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PKR: RATES ALMOST UNCHANGED

Steadier trend was witnessed on the money market on Friday in the process of trading, Kamal Hayder, Research Analyst-PAGE said. The rupee almost unchanged against the dollar for buying and selling at Rs 104.84 and Rs 104.85 respectively. In the final Asian session, the dollar inched up from a five-week low against the yen and steadied against the broader basket of currencies, while the markets brushed off softer-than-expected Chinese exports figures.

TURKMENISTAN ORGANIZES COMPANY FOR TAPI PROJECT FINANCING

Turkmenistan has established a company for financing Turkmenistan-Afghanistan-Pakistan-India (Tapi) gas pipeline project and allocated US $2 billion from its own resources to implement the project, which will be completed by end-2019 to export gas to Kabul, Islamabad and New Delhi. The four nations as part of the gas pipeline project had already registered the company in November 2014 in which Afghanistan, Pakistan and India would have five percent shareholding each and the remaining 85 percent stake would be held by Turkmenistan. The investment agreement pertains to five percent shareholding of each of the three gas-importing countries, which means an initial investment of around $200 million. The National Assembly’s Standing Committee on Petroleum and Natural Resources in its last meeting expressed serious reservations over Pakistan government’ imposition of a levy for financing of the project.

WATER TREATY: UN, WB URGED TO DO SOMETHING ABOUT VIOLATION BY INDIA

The Sindh National Tehreek (SNT) have demanded of the United Nations and the World Bank (WB) to take notice of violation of Indus Basin Treaty by Indian government adding that negligence in this regard could trigger a war between the two countries. The Chairman SNT Ashraf Noonari made such demand while addressing a big rally of the party workers, brought out from Gul Centre on Friday and later finished in front of Hyderabad Press Club where the participants staged protest demonstration against the policies of Indian government and also burnt the Indian flag as a mark of protest. Ashraf Noonari lashed out at the role of Indian ruling party of irking Pakistan by making such decisions which could lead the war not only between the two countries, but said that it could also create unrest in the region and the world. By building dams on rivers particularly on Indus River, the Indian government wants to create scarcity of water in Pakistan, the agriculture based country, he said and added that closure of water from Indian side is more dangerous than nuclear attack as such tactics could destroy the agriculture sector and create starvation in Pakistan. He said that 80 million people of Sindh are ready to sacrifice if any move in this direction, made by Indian government as it become the issue of survival for them. After failure of stopping voice of the people of occupied Kashmir despite playing blood bath, the Indian government is now trying to stop water towards Pakistan by building dams on rivers, he said and demanded the United Nations and the World Bank to hold Indian government of its ill designed act of terrorism.

MONETARY IMPACT OF PM’S PACKAGE READJUSTED

The Economic Co-ordination Committee (ECC) of the Cabinet has reportedly readjusted financial impact of Prime Minister’s package of incentives for exporter prepared after months of consultative process. Well-informed source told to Research Analyst-PAGE that the ministry had estimated Rs 38.7 billion for garments sector at 7 percent duty drawback but after discussion the amount was slashed to Rs 37.6 billion. Likewise, financial impact on made-ups was slashed from Rs 30.3 billion to Rs 29 billion at 6 percent duty drawback. However, the ECC did not change financial impact of Rs 8.8 billion at 5 percent duty drawback on processed fabric. The estimated financial impact of Rs 14.1 billion was reduced to Rs 12.1 billion on yarn and greige fabric at 4 percent duty drawback. The total estimated financial impact of Rs 91.9 billion was reduced to Rs 87.5 billion. The amount for non-textile sector remained unchanged at Rs 12.5 billion on basis of various rates ranging from 5 percent to 7 percent. The source said the Ministry of Finance had estimated financial impact of withdrawal of duty and sales tax on cotton imports at Rs 5 billion but the ECC increased it to Rs 10 billion.

 

GUNVOR SET TO BEAT RIVALS IN BUMPER LNG TENDER

Commodity trader Gunvor is tipped to win bumper liquefied natural gas (LNG) tender, traders participating in the process said, beating a host of rivals, including Trafigura, Malaysia’s Petronas and Spain’s Gas Natural Fenosa. Pakistan LNG launched a five-year supply tender and a 15-year tender last year to buy a combined 240 shipments of LNG, drawing a lot of interest from suppliers eager to sell gas in an oversupplied market. The five-year tender for approximately 60 shipments is the most attractive for trading houses which will struggle to commit to longer periods without direct access to supply. Gunvor’s existing presence as an LNG supplier to Pakistan, among other factors, may give it an edge over rivals, the traders said. The list of bidders is a who’s who of top commodity traders and oil firms, with Engie, Trafigura, Gunvor, Glencore, SK, Oman Trading International, Noble , Eni, Petronas, Shell, Gas Natural Fenosa and CNOOC in the mix, according to trade sources. Participating traders say potential profit margins in the tender are under pressure from aggressive bidding. Multi-year LNG tender deals tend to be linked to Brent crude oil prices, expressed as a percentage and recent extreme price volatility has made some players wary of bidding too low for fear of winning an unprofitable deal, they said. Brent-linked values have fallen below 11 percent in some cases, though more are held to be above 12 percent, the traders said.

RS 3 KWH TARIFF CUT: GOVT REQUESTED TO PICK NET DIFFERENCE OF SUBSIDY

The federal government has been requested to pick the net difference of Rs 3 kWh tariff reduction for industrial sector announced by Prime Minister Nawaz Sharif as subsidy because the support package can not be cross-subsidised against other categories of consumers in K-Electric area, source said to Research Analyst-PAGE. This view was expressed by Ministry of Water and Power in writing to the last meeting of the Economic Co-ordination Committee (ECC) of the Cabinet presided over by Finance Minister Ishaq Dar after the Finance Division wanted the tariff reduction announced by the Prime Minister to be cross-subsidised. The minister contended that the “support package Rs 3/kWh tariff reduction for industrial consumers is to be netted against negative fuel price adjustment for industrial consumers and the net difference will be picked up by the government as subsidy. Soon after the support package of tariff reduction for industrial sector was announced by the Prime Minister during the 39th Annual Export Awards Distribution Ceremony of FPCCI in Karachi, a summary was moved to the ECC on January 27, 2016 for implementation of the directive that existing base tariff for all industrial consumers of all DISCOs should be reduced up to Rs 3/kWh for the financial year 2015-16 with effect from January 1, 2016 to maintain a uniform tariff. Subsequently, policy guidelines were issued to NERRA not to pass on negative fuel price adjustment to the industrial consumers till the tariff determination/notification of all XWAPDA DISCOs with communication of decision to all the stakeholders for implementation. Again, the Finance Division requested that ECC decision may be rectified to include KE as well as exact period of subsidy instead of January 2016 to June 2016. The ECC was requested that Rs 3/kWh reduction on the existing base tariff for the industrial consumers may also be allowed to KE industrial consumes and the subsidy on account of industrial package may be allowed to industrial consumers till new tariff determination/notification of all DISCOs is issued. Additionally, the NEPRA may not pass on negative FPA to the industrial consumers. Source further said that the ECC approved the proposals for inclusion of KE industrial consumers in Prime Minister’s Support Package and extending the package in time till new tariff determined is notified subject to condition that subsidy would be cross-subsidised. The ECC was informed that the support package has already been cross-subsidised against negative fuel price adjustment across all DISCOs, including KE and in case of negative or positive fuel price adjustment, net benefit is passed on to the industrial consumers. The mechanism for these adjustments is in place and subsidy claims were being adjusted and paid based on this mechanism.

GOVT PLANS TO COVER 800,000 HECTARES AREA UNDER SLMP

The government is planning to cover an area of around 800,000 hectares in 200 villages of 14 districts of the country under Sustainable Land Management Programme. The integrated activities will be performed in agriculture, forest, irrigation, livestock, rangelands and soil conservation/stabilisation sectors. This was briefed to a meeting of the Programme Steering Committee on the Sustainable Land Management Programme (SLMP, Phase-II) that took place on Friday in the chair of Secretary Ministry of Climate Change Syed Abu Ahmad Akif. Ministry of Climate Change is taking care of the programme in partnership with United Nations Development Programme-Pakistan (UNDP) and Global Environment Facility (GEF).

UFG LOSSES IN LAHORE REGION DECLINED BY 825MMCF

General Manager Lahore Sui Northern Gas Pipe Lines Limited (SNGPL) Qaiser Masood on Friday claimed that in the current fiscal year Unaccounted For Gas (UFG) losses in Lahore region had been reduced by 825MMCF which was 1.34 percent less than previous year, source said to Research Analyst-PAGE. The company has saved Rs 270 million by controlling the line losses. He was briefing the media on the issue of low gas pressure faced by the people living in different localities of Lahore. He said that as a part of the company’s efforts to control line losses 372 successful raids were conducted out of which 127 were against those who were getting gas through illegal means, 143 raids were conducted against domestic users who were using domestic connections for commercial purposes. The company took action against 60 consumers who were using fake meters and action was taken against 42 consumers for unauthorised extension cases. During these raids 86 FIRs were lodged against gas pilferers. Volume booked to consumers against theft is 146MMCF amounting to Rs 50 million (67 percent more than previous year), which show our increased efforts in curbing gas pilferage. Similarly non consumer cases have also been detected and volume of 248 MMCF has been booked against these and cases have been registered against them.

COTTON PRICES GAIN MOMENTUM ON SHORT SUPPLY: KAMAL

Prices showed modest improvement on the cotton market on Friday in the process of renewed buying by mills and spinners, Kamal Hayder, Research Analyst-PAGE said. The official spot rate was higher by Rs 25 to Rs 6375. In Sindh, seed cotton prices were at Rs 3000-3300. In Punjab, phutti rates were inert at Rs 3200 and Rs 3550, as per 40 kg. In the ready session, around 20,000 bales of cotton changed hands between Rs 5600 and Rs 6700. Market sources said that this is short supply position which caused increase in the rates. Kamal further said that the spinners preferring to lay hands over the domestic stuff to keep away from huge losses. Some other experts said that it is most likely that soaring prices in India may propel local importers to purchase from other sources. They also said that there were high prospects of importing cotton from India, but now rates have touching record high, are fading.

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