PAR News - Wed, 24th May 2023

TOPLINE

●     212,896 tonnes of sugar was exported, causing the average retail price to skyrocket to Rs 136 per kg in May.

●     Wheat flour supply from Punjab to KP resumed, reducing Peshawar's flour price by 3,000 rupees per 80 kg sack. Multan conducted 421 raids, seizing 11,273 metric tons of hoarded wheat while the Attock Food Department prevented 172 smuggling attempts, seizing 3546.50 metric tons of wheat in 2 months.

●     Nepra denies govt's request for tariff hike for KE consumers while KE is seeking early approval of PPC Act 2022 to tackle Rs 39 billion electricity theft loss in current fiscal year.

●     TTP claimed responsibility for an attack on oil and gas site near the Torkham border, resulting in the death of 6 security officials.

●     Several senior leaders of PTI resigned from the party, citing their condemnation of the May 9 incidents and placing blame on Imran Khan for inciting people against the army, while Imran Khan was interrogated by the NAB in relation to the National Crime Agency £190 million scandal for 4 hours yesterday.

●     Pak reiterated its position of not engaging in negotiations with India regarding Kashmir until India reverses its 2019 decision to revoke the territory's special status as the G20 moot was held in Indian Occupied Kashmir.

●     PM Shehbaz Sharif chaired budget meeting, stressing revenue expansion through tax net growth, while Power Minister Khurram Dastgir plans an alternative strategy to tackle economic challenges.

●     US dollar hits 2-month high on rising Treasury yields and hawkish Fed comments, raising rate hike expectations.

COMMODITIES - CROPS, LIVESTOCK & HORTICULTURE

●     Sugar Exports Drive Domestic Price Surge: Pakistan exported a significant amount of sugar during the February-April period of this fiscal year, leading to a surge in domestic retail prices. The country exported 212,896 tonnes of sugar, causing the average retail price to skyrocket to Rs 136 per kg in May, with expectations of further increases. [Dawn]

●     Flour Prices Drop in Peshawar: After the resumption of wheat flour supply from Punjab to Khyber Pakhtunkhwa, the price of an 80 kg sack of flour in Peshawar's markets decreased by approximately 3,000 rupees, from Rs 15,000 to Rs 12,000. However, despite the reduced flour prices, breadmakers continued to sell bread at high rates, causing concerns among consumers. Additionally, the local market experienced a decrease in prices for different types of flour, and traders anticipated further reductions in flour prices in the future. [The Nation]

●     Wheat Hoarding Crackdown: The Food Department in the Multan division has conducted 421 raids against wheat hoarding and smuggling, resulting in the confiscation of 11,273 metric tons of wheat. The department is actively working to meet the revised target of wheat procurement and has already achieved over 78.52% of the total target, with 538,161 metric tons of wheat purchased so far. [ET]

●     Wheat Smuggling Crackdown: Over the past two months, the Food Department in Attock, with the help of police and other law enforcement agencies, prevented 172 attempts to smuggle wheat from Punjab to Khyber Pakhtunkhwa (KP) and seized 3546.50 metric tons of wheat. Additionally, they thwarted 17 smuggling attempts of wheat products, particularly flour, and confiscated 296.86 metric tons of wheat products. [PO]

●     Textile Industry Struggles: The textile industry in Sindh and Balochistan is in crisis as gas shortages and disruptions have led to the closure of numerous industries or reduced their production capacity to 50%. The shortage of gas supply has caused significant damage to the export-oriented textile sector, leading to a substantial decline in manufacturing and textile exports, resulting in losses of foreign exchange and revenue for Pakistan. The industry is urging the governments of Sindh and Balochistan to address the gas shortage and ensure continuous and uninterrupted supply to support the export-oriented sector. [BR] [ET] [The News]

●     Sustainable Biofloc Fish Farming: A large-scale biofloc fish farm has been established in Tando Jam, Hyderabad, covering 1.5 acres with 60 tanks that can produce 50 tons of fish or prawns annually. The farm utilizes biofloc technology (BT) to recycle waste nutrients as fish food, maintaining water quality and reducing costs. The initiative aims to meet local and foreign market demands while contributing to poverty alleviation and reducing malnutrition in Sindh, with the World Bank showing interest in supporting biofloc farm projects in collaboration with the Sindh government. [ET]

●     Governor Hails Farmer-Friendly Policies: Governor Punjab Muhammad Balighur Rehman praised the government's farmer-friendly policies, which have led to an increase in the average yield of wheat per acre this year. He expressed deep concern over the recent attacks on institutions and military installations, emphasizing the importance of respecting martyrs and working towards development and stability in the country despite economic challenges. [BR]

●     Opinion: Can Agriculture be a Leading Sector? - “Agriculture is usually the stepchild of the development process. As countries grow, its importance shrinks while that of the manufacturing and services sectors expands. However, Pakistan has failed to make this transition. It has failed to build up an efficient competitive manufacturing or services sector; it has failed to develop its exports of high value goods and services; and it has failed to keep up with neighbouring countries in terms of high and sustained growth.” - By Daud Khan & Sanakhawan Hussain [ET]

AGRI-INPUTS, WEATHER, WATER & POWER

●     Nepra Rejects Electricity Tariff Increase: The National Electric Power Regulatory Authority (Nepra) rejected the federal government's request to increase electricity tariff for K-Electric consumers by an average of Rs 3.5 per unit for three months. Nepra conducted a joint public hearing on the government's requests to increase the tariff but disallowed the proposed increase of up to Rs 4.45 per unit for the first quarter of FY23, citing technical grounds rather than assessing its merits. [Dawn]

●     KE Seeks Early Approval for Electricity Theft Act: K-Electric (KE) has requested the early approval of the Pakistan Penal Code (PPC) (Amendment), Act 2022 from the Power Division to address the issue of electricity theft, which has resulted in a loss of over Rs 39 billion during the first three quarters of the current fiscal year. KE's CEO, Syed Moonis Abdullah Alvi, emphasized the importance of this Act to combat theft and protect the country's power sector. The requested amendment aims to make electricity theft offenses cognizable by the police, thereby enabling them to make arrests without a warrant and effectively tackle the issue. [BR]

●     Fertilizer Import Proposal: The Ministry of Industries and Production has proposed importing 0.2 million tons of urea fertilizer on a government-to-government basis, along with ensuring uninterrupted gas supply to urea fertilizer plants until December 2023. This initiative aims to meet the demand for urea fertilizer during the Kharif Season 2023, as recommended by the Ministry of National Food Security and Research. The Economic Coordination Committee (ECC) has directed the Petroleum Division to provide indigenous gas to specific fertilizer plants without subsidies, effectively bridging the gap between demand and supply. Gas supply was restored to the plants in March 2023, leading to the resumption of production. [BR]

●     Rawalpindi's Leh Expressway: Due to a lack of funds, the Rawalpindi Development Authority (RDA) has scaled down the Leh Expressway and Flood Channel project, focusing only on laying sewerage trunks, and is now seeking an additional grant of Rs 20 billion from the Punjab government. The project, aimed at providing an alternative route for traffic and preventing flooding in Nullah Leh, has faced delays for over a decade, and its estimated cost is expected to rise significantly if further delays occur. [ET]

●     Solar Project in Muzaffargarh: The National Electric Power Regulatory Authority (NEPRA) has approved a tariff of 3.4 cents (Rs 7.8 per unit) for a 600 MW solar project in Muzaffargarh, subject to conditions such as quarterly indexation of 70 percent due to exchange rate variations. The regulator also decided that the income tax of 15% on the power producer's income and gains will be paid by end consumers as part of the benchmark tariff. Additionally, consumers will bear the yearly lease rentals and bidding for the project will remain open until May 31, with the winner being awarded the contract. [The News]

●     Reviving Trilateral Cargo Train: Pakistan Business Forum (PBF) leader Ejaz Tanveer has proposed the re-launch of a cargo train between Pakistan, Iran, and Turkiye to enhance trade between the three countries. Tanveer believes that the cargo train could provide a faster, more cost-effective, and reliable transportation option for goods, diversifying Pakistan's trade routes and benefiting the logistics industry. The project could also leverage Turkey's strategic location as a gateway to Europe, potentially boosting economic growth and job creation. [Dawn]

●     Iran-Pakistan Gas Pipeline Progress: The Ministry of Foreign Affairs (MoFA) has organized an inter-ministerial meeting to discuss the progress of US sanctions on the Iran-Pakistan (IP) gas pipeline, following Minister of State for Petroleum and Natural Resources Musadik Malik's visit to the United States. The meeting aims to address various energy-related issues, including US investment in Pakistan's energy sector, waivers for Iranian energy resources, the TAPI pipeline, offshore drilling projects, and the Pak-US Energy Dialogue. [BR]

●     Pakistan's Housing Crisis: Pakistan has a housing shortage of 10 million units, with the poorest households facing the most severe challenge. The Residual Expenditure Method (REM) is a more accurate methodology for measuring housing affordability than the Expenditure-to-Income Ratio (EIR) approach. [BR]

●     Global Support for Disease Control: The Senate Standing Committee on National Health Services and Regulations was informed that the health authorities have received $1.10 billion in funds from the Global Fund for various disease control programs, primarily focused on HIV/AIDS and TB control. The committee discussed the cancellation of the "Additional Safeguard Policy" (ASP) and the need to restore it, as well as the importance of screening individuals returning to Pakistan to prevent the spread of diseases like HIV/AIDS. [BR]

●     CDWP Approves 15 Projects: The Central Development Working Party (CDWP) has approved 15 projects worth Rs 249.2 billion, primarily in Punjab, Khyber Pakhtunkhwa, and Azad Jammu and Kashmir. Among these projects, two larger initiatives have been referred to the Executive Committee of the National Economic Council (Ecnec) for formal approval. The CDWP, chaired by Planning Minister Ahsan Iqbal, cleared 13 projects with an estimated cost of around Rs 22.6 billion and recommended two projects worth approximately Rs 226.56 billion for Ecnec's approval. [Dawn]

●     Deadly Attack on Oil and Gas Site in Hangu: Six security officials, including four members of the Frontier Constabulary and two private guards, were martyred in an attack on an oil and gas exploration site in the Manji Khel area of Hangu district near the Afghan border. The Tehreek-i-Taliban Pakistan (TTP) claimed responsibility for the attack, in which militants targeted wells with heavy weapons, including rocket-propelled grenades. [Dawn]

AGRI UPDATES & PAKISTAN POLICY

●     PTI Senior Leaders Resign Amid Controversy: Several senior leaders of the Pakistan Tehreek-e-Insaf (PTI) resigned from the party, citing their condemnation of the May 9 incidents and placing blame on party Chairman Imran Khan for inciting people against the army. Among those who resigned were former federal minister Dr. Shireen Mazari, former Punjab minister Fayazul Hassan Chohan, and other prominent members, who strongly criticized the violence against state institutions and symbols. [Dawn] [ET] [The News]

●     NAB Interrogates Imran Khan: Former Prime Minister and Chairman of the Pakistan Tehreek-e-Insaf (PTI) party, Imran Khan, was interrogated by the National Accountability Bureau (NAB) for nearly five hours at their Rawalpindi headquarters in relation to the case known as the 'National Crime Agency £190 million scandal', formerly titled the 'Al-Qadir Trust reference'. During the interrogation, documents were provided to Imran Khan, and he was requested to respond at the next session when he appears before a team of five NAB investigators, led by the director general. [ET] [The Nation]

●     Shehbaz Sharif Prioritizes Budget Reforms: Prime Minister Shehbaz Sharif chaired a meeting on budget preparation and emphasized the need to increase revenue by expanding the tax net. The meeting discussed the progress in reducing the financial deficit and achieving economic stability, and the Prime Minister directed the government to focus on alleviating economic difficulties faced by the middle and poor classes, reducing urea fertilizer prices, implementing pension reforms, and establishing a pension fund. [BR]

●     Baloch Militant Founder Offers Cooperation: Gulzar Imam Baloch, reportedly the founder of the banned Balochistan National Army (BNA), expressed willingness to assist the government and security forces in negotiating with disgruntled Baloch militants, stating that issues can be resolved peacefully. He made this statement during a media appearance under tight security after being arrested in a high-profile intelligence operation a few months ago, with claims of merging the Baloch Republican Army (BRA) and the United Baloch Army (UBA) to form the BNA. [Dawn]

●     New Air Cargo Routes Boost China-Pakistan Trade: China and Pakistan have opened two new air cargo routes to strengthen trade relations between the two countries. The routes, operating between Nanning and Karachi as well as Nanning and Lahore, will facilitate the transportation of Pakistani fruits and seafood to China, while Chinese clothing accessories and other goods will be delivered to the Pakistani market. [ET] [PO] [RP]

●     PSX Urges Capital Market Reforms: The Pakistan Stock Exchange (PSX) has called on the government to implement reforms that would strengthen the country's capital markets, attract more companies and investors, and address imbalances in the economy. The PSX CEO/MD emphasized the importance of well-thought-out tax policies, including adjusting the Capital Gains Tax (CGT) rates and exempting income from foreign investments in the capital market from taxation, to foster growth, attract investments, and promote documentation in the capital markets. [The News]

●     Resource Boost & Investment Opportunities: Provincial Minister SM Tanveer chaired a meeting to approve proposals for increasing resources in different departments for the fiscal year 2023-24, focusing on economic stability and promoting industrial activities. The minister also met with a delegation from Primark Company to discuss investment opportunities in the ready-made garments sector. [The News]

●     Economic Challenges & Alternative Strategy: Power Minister Khurram Dastgir stated that an "alternative strategy" will be announced to address Pakistan's economic challenges and the perceived assault on the country. The government's decision comes as a staff-level agreement with the International Monetary Fund (IMF) to secure a $1.1 billion tranche appears unlikely, with a significant delay in reaching an agreement since November. [Dawn]

●     Pakistan Stands Firm on Kashmir Issue: Pakistan reiterated its position of not engaging in negotiations with India regarding Kashmir until India reverses its 2019 decision to revoke the territory's special status. Foreign Secretary Dr Asad Majeed emphasized this stance during a briefing to the National Assembly's committee on foreign affairs, stating that the absence of important countries like Saudi Arabia, China, Turkiye, and Indonesia from the G20 meeting in Srinagar supported Pakistan's stance and recognized the disputed status of the region. [Dawn]

INTERNATIONAL – OVERVIEW & MARKET OUTLOOK

●     Oil Prices: Oil prices rose on Tuesday on a tighter gasoline market outlook and a warning from the Saudi energy minister to speculators that raised the prospect of further OPEC+ cuts to support the market. Brent crude was up $1.14, or 1.5%, at $77.13 a barrel by 11:33 a.m. EDT (1533 GMT). US West Texas Intermediate (WTI) crude gained $1.21, or 1.7%, to $73.26 a barrel. [BR] [Reuters]

●     Palm Oil Prices: Malaysian palm oil futures fell on Tuesday for a second session, hitting their lowest closing in over three weeks, as slower demand and expectations of higher production weighed on the market. The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange slipped 47 ringgit, or 1.37%, to 3,381 ringgit ($762.34) a tonne, closing at its lowest since April 28. [BR] [MG]

●     Dollar Soars on Rate Hike Expectations: The US dollar reached a two-month high as higher Treasury yields and hawkish comments from Federal Reserve officials fueled expectations of further rate hikes. The focus on inflation and recent hawkish statements from regional Fed presidents supported the dollar, while investors await further indications of Fed Chair Jerome Powell's thinking in the minutes from the Fed's May meeting. [BR]

●     Opinion: Feeding Arizona as Water Becomes Scarce - “Motivated by the severe drought in the Southwest, Kim Elle, a retired Air Force intelligence officer, took up gardening after moving to suburban Phoenix. Facing water scarcity, she aimed to create a yard that required less water, joining many others who turned to gardening as a response to the prolonged drought in the region.” - By Brett Anderson [NYT]

PAKISTAN - REMAINDERS

●     Pak Suzuki shuts motorcycle plant till June 10. [BR]

●     MQM-P moot highlights concerns over census accuracy, inclusivity. [The News]

●     Call to hold census afresh as country’s population growth rate termed exaggerated. [Dawn]

●     Opinion: Food Fortification Ecosystem - “Proper nutrition in the first 1,000 days of a child's life is crucial to improved physical and cognitive development. Lack of adequate nutrition can affect a child adversely later in life, leading to poor cognitive skills, reduced schooling and more chances of ending up in poverty.” - By Prof Dr Tipu Sultan [ET]

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