days, the Collectorate of Customs Enforcement in Karachi hasseized Iranian smuggled petroleum products, smuggled vehicles, and variousother illicit goods valued at approximately Rs 792 million. The operation ledto the apprehension of 14 oil tankers transporting Iranian smuggled diesel andpetrol, as well as the confiscation of non-customs paid vehicles and a range ofother smuggled items. [BR]

●     Sindh's Updated Forest Conservation Policy:The Sindh forest department has released the amended Sindh Sustainable ForestManagement Policy, removing provisions that promoted agricultural activity onforestland in riverine areas. The policy aims to bring back forest cover on allplantable areas, involving private sector investment and protection throughpublic-private partnerships. The amended policy complies with internationalforest management standards and court orders prohibiting crop cultivation onreserved forestlands. [Dawn]



●     Contemplating Ban on PTI:Defense Minister Khawaja Asif stated on Wednesday that the ban on the PakistanTehreek-e-Insaf (PTI) party is being considered. He accused PTI leader ImranKhan of having heinous ambitions and attacking the foundation of the State,suggesting that the events of May 9 were pre-planned. Asif mentioned that if adecision is made to ban PTI, it will be referred to Parliament, and he warnedagainst Imran Khan's attempts to negotiate after his failed gamble. [BR][Dawn]

●     PTI Faces Prominent Member Departures:Several prominent members of the Pakistan Tehreek-i-Insaf (PTI), includingFawad Chaudhry and Asad Umar, have left the party following the violence on May9. While Umar stepped down from his party office but remained associated withPTI, others, including Shireen Mazari and Fayyazul Hassan Chohan, quit the partyentirely. The departures come in the wake of the arrests of former primeminister and PTI leader Imran Khan, with Umar calling for a transparent inquiryinto the violence and the release of arrested party workers. [Dawn]

●     Provisional GDP Growth Rate:The National Accounts Committee (NAC) has approved a provisional Gross DomesticProduct (GDP) growth rate of 0.29% for the ongoing fiscal year 2022-23,compared to 6.1% in the previous year. The growth rates for the agricultural,industrial, and services sectors have been estimated at 1.55% , -2.94%, and0.86%, respectively, for the current fiscal year. [BR][Dawn]

●     Bird Strikes Plague Pakistan's Airports:The Pakistan International Airlines (PIA) has reported a significant number ofbird strikes, with 29 incidents occurring at domestic airports in the last fivemonths, resulting in damage to seven planes. In a recent incident, FlightPK-310 from Karachi to Quetta was hit by a bird after takeoff, causing damageto the plane's engine blades and necessitating the passengers to be transferredto an alternative flight. [ET]



●     IMF Chief Urges Debt Resolution:IMF Chief Kristalina Georgieva expressed her view that the US government debtshowdown was unnecessary for the world economy and believed a default could beavoided. She acknowledged the historical pattern of last-minute resolutions butemphasized the risks and uncertainties associated with the situation, whileBlackstone CEO Stephen Schwarzman described it as a tense battle of wills anddesires. [BR]

●     Oil Prices: Oil prices rose over 1% on Wednesday,after a large unexpected drawdown in US crude inventories and a warning fromthe Saudi energy minister that raised the prospect of further OPEC+ productioncuts. Brent crude futures rose 90 cents, or 1.2%, to $77.74 a barrel by 12:29p.m. EDT (1629 GMT). US West Texas Intermediate crude (WTI) gained 97 cents, or1.3%, to $73.88. [BR]

●     Wagner Mercenaries' Heavy Losses in Bakhmut Battle:Yevgeny Prigozhin, the founder of Russia's Wagner mercenary group, revealedthat around 20,000 Wagner troops were killed in the battle for control ofBakhmut in eastern Ukraine. Prigozhin also mentioned recruiting about 50,000prisoners to fight in Russia's war in Ukraine, with approximately 20% of themlosing their lives, along with a similar number of contract soldiers, in thecity's battle. However, while Wagner and the Russian military claimed to have takencontrol of Bakhmut, the Ukrainian forces continued to fight for the cityaccording to Kyiv. [Al Jazeera][The Guardian]

●     US Presidential Race: RonDeSantis officially launched his long-awaited 2024 presidential campaign,signaling he will lean into culture war issues as a central strategy to wrestlethe Republican nomination from Donald Trump. The Florida governor held aTwitter Spaces event with its owner Elon Musk, which was beset by technicalglitches as hundreds of thousands of listeners tried to tune in. [Bloomberg] [Bloomberg]

●     Solidifying Russo-Chinese Ties:Chinese President Xi Jinping has offered its support on Moscow's coreinterests.  At a meeting with RussianPrime Minister Mikhail Mishustin in Beijing. Xi Jinping told the Russian PrimeMinister that the two countries would continue to offer each other "firmsupport on issues concerning each other's core interests and strengthencollaboration in multilateral arenas. The Russian Prime Minister said relationsbetween Russia and China are at an unprecedented high level. [ET][MT][RP][DP][Barron’s]

●     Russia-China Strengthen Ties Amid Ukraine Crisis:During a visit to Beijing, Russian Prime Minister Mikhail Mishustin signedseveral agreements with China, emphasizing the strong bilateral ties betweenthe two countries despite Western criticism of their relationship amid theongoing war in Ukraine. As Russia faces Western sanctions and seeks support, itis relying on China for economic cooperation, particularly in the areas of oil,gas, and trade, with energy shipments projected to increase and discussions ontechnological equipment supplies taking place between the two nations. [Dawn]

●     Iran Assigns Ambassador to Saudi Arabia:Iran has appointed Alireza Enayati as its ambassador to Saudi Arabia, marking asignificant step in the thawing of relations between the two countries aftermore than seven years of severed ties. Enayati, a former ambassador to Kuwaitand an experienced diplomat in Gulf affairs, will assume the role, following asurprise reconciliation agreement signed between Iran and Saudi Arabia inMarch. [BR][Dawn][ET][The News]

●     Central Afghanistan Hit by Deadly Flooding:Flooding in central Afghanistan has resulted in the deaths of six people andthe destruction of dozens of homes. The heavy floods, accompanied by the lossof agricultural land and damaged irrigation canals, add to the ongoinghumanitarian crisis in the country, which is already grappling with foodinsecurity and the effects of climate change. [BR] [ET][Geo]



●     Robberies in the vicinity of Northern Bypass cattle marketfrighten the public. [Dawn]

PAR News - Thurs, 25th May 2023

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