Day: December 17, 2021

To curtail the gas crisis, Pakistan must prioritize the expansion of existing terminals under the approved Third-Party Access (TPA) rules on an immediate basis while eventually transitioning towards onshore terminals for greater energy security.

Highlighting the achievements of Engro Elengy Terminal (EETL), Yusuf Siddiqui, CEO of EETL, shared that EETL has set new industry benchmarks in over five years of its safe and essentially non-stop operations, with an availability factor of around 98 percent. EETL now contributes around 15 percent of gas supplies to Pakistan and can be considered the country’s largest “gas field” (630-690 mmscfd).

As the most utilized regasification terminal in the world, it has enabled Pakistan to save more than $3 billion through import substitution of furnace oil. Since its inception, EETL has achieved send-out of more than 1200 billion cubic feet (BCF) of RLNG/natural gas. Further, its partnership with world-class organizations like Royal Vopak of the Netherlands has brought global expertise and foreign investment to Pakistan for the development of the LNG sector.

He stated that LNG imports, which now constitute around 30 percent of the total gas supply mix, have been instrumental in bridging the energy shortages as the production of indigenous gas continues to decline drastically.

To mitigate the gas shortfall in the future, the government has adopted a favorable policy of encouraging private sector involvement in the LNG sector, but there is a need to remove any roadblocks that impede operationalization of additional capacity of existing LNG terminals under TPA rules, as allowed under the LNG Policy 2011 and LNG Supply Agreement (LSA) with SSGC. The TPA will allow private players to have access to the terminal capacity and bring LNG into the country, with no guarantee or liability required by the government or state-owned entities. This step will facilitate LNG market development as a whole and mitigate circular debt in the gas sector.

While the expansion of existing terminals offers a short-term and quickest possible solution to bridge the supply-demand gap, Pakistan must eventually shift its focus from FSRU-based terminals to onshore LNG terminals. Based on global experience, Yusuf stated that the deployment of the first or second FSRU is followed by an onshore terminal to ensure energy security, the longevity of the gas market, and the creation of a strategic national asset for the country.

With an expected capital outlay of $500-600 million, Engro Corporation and Royal Vopak are evaluating the development of Pakistan’s first multi-functional onshore LNG terminal that will offer regasification, bunkering, and LNG trucking services. If approved, the project will be built in a phased approach on the open-access terminal concept. The onshore terminal would result in reduced foreign exchange outflow compared to FSRUs, create greater market competition, and help optimize the LNG supply chain.

Source: Pro Pakistani

Petroleum group imports witnessed an increase of 112.33 percent as they reached $8.379 billion in July-November 2021 compared to $3.946 billion during the same period of the last fiscal year, says the Pakistan Bureau of Statistics (PBS).

The exports and imports data released by the PBS revealed that petroleum group imports registered 36.04 percent growth in November 2021 and remained $2.182 billion, compared to $1.604 billion in October 2021. On a year-on-year basis, petroleum group imports registered 180.55 percent growth compared to the same month of 2020.

Construction and mining machinery imports witnessed a growth of 42.32 percent during the July-November period and remained at $67.43 million, compared to $47.37 million during July-November 2020.

The construction and mining machinery imports registered 99.10 percent growth on a year-on-year basis and remained $16.963 million in November 2021, compared to $8.520 million in November 2020. The imports in this group registered 43.24 percent increase on a month-on-month basis when compared to $11.842 million in October 2021.

The country’s textile group exports witnessed 28.41 percent growth during the first five months (July-November) of the current fiscal year and remained $7.758 billion, compared to $6.041 billion during the same period of the last fiscal year.

The textile group exports on a month-on-month basis witnessed 8.45 percent growth and remained $1.736 billion in November 2021 compared to $1.6 billion in October 2021.

On a year-on-year basis, textile group exports witnessed 35.33 percent growth in November 2021, when compared to $1.282 billion in November 2020.

Cotton yarn exports registered a growth of 65.45 percent during July-November 2021 and remained at $503.897 million compared to $304.553 million during the same period of last year. The exports in this group increased by 47.03 percent in November 2021 and remained $109.133 million when compared to $74.224 million during the same month of last year. Raw cotton exports witnessed a 100 percent decline on a month-on-month basis as well as on a year-on-year basis.

The country’s exports during July-November 2021 stood at $12.364 billion (provisional) against $9.744 billion during the corresponding period of last year, showing an increase of 26.89 percent.

The country’s exports in November 2021 stood at $2.903 billion (provisional) as compared to $2.464 billion (provisional) in October 2021 showing an increase of 17.82 percent and a 33.72 percent increase as compared to $2.171 billion in November 2020.

The country’s imports during July-November 2021 stood at $33.012 billion (provisional) as against $19.468 billion during the corresponding period of last year showing an increase of 69.57 percent.

The imports in November 2021 stood at $7.928 billion (provisional) as compared to $6.369 billion (provisional) in October 2021 showing an increase of 24.48 percent and an 84.72 percent increase as compared to $4.292 billion in November 2020.

The country’s trade deficit widened by 112.34 percent from $9.724 billion in July-November 2020 to $20.648 billion in July-November 2021. The trade deficit widened by 136.92 percent in November 2021, and remained $5.025 billion compared to $2.12 billion in November 2020.

Main commodities of exports during exports during November 2021 were knitwear (Rs. 79,221 million), readymade garments (Rs. 56,877 million), bed wear (Rs. 54,516 million), cotton cloth (Rs. 35,444 million), rice others (Rs. 29,203 million), cotton yarn (Rs.18,883 million), towels (Rs.18,217 million), madeup articles (excl. towels & bedwear) (Rs.14,560 million), rice basmati (Rs.10,872 million) and fish & fish preparations (Rs.9,364 million).

Main commodities of imports during November 2021 were petroleum products (Rs. 218,224 million), medicinal products (Rs.119,194 million), petroleum crude (Rs.75,456 million), natural gas liquified (Rs. 72,372 million), palm oil (Rs. 67,478 million), plastic materials (Rs. 51,515 million), iron & steel (Rs.48,005 million), iron & steel scrap (Rs.47,603 million), mobile phone (Rs.36,691 million) and electrical machinery & apparatus (Rs. 32,400 million).

Source: Pro Pakistani

The Sensitive Price Indicator (SPI) recorded an increase of 19.49 percent on a year-on-year (Y0Y) basis due to the price hike. According to the Pakistan Bureau of Statistics (PBS) data, the SPI for the week ended on December 16, 2021 registered an increase of 0.55 percent.

The increase was recorded mainly due to a hike in the prices of pulse Masoor (4.11 percent), salt (3.70 percent), pulse gram (2.08 percent), bananas (1.69 percent), mustard oil (1.35 percent), pulse Mash (1.32 percent), and electricity in the first quarter (10.37 percent).

The YoY trend depicts an increase of 19.49 percent mainly due to an increase in electricity in the first quarter (83.95 percent, LPG (65.26 percent), cooking oil 5 liter (60.37 percent), vegetable ghee one kilogram (57.56 percent), vegetable ghee 2.5 kg (55.62 percent), mustard oil (55.60 percent), washing soap (45.75 percent), petrol (35.42 percent), powdered chilies (32.24 percent), pulse Masoor (29.52 percent) and diesel (26.72 percent), while a major decrease was observed in the prices of onions (28.72 percent), pulse moong (24.87 percent), chicken (16.09 percent), tomatoes (14.76 percent), potatoes (14.58 percent) and eggs (9.86 percent).

According to the latest data, SPI went up from 167.24 percent to 168.16 percent during the week under review. SPI for the consumption groups up to Rs. 17,733, Rs. 17,733 to Rs. 22,888, Rs. 22,889 to Rs. 29,517, Rs. 29,518 to Rs. 44,175 and for above Rs. 44,175 increased by 0.45 percent, 0.98 percent, 0.43 percent, 0.11 percent and 0.30 percent, respectively.

During the week, out of 51 items, prices of 17 (33.34 percent) items increased; rates of 15 (29.41 percent) items decreased; and, the prices of 19 (37.25 percent) items remained stable, said PBS in weekly SPI data.

The commodities, which recorded an increase in their average prices include electricity charges for Q1 per unit (10.37 percent), pulse masoor (4.11 percent), salt powdered (3.70 percent), pulse gram (2.08 percent), bananas (1.69 percent), mustard oil (1.35 percent), pulse mash (1.32 percent), Sufi washing soap (1.23 percent), shirting (0.97 percent), firewood whole 40kg (0.92 percent), cooked beef (0.81 percent), vegetable ghee Dalda/Habib 2.5kg tin each (0.69 percent), bread plain (0.43 percent), garlic (0.42 percent), cooked daal (0.39 percent), toilet soap (0.30 percent) and rice Irri-6/9 (0.13 percent).

The commodities which recorded a decrease in their prices during the period under review included potatoes (15.52 percent), tomatoes (12.65 percent), chicken (5.94 percent), onions (3.94 percent), hi-speed diesel (3.48 percent), petrol super (3.40 percent), eggs (1.69 percent), Gur (1.34 percent), sugar (1.29 percent), powdered chilies (0.57 percent), beef with bone (0.54 percent), pulse Moong (0.37 percent), rice Basmati broken (0.20 percent), mutton (0.15 percent) and wheat flour bag 20 kg (0.04 percent).

The commodities which prices remained unchanged during the period included milk fresh, curd, powdered milk, cooking oil Dalda or other similar brands, five liters tin each, vegetable ghee Dalda/Habib or other superior quality one kg pouch, tea Lipton Yellow Label, tea prepared, cigarettes capstan, long cloth 57" Gul Ahmed/Al Karam, lawn printed Gul Ahmed/Al Karam, georgette, gents sandal Bata pair, gents sponge chappal Bata pair, ladies sandal Bata pair, gas charges, energy saver, matchbox, LPG and telephone call charges.

Source: Pro Pakistani

The government has set an ambitious target to take Pakistan’s exports of textiles and apparel industry to a whopping $40 billion by FY25.

ProPakistani has gained exclusive access to the Draft Textiles and Apparel Policy, 2020-25, approved by the Economic Coordination Committee (ECC) of the Cabinet on Thursday.

Value addition for each segment of the supply chain is a central goal of the policy, the result of which will be export projections of $20 billion for FY22, $25 billion for FY23, $31 billion for FY24, and $40 billion for FY25.

The policy outlines a 24-point incentives agenda for the textiles and apparel industry. Some of the key incentives proposed under the policy include the uninterrupted supply of electricity and gas/RLNG to the export-oriented units at regionally competitive rates throughout the policy years without any disparity among the provinces. For FY22, electricity will be provided at nine cents per kwh all-inclusive, and RLNG at $6.5/MMbtu all-inclusive.

The Long Term Financing Facility (LTFF) and Export Financing Scheme (EFS) rates will be continued at five percent and three percent respectively during FY22. Furthermore, a review of the LTFF and refinancing scheme for small and medium enterprises (SMEs), indirect exporters, and building costs will be included.

A brand development and acquisition fund will be launched and the Karachi Garment City Company (KGCC) will be revitalized under the policy. Additionally, a mass-level training program, especially for industrial stitching, will be launched for women in particular.

The e-commerce policy that is being implemented is also expected to provide open access to textiles and apparel manufacturers and exporters to tap the available business opportunities across the globe.

The State Bank of Pakistan will allocate sufficient funds for the LTFF and the EFS. Moreover, textiles and apparel machinery, spare parts, accessories, and dyes and chemicals will also be included in its schemes.

The government will establish state-of-the-art infrastructure having an electricity and steam generation system backed by the combined effluent treatment and water recycling plants to reduce the cost of manufacturing.

It will develop new garment cities for SMEs to have plug-and-play buildings in a number of cities including Sialkot, Sahiwal, Multan, and Hyderabad. More state-of-the-art buildings will be added, and buildings and procedures for rent will be designed in accordance with the SMEs in the existing garment cities. Additionally, expo centers will be developed in Sialkot and Multan under the policy,

The government will also allow back-to-back letters of credit (LCs) to boost value-added exports, and expects them to become the basis for development and provide a launchpad to SMEs.

It will also provide tax exemptions, free spaces, and other incentives for international buying houses to open offices in Pakistan, and will hold annual textiles and apparel exhibitions in Pakistan and other countries.

The duty drawback scheme (DLTL/DDT) will be continued for technical textiles, apparel, and made-ups. Moreover, diversification within products and markets will be offered an additional duty drawback.

The textiles and apparel machinery which has been customs duty-free since the first Textiles Policy will be continued, and the customs duty on spare parts that are not manufactured locally will be made zero.

The Ministry of Commerce will consult with the SMEs and large-scale industries to review federal, provincial, and other organization-based taxes/cess, and will provide recommendations to the government to rationalize them to reduce the cost of manufacturing. Similarly, federal taxes will be reviewed jointly with the Federal Board of Revenue.

Tax credit for investment under 65B of the Income Tax Ordinance, 2001, will be restored, and the import tariffs of accessories, dyes, and chemicals utilized by the textiles and apparel value chain will also be rationalized.

Challenges

The policy underlines the restoration of the profitability of cotton farmers as a major challenge. Product diversification is another serious challenge that can hinder achieving the targets set under the policy.

The lack of foreign direct investment in textiles and apparel is another major challenge. The government expects the favorable China-Pakistan Free Trade Agreement-II and the development of Gwadar Port and projects under the China-Pakistan Economic Corridor (CPEC) to help attract investment in the sector.

The policy document highlights the looming challenge of the textiles and apparel sectors’ demand for the restoration of the zero-rating regime, and the release of delayed refund payments by the government. It details that these measures are crucial for the enhancement of the capacities and production of exporters.

The document also mentions that the targets will only be realized with long-term commitments from the federal government and the full fiscal support of the Finance Division.

Source: Pro Pakistani