PAR News - Wed, 15 Nov 2023

TOPLINE

• The intense 18-month inflationary cycle has permanently altered pricing dynamics, especially in the poultry industry as prices have declined 32% since June 2023.
• The Punjab Food Department has set the retail price of flour at Rs 139.9 per kg and fixed the rate of wheat at Rs 4700/maund for mills. The price of a 10 kg bag of flour from mills is set at Rs 1374 and retail at Rs 1399.
• The Punjab government has relieved agriculture department officers of their roles as focal persons for monitoring and preventing stubble burning, assigning the responsibility to assistant commissioners in all tehsils of the Lahore division.
• The government has decided to cease providing free electricity to officers of electricity companies and will instead offer them a monthly sum. The government has sought a Rs 1.25 per unit increase for the first quarter of the fiscal year (July-September 2023) to recover Rs 22.56 billion from consumers.
• The acting commerce minister of the Taliban met with Pakistan's foreign minister in Islamabad to discuss trade (3000 stuck containers) and the repatriation of Afghan citizens expelled by Pakistan.
• The IEA has revised global oil demand projections upward for 2023, citing China's record-breaking consumption. China's consumption peaked at 17.1 million barrels per day in September. The IEA increased its 2023 growth forecast to 2.4 million barrels per day and 2024 forecast to 930,000 barrels per day.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

• Poultry Prices Decline, Raising Concerns: The intense 18-month inflationary cycle has permanently altered pricing dynamics, especially in the poultry industry. Despite recent price stabilization due to reduced demand, the domestic market is expected to undergo a lasting transformation. In the poultry sector, prices have continuously declined for at least 4 months, experiencing a 32% drop since June 2023. [BR]
• FIA Abruptly Halts Sugar Price Surge Inquiry: The Federal Investigation Agency (FIA) abruptly halted its inquiry against the sugar mafia accused of doubling sugar prices. The interim government had initiated the investigation after sugar prices surged from Rs 90-180/kg. The FIA had summoned top brokers and hoarders, seeking records from sugar mills. However, the sudden halt in proceedings raises questions about the investigation. [ET]
• Pakistan-China Collaboration for Sugar Industry Revolution - Moazzam Ghurki, President of PCJCCI, highlights the potential for Pakistan and China to revolutionize the sugar industry through collaboration, aiming to produce high-grade sugar for global export. He proposes connecting experts from both countries and leveraging technologies like 'Tissue Culture' for significant improvements in sugarcane production. [ET]
• Punjab Sets Retail Flour Price at Rs 139.9 per kg: The Punjab food department in the province has set the retail price of flour at Rs 139.9 per kg. With approval from the provincial cabinet, authorities issued a notification fixing the rate of wheat at Rs 4700 per maund for mills. As per the notification, the price of a 10kg bag of flour released from mills is set at Rs 1374, while the retail price of flour is fixed at Rs 1399 per 10kg bag. [ARY]
• Withdrawal of Funding Hits Sericulture, Leaves Rural Women Jobless: Withdrawal of government funding from the non-timber sector, particularly sericulture, has left thousands of female home-based workers in rural areas without livelihoods. In areas like Changa Manga, women involved in silkworm rearing faced challenges due to a lack of funding, impacting dozens of women in the region. About 4,000 women across various rural areas have lost their livelihoods due to the withdrawal of funds for the non-timber sector. [ET]
• Meat Export: Rs 11.9 billion was the export value of meat and meat preparations in Sept 2023, up 74.5% compared to Rs 6.8 billion in Sept 2022, according to the PBS. [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

• Lahore Faces Hazardous Air Quality: After a brief respite, Lahore faces hazardous air quality once again, with the AQI spiking to alarming levels on Tuesday. The maximum AQI reached 401 at 9 am, indicating extremely unsafe conditions for breathing. Although there was a slight improvement in the afternoon, with the AQI dropping to 188 by 7 pm, it deteriorated again, registering 236 at 9 pm. [Dawn] [Dawn]
• Punjab Shifts Stubble Burning Oversight to Assistant Commissioners: The Punjab government has relieved agriculture department officers of their roles as focal persons for monitoring and preventing stubble burning, assigning the responsibility to assistant commissioners in all tehsils of the Lahore division. This decision came after the government observed negligence on the part of agriculture officers (deputy/assistant directors) in fulfilling their assigned duties. [Dawn]
• Deforestation in KP Raises Flood Risk & Environmental Concerns: Rampant deforestation in Khyber Pakhtunkhwa (KP) by the timber mafia has heightened the risk of flooding and other natural catastrophes, according to experts at a seminar organized by the Sustainable Development Policy Institute (SDPI) and Sarhad Conservation Network (SCN). Deforestation, accentuated since June 2023 under the interim government, poses environmental challenges, increasing the vulnerability to natural disasters in the province. [ET] [The Nation]
• Pakistan's Interim Gov: Stable Petrol Price, Cuts in Other Fuels - The interim government in Pakistan is likely to maintain the current petrol price and decrease other petroleum products starting November 16, 2023. While petrol prices were expected to rise by Rs 3 per liter, adjustments in oil company margins and refinery prices may keep the petrol price unchanged. Additionally, significant reductions are anticipated for high-speed diesel, kerosene oil, and light diesel oil. [BR]
• Oil Sector's Port Solutions for Efficient Petroleum Supply: The oil sector has highlighted port-related issues affecting the petroleum supply chain and suggested solutions, including a dedicated line for petrol, streamlined berthing procedures, and improved night navigation for vessels. This could increase handling capacity by 30 percent. [The News]
• Government Ends Free Electricity for Officers, Proposes Monthly Stipend: The government has decided to cease providing free electricity to officers of electricity companies and will instead offer them a monthly sum, pending approval in the federal cabinet meeting. The proposed amounts for Grade 17 and above officers of distribution and generation companies range from Rs 15,858 to Rs 55,536 per month in lieu of the currently allocated free electricity units. [The News]
• Rs 22.56 Billion Recovery: Government Seeks Quarterly Power Adjustment: The government has sought a Rs 1.25 per unit increase for the first quarter of the fiscal year (July-September 2023) to recover Rs 22.56 billion from consumers. NEPRA is reviewing the request for quarterly power adjustment filed by power distribution companies. [BR]
• Federal Cabinet Mulls Tax on Banks' Forex Windfall Profits: The federal cabinet, led by Caretaker Prime Minister Anwaar-ul-Haq, is likely to grant an exemption from Public Procurement Rules, 2004, to the Trading Corporation of Pakistan for the import of 200,000 metric tonnes of urea. The Cabinet Division is expected to propose the exemption during the meeting, which will also consider the Federal Board of Revenue's proposal to impose tax on windfall profits of banks from foreign exchange transactions in 2021 and 2022. [BR]
• Finance Ministry Plans to Devolve Urea Subsidy, BISP to Provinces: The Finance Ministry, through the Special Investment Council, aims to eliminate urea subsidy and the Benazir Income Support Fund, transferring responsibility to provinces. Secretary Finance ImdadUllah Bosal stated that these matters are devolved to provinces. The cost of the country's annual urea requirement (200,000 Mts) is approximately US$82 million. [BR]

AGRI UPDATES & PAKISTAN POLICY

• New Tax Proposal: Cabinet to Discuss Banks' Windfall Profits Tax - The government is likely to use the Finance Act, 2023, to impose taxes on windfall profits of banks, particularly those earned from foreign exchange transactions in 2021 and 2022. The federal cabinet is expected to discuss this agenda item, utilizing a new section (99D) introduced in the Finance Act for imposing additional tax on windfall profits and gains. [BR]
• Taliban & Pakistan Discuss Trade, Repatriation: The acting commerce minister of the Taliban met with Pakistan's foreign minister in Islamabad to discuss trade and the repatriation of Afghan citizens expelled by Pakistan. This comes after Pakistan's move to deport undocumented Afghans, citing the Taliban-led administration's alleged inaction against militants. The Taliban views militancy as an internal matter for Pakistan and has called for a halt to the deportation of Afghan citizens. [BR] [Dawn]
• SIFC Expects $70 Billion in Investments, Reko Diq Valuation Finalized: Pakistan's Special Investment Facilitation Council (SIFC) anticipates $70 billion in investments, backed by foreign assurances, with discussions ongoing. Jahanzeb Khan, SIFC Secretary, revealed the finalization of Reko Diq copper and gold mines' valuation and upcoming talks with Saudi Arabia on investment. The $70 billion figure is not abstract, relying on assurances from other countries, said Khan, while it is expected to be delayed due to the current Israeli genocide. [ET]
• Balochistan Political Shift: PML-N Gains Momentum - Dozens of prominent politicians from Balochistan joined the PML-N after a meeting with its leader Nawaz Sharif in Quetta, as part of his efforts to garner support for the upcoming Feb 8 elections. Nawaz Sharif, also engaged in closed-door discussions with leaders of various political parties, accompanied by PML-N President Shehbaz Sharif and Chief Organiser Maryam Nawaz. [Dawn]
• Stagnation in Pakistan's Insurance Sector: Pakistan's insurance sector, with less than 1% of GDP penetration, has shown stagnation, especially in categories like micro-insurance and livestock insurance. The Securities and Exchange Commission of Pakistan highlighted these issues, citing a gross premium of Rs 553 billion, with Rs 375 billion in life insurance. Among the 42 insurance companies, 27% operate in the non-life sector. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

• Gaza Genocide - Mass Grave & Evacuation Issues: Ongoing conflict in Gaza has led to unverified claims about patients digging a mass grave and the lack of evacuation plans for babies at Al Shifa Hospital. The situation involves casualties and challenges for medical facilities. Separately, the Israeli army claimed to have captured Gaza’s parliament building and other government institutions as part of their ongoing offensive. [BR] [Dawn] [ET]
• Biden Administration Employees Urge Ceasefire: Over 400 Biden administration employees have written an open letter to the US President, urging an immediate ceasefire in Gaza. Additionally, more than 10,000 carnation stems were placed on Capitol Hill's steps, symbolizing civilian lives lost since October 7. The open letter is a significant departure from the usual practice of aides staying in the background and outlines specific actions for de-escalation and humanitarian relief in the region. [Dawn]
• Russia Signs Igla-S Missile Deal with India, Allows Local Production: Russia has signed a contract to supply Igla-S hand-held anti-aircraft missiles to India and granted a license for local production, as stated by Alexander Mikheyev, head of Russia's state arms exporter Rosoboronexport. The Igla-S is a man-portable air defense system (MANPADS) capable of being operated by individuals or crews to target enemy aircraft. [Dawn]
• Despite Restrictions, Chinese Companies Invest in US Chip Making Tools: Chinese companies are acquiring US chip-making equipment for advanced semiconductors, despite recent export restrictions aiming to impede China's semiconductor progress. The annual report criticizes the Biden administration's curbs, designed to prevent Chinese chipmakers from accessing US tools for making advanced chips. [BR]
• Afghanistan Appeals for Container Release - Afghanistan has urged Pakistan to release thousands of stuck containers at Karachi port. Pakistan asserts losses in taxes as duty-free goods sent to Afghanistan are smuggled back. Afghan authorities claim Pakistan halted over 3,000 containers, demanding more tax payments. [BR]
• Gold Prices Rise on Weaker US Inflation Data, Dollar Decline: Gold prices rose as the dollar and Treasury yields fell after softer-than-expected US consumer inflation data, suggesting a potential halt in Federal Reserve interest rate hikes. Spot gold increased 0.6% to $1,957.70 per ounce, and US gold futures rose 0.7% to $1,963.00. October US consumer prices were unchanged, with a 3.2% increase in the CPI over the 12 months through October, compared to a 3.7% rise in September. [BR]
• Record-Breaking China Drives IEA's Upward Revision in Oil Demand: The IEA has revised global oil demand projections upward for 2023, citing China's record-breaking consumption. China's consumption peaked at 17.1 million barrels per day in September. Oil prices rose 1%, with Brent futures at $83.53 per barrel and US WTI crude at $79.26. The IEA increased its 2023 growth forecast to 2.4 million barrels per day and 2024 forecast to 930,000 barrels per day. [BR] [BR] [ET]

PAKISTAN - REMAINDERS

• Karachi Authorities Dismantle 150 Illegal Hydrants in Water Theft Crackdown. [Dawn]
• Amendments to Solar PV Initiatives: Facing challenges, the caretaker government plans amendments to the Framework Guidelines for Fast-Track Solar PV Initiatives 2022. The amendments aim to empower public sector entities for independent procurements. Initial interventions were approved on October 18, 2022, focusing on initiatives like Solarisation of Public Sector Buildings, with subsequent amendments on May 24, 2023, and August 9, 2023. [ET]
• IMF Cautions Pakistan on Investment Council Transparency: The International Monetary Fund (IMF) has cautioned Pakistan against establishing a Special Investment Facilitation Council (SIFC) with preferred investors, emphasizing the importance of transparency and accountability in business dealings. The IMF mission expressed concerns about the creation of such an institution, questioning its necessity and potential risks, and urged that transparency should be prioritized in these matters. [Dawn]